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It looks like the American Century of Humiliation started in 2017 after all.
The new USCBC survey data is testament to China's prowess in global markets.
Some 68% of survey respondents said China is a top five priority within their corporate strategy. While that's down from 78% pre-trade war in 2015, only 5% said it was not a priority.
For nearly 20 years, U.S. corporations have used China as their go-to place for low cost manufacturing. Americans could buy things cheaply. It's a consumer driven economy. Without cheap China, America wouldn't have hoarders and garages full of stuff they don't use.
Worth noting, even with tariffs, companies still say China is cheaper than most emerging markets, and surely cheaper than the U.S.
American companies are being charged as high as 25% to import goods from China, but a whopping 78% of them said that margins were either the same (32%) or better (46%) than importing from other countries.
Only 22% said the tariffs made profit margins from China operations worse and that is actually down from the 29% who said so in 2018 and down again from the 39% who said so in 2015.
A massive 97% of survey respondents said their China operations were profitable. And that is up from the 85% who said so in 2015 and the 90% who said so in 2016.
Based on this survey of major American multinationals, tariffs are not hurting American companies at all. No one there is suffering. Multinationals, who took years to plan to set up shop or find the right partners in China, are accustomed to obstacles. Frustrations are part of running a global enterprise. They are dealing with it, and by the looks of this survey, they are dealing with it well.
That could change in the months ahead as more tariffs kick in next week and again Dec. 15.
"We will need to see evidence of the impact of tariffs on American companies in the third quarter," says Scott Clemons, chief investment strategist for Brown Brothers Harriman. "So far, I'm not really seeing it in any major way."
Some $250 billion worth of China goods have tariffs as high as 25% now. Another $300 billion worth of tariffs will be in effect by the end of the year.
"Everyone is belly aching about tariffs because of their supply chain," says Scott McCandless, head of the U.S. trade policy practice at PwC in Washington, DC. "They don’t want to call the plumber, but they got to do it. Not every client has done anything yet, but everyone is planning on moving some supply out of China."
Really?
If so, they are squarely in the minority at the moment.
When asked "has your company moved or does it plan to move out of China?", only 3% said "yes, to the United States" and only 10% said "yes, to another country." A massive 87% said they were not moving supply out of China.
To put that into perspective, that's just two percentage points higher than it was in 2015.
S&P Global Business Intelligence said in a recent report that companies were spending less because of the trade war.
"You've got to look for that on an individual corporate level," says Clemons. "I'm hearing them say that. But I want to see it. It's always cloaked into stuff like 'these were our spending plans in 2019 but we will now do it in 2020 instead'," he says. "What we are looking for in October earnings calls is not whether companies are hitting their numbers or not, but how they are dealing with the tariffs. I think we will get a better view of that in those calls."
The U.S. China Business Council just gave the market a prelude.
Their members might change their tune after December, when every China export to the U.S. is finally hit with tariffs.
As of now, only 17% of companies said they will stop or reduce new investments in China. Though 17% is largely in-line with historic trends, the rationale for this reduction points to new company pressures in the local market as a result of the trade war.
Sixty percent of respondents cited increased costs or uncertainties and 47% blamed the political climate in China not being conducive for U.S. firms at this time. This reason was not cited in the past two surveys, despite being included as an option.
On a slightly positive note, U.S. companies reportedly had limited impact from the Made in China 2025 industrial policy out of Beijing.
The number of companies indicating that the Made in China 2025 policy offered positive opportunities for their business in 2019 doubled since 2018 to 11%, but with a rising number of 78% saying they expect no impact.
Those numbers suggest two things. One, American firms feel they are not included in the program. And two, a handful who feel they can supply content to Beijing's favorite sons in the program believe their business prospects are better because of it.
The takeaway from this report is not much different from previous reports: China is growing as a local rival. Labor costs are rising. Regulations are rising, and China picks on them a bit more, but...whatever. China is impossible to ignore. No one wants to be shut out from it out of fear that they will not only be cut out of China, but most of southeast Asia as well, the world's biggest consumer market.
Like previous surveys, respondents say China is still opening its economy to foreigners.
China and the U.S. are in a trade war, but companies are investing like they always did and — by and large — are not moving factories out of China. The hoped for outcome of remapping supply chains and lowering the trade deficit have not come to fruition. That alone could put the risk of further trade war escalation to the upside.
