| By Bill Bonner RANCHO SANTANA, NICARAGUA – Napoleon called her a “sleeping giant.” But now, the big girl is wide awake. She’s had Covid… and shook it off. Now, she’s back at work… with big plans. Here’s the latest from Politico: China was the EU’s main trade partner in 2020, taking the top spot occupied until last year by the United States. In 2020, exports of EU goods to China increased by 2.2 percent and imports went up 5.6 percent, while EU trade with the rest of the world dramatically dropped (down 9.4 percent in terms of exports, and down 11.6 percent in terms of imports compared with 2019). The pandemic severely hit transatlantic trade, with exports of European goods to the U.S. falling by 8.2 percent year-on-year. Imports fell 13.2 percent. As a result, the U.S. is no longer the bloc’s top commercial partner and has been replaced by China. EU exports to China in 2020 amounted to €202.5 billion while imports reached €383.5 billion. And here’s more from the Business Times. For perspective, Donald Trump’s trade wars were supposed to reduce America’s trade deficit – especially with China. Here’s what happened: US annual trade gap grows to biggest since financial crisis The US last year posted its biggest annual trade deficit since 2008 as the global health crisis depressed export markets for American companies. The gap in trade of goods and services widened to US$678.7 billion in 2020 from US$576.9 billion in 2019, according to Commerce Department data. […] China regained the top spot among US trade partners for goods after finishing behind Mexico and Canada in 2019. | Recommended Link | | Emergency Briefing: "The Great Reset"
By May 28th, Americans could be faced with a difficult choice: Accept a "Great Reset" and risk losing the American way of life… or stand up and fight back to save what's left of the American dream. Jeff Brown, member of a D.C.-based advocacy group, explains what every American must do before May 28th to preserve his assets and thrive. | | | -- | Us Versus Them China is finding favor with investors, too. Here’s the lowdown from CNN: Foreign companies are turning their backs on the United States, taking advantage of China’s booming economy and superior management of the Covid-19 pandemic. Direct investment in the US by foreign companies plummeted 49% to $134 billion last year, according to a report by the United Nations Conference on Trade and Development. By contrast, foreign direct investment in China grew by 4% to $163 billion in 2020. 2020 marked the first year in history that foreign direct investment in China overtook that of the US, according to the UN. China is now the world’s largest recipient of foreign companies’ investments. Some people will view these facts with alarm. They think we’re in an “Us versus Them” competition with the Chinese. If they win, that must mean we lose, right? But does it really work that way? If Chinese engineers invent a better light bulb... won’t our days be brighter, too? If they get richer and buy more of our Netflix features… won’t we be better off, too? If China’s growth brings dangers, it brings opportunities, too. Chinese billionaires may buy our houses… our malls… and our stocks. They may hire our children as chauffeurs and houseboys… and our ex-military to help them suppress dissenters. And who knows, maybe smooth-talking Americans will be able to hook up with rich Chinese lovers… like a down-at-heel English aristocrat hoping for an American heiress to save his pile. [Featured: Where America Goes From Here (It's a Nightmare)] Useful Theme The “Yellow Peril” is a useful theme. The politicians, warmongers, fixers, media, lobbyists, think tanks – all love it. It’s another big threat they can protect us from. And it is a good distraction (along with many others) because it leaves the Elite Establishment large, in charge… and in the money. But as far as we can tell, the Chinese are not about to invade San Francisco. Or if they do… it will probably be as part of a UN “peacekeeping” mission, trying to keep Americans from killing each other. Age-Old Story So what will happen in China? Is the country becoming richer and more powerful? Or will central planning and debt soon cause it to blow itself up? We don’t know. The Chinese book is a mystery to us… ancient and unfathomable… largely off limits to western eyes. The U.S. book, on the other hand, is tattered and worn. It’s an old story with an old plot. Oft-repeated, for amusement… and moral instruction… it is a perennial favorite. Boy meets girl. Boy spends too much money trying to impress girl. Boy counterfeits money to try to cover his debts. Girl goes off with someone who hasn’t made a fool of himself by trying to tell everyone else what to do… someone who is still solvent. A Chinese guy? Maybe. Over the last four years, the U.S. has added $3 trillion in new money (central bank holdings). The Peoples’ Bank of China, by contrast, has added almost nothing. [Featured: Hidden Time Bomb in Your Brokerage Account?] Eastward Drift Here’s how CNN summarized it: China wants to lead the global recovery from the pandemic and become more influential on the world stage than ever before. It might just have the momentum – and the confidence – to pull that plan off. “China emerged from the Covid-19 shock earlier than the rest of the world and authorities are already planning for the long term,” wrote Françoise Huang, senior economist for Asia-Pacific at Euler Hermes, in a report titled, “The world is moving East, fast.” The world can’t really move east. It is a ball. Half moves east. The other half moves west. But the China story is one for the history books. It has risen from one of the most backward nations on the planet to one of the most powerful and modern – in a single generation. And what next? How does the story end? Oh, Dear Reader, you can’t be serious. You’re asking us? Again, we will have to turn the pages, one at a time, along with everyone else. But the U.S. story? We think we can skip ahead. Tune in tomorrow... Regards, Bill
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FEATURED READS Stimulus Checks Drive Stronger-Than-Expected January Retail Sales
Retail sales for January increased a whopping 5.3%. This spending boost has been largely driven by the $600 federal stimulus checks issued in January. And as the number of new COVID-19 cases declines and more businesses resume normal operations, the spending spree is expected to continue. Biden Appointments Signal No Reconciliation With China on the Cards
As Bill writes above, the “China challenge” is no longer in the distant future. And President Biden’s recent appointments to his China policy team indicate that the hard line taken by the Trump administration will be maintained. MAILBAG Today, we get a firsthand report from a dear reader in China, in response to Bill’s Diary last Thursday, “The Future Can Wait”... Talk about hitting the nail on the head. We do not chat much amongst us foreigners here in China about shares, but some of the Americans have certainly moved their money overseas. While being a Brit, I have moved well and truly into gold and rare earths. My American friends (surprise!) have gone for no major companies but small ones, where a small raise of cents or pence makes a good percent raise. My Chinese friends think China will take back Taiwan soon, as well as the Diaoyudao Islands, I’d say just before the new missile defense from the U.S. is set up. What all that will do to the U.S. dollar, I have no idea. But I still think it will need a large devaluation down, whatever happens. – Chris M. And another reader has a theory about why the U.S. dollar hasn’t tumbled just yet… Bill, is the U.S. the only country that is creating money at a dizzying rate? My opinion (gut, not backed by research) is that the only reason we haven’t gone the way of Venezuela and Zimbabwe yet is that all the other countries are destroying the value of their currency at a faster rate than we are. So while we are bad, relative to the other currencies, we are still better. At least our nominal prime rate is still in positive territory. What is your take? – Michael W. Meanwhile, this dear reader strongly disagrees with Bill’s claim in his essay, “Same Old, Same Old,” in which he said: “For a president, there are only two things that really count: Protecting the citizens’ wealth… and protecting their freedom.”... Is this statement of yours missing something that everyone yearns for? How about protecting the citizens’ health? If you don’t have that, the other two don’t matter anyway! Good health is what a lot of Americans don’t seem to have right at this point in time. Or has that issue just slipped past you while you weasel off to a bolthole like Nicaragua or Argentina? – Stephen F. Do you think China is winning the “Us versus Them” war? And what future do you see for the U.S. dollar? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… How To Retire Rich Off a Single "Boring" Stock Most people wouldn't look twice at this stock, but it helped make this man rich… (Name and ticker FREE). Get the details here. 
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