China and India are in deep, deep debt.
Don't confuse Trade deficits with debt. China has borrowed massive amounts of world money, including the from the US, to do things like build the 3 Gorges project, and overall industrialize their economy and infrastructure.
Their population is out of control. As far as war goes, their only big commodity is human beings. Their economy couldn't sustain occupying Taiwan.
Comparison: Iraq my be like a slow leak to the US economy , Taiwan , for China, would be like a blow-out going 60 mph to their fragile economy.
Our economy dwarfs China's. We are their only large outlet for cheap goods, so, the Trade situation goes both ways. If we impose an import tax on them, China will be in deep serious trouble.
Who is going to buy the excess goods they produce? France?
USA GDP: $ 11,750,000,000,000 .....that's Trillions. We are by no means beholden to China. That's an economic myth.
China misrepresents their GDP, at about $7 Tril, and doesn't even make the top 10 list using their skewed numbers. Most economists agree that China's numbers are about Half of what they report.
The countries whose GDP per Capita, (think standard of living and dollars per person) ranked among the top ten were Luxemburg, Norway, Switzerland, Denmark, Ireland, the United States, Iceland, Japan, Sweden and Qatar.
Looks comparable on the surface, but, when you are counting in Trillions of dollars, it is a quite significant gap, especially considering a big chunk of China's GDP is due to the USA buying their stuff.
Chian calls our debt? Big deal, we hike rates and stop importing their stuff.
We will still eat, be employed and be warm. They will have to lay-off large sectors of their economy and pay for their infrastructure. When you invest to industrialize, you need money coming in to pay for all the new toys.
It's fairly complex, but, when you look at it, we can do without cheap Chinese widgets, while on the other hand, they have trouble even adequately feeding their people. Big difference. They are trying to industrialize, but that is costing them vast sums of money, which means they are mortgaging their future.
If world interest rates rise a couple points, both India and China will fall into deep recessions, possibly depressions. They are maxxed out.
Lastly, look at it this way:
How many of your jobs, and mine, are dependant on China?
Now, how many of their jobs are dependant on the rest of the world buying their widgets?
My Economics professor had a saying:
"When the US's economy sneezes, the world economy gets pneumonia".
Despite what people may say, there isn't going to be a GreatDepressionII, not in the Western World. As far as the 3rd World goes, well, they haven't seen the Movie yet, rapid industrialization brings along a precarious economy.
They are where we were in the 1920's.
I wish them lotsa luck.
