Chinese Economics Thread

[FactsPlease]

Tuesday at 7:54 AM

now
U.S. formally initiates investigation of China despite worries about potential harms to bilateral trade ties
Xinhua| 2017-08-19 07:45:33

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So it started, thought yet to see the extent to a "war". We may also conclude that what implied in the interview with Bannon is still valid, or his influence will remain there for a while.

 

[Jura The idiot]

Today at 8:02 AM

Tuesday at 7:54 AM

now
U.S. formally initiates investigation of China despite worries about potential harms to bilateral trade ties
Xinhua| 2017-08-19 07:45:33

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and
News Analysis: Unilateral probe of China's trade could hurt both Washington, Beijing
Xinhua| 2017-08-19 13:53:13

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U.S. Trade Representative (USTR) Robert Lighthizer on Friday formally launched a Section 301 investigation into alleged intellectual property practices by China under a rarely used 1974 trade law, triggering concerns that Washington may unilaterally impose restrictions that would eventually hurt both countries.

"The investigation will seek to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce," the USTR's Office said in a statement.

The move comes after U.S. President Donald Trump on Monday signed an executive memorandum directing Lighthizer to consider the possible initiation of an investigation, signaling his administration's tough trade stance against China.

Section 301, once heavily used in the 1980s and the early 1990s, allows the U.S. president to unilaterally impose tariffs or other trade restrictions on foreign countries. But the

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has rarely used the outdated trade tool since the World Trade Organization came into being in 1995.

"The 301 toolkit was retired for good reason. Bringing it back in 2017 is likely to be more deeply problematic to more firms in more places than many might expect," said Deborah Elms, founder and executive director of the Asian Trade Centre based in Singapore.

"It became no longer necessary really for the United States that they have to use that law, because now we have an effective dispute settlement system under the

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," Chad Bown, a trade expert and senior fellow at the Washington D.C.-based Peterson Institute for International Economics (PIIE), told Xinhua in a recent interview.

Meanwhile, the global trading community had become increasingly concerned about the use of Section 301 as the U.S. government "acts as police force, prosecutor, jury and judge" in the process, Bown argued. He recommended Washington and Beijing resolve trade disputes through the WTO.

If Lighthizer did decide to go ahead with the Section 301 investigation, the United States would first consult with China and the investigation process could take as long as a year, senior administration officials told reporters last week.

Jeffrey Schott, another trade expert at the PIIE, told Xinhua that the purpose of the investigation is "to find out what the facts are and to use the process of investigation to expand bilateral consultations with China" so that there is a better understanding of each country's practices.

Schott didn't see "any immediate restrictions" being imposed on China by the United States as the USTR has to do "a lot more study" on this case.

"Whether there are restrictions or not will depend on how the study proceeds and how the bilateral consultations between the United States and China unfold over the next few months," he said.

China has urged the United States to objectively evaluate China's progress in protection of intellectual property rights (IPR) and resolve differences with China through dialogue and consultation.

"The United States should treasure the current sound Sino-U.S. economic and trade ties and cooperation momentum. Any U.S. trade protectionism move will surely damage bilateral ties and the interests of companies from both countries," China's Ministry of Commerce said in a statement on Tuesday.

Lighthizer, former deputy USTR in the Reagan administration, may wish to relive the trade battle against

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in the 1980s. However, the world has tremendously changed in the past three decades and the China-U.S. economic and trade relationship is more important than ever.

Trade and investment between China and the U.S. supports about 2.6 million American jobs, according to the U.S.-China Business Council.

"The Chinese market matters very much to the U.S. administration, much more than the Japanese market matters to the U.S.," Yorizumi Watanabe, a professor at Faculty of Policy Management of Keio University in Tokyo, told Xinhua.

"If they (the Trump administration) become very naughty and nasty against Chinese exports, then Chinese authorities would easily imagine similar sorts of restrictions (against U.S. exports), so this is kind of tit-for-tat situation," he said.

