Why We Don't Want A Trade War With China

1. Trade War With China Benefits No One
2. Why the US-China Trade Deficit Will Likely Fix Itself
3. China Repels Foreign Investment, But Should Welcome It
4. Foreign Corporations Earn Lofty Returns in China
5. Why the Chinese Don’t Invest More Domestically


I have argued in recent months that a trade deficit is not necessarily a bad thing and certainly not as troubling as President Trump would have us believe. I have also made the case that as the largest and richest economy on the planet, it only stands to reason that we would run a large trade deficit with many of our trading partners – simply because we can afford it.

Still, President Trump harps on and on about how unfair the trade deficits are, especially when it comes to our whopping trade deficit with China. As you probably know, Mr. Trump just announced another round of trade tariffs on $200 billion in imports from China, in addition to the initial $50 billion in tariffs he announced earlier this year. China immediately threatened to retaliate, of course.

Fortunately, these new tariffs don’t go into effect for a couple of months so there is a chance of negotiating some kind of a compromise to avoid them. Let’s hope so – otherwise, this spirals into an all-out trade war which could be bearish for stocks.

Today, I’d like to take the tariff discussion a step further and specifically explain why our trade deficit with China is more of a problem for them than for us. In any event, it in no way justifies a trade war.

Finally, I’ll discuss why wealthy Chinese invest so little of their money in China and why many prefer to invest (and even live) in places like the US, Canada, Australia and other free countries. Hint: they don’t trust their government and even many of their fellow Chinese.