Trade War with China

Wow seem US and UK university are force to abandon Huawei, ZTE and other Chinese brands telecommunications equipment including video conferencing equipment.

Top American universities are ditching telecom equipment made by Huawei Technologies and other Chinese companies to avoid losing federal funding under a new national security law backed by President Donald Trump.

U.S. officials allege Chinese telecom manufacturers are producing equipment that allows their government to spy on users abroad, including Western researchers working on leading-edge technologies. Beijing and the Chinese companies have repeatedly denied such claims

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now noticed the tweet





The Foreign Ministry confirmed on Thursday that Australian citizen Yang Hengjun had been detained on suspicion of engaging in activities that threatened China's national security

AndrewS said:

It's not just personnel, it's the hardware as well where China has a cost advantage.

The Type-54 Frigate is approx $300M at current exchange rates, and which works out as $500-600M in PPP terms.
The underarmed LCS is roughly at $600M, and the successor LCS Frigate has a cost estimate of approx $850M.

We see a similar diffferential with other ships, submarines, non-stealth aircraft, and army equipment in general.
But I suspect China has less of a cost advantage for things like missiles and stealth airplanes.

I think in 10 years, China will only grow somewhat slower to only $40-$45 Trillion in PPP terms.
So Chinese GDP would be approaching twice the size of the USA.
But yes, China would easily match US military spending.

The Australian Defence and Treasury white papers are working to the projection that China continues with a modest level of military spending.
But that still means China will start spending more on the military in 2030.

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If Xi liberalizes or USD devalues/Yuan appreciate, I wonder if the GDP could rise even faster like Japan from '85 to '95 ($2 to $5 trillion).

If next 10 years is a significant shift to consumption then Yuan needs to appreciate. Automation might be able to keep the costs low and allow exports even after the appreciation.

AndrewS said:

But that is not the same as hyperinflation, when loaf of bread in Berlin jumps from 160 Marks to 200 Billion Marks in the space of a year.

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Your "hyperinflation" definition is extreme, so I am not surprised that you think it's unlikely to appear in the U.S. I have three comments.

(1) To most people, hyperinflation means painfully high inflation, such as the 3079% that Argentina had in 1989.

(2) High inflation rates tend to grow much higher. Example: Argentina went from 18.74% in 1946 to 50.21% in 1951.

(3) Even 10% inflation would rapidly destroy most Americans, more than 50% of whom have less than $1000 in the bank.

The US dollar is becoming drastically less important for most international payments. If the US is no longer the issuer of the world's favorite reserve currency, other countries are less likely to accept printed dollars. If in spite of this the USA continues to print (quite likely, as it's in too deep to stop), the extra dollars will remain inside the country and inevitably drive up the inflation rate. Unless the US is extremely careful, hyperinflation will ensue.

Remember that the USA is still a large, diversified and broadly self sufficient economy.

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If the USA were socialist, its citizens would have little to fear. But America is what it is; the likelihood is that farmers will be burning their crops for lack of customers, as starving people watch. That was what happened during the Great Depression (see John Steinbeck's The Grapes of Wrath).

The title is a bit dubious since Huawei has already been using its own technology in the form of the Kirin chipset for quite some time already. "Based entirely on own technology" would be a better description.



Huawei Announces 5G Smartphone Based on Own Technology

BEIJING — Chinese tech giant Huawei announced plans Wednesday for a next-generation smartphone that will use its own technology instead of U.S. components, maneuvering to gain a competitive edge and sidestep complaints it is a security risk.

The leading supplier of network switching gear for phone companies, Huawei Technologies Ltd. is spending heavily to develop its own chips, an area where the U.S. dominates. That can reduce Huawei's multibillion-dollar annual components bill and help insulate it against possible supply disruptions when U.S.-Chinese relations are strained.

The handset, billed by Huawei as the first foldable fifth-generation smartphone, will be unveiled next month at the Mobile World Congress in Barcelona, the industry's biggest annual event, said Richard Yu, CEO of the company's consumer unit.

The phone is based on Huawei's own Kirin 980 chipset and Balong 5000 modem. The company says the Kirin 980, released in August, performs on a par with Qualcomm Inc.'s widely used Snapdragon 845.


The ruling Communist Party's plans for state-led development of such industries, along with robotics and artificial intelligence, helped trigger a trade war with President Donald Trump.