He hoped the Trump administration would be "extremely careful" about imposing new import restrictions against China.

If the U.S. side fails to respect basic facts and multilateral trade rules, and takes measures that harm bilateral economic and trade relations, "China will definitely not sit by, but take all appropriate measures to resolutely safeguard its legitimate rights and interests," China's Ministry of Commerce said.

Given China's role in current global supply chains, "a trade war between U.S. and China will hurt not only Chinese manufacturers, but also upstream suppliers and downstream distributors such as U.S. retailers," the Institute of International Finance (IIF), a global association with around 500 major financial institutions, warned in a recent report.

Asked about the trade investigation, the International Monetary Fund (IMF) on Tuesday reiterated its support for an open trading and investment system and the importance of working within the multilateral framework to resolve differences.

"We believe that the multilateral trading system can be an important source of economic prosperity for all countries concerned," said Markus Rodlauer, deputy director in the IMF's Asia and Pacific Department.

 

[SamuraiBlue]

Today at 8:02 AM
and
News Analysis: Unilateral probe of China's trade could hurt both Washington, Beijing
Xinhua| 2017-08-19 13:53:13

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Can't really understand the logic behind this.
Why would it hurt either sides.
If someone is abusing the system this probe should mitigate that abuse saving the ones that were placed into disadvantage due to the abuse.
The only ones that are going to be hurt is the ones who abuse the system which should be penalized in the first place.

 

[manqiangrexue]

Can't really understand the logic behind this.
Why would it hurt either sides.
If someone is abusing the system this probe should mitigate that abuse saving the ones that were placed into disadvantage due to the abuse.
The only ones that are going to be hurt is the ones who abuse the system which should be penalized in the first place.

Hurts both sides because China is a country strong enough to retaliate. No one with the strength to fight back would allow you to take something from them without dishing back in return, no matter what "reason" you find. China can follow by launching its own trade probe and make infinite reasons for why the US is in violation. Economics is a very hazy topic. Anyone can find any reason to say the other side violated something; then the other side will find a reason themselves to retaliate. There can be no end to this and it will lead to trade war.

 

[kurutoga]

Can't really understand the logic behind this.
Why would it hurt either sides.
If someone is abusing the system this probe should mitigate that abuse saving the ones that were placed into disadvantage due to the abuse.
The only ones that are going to be hurt is the ones who abuse the system which should be penalized in the first place.

The logic is so called Chinese abusing system is propaganda. Our current situation is the natural result of capitalism and globalization.

Trade wars will lead to two results (1) China stop buying US agricultural products (2) US companies producing "made in US" products will spend more buying parts made in China (and US no longer makes these parts). Neither one is positive to international trade.

For wheat, pork, beef ... China can buy from Australia or Ukraine. For the second type of issues you can check out this Forbes article.

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[siegecrossbow]

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Taiwan has long seen its international allies switching allegiance to an ascendant Beijing, but now there are also fears of a brain drain of the island's youth as they pursue careers in rival China.

Cross-strait tensions have soared since China-sceptic Tsai Ing-wen took power last year, with Beijing cutting all official communication.

China still sees the self-ruling island as part of its territory to be reunified, but young people in particular have increasingly developed a sense of pride in their Taiwanese identity.

They have been at the forefront of anti-Beijing sentiment in recent years, famously occupying Taiwan's parliament in protest at trade deals with China in the Sunflower Movement of 2014.

However, with monthly starting salaries for college graduates unchanged at below Tw$30,000 ($1,000) since the 1990s and property and consumer prices spiralling upwards, some are now taking a more pragmatic approach.

China is also wooing young Taiwanese talent in what analysts say is a "soft power" push to sway political sentiment.

Katherine Wang, 33, quit kindergarten teaching in Taipei and co-launched a business in May offering a variety of courses for young Chinese women in southeastern Xiamen city, saying she feels "hopeless" about Taiwan's economy.

