The agreement between Donald Trump and Xi Jinping changes world history

Trump and Xi Jinping want to cut China’s phenomenal trade surplus in half (US$1.6 trillion) and at the same time multiply North American exports by three.

In this way, both leaders plan to resolve the US current account deficit of US$ 1.6 trillion, arising from the combination of a fiscal gap of -3%/-6% of product and a trade deficit of US$ 1.2 trillion.

This deficit, in turn, is the cause of the growth of the world’s largest public debt. US$38 billionUS$ 10 trillion more than nominal GDP.

The two superpowers, in short, have agreed to jointly resolve their respective structural crises of global reach. And that path forces them to transform the world.

This is what the meeting that Donald Trump and Xi Jinping would hold in Beijing is about.

The US and China are the only two superpowers in the world that have and compete in all terms of global power; and that is why they exclusively hold the destiny of the world system in their hands.

The International Monetary Fund (IMF) warned that China invests every year between 4 and 6 points of the product in the phenomenal expansion of its astonishing manufacturing-export machine, whose brutal and seemingly unstoppable strength is virtually destroying the rest of the planet’s industries.

The result is that its superior competitiveness and lower prices have unleashed a process of profound “deindustrialization” in the rest of the world, which began in the US in 2007 (and which was the origin of the “Trump phenomenon”) and has now spread to the rest of the global system.

The notable thing about this manufacturing super-competitiveness of China is that it has as a necessary counterpart an acute process of domestic depression with deflationary characteristics; and while it presents a trade surplus of almost US$ 2 billion a yearits level of domestic consumption is barely 38% of GDP, the lowest among the large economies of the time (in the US it is 78% of GDP).

The Chinese economy (US$ 18.6 trillion/19% of global GDP) is endowed with an extraordinary drive for creativity and innovation that allows it to compete with the US for mastery of the most advanced technologies of the 4th Industrial Revolution, above all Artificial Intelligence.

But it happens that the interests created around their export machine have become a status quo practically impossible to break; and that prevents the People’s Republic from deploying its immense potential for innovation and creativity.

That is why Xi Jinping needs the agreement with the US, so that through his high-tech transnationals, headed by Nvidia, they allow him to reduce by half his immense and useless investments in the foreign sector and thus increase US imports by 3 in the next 10 years.

In short, China needs big companies high tech of the US to resolve its domestic crisis and thus increase domestic consumption by 2 or 3 in that period.

History, even the most complex and difficult to decipher, is written with simple strokes; and that is why reality – which is the truth – is always what is visible and despises the subterfuges of small things and obscurities.

What gives a sense of urgency to this crucial meeting between Trump and Xi Jinping, which has now been postponed for a month from March 31, is that the impact of overwhelming Chinese exports, which reached US$3.41 trillion last year, by far the highest level in world history, is now causing a ruinous damage in the other manufacturing industries of the global system, with the consequent wave of rejection and anti-Chinese sentiment.

This is a primitive but inevitable resource, whose paradoxical accent is that it coincides with an increasingly deflationary domestic recession.

February/March was the 38th consecutive month of inflationary contraction in the People’s Republic and in that period the CPI only reached 0.7%. That minimal increase came from the price of food and not manufactured products.

China buys, in short, less and less from the world, and sells it more and more; and the very low domestic consumption reflects the low productivity of its workforce and its low salary level.

All of this can be reversed in a historically short period of 5/10 years and the agreement between Xi Jinping and Trump has this deliberate objective in its joint action.

“I have always believed that China’s development must go hand in hand with its MAGA vision of the United States,” Xi Jinping told Trump at the meeting in Busan, South Korea.

The time is approaching for that crucial act in the history of the world.