Trade War with China


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YEP, good luck wit dat, I'm a farmer Bub, nobody produces a soybean like the US, NOBODY!
Nobody needs to produce a soybean like the US. Brazilian, Chinese, Russian soybeans are just as fine, if not, better. They don't have any fake democracy bully stench (or is it GMO? Can't tell...) so the US can keep all its "special" soybeans eat them yourselves LOL.
remember this, American Farmer's Feed the World!
You meant to say American farmers rely on the world for income. It can be remembered for history. As for the future, don't sell anything then; see if we starve to death or if you all end up welfare queens fiddling with your fingers on open fields ¯\_(ツ)_/¯
 
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YEP, good luck wit dat, I'm a farmer Bub, nobody produces a soybean like the US, NOBODY! remember this, American Farmer's Feed the World!
ahhaaaaa, old paradigm ...buddy .. a lot of countries, including China can produce much more. Yes the US soybean is good and very competitive, but with 25% tax, everybody could compete well, including Chinese farmers, especially with Chinese govt incentives
 
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Air Force Brat

Brigadier
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It is called hubris elevated self importance My way or highway. Seem to be a lot of noise about China is "loosing" the trade war Well I am not so sure about it China has faced worse challenge than that and she still not only survive but thriving Don't forget China has faced total embargo from 1949 until 1976
China’s economy will not buckle under Trump’s trade war
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AUGUST 17, 2018 6:19 PM (UTC+8)
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If one were to believe the news coming out of world media, China is about to concede to US President Donald Trump’s demands: Refrain from “unfair trade practices” and abandon the “Made in China 2025” industrial policy, the reasons for his trade war against the world’s second-largest economy.

According to articles published by outlets such as the South China Morning Post, Reuters and others, Trump is winning the trade war against China. For example,
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wrote for Reuters that four “anonymous sources” had said the US-China trade war had caused a rift within the Chinese leadership in part because of the government’s overly “nationalistic” tit-for-tat response. The article added that one “source” indicated Xi Jinping’s influence and power were waning.


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According to Blanchard and Yao, these “anonymous sources” said the leadership’s tit-for tat stance had hardened Trump’s stance, which they claimed was causing the loss of 20% in stock market values, a 0.1% year-on-year decline in growth in the second quarter and a 1.5% devaluation of the yuan against the greenback. These “sources” also claim China “overestimated” its strength, culminating in “a state of panic.”

Independent China-based researcher Xu Yimiao wrote in an August 10 the
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that China should cut its losses and concede defeat to Trump. He argued that China was running out of retaliatory countermeasures and overestimated its economic strength. Xu also saw the newly established EU-Japan Free Trade Agreement as a vehicle against China.

Another sign critics have used to show the US was winning the trade is the opposite directions in which the two economies were heading. The US Department of Commerce revealed that the US economy grew 4.1% in this year’s second quarter compared with Q1’s 2.3%. The National Bureau of Statistics of China showed that China’s second quarter increased slower than the first, 6.7% and 6.8% respectively.

But is China losing the trade war?
However, the critics were silent about China’s stock market rebounding since August 8. According to Bloomberg, foreign investors were bullish on the Chinese economy, buying US$2.9 billion worth of mainland shares through Hong Kong links between July 25 and August 8. Since most of the money came from institutional funds looking for long-term investment opportunities, it would seem foreign institutional investors are not worried about China’s economic “slowdown,” stock market losses or currency devaluation.

The US Chamber of Commerce in China has reported that 73% of its members are profitable and 74% planned to expand investment in China in 2018.

The China “gloom and doom” messengers also fail to mention that unlike Western stock markets, China’s are dominated by individual investors who have little knowledge about the economy or capital markets. They only want to make some fast money and for the most part panic at the first negative sign, as they did during the 2017 “Chinese stock-market rout” – which bounced back within a short time period.

Therefore, the stock market in China is never an indicator of economic performance. Rather, small investors see it is a casino in which to make a quick buck.


On currency devaluation, some critics see the trade war is weakening the Chinese economy while others speculate that China is “weaponizing” the yuan to counter Trump’s stance. Either way, that does not mean a weakening economy and capital outflow are in the offing.

