Trade War with China

Discussion in 'Strategic Defense' started by Ultra, Jan 27, 2018.

  1. Ultra

    Ultra Junior Member

    Oct 6, 2014
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    Lately the news has been that US has put up stiff tariff on Chinese solar panels and washing machines, but more are definitely coming from Trump's administration.

    Now that question is, what is China going to do? Is China going to retaliate? Without showing Trump taht China can also damage America deeply and economically to affect his administration, Trump is not going to stop.

    I would say China should start putting very stiff tariff on US cars. GM sold a record 10 million cars last year and 4 million (40%) came from Chinese market. Putting stiff tariff on US cars to make it effectively completely unaffordable in China will completely destroy GM putting massive pressure on Trump's administration. It will also give the Chinese car maker a massive boost and breathing space to actually have a foothold in its own home market.

    Tit for tat.
    bluewater2012 and antiterror13 like this.
  2. Hendrik_2000

    Hendrik_2000 Brigadier

    Dec 20, 2006
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    But most of the GM car is manufacture in China with the Chinese partner and made with Chinese manufacture part. they are not imported plus China export a lot of car parts to US. Limiting Africulture import is a better choice since they are mostly from middle America the bastion of Trump Conservative suporter. It is easily substitute by either Canadian, Argentinian or Brazil Agi import

    Baojun is the hottest brand GM has in China. Sales of the bargain-priced vehicles soared 52% in November to 113,711 units, accounting for over a quarter of GM’s total sales in China.

    GM launched Baojun in 2010, after the “New GM” had emerged from Chapter 11 bankruptcy in the US in July 2009, with Debtor in Possession (DIP) financing and equity investments from the US taxpayer. This support helped GM go on an investment spree in China, and, along with its joint-venture partner SAIC, plow $2.4 billion in the Baojun factory in Liuzhou, even as many former GM plants in the US had been shuttered and were disposed of in bankruptcy.
    #2 Hendrik_2000, Jan 27, 2018
    Last edited: Jan 27, 2018
  3. AssassinsMace

    AssassinsMace Brigadier

    Aug 31, 2005
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    Raise the price of rare earth elements.
  4. Hendrik_2000

    Hendrik_2000 Brigadier

    Dec 20, 2006
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    Here is another arrow in China's quiver that can be used against US trade war via Emperor

    Mr Trump, as you ponder a China trade war, count the US$33 billion Chinese tourists spent in America

    Back-of-the-envelope arithmetic shows that for every 1 million Chinese who skip the US for holidays elsewhere, America’s economy loses US$11 billion in revenue, as 8.6 million jobs depend directly on tourism

    PUBLISHED : Sunday, 21 January, 2018, 2:18pm
    UPDATED : Sunday, 21 January, 2018, 9:16pm

    David Dodwell

    Zhu Guangyao, China's finance vice-minister, speaks in Hanghzou, Zhejiang province, in September. Zhu said on Saturday there would be no winner in a trade war between China and the United States. Photo: Simon Song

    As the administration of Donald Trump ponders how best to launch its trade war with China, maximising impact on China and minimising cost to politically important voters at home, it could do worse than pause to think about tourism.

    And as he and his henchmen like Robert Lighthizer fulminate about merchandise trade deficits, he may do well to remember that set against those visible trade deficits, the US is the world’s largest exporter of services, with surpluses almost anywhere you look. And 40 per cent of those services exports are tourist spending by foreigners in the United States.

    While France is the world’s leading destination for foreign tourists – attracting nearly 83 million people in 2016 – it attracts tourism spending of a modest US$42 billion. This pales against the US, whose 75.6 million inbound tourists spent US$290 billion, making the US by far the world’s biggest earner from international tourism.

    Out of those nearly 76 million foreign visitors to the US in 2016, fully half came from Canada and Mexico. China accounted for just 3 million. But then look at the spending: those Chinese tourists spent US$33 billion – almost as much as Canadians and Mexicans combined.

    Already, the US tourism industry has suffered what some are calling the “Trump Slump”. From his early efforts to block travel to the US from a number of Middle Eastern economies that he deemed were sources of terrorism, to his attacks on Hispanics (remember his comments about Mexicans on the campaign trail: “They’re bringing drugs. They’re bringing crime. They’re rapists.”), his decision to engage in trade wars with Canada and Mexico, his biggest trade partners, and his recent slur on “s***hole countries”, it is hardly surprising that the flow of international tourists into the US is faltering, and may decline further.

    Data just released by the UN World Tourism Organisation show international travellers growing by more than 7 per cent in 2017, with Europe seeing the strongest arrivals growth, up 8 per cent. Arrivals in South America rose by 7 per cent, while arrivals in Asian destinations jumped 6 per cent.

