It is simply a defense mechanism against mercantilism. The Western countries are forced to raise the prices because no country could possibly compete with China’s industries without driving down wages and production costs, which will undoubtedly destroy their own domestic industries in the process.

In the old days, after the Industrial Revolution, under free trade, the most industrialized nation with the most cost efficient productive capacity will be able to flood the competitor’s markets and kill off their domestic industries.

The most successful countries were the countries running trade surpluses, weaponizing mercantilistic warfare to destroy the trade revenues of their competitors.

It took two world wars to eliminate such excess industrial capacities in the West.

After the collapse of Bretton Woods in the 1970s, global trade was kept in a unique configuration where the US, whose currency is no longer tied to gold, is able to run persistent trade deficits in order to absorb the surplus industrial goods from the rest of the world, thereby balancing the excess industrial capacity of the world.

Such oversupply of industrial capacity was what allowed global commodities to remain relatively cheap over the past few decades, as surplus values were extracted from the Global South and in return, the consumption demand for such surplus capacity in the US keeps the workers employed and factories opened in those Global South economies.

The US finance capitalists are the true winners of this arrangement, as the de-industrialization killed off the growing trade union movements that accompanied the rise of the post-war industrial capitalism. However, the long term consequences of de-industrialization began to emerge in the 2010s, after the GFC in 2008 ended what remained of social mobility of the middle class, in the form of populism under the Sanders and Trump.

So what you’re really seeing, at its core, is the US attempting to transition away from the neoliberal arrangement that had worked so well for nearly half a century. The US knows that there is no way any Western country could possibly compete with Chinese industrial goods, so it is attempting to upend this trade relations by invoking global tariffs, which will reduce the consumption demand from the US, and thereby causing an excess of surplus capacity in the rest of the world.

If no other countries wants to run up their deficits to absorb such surplus capacity, then we will return to the old days of mercantilism. The EU market, once projected to overtake the US in the 2020s, is now dead in the water because of Ukraine. China also struggled to transition into domestic consumption after Covid.

The chaos created by the US tariffs thus has the potential to cause damage to many exporter economies as they desperately lower their costs (and wages) to compete China’s vastly superior and cost efficient productive capacity. The US can then pick off the failing economies by bailing them out, and reshapes the global supply chain through financial takeovers.

The first reason is cost, and the same reason why the US continues to rely on importing uranium from Russia even to this day, more than 3 years since the war in Ukraine has started.

After the fall of the USSR, the Lisbon Protocol was signed which included Russia converting their highly enriched uranium from their massive nuclear arsenals (as part of the non-nuclear proliferation agreement) and blending them down into low-enriched uranium to be used as fuel for the nuclear power plants in the US.

Why invest in uranium extraction and processing when you’re practically getting it for free?

The second reason is the export of environmental pollution to the developing world.

You’d notice that the narrative now is that the Western world lost its supply chain and falling behind China because of the restrictive environmental policies that made it very expensive and hazardous to perform and to maintain such dirty extraction and processing work in their own countries.

It will be used as excuses to kill the environmental policies in Western countries, and perhaps the main reason behind this whole drama, to drive the narrative that “left-wing environmentalism is why you’re losing your jobs”.

Internally, they had many economic shortcomings but most of it was still preferable to status quo.

I have written at length about this in the past so won’t be doing a deep dive here. The economic problems of the Soviet Union began to emerge after Khrushchev reversed many of Stalin’s policies after his death and brought liberalism back into the system.

The most notable was the 20-year suspension of Soviet public debt repayment (effectively a default) in 1957.

The genius of Stalin’s Five-Year Plan was partly due to its ability to utilize the State Bank to effectively create an unlimited amount of rubles to finance its domestic development (implemented during the Credit Reform in 1930-32). The Soviet (internal) ruble was already unpegged from gold as early as 1933, and since the ruble was not convertible to any foreign currency or precious metal, the Soviet government will always be able to repay its public debt.

To make it even clearer, the Soviet (internal) ruble was effectively a fiat currency 40 years before the Americans discovered the power of monetary sovereignty by accident after abandoning the Bretton Woods.

