Trade War with China

[xiabonan]

The thing is, China does not have to go back thousands of years to know better.

In the past few decades China has seen and managed a lot worse scenarios. The transitioning from command economy to market economy during the 80s caused so much chaos and corruption that it directly led to the Tiananmen Square thing. During the 90s China was faced with trade sanctions imposed by almost all major Western countries and mainly the US. In 1995 the US imposed sanctions on China for IP protection (yes back then there's no trade war, only unilateral sanctions). In the late 1990s China went through an Asian Financial Crisis and a painful restructuring of SOEs which resulted in tens of millions of SOE workers losing their once-thought-to-be-lifetime-guaranteed jobs and a major social shakeup and unrest. In the early 2000s China's economy truly started to skyrocket following its entry into the WTO, but not without cost. Many domestic industries were lost and eradicated or bought by foreign companies. And then there's the 2008 GFC and the famous 4 trillion dollar stimulus.

My point is China, and the Chinese people, doesn't have to look that far back into history to know and realise we've fought harder battles and survived them, and prospered afterwards.

This year marks the 100 year anniversary of the May Fourth Movement which was a landmark event in modern Chinese history, and the 70th anniversary of the PRC. In the past 100 years we have experienced foreign invasions, two world wars, Japanese occupation, a bloody civil war, famines, droughts, political turmoils and internal battles for power, the Cold War; and all kinds of ideologies - Capitalism, Imperialism, Democracy, Republic, Communism, Socialism, command economy, mixed economy, market economy.

Yes it's true that today's China is more wary of wars, be it a hot war or an economic one. Many have become complacent. But it's not because of weakness or cowardice, but because we know it took a lot of hard work to get to where we are now and we don't want to throw it away.

Trump will never understand this as he was born rich. He will never understand what it's like to work hard for something to get it. That's why he will not understand the Chinese. That's why he will not truly understand the American farmers.

 

[xiabonan]

Americans and American MSM like to brush aside any talks of Chinese patriotism or recollections of history as "Chinese Propaganda" and dismiss them as having no value or somehow does not warrant serious considerations. They talk as if these things are only floating in thin air and there's no real impact on how things work or operate or have any true effect on how the Chinese will respond to trade wars. As a result, such emotions or feelings are often made fun of or getting mocked by Americans.

Such attitudes of arrogance only show ignorance and nothing else. The Chinese are a very different people from the Americans and this difference isn't very well understood by many Americans. In fact, Americans are often so ignorant that they feel there's no need to understand anyone else apart from themselves. If the US doesn't get its way, just bomb their way through. If bombing isn't an option, just tariff and threaten and the opponent will give in. That's how Trump and most Americans think.

Strength is good when it comes to great power spats, but strength can often blind one's own eyes. I still remember last year when the trade war just started Americans, including anti-Trump US MSM were all very optimistic and thinking it's going to be easy and China will soon bend because of XYZ reasons. Yet one entire year has passed and American still hasn't got what it wanted.

 

[localizer]

I wonder if this is the right time to dump treasuries and appreciate the yuan and go fast pace towards domestic consumption. Chinese have been exploited like slaves by the West for too long. It might be about time to enjoy the fruits of our labor.

 

[xiabonan]

I wonder if this is the right time to dump treasuries and appreciate the yuan and go fast pace towards domestic consumption. Chinese have been exploited like slaves by the West for too long. It might be about time to enjoy the fruits of our labor.

The problem with dumping treasuries is that there's no true alternative option. China only buys US treasuries because 1) China accumulates large trade surplus and 2) treasuries are the best and most stable foreign reserve currency.

But yes, it's true that a US-China decoupling might actually benefit China too, at least in the long run. China has been working on improving and releasing domestic consumer market for years now and it's partially paid off. Domestic consumption now accounts for over 70% of economic growth.

Another thing that China has been doing for years now is the OBOR initiative which opens new markets for Chinese products. As the trade war intensifies it would also help to mitigate some of the impact because exporters can re-orient their exports to these new markets.