    How about the US? They reported a decline estimated at 2 per cent – with a 10 per cent drop from Europe and 7 per cent from Mexico. As a result, Spain has now jumped ahead of the US as the world’s second-most popular tourist destination.

    With an estimated 8.6 million jobs in the US directly reliant on tourism (according to the US Travel Association), and a further 15.3 per cent benefiting indirectly, such contraction is no small matter.

    And as Trump ponders his assault on China, he should think on a few facts. According to the China Outbound Tourism Research Institute, based in Hamburg and Beijing, China was last year the source of 154 million international travellers. Admittedly, 68 million of these went either to Hong Kong or Taiwan, but that left 86 million travelling elsewhere overseas – which outranks Germany (83 million), the US (68 million) and the UK (60 million).

    China’s outbound tourism growth is currently running at over 6 per cent a year, with predictions there will be more than 200 million Chinese travelling overseas by 2022. This is unlikely to slow any time soon. Chinese took more than 4.4 billion domestic holidays in 2016 (compared with Americans who took 2.2 billion local holidays), and a rising number of these local Chinese travellers are on the cusp of becoming wealthy enough to think about international travel (less than 10 per cent of Chinese currently hold passports).

    Since China’s international travellers are already by a large margin the world’s biggest-spending travellers, a failure to capture a share of this growth will have sobering impacts on those people in the US who rely on tourism.

    In 2016, (the latest year with reliable numbers) Chinese travellers spent US$261 billion on their holidays overseas, compared with US$124 billion by Americans, US$80 billion by Germans and US$64 billion by UK travellers.

    So far, Chinese visitors have not been a conspicuous part of the “Trump Slump”, partly because the China visitor numbers are currently quite small. Friendly meetings between Trump and Chinese President Xi Jinping during 2017, with lots of face given on both sides, have also no doubt insulated the travel numbers from China.

    But with China expected to be the source of around 50 million new international travellers over the next five years, a considerable price will be paid if trade war blocks the US tourism industry from capturing a good share of this growth.

    If the 3 million Chinese who visited the US in 2016 spent US$33 billion, the arithmetic is clear: for every 1 million Chinese that choose not to travel to the US, but to travel elsewhere, that implies a US$11 billion annual loss in tourism revenue to the US economy.

    Of course, Trump’s angry trade warriors are measuring their trade deficit in manufactured goods when they complain about the current account imbalance with China, not their surplus in services. But that may be a big mistake.

    Look at the overall data (again for 2016): of the US$2.2 trillion in total exports of goods and services, US$1.4 trillion were goods and US$0.8 trillion were services. Total imports amounted to US$2.7 trillion, giving an overall deficit of US$0.5 trillion.

    But break out the services, and the US made a surplus of US$300 billion, based on exports of US$800 billion and imports of US$500 billion. Even more important, where did those services “exports” come from? Around 40 per cent, or US$293 billion, came from tourism spending by foreign visitors in the US.

    Now these numbers look interesting: in launching a trade war to boost sales of goods like aircraft (US$121 billion in 2016), chemicals (US$71 billion), semiconductors (US$44 billion), soybeans (US$24 billion), or meats (US$17 billion), Trump is putting in jeopardy US$293 billion in existing revenues from tourism.

    If US tourism were growing like inbound visits to Europe (8 per cent), then this would mean services export growth amounting to more than US$23 billion a year. But the “Trump Slump” means tourism revenues are contracting by around 2 per cent – which means foregone growth in 2017 alone of almost US$30 billion.

    I sense that we are beyond the point where Trump’s trade warriors will pause to reconsider how ill-judged their coming trade war may be.

    But as we watch the tourism numbers stall, we may spare a thought for those millions of people in the US who rely on tourism, and other unnoticed services exports.

    David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view

    This article appeared in the South China Morning Post print edition as: Trading in of tourism
  5. PiSigma

    PiSigma "the engineer"

    Aug 30, 2005
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    Interesting perspective from the author, especially since trump is a property tycoon that owns several hotels. You would think tourism is high on his mind. So I don't know if I would believe everything the author wrote.
  6. Hendrik_2000

    Hendrik_2000 Brigadier

    Dec 20, 2006
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    Trade war? well let it rip
    China Could Target U.S. Firms if Trump Levies Tariffs, Group Warns
    By SUI-LEE WEEJAN. 30, 2018

    In December, Mr. Trump included economic challenges posed by China as part of his national security blueprint, vowing that he would pressure China, the world’s second-largest economy, on trade.
    Chinese officials have told American business representatives that they are prepared to push back, said William Zarit, the chairman of the American Chamber of Commerce in China

    “I have been told by certain officials that yes, definitely, there will be retaliation,” he said at a briefing in Beijing, to announce the findings of the group’s 2018 business climate survey.

