IWSF – Ch 274

I talked to Hyunjoo noona on the phone.

Noona said with a sigh, “You’ve caused another huge incident. You know the financial markets are in chaos right now, right?”

Uncertainty is what the market hates most.

Therefore, when Ronald fired the first shot in the trade war, stock markets around the world, not just in the countries involved, plummeted. Everyone is holding their breath, watching to see when this war will end and how far its repercussions will reach.

But of course, the biggest blow was to China.

In just one week after the trade war began, the Shanghai Composite Index and the Hong Kong Hang Seng Index fell by nearly 10 percent. In particular, the stock prices of Weihua, TZE, and Xiaomi, which were specifically targeted for sanctions, fell by 20 percent each, and Supernano plummeted by over 90 percent as news spread that damaged companies would seek compensation.

Zhou Auto, which was accused of copying CarOS’s technology, was also not spared.

Zhou Auto vehemently denied the allegations to the end, but the stock price decline was unavoidable. After the announcement, it fell by 25 percent, and then fell again when news broke that related companies such as Volvo and Daimler AG had begun inspections to see if Zhou Auto had also stolen technology from them.

With the world stock market in turmoil, the Korean stock market was also inevitably affected. In fact, as a country with significant exports to both China and the US, it could be said to have taken a hit as big as China’s.

As a result, individual investors are once again showering me with curses. For people who invest in stocks, the guy who makes their stock price fall is the worst person in the world.

“Is Golden Gate okay?”

“No, we’re also suffering significant losses. The China branch is on emergency alert. I’m also checking the stock market and bond yields every day.”

Feeling somewhat apologetic, I said defensively, “This was going to happen eventually, even if it wasn’t because of me.”

“But if it wasn’t for you, it wouldn’t have started now.”

“……”

Is that so?

I changed the subject. “How are you feeling?”

“Tired. I wish I could give birth soon.”

Even though she said that, her voice sounded bright.

Since she is older, people around her were worried about pre-eclampsia or prenatal depression, but so far, there seem to be no major problems.

Well, Henry and Ellie are there too, so she should be fine.

“Hold on. I’ll switch you to Ellie.”

Soon after, Ellie’s voice was heard.

“Hey, Jin-hoo. When are you coming back?”

“Hmm, I’m dealing with some things here.”

“Heeing, then what am I going to do, I miss you so much?”

I laughed and said, “I’ll be back soon, so take good care of Noona in the meantime.”

“Don’t worry. We’re going to the hospital together later after work.”

After the call ended, Taekgyu, who was lying on the sofa playing a game on his smartphone, asked, “Is our Noona okay?”

“Yeah. She said there’s nothing wrong.”

Since I had some free time, I read a book about China.

After China unlocked its firmly closed doors and embarked on reform and opening-up, experts made numerous predictions.

It would split into several countries, a democratic revolution would occur and the socialist system would collapse, it would fall into the middle-income trap, and so on.

All of them were wrong.

Things that were natural in other countries’ economic development processes did not happen in China.

The reason the predictions were wrong is simple. There has never been a country similar to China, and there never will be.

Therefore, predictions based on the cases of other countries are meaningless.

When China was achieving rapid growth of nearly 10 percent annually, many experts unanimously shouted that China would overtake the United States within the next 10 years.

Everyone knows now that it was nonsense, but back then, everyone believed it. However, it is impossible for a country of China’s size to sustain such rapid growth.

“Have you heard of the term ‘New Normal’?”

Taekgyu shook his head at my question. “No. What’s that?”

The term New Normal became widespread after the global financial crisis.

Capitalist economies inevitably repeat booms and busts, rises and falls. However, in the 21st century, low growth has become entrenched worldwide.

There are several reasons for this: increased productivity, lack of technological innovation, and shrinking consumption.

But the biggest reason is chronic oversupply. There are two solutions: reduce supply or increase demand.

It’s difficult to reduce supply, so demand must be continuously increased.

Until now, emerging countries, especially China, have been of great help. China was not only the factory of the world but also the market of the world.

If it weren’t for China, it would have been difficult to overcome the global financial crisis so quickly.

However, China’s growth rate is currently slowing, so demand is not increasing significantly, while productivity has greatly improved due to technology acquisition (mainly through technology transfer from foreign companies or copying).

As China turned from the market of the world to the factory of the world, the problem of oversupply became even more severe. Moreover, China is now actively pushing out the United States in advanced industries and the defense industry.

Therefore, this incident can be seen not just as an economic issue, but as a hegemonic war between the United States and China.

“I wonder how China will respond?”

Taekgyu said with his arms crossed, “Wouldn’t they be gathering and cursing you first?”

“……”

What did I do wrong?

***

Chinese state-run media such as People’s Daily, Global Times, and CCTV denounced the injustice of the United States and appealed to patriotism.

Fueled by the government and media’s public opinion campaign, a trend of boycotting American products and uploading photos supporting the Communist Party to Weibo became popular, especially among young people.

– Stop the US attack on China!

– I will not use American products.

– We will fight to the end with the Party!

– The Chinese nation will never yield.

– Let’s follow President Zhang Pinghua!

Separately, voices of dissatisfaction erupted everywhere due to stock price declines and rising prices. Employment rates were falling, unemployment rates were rising, and all economic indicators turned for the worse.

President Zhang Pinghua’s worries deepened.

It is clear that stealing technology through backdoors is wrong. However, China also had something to say.

Information gathering and wiretapping activities targeting governments and businesses around the world are also carried out by the United States. Britain, Russia, France, and others have also done similar things numerous times.

But it’s as if they are only cornering China as the bad guy!

