Trade War with China

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U.S. will hurt itself with action on ZTE: MOC
Xinhua| 2018-04-19 13:18:19

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U.S. ban "unfair," "unacceptable": ZTE
Xinhua| 2018-04-20 16:14:33

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Chinese telecom equipment maker ZTE Corp. said in a statement on Friday that it will not accept a ban by the United States on the company, calling the decision "unfair."

"The ban will not only severely impact the survival and development of ZTE, but also cause damage to all partners of ZTE including a large number of U.S. companies," said the statement, which came after the U.S. Department of Commerce imposed a denial of export privileges against ZTE for alleged violations of the Export Administration Regulations earlier this week.

It is "unacceptable" that the U.S. side insists on unfairly imposing the most severe penalty against ZTE, even before the completion of an investigation, the statement said.

The U.S. side has disregarded the fact that ZTE has identified the issues itself and immediately reported them to the U.S. side, and that "the company has taken measures against the employees who might have been responsible for this incident," the statement said.

ZTE argued that "corrective measures" had been taken immediately and a U.S. law firm had been engaged to conduct an independent investigation before the U.S. decision was made.

The company said it has continuously reflected on lessons from its past experience in export control compliance and has attached great importance to the matter during the past two years.

"Within ZTE, compliance is regarded as the foundation and bottom-line of the company's operation," the statement said.

Its efforts included organizing compliance training to over 65,000 employees, as well as comprehensively cooperating with the U.S. side and providing over 132,000 pages of documents. In 2017, ZTE invested over 50million U.S. dollars in its export control compliance program and is planning to invest more resources in 2018, the statement said.

The Shenzhen-based company said it is determined to take all judicial measures to safeguard its legal rights and interests, while it will not give up efforts to resolve the issue through communication.

China's Ministry of Commerce (MOC) said Thursday that the U.S. action against ZTE will damage itself. "The action targets China, however, it will ultimately undermine the United States itself," said MOC spokesperson Gao Feng.

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Once again, the Trump administration has lashed out at China. It's trying to hit China's technology sector. But it will only give China more reasons to make the technology themselves.
This ban isa short term instant gratification but the lng term effect will massive loss of China market for US Technology firm. Already Qualcomm lay off 1500 people and most of supplier for ZTE loss in wall street

This article nails it. Some articles are saying that China will get hurt more in a trade war versus the US, the reality is, the US is already getting hurt from it more evidently, from its farmers, to the recent stock market drops, to losses like Qualcomm and ZTE's American partners like Acacia.

From Foreignpolicy.com

Hendrik_2000 said:

Once again, the Trump administration has lashed out at China. It's trying to hit China's technology sector. But it will only give China more reasons to make the technology themselves.
This ban isa short term instant gratification but the lng term effect will massive loss of China market for US Technology firm. Already Qualcomm lay off 1500 people and most of supplier for ZTE loss in wall street

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Indeed, it’s a massive wake up call, and I think there will now be a multi industry wide drive to diversify away from American components at all levels.

Huawei for example, would be stupid not to put in place contingency plans or downright switch suppliers preemptively away from American ones.

Ironically, it also gives China a national security excuse to make American companies who want major Chinese contracts to either set up sanction proof manufacturing subsidiaries in mainland China so Trump or future American administrations could not manufacture some random reason to ban imports of key materials and components on a lark; or to sell their technology to a Chinese player as the price of entry to ensure Chinese national security is not compromised by a possible politically driven export ban by the US.

And Trump would be wise to stop while he is ahead on the ban side. China could retaliate by banning the sale and transfer of Chinese rare earth materials to US companies.

That is a nuclear option, as it will decimate the entire US high tech industry, but it is most certainly a card China could play if pushed far enough.

Of course, it doesn’t need to be explicitly stated as such for legal considerations, China could simply pass a new law requiring export licences for foreign companies to buy rare earths (with end use verification requirements), and simply lock all licence requests from American companies in red tape limbo for months or years.

And before anyone suggest the US simply get 3rd parties to buy the rare earths from China and then sell on to America, that is where the ban on transfer and end use verification parts come in.

