Trade War with China

AssassinsMace said:

What a bunch of bull of anonymous sources. The US doesn't buy DRAM modules from South Korea. China does but they're still going to bring production back to South Korea to avoid Trump's tariffs? Maybe South Korea will expect China to buy their more expensive than ever DRAM modules made with higher cost South Korean labor. The argument against the global economy is corporations will look to make every penny they can at the expense of workers. Yeah good luck not going bankrupt in the near future.

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Can US-China trade war rivalry reverse the worst economic trends in both countries?

Andy Xie says both China and the US have built their economies on financialisation while ignoring the people’s concerns, and the trade war will hasten the reckoning both countries need
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The US’ contention is that China makes money from the US and is using it to push America out of

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and elsewhere. It is difficult to see how the US could climb down from this position. To follow its rhetoric, it will try to cut off China from its market and block

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exchanges.

This rivalry may bring short-term pain to both nations, and to the world, but it may prove beneficial to all in the long run.
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The lack of external checks has led to rising internal imbalances in both countries. Since the end of the cold war, the US has been marred by surging inequality, while bubbles and ignorant hubris have come to occupy the central ground in China’s economic management and political thinking.
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Financial speculation and

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have become normalised around the world. The titanic rivalry between the world’s No 1 and No 2 economies will put all on their toes. Some of the most egregious trends could be reversed.
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There are arguments about how export dependent China is. At

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, China’s export ratio seems much lower than that of other East Asian countries during their boom. The low figure is actually due to China’s hinterland effect. The Eastern Seaboard of four provinces and one city account for two-thirds of the country’s exports.

They also account for all the financial support for the central government, and the subsidy transfers to the hinterland. The efficient part of

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is as export dependent as the other East Asian economies were.
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The big cost will come if and when

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of China. The process is inflationary. It is not just inflating the US$500 billion of imports from China. Imports from other countries will also rise, due to less competition from China. Inflation raises living costs for most Americans who live from pay cheque to pay cheque.

It will also force the

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to raise interest rates more than expected. The US has been experiencing one bubble after another for the past two decades. The low interest rate, justified by imported deflation, is the main culprit. The US’ bubbles seem resilient for now. They will soon follow China’s and burst.

Bubbles bursting is a necessary condition to bring sense to all players. Policymakers have been paying too much attention to asset prices. One major factor is that they hang out with speculators at places like

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. This is why, despite incredible economic growth since 1989, most people are discontent.

The world needs a new generation of policymakers who don’t hobnob with billionaire speculators and who understand workers’ concerns. Unfortunately, the change will not come smoothly. Political turmoil in the West is very much about this. A heavy price has to be paid to bring about the change.
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In 2008, Beijing and Washington pumped in massive amounts of money to bail out speculators in the name of saving the economy and helping workers. The reality is that they used workers’ money to enrich parasites.

We are living in a world in which wealth is theft, as Karl Marx once said. The sooner this world ends, the better. People may despair in the coming years over the ensuing chaos, but a better world will emerge.

As in everything else, competition enhances efficiency. At the end, both China and the US will become better countries.

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Hendrik_2000 said:

Andy Xie ? another one of those doomsday sayer Look at his prediction over the years none ever come close to realization!

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Anlsvrthng said:

Prediction of what?

The future is full of chances.
An event can not be "predicted", only a chance of the event can be earmarked.
That is one reason why I like Pettis, he analyse the probabilities / possible outcomes.

Same here, Andy Xie analyse the situation, NOT making predictions about the future.

However for many the "analysis of a situation" sound like black magic.

: D

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Hendrik_2000 said:

Well they already do it by massive state support for semiconductor industry because chinese industry is lazy and take the easy way out by investing in high margin low capital investment like Tencent , Baidu, Alibaba

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China Said to be Raising $47 Billion Semiconductor Fund

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5/8/2018 00:21 AM EDTAN FRANCISCO — A second fund to bolster China's domestic semiconductor industry — a government-backed investment firm set to be launched soon — is believed to be much greater than original thought

The Wall Street Journal, citing unnamed sources, reported that the government-backed China Integrated Circuit Industry Investment Fund would allocate the funding to — among other things — improving China's ability to design and manufacture advanced processors and GPUs. The size of the fund, which had previously

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may have been increased as the result of boiling trade tensions between China and the U.S.

State-backed funding of China's semiconductor industry has emerged as one focus of the trade tensions that have bubbled up between the two nations, with each poised to impose tariffs on billions of dollars worth of products. The U.S. claims that China's government support for its semiconductor industry is anticompetitive

The Chinese government has, in recent years, stepped up efforts to create a domestic semiconductor industry to help supply its massive electronics market, signaling its intention to spend $161 billion over 10 years to further that effort. China currently imports more than $100 billion worth of semiconductors every year.

The latest China Integrated Circuit Industry Investment Fund will follow a similar fund launched in 2014 that raised about $22 billion, according to the Wall Street Journal report.

Handel Jones, CEO of International Business Strategies, said that the recent trade disputes with the U.S. have created increased urgency for China to bolster its domestic semiconductor industry. The U.S. recently slapped an export ban on Chinese telecommunications provider ZTE, preventing U.S. suppliers of semiconductors and other components from selling devices to ZTE, a major customer of Qualcomm and other U.S. chip vendors.

"China needs to establish mega center design capabilities in order to be able to have a stronger design and IP ecosystem," Jones told EE Times. He added that some of Chinese fabless chip vendor HiSilicon's Kirin applications processors are, however, already competitive in global markets

• — Dylan McGrath is the editor-in-chief of EE Times

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tidalwave said:

Frankly, China needs someone real understanding to give them advises on going in inside US. (Me, included, at least I got more understanding than whoever give them advises currently)

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manqiangrexue said:

LOL Job application fail. Think you know more than all of China's advisers?

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