Of course, it’s true that China has been particularly severe compared to other countries. Above all, evidence has emerged, so they have nothing to say.

China has justified surveillance, wiretapping, and espionage based on its own laws. They have done this not just once or twice, and have been caught many times.

Each time, they made excuses such as security loopholes or mistakes to get away with it.

But this time, they couldn’t do that. If only CarOS had raised the issue, they would have claimed it was fabrication to slander China. However, spy chips were being discovered everywhere, so such excuses would not work.

They are currently denying any knowledge, but as time passes, international public opinion will worsen.

The situation was clearly turning unfavorable for China.

***

Zhongnanhai, located west of the Forbidden City in Beijing.

Like the White House in the United States, it has long been the center of Chinese politics. President Zhang Pinghua convened a meeting, summoning the Standing Committee members and officials from relevant ministries.

The expressions on the faces of those gathered in the conference room were grim. They are the ones who lead China, the top elites of the Communist Party. As such, they were taking this situation more seriously than anyone else.

President Zhang Pinghua said in a heavy voice, “What is the situation in the United States now?”

Foreign Minister Chang Yi replied, “It’s not good. Not only Republicans and Democrats, but also public opinion is on President Ronald’s side.”

When information leaks through backdoors were confirmed to be true, Americans were outraged. Polls also showed that over 70 percent of the public supported tariff imposition and sanctions on related companies.

With justification, power, and even solid approval ratings, Ronald had nothing to hold him back.

Still, if it were another president, they would have compromised by securing some concessions. But Ronald’s attitude was to see things through to the end.

It’s the ‘madman theory’ that Ronald often uses.

The problem is that even knowing it, it’s difficult to come up with countermeasures.

You think he wouldn’t do it unless he was crazy, but somehow it feels like Ronald could really do it.

The United States has already imposed 25 percent additional tariffs on $50 billion, followed by $200 billion worth of Chinese imports. And they plan to impose tariffs on the remaining $250 billion as well.

Unfortunately, China does not have many options to use.

Standing Committee member Ye Wulin said, “How about selling off US Treasury bonds?”

If China has been selling goods to the United States, the United States has been selling bonds to China. China is the largest creditor nation of the United States, holding over $1 trillion in Treasury bonds.

In the past, whenever there was pressure from the United States, China responded by selling off US Treasury bonds. However, with the US economy stable, this measure is not very useful.

The United States is raising interest rates and reducing bond issuance to absorb liquidity. In this situation, even if Treasury bonds are poured into the market, other countries will absorb the volume.

Therefore, everyone shook their heads. “It will only waste foreign exchange unnecessarily.”

Premier Bo Shaoyu said, “A bigger problem than tariffs is the sanctions on IT companies. Sales are completely blocked in the United States, Europe, and Japan right now.”

Asian and African countries, where China’s influence is relatively strong, were taking a wait-and-see approach, but Western countries showed signs of joining the US action.

They cannot confront the United States to the end, nor can they admit technology theft and patent infringement and apologize and compensate.

Zhang Pinghua tapped his fingers on the table, thinking.

‘What should I do?’

He advocated the Chinese Dream when he took office as President.

His goal was to realize the rejuvenation of the Chinese nation and regain past glory, in other words, to strengthen military and economic hegemony, push out the United States, and make China the center of the world.

He has been implementing the plan step by step.

The One China principle (incorporating Taiwan into China), the Belt and Road Initiative, development aid to Africa, the establishment of the AIIB (Asian Infrastructure Investment Bank), and so on.

Zhang Pinghua has made every effort to elevate China to the position of a hegemonic power.

Heaven helps those who help themselves, as they say? There was also a golden opportunity.

It was the Big One.

The Big One was the biggest disaster in American history. If the United States had not taken any precautions, millions of casualties would have occurred.

Moreover, the people there were not farmers or workers, but the best talents in the United States.

If they had been annihilated by the earthquake, America’s high-tech industry would have regressed by 10 years.

From China’s perspective, it was a golden opportunity to narrow the gap with the United States and expand international influence. But that opportunity vanished in vain.

Silicon Valley collapsed due to the earthquake and tsunami, but the talents gathered there moved elsewhere and created another Silicon Valley in the United States.

‘Did Kang Jin-hoo ruin the Chinese Dream?’

Not only that, but now he is at the forefront of ruining the Chinese economy.

Everyone sitting there had the same thought.

‘If only Kang Jin-hoo hadn’t existed……’

He is a hero who saved America. If they touched him, the United States would not stand idly by.

Above all, there is no practical benefit. Kang Jin-hoo did not create autonomous driving technology, nor did he create OTK batteries. He simply invested in companies and people who made them.

So, it would be meaningless to take action against Kang Jin-hoo now.

President Zhang Pinghua said, “Didn’t anyone anticipate that Kang Jin-hoo would do something like this?”

At those words, everyone’s gaze focused on Minister of Commerce Li Xuewei.

He recalled the young Korean man he had met before.

‘To think he would find the spy chip and move the United States.’

When Kang Jin-hoo protested at their first meeting, he had actually dismissed it.

Other companies that had suffered similar incidents had not been able to properly protest, yet this man dared to raise his voice in front of him.

He thought he would eventually succumb to China’s power, but what is this?

Kang Jin-hoo dragged the United States into this. He escalated a company-to-company issue between CarOS and Zhou Auto to an international scale.

Thinking about it, it was absurd.

‘Just for copying some technology, he’s made the situation this bad!’

Minister Li Xuewei wiped the sweat from his brow and said, “I, I will meet with Kang Jin-hoo again.”