"I see a ray of hope in Xiamen and working there makes me happy. I want to make a name for myself and my partners and hopefully expand our business to all over China," she explained.

Wang receives free housing and office space as an incentive from the Xiamen city government, an example of the perks offered by provincial authorities, which also include generous grants.

According to China's Taiwan Affairs Office (TAO), over 6,000 Taiwanese young people are working or interning at more than 50 youth start-up bases launched since 2015.

Top Chinese political and business leaders, including Premier Li Keqiang and Alibaba founder Jack Ma, have also encouraged Taiwanese youth to chase careers in China.

While Wang says she has no strong political views, others who do are putting them to one side for jobs.

One twenty-something has opted to work in China even though he supports Taiwanese independence -- a concept intolerable to Beijing.

"I just focus on how to do my job well," the young worker told AFP on condition of anonymity, saying he hoped it would be a stepping stone to an international career.

"My Chinese colleagues sometimes say things like 'Taiwan is a part of China' but that's their freedom of speech," he said.

Despite being a fully fledged democracy, Taiwan has never announced a formal split from China. Beijing has threatened military action if it ever did.

- 'Carrots' for youth -

There are already well-established business links between China and Taiwan.

Taiwanese manufacturers flocked to the mainland to take advantage of its resources and cheaper labour after restrictions were lifted in the late 1980s.

China is also Taiwan's biggest trade partner and market, with exports there totalling $112 billion -- 40 percent of last year's total.

But the youth links have an extra dimension, says Shih Cheng-feng, a political analyst at National Dong Hwa University.

"China realises that it needs to take a soft approach and use 'carrots' to attract (young people) in the hope that they will have some impact at critical time, such as the presidential election," Shih told AFP.

"Young people may not actively support Beijing's agenda, but their hostilities can be reduced and that for Beijing is a worthwhile investment," he explained.

There is no official data in Taiwan on the number of youngsters currently working in China.

However, a survey released by the Taipei-based Global Views magazine in March showed that nearly 60 percent of respondents aged 20-29 years old were willing to work there.

Interest was reflected in a recent recruitment drive by China's Hainan Airlines, with more than 1,500 Taiwanese applicants applying for 80 jobs based in Beijing, according to Chinese state media.

Some say such cross-strait exchanges are a good alternative way to promote stability as official ties worsen, but others fear a brain drain that will hurt Taiwan's competitiveness.

A commentary in Taiwan's Liberty Times this month accused China of trying to divide the island and draw young people away from their political ideals.

"If young generations can't see hope in Taiwan and feel pessimistic about the future, and if poverty becomes a fact, how can they feel the obligation to insist on democracy and defend ideals?" it said.

 

[sanblvd]

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New article on how Germany is getting nervous about competing with China. I will highly some juicy parts that is making Germans wetting their pants. All more evidence that Chinese economy is NOT depended on the low cost as the West like to say, instead innovation, automation, AI is starting to drive and keep driving the Chinese economy.

Also this article focus on how China is going to compete with German traditional industry like automobiles, robots, manufacturing etc... it didn't even mention China's high tech field and internet technology, because Germany have already lost that race so its not even mention.



China emerging as Germany's main economic rival
The Chinese government has adopted a 'Made in China 2025' economic development strategy which is emerging as a huge risk to Germany's economic base, says economist Christian Rusche from the IW think tank in Cologne.

DW: Dr. Rusche, should German business leaders and politicians be worried about increasing competition from China?

Christian Rusche: Yes. With its 'Made in China 2025' program, China's economic development strategy for the manufacturing sector, the Chinese government has initiated something that could prove very dangerous for Germany's economy.

What is 'Made in China 2025'?

Launched in mid-2015, Made in China 2025 is a Chinese government program for generating major and sustained investment in various future-oriented sectors, and especially in automated industrial manufacturing processes, often referred to as Industry 4.0 technologies. This includes developing expertise at developing and building production machinery. This means China is taking aim directly at sectors which are core strengths of the Germany economy.