It looks like the American Century of Humiliation started in 2017 after all.
USA is joined by strong nationalism, and lack of prior history of prexisting nation. Closest was CSA. Even if they collapse as a superpower the territory integrity will stay. USA is quite different compared to Europe.No! You'll never see an "American Century of Humiliation".
Why?
Well, This is easy to understand. Can you find a "Roman Century of Humiliation", or a "Spanish Century of Humiliation", or a "Swedish Century of Humiliation",... in the entire human history? And why not? Just remember, Roman Empire, Spanish Empire, Swedish Empire were once as powerful as today's American Empire, but when the empire was gone, every thing fell apart. We are now witnessing the dismembering of the all mighty British Empire and watching its shrinking. Even though I am uncertain if the city of London will become an independent kingdom in the future, I am confident there will never be a "British Century of Humiliation" in human history. The same will happen to the American Empire. Empire disintegration is like a domino show. When the first tile falls, the whole empire is finished. Domino show is over.
The same thing had happened in China, but with different ending. At the end of Qing dynasty and the beginning of Republic of China, all provinces declared independence. The reason why China can escape Western empire domino show is chiefly because of its long history of disintegration and unification over thousands of years. Or, put it simply, it is the Chinese culture that brings China revivification again and again. Can you see any of the above Western empires had such a culture?
Now, the conclusion. If you haven't seen a Western empire that had revived after disintegration over the past two thousands years, don't expect to see a miracle. You'll never see an "American Century of Humiliation" at least in the next two thousands years, if not in the next five thousands years. Once the first tile of American domino show falls in Taiwan, or in Iran, on in Ukraine, or in Venezuela, or in the dollar, or in China's 003 aircraft carrier,... any event when it is significant enough, the US is gone and forever.
USA is joined by strong nationalism, and lack of prior history of prexisting nation. Closest was CSA. Even if they collapse as a superpower the territory integrity will stay. USA is quite different compared to Europe.
The level of centralisation and language unfication is not the same. Lets say Germans. They fucked 2 world wars, got occupied 50 years, still remained in 1 piece after.Nice wet-dream.
You look like the Europeans. You behave like the Europeans. You claim you're the righteous heirs of the European Roman Empire. Thus must go down the same road that ancient Romans had traveled two thousands yrs ago. This is the destiny God promise you.
Some two thousands yrs later from now, tourists can only find piles and piles of rocks in the place where the Washington Memorial Tower now stands, very much like what you can see now in Rome, Italy.
Yeah but they are still NOT an empire and perhaps won't be in the near and far future.The level of centralisation and language unfication is not the same. Lets say Germans. They fucked 2 world wars, got occupied 50 years, still remained in 1 piece after.
No! You'll never see an "American Century of Humiliation".
Why?
Well, This is easy to understand. Can you find a "Roman Century of Humiliation", or a "Spanish Century of Humiliation", or a "Swedish Century of Humiliation",... in the entire human history? And why not? Just remember, Roman Empire, Spanish Empire, Swedish Empire were once as powerful as today's American Empire, but when the empire was gone, every thing fell apart. We are now witnessing the dismembering of the all mighty British Empire and watching its shrinking. Even though I am uncertain if the city of London will become an independent kingdom in the future, I am confident there will never be a "British Century of Humiliation" in human history. The same will happen to the American Empire. Empire disintegration is like a domino show. When the first tile falls, the whole empire is finished. Domino show is over.
The same thing had happened in China, but with different ending. At the end of Qing dynasty and the beginning of Republic of China, all provinces declared independence. The reason why China can escape Western empire domino show is chiefly because of its long history of disintegration and unification over thousands of years. Or, put it simply, it is the Chinese culture that brings China revivification again and again. Can you see any of the above Western empires had such a culture?
Now, the conclusion. If you haven't seen a Western empire that had revived after disintegration over the past two thousands years, don't expect to see a miracle. You'll never see an "American Century of Humiliation" at least in the next two thousands years, if not in the next five thousands years. Once the first tile of American domino show falls in Taiwan, or in Iran, on in Ukraine, or in Venezuela, or in the dollar, or in China's 003 aircraft carrier,... any event when it is significant enough, the US is gone and forever.