Trade War with China

Jura said:

now
US tech firms appeal to the White House not to impose tariffs on IT products
2018-09-08 13:26 GMT+8

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A "wide range" of Apple Inc products including the Apple Watch would be affected by proposed US tariffs on Chinese goods, the company told US trade officials, but gave no sign of an impact on its cash cow iPhones.

Apple did not disclose specific revenues for most of the affected products, but of those the Apple Watch may be the biggest seller. It brought in about 6.1 billion US dollars in revenue last year, according to an estimate from analyst firm Bernstein. That represents a small portion of Apple's 229 billion US dollars in overall sales.

Apple laid out the impact on its products of the Trump administration's proposed tariffs on 200 billion US dollars worth of Chinese goods in an unsigned letter it submitted on Wednesday to US officials as part of a public comment period.

On Friday, US President Donald Trump, speaking aboard Air Force One, said that he has tariffs on an additional 267 billion US dollars in Chinese goods "ready to go on short notice if I want."

Cell phones, the biggest US import from China, have so far been spared, but would be hit if Trump activates the new tariff list.

AirPods headphones, some of Apple's Beats headphones and its new HomePod smart speaker also face levies as part of the proposed tariffs on 200 billion US dollars worth of Chinese goods, according to the letter submitted on Wednesday.

"Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers," Apple said in the letter.

The letter did not mention the iPhone, which accounted for about two-thirds of Apple's 229 billion US dollars in revenue in its most recent fiscal year. The letter also made no mention of the iPad, which brought in 19.2 billion US dollars in sales in the most recent year, or most of its Mac computers, which generated 25.8 billion US dollars.

Apple did say its MacMini, a low-priced computer that comes without a keyboard or mouse, would be affected.

Many Apple accessories, such as mice, keyboards, chargers and even leather covers for iPhones and iPads would face tariffs, Apple said.

Reuters reported in July that the Apple Watch was likely to be affected by the tariffs.

Shares of Apple closed down 0.8 percent in regular Nasdaq trade on Friday, and slipped another one percent in extended trading.

Apple also said that computer parts for its US operations would be hit by the tariffs. The company said that "main logic boards with microprocessing units" could face levies, along with equipment used for research and development.

On Apple's most recent earnings call in July, Chief Executive Officer Tim Cook said the company could face such tariffs "related to data centers."

In its letter, Apple argued that the way US trade officials calculate the US trade balance - attributing the entire value of a product to a country like China where final assembly happens - fails to reflect the true value that Apple generates in the United States. The company noted it spent 50 billion US dollars with 9,000 US suppliers in its most recent fiscal year, including Texas-based chip firm Finisar Corp and Kentucky-based Corning Inc.

"Given the balance of Apple's economic footprint, the burden of the proposed tariffs will fall much more heavily on the United States than on China," Apple said in its letter

The technology sector is one of the biggest potential losers in the proposed 200 billion US dollars tariff list. Fitness tracker maker Fitbit said it would be hit by tariffs, and chipmaker Intel Corp said the levies could slow down the adoption of 5G networks, the next generation of wireless data technology for phones and other devices.

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Saturday's China Daily published an article titled "The West once again gets it wrong on China," which is an excerpt from a signed article published on Qiushi magazine. The following is the full text of the article:

The United States equates China's economy with "state capitalism", saying socialist market economy is not real market economy but state-led protectionist and mercantilist economy, which, it claims justifies the imposition of high tariffs on Chinese goods.

This is not the first time a Western country has labeled China's economic model as "state capitalism". Some people are re-circulating the term in the West now to hide the real reason why the US has resorted to trade protectionism and imposed high tariffs on Chinese imports, namely, their concern over China's development road and economic system.

The US is a self-proclaimed representative of free market economy and free market capitalism, but the government's role has been particularly important in its economic development. Let us not forget, the US has resorted to protectionism from its founding to the end of World War II.

Using free market as a ploy to make profits

In the postwar period, too, the US administration has intervened in the economy to fulfill its self-interests even while promoting trade liberalization, as Keynesianism came to play the dominant role in US economic policymaking. For example, the US' total government spending increased from 26.8 percent of GDP in 1960 to 41.3 percent in 2010, and the number of its government employees increased from more than 4 million in 1940 to more than 22 million in 2010.

