United States intends to revive manufacturing, which is a big challenge for us.
The United States government first raised tariffs and then accelerated the reshoring of manufacturing, and the two moves are closely linked with the clear purpose of protecting local industries.
What impact will this strategy have on the global economy?
United States' move to raise tariffs is like putting up a line of defense against the impact of low prices of foreign goods.
In the short term, this may put inflationary pressure on United States, but in the long term, they want to bring manufacturing back to United States and revive the economy.
Don't look at the tariff, on the surface, it is a restriction on foreign countries, but in fact, it is also to protect its own industrial chain.
In order to make manufacturing more competitive, the United States is also planning to depreciate the dollar sharply.
Think about it, as soon as the dollar depreciates, the price of imported goods will soar, and the products made in the United States will be relatively cheap, and international competitiveness will naturally rise.
In this way, United States can not only protect its domestic industries, but also achieve a trade surplus through high exports and achieve economic balance.
However, the renminbi is not vegetarian either.
In the face of the depreciation of the dollar, the renminbi will slowly appreciate, but the central bank will certainly not sit idly by and will take some measures to mitigate this trend.
The appreciation of the renminbi may lead to the gradual withdrawal of domestic manufacturing industries that rely on the demographic dividend, but at the same time, it will also attract a large amount of international capital to flow into China and promote the development of the capital market.
This will not only facilitate the return of talents, but also provide more impetus for scientific and technological innovation.
The game between United States and China is mainly reflected in currency wars.
China is pushing for the internationalization of the renminbi, while United States is a bit passive in this currency war.
The United States government has a heavy debt burden, known as high as $35 trillion, and could exceed $40 trillion by the end of the year.
What's worse is that there are still $11 trillion in debt coming due, and the United States government is under great pressure for such a large debt hole.
The United States government's sources of external financing are also decreasing, the amount of U.S. debt held by foreign investors is decreasing, and the share held by United States themselves is increasing.
The Fed's interest rate cuts, while aimed at stimulating the economy, have also led to a decline in Treasury yields, making the bond market less attractive.
United States themselves have to take on an increasing debt burden, which not only limits the government's fiscal space, but also inhibits the investment and consumption potential of the private sector.
In the global financial market, many countries began to settle trade in their own currencies and gradually abandoned the dollar, which made the influence of the dollar in the global financial market decline, and the hegemony of the dollar was in jeopardy.
For example, China and Russia have begun to use local currencies for trade settlements, which is undoubtedly a powerful blow to the hegemony of the dollar.
China has taken the initiative in the field of financial warfare, while United States has fallen into passivity.
This currency war is not only an economic contest, but also a game of international status and influence.
China's efforts to internationalize the renminbi and gradually reduce its dependence on the US dollar are important strategies for China to gain the initiative in the financial war.
The challenges facing the United States come not only from the outside, but also from within.
The known $35 trillion in debt, combined with the $40 trillion that could be reached by the end of the year, is simply astronomical.
And the upcoming debt of $11 trillion has made the United States government even more anxious.
Under such pressure, the United States government has had to rely on domestic capital to fill the debt gap, foreign investors have held less US debt, and United States themselves have had to take on more and more debt.
The Fed's interest rate cuts, while aimed at stimulating the economy, have also created new problems.
U.S. Treasury yields have fallen, bond markets have become less attractive, foreign investor interest has weakened, and the United States government has become more difficult to finance.
United States themselves are burdened with increasing debt, which not only limits the government's fiscal space, but also inhibits the investment and consumption potential of the private sector.
In this game between China and the United States, the currency war is undoubtedly the main battlefield.
China has promoted the internationalization of the renminbi and gradually reduced its dependence on the US dollar through a series of policies and measures.
The United States, on the other hand, has been passive in this currency war, with huge debts, increased difficulty in financing, and challenges to economic growth.
In the future, the currency war between China and the United States will continue, which will not only affect the economic development of the two countries, but also profoundly affect the changes in the global economic pattern.
Behind the appreciation of the renminbi and the depreciation of the US dollar is the fierce competition between China and the United States in the global economic field.
In this context, the flow of international capital, changes in trade settlements, and the increase in debt pressure are all important issues that we need to pay attention to in the future.
In the face of the currency war between China and the United States, we need to pay attention to the impact of this game on our own lives.
The global economic landscape is undergoing profound changes, and it is up to each of us to think about the future and be prepared to meet the challenges.
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