Both sides have raised tariffs on tens of billions of dollars of each other's goods in the dispute over American complaints Beijing steals or pressures foreign companies to hand over technology. Washington also says Chinese technology plans violate Beijing's market-opening obligations.

Huawei surpassed Apple as the No. 2 global smartphone brand behind Samsung in mid-2018. It uses Qualcomm in its high-end fourth-generation smartphones and earlier Kirin versions in lower-end models. The company, based in the southern city of Shenzhen near Hong Kong, also has developed chips for servers and mobile devices.

Apple Inc. and Samsung Electronics Ltd. already make their own chips.

Qualcomm has far more smartphone chip technology but Huawei is catching up, said Xi Wang of IDC.

"Generally speaking, Huawei's chips are equal to Qualcomm chips in performance," Wang said. "Not only at the mid-level but at the high end, Huawei can compete with Qualcomm."

Huawei, founded in 1987 by a former military engineer, has rejected accusations it is controlled by the ruling Communist Party or modifies its equipment to allow eavesdropping.

Its U.S. market evaporated after a congressional panel labeled Huawei and its smaller Chinese rival ZTE Corp. security risks in 2012 and told phone companies to avoid dealing with them.

ZTE was nearly driven into bankruptcy last year after the Washington cut off access to U.S. technology over its exports to Iran and North Korea. President Donald Trump restored access after ZTE paid a $1 billion fine and agreed to replace its executive team and install U.S.-chosen compliance officers.

Australia, Japan and some other governments also have imposed curbs on use of Huawei technology.

The company has stepped up efforts to mollify security fears after its chief financial officer, Meng Wanzhou, was arrested in Canada on Dec. 1 on U.S. charges she lied to banks about trade with Iran.

Huawei's founder and CEO, Ren Zhengfei, is Meng's father. In a rare public appearance, he told foreign reporters in a 2½-hour interview on Jan. 15 that he would reject requests from Chinese authorities for confidential information about its customers.

Yu said that despite "political noise" in some countries, Huawei sales outside the United States haven't suffered due to security concerns. The company says it serves 45 of the 50 biggest global phone companies and has signed contracts with 30 carriers to test 5G technology.

"Worldwide, all the carriers love us," said Yu.

Yu repeated Ren's assurances that Huawei has never received an official request for confidential information about customers.

"At Huawei, we never do these kinds of things," he said. "We always protect our customer."

The more US sanctions and embargoes the more countries to go protectionist and try to make their own alternatives.

Smartphone make on small part of Huawei Fussiness. But 5G infrastructure is the meat and potatoes of Huawei and now they will use their own chips independent of the US supplier
Huawei today reveals its new Tiangang (天罡) chipset dedicated to 5G base stations. It allows base stations to reduce size by 50%, mass by 23% and consumption by 21%. By the end of 2018, the Chinese company has already delivered 25,000 5G base stations.

Nutrient said:

Your "hyperinflation" definition is extreme, so I am not surprised that you think it's unlikely to appear in the U.S. I have three comments.

(1) To most people, hyperinflation means painfully high inflation, such as the 3079% that Argentina had in 1989.

(2) High inflation rates tend to grow much higher. Example: Argentina went from 18.74% in 1946 to 50.21% in 1951.

(3) Even 10% inflation would rapidly destroy most Americans, more than 50% of whom have less than $1000 in the bank.

The US dollar is becoming drastically less important for most international payments. If the US is no longer the issuer of the world's favorite reserve currency, other countries are less likely to accept printed dollars. If in spite of this the USA continues to print (quite likely, as it's in too deep to stop), the extra dollars will remain inside the country and inevitably drive up the inflation rate. Unless the US is extremely careful, hyperinflation will ensue.



If the USA were socialist, its citizens would have little to fear. But America is what it is; the likelihood is that farmers will be burning their crops for lack of customers, as starving people watch. That was what happened during the Great Depression (see John Steinbeck's The Grapes of Wrath).

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10% inflation does not spell the end of an economy, despite what you say.

During the 1970s, we did have stagflation when inflation rates of 10-15% did occur in the USA and elsewhere.
In the early 1990s, China's inflation rate touched 24%.

So inflation is a serious problem, but both China and the USA brought inflation back down under control.
So they didn't suffer from a hyperinflationary death spiral, when everyone keeps expecting prices to go up rapidly.