However, Khrushchev and his finance minister Arseny Zverev believed that the Soviet government had “too much national debt” and the government had “no more money to service its annual debt”. This is no different than the Democrats and the Republicans in the US crying about trillions and trillions of national debt and not realizing that the US government as the issuer of a sovereign currency will always be able to create the amount of dollars needed to pay the treasury holders.

As a result of this “default” in 1957, the circulation of ruble in the hands of the people was disrupted. With less money to spend, this caused a slump in domestic consumption, and led to commodity shortages as demand weakened. This was also when the stereotypical “food and goods shortage in the Soviet Union!” began to occur.

Later, an attempt was made to fix the problem by increasing the prices to control demand for goods shortages, and spiraled into even worse and more problematic economic issues. This culminated in the Novocherkassk massacre in 1962 when rail workers began to strike in the face of rising prices while forced to take pay cuts, and was suppressed by the government.

A rare anti-labor stance by the Soviet government due to the introduction of liberalism back into the Soviet economic system.

The Soviet economy would eventually turn into stagnation by the 1970s after much of Stalin’s policies had been completely reversed, further deterioration prompting more liberal reforms, and the rest is history.

Please don’t tell me he lost the nation because he spent too much time playing video games.

Agreed. This is not to say China’s different path to socialism is not viable, but that if we’re being honest, while China has achieved great economic success, the working conditions is not something to be envied of (on average, we’re working longer hours than every single country in the world despite an exponential growth in productivity).

If anything, it is a testament to the fact that the Soviet Union represented a true and unique alternative that defied contemporary Western economic models - one that achieved its success without having to sacrifice worker’s rights nor having to rely on foreign capital investment.

Yes! There are many legitimate criticisms against the Soviet Union, but it was truly an unprecedented experimentation of an alternative system that gave the Western capitalist bloc a run for their money (pun very much intended).

The concept of a socialist state built on a supranational identity is unparalleled even to this very day.

The significance is even greater than many leftists who live in the 21st century realize:

The Soviet Union was the ONLY adversary that the United States has ever been afraid of.

Yes, you heard it right. Not even the threat of China today reaches anywhere near the fear that the US had against the Soviet system. I’ll get into that in a moment.

It would be a grave mistake to see the 70-year long epic struggle between the US and the Soviet Union as nothing more than two superpowers vying for global domination. Such thought would be a great disservice to the significance of the 20th century Cold War: an ideological battle for the future of humanity.

Many people go crazy about China’s amazing economic transformation, but understand that what China has managed to overtake the US, whether it is infrastructure, shipbuilding, automation and robotics, cars, advanced electronics etc. all of that had already happened before with Japan more than 40 years ago.

And the rise of China since the reform and opening up through its integration into the global free trade market by producing cheap exports through suppression of domestic wages and demand makes perfect sense for countries/economies that were able to take advantage of industrial policies and the geopolitical circumstances of the time in the decades even before China (e.g. Japan, Germany, Taiwan, South Korea etc.)

What made the Soviet Union truly unique and a fearsome adversary to global capitalism was not its technological advances, rapid industrialization, or winning the space race, BUT that it managed to achieve all that in defiance of the Western economic theory!

A true socialist state where workers were treated with dignity and respect.

A country that is not drawn on nationalist lines but on a supranational identity committing to an ideology that brings together people from all over the world, regardless of nationality, ethnicity and culture.

A society without the oppression of an exploitative and parasitic capitalist class.

A system once thought impossible to achieve progress by capitalist propaganda. No, you see, capitalism is the fastest way to build a nation, while socialism only ends up bringing poverty to all!

The Soviet Union smashed all the capitalist propaganda into pieces.

It is unfortunate but I have to say this: unlike China today, the Soviet workers enjoyed the full welfare and protection of their rights as workers, did not have to worry about being unemployed, did not have to live paycheck to paycheck, did not have to pay mortgage, received free education and healthcare of the highest quality, enjoyed labor rights including working hours comparable to those of the “wealthier” social democratic Western European working class, and most impressive of all, the Soviet government continued to pay out full pension and free healthcare throughout the entire Great Patriotic War (WWII) even when unthinkable deaths and destructions were happening all around the country and the world.

