Trade War with China

[Franklin]

Someone has finally woken up and smelled the coffee.

Please, Log in or Register to view URLs content!

 

[antiterror13]

I do believe it's becoming more and more likely we will not see China becoming the most influential country in the world (to the same extent that US is influential today) within our lifetimes.

The incumbent power (US) is doing almost everything it can to slow down challenger's rise (China), and such moves were not calculated into various projections even just several years ago, when people simply extrapolated GDP growths, made projections and concluded sometime in 2030s Chinese nominal GDP would overshadow US. People also did not model for other smaller countries following suit, as the incument power always has some leverage on smaller countries. Of course, GDP is just one yardstick, and doesn't really convey full power or influence. Even if China manages to catch up with US in nominal GDP in 2040s, actual geopolitical power stemming from that economic strength would take a few more decades to shine. (Extra power stemming from cultural influence would take even longer, due to various deep rooted cultural/language differences) all this providing no one challenges China in the meantime. While US most probably will continue to do just that for decades to come.

US had it easy back in late 1800s when its GDP became world's top and in early 1900s, when Britain did not really do anything to contain them, as it wasn't in a position to do much. US is in a much stronger position than late 1800s Britain when it comes to world's hierarchy.

agree, I think in 2035-2040 it will end up we have 2 hyper powers (US and China) and 3 super powers (India, Russia and EU) and many regional powers (Brazil, Japan, Indonesia, South Africa).

Like you said there will not be any dominant power like the US today in near future .... which is a great thing

Current situation with only single hyper power is BAD!

 

[Biscuits]

There is nothing the US can do to stop China from overtaking it in nominal GDP in the 2030s. Furthermore, geopolitical strength stems from PPP adjusted GDP at least as much as it does from nominal GDP, and China is now more than 25% larger than the US by that measure.

I'd say it majority stems from adjusted GDP. Especially if the US seeks to isolate China, nominal GDP will have even less effect.

Ironically, if US had sought to engage China further and tangle it with the western economies, it would decrease China's actual economic power as it becomes dependent on outsourcing to countries with lower purchase power relative to itself. By trying to create a schism, they're letting China play to it's advantage by recalling factories back to the mainland where the purchasing power is high.

 

[Nutrient]

That is why the Chinese government has always stressed the importance of self reliance in all things. They know full well that to become dependent on western controlled resources would be to hand them unacceptable leverage over China.

Indeed. I think Trump's assault on ZTE, Huawei, Fujian Jinhua, et cetera was actually advantageous for China. He has notified everyone in the Middle Kingdom that the US is quite hostile. Even two years ago, a large percentage of the Chinese (maybe half) continued to believe that the US was friendly, and preferred to buy from American companies rather than invest some money to develop domestic alternatives. Now everyone knows better. If the U.S. president hadn't given China such a loud warning, the Americans might have struck when China was unready. Not now.

 

[plawolf]

Indeed. I think Trump's assault on ZTE, Huawei, Fujian Jinhua, et cetera was actually advantageous for China. He has notified everyone in the Middle Kingdom that the US is quite hostile. Even two years ago, a large percentage of the Chinese (maybe half) continued to believe that the US was friendly, and preferred to buy from American companies rather than invest some money to develop domestic alternatives. Now everyone knows better. If the U.S. president hadn't given China such a loud warning, the Americans might have struck when China was unready. Not now.

You can bet it’s not just Chinese companies who are taking notes.

I think the EU in particular will be making a very careful and quiet review of their dependency on American supplies.

The EU is purposefully building new economic vehicles to use to resist American sanctions on Iran to try and preserve the UN backed nuclear agreement.

They would have to be fools to not see the danger of American retaliation from both the ZTE and Meng cases.

The question is whether those examples will scare the EU into accepting America effectively having a veto on their foreign policy, or whether they will work to reduce their dependency and exposure to hedge against possible American moves against them in the same manner.

In the rest of the world, you can bet that companies and leaders are also taking note of how willing the US government is to weaponise trade, and so will have difficult decisions to make about hedging against that risk.

Increasingly, China is the main means by which countries who do not wish to be enslaved by American dictates can resist, as Chinese technology closes the gap to America’s.

That is another reason why America is trying to suppress Chinese technological advancement.

 

[Jura The idiot]

this thread for
21:22, 12-Feb-2019
Analysis: How far is too far when it comes to American hegemony?

Please, Log in or Register to view URLs content!

The U.S. is known for its tough legal system against crime in the business world. And that is supposed to be a good thing until it reaches too far beyond borders and gets on its own allies' nerves.

According to the latest edition of The Economist magazine, it reopened the old wounds of the French company Alstom being taken over by General Electric in 2015, in which it was fined nearly 800 million U.S. dollars. But the case is worth more discussion, as the article argues, because there are various credible sources which can put together an almost complete puzzle to show how America's foreign investigation is intertwined with its own business interest.

Just like how it became the world's policeman thanks to its strongest military power, dollar hegemony and its economic superiority, that made the U.S. a policeman in the business world too.

Trump was not bluffing when he unilaterally reimposed sanctions on Iran and claimed: “You are going to see how powerful the sanctions are when it comes to Iran.” International gas and oil trade are processed through U.S. dollars, and its status as the world reserve currency gives the U.S. exorbitant leverage over the sanctions it imposed, enough to cause fear among countries of revenge from America more than the economic loss of ending trade deals.

