China-US worse case scenario

As I have been saying on the blog for years, I don’t believe there will be any deterioration of US-China relations beyond the usual tariffs and hawkish rhetoric. The media, on either side of the aisle, is hoping for US-China relations to suddenly take a turn for worse, but that refuses to happen. It’s just mostly saber rattling.

If things were to get wore. here is what would probably happen:

1. U.S. and China call their nationals back to their respective countries, although the CCP may detain U.S. citizens for vague reasons such as being threat to the CCP or espionage. Although this has happened in the past, it would be much more widespread and sudden. It is estimated there are as many as 70,000 Americans in Mainland China, and under such a travel freeze, it possible none would be permitted to leave. Likewise, the US could respond with a travel ban of its own for Chinese nationals.

2. Confiscation/forfeiture of property such as businesses and real estate of Chinese nationals. The U.S. is very good at taking people’s private property. In 2014, $5 billion of private property of Americans was seized under civil forfeiture laws.

3. Bilateral trade freeze. This wold hurt he U.S. economy, but especially China. Almost all trade between the US and China would come to halt.

4. However, the U.S. would not renege on its debt obligation to China, the reason being that the resulting spike in treasury yields attributable to the loss of confidence in the US to repay its debts, would cost more than servicing the debt itself.

5. China defying the regard to Paracel and Spratly Islands dispute.

So far, we’re a long way from any of those things happening except for possibly the last one. It’s hard to know what China’s endgame is, but conquest and war does not seem like it. Maybe the answer is as prosaic that they aspire to the same consumerist culture as the US. Similar to how China venerates Marx, America venerates Washington and Jefferson despite modern society and government bearing little semblance to how the Founders conceived it, as neither does China resemble how Marx conceived communism either. The media narrative for past decade is that war with China is inevitable, but the only question is when. Yet how many pundits correctly predicted in January and February that governments all over the world in democratic countries would impose similar shutdowns as China, due to the virus? Zero. Even people who predicted a lot of deaths didn’t foresee the shutdowns and quarantines. Goes to show how little credibility many of these pundits have, but also the real threat of tyranny is not from China, but your own government and politicians.