Coronavirus 2019-2020 thread (no unsubstantiated rumours!)

[coolieno99]

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They are desperately searching for ways to punish China without shooting themselves in the foot, good luck with that lol

Disclaimer: This is an opinion

If U.S. decides to confiscates China's U.S Treasury bonds( $1 trillion) then China cannot buy Middle Eastern oil, since the Arabs want payment in U.S. dollars. This forces China to create a new international currency using China currency , Renminbi(Yuan). This is possible because China produces everything from A to Z. The customer holding the Renminbi is happy because they know that they can buy anything under the sun. If the Arabs refuse to accept Renminbi as payment, then China has to break the embargo against Iran, and buy oil (and natural gas) from her, which Iran will gladly sell. This means China will have to finish the giant oil/natural gas pipeline that runs from Iran, and cuts across through "all weather friend" Pakistan, and directly into China. That pipeline(s) was always on the drawing board but never realized due mainly to the oil embargo set by the U.S.. In the meantime China will buy oil (and natural gas) from Russia in the next 25 years.

 

[Gatekeeper]

The reason is very simple:
1. Mercedes-Benz biggest customer is China
2. BMW biggest customer is China
3. Audi biggest customer is China
4. Porsche biggest customer is China. Porsche ship their cars via the new OBOR railway network directly to China.

Yes, I think we knew it is out of self interest. It nearly always is. Which is why it is quite baffling that Australia seem to be the only "western country" bucking the trend by backing Trump when so much of their economy is tied in with China's.

 

[Gatekeeper]

Disclaimer: This is an opinion

If U.S. decides to confiscates China's U.S Treasury bonds( $1 trillion) then China cannot buy Middle Eastern oil, since the Arabs want payment in U.S. dollars. This forces China to create a new international currency using China currency , Renminbi(Yuan). This is possible because China produces everything from A to Z. The customer holding the Renminbi is happy because they know that they can buy anything under the sun. If the Arabs refuse to accept Renminbi as payment, then China has to break the embargo against Iran, and buy oil (and natural gas) from her, which Iran will gladly sell. This means China will have to finish the giant oil/natural gas pipeline that runs from Iran, and cuts across through "all weather friend" Pakistan, and directly into China. That pipeline(s) was always on the drawing board but never realized due mainly to the oil embargo set by the U.S.. In the meantime China will buy oil (and natural gas) from Russia in the next 25 years.

Treasury bonds is not going to happen. I just saw a clip from yesterday where kudlow have said POTUS and the treasury team have completely rule that out. For reasons that USA still wishes the dollar to be the reserve currency of the world. (Another word, they know how valuable being the reserve currency, and don't want anything to jeopardise that! Also, they don't want to jitter the bond market. (So basically it's not out of choice, it's fear of the market going south)!

 

[Gatekeeper]

Not only the German car industry, all of Europe has very close relationships with China.

Duisburg is not far from where I live. 35 container trains from China arrive there every week. The trains take 13 days to travel. The longest distance not only this network but of the world is the Yiwu – Madrid railway line with 13,000 kilometers, which takes 21 days.

The first train went from Xiangtan to Hamburg on October 6, 2008 and took 17 days.

The network currently serves 27 cities in Europe.

Nice area, Duisburg. My penpal was from Essen. My friend moved to the mossel valley last year. We visited to Koln when we were there. Nice time was had by all.

 

[Gatekeeper]

Disclaimer: This is an opinion

If U.S. decides to confiscates China's U.S Treasury bonds( $1 trillion) then China cannot buy Middle Eastern oil, since the Arabs want payment in U.S. dollars. This forces China to create a new international currency using China currency , Renminbi(Yuan). This is possible because China produces everything from A to Z. The customer holding the Renminbi is happy because they know that they can buy anything under the sun. If the Arabs refuse to accept Renminbi as payment, then China has to break the embargo against Iran, and buy oil (and natural gas) from her, which Iran will gladly sell. This means China will have to finish the giant oil/natural gas pipeline that runs from Iran, and cuts across through "all weather friend" Pakistan, and directly into China. That pipeline(s) was always on the drawing board but never realized due mainly to the oil embargo set by the U.S.. In the meantime China will buy oil (and natural gas) from Russia in the next 25 years.

All sound very nice. And in am ideal world, that should be the case...... except it is not ideal world!

USA controls all oil transactions because all oil are trade in dollar! They got the Saudis and OPEC to agree with this arrangement back in the 70s.

This is how they are able to applied sanction on Iran. And how they are able to applied sanction on China telecom companies. Transactions in dollars have to at sometime use a bank based in the USA.

To get by the dollar stranglehold, countries have use barter system. China have tried with a number of countries. But it's cumbersome and not risk free. Which is why it hasn't taken off.

Being reserve currency, the USA has benefits tremendously from it. As well as Control, it bring economic benefits. Some economists estimate this could be between .5 to 1 % extra growth per year (from memory when I was student of economics many years ago)!

 

[PiSigma]

"Drop the hammer on China"?

The US still does not seem to realize that in China, they are dealing with a peer power.

Only if China allows selling hammers to the US, it could be considered dual tech. Also US will put a tariff on it.

 

[Gatekeeper]

Only if China allows selling hammers to the US, it could be considered dual tech. Also US will put a tariff on it.

Is that sarcasm Trump style?

 

[PikeCowboy]

Disclaimer: This is an opinion

If U.S. decides to confiscates China's U.S Treasury bonds( $1 trillion) then China cannot buy Middle Eastern oil, since the Arabs want payment in U.S. dollars. This forces China to create a new international currency using China currency , Renminbi(Yuan). This is possible because China produces everything from A to Z. The customer holding the Renminbi is happy because they know that they can buy anything under the sun. If the Arabs refuse to accept Renminbi as payment, then China has to break the embargo against Iran, and buy oil (and natural gas) from her, which Iran will gladly sell. This means China will have to finish the giant oil/natural gas pipeline that runs from Iran, and cuts across through "all weather friend" Pakistan, and directly into China. That pipeline(s) was always on the drawing board but never realized due mainly to the oil embargo set by the U.S.. In the meantime China will buy oil (and natural gas) from Russia in the next 25 years.

? China doesn't purchase oil using T-bills??

USD and T-Bills are not the same thing and they're not freely interchangeable, well not usually...

 

[Gatekeeper]

? China doesn't purchase oil using T-bills??

USD and T-Bills are not the same thing and they're not freely interchangeable, well not usually...

Yes and no. Yes no one buys oil with treasury bills. Treasury bills is basically IOUs. But they are "freely interchangeable". In the sense it's very liquid. And it's this liquidity that makes them attractive. Treasury bills can be bought and sold openly for dollars!

I think that's what he meant by using treasury bills to buy oil.

 

[AndrewS]

based on your post, something occurred to me:

because of this pandemic, China may get caught in

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for decades to come

R&D spending in China continues to increase today.

Old post below on empirical observations of R&D spending and the middle-income trap.

@Anlsvrthng

In comparison, China is at 2.1% (of R&D Spending) which is exceptionally high for a middle-income country and places China amongst high-income developed countries.
No other developing or middle-income country is anywhere near this, as they all top out at half this level.

Furthermore, China's R&D spending is still seeing fast growth, so it's already higher than the EU (2%) and should soon approach the USA (2.7%)

So we will probably see China continue with fast growth by moving up the technology value chain, and therefore China should escape the middle income trap