According to the American Foreign Corrupt Practices Act (FCPA), bribery for a business deal is strictly forbidden and could face a large amount of fine, which is to be applauded for the regulatory purpose. But with the Alstom case, it seems rather odd that the U.S. fined a French company, who has bribed in Indonesia because it has a subsidiary on the U.S. soil. And these days business activities using Gmail to communicate already suffice supervision from the U.S.

In an ever more globalized world with dollar hegemony, it sends an unsettling message that the U.S. has made itself the policeman and judge at the same time. It is an uncomfortable thought that the U.S. law system could extend to the world, as any abuse of such power could mean serious disruption to the business world and rot its own internal system.

Another issue America's critics have raised is that the U.S. seemed to have punished foreign companies disproportionately in favor of its domestic companies. According to a consultancy named Fenergo, more than three-quarters of its 25 billion dollars fine has been against European banks which paid more than 100 million dollars.

"It's not just the dollar hegemony", Cheng Dawei, a professor at the School of Economics, Renmin University of China, points out the U.S. already has a mature legal and administrative system that could enable the U.S. to use non-market strategy to serve its domestic business interest.

When an American company enters a foreign market, it sometimes will request law change for the benefit of its company as part of the negotiation; when there's intense competition on the global market that could threaten America's dominance in one field, the U.S. would reach its long arm to find "wrongdoings" for prosecution in the court.

"The purpose is to maintain its technology dominance and global competitiveness, and achieve its foreign policy goal in the Iran sanctions case," added Wang Yong, a professor at the School of International Studies at the Peking University.

In either way, it raises the question of challenging countries' sovereignty and unjustified external interference. The extending of Uncle Sam's long arm had already caused backfire when Europe announced that it started to work on a new payment channel that would bypass U.S. sanctions.

In an interview with The Economist, Pierre Gattaz, head of Business Europe expressed Europe's frustration with its ally's arrogance: “European companies are increasingly impacted by the extraterritoriality of U.S. sanctions…moreover, these are increasingly instrumentalized to promote economic interests.”

But even with America's diminishing global power, would other countries succeed in challenging its unfair extraterritorial jurisdiction?

Both Cheng and Wang agree that multilateral cooperation is a core antidote. And countries could use America's logic and adjust their own legal system to reach its long arm to U.S. business as well, such as Europe's laws against unfair competition and monopoly.

 

[Nutrient]

[The EU] would have to be fools to not see the danger of American retaliation from both the ZTE and Meng cases.

....

In the rest of the world, you can bet that companies and leaders are also taking note of how willing the US government is to weaponise trade, and so will have difficult decisions to make about hedging against that risk.

Yes. Japan should start worrying too, as it is clear that from now on the U.S. will be choking individual companies if it cannot compete with them. Imagine Toyota or Mitsubishi on the U.S.'s hit list. If Toyota were destroyed, what would that do to Japan's economy?

So I disagree with Totoro that the U.S. will be successfull in stopping China's rise with the help of smaller countries, as the little countries will have to watch their backs: the U.S. is what they will have to fear the most. Therefore, any alliance between the Americans and the smaller nations will be quite unstable. Meanwhile, the countries in China's orbit will prosper, and China will continue to rise.

Increasingly, China is the main means by which countries who do not wish to be enslaved by American dictates can resist, as Chinese technology closes the gap to America’s.

Yes. For example, Pakistan can avoid the IMF's onerous terms by borrowing from China:

Please, Log in or Register to view URLs content!

The IMF is still controlled by the U.S.

 

[antiterror13]

You can bet it’s not just Chinese companies who are taking notes.

I think the EU in particular will be making a very careful and quiet review of their dependency on American supplies.

The EU is purposefully building new economic vehicles to use to resist American sanctions on Iran to try and preserve the UN backed nuclear agreement.

They would have to be fools to not see the danger of American retaliation from both the ZTE and Meng cases.

The question is whether those examples will scare the EU into accepting America effectively having a veto on their foreign policy, or whether they will work to reduce their dependency and exposure to hedge against possible American moves against them in the same manner.

In the rest of the world, you can bet that companies and leaders are also taking note of how willing the US government is to weaponise trade, and so will have difficult decisions to make about hedging against that risk.

Increasingly, China is the main means by which countries who do not wish to be enslaved by American dictates can resist, as Chinese technology closes the gap to America’s.

That is another reason why America is trying to suppress Chinese technological advancement.

very true .. also Japan and SK and don't forget Taiwan as well ..... are taking notes as well ... their companies are the next ... watch out TSMC, Samsung, LG, Toshiba, Corolla, etc

 

[gelgoog]

The Japanese already know that. The US basically stomped NEC's supercomputer sales in the USA for years for example. It is just that it used to be mainly restricted to so called strategic sectors. To a large degree the USA also used to protect their own companies by only adopting their own standards instead of following ITU standards at one point.

The USA notoriously did this with CDMA vs GSM to ensure Qualcomm would still dominate the segment. Only when CDMA totally lost in the world market were they forced to backpedal on that. Chinese investors did much of the same mistakes the Japanese did in the 1990s like investing in the US real estate and movie business.
It was a waste of money. They bought property which is not worth the property tax let alone the asking price. The movie business is also a waste of time.
You are better off creating your own industry. China has the Hong Kong film industry so why not just build on that?

After what has happened lately to both Chinese and Russian investors abroad I suspect a lot of Chinese are now reconsidering their investments in the USA.

 

[LesAdieux]

I do believe it's becoming more and more likely we will not see China becoming the most influential country in the world (to the same extent that US is influential oday) within our lifetimes.

don't know how old you are, but most likely China will have a nominal GDP larger than the US by 2025.