Over the years, we have become accustomed to China ' s second-time United States economy, ranked second in the world and growing at a rapid pace. So we look at the rate of economic growth in the country, as well as the trend in stock and housing prices, and we all think that it should go up, preferably 45 degrees up, a curve that is not volatile. But the recession, depression, recovery and prosperity are inevitable. We are, indeed, still on the way up, but whether we can hold it or not will depend on the years, the talks with the United States and the end of the big game on both sides.
Foreign Minister Wang Yi visited America
As we have also talked about before, competition between China and the United States will be a long-term process, and both sides will maintain a state of negotiation and mutual experimentation. In 2023, our head of the Central Office, Foreign Minister Wang Yi, visited the United States of America and the upcoming APEC summit in the United States, is now a phased receiver. At this critical juncture, one of China ' s important neighbours has been a little overwhelmed.
In the latest International Monetary Fund projections, Japan ' s nominal GDP in 2023 had already been exceeded by Germany, giving way to the third-largest chair in the world. Japan's GDP was the second highest in the world in 2009, and after having been surpassed by China in 2010, they had been the “third world” for 12 years. We all know that, since the late 1980s, Japan's economy has been “disappeared 30 years” or “disappeared” 30 years before it was developed.
Kishida and Biden
By the way, it's kind of weird. In the Global Economic Outlook report released by the IMF at the beginning of this month, they also forecast an economic growth rate of 2 per cent in Japan in 2023, with only -0.5 per cent in Germany, and a negative growth rate of Germany being able to outpace Japan’s positive growth, most crucially because the yen has depreciated by 15 per cent against the dollar and the euro by only 1.5 per cent against the dollar since the beginning of the year.
That is why, in dollar-denominated GDP data, Japan’s recession will be greater than that of Germany, and this is partly an indication of the fact that Japan, which still adheres to a loose monetary policy and is unwilling to raise interest rates against the Fed, will be worse in the future. The logic is very simple: the interest rate on Japanese national debt is still negative, while the interest rate on US Treasury debt is as high as 5.5 per cent, and if you were an investor, would you leave the money in Japan, the United States, or other countries with better economic development?
The Central Bank of Japan has long been implementing a policy of negative interest rates and unlimited QE. In their view, Japan needs “economic growth” more than a stable exchange rate. As long as there is enough money on the market, sooner or later the economy will prosper. This idea is very much in line with the theory of liberal economics, but not in practice. Japan’s problems will soon arise as China is forced to “strangle” with the United States as China develops rapidly in various fields.
From home appliances to automobiles, and now in the hot semiconductor sector, Japan has little industrial advantage, because their own odours are being replaced by China, and we are now ahead of Japan in the first half of the year, officially becoming the world’s largest car exporter.
(Japan is in the car industry by China)
The second is that when China is developing too fast, and the United States wants “to contain” us in order to preserve its “hegemonic position”, a subordinate country like Japan and Korea cannot afford the fallout of the game of great powers. In July, as an example of recent events, we imposed export controls on two key strategic minerals, thiram and thiram, in response to the “scientific war” unilaterally initiated by the United States, the most dramatic response being Japan and Korea. A few days ago, the Ministry of Commerce issued a letter on export controls of graphite, which was intended in response to the EU countersubsidization survey of China ' s electric cars, with the result that Japan and Korea were the worst injured.
In addition, in the first half of this year, the United States’ successive inflation-reduction bill on barriers to motor vehicle trade, and the Chips and Science Act, aimed at curbing China’s semiconductor industry, have all weakened the competitiveness of Japan’s and Korea’s products in China, America, and Europe’s markets in a variety of ways, to the extent that Japanese Prime Minister Kishida Wenchu, and South Korean President Yoon Seong-hyo, went to the United States several times to plead with the US in the hope that Biden’s hands would be lightened.
(meeting of the American and Japanese leaders)
If that is the case, the additional harm that the United States has inflicted on Japan and Korea by “quenching” China, then the monetary and economic policy of the United States and Japan is to use Japan nakedly as a cash machine. A week ago, the United States Department of the Treasury released data on US debt held by major economies in August of this year, and China continued to reduce US$ 16.4 billion, holding a warehouse at US$ 80.5.4 billion, a new low since 2009.
At this point in time, United States Treasury debt, because it can't be sold, returns will rise and countries around the globe will risk increasing? With the exception of the United Kingdom, Japan, which currently holds US$ 1.12 trillion in debt, and Japan’s third consecutive month in August, which is a six-month increase in total, Japan’s public statement is certainly a sign of confidence in the US economy and increased investment in the US, but the fact is that Japan cuts its own meat, lets the US bleed back, and then fights with China, which is an extreme irony that the Japanese economy continues to lose its blood.
I remember when last year’s Russian-Ukrainian conflict broke out, and when the Fed started to raise interest rates, there was a lot of economists’ analysis that the US had this time been a double-track provoking war and a United States dollar tide that would certainly have to harvest a larger economy to fill its own deficit. There were two hot options, one for the EU and the other for Japan. More than a year later, the EU did suffer from the Russian-Ukrainian conflict and the Fed’s interest rate hike, and you see that Germany’s economy is starting to decline. Now that America’s economic problems have not been resolved, it is because Japan’s exchange rate against the US dollar is falling, and they continue to raise their US debt.
In the end, it is the United States that is not human and that treats its allies, its servants, as “bloodbags”, after many senior United States officials came to China to increase its debt to the United States and become “bloodbags”. If we fail to do so, the United States will have to intensify its efforts to incite new wars, such as the expansion of the Israeli-Palestinian conflict and the continued harvest of its allies, a trend that may not have allowed us to do anything, and the American camp itself will collapse.