What is Industry 4.0?

The Chinese want to go up the manufacturing value chain, and massively accelerate the modernization of Chinese industry. Industry 3.0 is automated manufacturing, so for example, robots in car factories can assemble cars automatically once the steps for doing so have been programmed into them. Industry 4.0 is a set of technologies for creating 'smart factories' in which the parts that need to be assembled and the assembly robots can independently communicate with each other, allowing things like automated just-in-time on-demand customized manufacturing and integrated, responsive, real-time automated supply chain management.

The Chinese government has a draft regulation requiring that no less than 8 percent of cars sold in 2018 must be electric or plug-in hybrid vehicles, and 12 percent by 2020. If electric cars are the future, as most analysts expect, does this mean China presents a global market threat to German car-makers?

Yes. Electromobility is not in itself central to the Made in China 2025 strategy, but Industry 4.0 technologies are highly relevant to car factories of the future, and the Chinese quota for EVs will force rapid development of the country's EV production capacity. German car-makers should bear this in mind as they consider their e-mobility investment strategies.

The top-down authoritarian structure of economic policy in China, and the massive use of subsidies for key industries, means that China is likely to develop a major overcapacity in production of industrial robots. This will tend to result in building too many factories, and that in turn means price-dumping on global markets will likely result. This may well affect global electric vehicle markets, among others.

It seems like China is taking aim squarely at the most important industrial sectors underpinning Germany's economic success. Germany has already lost its photovoltaic panel manufacturing sector to cheap Chinese mass produced panels. Will car-making and machinery-building sectors go the same way?

That is indeed a serious risk. But it's not that the Chinese have decided they want to eliminate Germany as a competitor. It's more a matter of empowering China. Among the aims of 'Made in China 2025' is import substitution, i.e. the Chinese government wants the country to develop key high technologies domestically, and not be dependent on foreign input.

If you want to learn more, the Mercator Institute in December 2016 published a very useful report entitled 'Made in China 2025: The making of a high-tech superpower and the consequences for industrial countries.' The report's authors having read Chinese documents describing in the original, documents that describe the aims of the 'Made in China 2025' strategy.

Does Germany need a counter-strategy? And if yes, what should the key elements of that strategy be?

We can't stop China doing what it's going to do. Among the things the German government or Western governments in general could do in response would be impose punitive tariffs against dumping, but this always involves a risk of retaliation. Closing off European markets to Chinese goods is unlikely to work well, because sheltering European companies from Chinese price pressure would only improve the latter's price advantages on global markets in the medium term.

The main strategy German industry has applied so far, vis-à-vis Chinese competition, is to stay a step ahead in terms of technology and quality. It should continue to try to do that, but it may get more difficult in future.

Another comparative advantage Germany could try to maintain is superior infrastructure. The German government should invest heavily in updating and improving Germany's infrastructure, to make made-in-Germany production lines more attractive.

A third strategic element is for German makers of machines and production systems to offer premium-quality comprehensive packages comprising not only automated machines, but also remote operation and servicing of those machines.

What's the medium-term outlook?

In general, it will be difficult for Germany to compete with sectors in which China invests heavily. China has much lower labor costs and a much bigger workforce, and it has the ability to flood money into a sector using direct or indirect government subsidies until it dominates the sector, like it did with photovoltaic panel production.

Germany may remain viable as a high-technology research and development hub, as a service hub, and as a logistics hub for distributing products throughout northern Europe – including imported Chinese products. Some products, including big, heavy equipment whose transport costs are very high, for example wind turbines, may continue to be produced in Europe. And there will probably be various niche markets and specialized technologies that German companies will continue to dominate.

If cheaper labor costs and lower standards of worker welfare are part of China's advantage, should Europe be pushing China to improve its labor standards and its pay and benefits for workers to reduce that advantage?

In principle yes, but it's hard to see how that could be achieved. So far, labor standards have not been incorporated in World Trade Organization rules in a serious way.

