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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

#221

Post by gumby »

joefranklinsrs wrote: post #190
gumby wrote: post #180

Earlier quoted context omitted.

> This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess)... I agree with your conclusion but not your map; I see China investing and stepping up ag purchases from Brazil sub-saharan Africa; increasing the militarization of oil-producing countries, and exporting cheap products to Europe, Africa, South America and their sou…

"The US will be forced to pay more for everything" I'm assuming your assumption is because China is taking over all of the resources/production capabilities around the world? I don't think that can even remotely happen. Again, lots of multinationals are already 30% in Vietnam, Malaysia, or India. Companies can source ag or oil from plenty of non-Chinese sources. The consumers have barely felt the supply chain shifts.…

>> "The US will be forced to pay more for everything"

> I'm assuming your assumption is because China is taking over all of the resources/production capabilities around the world?

No, it's because the US government is forcing US consumers (and producers) to pay more for the goods than buyers in other countries will -- that's what a tariff is.

> You would be surprised at how much reshoring and US factories automation have occurred in the last few years in US.

Indeed I would be surprised and until recently I bought a lot of manufactured goods. OK, I may have overdone it on the beryllium bearing example: I did see a piece of fancy firefighting equipment being built in the Central Valley for shipment to a customer in NZ. But it was exotic enough that it wasn't worth figuring out how to make in NZ, while the volume was so low (they made 3-4 of them a year, at $100K/pop) that it couldn't keep the lights on. Most of what they made was farm gear and solar mounts for sale in the valley.

Another example: I bought some pressure vessels (about $60K each FOB Redwood City) made in LA: about half a dozen guys, a massive steel roller press and some excellent union welders. I could get them for much less from India, with about 50 guys feeding 2" sheet steel manually into a tiny roller press, excellent welding, also x-rayed and to the same safety standard. After shipping? About $65K. But that same factory in Amedebad is shipping tons of stuff to the oilfields of Central Asia and the Middle East -- they didn't really care if they got our businesses. While the factory in Los Angeles couldn't keep busy. So that's the low end: "not worth shipping". While $150K of high pressure steam boiler had parts falling off it in shipment from Chicago. It would have been cheaper for us to buy from Germany and have it shipped over just in terms of TCO.

So yes I'm pretty familiar, as a customer, of US heavy industry.

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

#222

Post by MR4D »

joefranklinsrs wrote: post #128

This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess) is 1.) 40-60 percent of a company’s supply chain moves out of China 2.) China restricting the movement of capital/equipments out of China (similar to what happened with Korean companies last year) 3.) China growing homebrew competitors to the foreign companies leaving…

Interesting analysis. Oddly, it reminds me of Venezuela’s path.

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

#223

Post by gonvaled »

rsj_hn wrote: post #91
gonvaled wrote: post #86

Earlier quoted context omitted.

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 asse…

Your whole argument comes down to "the dollar is overvalued". What does this mean? Bad things and good things for the US. You are not going to mention the good things, so I will.

For starters, you are using worthless (overvalued) papers to acquire real goods. The American consumer is getting a bargain.

You are also able to buy foreign assets at firesale prices (yes, for all your grandstanding, the US is not the only economy allowing direct foreign investment)

Having the world reserve currency (something the US has allowed / promoted to happen, out of interest) gives the US unfair operative advantages, already mentioned above.

The appetite for the dollar allows the US to be largely independent from the financial markets. It also allows the US to get favourable credit ratings, and financing terms which are unthinkable for other economies. This has been happening for decades, and is continuing until we reach a certain breaking point Incidentally, it is possible that this trade conflict is motivated by that breaking point getting closer.

To summarize: the US has enjoyed unfair, enourmous trade advantages for decades. It has been indulgent with its finances because the market has allowed it to be overspend. And now it wants the world to increase its already existing advantages, by claiming for "fair trade".

It is not going to happen.

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

#224

Post by sheepmullet »

chowchowchow wrote: post #202
sheepmullet wrote: post #181

Earlier quoted context omitted.

> doesn’t imbalance vote value like the electoral college does Of course it does - it imbalances them all the way to zero.

I don’t see how this is an insightful comment. You’ve just provided a different way of saying there’s a winner and a loser. Disenfranchisement !== losing, it’s being denied the ability to have your vote count the same as anyone else’s. Under the electoral college system, 50 voters for candidate A in Wyoming get more influence than 50 voters in California for the same candidate .

> You’ve just provided a different way of saying there’s a winner and a loser.

No I haven’t. Let me explain a bit more below.

> Disenfranchisement !== losing, it’s being denied the ability to have your vote count the same as anyone else’s.

> for the same candidate.

Exactly!

It’s a vote for the same presidential candidate regardless of whether you live in California or Ohio. Yet a Republican vote in California is meaningless because California assigns it’s electoral votes as winner takes all based on state level results.