I know it is hard for people who live in the 21st century to understand, but know that there was a time when workers committed their energy and time not to work to survive, but to build a new society that would benefit all of humanity.

I strongly recommend reading Ostrovsky’s semi-autobiographical novel How the Steel Was Tempered (1930s) to get a glimpse of what I wrote above meant:

Man’s dearest possession is life.
It is given to him but once, and he must live it so as to feel no torturing regrets for wasted years, never know the burning shame of a mean and petty past;
so live that, dying, he might say: all my life, all my strength were given to the finest cause in all the world──the fight for the Liberation of Mankind

Seriously, read the novel which was based on the author’s own lived experience. It is impossible to grasp what happened in the minds of the Soviet people with a perspective of the 21st century world.

This is not the say that the Soviet Union did not have its flaws, but that its existence served as a beacon for a different kind of future for many people living in the post-war reconstruction era. That brief period of hopefulness has never been replicated, nor has its conditions emerged again (so far), since the fall of the Soviet Union. It is an entirely different kind of future that we had lost.

It’s an interesting question. Obviously I don’t know enough about your country, but my take is that left wing movement should always be built on an actual grassroots base of support.

Too many internet leftists think it’s about getting people to join your party to win elections, to win/fight back against the media propaganda war, to win internet arguments (lol), but the real question is - do you have an actual base of support?

You can participate in elections, fight propaganda wars, organize protests etc, that’s all fine. But at the end of the day, but do you have an organized network to deliver mutual aid to the disenfranchised communities, do you have the capacity to help workers organize to win concessions against their employers, can you provide legal aid to help people who are being discriminated by the system?

If you do not have that capacity, then you don’t have a foundation for the movement to stand on. Why should a working class family trust that your party can deliver on its promises? Just because they also hate the capitalist system doesn’t mean they will trust any self-proclaimed socialist movement to actually be beneficial to them.

You need to win the hearts and minds through real actions in the first place, cultivate the trust of the working people in your organization, show that how far you are willing to stand and fight with them, and even die fighting for their rights if it comes to that. You want the people to say “I’m not like a commie or anything and I don’t really like their ideology, but I trust them because I know they’ll always have my back.”

This is the nuts and bolts of all successful labor movements. You can resist against smears from mainstream media propaganda all you want, but at the end of the day, that is nowhere near as important if your movement has a solid foundation of working class support to stand on.

Nah, they want the voters who didn’t turn out for Harris to have a taste of what it’s like to live under Trumpian fascism because of their refusal to toe the party line.

In the Democrats’ eyes, they are the Adults in the Room, and the voters are petulant children who need to be disciplined.

You want to protect the Palestinians? Too bad, Trump’s going to turn it into an absolute nightmare. It’s YOUR fault.

You want to protect immigrants and minorities? Too bad, Trump’s going to deport all of them. It’s YOUR fault.

Same goes with LGBT and other progressive issues.

After all, Trump is doing the dirty work for them, and that once the voters have been sufficiently disciplined, they can blame it all on Trump as a stern lesson and reminder for you petulant children, never to disobey the Adults in the Room again.

The ruling class is extremely vindictive and they want to see maximum pain inflicted on those who thought they could break the system.

That’s the greatest thing about Democracy™. We got it wrong last time, but we’ll surely get it right this time. You may not like how things are going, but it’s still the least worst system you can have. You just have to trust us on this one.

And I suspect enough people will be scarred enough by Trump to vote the Democrats during the mid-terms, not because they like the Democrats, but because Trump is too painful to live under.

Do you mean achieving the level of industrialization in China? We have some Indian comrades here who know more than me on the topic, but here are my takes with respect to the success in China.

There are two aspects that were fundamental to the success of the reform and opening up.

First is land reform, which necessitated the abolishment of feudal landlords’ grip on the land, without which the government would face incredible obstacles when it comes to national planning. This was achieved as early as 1953 during the Three Socialist Transformations era as landlords were purged.