Another sign that critics apply to suggest China is taking a hit from the trade war is the fact that the Caixin/Markit Purchasing Managers Index contracted from 50.1% in June to 50.8% in July, suggesting that manufacturing expansion had slowed.

Whether decreases in some economic indicators are a sign that the trade war is taking its toll on the Chinese economy is unclear. But Chinese key economic indicators are far more robust than those of the US, despite its president claiming the economy has never been better.

Further, critics have applied the same logic in past assessments, falling over one another to tell the world that China’s economy is collapsing at the first sign of weakness. They were wrong each time in the past. They will be wrong again because their analysis is inconclusive, lacks long-term data, and to some extent is injected with ideological biases.

Impact on US economy
The 4.1% Q2 growth rate in the US might have been a blip rather than a trend. Surging agricultural exports to bypass tariff retaliation by China and other countries contributed to one full percentage point of the growth rate, according to The Wall Street Journal. Trump’s tax cuts and increased government spending also contributed. Making allowance for these one-time phenomena, the seasonally adjusted growth rate (an indication of long-term growth trend) would be lower.

What’s more, other organizations are not as optimistic as the White House, pointing to a less than successful trade war.

According to an August 8 China Global Television Network (CGTN) report, the Atlantic Federal Reserve revealed that the trade war was forcing 20% of businesses either to postpone or cancel investment plans. If true, US economic growth will contract and unemployment will rise.

The Wall Street Journal has reported that small businesses and startup companies are being particularly hit hard, losing profits and investment funds (largely from China). Unable to withstand the losses, many could shut down, according to the WSJ. Should this occur, the impact on the US economy will be severe because small businesses are its backbone, creating most of the country’s jobs.

In the meantime, US farmers are still waiting for Trump’s promise of a $12 billion bailout. According the US Chamber of Commerce, Trump will require another $27 billion bailout for other agricultural groups. Where he will get that money is a mystery in light of increasing government deficits.

What’s more, the bailouts may only be a Band-Aid solution because they are intended to ease current revenue losses caused by Trump’s trade war against China (and other countries). The long-term pain will be much more pronounced because the US may lose the lucrative China market.


According to the China’s Ministry of Commerce, the country has other sources in Brazil, Argentina, Russia and other countries for its food and animal feed. And even if the European Union caves in to Trump’s bullying and shifts to buying US soybeans, farmers would still face surpluses, culminating in significant price drops.

The latest news on the effects of Trump’s trade war relates to the cost of rebuilding houses destroyed by California wildfires. According to the California Construction Association, the cost will rise because of tariffs imposed on lumber, nails, drywall and other building materials. Such costs would affect not only California, but would apply nationwide.

What’s more, Trump’s trade war against China disturbs the global supply chain, harming other countries, including the US. The parts imported from China and other nations to make the final product in America will become more costly, causing cost-push inflation. Moreover, prices rising faster than wages due to China’s and other countries’ tit-for-tat tariffs may lead to “price or demand pull” inflation.

History is not on the critics’ side, pundits having been wrong again and again over the last 40 years about China’s imminent collapse. Based on the cherry-picking of “facts” or inconclusive analysis, they will probably be wrong again.
I never suggested that, everybody loses in a "Trade War", but American soybeans are the best in the world and in very high demand....

I think we all realize the consequences of that, and all Trump is bargaining for is "Fair Trade".
 
I'm not sure where Western media got the impression that Xi is in some kind of political instability right now.

Most of the ordinary people on the street still firmly support him and even though there are different voices as to how to resolve the trade war, they are mostly in the realm of healthy policy debate and should not be seen as a challenge to Xi's political status and power.

If this trade war came even 1 or 2 years earlier that might be the case, but now his power consolidation is well completed and I personally believe nothing short of an economic crush or large scale riot will damage his political power.

Heck, even the recent vaccine scandal in China had a much large negative impact society wise than the trade war, why are western media always focusing on the less relevant things?
Western centric Western propaganda, the real danger is when the West buys into its own propaganda too much as if its true. Same risk with Chinese and Chinese propaganda so in that sense the vaccine scandal is a good thing.
 
