Today the new tariffs on Chinese goods go into effect. Would it change
the trade balance between the US and China? Would it make America great
again?
Some Americans are delirious and crowing that China has no more bullets
to fight the Americans after the latest bout of tariff hikes. US raised
tariffs on US$200b and China could only raise US$60b. So apparently the
China could not raise any more tariffs, as there is no more products to
raise tariffs on. This is about all that China is buying from the
Americans.
Did the American won in this supposed final round? Jack Ma just
announced that his promise of creating 1m jobs for the Americans is off,
no deal, deal cancelled. Haier, Chinese consumer manufacturer giant
that bought over the appliance arm of GE has stopped selling goods made
in the USA to China as the tariff has made goods made in America more
expensive to export to China. Haier is not the only China manufacturer
setting up factories in the USA. And not only that production would be
cut down, leading to more job losses, Chinese companies planning to set
up factories in the USA, to provide jobs for Americans are hold back
their plans. The cancelling of hundreds or thousands of Boeing aircraft
would also mean job cuts in Boeing.
When the dust finally settles after this brief war initiated by the US,
China would have found many substitutes for America produce and goods.
The American farmers would have to find another 1.4b market to sell
their produce and goods. India is a good potential, provided they have
the middle class that can afford expensive American produce and goods.
Look at what is happening to the Australians, now crying but no tears
left. Trillions of Chinese dollars vanished in the air and now pleading
for mercy.
China has been responding and retaliating American attacks so far and
has not taken the offensive yet. Wait for the next wave when China
starts the counter attack. Americans are deluded to think only they can
hit others, can start wars against others, can imposed sanctions on
others and not the other way. In the phases of war, the one who has the
initiative by starting the war always looks good at the beginning of the
war. If they cannot defeat the enemy, just like Germany and Japan, and
when the counter offensive starts, the table will turn.
15 comments:
Yes, China is so poor thing. No more bullets to fire back. Must surrender now so the Dotard Trump can claim victory for his Mid-Term Election. How convenient! Make America Great Again?
By the way, USA is not America. America comprises North America (Alaska, Canada, USA), Central America and South America. That means it is impossible for Trump to make America Great Again. His use of the word "America" is a misnomer. He can't even make USA great again. What he is doing is to make the US the Most Hated Country In the World!
China basically is giving Trump a lot of ropes to hang himself. While Trump is using the Warrior's Approach, China is using the Diplomat's Approach. Tsun Tze said, "Most superior is to win without fighting."
China has many options to retaliate. If you have noticed, China is not confining herself to only the Trade War. China is going relentlessly on the "Charm and Persuasion" Approach on ALL Fronts.
The BRI is one.
The China-African Conference is second.
The Middle-East Assistance Program is third.
The Latin-America Trade Cooperation is forth.
The East-Asia Strategic Cooperation is fifth.
The Asean Dialogue is sixth.
The China-India Cooperation Dialogue is seventh.
The China-Japan Dialogue is eight.
The China-EU Bilateral Trade Cooperation is nineth.
Last but not least, China-UN Cooperation on Multilateralism and Free Trade.
Actually noboli is the clear winner in this trade war. Yes, u may win some lose some but overall noboli wins. An open fair trade is the middle path.
As China exports more than it imports from Uncle Sam, Trump obviously believed he will win easily. China has called the trade war "the fruit of a president's folly". It has announced that it will retaliate using "qualitative measures" should Trump decided to resort to a blanket strategy of imposing tariffs on all imported Chinese products. China may decide to withhold export of certain products like rare earth. It can also create administrative red tape for Uncle Sam's companies operating in China. China knows that the trade war is an excuse used by Uncle Sam to cut China down to size.
When companies move to USA, the story does not end there. They have yet to try producing goods cheaper than elsewhere before they can compete abroad. It is not mission accomplished yet that they have moved back to USA.
Steel manufacturers were said to be making good profits after the tariffs were imposed, and steel workers, through their unions, are now demanding wage increases due to the higher profits made.
This kind of demand by workers will go through all the other manufacturing activities. Workers will do that because Walmart already started the ball rolling, by warning that this coming Christmas, things are going to get much more expensive for US workers.
