All right, welcome to another deep dive.
And today we're diving deep into the world
of US-China trade relations.
Now I know, I know what you're thinking, trade relations,
sounds a little dry, right?
But stick with us, this is a story.
It's got some crazy twists, unexpected turns.
I mean, imagine, imagine one of your biggest customers,
like your biggest customer suddenly just stops ordering
from you, just walks out.
That's kind of what's happening right now
between the US and China.
Yeah, the sheer scale of the shift
is really quite remarkable.
For decades, the US had this pretty significant trade
surplus with China.
They were buying up everything, you name it,
agricultural products, high-tech equipment, everything.
But now, well, the situation's flipped.
Yeah, it's like going to your favorite restaurant
and finding they've completely redone the menu.
And not just a few new items, like the whole thing's different.
And this isn't some random change.
China's very deliberately pursuing this path
towards what they call greater economic independence.
And they've got strategic reasons for doing this.
This is a long-term shift.
This is not just some temporary thing.
OK, so what does that actually mean for, well, for everyone?
What happened?
What does economic independence even look like for China?
Well, one of the big catalysts for all this
was that trade war that flared up a few years back.
The US, they slapped tariffs on a bunch of Chinese goods.
And the thinking was, this would force China
to buy more American products.
But, wow, it didn't really work out that way.
Yeah, kind of like trying to make someone eat more broccoli
by making all the other veggies more expensive.
They'll probably just find something else to eat entirely.
Exactly.
And that's precisely what happened.
Those terrorists, well, they made American goods more expensive,
less competitive over the Chinese market.
So instead of buying more from the US,
China started, well, shopping around.
And this is where the soybean story comes in, right?
Because I know American soybean farmers,
they got hit pretty hard.
Soybeans are a perfect example, really.
Before that trade war, China was buying,
get this, almost 60% of all the soybeans the US was exporting.
But once those terrorists hit, American soybeans,
well, they got pricier.
So China just switched to Brazil.
It's like going to the grocery store,
seeing your favorite cereals, suddenly way overpriced,
and you just grab a different box.
Except in this case, we're talking about billions
of dollars worth of soybeans.
Oh, yeah, the impact on American soybean farmers
was huge, soybean prices just hanged.
And they lost an estimated, get this, $4 billion in revenue.
Wow, $4 billion, that's a lot of money.
And I imagine it wasn't just a financial hit, right?
What happened to those farms, to the communities
that rely on them?
Oh, absolutely.
This is about real people, real livelihoods,
not just numbers on a spreadsheet.
You had family farms really struggling
to keep going, rural communities,
whole communities that depended on the soybean industry.
And they were all facing real economic hardship.
So China shifted away from American goods,
but it sounds like they didn't stop there, right?
They didn't just sit back and wait.
No, no, not at all.
They didn't just react to the tariffs.
They used this as a chance to push their own agenda,
their own goals.
And a core part of that was diversification.
They didn't want to be reliant on one country anymore,
especially one that was, well,
increasingly becoming an adversary.
Okay, so they branched out, found new suppliers,
different products.
Exactly, we talked about Brazil for soybeans, right?
But they also got closer with Europe
for technology partnerships,
and started making energy deals with Russia,
spreading the risk, making sure they had options.
Makes sense, don't put all your eggs in one basket.
So what else were they doing?
Another big focus was domestic production.
China realized, if you want real economic independence,
you gotta be able to make essential stuff yourself.
So they poured money into their own manufacturing,
especially in sectors where they've been relying on the US.
Okay, so diversifying suppliers,
boosting their own production, what else?
Well, this is where things get interesting.
They also made some big moves on food security.
They realized relying so heavily on imports,
especially for food, is a big risk.
Yeah, you can't be independent
if you can't feed your own people.
So how did they tackle that?
Well, they took several steps.
First, they just stopped buying
American agricultural products, completely.
Whoa, that's a pretty big statement.
What kind of impact did that have on the US?
It was a huge blow to American farmers,
especially those who were really counting
on that Chinese market.
But from China's side, it was a calculated move.
So they were willing to take that hit short-term
to reach their long-term goal.
Exactly, it was a message loud and clear
they weren't gonna be dependent on the US for food anymore.
But stopping imports, that was just the start.
They also pumped money into their own agriculture.
So they weren't just closing the door on imports,
they were opening a window to self-sufficiency.