The same also happened in Western capitalist countries, for example in the US the government could use eminent domain to seize the necessary land to build federal highways in the 20th century, which were crucial for industrialization. The refusal of the government to evoke such powers in recent times to appease the landlords and lobbyist groups is also a primary reason why it is so difficult to build vast public transportation networks in the US today.

Ironically, China also faces new problems as the local governments themselves become the new landlords that have tied land finances to municipal budgets (a consequence of the 1994 Tax Sharing Reform as the decentralization of the powers left too much tax revenues in the hands of the local governments). This created a completely different set of problems in China though, where you have such excessive infrastructure building in China in recent years because of the prospect of rising land value as new infrastructure is built. This ultimately did not materialize, and so there are a lot of excess capacity that is simply wasted and unproductive.

Back to the topic, my understanding is that India simply has not achieved the level of land reform in China and in the West to allow for a coordinated level of national industrialization planning to take place. The rural conservative landlords simply will resist to prevent their influence and power from being eroded by the national government, so you have obstacles everywhere.

The second factor that is vital to the success of reform and opening up in China is the role of Chinese diasporas. What is not well known is that the early years of opening up was almost entirely supported and financed by wealthy Chinese diaspora businessmen from Hong Kong, Taiwan, Southeast Asia, the US and other Western countries who left the country since the late 19th century and have “made it” overseas.

Western corporations did not enter China en masse until the late 80s and the 90s. I didn’t make this up by the way, the Guangzhou government (the most important hub for China’s export industry) website itself stated that between 1979-1990, 80% of the foreign capital investment came from overseas Chinese.

This is simply a historical condition that I guess you can say, owed to Qin Shi Huang who united the Chinese civilization since 2000 years ago, as brutal and violent as it could be (for example, the whole concept of “collective punishment” central to the Legalist reform - what Western historians love to attribute as “Oriental despotism” in China - was, ironically, vital to the success of Qin’s unification of China).

Most Chinese diasporas, no matter where they live in the world today, will always feel a level of pride for being descendants of this great civilization - the only civilization in the world today that has remained uninterrupted for thousands of years. It is difficult to describe the nationalism and patriotism one could feel to their ancestral land of such an enduring civilization. A lot of the overseas Chinese donated both financially and materially during the anti-Japanese colonialism during WWII. Even the anti-CCP reactionaries cannot deny such feeling.

A lot of wealthy Chinese businessmen saw not only a business opportunity when China opened up in the 1970s, but also saw it as a way to reconnect with their ancestral land.

This is a key ingredient that many countries trying to emulate China’s reform model is missing.

Finally, I will leave you with a trivia of the day: What was the first foreign corporation to invest in China since the reform and opening up?

Mostly in Yunnan lol. Getting accidentally dosed on hallucinogenic mushrooms is quite common. There are warning signs everywhere.

I think you are joking, but serious answer:

A nation produces to consume. When its people want to consume something it cannot produce, then it can exchange some of its production through export to get the stuff it wants to consume from abroad.

However, when a country runs an export-led growth strategy, its productivity is vastly greater than what its own people can consume (through suppressing domestic demand). It means a net flow of real goods and services (product of labor, energy and resources) into foreign hands, typically wealthy Western countries, while the exporter country receives foreign IOUs (a financial asset) in return.

So, instead of working 8 hours, a Chinese worker has to work 10-12 hours. Instead of working 5 days, they have to work 6, while receiving wages with suppressed purchasing power. Instead of focusing on prioritizing care for its own people (e.g. elderly, sick patients, children, disabled, poor people), the economy is prioritized towards providing cheap goods and services for foreigners.

When you produce more than you can consume and the export is not allowing the return for your own people to enjoy real goods and services produced by foreign countries (and instead, receiving financial assets in the form of junk papers), it is nothing more than a misallocation of labor, capital and resources where such vast surplus value is allowed its perpetual extraction by foreign imperialists under the guise of “neoliberal free trade” regime.

Average Yunnan lifestyle

He’s ok when talking about business and supply chain stuff, but when he’s talking about how BRICS is going to destroy the dollar system by building some parallel banking system it’s completely wrong.