Workers will have to find ways to cope with the cost of living rising because of the tariffs. In the long run, many more farm workers will lose their livelihood when they lost the China market forever. Trump will be pouring more money to subsidise the farming community. Isn't this what they have been accusing the Chinese of doing for decades?
Trade war is not easy to win. Only Trump thinks so, like his apprentice game show.
it is clear that trump's action spells fear of the US losing its top dog position to China eventually. It is a long term push by China. Trump's backers are pushing him hard to put hurdles in China's path.
What precipitated this fear was China starting the Petroyuan idea, the AIIB, the BRI and its serious intent to pour resources into AI, robotics, military hardware and courting countries in South America and Africa with massive development projects.
While the US forces countries to obey using its military power, China is using soft power, which is more palatable to most African, South American and some South Asian countries. Why would less developed countries look for war and destruction when there is this Chinese alternative to develop the country and progress? The choice is very clear and simple.
Next phase of trade war, China will treat US companies in China differently - being harsh with US companies that only aim to reap profits from China without a tangible contribution in employment or technologies to the domestic market, while maintaining a friendly stance toward US companies that offer clearer benefits.
China will decrease or even stop importing some US products that are highly dependent upon Chinese demand, such as airplanes or cars.
China will strengthen cooperation with business competitors of US companies.
China will block the export of rare earths to the US.
China will dump its US$1,171 trillion holdings of US Treasurys.
China will lift sanctions on North Korea.
China will buy up all the oil from Iran.
China will etc , etc . . .
RARE EARTH - THE KING AND FUTURE OF ADVANCED TECHNOLOGY
Rare Earth is a strategic commodity. Without Rare Earth, the progress of any country's advanced technology can come to a standstill.
China exports 78% of US's Rare Earth requirements directly and another 15% indirectly, through Japan, Estonia and Turkey. That means, 93% of US's Requirements of Rare Earth are from China.
Last week Trump unilaterally imposed sanctions on China using the excuse tha China purchased military hardware from Russia with total disregard and defiance to the World Trade Organization's rules and regulations. If the US continues to impose sanctions on China, one day China will have no choice but to retaliate with the imposition of sanctions on exports of Rare Earth to the US. This will hit where it hurt most! Without Rare Earth, USA will not become great again but will become a Disunited States of Assholes.
Why did the high tech US companies moved to China? It is not just because of cheaper labour cost. It is also because the workers in China don't go on strikes and are easy to train, and obedient. Most importantly, it is because of the guaranteed continuous supply of Refined Rare Earth at lower price. If these companies were to move back to the US, they would not only face higher manpower costs and likely disruptions due to industrial actions by US Trade Unions, but also their requirements of Rare Earth might face uncertainty and cost more.
China has 37% of the World's Rare Earth deposits. North Korea has 60%. Together, the two countries control 97% of the World's Rare Earth Deposits.
That's why Trump is trying to play friendly with North Korea. The main objective is to ensure a continuous supply of Rare Earth from North Korea. Denuclearization is just an excuse for negotiating with North Korea and to appease Japan and South Korea.
The Japanese PM Abe has begun to wake up. He has experienced the treacherous attitude and behaviour of Trump. Now, Abe is turning towards direct negotiations with North Korea and has begun a reconciliatory approach towards China. He realises that the long-term survival of Japan is not dependent upon USA but on being a partner with China.
South Korea's leadership has also realized that re-unification with North Korea is just a matter of time and approach. To continue to be a semi-colony of USA means it is not really independent.
The Koreans, like the Japanese, are people who hold their culture and tradition with pride. To be subjected to the dictates of a foreign power for 60-70 years in order to have an illusory gesture of independence is not only silly but self-defeating. Why not subject themselves to North Korea and be reunited as a true independent country. Unity is strength. With North Korea's huge supply of Rare Earth and Nuclear Technology, and with South Korea's additional technological know-how, an independent reunited Korea will be a force to be reckoned with in the World, in time to come.
Moral of the story:
Whoever controls Rare Earth controls the Future of Advanced Technology!
No one "wins" trade wars. The people who directly suffer are the non-politically connected, i.e. the voting, taxpaying "ordinary people" who work and run enterprises for their livelihood.
