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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

#71

Post by rsj_hn »

adventured wrote: post #40
JackFr wrote: post #20

Earlier quoted context omitted.

Additionally when we import from China, we pay with dollars. China can either buy US goods with the dollars, or buy US assets (typically Treasury bonds) with the dollars. If you end the trade surplus with China, you end a cheap source of funding for the US government. Not clear if this is a feature or a bug.

China hasn't net added much to its treasury holdings in 15 years (it hit around $1 trillion back in 2003, it's now at ~$1.2 trillion). In that time they've probably run a $4 trillion trade surplus. Clearly that isn't how it works at this point, they're intentionally avoiding buying more US paper. In that time US debt has gone from $6.7t to $21t. Their share has gone from 15% or so, to 5.7%. They're no longer a fundin…

The Rest of the World has never been a funding source for the U.S. It's impossible, because to purchase a treasury, the Rest of the World must first obtain dollar from an American, which decreases our income. Then, they purchase the treasury instead of the american. If someone grabs your wallet and then buys a share of stock with the money inside, they aren't funding the stock market and you don't need to be grateful to them.

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

#72

Post by methodover »

Simulacra wrote: post #63

I think a heavy hand with China is absolutely needed. Trade and manufacturing from cheap, and some say abusive, labor practices have done nothing to improve human rights for China, but it's done wonders to prop up the current regime. It seems the only thing China will respond to is losing money. Who would've thought communists would've made such great capitalists.

> Trade and manufacturing from cheap, and some say abusive, labor practices have done nothing to improve human rights for China

Your comments were narrow — you only cited “human rights”, which yes, China is abysmal. But what about quality of life in general? My understanding is that QOL has gone up dramatically in China.

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

#73

Post by bluGill »

makomk wrote: post #43
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…

Based on the figures I could find, China imported $130 billion dollars worth of goods from America last year, of which $12.3 billion was soya beans. The most likely reason they imposed high tariffs on soya beans is precisely because they had so few actual options. (I know the media portrayed it as some kind of genius move at the time, but that's been looking increasingly dubious. It's not clear that they will be able…

To a large extent the tariffs were imposed just before China traditionally started importing from Brazil, so for several months they had little effect on actual supply (a few ships did get turned away, but for the US it was slow season). Brazil has ended their shipments, and China is turning to other countries which are selling at inflated prices and then buying from the US.

Don't paint the above as good for the US - things are bad for farmers, they are selling below what the cost would have been. I'm pointing out that the picture is (as always) complex.

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

#74

Post by gonvaled »

Extremely one sided comments, with a US centric view. The world is not the US, and HN readers are not only US citizens, so let me express a different point of view.

Assumption: Trump wants fair trade. HN readers want fair trade.

What is needed: fair trading rules, fair IP rules, fair capital structures, and a fair currency.

Tackling some of the unfair trade practices does not address all those issues. In particular it does not address the services trade imbalances, the favouring of US IP holders (as incumbents and head starters), and the massive advantage that the dollar gives to the US economy.

And we have not yet started talking about the weaponizing of the dollar, which can be recently seen in the conflict with Iran.

All this to say that the US demands are not fair.

You can obviously pursue your interests, but you will not sell it as being a "fair" policy.

The Chinese, the Europeans, all countries have equally fair, if not fairer, demands, which must be respected.

The core of the problem is obviously that the initial assumption is false: Trump and HN do not want fairer trade, but trade one-sidedly beneffiting the US.

We will fight this policies, if needed at the personal level, by selectively consuming products according to country of manufacture.

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

#75

Post by gonvaled »

JackFr wrote: post #20
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.

Additionally when we import from China, we pay with dollars. China can either buy US goods with the dollars, or buy US assets (typically Treasury bonds) with the dollars. If you end the trade surplus with China, you end a cheap source of funding for the US government. Not clear if this is a feature or a bug.

This is a bug exploited as feature. Pretty sure this happened organically, it was not a dollar design decission, but it has, and is, exploited to the advantage of the US, economically and politically.

If we want fairer international trade, the dollar must be ditched.

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

#76

Post by User23 »

China is in an extremely weak economic position. Their economy is large, but fragile and extremely vulnerable to external disruption. If you doubt me, realize that Chinese leadership also realizes this, which is why they created the One Belt One Road initiative to shore up that vulnerability.

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

#77

Post by gonvaled »

rsj_hn wrote: post #71
adventured wrote: post #40

Earlier quoted context omitted.

China hasn't net added much to its treasury holdings in 15 years (it hit around $1 trillion back in 2003, it's now at ~$1.2 trillion). In that time they've probably run a $4 trillion trade surplus. Clearly that isn't how it works at this point, they're intentionally avoiding buying more US paper. In that time US debt has gone from $6.7t to $21t. Their share has gone from 15% or so, to 5.7%. They're no longer a fundin…

The Rest of the World has never been a funding source for the U.S. It's impossible, because to purchase a treasury, the Rest of the World must first obtain dollar from an American, which decreases our income. Then, they purchase the treasury instead of the american. If someone grabs your wallet and then buys a share of stock with the money inside, they aren't funding the stock market and you don't need to be grateful…

You are giving the dollars to foreigners, in exchange of goods. Nobody is forcing you to do that. If you feel those products are not worth your dollars, do not buy them.

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

#78

Post by SubiculumCode »

methodover wrote: post #70
SubiculumCode wrote: post #46

Earlier quoted context omitted.

His trade war with China (and only China) is one of the few administration's positions I whole wholeheartedly support (as a economics dilettante, no expert).

Yes, but what’s the actual strategy? According to Woodward’s book, Trump’s true opinion is that “Trade is bad.” These tarrifs aren’t negotiating chips — something unpalatable to get what he wants. They’re what he wants.

Trump may have less to do with it.

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

#79

Post by lovich »

kevin_b_er wrote: post #8
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.

And the "losing" scenario is a WTO ruling like Antigua and Barbuda where China is directly permitted to ignore US copyrights and patents from trade disputes.

Aren't they doing that anyway? It was my understanding that most companies didn't send their latest generation products to be built in China due to them bring consistently stolen and china not backing up the IP protections

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

#80

Post by rsj_hn »

gonvaled wrote: post #77
rsj_hn wrote: post #71

Earlier quoted context omitted.

The Rest of the World has never been a funding source for the U.S. It's impossible, because to purchase a treasury, the Rest of the World must first obtain dollar from an American, which decreases our income. Then, they purchase the treasury instead of the american. If someone grabs your wallet and then buys a share of stock with the money inside, they aren't funding the stock market and you don't need to be grateful…

You are giving the dollars to foreigners, in exchange of goods. Nobody is forcing you to do that. If you feel those products are not worth your dollars, do not buy them.

Nobody is forcing you, but the forex rate adjusts so that the appropriate amount of goods is bought voluntarily.

If country A bans foreign capital inflows and purchases $10 of foreign assets, then that forces a trade surplus of $10. Yes, that $10 transaction will be voluntary because it's currency will adjust so that the transaction is made. But from the macro point of view, the foreign capital flows drive the "voluntary" transactions.

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