Anthony Scaramucci, the former White House Communications Director, recently highlighted what he considers a significant error by the US that enabled China to ascend as a manufacturing superpower.
What Happened: In the latest The Rest Is Politics US podcast, Scaramucci pointed out a crucial mistake made by the United States, which paved the way for China’s rise in the manufacturing sector.
“Nixon allows Mao to link his currency to the US dollar. By 1979, Deng Xiaoping takes over and he realizes that he needs to reform and he needs to bring capitalist ways into a communist system, and he has this good fortune of having his currency linked to the U.S. currency. Now, why is this important? US is spending lots of money in deficit spending, and so what are we, we’re inflating our dollars,” Scaramucci said.
“We want to pay our deficits back with dollars that are worth less than the dollars that we borrowed, and so we’re running pretty high inflation in order to do this, and this is good for the Chinese, because as our dollar is going down in value, their currency is also going down in value because it’s linked to our currency, and it allows them to become an oasis of exportation, an oasis of manufacturing,” he further said.
Why It Matters: China’s dominance in the manufacturing industry is a well-known fact. The country’s rise as a global manufacturing powerhouse has been attributed to various factors, including its vast labor force, strategic economic policies, and significant investments in infrastructure and technology.
However, according to Scaramucci, the US had a role to play in this. It implies that certain decisions or actions by the US inadvertently contributed to China’s manufacturing prowess.
Scaramucci’s statement underscores the importance of understanding the dynamics that have shaped the current global economic landscape.
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