Also, as usual, take anything you hear from the internet, “alt media”, youtube channels, twitter, and especially Hexbear, with a grain of salt. It might be fun to give hot takes on the internet, but if you try to base your financial decisions on these channels, then be aware of what you’re getting into.

EDIT: I should perhaps elaborate on why the BRICS stuff is wrong instead of just telling you that he’s wrong.

Whenever you hear someone says China has this vast dollar reserves they can take out and build its own banking system using those dollars, you have to realize that this is an impossibility because all of those dollar assets cannot leave the US banking system. The dollars are simply numbers that exist on their bank accounts in some US banks. You literally cannot take the dollars out and transfer it into your own bank that is not regulated by the US law, unless you convert them into physical notes and smuggle them out of the country through briefcases while evading customs.

You can of course do it like the Eurodollar and run a parallel version of “dollar” with it (this happened because back in the USSR days, the Soviets did not trust to keep their dollars in US banks so they demanded that the dollars be kept in Europe instead, and it took on its own life as a separate form of “dollar”) but the moment someone tries to use this Eurodollar on the real world, i.e. it is being is plugged into the global dollar market to claim for real, physical goods, then it will automatically be priced at its actual exchange value to the real “dollar”. It’s like you can trade bitcoin and pretend it’s of a certain value, but if you try to cash out the bitcoin into dollar through USDT, it will be exchanged at the rate at which bitcoin has been pegged to.

Please see my comment to another user above. There is no coup. What you’re seeing is simply the logical extension from Trump I.

The constraints facing US re-industrialization is just like what constrained the KMT from doing land reform in mainland China - their deeply entrenched class relations with the feudal landlords meant that the KMT was destined to lose the ideological war in the mainland. They could only initiate their own land reform after they had retreated to a small island called Taiwan where such class relations did not exist.

There is no coup. The bourgeois establishment doesn’t lose their influence simply because Trump is now the president. There are different strains of bourgeoisie but long-standing establishment like Wall Street simply isn’t going to go away.

The current is already set in motion back in 2015 when electoral populism began to emerge under the flags of Bernie Sanders and Donald Trump. The contradictions of long-term deindustrialization could no longer be ignored. What you are seeing right now is nothing more than an extension of the first Trump presidency that started in 2016 and the first US-China trade war that began in 2018 - all of which was set in motion in order to escape the heightened contradictions that will eventually befell American capitalism.

What became problematic back then was the EU could become a kingmaker if the US and China went at each other. So the Europe problem had to be dealt with first. The opportunity arose when Nord Stream 2 was about to become operational in 2021. This happened under the Biden administration.

Same with China. The Covid pandemic couldn’t have given the US a better opportunity to start its aggression when China is struggling to transition into a domestic consumption economy. This was also why Biden started to sanction Chinese EVs back in early 2024, because the only other place the bulk of those EVs could be sold to is Europe!

but reindustrializes the country like Stalin.

This is not going to happen:

1. The Wall Street finance capital will not allow it
2. The US spent decades killing trade union movements by de-industrializing itself, it’s not going to want to have to deal with labor movements once again
3. Trump has no industrial policy, is cutting federal government funding on key sectors especially academia and sciences, and mass laying off federal employees

Does this look like re-industrialization to you?

What is happening with Trump’s global tariffs is becoming clear though:

The US is leveraging China’s vast industrial capacity to destroy the European economy. Have you noticed that European car manufacturers and green tech sector are being destroyed by China’s vastly cheaper and superior products?

Yeah, good luck dealing with that. The EU economy is cooked, and what’s going to happen is a massive harvest by US finance capitalism as they did to the USSR 30 years ago.

Perhaps it will be like what Varoufakis says, the EU will be coerced into de-industrializing itself and import from the US manufacturers, swapping the role with the US to prop up whatever is left of the US industrial base.

Meanwhile, Trump’s tariff is forcing China to dump its surplus export goods on the rest of the Global South. The latest trade numbers on China’s export shows that its export has grown 8.3% yoy in September!

