"We are not looking for a new Cold War, nor are we looking for a world divided into distinct blocs." On September 24, U.S. President Joe Biden addressed the United Nations General Assembly for the first time since taking office.
When Biden said this on this occasion, he naturally knew very well in his heart that if the United States now used the same set of "Cold War" to deal with China, it would be unpopular in the international community.
But Biden probably has another intention, that is, to use such a very solemn occasion to shout at China. He seems to think that saying this kind of "spare you" at the United Nations is an expression of respect, and China will help him solve the domestic mess.
However, the previous United States has been making a stumbling block for China in all aspects, targeting China everywhere, such as wantonly using political means to suppress China's high-tech enterprises, operating the issue of tracing the origin of the new crown virus, and frantically smearing China's image in the world. Biden inherited these practices when he first took office.
Now that the deadlock of inflation and debt crises in the United States cannot be solved, the United States has thought of China again, and has constantly made overtures to China, and on October 6, Yang Jiechi and Sullivan met in Zurich, Switzerland.
This is already the third exchange meeting after the Sino-US trade war began, and it was initiated by the United States. Earlier, three senior officials of the Biden administration called China three times in a row in 15 days to ask for China's cooperation.
After the first call between China and the United States dollar on September 10, Canada also released Meng Wanzhou. It seems that Biden is really anxious to red-eyed, facing the serious economic problems facing the United States, eager to find China to help.
What's wrong with Biden? As we all know, last year the global economy was affected by the epidemic, and the GDP of all countries except China was basically shrinking, and the same was true of the United States.
Last year, due to the epidemic, factories in the United States were shut down and workers lost their jobs, which is undoubtedly a disaster for the American people. Both the previous Trump administration and the current Biden administration have given covid-19 subsidies to the American people.
They all hope that the distribution of epidemic subsidies will allow the American people to get through the crisis first, so as not to open the pot. In addition, the issuance of money can also stimulate consumption, which is conducive to the restart of American companies.
At the same time, since Biden took office, he intends to further boost U.S. employment with infrastructure plans that surpass roosevelt's New Deal. In this way, the US Treasury issued bonds, the Fed printed money to buy, and the super-loose monetary policy of the United States made $6 trillion pour into the market.
That's more than a quarter of the total U.S. debt in 2019, which has gradually accumulated since the George W. Bush administration began fighting wars, during a financial crisis.
By 2019, U.S. debt had accumulated for 18 years, reaching a level of $22.5 trillion. In just two years, U.S. debt swelled to $28.5 trillion.
What Biden did not expect was that when he first sent money to the American people, the inflation rate in the United States greatly exceeded the estimates of the Treasury Department and the Federal Reserve, and instantly exceeded the hyperinflation warning line set by the United States itself.
Not only that, but inflation in the United States remains high, remaining above 4 percent for six months. Knowing that inflation is running at a long-term high is a tricky thing for an economy.
Robert Lucas, an American economist who won the Nobel Prize in economics, proposed a concept of rational expectation, which simply means that if people generally expect inflation to be more serious, it will accelerate consumption, and prices will really rise, so people will confirm their ideas more, consume more rapidly, and the inflation rate will fly higher and higher.
When this situation is serious, even the central bank's monetary policy will fail. This theory explains inflation in the United States in the 1970s, when the United States took special measures several times to freeze prices and wages for 90 consecutive days, a trick that worked at first, and then became less and less effective, until finally it lost its effect completely.
This is because the Americans at that time had formed a consensus expectation, and everyone believed that as soon as the temporary special measures were over, inflation in the United States would rise, so they chose to spend the money in their hands quickly, so the inflation rate really rose. Inflation becomes a self-fulfilling prophecy.
But now the Fed can not immediately take measures to raise interest rates to curb inflation, on the one hand, high interest rates make Americans more willing to save than consume, so that there are fewer companies willing to lend to expand production, so high interest rates are completely unfavorable to the US employment rate data.
To know that Biden's infrastructure plan has begun to be implemented, and the number of new jobs in the United States has not yet reached half of the estimated, if Americans can not be fully employed, then the new crown pneumonia epidemic relief plan can not be stopped, Biden must continue to pay the American people. As a result, inflation in the United States does not really come down.
So many senior officials of the Biden administration came to China for dialogue, after all, if the price of Chinese-made goods can be stabilized, it will not form a consensus among the American people that inflation will continue to rise.
That would somehow give Biden a sigh of relief. It allows him to vigorously stimulate the economy without worrying about runaway inflation, and restore the US employment data first.
So in June, U.S. Trade Representative Dai Qi called China and said that he hoped that the renminbi would not appreciate suddenly. Secretary of State Blinken and Treasury Secretary Yellen also called China, and the three each called China within 15 days. During his visit to China in July, Sherman also asked China to provide the United States with a large number of goods at cheap prices.
But things are not as simple as the Americans think, and many Chinese factories have been reluctant to accept orders from the United States. This is not what China is engaged in, on the contrary, it is a rational choice made by Chinese enterprises under the market economy.
