Quote:
Originally Posted by Clocker
All those quotes and not a mention of or reference to "wealth".
Except of course from the little voices in your head.
And at the danger of repeating myself for the 47th time, there is no connection between trade surplus and creation of wealth. Quite to the contrary, wealth creation is much more likely to take place in a mature, developed economy whose members, like Americans today, enjoy the benefits of trade deficits.
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The little voice in my head is just fine and this is what it tells me.
It tells me you don't understand capital. Capital is wealth, if you build capital you are building wealth.
Capital has a number of related meanings in economics, finance and accounting. In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business. In classical economics, capital is one of the three factors of production. The others are land, and labor. https://simple.wikipedia.org/wiki/Capital_(economics) [emphasis added]
Financial capital is the money, credit, and other forms of funding that build wealth. Individuals use it to invest.......
https://www.thebalance.com/what-is-f...apital-3305825
[emphasis added]
If you are using trade surpluses to acquire capital to build, expand and maintain factories, businesses, etc. and the supporting infrastructure, you are building wealth.
If I understand you correctly, you are now saying China can obtain capital (wealth) to build, expand and maintain businesses, etc at its current rate, under large trade deficits with its major trading partners. Thus, China does not need large trade surpluses to maintain its current rate of expansion based on capital investment.
If you are correct about trade, why do you insist China needs trade surpluses at this point in its development? If China needs trade surpluses due to its current situation, by definition, there has to be some positive relationship between trade surpluses and acquiring capital (wealth). If there is a neutral relationship between capital (wealth) China, by definition, does not need trade surpluses.
If trade is neutral why does China insist on maintaining a trade surplus? Again you are invited to address the economic leadership of China. As the expert how would you convince China there is no connection between trade surplus and creation of wealth? Do you think China would believe your theory of no connection and acquiesce to the U.S terms?
I wager China would politely show you the door, because China knows there is not enough local wealth (capital) to build, expand and maintain businesses, etc and supporting infrastructure without a large trade surplus. China understands what you don't understand, there is a relationship between trade and wealth.