Precisely, and one way they did this was embracing GMOs,
genetically modified crops.
They saw the potential there to increase yields,
make their agriculture more resilient.
GMOs, they're still like a bit of a hot topic, aren't they?
What's the general consensus on that?
The GMO debate, it's complicated, it gets pretty heated.
People who are for it, they say it's got all these benefits.
Higher yields, less pesticide use,
even more nutritious food.
But people against it, they worry about the environment,
about big corporations controlling food.
It's a complex issue, but China,
well, they decided to go for it.
A pragmatic way to address their food needs.
It sounds like they're doing what they think is best for them,
regardless of what anyone else thinks.
Yeah, I think that's fair to say.
And they didn't stop there.
In 2022, they implemented this food security law, a big one,
aimed at being totally self-sufficient
in their staple grains.
It covers everything, land use, water, seeds, technology.
Wow, so while American farmers are struggling
because of that lost market, China's building up this fortress
around their own food supply.
It really seems like they had a plan.
Oh, they definitely had a plan.
And they've been putting it into action.
It's fascinating to see, really,
how a country can use economic policy
to achieve these bigger goals.
All right, so China's diversifying suppliers,
boosting domestic production, securing their food.
What's all that mean for the US?
What happened on this side of the Pacific?
Well, the impact on the US has been, well, multifaceted,
say the least, and pretty significant.
We talked about agriculture,
but the effects go way beyond soybean farms.
So let's talk about those ripple effects.
What were some of the key areas
where the US really felt this trade war
and this strategic shift?
One of the biggest casualties was the American tech sector.
Companies like Qualcomm, they were really dependent
on the Chinese market for their semiconductor chips.
Their revenue just plunged when China started developing
their own chip industry.
Semiconductors, those tiny little chips
that power everything, our phones, our cars,
why are they such a big deal?
Well, they're often called the new oil
because they're so essential to all this modern technology.
Whoever controls semiconductor production,
they've got a lot of power,
economic and strategic power.
So China realizing that and investing in their own chips,
that's huge.
And American tech companies feeling the pain from that,
it shows this isn't just about soybeans anymore,
this is about something much bigger, real power shift.
Absolutely.
And it's not just tech and agriculture
that are feeling the heat.
The US energy sector has been hit hard too.
Remember those liquefied natural gas exports we talked about?
Well, those are plummeted.
China's turned to countries like Qatar and Russia
for their energy needs.
Okay, so we're seeing a pattern here.
Agriculture, technology, energy,
they're all feeling the effects of China's shift.
What could this mean for the US economy in the long run?
Well, in the short term,
we're already seeing some consequences.
More farm bankruptcies,
less land being used for certain crops,
those economic struggles in rural communities,
they haven't gone away.
It's tough to think about the impact on all those families,
those communities who've relied on these industries
for generation.
It is, it is.
And beyond the immediate economic hit,
there are bigger longer term worries.
Losing market share in China,
with China going all in on becoming a tech leader,
that could mean slower economic growth for the US,
maybe even a decline in US influence globally.
Okay, so we've seen how this trade war
and China's moves have played out so far,
but this is the deep dive, right?
So let's go even deeper.
What does all this mean for the future?
Is this just a trade spat,
or is this something much bigger,
like a whole reshaping of how the global economy works?
Well, that's a question we'll explore further,
but one thing's for sure,
China's not just playing defense here,
they're actively building this new global trade network
with themselves right at the center.
Hold on tight everyone,
because it looks like we're in for a wild ride.
We'll be back soon to break all of this down
in part two of the deep dive.
What's really striking to me is how China
used this trade war, you know, to their advantage.
It's almost like they saw this coming
and were ready to pounce.
That's a really interesting point,
makes you think they were like way ahead of the game.
And speaking of strategic moves,
we gotta talk more about this whole food security thing,
feeding the world's largest population.
That's a massive undertaking.
It's a Herculean task to say the least.
For China, having a reliable food supply,
it's essential, not just economically,
but for their national security too.
Depending on imports for something that crucial,
that's a big vulnerability.
Yeah, can't really be independent
if you can't feed your own people, right?
So how'd they address that?
They took a multi-pronged approach,
starting with a pretty bold move in August 2019.
They completely stopped buying American agricultural products.
Whoa, just like that.
That's a serious move.
What did that do to the US?
