Future Trade War Balance of Power From Now to 2055

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The Trade Wars have revealed that true power is consumer market spending power and having control of key production and production inputs. Economic power is consumer market power and lack of production supply chain weaknesses.

Trade War Reveals Production Dependence

China, India, Japan and Asia are dependent on imported oil and gas. Dependencies tend to range from 70-90%. Coal, hydro and nuclear power are the options for high levels of domestic power in Asia.

China has had its dependence on US semiconductor circuits revealed. However, the entire world has a certain level of semiconductor and electronic dependence on the USA. Russian electronics are much worse than China’s. 40% of the electronics in Russian rockets and satellites need foreign sourcing.

China is also dependent on foreign sourcing for large aircraft engines.

The lesson of the trade war is for China and other countries to address dependencies where possible. A country with less or mitigated dependencies is tougher in a Trade war.

Consumer Markets

If a country is dependent upon access to a large consumer market, then the countries with those markets have power over those who need access. The US as Superpower has also been the super consumer market. As recently as 2000, the US has been half or more of the entire world’s consumer market. The US had a $10 trillion consumer market and the world was about $22 trillion.

Now the total world consumer spending is over $40 trillion. The US has $13.6 trillion and China is number two with $6 trillion. The European Union collectively has $9.7 trillion and Japan is next with $2.8 trillion. Germany has $2 trillion.

The World and US consumer spending is growing at about 3% per year. China is growing at 9% per year. China’s consumer spending growth is faster than its GDP growth. China’s share of GDP for consumer spending is about 44% when many countries have 54% to 68%. South Korea is the developed country with the next lowest share of consumer spending at 48%. Singapore is an outlier at 36%. Hong Kong has 68% consumer spending. It seems that China could grow consumer spending at a 9% pace for several years until it gets into the 55-65% range of share of GDP for spending. This is even if the GDP growth rate drops to 4-5% per year. There should be about 10-15 years of high consumer market growth after the over all GDP growth rate slows.

China is on track to get to about $8 trillion in consumer spending in 2021. In 2025, China should be at $11.2 trillion. They should reach $16 trillion in 2029. The US market should have still grown to around $17-18 trillion in 2029. The passing of the US consumer market should happen around 2030-2035. This should happen even if China drops from 6-7% down to 4-5% in the early 2020s.

The USA and China will have nearly equal consumer market sizes (within plus or minus 15%) from 2029 to 2037. China would have to maintain a GDP growth advantage over the US beyond 2037 to pull away. China consumer market share of overall GDP will be in the 55-65% range in the 2030s.

India’s consumer spending growth has fluctuated but has more than doubled from 2010 to 2018. India has the goal of overtaking Japan as the third largest consumer spending market by 2025. However, they will both be five times smaller than the US market in 2025.

If India stays on track with a consumer market doubling every 8 years, then India gets close to the US market size around 2048.

The Trade War Balance of Power in the Future

The US remains the dominant consumer market force until 2028.
China is about equal in consumer market power from 2029 to 2037. China is already stronger regionally or with certain countries. China is trying to use Belt and Road to strengthen ties and trading partners in Asia, Africa and Europe.
China should be building a large gap as the world leader from 2038.
India will change the global consumer market big 2 to the big 3 in 2045-2055. If China can be as strong as South Korea and Japan, then solid 4-5% GDP growth can be maintained until per capita income is 80-85% of US levels. This level is the UK and German per capita GDP levels. Japan reached UK per capita GDP levels. China should be able to get an economy and consumer market that is 2.5-3 times the US level. US immigration will move the US population from 25% of China’s to 33% of China in the 2050 timeframe.

China moving beyond 80-85% of US per capita GDP levels means being more innovative than Germany and Japan and the USA. It also means being willing to restructure and reorganize cities and societies for growth more aggressively. The US is more willing to have creative destruction than the French and other developed countries in Europe. China seems to want growth even more than the US does and China is willing to do things that US is not willing to do. Just as the US and Americans have been willing to do more on average than Europeans to achieve growth and wealth.