Dr. Christian Rusche is an economist at the Cologne Institute for Economic Research (IW). He has written a number of reports on China's economy, including 'Activities of Chinese Investors in Germany.'

 

[manqiangrexue]

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New article on how Germany is getting nervous about competing with China. I will highly some juicy parts that is making Germans wetting their pants. All more evidence that Chinese economy is NOT depended on the low cost as the West like to say, instead innovation, automation, AI is starting to drive and keep driving the Chinese economy.

Also this article focus on how China is going to compete with German traditional industry like automobiles, robots, manufacturing etc... it didn't even mention China's high tech field and internet technology, because Germany have already lost that race so its not even mention.



China emerging as Germany's main economic rival
The Chinese government has adopted a 'Made in China 2025' economic development strategy which is emerging as a huge risk to Germany's economic base, says economist Christian Rusche from the IW think tank in Cologne.

DW: Dr. Rusche, should German business leaders and politicians be worried about increasing competition from China?

Christian Rusche: Yes. With its 'Made in China 2025' program, China's economic development strategy for the manufacturing sector, the Chinese government has initiated something that could prove very dangerous for Germany's economy.

What is 'Made in China 2025'?

Launched in mid-2015, Made in China 2025 is a Chinese government program for generating major and sustained investment in various future-oriented sectors, and especially in automated industrial manufacturing processes, often referred to as Industry 4.0 technologies. This includes developing expertise at developing and building production machinery. This means China is taking aim directly at sectors which are core strengths of the Germany economy.

What is Industry 4.0?

The Chinese want to go up the manufacturing value chain, and massively accelerate the modernization of Chinese industry. Industry 3.0 is automated manufacturing, so for example, robots in car factories can assemble cars automatically once the steps for doing so have been programmed into them. Industry 4.0 is a set of technologies for creating 'smart factories' in which the parts that need to be assembled and the assembly robots can independently communicate with each other, allowing things like automated just-in-time on-demand customized manufacturing and integrated, responsive, real-time automated supply chain management.

The Chinese government has a draft regulation requiring that no less than 8 percent of cars sold in 2018 must be electric or plug-in hybrid vehicles, and 12 percent by 2020. If electric cars are the future, as most analysts expect, does this mean China presents a global market threat to German car-makers?

Yes. Electromobility is not in itself central to the Made in China 2025 strategy, but Industry 4.0 technologies are highly relevant to car factories of the future, and the Chinese quota for EVs will force rapid development of the country's EV production capacity. German car-makers should bear this in mind as they consider their e-mobility investment strategies.

The top-down authoritarian structure of economic policy in China, and the massive use of subsidies for key industries, means that China is likely to develop a major overcapacity in production of industrial robots. This will tend to result in building too many factories, and that in turn means price-dumping on global markets will likely result. This may well affect global electric vehicle markets, among others.

It seems like China is taking aim squarely at the most important industrial sectors underpinning Germany's economic success. Germany has already lost its photovoltaic panel manufacturing sector to cheap Chinese mass produced panels. Will car-making and machinery-building sectors go the same way?

That is indeed a serious risk. But it's not that the Chinese have decided they want to eliminate Germany as a competitor. It's more a matter of empowering China. Among the aims of 'Made in China 2025' is import substitution, i.e. the Chinese government wants the country to develop key high technologies domestically, and not be dependent on foreign input.

If you want to learn more, the Mercator Institute in December 2016 published a very useful report entitled 'Made in China 2025: The making of a high-tech superpower and the consequences for industrial countries.' The report's authors having read Chinese documents describing in the original, documents that describe the aims of the 'Made in China 2025' strategy.

Does Germany need a counter-strategy? And if yes, what should the key elements of that strategy be?

We can't stop China doing what it's going to do. Among the things the German government or Western governments in general could do in response would be impose punitive tariffs against dumping, but this always involves a risk of retaliation. Closing off European markets to Chinese goods is unlikely to work well, because sheltering European companies from Chinese price pressure would only improve the latter's price advantages on global markets in the medium term.