The licences would only be granted to companies that can demonstrate and prove end-use, so no shell companies can get a licence. Any company that actually needs rare earths for their own operations would be risking the viability of its own existing operation to open a side business selling rare earths to embargoed American companies, so it would make little sense for the big companies to risk it, and the little ones won’t be able to buy enough extra to make any difference in the grand scheme of things without raising obvious red flags by trying to buy orders many times their previous annual purchases.

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U.S. restrictions for Chinese investment are oppression: FM
Xinhua| 2018-04-20 21:03:41

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The mooted U.S. move on setting limits for Chinese investment in science and technology, is an act of technological oppression, a Foreign Ministry spokesperson said Friday.

Media reported that the U.S. Treasury Department is considering ways to restrict sensitive Chinese investment in the United States by invoking an emergency power law and declaring some security review reforms for corporate acquisitions.

"The move and recent many others expose U.S. hegemonic mentality," said spokesperson Hua Chunying. "It is obvious that the United States has been pushing for trade protectionism in the name of national security by repeatedly setting limits for Chinese trade and investment in high-tech fields in the States."

Hua said that while the United States required China to open up its market, it imposed restrictions on Chinese trade and investment.

"It is being unreasonable and hegemonic in suppressing China's economic growth and scientific and technological development on national security grounds," she said. "Technology should serve the interests of humanity rather than be a tool to advance one nation's power over another."

China contributed 57.5 percent to global scientific and technological progress last year and more than 30 percent of global growth, according to Hua.

"Nothing can slow the pace of China's technological innovation," she said.

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Via Taishang. US think only they can supply ag product but there are other producer of agriculture product

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By Chu Daye Source:Global Times Published: 2018/4/19


Strong demand, Sino-US trade tension provide opening

China will work with Russia to actively expand bilateral trade and further ease mutual market access for agricultural products, a Chinese official said on Thursday.

Mature Sino-Russian ties are not affected by external factors, and bilateral trade between China and Russia has rebounded swiftly in recent years, Gao Feng, a spokesperson for the Chinese , said at a press briefing Thursday.

In the first quarter, Sino-Russian trade recorded robust growth, with the bilateral trade value increasing by nearly 30 percent year-on-year, and the trade value for 2018 is expected to exceed $100 billion, according to Gao.

Going forward, the two sides will work on expanding mutual market access for agricultural products, boost cross border e-commerce and further speed up trade facilitation, Gao said.

The statements came as the US continues its sanctions against Russia and amid concerns that certain sanction measures could hurt Sino-Russian trade.

Sun Zhenbo, an agricultural businessman with Erenhot Jinguyuan Grain and Oil Co, said that trade of agricultural goods between China and Russia has been growing at a rapid pace in the past two years.

At the end of 2015, China and Russia signed an agreement over the imports of Russian soybeans, corn, rice and rapeseed, and Russian agricultural imports have been surging since then, noted Sun, whose company is based in Erenhot in North China's Inner Mongolia Province.

"In 2016, the Port of Erenhot imported 60,000 tons of agricultural products, almost all of which were from Mongolia. But in 2017, the import volume reached 200,000 tons, and many of these imports came from Russia," Sun said.

In 2017, the trade volume between China and Russia reached $84.07 billion yuan, up 20.8 percent year-on-year, according to customs data.

"Year-to-date, imports of Russian goods at Erenhot have reached 40,000 tons, and the trend is that Russia is replacing Mongolia as the primary source of agricultural product imports," Sun told the Global Times on Thursday.

Russia's capacity to produce massive amounts of agricultural products, its stringent food safety regulations and better packaging that can prevent vegetable epidemics all contributed to the increase, said Sun.

Exports of Russian soybeans to China are still in the early stages. All the ports in Northeast China's Heilongjiang Province, for instance, imported a total of just 515,000 tons of Russian soybeans in 2017, according to media reports.

Sun said that as the rising trade tensions between China and the US will affect US-produced soybeans, Russian soybeans have great prospects.

"The price of Russian soybeans will be a determining factor in their ability to gain market share in China. On the Chinese side, its demand for soybeans is rigid as it is an 80-million-ton market. If the Sino-US soybean trade faces long-term uncertainty, there will surely be an increase of Russian soybean imports in China," Sun said.