You really need to get a better economics education.

In the 1930s, the US economy was already in a recession.
Yet they cut government spending and took out even more economic activity, thereby making it a depression where nobody had any jobs or a social security net.
So it won't happen again

localizer said:

If Xi liberalizes or USD devalues/Yuan appreciate, I wonder if the GDP could rise even faster like Japan from '85 to '95 ($2 to $5 trillion).

If next 10 years is a significant shift to consumption then Yuan needs to appreciate. Automation might be able to keep the costs low and allow exports even after the appreciation.

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The RMB USD exchange rate isn't really what matters.

What matters is that China increases wages and living standards as fast as possible.
The exchange rate is just one factor.

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And what is the point of exports?

The classical answer is to generate foreign currency in order to buy imports which are needed/desired/cheaper.

But the East Asian development model also uses exports as a source to drive demand in an otherwise poor country, especially in the early stages of industrialisation and development.

But after a while, exporting just for the sake of exporting is pointless, because you just collect large amounts of foreign currency that you can't use and invest wisely.

What matters then is efficiency, quality of growth, consumption and technological upgrading.

That is where China now is

Equation said:

8 out of 72? That's really very very good. Do you know how many countries out there are completely irresponsible with money? You can't deal with them without them getting into debt "traps" and it's never anyone's fault except their own. If they see money, it's gone and it's not to an investment. China's OBOR is as mutually-beneficial as it gets. China offers generous loans that these countries eagerly accept in order to improve their own infrastructure. They saw the terms, they agreed to them, they promised that these financial commitments would not overwhelm them, and China let them have what they asked for. If this isn't mutually beneficial then I guess your definition would have to be China holding their hands and micromanaging their accounts to make sure that every step went well, in which case they'll call China condescending. And if that doesn't work, then China should just give them endless cash without the need for repayment, right? That's mutually beneficial, right? Cus that would be the only place to go from what's already been given to them.

You're the only person I've heard call infrastructure investments short-sighted. These investments are the definition of long-term plan. You're the one who's short-sighted, abandoning long term projects and future benefit because of near-term financial difficulties. Blinder than a bat with strep throat, I'd say. And you're the one who needs to wake up, to the simple fact that everyone is responsible for their own finances. All loans were offered as an opportunity, and they accepted; nothing was forced on them. If they cannot live up to the terms that they willfully entered into then the only fault lies with them and they can lose trust in their own financial management. If they lose trust in China when China has fulfilled all parts of its side of the contract, then they can be swallowed by their own irrationality. Nothing can be done about that.

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First, I never said "infrastructure investments is short-sighted". I fully support critical infrastructure investment when it is needed.

My main point is that China structured the deals to be a debt trap. It is a very high percentage for all those countries who goes into deal to be trap in unescapable debt.
Sure you can argue that's their own fault for not reading the contract and mismanage their own country finance to be in that situation.

BUT You guys are too short sighted to see the whole picture.

These countries are mostly chinese allies, or potential allies. What China invested in them (giving massive loans to them) is Chinese people's money. ALL of these investments have critical strategic value for China. China doesn't just benefit monetarily from just giving the loan out, they form part of China's geo-political strategy. The US-led allies can't wait to dismantle them. Becauses it is against their own interest.

Now when these debt-trapped countries starting to fail because the deal structure make them poorer and has critical snowball effect to the rest of their economy, do you know what will happen? The west will apply pressure economically and politically to destablize the incumbent political leader and the country until it breaks while supporting politcal rival that's friendly to the west to prepare to take control over the chaos. The end result is China's total loss - economically (country no longer service the debt to China) and geo-politically.

Just look at Venezuela. China is about to lose all of its investment in that country.

What China need to do is to structure country that benefits both parties, at the same time give timely advise to guide them and assistance to help them out of any situation. Failing to do so is only a ticket for the west to take advantage of to destablize the country for their own gain. A stablized and economically strong country is a strong ally. Look at South Korea, Japan, EU. They are strong US-allies because they are economically stabled, and when they are not US came helping out (eg, IMF - South Korea).

And another thing you guys don't seem to understand is, US-led west is playing a zero-sum global politcal game, to their view any China/Russia/opponent's loss is their gain, and they will do ANYTHING to gain. Look at Syria, Middle East, South America...