If neither side suggests everyone just "sits down and starts talking", then the trade war is going to be determined by which cuntry can take the most amount of PAIN...i.e. whether American exporters can "tahan" the drop in revenue, and whether the people who get fired from those export-dependant jobs can "tahan" their reduction in living standards and unemployment.
Same applies to China, but because China is essentially a command economy, and the govt has tight control on "social order", the average Chinese who depends on China's export revenue is likely to suffer more. Both the Yuan and China's markets are down---capital market strength being a "proxy" for the overall health of the cuntry's economy.
The smart Chinese who have moved their money overseas into income generating assets are lucky to have much more "protection", but everywhere in the world these assets are all in bubbles.
The double-whammy for the average Chinese citizen: tariffs on US imports...makes US goods they need goods more expensive. The Yuan has depreciated, again raising the prices of ALL imported goods, plus there's a good chance of domestic inflation making the local alternatives cost more too.
China has to play this one very carefully. IMO, their best play would be to be "cool" about the tariff wars, and redouble their cyber attacks on the US, as well as up the ante on the "war of influence" by upsetting the social order in the US---thru social media, bribing/ blackmailing US officials, and turning the more people against Trump so that the Republicans lose the upcoming mid-terms in November. In other words, keep up and increase the asymmetric warfare. If you can't beat them toe-to-toe, then play a dirty game where you have the upper hand.
China is fully aware that Trump's trade war is part of a broader effort to thwart its strategic plan "Make in China 2025" which aimed to surpass Uncle Sam in science and technology. The trade war has shifted focus. Uncle Sam is now whipping up hysteria over Xinjiang's sensitive Uigher issue. China's effort to defuse tension and combat violence are being mendaciously blown up as systematic and full-scale repression of the Uigher minority.
This trade war is seen by Beijing as a long-term affair, whereas President Trump is not seen by Beijing as a long-term leader.
President Xi Jinping will patiently sit out US trade aggression while pursuing China’s industrial policy, and wait to deal anew with the next US president.
@ 1057
>> China has 37% of the World's Rare Earth deposits. North Korea has 60%. Together, the two countries control 97% of the World's Rare Earth Deposits. <<
Err...no. Rare earths in N Korea may as well still stay in the ground, because they don't really have any mining industry to produce. In fact, N Korea is RICH in minerals. But at the moment...they are all UNTAPPED. Also no one cuntry "controls" anything. The markets where these commodities are traded is the final arbiter on who is going to make money and who is going to lose. You might be able to "corner" the market...for awhile, or manipulate it...for awhile...but that usually ends up costing the manipulators more than what their antics were worth.
It also takes hundreds of billions to develop a mining sector, and many years---decades---before those mines re able to produce enough and turn a profit. Rare earth mining is VERY DIRTY BUSINESS...highly toxic to the environment. So mine operators and governments must have the infrastructure to deal with the pollution or later face the increased expense of cleaning up the environment (i.e. polluted environments DROP in economic value...i.e. in the long run, you lose money if you don't keep the environment clean)
Here is a truism of capitalism: The cure for high prices, is high prices. As the price of an in-demand item increases, it motivates people to seek ways to profit from such higher prices. More competition moves into the space, alternatives---like RECYCLING---start to make economic sense, because higher prices make these alternative more PROFITABLE.
I seriously doubt that we're going to run out of rare earths anytime soon.
Like I said before: the trade war will come down to "who can take the most pain". If China imposes export sanctions on rare earths, China will lose money. How much pain are they willing to take? Who knows? Let's see.
China's rare earth trade is really BIG BUX. A lot of business people and investors...powerful, well-connected people are involved. Will they be willing to LOSE MONEY for "nationalism"? How far will Xi go to make these people feel "uncomfortable"? I have no answer to that, but knowing human behaviour when it comes to losing money...well, you be the judge lah.
All the rare earths prices are DOWN. Prices haven't moved.
https://price.metal.com/Rare-Earth
Uncle Sam vs China. Who will win?
Many countries are turning to nationalism including germany, italy and sweden.
Har har!!!
US go up 10%, China drop 20%!
US drop 20%, China drop 50%!
US drop 50%, China drop 90%!!
S'pore leh?!? In between US & China lah!! Job losses too!! Har har har!!!
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