If 51% of voters in California vote Democrat then all 55 electoral votes go towards the Democrats. This clearly disenfranchises conservative voters.

California has the ability to assign it’s electoral votes proportionally and enfranchise millions of conservative voters.

Of course they won’t because it would hurt the Democrats chances of winning unless all the other states followed suit.

Yet if it’s a question of right and wrong then shouldn’t California do the right thing and give conservatives a voice regardless?

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

#225

Post by _ptgt »

mc32 wrote: post #48
tambourine_man wrote: post #35

Earlier quoted context omitted.

I’m not sure. Tim Cook seemed to suggest the iPhone couldn’t be manufactured anywhere else.

Tim Cook has a business reason to make such a suggestion. He doesn’t want disruption; he wants an affordable and reliable workforce and does not want to abandon his investment in technology, capital, supply chain, etc.

And Tim Cook also makes a lot of money from selling iPhones to a highly nationalistic Chinese populace

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

#226

Post by rgbrenner »

joefranklinsrs wrote: post #128

This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess) is 1.) 40-60 percent of a company’s supply chain moves out of China 2.) China restricting the movement of capital/equipments out of China (similar to what happened with Korean companies last year) 3.) China growing homebrew competitors to the foreign companies leaving…

I think you went way overboard toward the end. Only 37% (and declining) of China's GDP is from trade.. and only Meaning, if all trade between US and China was cut off tomorrow, they would only lose 7% of GDP. So how do you get from that to 5X?

Seems like you have a model of the Chinese economy from a decade ago. Fact is, China is much larger now, and much less dependent on trade today.

Also keep in mind, a good portion of our imports from China consist of items that were imported into china for assembly. Look at all the items from other countries inside an iphone... yet when an iphone is assembled in China, the value gets assigned to China. If you adjust for this, it significantly reduces (but nowhere near eliminates) the trade imbalance. So the numbers above, actually overstate the impact on China's economy from cutting off trade.

Edit: corrected a few of my numbers from worldbank data

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

#227

Post by gonvaled »

pathseeker wrote: post #161
gonvaled wrote: post #74

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 i…

>the favouring of US IP holders (as incumbents and head starters) You mean favoring the people that actually invented these things? I understand there isn't much of a notion of IP in China, but are you suggesting that it's unfair to not be able to copy IP and just manufacture without paying?

The IP laws have been written by the US, for the US, and its terms keep on changing to continue protecting US interests.

The IP laws should be a trade-off: temporary protection of inventors / creators, so that progress happens and consumers get a good deal. Instead, HN is already aware how IP laws get abused. The effects of those abuses are felt largely outside the US: it allows the US to foster its economic and cultural dominance.

All thanks to founding and controlling the international bodies in charge of ruling on IP matters.

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

#228

Post by JPKab »

tim333 wrote: post #104
lgleason wrote: post #36

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…

Trade doesn't really work like that. If I say buy a car off you it doesn't mean you've won and I've lost, just that we've done an exchange. If the government bans or taxes the exchange it probably just makes us worse off. Similarly with China trade there wasn't much of a problem till the stable genius decided to get worked up about things and it will probably cause both sides losses.

https://qz.com/1269172/the-epic-mistake-about-manufacturing-...

Yeah, you live in a bubble. Outside of the bubble, the American working class has been eviscerated.

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

#229

Post by gonvaled »

engi_nerd wrote: post #210
gonvaled wrote: post #74

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 i…

I think the US is past being "fair" with China, and I believe this is a very good thing. The Chinese are cheating in every arena with everything they've got, and being fair only plays into their hands.

The US has been cheating, bigger, better and longer.

We seem to agree that this is not about fair trade, but that is what Trump is calling the whole thing.

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

#230

Post by joefranklinsrs »

rgbrenner wrote: post #226
joefranklinsrs wrote: post #128

This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess) is 1.) 40-60 percent of a company’s supply chain moves out of China 2.) China restricting the movement of capital/equipments out of China (similar to what happened with Korean companies last year) 3.) China growing homebrew competitors to the foreign companies leaving…

I think you went way overboard toward the end. Only 37% (and declining) of China's GDP is from trade.. and only Meaning, if all trade between US and China was cut off tomorrow, they would only lose 7% of GDP. So how do you get from that to 5X? Seems like you have a model of the Chinese economy from a decade ago. Fact is, China is much larger now, and much less dependent on trade today. Also keep in mind, a good porti…

I didn’t go into the 20-30% loss in GDP in detail, but it factors in loss of millions of manufacturing and management jobs, fake/wasteful GDP boosting stopped, loss of FDI, capital outflow, debt deleveraging, 20-30% further drop in Yuan, etc etc
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