    Chinese officials were not specific on what form of retaliation Beijing would take, Mr. Zarit said.

    • “What we have urged our interlocutors is that if there is some kind of tariffs, and if the Chinese do want to retaliate, that they do so maturely and with precision, so as not to adversely affect their own economy,” he said.

      The relationship between President Trump and President Xi Jinping of China got a promising start last year at Mar-a-Lago, but this year ties between the world’s two largest economies could be rocky. Of particular concern are trade disputes and a longstanding argument over how to handle a nuclear-armed North Korea.

      Last week, the Trump administration unveiled tariffs on imports of solar panels and washing machines — industries dominated by Chinese and South Korean businesses.

      If China does strike back, the two biggest likely targets would be the agriculture and aircraft industries, said Lester Ross, chairman of AmCham China’s policy committee.

      “From the Chinese government’s perspective, I think it would be likely that it would target sectors that have political resonance in the United States,” he said.

      China imported $21.4 billion in American agricultural products in 2016, according to government data, more than half of which was soybeans.

      “Agriculture affects a sector where the United States enjoys a surplus and where there are competitors in other parts of the world for the commodities that China imports,” Mr. Ross said. “And the producers are predominantly in states which voted for President Trump.”

      He noted that Boeing, the aircraft maker, would be “another obvious example” of a company that could be in Beijing’s cross-hairs if the Trump administration imposes trade sanctions against China.

      Boeing competes against Airbus of Europe to sell jetliners to Chinese carriers. This month, President Emmanuel Macron of France said on a visit to China that an $18 billion contract with it for 184 Airbus A320 narrow-body jets would be finalized soon, according to Reuters.

      Yukui Wang, a spokesman for Boeing, declined to comment.

      China could also consider initiating antidumping investigations of American imports of other products, contending that they are sold below their fair value and subsidized by the United States, Mr. Ross said.

      China remains an important market for some of the largest corporations in the United States, and their fortunes are tied in part to the Chinese authorities’ willingness to let them sell products or operate businesses there. That has made them fearful of complaining publicly about lack of market access and other regulatory problems. Their worries include being subject to unannounced government audits or facing antimonopoly investigations.

      In AmCham’s business climate survey, three-quarters of respondents said they felt less welcome in China, a slight drop from levels in the previous two years.

      But American companies increasingly believe that some changes in China’s business and trade practices need to be made, Mr. Zarit said.

      “There’s a sense that strictly just dialogue has not really brought much in terms of progress,” Mr. Zarit said. “So perhaps some pressure will help get us more progress to a more balanced economic and commercial relationship.”

      On paper China has more to lose from a trade war, as it exports more to the United States than it imports. Still, it is less trade-dependent than it was in the past, according to an analysis by Capital Economics, a London-based research company. Exports to the United States contribute only 2 percent to China’s annual economic output, and Beijing has “far greater leeway to make life difficult for U.S. firms.”

      “The chances of China acquiescing to U.S. demands by leveling the playing field for firms selling to or investing in China are low,” it said in a report.

      In an editorial last week, the newspaper Global Times, which is controlled by the Communist Party, said China could also restrict sales of American cars and the flow of Chinese students going to the United States. China could also sell its holdings of United States Treasury bonds, it noted.

      “The easiest solution would be for U.S. leaders to realize as soon as possible that China is not a tamed sheep they can manipulate,” the editorial said.
  7. Yodello

    Yodello Junior Member
    Registered Member

    Dec 29, 2015
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    If only the U.S is willing to sell stuffs that China would like to buy, in a free and fair trade. It is absolutely hypocritical for American businesses to talk about or blame China for not having a level playing field. If only those U.S businesses could ask their own government to let some of the companies or industries restricted by the U.S government to sell or do any business with China, to be allowed to do business with the worlds second largest economy, the U.S could sell more products to China and hence acquire more of a level-playing field.
    Of course, the U.S doesn't know what hypocrisy is. Always look out for someone to blame your ills upon :(
    In a trade war, I believe the U.S will be the first to blink, that is my firm assumption.
  8. solarz

    solarz Colonel

    Oct 9, 2009
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    As usual, the US rhetoric is hypocritical. While they harp on how unfair China is to restrict access to US companies, they pass legislation to forbid Chinese companies from selling telecom equipment, build trains, or purchase companies in the US.
    plawolf, Ultra, bluewater2012 and 9 others like this.
  9. Hendrik_2000

    Hendrik_2000 Brigadier

    Dec 20, 2006
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    Trump Gets Mad; Farmers Get Hurt
    John Brinkley , CONTRIBUTORI write about international trade and investment. MOST POPULAR

    One of the first things you learn in high school physics class is that every action has an equal and opposite reaction.

