US - Trade War (China)

[behappyalways]

2018.08.12【文茜世界周報】中國國力超越美國　胡鞍鋼研究成眾矢之的
https://www.youtube.com/watch?v=ysAoJK_ ... -pKgdwMSAU

[winston]

Shooting War With China More Likely Than You Think

Trump has ample financial warfare weapons including tariffs, penalties, bans on direct investment, improved cybersecurity, forced divestiture and freezing of assets.

Meanwhile, China has almost run out of room to impose tariffs. Further, they will invite retribution if they try to devalue their currency further.

Once Xi got these powers, he proceeded on a disastrous policy course that has resulted in a slowdown of the Chinese economy, higher debt defaults, lost investment opportunities in the U.S. and declining hard currency reserves.

Reports are circulating that Xi’s opponents are questioning his judgment and the wisdom of expanding his powers at such a critical time. Many are starting to blame Xi for the trade war almost as much as they blame Trump.

China does not want war at this time. But diverting the people’s attention away from domestic problems toward a foreign foe is an old trick leaders use to unite the people in times of uncertainty.

If China’s leadership decides that the risk of losing legitimacy at home outweighs the risk of conflict with the United States, the likelihood of war rises dramatically.

Source: Daily Reckoning

https://dailyreckoning.com/shooting-war ... you-think/

[winston]

CN Proposes No Trade Talk before US Midterm Election: Report

The trade negotiation between China and U.S. at deputy level has not seen any progress so far.

Chinese officials mentioned about the likelihood of not having further talks with U.S. prior to the latter's midterm elections in November, Bloomberg cited sources.

The report cited Chinese MOC officials that China will not accept the U.S. request to suspend "Made in China 2025" and its industrial policy, while the intellectual property protection and market access are negotiable.

Source: AAStocks Financial News

[winston]

Big business takes tariffs battle to Trump's doorstep

by Andrew Wong

The public consultation period on whether to impose tariffs on US$200 billion (HKS1.56 trillion) of Chinese goods ended last Thursday, with the markets expecting the President of the United States to announce details on the new tariffs on Friday.

However, Donald Trump just said the tax measures were readily available at any time and he even threatened to slap tariffs on all Chinese imports.

However, Trump stayed true to character, as he would never give warnings again and again before taking action.

It could be concluded that the feedback received during the consultation period was that most were against imposing tariffs on China.

Businesses opposing the tariffs included Apple, Cisco and Inteland other big technology players who wrote an open letter to the Washington administration, requesting that Trump think twice about imposing tariffs on China since it is more likely that American instead of Chinese firms would end up being harmed.

Trump, of course, has responded by continuing to play hardball, arguing that Apple should move its factories back to the United States as soon as possible if it wants to avoid tariffs.

This proposal might look easy to do on paper, but in reality is actually very difficult to execute.

It should be known that during the consultation period, it was not just big technology companies such as Apple, Cisco and Intel that objected to the tariffs.

The National Retail Federation and 150 organizations also jointly issued a statement to the United States trade representative Robert Lighthizer, saying that manufacturers - especially small and medium-sized enterprise - would not be able to adjust quickly and as such the tariffs would affect the operations of domestic enterprises.

They said that Washington should halt further action on tariffs and should strive to reach an agreement through Sino-US trade negotiations.

Their "inability to adjust quickly" suggests that even if American companies are willing to move their factories back to America, they will not be able to do so in three minutes flat.

China has 1.3 billion people, or one-fifth of the world's population.

It is a huge market in which almost all enterprises want to have a share, and it is also a country that gives the world a cheap and high-quality workforce.

After the implementation of the minimum wage in China, many enterprises looked at moving their factories to other parts of southeast Asia.

However, countries like Cambodia and Vietnam cannot completely take China's place simply because the average labor productivity in these places is only 50 to 60 per cent compared to that of China's.

Also, their infrastructure and systems are inferior to China's.

Of course, the US is not systematically inferior to China and its infrastructure may be better than China's.

But is it really possible for people who have long been used to mechanization and service industries to start working in mid - and low-end assembly industries?

And another reason why US companies are reluctant to move their factories back home is that they would have to pay far higher wages for American workers.