13 thoughts on “Future Trade War Balance of Power From Now to 2055”

  1. Once again: China is going bust in a world where the world trading regime is collapsing. Brian himself presents good reasons why it is collapsing too.

    China can make all the iPhones it needs for its citizens, sure. It just won’t be able to charge Chinese customers $900 for them. And that is China’s problem.

  3. Heh, many cars can accelerate ten miles per hour per second.

    All they have to do is accelerate ten miles per hour every second for a little over two years and they would be going faster than the speed of light.

    Funny, we’ve had cars that can can accelerate ten miles per hour per second for more than two years. What’s the hold up?

  4. In 2027, Singapore powers up the first strong AI. Seven months later they have completed financial takeovers of every significant institution on the planet. Or something else. Something always comes along to make most other predictions OBE.

  7. PS: get used to my double contractions. I’ve come to like’em. We-have-not = we’ven’t. I’ven’t. Kind of like Twasn’t. For it-was-not. There are a few triple contractions that leave the mind numbing, but I’m not embracing them yet. GoatGuy

  8. 2055?

    Are we kidding ourselves? That’s what … 2055 – 2019 = 36 years away.
    Let’s look back.

    2019 – 36 = 1983.

    In 1983 China was truly a “nothing-burger” economically. No one — anywhere — was predicting the auguring in of The Chinese Era of international commerce. No one.

    In bloody 1983, no one was predicting the 1991fall of the Berlin Wall. On December 25, Christmas Day, the Soviet Hammer-and-Sickle flag was raise, and at sunset, lowered for the absolute last time, ever, as a nation. In 1983, would you have claimed that in polite geopolitically astute company, you’d have been laughed out of a Martini.

    Not a single soul — in the Humankind Universe — could have predicted in 1983 that only 24 years hence, that FORD would be trading for 87 cents a share. No one would have predicted that on September 11, 2001, that not one but BOTH World Trade Center towers would be leveled by a passel of Islamic Radicals using 2 commercial jets and a whole lot of chutzpah.

    In 1983, not a living member of Humanity saw the coming of the Electric Car Era. Nor did any see the Decline of the Nuclear Reactor. They were hot-hot-hot-hot then.

    The point, if it ain’t deadly obvious, is that to predict out as far in the future as past-casting can reveal of the near-history past, is a fool’s folly. Fool’s aren’t noted or their sanguine perspicaciousness, aught… and Fools exhibiting Folly, less than that.

    I think — all in all — we’ven’t a clue, a wee clue, GoatGuy

  9. I will note that there was NO trade deal announcement and China does not have long to make a deal before the next round of tariffs are imposed and wavers get eliminated.

  10. Enough of this simplistic 5 years type blind 5th grade Chinese extrapolations! Even by looking at this tables you can see that China consumer market share of the economy is approaching that of developed countries, after that there will be only a normalized room of growth. Their consumer market growth rate is and the economy as a whole are already slowing down and normalizing with other countries with similar stage of development. Eventually how fast China economy is going to grow depends on how fast they are going to free their economy and especially their public sector without going to more debt that they already have. China, being a totalitarian state eventually may not go far enough and that will affect their rate growth.

    Also, the best economic model for a developed country is that of North Europe, not of the United States, being able to create healthier and faster growth with combining promotion of free market and wealth distribution to the lower end working class, the real base of the economy, in the form of higher minimum wage, better education, public health care system, child support and public transportation. These measures are also integral to increasing the consumer market.

  11. There were no assumptions made about population sizes of the countries. An economy’s total domestic consumption only has 2 factors, population x per capita consumption (factor of income). This is the reason India is on pace to become third largest economy with its population base. That would be the momentum of population and is very much inevitable, with exception to any large scale events such as wars or natural disasters.

  13. Hard to predict that far into the future. It is three global recession from now. And the result will depend on how the top runners deal with these recessions.

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