    You can apply that law, loosely, to trade disputes, such as the one President Trump is starting with China. Put it this way: Every trade sanction the United States imposes on another country causes a retaliatory sanction — and the target is almost always agriculture.

    This has happened again and again over the course of many years, and the benefits have never outweighed the detriments. This fact seems lost on Trump, who will soon decide whether to declare steel and aluminum imports from China and elsewhere threats to national security. The Commerce Department released a report this month saying he should do so and should impose high tariffs on those commodities.

    Soon afterward, China announced it was considering anti-dumping tariffs on imports of U.S. sorghum and soybeans.

    China buys 70% to 80% of all sorghum produced in the United States every year and about one-third of the soybeans. The United States is the world’s largest producer of soybeans, and China is the world’s largest buyer of them.

    “U.S. sorghum farmers sell their product to our valued partners in China,” said a statement by the National Sorghum Producers, a trade association. “We appreciate our deep and longstanding relationships within these buyers, and the feed and livestock industries in China. U.S. sorghum farmers do not dump our products into China or elsewhere, and our products are not unfairly subsidized.”
    John Heisdorffer, president of the American Soybean Association, said: “China is not only our largest customer; it purchases more than all our other customers combined. Add to that the sobering fact that our capable competitors in Brazil and Argentina are all too happy to pick up whatever slack we leave in supplying the Chinese market, and these potential tariffs have the potential to make life very hard for soybean farmers.”

    Brian Kuehl, executive director of Farmers for Free Trade, said: “The agriculture sector knows from experience that our ag exports are the first to be hit by retaliation. The fact that China just targeted U.S. sorghum is only the most recent example. We urge the president to consider the very real price our farmers and ranchers would end up paying if we continue to escalate back and forth reprisals that close off global markets.”

    Even Trump’s agriculture secretary, Sonny Perdue, counseled caution about tangling with China over steel and aluminum imports.

    “It just shows you … how fragile and sensitive the ag economy and commodity prices are now to trade disruptions, and we need to be careful as we take actions there,” he said at a hearing of the House Agriculture Committee. “Agriculture is usually the tip of the spear of retaliatory measures.”

    China seems to be using a carrot-or-stick approach; it has asked Trump to cool his ardor and try to resolve the issue through negotiation.

    “We urge the United States to stop the strategic intention of deliberately distorting China and abandon the outdated concepts of Cold War thinking and zero-sum game, or else it will only harm itself,” a Chinese Foreign Ministry spokesman said. He said the Commerce Department’s recommendations were "completely groundless and unreflective of reality.”

    The Commerce report is based on Section 232 of the Trade Act of 1962, which empowers the president to retaliate against imports that he deems a threat to national security. Unlike other U.S. trade laws, Section 232 doesn’t require him to ask the U.S. International Trade Commission for an independent analysis.

    It’s not just China. Trump’s repeated threats to withdraw from NAFTA have led Mexican corn buyers to turn increasingly toward South American sellers. Reuters reported on Thursday that Mexico bought 583,000 metric tons of corn from Brazil last year – a 970% increase over 2016.

    In January 2018, Mexico bought 100,000 metric tons of Brazilian corn, compared with zero in January 2017.

    Farmers voted overwhelmingly for Trump in 2016, even knowing that he hated NAFTA and that he vowed to withdraw the United States from the Trans-Pacific Partnership, which he did. They considered these threats against his promise to do away with environmental regulations that have been costly and burdensome to them and decided the latter was more important than the former.

    If Trump follows through on his threats against China and our NAFTA partners, farmers may abandon him.
  10. Phead128

    Phead128 Junior Member

    Jun 1, 2006
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    US had more leverage against China ~20 years ago, when US-China trade (imports+exports) accounted as much as ~20% of China's GDP in year 2000.

    Now, 20 years later, US has far less leverage than China compared to 20 years ago, with US-China trade only accounting for 4% of China's GDP in 2018.

    The time for US to bully China is long past. US will probably incur retaliation from a more confident China that is less reliant on US as an export market compared to 20 years earlier.

    REMEMBER, exports isn't everything. India is yet another +1 billion nation that is achieving 8-9% growth based on domestic consumption alone, so it is a myth that China can only rely on Western markets to fuel rapid growth. India is a prime example of domestic consumption led growth, and India is only 10 years behind China's GDP today at 7% annual growth.

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