Trade War with China

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taxiya

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LesAdieux said:
a scenario analysis on the China-US trade war, the financial front

in the tit for tat trade war, China will soon run out cards, so it may resort to its last weapon, the US treasury.

how much damage a sell down can do to the US financial market? actaully the impact is straight forward, because there's a one to one correspondence between the treasury price and the interest, interest is the inverse of bond price, that is:

1/P=R=1+r

China holds about 10% of the US treasury in circulation, if China dumps the treasury, a 20% nominal loss will push up the10-year treasury interest by 2%, and the 5-year interest by 4%, it's as simple as that. if America can stand a 2-4% interest hike in one go, that's Trump's business.

selling the treasury will get the dollar, that's no reason for China to swap one US paper for another, China will dump the dollar on the Forex market, that's the double-whammy.

the US cannot live without the international market, it need to raise a trillion every year to finance its deficit.
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Instead of that, it may be better to buy any raw materials with dollar when it still has some value. For example, buying Saudi oil with dollar, or import from Japan. This is to shift the risk of dollar to others dollar lovers. Todays dollar lovers are important to China to offload. However, dumping dollar in Forex market will just devalue dollar (that is still in Chinese hands, so it is still Chinese property).

Getting rid of dollar is a long term goal, it has to be done in a controlled and slow motion to minimize the Chinese loss. China need both dollar lovers and RMB lovers right now, the first ones are to take up the hot potato, the second ones are to assist RMB spreading.
 
vincent

vincent

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Trade war at the next level. US is trying to kill a Chinese hitech company now

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APRIL 16, 2018 / 8:57 AM

WASHINGTON, April 16 (Reuters) - The United States has banned American companies from selling telecommunications equipment to China’s ZTE Corp after the Chinese company illegally shipped telecom equipment to Iran and North Korea, the Commerce Department said on Monday.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” Secretary of Commerce Wilbur Ross said in a statement (Reporting by David Lawder and Doina Chiacu; Editing by Chizu Nomiyama)
 
manqiangrexue

manqiangrexue

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vincent said:
Trade war at the next level. US is trying to kill a Chinese hitech company now

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APRIL 16, 2018 / 8:57 AM

WASHINGTON, April 16 (Reuters) - The United States has banned American companies from selling telecommunications equipment to China’s ZTE Corp after the Chinese company illegally shipped telecom equipment to Iran and North Korea, the Commerce Department said on Monday.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” Secretary of Commerce Wilbur Ross said in a statement (Reporting by David Lawder and Doina Chiacu; Editing by Chizu Nomiyama)
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And American companies feel the burn.
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Betcha ZTE finds a way to do just fine. Repeat of the Intel supercomputer chip ban.
 
plawolf

plawolf

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vincent said:
Trade war at the next level. US is trying to kill a Chinese hitech company now

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APRIL 16, 2018 / 8:57 AM

WASHINGTON, April 16 (Reuters) - The United States has banned American companies from selling telecommunications equipment to China’s ZTE Corp after the Chinese company illegally shipped telecom equipment to Iran and North Korea, the Commerce Department said on Monday.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” Secretary of Commerce Wilbur Ross said in a statement (Reporting by David Lawder and Doina Chiacu; Editing by Chizu Nomiyama)
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Was any actual evidence produced, or was the US commerce department treating any answer other than ‘yes, we are guilty of everything you accuse us of having done, please take all our money’ as a ‘false statement’? :rolleyes:

Even before Trump, the US has a well established track record of corporate shake downs based on flimsy evidence to be generous.
 
manqiangrexue

manqiangrexue

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vincent said:
Not so simple. Many of the optical components are not available in other places
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Like what? What components are made with only American tech with no alternatives? And also, just like the computer chip incident, all China needed was a push to start making them all by itself. Nobody knows the future for sure, but I believe it won't be different here either.
 
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taxiya

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vincent said:
Not so simple. Many of the optical components are not available in other places
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I wonder where does Huawei get these components. I don't think from American company though, maybe Huawei made them itself or from Chinese vendors which ZTE can turn to.

These components are for fiber optic transport equipment. This particular American company got its tech by acquiring the UK company Marconi. Although Marconi was one of the best, they are not the only one. All big telecom companies are in the business of fiber network such as Huawei, Ericsson, Nokia (Lucent, Siemens), former Sprint, Alcatel and NEC, to name a few. They surely don't rely on a single supplier.
 
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antiterror13

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vincent said:
Trade war at the next level. US is trying to kill a Chinese hitech company now

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APRIL 16, 2018 / 8:57 AM

WASHINGTON, April 16 (Reuters) - The United States has banned American companies from selling telecommunications equipment to China’s ZTE Corp after the Chinese company illegally shipped telecom equipment to Iran and North Korea, the Commerce Department said on Monday.

“ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation,” Secretary of Commerce Wilbur Ross said in a statement (Reporting by David Lawder and Doina Chiacu; Editing by Chizu Nomiyama)
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I think it is a great news for China ... more incentive to stop importing hitech components from the US

and a message to any companies in the world that relying from the US components are not a good idea
 
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BoggedDown

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China can retaliate by having a law like any US or European company or its subsidiary selling arms or take part in military project with Taiwan will be banned for doing business with China. To take it even to harder line any US or European company having trade relation with Taiwan in specific sectors like for example telecom, oil & gas, power grid, shipping, air travel, high tech etc will be banned in doing business with China.
 
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