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One's loss, other's gain. artay:

No one win in trade war

Report: Ships carrying US sorghum stuck at sea after China imposes tariffs
BY JOHN BOWDEN - 04/20/18 10:24 AM EDT
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http://thehill.com/policy/finance/384126-report-ships-carrying-sorghum-from-us-turn-around-after-china-imposes-tariffs

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Several China-bound ships carrying U.S. sorghum exports have changed course since China's government announced a new tariff targeting the U.S. grain industry this week.

reports that 20 ships carrying more than 1.2 million tons of U.S. sorghum are currently at sea, with at least five of them announcing new courses after China's government announced a new tariff on sorghum Tuesday morning.

The grain on board the 20 ships is valued at more than $216 million, but China is now forcing grains handlers to pay a 178.6 percent tariff of the value of the shipments as a deposit upon arriving.

U.S. sorghum is relatively cheap in China due to artificial price inflation, which experts say allows the country to target a U.S. export from typically red states. China started mass importing sorghum in 2014 as a result of inflated grain prices set by China's government.

China announced the tariff on sorghum this week alongside an action meant to free up restrictions on U.S. auto exports, a decision that could benefit U.S. auto companies that do not already have a footprint in the country.

Trade analysts told Reuters that tariffs targeting U.S. grain shipments could lead to an escalation of the back-and-forth tariffs that the U.S. and China have rolled out in recent weeks.

“For their overall trade businesses, this is not that substantial. But it’s a warning,” Bill Densmore, senior director of corporate ratings at Fitch Ratings, told Reuters. “If China really does start slapping tariffs on everything, like soybeans and corn, things could get really ugly, really fast.”

Tom Sleight, president of the U.S. Grain Council, reacted to China's most recent tariff by calling for an end to the Trump administration's escalating tough talk aimed at China's trade policies.

“This tit for tat has to stop, and talks to find reasonable and lasting solutions must begin, for the good of U.S. agriculture and the customers we have spent decades working to win as loyal buyers,” he said

Sorghum Trade Is Drying Up in U.S. After China Imposes Tariffs
By
Shruti Singh

April 20, 2018, 12:21 PM CDT

• Bids have almost disappeared in Gulf of Mexico, Scoular says
• Prices for the grain are seen heading lower relative to corn

Bids for sorghum in the Gulf of Mexico have almost disappeared after China’s decision earlier this week to impose a 179 percent tariff on U.S. imports, according to grain-handling company Scoular Co.

“There’s been very little trade,” Bob Ludington, who oversees Omaha-based Scoular’s North America grain and oilseed division, said in an interview Thursday. While some U.S. grain elevators are still bidding for sorghum, “nobody is looking” for it in the Gulf, he said.

Scoular has elevators in Kansas that buy crops including sorghum. The company then ships supplies around the U.S. as well as to Mexico and exporters in the Gulf.


China has been the biggest importer of U.S. supplies. When the Asian country announced an investigation into American shipments in February, sorghum prices dropped on speculation that tariffs would be imposed, erasing the premium the grain had fetched over corn prices in Kansas.

Now that the tariffs are here, sorghum prices relative to corn must drop to attract domestic as well as international customers, said Ludington, who is based in Overland Park, Kansas.



Sorghum is fed to livestock and poultry and is also used to make ethanol. It has been priced out of the U.S. animal-feed market because of strong Chinese demand over the last few years, Ludington said. Where U.S. supplies may go now isn’t certain, but Mexico may be a potential destination, he said.

— With assistance by Jeff Wilson

About time they crank up all those chip via Beijing walker and cirr

Major Chinese Memory Companies Arrange Trial Production to Begin in 2H18

April 20, 2018 | TrendForce

According to DRAMeXchange, a division of TrendForce, China has entered the semiconductor sector and focused on the development of domestic memory industry. The three key players are YMTC, Innotron(Hefei Chang Xin) and JHICC, which work on NAND Flash, mobile DRAM and specialty DRAM respectively. All three companies have arranged trial production to begin in 2H18 and mass production to begin in 1H19. This will make 2019 the first year of China’s domestic memory chip production.