Oh, it was a major hit,
especially for American farmers who were exporting to China.
But for China, it was a calculated risk.
So willing to take a short-term loss
for those long-term goals?
Exactly, it was a message, no mistaking it.
China wasn't gonna be dependent on the US for food anymore.
But that was just the first step.
They also ramped up
their own agricultural production at home.
So not just shutting out imports,
but boosting their own self-sufficiency?
Exactly.
And part of that was, well, they went all in on GMOs,
genetically modified crops.
They saw the potential there,
higher yields, more resilience in their agriculture.
GMOs, that's still pretty controversial, isn't it?
What's the general feeling about them these days?
It's a complicated issue, lots of debate.
People who support GMOs, they point to the benefits.
More food, fewer pesticides,
potentially even more nutritious food.
But the people against it,
they worry about the environmental impact
about big corporations controlling our food.
That's a tough one.
China, though, they decided it was the way to go,
a practical solution to their food security needs.
So they're making their own choices
based on what they think is best?
Yeah, I think that's a good way to put it.
And they didn't stop there.
In 2022, they introduced this food security law,
really ambitious, aimed at being completely self-sufficient
in their staple grains.
It covers everything, how they use land, water management,
seed development, technology, the whole works.
So it's like, while the US is dealing with a fallout
from this trade war, China's busy
building up this secure food system.
They've been very strategic,
very methodical in their approach.
We've talked about the negative impact on the US,
but is there anything America can learn from all this?
I think there are definitely some lessons to be learned.
This whole situation has exposed some vulnerabilities
in the US economy and how it approaches global trade.
What kind of vulnerabilities?
Well, one of the biggest is being too reliant
on one country for trade,
especially a country with very different
political and economic systems.
The US had become too dependent on China,
both for selling its products and for buying things.
So the classic, putting all your eggs in one basket,
especially when that basket's held by a,
well, a potential rival.
Exactly.
Yeah.
The US needs to diversify, find more trading partners,
build up its own industries at home.
And what about this idea of playing the long game?
China seems to be thinking decades ahead
while the US gets caught up in short-term political stuff.
That's a key difference.
China's economic policy is tied
to their long-term strategic goals.
They're willing to accept short-term paint
to achieve those bigger objectives.
The US, on the other hand,
often struggles to stick to long-term plans,
partly because of the way its political system works.
So is it like a built-in problem for the US,
this difficulty with long-term thinking?
There's definitely a structural element to it,
but there's also a cultural element.
China has this long history of critigic thinking.
They understand how economic power translates
to influence on the world stage.
So it's a mix of how their system works
and how they think about strategy
that gives them an advantage.
I'd say so, yes.
Okay, this is all pretty thought-provoking.
But I gotta ask, are there any potential downsides
to China's strategy?
It seems like they've been doing pretty well so far.
While they've been very successful,
there are risks, potential problems, with their approach.
One is their reliance on, well, on authoritarianism.
That top-down control has helped them
grow their economy quickly.
But it can also stifle innovation,
people taking initiative.
So good at following a plan,
but maybe not so good at coming up with new ideas
when things change.
That's a risk, definitely.
Another potential issue is that they're operating
within a global system they didn't create,
but now they're trying to change it.
So they're playing a game where they didn't make the rules
and that could backfire.
It's possible.
There's a lot of uncertainty about how the global order
will evolve and whether China can manage that
while still getting what it wants.
Okay, so we've got the US potentially losing its top spot,
the US adapting, and China facing its own challenges.
Sounds like the future is pretty unpredictable.
I think that's a fair assessment.
There's so many factors involved,
economic trends, technology, politics.
It's impossible to say for sure what will happen.
But that's what makes it so interesting, isn't it?
We're living through a major turning point in history
and we don't know how it'll end.
Exactly.
It reminds us that history isn't set in stone.
It's shaped by the decisions we make,
the actions we take, the ideas we believe in.
So as we wrap up this part of the deep dive,
I wanna bring it back to our listeners.
What does all this mean for you?
How can you make sense of this complex,
constantly changing world?
It's essential to stay informed,
to hear different perspectives,
to think critically about what you see and hear.
Don't just take things at face value,
question everything,
look for different viewpoints and form your own opinions.
And remember, the future isn't something
that just happens to us.
We create it through our choices and actions.
