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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

#91
post #84

Earlier quoted context omitted.

The dollars are worth whatever the relative foreign policies set. If China has a policy to depreciate against the dollar, by printing Yuan and buying dollars with them (what happens now) then the dollars end up being "worth" more, but the underlying capacity to produce of the U.S. hasn't increased, indeed it starts to decrease as people start to buy cheaper foreign output. So it's a bit disingenuous to say "well, peo…

The US manipulates the currency market in other, more powerful and more fundamental ways, by controlling the global currency. You do not need to hold foreign reserves, you do not need to pay exchange commissions, you are not blocked to do business with third parties by having capital flows stopped ...

I don't think you understand what you are saying here. Yes, the U.S. has the world's reserve currency _because_ it allows unrestricted foreign capital inflows and has a long respect for property rights and rule of law. Try, as a foreigner, buying a house in China. It's illegal. Try, as a foreigner, to buy a house in the U.S. -- no problem. The U.S. opens it's markets to the rest of the world to purchase American assets while the rest of the world closes its markets. If you are a foreigner, you can buy all the corporate and government bonds you want. You can repatriate money out of the U.S. in unlimited amounts. In China, this is illegal. They don't even allow their own citizens to move more than a small amount of money out of their country. There is a great black market of people smuggling money into and out of china because the government restricts cross border capital flows -- like hiding money in your socks or trick suitcases, bribing border guards to let you through stuff.

This is why the U.S. is the reserve currency, and it is also why we have a trade deficit, because as the rest of the world's capital pours into the U.S., that forces our currency to be overvalued enough to have an equal sized trade deficit on the way out.

Whereas you seem to think that that the U.S. "manipulating" it's currency by making U.S. currency more attractive to hold for foreigners -- is somehow a counter or offsets what China is doing, which is making its currency less attractive to hold.

But it's not, these two work together to cause the same distortion and large trade deficits.

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

#92
post #88

As much as some people here may hate Trump, the fact is that he was right when we said that it is difficult for us to lose a trade war with China since we import more from them than we export. Is there going to be some short term pain? Absolutely! But, long term it is likely to create more jobs in the US. As an extra bonus, there won't be as much of a carbon footprint for shipping things half way around the world and…

A trade war is you and your buddy alternately shooting yourselves in the foot.

If your running a trade deficit how exactly are you shooting yourself in the foot?

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

#93

As much as some people here may hate Trump, the fact is that he was right when we said that it is difficult for us to lose a trade war with China since we import more from them than we export. Is there going to be some short term pain? Absolutely! But, long term it is likely to create more jobs in the US. As an extra bonus, there won't be as much of a carbon footprint for shipping things half way around the world and…

This requires trade to be zero sum. It’s not. Even if we “win” the trade war we can lose if not having done it at all was better.

Honest question, how would we lose in that scenario?

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

#94

Earlier quoted context omitted.

Point number two has been preoccupying my brain the last few months. Our system of electing presidents tend to hinge on several swing states, and in those states, a few key districts, and this means that our elections are vulnerable to foreign influence much more so than if, say, presidents were elected by popular vote. Protecting elections may mean ending winner take all electoral college system.

> Protecting elections may mean ending winner take all electoral college system. I think 2016 proved that the electoral college is not supplying the adult oversight that the founders intended.

This seems inconsistent with this article anyways:

https://www.historycentral.com/elections/Electoralcollgewhy....

Is there a more accurate interpretation describing how the founding fathers believed it served the purpose of "adult oversight"? What exactly does that mean by the way?

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

#95
post #22

Earlier quoted context omitted.

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

Meantime, other soybean manufacturers will dial up production, so when the tariffs are dropped by China, the US soybean manufacturers will be selling to an oversupplied market, dropping the price. And given the US subsidies will almost certainly go when the Chinese tariffs do, the risk to the US soybean industry has only been postponed, rather than countered.

> Meantime, other soybean manufacturers will dial up production, so when the tariffs are dropped by China, the US soybean manufacturers will be selling to an oversupplied market, dropping the price.

I don't think so. Doing some Googling, it looks like China's soybean imports (100 million tons) could be more than satisfied by the production of Brazil and Argentina (139 million tons). US production is 108 million tons.

Soybeans are fungible, so instead of other producers ramping up soybean production, I think we'll see production stay constant while trading relationships reconfigure around the tariffs. For instance: China can replace American soybeans with Brazilian ones, and American soybeans will then go to wherever the Brazilian soybeans were going to previously.

https://www.worldatlas.com/articles/world-leaders-in-soya-so...

https://www.world-grain.com/articles/10955-china-soybean-imp...

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

#96

As much as some people here may hate Trump, the fact is that he was right when we said that it is difficult for us to lose a trade war with China since we import more from them than we export. Is there going to be some short term pain? Absolutely! But, long term it is likely to create more jobs in the US. As an extra bonus, there won't be as much of a carbon footprint for shipping things half way around the world and…

We won’t lose more than China does, but we’re still going to lose a fair amount of wealth and standard of living.

How so? As it is the only people who's standard of living has been rising in the past 30 years has been those at the top while the middle class etc. continue to lose ground.

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

#97
Time is on China's side. The US can throw a tantrum all they want.

They should play a long game. There is no benefit for them in retaliating to hurt the US as long as it does not cause issues in domestic politics. They should focus on not getting hurt too much and let time do the rest.

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

#98

As much as some people here may hate Trump, the fact is that he was right when we said that it is difficult for us to lose a trade war with China since we import more from them than we export. Is there going to be some short term pain? Absolutely! But, long term it is likely to create more jobs in the US. As an extra bonus, there won't be as much of a carbon footprint for shipping things half way around the world and…

This requires trade to be zero sum. It’s not. Even if we “win” the trade war we can lose if not having done it at all was better.

Only if growing GDP at all costs at all times is a constraint, and if one gives no consideration to the future when calculating "losing".

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

#99
post #88

Earlier quoted context omitted.

A trade war is you and your buddy alternately shooting yourselves in the foot.

If your running a trade deficit how exactly are you shooting yourself in the foot?

A trade deficit means we ship portraits of George out instead of goods that are more useful. I've got a big trade deficit with my barber.

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

#100
post #97

Time is on China's side. The US can throw a tantrum all they want. They should play a long game. There is no benefit for them in retaliating to hurt the US as long as it does not cause issues in domestic politics. They should focus on not getting hurt too much and let time do the rest.

The US would need to implement tarrifs of several hundred percent to make a difference. A 20% tariff China can just make a small change to the price of their currency and ride it out. An article today has a quote from Jack Ma that he thinks this trade war will last 20 years.

https://markets.businessinsider.com/news/stocks/alibaba-stoc...

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