Future Trade War Balance Of Power From Now To 2055


Trade wars have revealed that true power is consumer market spending power and having control of key production and production inputs. Economic power is consumer market power and lack of production supply chain weaknesses.

Trade War Reveals Production Dependence
China, India, Japan and Asia are dependent on imported oil and gas. Dependencies tend to range from 70-90%. Coal, hydro and nuclear power are the options for high levels of domestic power in Asia.

China has had its dependence on US semiconductor circuits revealed. However, the entire world has a certain level of semiconductor and electronic dependence on the USA. Russian electronics are much worse than China’s; 40% of the electronics in Russian rockets and satellites need foreign sourcing.

China is also dependent on foreign sourcing for large aircraft engines. The lesson of the trade war is for China and other countries to address dependencies where possible. A country with less or mitigated dependencies is tougher in a trade war.

Consumer markets
If a country is dependent upon access to a large consumer market, then the countries with those markets have power over those who need access. The US as superpower has also been the super consumer market. As recently as 2000, the US has been half or more of the entire world’s consumer market. The US had a US$ 10 trillion consumer market and the world was about US$ 22 trillion.

Now the total world consumer spending is over US$ 40 trillion. The US has US$ 13.6 trillion and China is number two with US$ 6 trillion. The European Union collectively has US$ 9.7 trillion and Japan is next with US$ 2.8 trillion. Germany has US$ 2 trillion.

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The world and US consumer spending is growing at about 3% per year. China is growing at 9% per year. China’s consumer spending growth is faster than its GDP growth. China’s share of GDP for consumer spending is about 44% when many countries have 54% to 68%. South Korea is the developed country with the next lowest share of consumer spending at 48%. Singapore is an outlier at 36%. Hong Kong has 68% consumer spending. It seems that China could grow consumer spending at a 9% pace for several years until it gets into the 55-65% range of share of GDP for spending. This is even if the GDP growth rate drops to 4-5% per year. There should be about 10-15 years of high consumer market growth after the overall GDP growth rate slows.

China is on track to get to about US$ 8 trillion in consumer spending in 2021. In 2025, China should be at US$ 11.2 trillion. They should reach US$ 16 trillion in 2029. The US market should have still grown to around US$ 17-18 trillion in 2029. The passing of the US consumer market should happen around 2030-2035. This should happen even if China drops from 6-7% down to 4-5% in the early 2020s.

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The USA and China will have nearly equal consumer market sizes (within plus or minus 15%) from 2029 to 2037. China would have to maintain a GDP growth advantage over the US beyond 2037 to pull away. China consumer market share of overall GDP will be in the 55-65% range in the 2030s.

India’s consumer spending growth has fluctuated but has more than doubled from 2010 to 2018. India has the goal of overtaking Japan as the third largest consumer spending market by 2025. However, they will both be five times smaller than the US market in 2025. If India stays on track with a consumer market doubling every eight years, then India gets close to the US market size around 2048.

The trade war balance of power in the future
The US remains the dominant consumer market force until 2028. China is about equal in consumer market power from 2029 to 2037. China is already stronger regionally or with certain countries. China is trying to use Belt and Road to strengthen ties and trading partners in Asia, Africa and Europe.

China should be building a large gap as the world leader from 2038. India will change the global consumer market big 2 to the big 3 in 2045-2055. If China can be as strong as South Korea and Japan, then solid 4-5% GDP growth can be maintained until per capita income is 80-85% of US levels. This level is the UK and German per capita GDP levels. Japan reached UK per capita GDP levels. China should be able to get an economy and consumer market that is 2.5-3 times the US level. US immigration will move the US population from 25% of China’s to 33% of China in the 2050 timeframe.

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China moving beyond 80-85% of US per capita GDP levels means being more innovative than Germany and Japan and the USA. It also means being willing to restructure and reorganise cities and societies for growth more aggressively. The US is more willing to have creative destruction than the French and other developed countries in Europe.

China seems to want growth even more than the US does and China is willing to do things that US is not willing to do. Just as the US and Americans have been willing to do more on average than Europeans to achieve growth and wealth.


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