So as you go about your day, as you make decisions,
think about how those decisions might be connected
to these global forces we've been talking about.
The world is changing and it's up to each of us
to navigate those changes wisely, with curiosity,
and with a commitment to building a better future
for everyone.
That's a great point to end on.
Thanks for joining us for this deep dive.
All right, welcome back to the deep dive.
We've been digging into this,
this whole US-China relationship,
started with soybeans, but man, it's gotten so much bigger.
It really has.
We've moved way beyond just trade.
Now it's about economics and geopolitics,
all tangled up together.
So yeah, exactly.
It's like we zoomed out from this close up on a soybean field
and now we're looking at the whole world from space.
So let's talk big picture.
What does all this mean for global power,
for who's in charge?
Are we seeing a whole new world order taking shape?
What, this idea of a new world order,
it gets thrown around a lot,
but I think it's fair to say we are seeing things shift.
Definitely.
Okay, shifting, but what does that even look like?
What are some of the ways this could all play out?
One scenario that people are talking about
is the US being sidelined.
Not completely gone, but maybe less influential.
As China builds up its own trade networks,
it becomes more sort of globally,
the US might not be the top dog anymore.
Okay, so imagine this.
China's at the center of this,
this web of connections, economic and political,
reaching out to countries in Asia, Africa, Latin America,
and the US is still there,
but not calling all the shots anymore.
Yeah, that's one possible outcome.
And it's not totally unrealistic.
China's been very deliberate in how they're engaging with,
especially developing countries.
They're investing in infrastructure, offering trade deals,
giving loans to countries
that might have trouble getting financing elsewhere.
We talked about those loans before.
There's this term debt trap diplomacy.
What exactly is that?
Get trap diplomacy is when a country,
often China in this case,
they give loans to another country,
but they kind of know that country
can't really pay them back.
And then when that happens,
they use that debt as leverage to get political favors,
or to get access to resources they want.
So it's like lending someone money,
knowing they can't repay it,
just so you can call in a favor later on.
It's an old tactic.
And it's something that people are worried about
with China's lending.
Okay, so back to these scenarios.
We've got the US maybe losing its top spot.
What else could happen?
Another possibility is that the US adapts,
changes its approach.
Maybe this whole trade war was a wake up call.
So like the US sees what's going on,
realizes they need to change,
and actually does something about it.
It could happen.
And there are signs that it already is.
More and more people are saying the US needs to find
more trading partners,
build up its own industries, strengthen its alliances.
So it's not all bad news for the US.
They could come out of this stronger.
It's possible, definitely.
But it takes, admitting some mistakes were made,
being willing to adapt, and investing in the future.
And what about China?
It seems like they're on a roll.
But are there any cracks in their strategy?
Anything that could trip them up?
Well, one potential problem, like we said before,
is their reliance on being authoritarian.
That top down control,
it's helped them grow their economy fast.
But it can also stifle innovation,
people taking initiative.
So good at following a plan,
but maybe not so good at coming up with new ideas
when things change.
Exactly.
Another issue is that they're operating
within this global system that they didn't build.
But now they're trying to change it.
Kind of like playing a game with rules they didn't write.
Yeah.
And that could cause problems.
No one knows for sure how the global order will change,
and whether China can handle that
while still achieving its goals.
So we've got all these possibilities,
the US declining, the US adapting,
China facing its own issues.
Sounds like the future is, well, pretty wide open.
I think that's a good way to put it.
There's so much going on, the economy, technology, politics.
It's impossible to say for sure what'll happen.
But that's what makes all of this so fascinating, right?
We're living through a major historical moment,
and we don't know how it's gonna end.
Exactly.
It's a reminder that history isn't set in stone.
We make history through our choices,
our actions, what we believe in.
So as we wrap up this deep dive,
I wanna leave you with this.
Think about what all of this means for you, for your life.
Stay informed, engage with different ideas,
be critical of what you see and hear.
Don't just accept things blindly.
Question everything, look for different perspectives,
form your own opinions.
And remember, the future is in our hands.
We create it through our choices and actions.
So as you go about your day, as you make decisions,
think about how they might be connected
to these global forces we've been discussing.
The world is changing.
It's up to us to navigate those changes
with wisdom, curiosity, and a commitment
to building a better future.
Couldn't have said it better myself.
Yeah.
That's it for this deep dive.
Thanks for joining us.