China has loaned money to many of the countries in Northern Africa, Southeast Asia and countries Like Kazakhstan to purchase railroads so they can get their good and services to market. I do not know this for a fact, but I would assume those contracts have egregious penalty clauses. My most recent reading leaves me to believe that many of the third world countries are financial trouble, and I am concerned that China will take advantage of the situation.
There are two issues here:
- What happens if these countries are in default? Is there a place for us to assist them?
- If not, what is China going to do?
I am also concerned that this has given China a competitive advantage in the marketplace that we need to defend against. We may want to give double tax credits or some other creative way to offset the transportation cost so our corporations can compete better with China.
This problem is exacerbated by Trumps tariffs and cancelling USAID. He is alienating countries around the world. They are more likely to continue to advance their relationship with China who they see as a more stable trading partner. I believe Trumps erratic behavior will also cause them to consider moving away from the U.S. dollar as the world’s currency.
This is another example of why Trump is incompetent and why we need a third party.