As for the schedules of the three suppliers, the construction of Innotron’s fab was completed in June 2017 and the equipment installation took place during 3Q17. For now, Innotron and JHICC have both postponed trial production to 3Q18 and tentatively arrange mass production to take place in 1H19, falling behind their announced schedule. Furthermore, Innotron apparently wants to compete head to head with top DRAM suppliers by choosing LPDDR4 8Gb chips as its first product, but there is a strong possibility that Innotron will have potential issues of patent infringement. To avoid arguments, Innotron will need accrue IPs that are recognized by the international laws. Another safer approach is to sell products only in the domestic market at the outset.

JHICC, which pursues the manufacturing of specialty DRAM, unveiled a plan in July 2016 to invest US$5.3 billion in constructing a 12-inch wafer fab in Jinjiang, Fujian Province. JHICC has deferred the trial production of its specialty DRAM products to 3Q18 and their mass production to 1H19.

In terms of China’s domestic NAND Flash industry, YMTC’s national memory base broke ground at the end of December 2016, and three 3D-NAND Flash manufacturing plants are arranged to be built sequentially in three phases. The construction of the first-phase plant was completed in September 2017, and the equipment installation is set to commence in 3Q18. The first-phase plant is also scheduled to begin trial production in 4Q18. During its early operational period, the first-phase plant will be producing 32-layer MLC 3D-NAND Flash, and its wafer starts are not expected to exceed 10,000 per month. The construction of the second- and third-phase plants and their production plans will proceed according to the situation after YMTC perfects its 64-layer design, says DRAMeXchange.

Based on R&D and production plans of domestic DRAM suppliers, DRAMeXchange expects the Chinese memory industry to formally begin production in 2019. As Chinese suppliers will need time to ramp up, the competitive landscape of the global DRAM market will not change immediately following the entry of JHICC and Innotron. For both DRAM and NAND industry, these Chinese semiconductor companies are still new comers that may experience more challenges compared with established memory chip makers, so there is a possibility that they progress slower than expected and have delays in their schedules.

In the long term, Chinese DRAM suppliers may be able to operate on a fully loaded capacity in 2020-2021 as they achieve maturation for their products. Together, JHICC and Innotron’s total production capacity is forecast to reach 250,000 wafers per month in 2020-2021. They thus will have some influence over the global DRAM market by that time. On the other hand, since the three facilities together will have a total capacity of 300,000 wafers per month, YMTC may start to significantly raise its wafer starts once it has finished developing its 64-layer products. This ramp-up in turn may have a huge effect on the overall market supply of NAND Flash in the next three to five years.

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U.S. ban against ZTE could hurt 5G aspirations: expert
Xinhua | 2018-04-20 23:34:25

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The U.S. ban on exporting components to China's major telecom manufacturer ZTE could hurt the development of fifth-generation (5G) smartphones and plan of building a fast 5G wireless service, a California-based expert said Thursday.

The U.S. Department of Commerce on Monday announced suspending the export privileges of ZTE in the next seven years for alleged violations of the Export Administration Regulations.

"From a 5G telecom equipment point of view, I don't think this hurts the company too badly, but this will hurt 5G smartphones and any aspirations in the 5G edge data center," said Patrick Moorhead, president and principal analyst of Moor Insights and Strategy, a global technology consulting company.

5G is the proposed next telecommunications standard, aiming at higher capacity than the current 4G. The next seven years are considered as a critical period during which the world's telecom companies are developing and launching 5G technologies.

ZTE's major suppliers in the United States include Qualcomm and Intel for chips, and Acacia Communications and Lumentum for optical components.

"The implications (of the ban) are that ZTE will have challenges competing in smartphones and edge computing," said Moorhead.

China's Ministry of Commerce (MOC) said Thursday that the U.S. ban would end up having an adverse impact on the country itself.

"If the United States attempts to curb China's development and force China to make concessions by sticking to its unilateral protectionism at the cost of harming the interests of Chinese and American enterprises, it miscalculates," MOC spokesperson Gao Feng said.

ZTE has 14 offices and six research centers in the United States and supports nearly 130,000 high-tech jobs in the country.

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