The president has said he is ready to put tariffs on $500 billion worth of imports from China. He has also accused China of manipulation to decrease the value of the Chinese yuan. President Trump has encouraged the Federal Reserve to slow down on interest rate hikes so as not to mitigate the impacts of the tariffs. What is happening?
President Trump appears to be willing to up the ante until trade relations are fairer and more equitable. He believes that free trade is good, but that one-way free trade is detrimental to the U. S. worker and economy, and that much of our economic future is tied to our intellectual property. But what now? Economic and political risks are significant.
First, there are indications that the U. S. is winning the China/U. S. trade war. The Chinese have more to lose and are already feeling the impacts of current tariffs. According to an article published by The Hill, the Chinese stock index (Shanghai) is down nearly 20 percent, while the U. S.&P index is down less than 1 percent since the White House announced the first tariffs.
Second, Chinese corporations are burdened with huge amounts of debt. A coal mining corporation (Wintime Energy Co.) defaulted this month in one of the largest corporate defaults yet ($10.8 billion) according to Bloomberg. Unfortunately, their default will likely be followed by others (perhaps many).
Much (perhaps most) of recent Chinese economic growth has stemmed from corporate debt. A large percentage of their debt has been from shadow banking (credit through intermediaries outside the official banking system). Wintime quadrupled its debt in less than five years, and it's not alone. When credit was easily available in 2015, more than half of Chinese commodity companies did not have enough earnings to cover their interest payments, so they borrowed more (Zero Hedge). At the end of 2017, average corporate total debt to common equity was 99.5 percent (Bloomberg). To increase their debt loads, corporations often put up their stock as collateral.
Shadow banking grew debt to unmanageable levels. Currently, China has an aggressive deleveraging policy (sort of like stepping out of the shadows). Credit is no longer readily available. In an effort to stabilize their economy they are increasing the money supply, which lowers the value of the yuan, which decreases imports and increases exports. To keep inflation from a booming U. S. economy at bay, our central bank has been increasing interest rates.
In the kingdom, believers have a responsibility to get out of the shadow. We worship the Father of lights. Jesus is the light of the world, and He told us that we are also the light of the world. Jesus asks us to let our light shine before men to glorify the Father. If the Father, Jesus and followers of the Lord are light, and we are told to provide light to the world, perhaps we should give more thought to getting out of the shadows and letting our light shine.
"Every good gift and every perfect gift is from above and comes down from the Father of lights, with whom is no change or shadow of turning" (James 1:17).
"Again, Jesus spoke to them, saying, "I am the light of the world. Whoever follows Me shall not walk in the darkness, but shall have the light of life" (John 8:12).
"You are the light of the world. A city that is set on a hill cannot be hidden. Neither do men light a candle and put it under a basket, but on a candlestick. And it gives light to all who are in the house. Let your light so shine before men that they may see your good works and glorify your Father who is in heaven" (Matt. 5:14-16).
A shadow is a dark area or shape produced by a body coming between rays of light and a surface. In other words, something (or someone) is keeping the source of light from reaching areas (or people) it would otherwise reach. Jesus said if we follow Him, we will not walk in darkness but will have the light of life. Do we have the light? He then said we need to let our light shine, and that involves a willingness on our part. Are we willing to let our light shine?
First, we need to make sure we have the light. Do we have a relationship with the Lord Jesus? Is there sin in our lives that needs repentance? Are we fellowshipping with other believers? How are our prayer life, Bible study and personal devotionals? Do we have good works that express the goodness which the Lord has shown us? Are we walking in love?
Second, we need to willingly let our light shine. Are we bashful, shy or fearful when we should be bold? Are our good works tied to our love of Jesus in the eyes of others? Would others describe us as a loving person, or something less? Are our actions in line with our beliefs and words? Do we take the opportunities the Lord provides to talk about what He has done and is doing? Are we ashamed to publicly express our belief in the gospel?
Letting our light shine is a natural fruit of a relationship with Christ. Most of us have known a person who exemplifies the light of Christ. This person may have been a leader but is often someone in the background who overflows with the love of the Lord and their dedication to Him. If we want our light to burn brighter, we need to deepen our relationship with the Lord.
"The fundamental principle of Christianity is to be what God is, and He is light" —John Hagee.
Dr. James Russell is a professor of economics at Oral Roberts University.
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