The main strategy German industry has applied so far, vis-à-vis Chinese competition, is to stay a step ahead in terms of technology and quality. It should continue to try to do that, but it may get more difficult in future.

Another comparative advantage Germany could try to maintain is superior infrastructure. The German government should invest heavily in updating and improving Germany's infrastructure, to make made-in-Germany production lines more attractive.

A third strategic element is for German makers of machines and production systems to offer premium-quality comprehensive packages comprising not only automated machines, but also remote operation and servicing of those machines.

What's the medium-term outlook?

In general, it will be difficult for Germany to compete with sectors in which China invests heavily. China has much lower labor costs and a much bigger workforce, and it has the ability to flood money into a sector using direct or indirect government subsidies until it dominates the sector, like it did with photovoltaic panel production.

Germany may remain viable as a high-technology research and development hub, as a service hub, and as a logistics hub for distributing products throughout northern Europe – including imported Chinese products. Some products, including big, heavy equipment whose transport costs are very high, for example wind turbines, may continue to be produced in Europe. And there will probably be various niche markets and specialized technologies that German companies will continue to dominate.

If cheaper labor costs and lower standards of worker welfare are part of China's advantage, should Europe be pushing China to improve its labor standards and its pay and benefits for workers to reduce that advantage?

In principle yes, but it's hard to see how that could be achieved. So far, labor standards have not been incorporated in World Trade Organization rules in a serious way.

Dr. Christian Rusche is an economist at the Cologne Institute for Economic Research (IW). He has written a number of reports on China's economy, including 'Activities of Chinese Investors in Germany.'

If I were German, I'd be too embarrassed to write an article like this. This is praise for the CCP. Basically it's like saying that another person is so daunting to you that even when he just starts to train in your specialty, you know it's over for you, fair and square.

 

[sanblvd]

If I were German, I'd be too embarrassed to write an article like this. This is praise for the CCP. Basically it's like saying that another person is so daunting to you that even when he just starts to train in your specialty, you know it's over for you, fair and square.

DW.com is an German website, so the author is probably German, also he has the right to worry, there are many fields like photovoltaic panel, wind turbine, high speed rail etc.... where China have 0 expertise and then end up dominating the field. He sees where China plan to focus with its 2025 plan that directly competes with German's Industrie 4.0 and he panics lol.

But I'm not worry for Germany, both country actually cooperate closely, I think it will be more of complimentary co-existence rather than competition. Geo-politically that means China can draw Europe out of US orbit when it come to Chinese interest, so if US decide to go against Chinese interest it will be isolated in the world.

 

[kurutoga]

DW.com is an German website, so the author is probably German, also he has the right to worry, there are many fields like photovoltaic panel, wind turbine, high speed rail etc.... where China have 0 expertise and then end up dominating the field. He sees where China plan to focus with its 2025 plan that directly competes with German's Industrie 4.0 and he panics lol.

Industry 4.0 is a very fuzzy concept. German do not have experiences with large scale online commerce they tend to overestimate the power of online activities. By combining manufacturing with marketing and sales (especially online retail) process, Industry 4.0 is not practical in most industries today. Maybe in some highly standardized (therefore less flexible) industry it may work, but in its current form Industry 4.0 can never be mainstream.

Think of this way, when you order a car you specify customization you want in the last minute then the robots build your car in 2 hours, you are happy. Then six months later your car needs service but its structure is so different nobody knows how to work on it? Then in the winter your cars break down due to some unforseenable issues of your customization, because the robots can build your car with customizations, there is no process to full test this combination, and since they only made one car based on your customizations, there is no scale to let it go through a full test/verification process.

So to summerisze, Industry 4.0 is a concept that is hard to materialize as a general practice. Today it is more of a political agenda than a solid industrial policy that can actually raise efficiency.