Some experts on innovation say, despite advocating "small government" and "free market", the US has been running massive public investment programs in technology and innovation for decades, which have brought the US great economic benefits. In fact, the US government has always been a central driver of innovation-led growth, from internet to biotechnology and even shale gas development. After the outbreak of the 2008 global financial crisis, the US once again resorted to state interventionism, and introduced huge financial rescue and fiscal stimulus packages to stabilize its economy.

Since taking office, President Donald Trump and his administration have been using interventionist policies, such as protectionism and immigration control measures, to realize their "America first" goal at the cost of the interests of people around the world. Which shows the "pure" free market economy and "true" laissez-faire that the US bandies about have never existed. Instead, capitalism as we see it today is closely related to "state capitalism". So to label China's socialist market economy as "state capitalism" is to confuse one thing with another.

"State-capitalism" theory a result of ill intentions

After the global financial crisis, some developed economies, such as the US and some European countries, faced severe economic difficulties while China and many other emerging economies maintained relatively strong growth. The resultant rise and fall in the relative strengths of China and the US made the contradictions among the developed economies, and those between the developed world and emerging economies, such as China, increasingly prominent.

Some politicians cannot accept China's rapid but peaceful rise under the leadership of the Communist Party of China, so they use terms such as "state capitalism" to criticize it. The intention of such people is clear: to defend capitalism by pitting "state capitalism" against "liberal capitalism" and creating an atmosphere that would curb the development of developing and emerging market economies, especially China.

On the one hand, such observers try to divert and cover up people's discontent with the profound defects of the capitalist system, and claim free market capitalism is facing a crisis because of the threat posed by "state capitalism". On the other hand, they try to find faults with socialism with Chinese characteristics, so as to distort the attributes of socialist market economy with the aim of shaking people's confidence in the socialist market system, and forcing China to abandon its development path. Their ultimate is to contain China's rise.

Such people always use double standards when it comes describing the attributes of "state capitalism". When Western economies need state support for capital accumulation, these people advocate protectionism and state intervention. But when Western economies enjoy competitive advantage, they forcibly promote free trade and require other countries to unconditionally open up their markets, so as to benefit from it. And when the Western economies' competitive advantages fade out due to competition from other economies, including latecomers such as China, they go back to practicing protectionism.

A pretext for not accepting reality

Many observers and politicians have attempted to include China into the capitalist spectrum, or assumed that by adhering to the rules of market economy, China will automatically embrace the capitalist system. But when they realize socialism with Chinese characteristics, compared with capitalism, is yielding better results, some of them start identifying China's socialist market economy with "state capitalism", instead of admitting that socialism with Chinese characteristics and socialist market economy have achieved success beyond their wildest dreams. This is the essence of their "state capitalism" argument.

Western countries have always regarded market economy as their exclusive economic system, as is evidenced from Western economic theories. But market economy and capitalism are two different things, the former being a means to allocate resources, which can be combined either with the capitalist or socialist system.

Capitalist market economy and socialist market economy share common features in terms of resource allocation and commodity relations. For example, both have clear property rights relations and require market players to maintain equal and fair competition. And both allow the market to play a decisive role in resource allocation.

The macro-regulatory policies implemented by China conform to the laws of market economy and the rules of the World Trade Organization. Yet market economy is a social and historical concept with different characteristics under different social systems and stages of development. Socialist market economy is a new type of market economy, which, despite having the general characteristics of market economy, is fundamentally different from capitalist market economy in terms of ownership structure, distribution system and institutional mechanism. So it is erroneous to identify the Chinese economy as "state capitalism" just because China has State-owned enterprises and its government plays a role in some economic activities.

Argument on SOEs untenable, baseless

Moreover, it is grossly erroneous to equate state-owned enterprises with "state capitalism", as SOEs are just a means to ensure large-scale production through modern methods. In fact, state-owned enterprises first appeared in Western capitalist countries.

