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China Once Looked Tough on Trade. Now Its Options Are Dwindling

nytimes.com

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Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#21

Post by adventured »

apo wrote: post #4

Some hard-liners want a more aggressive stance. Lou Jiwei, who retired as finance minister in 2016 but is still the head of the country’s social security fund, suggested on Sunday that China could deliberately disrupt American companies’ supply chains by halting the export of crucial components mostly made in China. But Chinese trade experts dismiss that idea as impractical and not the government’s position. If anyth…

It would no doubt be disruptive, temporarily. And it would also prompt a multi hundred billion dollar redirection of investment into moving those supply lines to other countries. Vietnam would love to get some more of China's tech manufacturing action, as would a dozen other developing countries. Others would welcome gains to be had in apparel or autos by moves like that by China.

One of the biggest problems China has in this trade war: they're entirely replaceable. They offer nothing strictly unique that can't be replaced by another country, even though there may be a serious cost involved. The mistake of not being a large technology originator.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#22

Post by MarkMc »

enitihas wrote: post #12

I initially used to think China might have more leverage against any potential trade war agains the US, as: 1. The Chinese had option of imposing high tariffs on politically significant US agricultural products, like soyabean, which are not very large in $ value, but affect a lot of areas. 2. Since some swing states are highly influential in US elections, the Chinese always had the option of imposing tariffs which im…

Trump has countered the soybean attack by handing out subsidies to soybean farmers.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#23

Post by adventured »

sct202 wrote: post #18

China still hasn't pulled out the boycott card like they have recently done to both Korean and Japanese companies for perceived slights. A lot of F500 companies are reliant on China's consumer market to meet their quarterly goals, and would be vulnerable.

That's because China would be largely punching itself in the face at the same time.

One of the unexpected benefits of China having forced everyone to partner up with local companies. They'd be considerably harming their own companies and economy in the process.

When your country owns the majority of the popular Shanghai Disney park, do you call a boycott on it (via boycotting all things Disney)? When your country owns the majority of all value derived from local McDonald's franchises, do you call a boycott on that American brand? When your companies have partnership deals on manufacturing with GM, such that most Chinese-purchased GM vehicles are made domestically in China, do you call a boycott on those cars? And so on.

China feels a lot more free to play the boycott card in dealing with Japan and South Korea because there's a vast difference in the scale of the benefit in question. China only has a small trade surplus with Japan, of about ~$20b. But China is a very large export market for Japan, equal to 2.5% of Japan's economy in scale, so they can hammer Japan there (by contrast China's imports from the US are merely equivalent to 0.5% of the US economy). With the US, China has a $400b trade surplus that is at risk, the damage is overwhelmingly tilted at themselves in any boycott.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#24

Post by ThomPete »

cthalupa wrote: post #3

>Proponents of the plan say letting Washington impose more tariffs than Beijing would actually hurt the United States more because tariffs are ultimately paid by consumers and businesses in the countries that levy them. Well, this is actually the fundamental problem, isn't it? There's no way actual trade evens out, so tariffs are the only real outcome here. Even if we "win", it's not actually winning.

Winning is reaching a better agreement than we have now.

China is still considered a developing country by the WTO, it's very difficult to get into the Chinese market and they don't actually enforce IP rights which is a problem both for the US and EU.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#25

Post by ThomPete »

h8liu wrote: post #16
Invictus0 wrote: post #5

Earlier quoted context omitted.

The "winning" scenario for the United States is that China agrees to change its IP policies. IP is America's most valuable product, and the Chinese have been stealing it with 0 consequences for decades. A win on this front would see an end (or at least decrease) in cyberattacks and more US friendly IP laws.

Like which IP policy? Any specific policy document that you can point out? China has been having IP laws and protection since around 1980, and China government never said once that stealing IP is okay. It is IP law execution and enforcement in China that is sub-par. Policing is sometimes hard. Also, I believe the US really wants to treat IP as an "asset" rather than a "product".

They don't enforce it it's a major issue both for the US and EU.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#26

Post by adventured »

riphay wrote: post #17
euroclydon wrote: post #2

Are tariffs just straight up revenue for the US government, like income taxes?

Yes, but they are paid by the importer and (usually) passed on to the consumer. In effect they become a subsidy for local industry paid by consumers.

It's equivalent to the US implementing a VAT, except superior as it directly encourages replacement domestic manufacturing rather than merely acting as a tax on goods (as in the case of steel and aluminum, which are seeing US steel companies boom again with vast profit growth).

It doesn't merely redistribute wealth from one company to another. It reclaims critical domestic industrial investment and blue collar jobs as well.

Nucor's profit for all of 2016 was $796m, and $679m for 2014 (2015 was a bad year). For just the second quarter it was $683m and they've yet to see the full benefit of the tariffs. Alcoa, which has been a disaster the last several years, produced a billion dollars in operating income in the first two quarters, equal to a full year's operating income previously. US Steel which has been bleeding to death for years, looks capable of producing a billion dollars in annual profit again in the near future ($214m in profit in the second quarter on a large bump in sales).

Yes, we'll pay slightly higher steel & aluminum prices than we would have otherwise if we were getting artificially low dumping-level prices set by the Chinese impact on the global markets. It's worth it to regenerate major US industry back to health and the blue collar jobs that go with that. We can afford the slightly higher prices, we can't afford a hollowed-out industrial base.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#28

Post by h8liu »

ThomPete wrote: post #25
h8liu wrote: post #16

Earlier quoted context omitted.

Like which IP policy? Any specific policy document that you can point out? China has been having IP laws and protection since around 1980, and China government never said once that stealing IP is okay. It is IP law execution and enforcement in China that is sub-par. Policing is sometimes hard. Also, I believe the US really wants to treat IP as an "asset" rather than a "product".

They don't enforce it it's a major issue both for the US and EU.

True, and it is also a major issue for many Chinese companies..

And rather than going to the court for justice, the US place tariffs for a war..

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#29

Post by duxup »

MarkMc wrote: post #22
enitihas wrote: post #12

I initially used to think China might have more leverage against any potential trade war agains the US, as: 1. The Chinese had option of imposing high tariffs on politically significant US agricultural products, like soyabean, which are not very large in $ value, but affect a lot of areas. 2. Since some swing states are highly influential in US elections, the Chinese always had the option of imposing tariffs which im…

Trump has countered the soybean attack by handing out subsidies to soybean farmers.

For now, I belive the subsidies are only going to last a while. Granted considering the current administration's lack of care for deficit spending.... they probabbly would just dial up more subsidies after a while.

Re: China Once Looked Tough on Trade. Now Its Options Are Dwindling

#30

Post by chelical »

h8liu wrote: post #16
Invictus0 wrote: post #5

Earlier quoted context omitted.

The "winning" scenario for the United States is that China agrees to change its IP policies. IP is America's most valuable product, and the Chinese have been stealing it with 0 consequences for decades. A win on this front would see an end (or at least decrease) in cyberattacks and more US friendly IP laws.

Like which IP policy? Any specific policy document that you can point out? China has been having IP laws and protection since around 1980, and China government never said once that stealing IP is okay. It is IP law execution and enforcement in China that is sub-par. Policing is sometimes hard. Also, I believe the US really wants to treat IP as an "asset" rather than a "product".

China has actively promoted and condoned IP theft as a way of catching up to the US. I'm surprised you're unaware of the widespread coordinated Chinese industrial espionage, especially by Chinese students studying abroad in America. The IP laws and protections in China exist primarily so they can claim they're following the rules.
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