Submitted by Taps Coogan on the 4th of September 2019 to The Sounding Line.

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Geopolitical Futures‘ founder and Chairman, George Friedman, recently spoke with Bloomberg about why he believes that China has significantly more to lose in a trade war with the US, and why China’s economy reminds him of Japan in the late 1980s.

Some excerpts from George Friedman:

“China’s position (on the Hong Kong protests) is clear. It does not want another Tiananmen Square. Given the confrontation it has with the United States, it wants international support and a bloodbath in Hong Kong would cost it that. (China’s) assumption is that, in due course, the demonstrators will get tired. There’s one interesting thing about demonstrations. You can be on the streets only so long before it gets tedious and you’re not getting anywhere…”

“(China) exports 4% of their GDP to the United States. The United States exports less than one half of 1% of its GDP to China. It’s an asymmetric conflict. The United States can withstand it, though the media will find all of the places where it is hurting. The United States can withstand that a lot more than the Chinese can… China has a problem. It is dependent on exports…”

“China has had a wonderful run and it’s now Japan in 1988, 1989. It’s financial system is in shambles. It can no longer compete with many other countries exporting. Many of the promises that it made internally to its public have to be limited. And so, China has to reshape itself, but Japan was in a better position. It did not have a large pool of impoverished people, as the interior of China has… It is not necessary for the United States to bring pressure onto China to limit it. China has an internal problem, as any country that develops as a major exporter has, when they no longer have the wage advantage. They’ve lost the wage advantage. Vietnam, Colombia, other places, are taking away markets from them. They are trying to go high-tech, which means they are competing with the United States, South Korea, Japan, Germany. Those are tough tickets for them…”

“…The United States wants access to the Chinese markets in the same turn as it provides access to the American markets. The Chinese are also trying to stimulate domestic consumption to support domestic production, because it’s lost many markets. So what the United States is asking for, the Japanese could give (in the 1990s). They had more room to maneuver. They had more wealth. The Chinese can’t give the same thing… The US can hold its position for a very long time. The Chinese need to make some concessions that it can’t afford to…”

There is much more to the interview, so enjoy it above.

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