The trade war will only help to accelerate these transformations and reforms within China.

Of course, not all negative impact can be nullified. It's just not possible. Just like it's not possible for the US to fully nullify the negative impacts on its economy.

 

[gelgoog]

China is basically selling goods to the US in exchange for IOUs. That's what buying US Treasuries is.

 

[vincent]

I wonder if this is the right time to dump treasuries and appreciate the yuan and go fast pace towards domestic consumption. Chinese have been exploited like slaves by the West for too long. It might be about time to enjoy the fruits of our labor.

Become like America, spending money they don't have?

 

[Hendrik_2000]

American farmer will never regain their market China is revving up the domestic soy bean supply by giving subsidy to the soy bean farmer via Taishang

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Soybean planting expands amid trade tussle

By Shen Weiduo Source:Global Times Published: 2019/5/14


Nation supporting farmers at home, seeking new sources abroad

File photo: IC


Farmers in Northeast China are striving to expand soybean planting area during the spring sowing season, in response to the country's call to revitalize the soybean industry and reduce reliance on US soybean imports amid the escalating China-US trade war.

US soybean futures fell on Monday to hit their lowest in more than 10 years, after China hit back at US President Donald Trump's latest tariffs on $60 billion worth of US goods on Monday, escalating the ongoing trade war.

China's duties, ranging from 5 percent to 25 percent, are scheduled to take effect June 1. More than 5,000 products are affected, including beef, fruit, vegetables, coats, refrigerators and furniture.

China slapped a 25 percent tariff on US soybeans in July last year as part of a tit-for-tat trade war between the world's two largest economies.

US soybean farmers are "frustrated" with the escalating situation. "We cannot withstand another year in which our most important foreign market continues to slip away and soybean prices are 20 to 25 percent, or even more, below pre-tariff levels," said John Heisdorffer, chairman of the American Soybean Association in a statement published on Monday.

"What that means for soybean growers is that we're losing. Losing a valuable market, losing stable pricing, losing an opportunity to support our families and our communities," said Davie Stephens, president of the association, in the statement.

China's imports of US soybeans for the first quarter of 2019 came to 16.75 million tons, down 14.4 percent from the same quarter last year, according to a Reuters report.

Experts said that given the unstable external situation, China will seek multiple import sources such as Russia and increase domestic output of soybeans.

The soybean planting area has increased significantly in northern China this year, especially in North China's Inner Mongolia Autonomous Region and Heilongjiang Province, according to a report by cctv.com on Tuesday that cited data from the

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and Rural Affairs.

According to the report, soybean planting area in Hailun, a city in Heilongjiang Province, also known as "home of domestic soybeans," reached 2.6 million mu (173,333 hectares) this year, an increase of 600,000 mu compared with last year.

"The main reason for the increase in soybean planting area is that the country has proposed a soybean revitalization plan, and farmers have seen a policy dividend. The market price is also good," Wang Baofeng, vice mayor of the city said, cctv reported.

Jiao Shanwei, editor-in-chief of cngrain.com, told the Global Times on Tuesday that China has been improving domestic soybean production to reduce its reliance on foreign markets in the past year, especially after the outbreak of a trade war between China and the US.

Subsidies for soybean farmers could be as much as 340 yuan ($49.4) per mu, about 200 yuan higher than those offered to corn farmers, according to media reports.

China also unveiled a soybean revitalization plan at the beginning of the year. It aims to expand soybean planting area to 140 million mu by 2020, and to 150 million mu by 2022. It also aims to add about 10 million mu in 2019.

China is also diversifying import sources to include Russia, Brazil, Turkey and other Asian countries, Jiao said.

In the second and third quarter of this year, China will mainly import soybeans from South America countries. Also, outbreaks of African swine fever in China have curbed demand for soybeans in the form of animal feed, so supplies will remain stable, experts said.


