
American Mistakes Handing China Short-Term Gains
In the short term, China has already achieved four results: 1) halted rare earth exports to counter the US tariff offensive; 2) used the September 3 parade to intimidate the US military; 3) distanced India somewhat from America's orbit; 4) increased exports to third countries, pushing the total trade surplus to nearly $600 billion in the first six months of the year, even as exports to the US declined.
In the medium term, China is tied to two losing partners, Russia and Iran, which are draining its resources. While the conflicts in Ukraine and the Middle East have diverted US attention from China, as was the apparent plan four years ago, it remains unclear whether Beijing needed to support these lost causes, entangling it in unwinnable struggles.
In the long run, it remains unclear how China will address the fundamental issues posed by its large trade surplus and non-convertible currency. Historically, China's surplus-related problems contributed to the fall of the Ming and Qing dynasties in the 17th and 19th centuries, respectively.
Today, China might try to address these challenges by gaining control over global trade. However, this depends on having a free market – which also assumes free information and a liberal political system – as well as a trade deficit, in which a country imports foreign goods to circulate its own currency. This could lead to the de-industrialization of China, causing problems similar to those faced by the US today.

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