To the Democrats, they will not interfere with Trump's foreign policy unless it is something deem too damaging to the nation. The Democrats aim is to focus on domestic issues, the bread and butter issues facing the people so that they could win the support for the 2020 US Presidential Election. They will not focus on foreign policies until they have a people of their own in the top seat.
To the Republicans and Trump, it will be a total different story. No longer they will enjoy the smooth passage in passing policies prior to the midterm. They will have practically 0 chance of smooth sailing with their policies on domestic issues. With slightly more than 2 years left to the 2020 Presidential Election in which Trump hopes to get re-elected, he will unlikely to get much credits from his domestic policies with the Democrats controlling the House now. His only best chance to get some credit is his foreign policy. So far, he only has the denuclearisation deal with North Korea and the NAFTA with Mexico and Canada to be so-called credit to his name. However, these 2 deals probably mean little to the people who are more concern about bread and butter issues. His only best bet to score point is making the trade deal with China. Why ? Corporate and family business are taking hit now from the trade war which Trump started. People are also paying more for items that are imported from China. With China showing no sign of backing down, if Trump continues on his way, the nation will suffer more next. Remember nobody wins in a trade war. Giving tax incentive for those who are hurt by the trade war is not a long term solution as that only increases the Government debt. How many times US Government has raise its debt ceiling since the 2008 subprime crisis ? Having the idea of encouraging US companies to shift their manufacturing operation back to US also won't work in the long run. In short-term it can create employment for the people but the cost of manufacturing could not be lower than China and whether that can be sustain in the long run is questionable. This is what most could be getting wrong on US foreign policy with Democrats winning the House. Trump and the Republicans should be more hurried to sign the trade deal with China to get some credit to win people vote when they have very little chances in domestic issues.
China on the surface is taking hit from the trade war with its economy slowing but that is not the full picture. It is either luck, blessing or foresight that China decided to reform its economic model to consumers & services oriented rather than heavily relying on export in 2012, if not it will suffer more with the trade war now. Analysts and Trump are taking the slowing down in its economy as an implication that China is losing the trade war, is that really so ? Losing a battle doesn't mean will lose the war. We have seen numerous examples of lose the battle but win the war scenario in human history already. China doing a head on collision with US on the trade war is more like trying to buy times for its own economy reform to be fully complete and also the One Belt One Road project, a very typical lose the battle but win the war strategy.
These are politics at play. It is not difficult to read those politicians like a book as all you need is a heart purer than them. Either you read them like a book or you will get used by them as a prawn or tools in their political propaganda. This is what politics in the world including Singapore is all about and that is why politics is dirty !
2013 was the first time long run equilibrium (principle of macroeconomics) was mentioned in this blog (refer here). Then could sense something is abnormal about the fundamental of global economy after the 2008 GFC. The analysis at that time was due to the QE done by US Fed, ECB and BOJ that affects the interest rate and inflation. As the Central Bankers kept on printing money like nobody business, global economy failed to recover in the shortest possible time since 2008 GFC. This led to questioning has the addicted way of printing money caused the long run equilibrium line to be shifted to a new position. 5 years later, the picture is clearer for the reason of the long run equilibrium.
Above are the charts of S&P500 and Shanghai Composite since 2007 till present. A totally different direction for the World number 1 and 2 economy. S&P500 is at the ending part of an Elliott SuperCycle Wave 3 while SSE is at the ending part of an Elliott SuperCycle Wave 2. What Elliott Wave describes is after Wave 3 will be the corrective Wave 4 (recessionary scenario) and after Wave 2 is the super charge up Wave 3. These decade long data establish a trend for the 2 nations. This trend is not something that form overnight or the direction can be changed overnight either. These data don't lie. What these data are saying is that the fundamental of the global economy is no longer the same prior to 2008 GFC. What the world heading toward is establishing various pillars (or legs) to support the global economy. This is the new long run equilibrium line in term of macroeconomics.
Going forward the world cannot afford to have just one leader in US alone. The global debt is in trillion USD, a figure probably nobody would have expected few decades ago. Should a bubble burst in the debt, the domino effect will be another Great Depression, one that will be worse than the 1929 - 1939. Thus, the world needs several pillars (or legs) to prevent another Great Depression.
US as one of the leg and China as the other. However, that is only 2 legs. If one is broken or crippled, the other can't stand up alone. EU is the third to make it like a tripod. Unfortunately, EU has been hit with its own Euro crisis in 2012 and now still trying to repair the damage. The third leg is there but not fully functional. Technically, 3 legs is more stable than 2 but 4 legs will be even better, more stable. Even if one leg is crippled, the world still can afford to hold up with just 3 legs. So where is the fourth leg ? There are several candidates in India, Africa and ASEAN. Should India become the 4th leg it will make no different like China, a duplicate so doesn't make much sense. Africa as a contingent is a good choice but it is still too underdeveloped. The best candidate will be ASEAN. With a combine population of over 600M, 3rd largest after China and India, and a good geopolitical position is a potential growth spot. Is ASEAN ready to be the 4th leg or still developing is another questionable at this moment but it is no doubts should be the 4th leg.
The world now is very much interconnected compared with few decades ago due to free trades. It makes logical sense that the world cannot afford to have just 1 leader but several pillars to support the global economy. This is what the world will be going forward.