So it will not be easy for Trump to impose further Chinese tariffs, it seems, without countering opposition from big business in the United States.

Source: The Standard

http://www.thestandard.com.hk/section-n ... r=20180910

[winston]

China would be wise to avoid going MAD in the trade war

A proposal by China’s former finance Lou Jiwei to hit back at the US by withholding key exports would backfire, because Washington’s bigger arsenal means ‘mutually assured destruction’ would not be mutual

Lou Jiwei, a former minister of finance who now heads the National Council for Social Security Fund, China’s national pension fund, in a defiant speech at the China Development Forum on September 16, proposed withholding exports of goods that American companies need, thereby severely disrupting US supply chains for three to five years at least.

[quote]
The most crucial intermediate good the US can withhold is advanced semiconductors. In April, the US banned the sale of such chips to the Chinese telecoms giant ZTE as punishment for the company’s violations of US export rules.

The US could also order Boeing and United Technologies to withhold aircraft parts and jet engines on which China’s large commercial fleet depends, effectively grounding many Chinese jetliners. The US could also forbid Google from offering support to Android smartphone software in China.
/quote]

Source: SCMP

https://www.scmp.com/comment/insight-op ... -trade-war

[winston]

Financial markets must wake up to the damage and havoc wreaked by this US-China trade war

Global trade growth slowed in the first half of 2018 to 3 per cent, from 5 per cent a year earlier.

Trade tensions are already having adverse affects on confidence and investment plans, the September 20 report noted.

And that was even before the US and China began announcing reciprocal trade assaults on each other.

Source: SCMP

https://www.scmp.com/business/money/art ... hina-trade

[winston]

The worsening US-China trade war might cost the world much more than US$430 billion of lost GDP

Aidan Yao says the US-China trade war threatens to be a drawn-out affair, pulling down the global economy.

The IMF has put the cost of the conflict at 0.5 per cent of world GDP, but there might be more serious consequences ahead

An all-out trade war could cost the US economy almost 0.5 per cent of gross domestic product once the domestic and international feedback effects are considered. A nasty financial market reaction could cause more damage to the US economy, raising the cost to almost 1 per cent of GDP over the next 24 months.

Based on the tariffs already proposed, there would be a GDP shock of almost 1 per cent over the next 12 months. That damage will widen to more than 2 per cent of Chinese GDP if Trump decides to hit all Chinese exports to the US with higher taxes.

The IMF put the cost of the trade war at US$430 billion, or 0.5 per cent of world GDP. This seems conservative now, as conditions have since deteriorated markedly.

In a worst-case scenario, a full-blown US-China trade war will cause economic and financial carnage on the scale of the 2008 global financial crisis.

Source: SCMP

https://www.scmp.com/comment/insight-op ... cost-world

[winston]

China Changes Gears in Trade-War Tactics

A new white paper, Xi Jinping's recent words indicate harder stance

BY ANNIE WU

The state-run Beijing Daily also reported that day that the central government will ban the addition of new capacity in low-end manufacturing sectors such as textiles, furniture, food, and chemicals — confirming that Beijing plans to continue its high-tech aspirations.

Source: EPOCH TIMES

https://www.theepochtimes.com/china-cha ... -238084345

[winston]

Matthews Asia: CN Econ Unbeaten Trade War

Robert Horrocks, Chief Investment Officer at Matthews Asia, opined that Chinese economy will not be beaten by the China-US trade war.

While most people believed US is leading the trade war, China is indeed the true dominant player in this battle.

As China no longer depends on her exports, Chinese exports accounted for only 9.1% of the overall Chinese economic growth, whereas domestic consumption represented 58.8%.

Horrocks was convinced that both nations will reach a trade solution eventually.

Source: AAStocks Financial News

[winston]

Why the trade war will usher in a long, drawn-out bear market, with stocks, bonds, credit and property all at risk

Andy Xie says the unravelling of the US-China relationship that has sustained leveraged speculation will reverse trends that investors have become used to

A close look at price-to-book and price-to-sales ratios reveals that the stock market is overvalued, and this will compound the downturn

Source: SCMP

https://www.scmp.com/comment/insight-op ... n-out-bear