What this means is that we’re about to see a full blown mercantilist fight in the Global South as many exporter countries find their domestic industries unable to compete with the cheap Chinese goods flooding their countries, so they have to either make a deal with the US, or be forced to take IMF/foreign loans to bail out their failing economy. And by doing so, the US reshapes the global supply chain through its finance capital as we see a bailing out through IMF/foreign loans on a scale never seen before (Argentina is taking a lead on that).

The above is only made possible because:

1. The Ukraine war has destroyed Europe’s energy sovereignty and negated their ability to expand the EU consumer market to replace those of the US
2. Covid pandemic has stalled China’s attempt to transition into a domestic consumption led economy, and with the investment-led property bubble bursting, forcing it to return to relying even more on exporting EVs and solar panels to make up for the drop in GDP growth

The only way out of this is for China to abandon the neoliberal export-led growth model, run up its fiscal deficit (by giving jobs guarantee) to offset the loss in export and investment to drive up a 1.4 billion consumer market that capable of absorbing the global surplus capacities.

This will stop the exporter countries’ reliance on selling to the US, and when countries no longer have to run a trade surplus against America, the dollar becomes useless. This is how you properly de-dollarize.

Hate to do a “I told you so”, but I told you so lol.

The US has no choice but to negotiate. China showed just how difficult it is for Trump to decouple from itself. The is a lesson that Trump will continue to have to learn until he concedes the point.

However, China also cannot keep going with this because it cannot afford to see inflation going up in the US. This is because China has huge local government debt that desperately needs the Fed to lower its interests, way more than what was done last month.

Remember, China controls the industries, the US controls the finance. Unless China gives up its neoliberal policy, the two countries will continue to need one other.

As Premier Li Qiang himself said last month:

Chinese Premier Li Qiang met American executives and academics on Thursday with a metaphor for U.S.-China relations: They are a married couple who bicker but ultimately need each other, said people who heard his speech.

“He said there are disagreements between husbands and wives, but they still stay close,” said Stephen Orlins, president of the National Committee on U.S.-China Relations, which co-hosted the event with the U.S.-China Business Council. Previous Chinese leaders used the married-couple metaphor to describe the bilateral relations, but it sort of faded as relations have worsened in recent years.

The two may hate each other, but marriage is more than about personal affection. Married couples stay together long after their relationship had faded for political and economic reasons.

Just let people have this… it’s been too much suffering at this point.

This.

American investors have too much money (I believe because of all the stimulus from covid)

Don’t forget the interest income payment from the rate hikes in 2023-2024 that were generating $1 trillion of net interest per year that mostly went to rich people. With such strong fiscal flows (7-8% of GDP) over the past 2-3 years where so much money has been pumped out and mostly given to the rich people, those money has got to go somewhere.

These are all free money created by US Federal Government that cannot be removed from the circulation unless taxed back by the government itself (ironically, what Trump is trying to do with his tariffs).

When you buy stock, the money simply switches hands to the people who sold you the stock. From an aggregate standpoint, if the stock market crashes, then the people who spent money to buy the stocks lose, but the people who sold their stocks don’t. It’s simply money that is changing hands. The dollars already spent by the government into existence won’t go anywhere, unless they are taxed back by the government itself.

(Of course this doesn’t preclude the misallocation of capital where investment is mostly concentrated in unproductive sectors while they could have been better invested in industries that improve the living standards of the people etc. and will have an impact on a real economy. A government that knows what it’s doing can easily offset this with fiscal spending, though the US finance capitalism is driven to extract from the national wealth rather than to build the nation itself)

It’s not the same as the 2007 subprime mortgage bubble where the asset price inflation was fueled by bank lending.

Of course, this also doesn’t preclude investors from borrowing from the banks to invest in the AI stocks but with the high interest rate, that’s not very likely.

A recession in the US is going to be caused by a contraction in government spending (which Trump is trying very hard to achieve) and the increasingly uneven distribution of income where the wealth is increasingly concentrated into the top 1% that drives a contraction in aggregate demand as poor people reduce their consumption, leading to a recessionary spiral where people start to lose jobs and have even less money to consume.