The US and China are two sides of the same coin. The US hardly manufactures anything, but is the largest single market for goods in the world. China manufactures virtually everything, but its population is too poor to generate much demand for those same goods.
It’s a symbiotic relationship. The two countries are joined at the hip; where one goes, the other will follow. This means that the US and China would not dare go to war with each other, as it would be an unmitigated disaster for both of them.
Scenario 1: China’s attempts to gain access to resources (especially oil) to fuel its booming economy interfere with the US’s ability to satisfy its own insatiable appetites. OR, China attempts to occupy Taiwan, and treaty obligations force the US to come to Taiwan’s defense. Whether the US threatens conventional or nuclear retaliation, China is hopelessly outgunned, and knows it.
Scenario 2: The American people – unemployed in the tens of millions from job loss to outsourcing and all but the super rich seeing their standard of living plummet to Third World levels due to shrinking wages – force the government to ban outsourcing, requiring companies to bring their manufacturing facilities and jobs back into the US, raise wages, and erect tariffs high enough to make expensive US goods the cheapest available to US citizens. China is mortally wounded by the massive loss of both jobs and business.
In either case, China unloads its vast supply of US Treasury bonds. Overnight, the dollar becomes worthless and the US economy collapses. Good for China, until they realize that they’ve lost their biggest customer. Unable to fill the void, their economy goes into a tailspin. They try to find buyers elsewhere, but the massive glut of goods overwhelms the world economy, and prices crash, only making the situation worse.
