Good Bet: Protectionism Is Coming

Socionomic theory predicts protectionism will rise during periods of negative mood. It is surprising how long it has taken for protectionism to break out, but then it is also surprising how long the central bankers have levitated global asset markets.

One area where I find disagreement with socionomic theory is the general negative connotations towards negative emotions. It is true that war and conflict are more likely during periods of negative mood, and these must be guarded against, but it is also true that in order to change bad policies, there must be some amount of conflict. Just as a recession cleanses the economy of bad debts and inefficient companies, a decline in social mood can lead to similar changes in politics, where bad leaders, institutions, trade deals, etc. are changed.

China is also correct when it hits the U.S. on leadership:
Chinese Finance Minister Lou Jiwei called GOP presidential front-runner Donald Trump an “irrational type” and said the U.S. “wouldn’t be entitled to world leadership” if it followed Mr. Trump’s proposed trade policies toward China.
In order to maintain reserve currency status, the U.S. must send trillions of dollars overseas each year, which hurts American exporters. It is great for the FIRE economy and leads to the financialization of the economy. Since the end of the Cold War, Americans were only given one choice: maximize American power. Now they are being given another option: maximize American living standards. These two choices are in contradiction in the short-term because American economic might is being drained to finance an empire. In the long-term, maximizing living standards will tend to lift national power.

And China continues to take steps that can only be regarded as equally against the spirit of free trade, in addition to counteracting the country's reform efforts. The State Council issued a document today calling for improved quality in Chinese consumer goods, so that Chinese will stop shopping overseas.

iFeng: 应对国人海外“买买买” 国务院发文了
In recent years, overseas consumers crazy shopping , sitting on "the world's first manufacturing country" has a steady stream of big spenders abroad, a phenomenon that hurt the Chinese people's nerves. Today, the State Council issued a document to carry out their actions to improve the quality of consumer goods. If the future of local products to meet consumer demands, will improve this phenomenon radically.
Simply open the market to imported consumer goods and the quality will rise naturally as substandard Chinese manufacturers that cannot compete go out of business. Plus, it would reduce the trade deficit and weaken the protectionist case being built in the U.S. and elsewhere.
We note that the priorities for action to improve the quality of goods, the crazy people had "swept" Japanese buying smart toilet lid, rice cookers impressively. In recent years, as people's living standards improve, the pursuit of quality of life for consumers are increasing, inexpensive choice of goods no longer the sole criterion, the pursuit of quality people to become more enthusiastic. The toilet lid can be so accustomed to this kind of daily necessities have to go abroad to buy, obviously, the quality is still the Chinese consumer pain points, China is facing "manufacturing, brand effect" embarrassment.
One issue of concern is the very low quality of basic necessities though, such as milk powder:
According to statistics, nearly four years of Chinese Residents consumption abroad more than 25% average annual growth in 2015 reached 1.2 trillion yuan Chinese tourists overseas consumption yuan . Chinese goods have been scouring the sea from the earlier "only buy luxury goods" to "pay more attention to daily necessities." Lack of brand development largely spawned a cycle of product markets, namely the formation of a "brand quality difference between enterprise supply and consumer demand - low quality image - high-end shifts in demand - supply quality improvement underpowered - Brand quality poor "non-virtuous circle.

Analysts believe that people are shopping overseas, reason than: Now the domestic supply side to provide the goods and did not fully meet the demand. On the surface, the gap with the international advanced level in China there are two points: First, the process, the second is material. The deep is derived from three points: First, key technology, the core technology to master enough, feature ideas level of product gap . Second, product manufacturing standards lag other countries. Third, the lack of sincerity of manufacturing, the lack of good faith "artisan spirit" the pursuit of perfection and refined products.

This year, China's accelerated supply-side reforms, the two sessions but set a build quality power, "Thirteen Five" period, manufacturing power goals. Analysts believe that the cost advantage is already not hope for China today's consumer market, "supply-side reform" is through reform, on the "excess supply" of trade industry to the inventory of "supply shortage" in the industry to expand the effective supply industry, meet people and diverse, upgrades, upgrading the consumer demand.
Maybe a President Trump would be just what China's economy needs.

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