In the postwar period, some capitalist countries nationalized enterprises on a large scale, and established a large number of SOEs in many sectors. Even when the wave of privatization was at its peak, many Western countries retained a sizable number of state-owned enterprises. In fact, even after the outbreak of the 2008 global financial crisis, some Western countries took measures to nationalize a number of enterprises to offset the effects of the economic slowdown, which shows the West also uses state-owned enterprises as a means to resolve the basic contradictions of capitalism.

However, it should also be noted that the natures and functions of state-owned enterprises vary in different social systems. In Western economies, state-owned enterprises are essentially controlled by a few big capitalists backed by governments and operate to make more and more profits. In a socialist market economy, however, SOEs are owned by the people, and serve as an important tool for promoting modernization and safeguarding the common interests of the people. They shoulder multiple responsibilities, from providing public services, developing strategically important industries and protecting the environment to promoting science and technology, safeguarding national security, facilitating fair resource distribution and realizing common prosperity. These traits distinguish them from their counterparts in capitalist market economies.

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Is this Western envy or jealousy?

The fundamental reason why some Western politicians target China's SOEs for criticism is that these enterprises have become bigger and stronger than Western politicians' expectations, and are helping China to develop into a comprehensive modern socialist power to realize the Chinese Dream of national rejuvenation.

Yet there is no inherent logic in using the role of the government to identify the Chinese economy with "state capitalism". The relationship between the government and the market depends on the evolution of the economic system, with the two being mutually complementary and indivisible. This is the development law of market economy.

Capitalist market economy and socialist market economy both need effective market regulations -- which only the government can provide -- for the supply of public goods, maintenance of macroeconomic stability, improvement of the social security system and strengthening of economic security.

In a capitalist market economy, which is based on private ownership, the government is not only the spokesperson for capital but also serves the interests of capital. As a result, it is difficult for the government to ensure economic and social development serves the interests of the entire society, so as to resolve the basic contradictions between socialization of production and private ownership.

Govt represents people in socialist market economy

In contrast, a socialist market economy is dominated by public ownership, in which the government represents the people and serves their interests. This makes it possible for the government to implement regulations for social and economic development in order to meet the people's increasing needs for a better life, and achieve prosperity for all.

The difference between socialist market economy and capitalist market economy, as such, is not whether the market or the government plays a decisive role in the allocation of resources, or whether state-owned enterprises exist. Instead, it depends on whether the government and market are serving capital or the people.

Those that equate the Chinese economy with "state capitalism" claim that an economy in which the government intervenes to serve the interests of capital and private ownership will be seen as following the "free market system" irrespective of the extent of its intervention. In contrast, a socialist market economy for them is equivalent to "state capitalism" regardless of the aim and magnitude of the government intervention.

This shows such observers identify Western countries with the "free market system" even if their governments support enterprises with policies and financing. But if an emerging market economy does the same, it is labeled "state capitalism". Which is a typical example of economic hegemony.

Since launching reform and opening-up four decades ago, China has developed the socialist development road, theory, system and culture with Chinese characteristics, fulfilled the basic economic requirements to build the primary stage of socialism, allowed public ownership to develop along with private and other forms of ownership, and transformed from a planned economy to a dynamic socialist market economy.

Fostering development of high quality

Moreover, since the 18th National Congress of the CPC, China, under the strong leadership of the CPC Central Committee with Xi Jinping at the core, has more vigorously helped the market to play a decisive role in resource allocation. Simultaneously, the government has taken concrete measures to improve the property rights system, further deepen economic reform, and improve the socialist economic system with Chinese characteristics, in order to promote high-quality economic development.

China is committed to building a community with a shared future for mankind and improving global economic governance, by safeguarding and promoting economic globalization and free trade. In this regard, it has taken a series of measures to greatly ease access to its huge market, build a more attractive investment environment, strengthen intellectual property rights protection and expand imports.

A socialist market economy gives full play to the advantages of market economy and the socialist system, and helps build an organic bond between the government and the market. It also ensures sustainable development and market stability, which have benefited the Chinese people and contributed to human development and progress across the world.