Subsidies encourage farmers to grow more soybeans

(China Daily) 07:21, May 15, 2019

The planting of soybeans has increased this spring because of encouragement in the form of increased subsidies, the Ministry of Agriculture and Rural Affairs said on Tuesday.

In addition to soybeans, peanuts and rapeseed－two other major sources of edible oil in China－have also been planted more extensively, the ministry said.

In Hailun, Heilongjiang province, 173,000 hectares of farmland were planted with soybeans, an increase of 30 percent over last year, Wang Baofeng, vice-mayor of the city, told China Central Television on Tuesday.

Sun Anfu, a farmer in Hailun, said he planted all his 100 hectares of land with soybeans this year because of the increased subsidies. He can get 5,100 yuan ($741) from the local government for every hectare of land planted in soybeans, compared with a subsidy of 675 yuan per hectare for corn, he said.

The rising price of soybeans is another reason he planted more soybeans this year, he said.

The planting of soybeans in the Inner Mongolia autonomous region, another major production area, also saw a large increase this year, the ministry said.

China is expected to continue expanding its soybean crop over the next few years, according to a plan released by the ministry earlier this year.

The area planted in soybeans is expected to expand by 667,000 hectares this year, an increase of nearly 8 percent over last year, under the plan. The total area of soybean cultivation is expected to reach 10 million hectares by 2022, the plan said.

China relies heavily on imports to meet its soybean demand, with Brazil and the United States the two biggest suppliers. Most of those imports are used to produce edible oil and animal feed.

Last year, China imported 88 million metric tons of soybeans, a decrease of 7.9 percent from the previous year, according to a report released by the Chinese Academy of Agricultural Sciences on Monday.

The government's plan to increase soybean cultivation and improve productivity will reduce China's reliance on imports to meet domestic demand, the report said. It predicted that by 2020, China's total output of soybeans will increase to 18.9 million tons.

However, the gap between domestic production and demand is unlikely to be bridged over the next 10 years, and China will continue to rely on imports to meet its soybean demand, the report said.

 

[Quickie]

I wonder if this is the right time to dump treasuries and appreciate the yuan and go fast pace towards domestic consumption. Chinese have been exploited like slaves by the West for too long. It might be about time to enjoy the fruits of our labor.

Right...I recall the phrase "producing millions of T-shirts in exchange for one passenger jet".

China should take this opportunity to further restructure their economy that truly benefits their own workers, away from an economy that allows foreign companies to take advantage of their hard work with minimum benefit in return.

it's no fun being accused as "a thief" in return for your "sweat and blood" producing very affordable high-quality goods.

 

[gelgoog]

China hasn't even hit the US where it hurts yet. Imagine they simply dropped Boeing aircraft imports. Or if they started taxing heavily transfers from US corporations in China to the US. Imagine what that would do to the likes of General Motors. GM sells more with its China joint venture than in the US. Or reduce the amount of movies and other US copyrighted media allowed to be sold in China. Under WTO rules China can do counter sanctions against US anti-competitive behavior. The case of Huawei is a perfect example of something China can and should use as grounds to sanction the US and US companies. The more targeted the counter sanctions the most effective they would likely be.

Most Boeing aircraft ordered by China are the 737 MAX model even. China could either speed up the C919, do a deal with Airbus to increase A320 NEO assembly and production in China, sell Russia composites so they could produce the MC-21 and sell it to China, or simply do nothing at all. Given the wide availability of high-speed rail in China a short range small aircraft like the 737 MAX isn't strictly required. Also with oil prices at more reasonable levels, Chinese airlines can simply sit this one out and continue using their older 737 aircraft.

 

[AssassinsMace]

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Mike Pompeo was in Brazil in the last couple months and you know what he wanted Brazil to do... He wanted Brazil to help the US gang-up on China and bring China to its knees with soybeans. But that would mean Brazil would lose China buying their soybeans. And that's pretty much how the world is going react to the US trying to enlist the help of other countries against China. Any country that helps the US will cut-off their nose to spite their face. No one is going to help the US allow Trump to abuse power over even close allies and he has done.