You would have thought that the $1.9 trillion stimulus package of Joe Biden would help ordinary Americans cushion the hardships they have been facing since the wretched Chinese virus set foot in the United States. Well, that would have most definitely been the case had Joe Biden known how to govern and protect America as its President. Apparently, he does not, and the direct consequence of the same is that China’s GDP growth is all set to rise by 0.5 per cent over the next year due to the $1.9 trillion stimulus package passed by the US Congress. This economic expansion will solely be fuelled by the Democrats’ mindless stimulus package, which was passed by Congress without any substantial checks and duties to protect the American economy.
The $1,400 cheques which Americans have recently got are proving to be a major driver of consumption demand in America. From a year-long slump in the demand for goods and services, Americans who have gotten their $1,400 cheques are finally having free hands to spend on goods. There is nothing wrong with Americans, deprived of their freedoms for the past one year, from finally beginning to spend. What is certainly wrong, however, is that the sudden spike in consumer demand is not benefitting the USA’s domestic production and manufacturing industry.
Joe Biden had the perfect opportunity, after assuming the Presidency, to solidify America’s economic position against China. Prior to the $1,400 cheques being handed over to Americans, Biden could have very well imposed protectionist tariffs and duties on Chinese imports, alongside those already imposed by his predecessor. That he did not do so will now result in close to $360 billion out of the designated $473 billion in direct payments moving out of the country. Essentially, a mere $113 billion are expected to circulate in America.
Countries like China are now expected to be the biggest benefactors of a sudden rise in consumer demand being witnessed in America. About $360 billion of the stimulus package will be spent on imports, according to Allianz SE, with Chinese exports to the US likely to increase by $60 billion over 2021-2022. Essentially, in his very first few months as President, Joe Biden has allowed the trade deficit between the US and China to widen by a gap of $60 billion, to the USA’s disadvantage. The boost to China’s exports to the US is likely to focus on computers and telecom, household equipment and textiles. While $60 billion goes to China alone; domestically, that a mere $113 billion will be infused into the American economy by consumers is a catastrophe.
In 2019, China’s total exports to the United States stood at $452.34 billion, while in the following year, the figure fell to $435.4 billion. American exports to China, meanwhile, have not been able to even breach the $135 billion mark in the past 10 years. So, in 2019 and 2020, the trade deficit between the countries stood at a whopping $345.61 billion and $310.8 billion respectively. In 2020, the US closed its trade deficit gap with China by close to $35 billion – solely because of former President Donald Trump’s escalatory trade tariffs and import duties imposed on the paper dragon. By September 2019, more than two-thirds of the consumer goods the United States imports from China faced higher taxes. Prior to consumer goods, Trump had imposed heavy tariffs on non-consumer imports from China as well.
Over the next year, however, China is all set to widen the trade deficit gap with the US by over $60 billion. So, can you join the dots now? In 2020, Trump reduced the deficit by $35 billion, and now, President Biden has, in a single stroke, given China the opportunity to again create a trade imbalance with America – to the tune of no less than an additional $60 billion over and above the existing trade deficit. Essentially, what this means is that the American taxpayer – who funded Biden’s $1.9 trillion package will now aid China’s economic growth too.
The motive of the Biden administration should have been clear – a rise in domestic consumer demand must not aid the economic revival of China and help the paper dragon expand its trade deficit with America. The same would have also ensured that the amount which Americans are receiving is used to liquidate and flush the USA’s domestic economy with cash and help the domestic manufacturing industry stand on its own feet. Throughout last year, American households focussed on saving their income – if they had one at all. Therefore, liquidity infusion into the economy was a must, now more than ever.
Yet, why proper checks were not put in place prior to the passage of a humongous stimulus package is something which points towards the inherent pro-China nature of the Biden administration. The stimulus package seems to have achieved what it primarily intended to – widening the trade deficit between America and China to Beijing’s benefit. So, even while Joe Biden pretends to continue with the Trump-era tariffs on Chinese imports, he is slyly also aiding the paper dragon to make up for the trade deficit losses it incurred in 2020, under Donald Trump.