Big beautiful healthy soybeans,, that GMO paranoia is just that, paranoia,,,
I heard they get bigger and more beautiful when you put spent nuclear fuel into the water! Of course it's all paranoia, and you know that because they're mostly sold to other countries... as pig feed quality LOL
I think we all realize the consequences of that, and all Trump is bargaining for is "Fair Trade".
"Fair trade" is such a cute euphemism for "We can't compete so let's change the rules until we can." If Trump ran in a race, he'd ask for a "fair race" as defined by saddling all other racers with increasingly heavy backpacks until they all cross the finish line at the same time as Mr. Bone Spurs (even if he has to hit up 3 fast food joints on the way there) ;)
 
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tidalwave

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Now there's a report out of wallstreet journal that China US officials are plotting to resolve the trade war issue by November.

The reason US admin keep leaking out made-up stuffs and hyping up is their goal of winning November election.

If trade war progress forward it will harm alot of American interests, and cause them to lose November election.

US admin try to win the election first and then put foot on gas pedal after that on trade war, intensifying.

Let's face it, what Trump asking is impossible for China to make that kind of concessions.

What they doing is dishonest and manipulative just like Trump tears up the agreement between US and China previously. China officially say they do not trust Trump no more after the flip flop. Secret plot to resolve trade war? It's totally a one sided joke!
 
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Hendrik_2000

Brigadier
Here is why stock market in China does not reflect real economy. Excellent article
As I said before stock ownership in China is minuscule compare to US Most Chinese invest in real estate and not stock market. And most company get their capital from bank and not stock market so gyration in stock market has no bearing to real economy
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Why the drop in China's stock market might not reflect its economic reality
  • National Economic Council Director Larry Kudlow raised eyebrows when he said in a Cabinet meeting with President Trump that China's economy "looks terrible."
  • Kudlow may simply have been looking at the decline in the Shanghai stock market.
  • But the Chinese stock market is not very efficient and does not necessarily reflect underlying economic realities.
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Published 7:52 AM ET Fri, 17 Aug 2018 Updated 8:47 AM ET Fri, 17 Aug 2018CNBC.com
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Zhang Peng | LightRocket via Getty Images
Employees walk out of the Shanghai Stock Exchange building in China.
China's stock market is in terrible shape, but it may not reflect the state of the Chinese economy.

National Economic Council director
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raised eyebrows Thursday when he said in a Cabinet meeting with President
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that China's economy
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But does it really? Most estimates for China's 2018 economic growth remain near 6.5 percent. That doesn't mean there aren't concerns. New U.S. tariffs on Chinese goods are making it more costly for companies there to operate, and China's central bank has recently been pumping money into its economy.


Kudlow simply may have looked at the Chinese stock market. The Shanghai exchange is down 25 percent from the high it hit at the end of January. He may have assumed that the decline reflects a dramatic deterioration in the Chinese economy.

That, some traders said, would be a mistake.

"I think our dear friend Larry Kudlow is off the mark," UBS' Art Cashin said on CNBC on Thursday. "In highly efficient full-production places like the U.S., the stock market is reflective somewhat to what the economy is doing. But there's almost a total disconnect in China," he said.

Nick Colas, who runs market analysis firm DataTrek Research, agreed. "The Chinese stock market actually tells us very little about the country's economic welfare and doesn't play anywhere near as dominant a role in the lives of its citizens as the US equity market does in America," he wrote in a recent note to clients.

Colas backed up his assertion by noting that the Shanghai Composite trades for less than half its October 2007 peak, yet China's economy in the 11 years since then has more than tripled to $13 trillion.


The Shanghai market staged a huge rally from 2014 into 2015, more than doubling in value, but again collapsed and is trading 45 percent lower since 2015.

"This decline has had no discernible impact on consumer spending or business investment over the last 3 years," Colas said.

Colas also cited a September 2017 Bloomberg article noting that retail investors account for 80 percent of the trading volume on the Shanghai exchange. Colas said those traders can cause individual stock prices to swing wildly on arbitrary and noneconomic information.

He agreed with Cashin's point that the Chinese stock market is not very efficient and does not necessarily reflect underlying economic realities.

Finally, Colas noted that the allocation of household wealth to stocks in China is relatively minuscule: 4 percent versus 23 percent in the U.S.