On September 21, a reporter interviewed a businessman who produced small commodities in Yiwu, which received a large number of orders for Christmas supplies from the United States, and most of the Christmas goods shipped out by sea were difficult to deliver.
This creates a backlog of orders, the factory's capital turnover becomes a problem, and the production schedule is disrupted. Moreover, the container in the port is difficult to find, and the factory in Yiwu often takes the default compensation because it cannot be shipped in time.
Originally, a standard container shipped to the United States only needed 13,000 yuan, but at that time it rose to 130,000 yuan, which greatly increased the transportation cost, and many profits of the Yiwu small commodity factory were put in.
And at that time, the international raw material prices continued to rise rapidly, many manufacturers received orders to start production, and finally received the payment from American importers, but found that the profits earned were offset by the rising cost of raw materials.
Under the influence of such a variety of factors, selling goods to Americans basically has no profit, and may also lose money, so many Yiwu businessmen interviewed by reporters believe that the most secure way is not to accept US orders first, wait and see.
Now that the Costco supermarket in the United States has been snapped up, the American people really expect that the money in their hands is becoming less and less valuable, and they are anxious to spend it quickly, watching the inflation expectations come true.
In fact, these factors, in the final analysis, are because the dollar is released, the price of raw materials around the world is rising, the price of energy is soaring, so that the freight rate will rise, and the inflation of the UNITED States output will ultimately affect itself.
In fact, the Fed also has a very important reason for them not to raise interest rates at will, that is, the current debt scale of the United States is indeed too large, once the Fed raises interest rates, the interest rate of the US Treasury bonds will also go up, and as long as the interest rate of the US Treasury bonds changes a little, the interest payment of the US Treasury bonds will change very largely.
If the Fed increases the interest rate on Treasuries to 5 percent, the annual interest payment on Treasuries in the United States will suddenly reach twice the size of military spending.
The U.S. military spending ranks first in the world, and it is more than the second to ninth place combined, and the interest that the United States will spend more after the Fed raises interest rates is indeed a rather frightening figure.
This leads to another dilemma that Biden faces, that is, the United States is suspending the expiration of the debt ceiling, and now the US Treasury department cannot continue to issue bonds for the Fed to print money to buy.
Now the U.S. federal government is facing a shutdown and the National Debt is facing default. But because the struggle between Republicans and Democrats in the United States is fierce, the Republican Party is using this debt ceiling issue as a tool to restrain Democrats.
The Republican Party, on the one hand, firmly disagrees with Biden's bill to raise taxes on the wealthy in the United States, and on the other hand, it does not agree with the bill to raise the ceiling of the US debt, on the grounds that the debt owed by the Biden administration will become a burden on the next president.
In fact, if the Republican Party is in power now, the debt issued may not be less than Biden, after all, the money always has to have a source, and he can only issue bonds without raising taxes.
If the two parties in the United States do not reach an agreement for a long time, the United States will not even be able to issue new bonds to repay the interest on the old debts, and the US Treasury bonds will be in default.
So Biden is really struggling with internal and external affairs right now. As a result, China has once again become the object of the United States' help, for example, recently the US Secretary of Commerce Raymondo wanted to come directly to China for talks.
In response to the matter, Shu Yuting, a spokesperson for China's Ministry of Commerce, also responded, telling the reporter who asked the question that she had noted relevant news reports.
She also said that the essential significance of economic and trade exchanges between China and the United States is to achieve mutual benefit and win-win results, which conforms to the basic interests of the two peoples, and is also beneficial to other countries.
However, When Biden first took office, Raymondo said that the US sanctions on Huawei will continue, and she said in an informal setting that one of the main purposes of her visit to China is to persuade China to buy $600 billion in US Treasury bonds and help the United States alleviate the debt crisis experienced by the United States.
In fact, this happened once in 2008. Just like then, the United States began to preach the idea that saving the United States is to save the world, in an attempt to globalize the United States' own problems.
Admittedly, the U.S. Treasury bond rate is a risk-free rate in global capital markets, and if U.S. debt does default, the impact will be unimaginable, and even the U.S. is likely not to be the most hurt.
But China is now the only country that has controlled the epidemic, the real economy has completely recovered from the epidemic, no matter what kind of financial storm there is abroad, the world still has to honestly find China to buy goods, and it is not a big deal to announce that only gold and yuan will be collected.
Moreover, China has always had exchange controls, domestic capital has not been open to foreign investors, the external financial storm is no matter how bad, the impact on China's internal is also limited, China at least can not be harvested by hot money.
So no matter how serious the impact of the US Treasury default is, at least it cannot interrupt the process of China's economic development.
Previously, Yang Jiechi, member of the Political Bureau of the CPC Central Committee and director of the office of the Foreign Affairs Commission of the CPC Central Committee, responded to the United States in a high-level strategic dialogue: "The vast majority of countries in the world do not recognize the United States as the international community, do not recognize that the value of the United States is international value, do not recognize that what the United States is talking about is international public opinion, and do not recognize that the rules formulated by a small number of countries are international rules." ”