These are the great achievements of socialist market economy and socialism with Chinese characteristics, and have nothing to do with "state capitalism".

The socialist economic system with Chinese characteristics is the result of Chinese wisdom, the Party's leadership and Chinese people's efforts to build a prosperous but sustainable social and economic system, and thus a great innovation in economic development history. Chinese people, led by the Party, have embarked on the road of socialism with Chinese characteristics. And they most certainly will achieve success after greater success.

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solarz said:

Honestly, WTH are you talking about? You're making no sense whatsoever.

You were describing a company making 1000$ but only reporting 500$ of that to the government. That's simply fraud, and I don't understand how that relates to using the company laptop for personal purposes.

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solarz said:

Again, WTH? Who said the Chinese pay less taxes than other countries?

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manqiangrexue said:

The problem is that there was too much wealth focused on decadence and not enough on military development/scientific innovation. That is not a mistake to be repeated, ever. And this point goes against your argument that richer citizens do not develop society; richer Europeans meant a stronger Europe and now, richer Chinese will mean a stronger China. I have no idea what you're confused on.

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Anlsvrthng said:

C'mon, Chin was allays bigger than the whole europe + usa together. I don't think that the decadence of Empress Dowager Cixi required more resources than than say the population of France .

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Anlsvrthng said:

The population equivalent of USA, UK and Germany should take care of a military in your world : )

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Anlsvrthng said:

I mean, Chin organisation and per capital capability ( efficiency) is inferior compared to the Europeans/ North Americans.

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Anlsvrthng said:

It improved lot in the past 110 years, but there is still long way to go.

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Jura said:

yes, this thread:
China's foreign trade up 9.1 pct in first eight months
Xinhua| 2018-09-08 12:04:06

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China's foreign trade registered steady growth in the first eight months of this year despite higher tariffs imposed by the United States, official data showed Saturday.

China's goods trade went up 9.1 percent year on year to 19.43 trillion yuan (about 2.85 trillion U.S. dollars) in the first eight months of this year, the General Administration of Customs (GAC) said.

Exports rose 5.4 percent year on year in the January-August period to 10.34 trillion yuan while imports grew 13.7 percent to 9.09 trillion yuan, resulting in a trade surplus of 1.25 trillion yuan, which narrowed by 31.3 percent, according to the GAC.

In August, exports rose by 7.9 percent, higher than 6 percent in July.

August's data was widely watched as it was the first reading since fresh U.S. tariffs on 16 billion U.S. dollars worth of Chinese imports went into effect.

Beginning August 23, the United States slapped an extra 25 percent tariff on 16 billion U.S. dollars worth of Chinese imports, to which China responded with an equivalent retaliatory measure.

The move came after additional tariffs on 34 billion U.S. dollars worth of Chinese imports went into effect on July 6.

Saturday's data showed that China's exports have not deteriorated so far with strong export volume supporting total value, China Merchants Securities said in a research note.

The country's trade with major trading partners saw an increase during the January-August period. Trade with the European Union, its largest trading partner, climbed 6.2 percent, and trade volume with the United States and ASEAN countries increased by 5.9 percent and 11.8 percent, respectively.

Trade with countries along the Belt and Road totaled 5.31 trillion yuan, up 12 percent year on year, 2.9 percentage points faster than the average growth rate, data showed.

Saturday's data also revealed a more balanced trade picture, with imports in August continuing the rapid expansion seen in previous months.

In August, imports jumped by 18.8 percent in yuan terms, slightly lower than the 20.9-percent rise seen in July.

China's imports of consumer goods such as food and cosmetics have seen rapid growth since 2017, while domestic demand related to manufacturing investment remained robust, indicating that China's imports are less relevant to infrastructure and real estate investment, China Merchants Securities said.

China has been seeking a more balanced trade pattern, with a series of pro-import policies introduced.

Earlier in July, China's State Council released guidelines on expanding imports, promising tariff cuts, clean-ups of unreasonable price mark-ups, and better intellectual property rights protection.

Fast growth in imports has helped bring down China's trade surplus, which stood almost flat in August compared with July in dollar terms, China Merchants Securities said.

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