Chinese Economics Thread


solarz

Brigadier
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While you weren't looking, the trade war with China went off the rails
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Nov 17, 2019

·America's trade war with China has lost its way.
·Instead of pushing for structural change in China's managed economy, the Trump administration is negotiating to get US-China trade where it was before the tit-for-tat tariffs started.
·This story is starting to sound like a loop, and it's unclear how the Trump administration will get out of it.

While you weren't looking — perhaps while you were watching
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— the trade war with China went off the rails and lost its meaning.

To understand why, you have to know why the US started a trade war with China in the first place. It began with a very specific investigation, one using Section 301 of the Trade Act of 1974 to examine claims of Chinese theft of US intellectual property.

The investigation determined what many in the business community had been talking about for years: that China abused its US partners, stole the IP of American companies, forced those companies to reveal their technology to Chinese counterparts, and muscled US firms out of the Chinese economy in favor of state-owned enterprises.

This, the Trump administration said, was a problem beyond the capacity of the World Trade Organization. It was a problem worth going to economic war over. And so we did.

But so far this trade war has accomplished nothing aside from breaking up US supply chains and souring relations between the US and China. And now instead of discussing meaningful ways the Chinese economy will open to US businesses, trade negotiators are
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.


In fact, the status of the negotiations today sounds a lot like the status of the negotiations back in December 2018, when the US and China temporarily laid down their arms. Back then, The New York Times called the treaty — which included a resumption of soybean purchases on China's part — "
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." The "phase one" deal the administration is now working on would do much the same thing.


Of course, that's if we ever sign the deal.

Status quo antebellum

I understand if your head is spinning. This summer, it looked as if the world was ending — economic data was sputtering, the stock market was whipsawing, and it felt as if the US Treasury yield curve would remain inverted forever. President Donald Trump was sounding more and more unhinged.

On August 23, Trump
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out of the blue that American companies were "hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME."

Business leaders across the US didn't know what that meant or whether to take the president of the United States seriously. What a time to be alive.

The headlines about the trade war since then have been cloudy. First there was a cease-fire that paused an escalation of US tariffs on China, and then there was a deal
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. Then there were just some small details (agricultural purchases and whatnot) left to figure out to complete this so-called phase-one deal. Wall Street loved that. It loves any headline that smacks of this thing being over,
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.

Then something strange happened — the thing that is making this all seem so silly — the small details became onerous, so onerous that they became the main event.

The Trump administration reportedly started tossing
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in exchange for some agricultural purchases, and suddenly we were all supposed to get excited about a deal that promised only to get soybean purchases back to where they were before this mess started.

And the more desperate the Trump administration becomes to eke out some kind of win amid a darkening political situation, the more it will try to make small victories seem like big ones.
China, for its part, is digging its heels in too.

Bloomberg Businessweek, in
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what it was like inside the White House as this trade war descended into the farcical, obtained a quote so good it made this reporter jealous.

Douglas Irwin, an economic historian at Dartmouth, compared what the Trump administration is doing with the trade war to what the US did after the War of 1812 against the British. When the war started, Americans claimed they would take territory from Canada; by the time the war ended, Americans were reduced to touting the fact that they hadn't lost any territory.

Trump is taking from the same playbook, according to
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. The president "launched the trade war against China and said, 'We are going to remake the economy and get the state out of industrial policy and mercantilism,'" Irwin said. "We are ending it by saying, 'They are buying just as much stuff as they did before.'"


Part of this shifting of the goal posts is the result of Trump's obsession with narrowing the trade deficit between the US and China, an issue economists of all stripes have repeatedly said doesn't matter for an advanced economy like ours.

It's Trump's obsession with that deficit that drives him to negotiate so hard for China's purchase of US goods.
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, as long as he's tilting at this particular windmill with the force of a thousand Don Quixotes, negotiations will vacillate between being serious and being ridiculous.

Now it seems they may stay firmly in the ridiculous.
Just read the same article this morning. I like the comparison to the War of 1812: the Trade War is going to end up with the White House burned down, except it will be Trump who sets it on fire.
 

Biscuits

Junior Member
Registered Member
Can anyone explain what incentive China has to take any deal with USA?

China growth slowed to 6% from 6.4%, but is still higher in absolute terms than last year. Moreover, the “slowdown” (if you can call growing in larger amounts every year that) is not higher than what it would have been w/o the trade war.

Meanwhile US crashed from 3.4% growth to just 0.4% and has also had to use unsustainable currency manipulation to achieve that level.
 

AssassinsMace

Brigadier
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Both Ian Bremmer and Linette Lopez have been retconning their own past opinions to make themselves sound like wise sages. Ian Bremmer before Trump was advocating the very policies Trump has been forcing onto China for the same goals and now he rewrites history like it was a bad Trump idea. Every negative article about China in the Business Insider was from Linette Lopez. There was an article about all of Trump's lies about trade with China and it pointed to the most frequent lie which is how China pays the tariff. All Americans and the media before Trump believed that very lie which was the first thing Americans wanted to do against China. I posted a comment where I mentioned how Sen. Chuck Schumer before Trump wanted to slap a 45% tariff on everything from China. I got a lot of dislikes on that one. Somehow Americans weren't going to pay for that unlike with Trump's tariffs now..? Look at all the manipulative bull they tell themselves.
 

Biscuits

Junior Member
Registered Member
Last year Trump made a comment that suggested the US made a fortune on tariffs on Single's Day. The guy actually believes he can tariff products made and sold all within China.
US govt might very well have made a fortune on tariffs, but that money would be 100% from the pockets of the US people who participated in the sales...
 

AssassinsMace

Brigadier
US govt might very well have made a fortune on tariffs, but that money would be 100% from the pockets of the US people who participated in the sales...
I wouldn't call it a fortune. Given Americans' prejudices, the ones most likely shopping on Single's Day would be Asians living in the US and they're only around ten to twelve million in the US population. And then how many of them are shopping on Single's Day? Trump is not thinking that. He either believes the US controls world trade and has that power or he thinks Americans are Single's Day primary customers because that's what Americans in general think that it's the US that only buys things in the world not anyone else.
 
Oct 26, 2019
the text of the article is even more caution than its headline
China appears to indicate partial trade deal with US may be within reach
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(related press release is
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)


time will tell
and here's an update:
China remains silent as Trump repeats threat to hike tariffs if trade war deal not reached soon
  • Chinese officials and state media have been silent on threats from US president to raise tariffs on Chinese goods if ‘phase one’ trade deal not settled soon
  • Senior White House officials still optimistic a deal can be reached to end 17-month tariff war

follow the link
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if interested
 

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