In China, households have far more of their wealth in cash (20 percent versus 4 percent in the U.S.) and real estate (65 percent versus 45 percent).

And what about the super rich? Colas noted that they tend to invest in private equity and venture capital rather than having their core holdings in stocks.

The fact that China's stock market does not necessarily reflect the state of China economy's has important policy implications: "Further declines in Chinese equities are unlikely to push the country's leaders into an unfavorable trade deal with the US," Colas said. "Stocks are just not a large enough part of household net worth there, and the country has a long history of growth despite equity market volatility."
 

Anlsvrthng

Senior Member
Registered Member
Colas also cited a September 2017 Bloomberg article noting that retail investors account for 80 percent of the trading volume on the Shanghai exchange. Colas said those traders can cause individual stock prices to swing wildly on arbitrary and noneconomic information.

He agreed with Cashin's point that the Chinese stock market is not very efficient and does not necessarily reflect underlying economic realities.

Finally, Colas noted that the allocation of household wealth to stocks in China is relatively minuscule: 4 percent versus 23 percent in the U.S.

In China, households have far more of their wealth in cash (20 percent versus 4 percent in the U.S.) and real estate (65 percent versus 45 percent).

And what about the super rich? Colas noted that they tend to invest in private equity and venture capital rather than having their core holdings in stocks.

The fact that China's stock market does not necessarily reflect the state of China economy's has important policy implications: "Further declines in Chinese equities are unlikely to push the country's leaders into an unfavorable trade deal with the US," Colas said. "Stocks are just not a large enough part of household net worth there, and the country has a long history of growth despite equity market volatility."
Practically it mirrors Michael Pettis 2010 analysis about the Chinese stock market.
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We're used to thinking about stock markets as expected-cash-flow discounting machines, and we assume that stock price levels generally represent the market's best estimate of future growth prospects, but this is not always the case, and it is certainly not the case in China. I am often asked to comment on big price moves on the Chinese stock markets and what they mean about growth expectations, but I usually try to caution people from reading too much meaning into the market.
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To see why, it is probably useful to understand how investors make trading decisions.
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All of this means that speculators tend to buy in rising markets and sell in falling ones and this behavior, by reinforcing price movements, can increase market volatility.


Value investors typically do the opposite. They tend to have fairly stable target price ranges, and when an asset trades below or above the target price range, they buy or sell, thereby countering market volatility. For them information consists of anything that might affect the long-term cash generating ability of an asset, or anything that affects the appropriate rate at which to discount the cash flow. They need good macroeconomic data, good financial statements, and a strong corporate governance framework.
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A well functioning market requires all three types of investors. Without all three, markets lose their social value of ensuring that economically beneficial projects have access to cheap capital.
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The vast majority of investors in China tend to be speculators.
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Why are there so few value investors in China and so many speculators?
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The ability to make value decisions requires a great deal of confidence in fundamental information, like the quality of economic data and the predictability of corporate behavior, but in China today there is little such confidence.
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Poor macro data, inaccurate financial statements, a weak corporate governance framework, and many of the very factors that make speculation such an exciting game in China, make it difficult for relative value investors, and nearly impossible for fundamental and value investors, to ply their trades.
The above analysis agree with Pettis (2010), and saying the same: there is no quality data about economy, companies, audits, ownership enforcement, transfer and so on, and due to that the stock market is simply a casino, not the allocator of resources ( like in the Europe and US).

This is a shame, considering that the ownership transfer mechanism and company evaluation by market IS the secret sauce of the European (later US) success since 1600.
 

vincent

Senior Member
Practically it mirrors Michael Pettis 2010 analysis about the Chinese stock market.
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The above analysis agree with Pettis (2010), and saying the same: there is no quality data about economy, companies, audits, ownership enforcement, transfer and so on, and due to that the stock market is simply a casino, not the allocator of resources ( like in the Europe and US).

This is a shame, considering that the ownership transfer mechanism and company evaluation by market IS the secret sauce of the European (later US) success since 1600.
Oh boy, another Efficient Market acolyte. If the market is so efficient, it wouldn't crash ever so often (want to buy a tulip?) and there is no need for the “Greenspan Put”. Western countries were able to industrialize because they robbed so much wealth from the rest of the world.
 
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