Trade War with China

manqiangrexue said:

"Despite a lack of access to uncensored news, the adverse effects of the trade war have started to be felt and are rapidly becoming known throughout Chinese society. This is especially true for those who now have things to lose, including the value of their stocks and real estate, the chances of sending their children to study in the US, or even just being able to watch the final season of Game of Thrones on television."

That's when I realized how serious their complaints are.

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styx said:

The idea of chinese government is deflating housing and other bubbles bubbles through inflation, so its good for them the soaring of food prices.

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"Billions of dollars are pouring into the coffers of the U.S. because of the tariffs being charged to China," U.S. President Donald Trump boasted trophies of his trade measures on Chinese products on Twitter last November.

The president vowed to use "every lawful presidential power to remedy trade disputes" since his campaign trail in 2016, but in spite of Trump's triumphant tweet, figures show that the trade war against the world's second-largest economy turned out to be dragging the U.S. further into the economic quagmire.

Oxford Economics estimated that the tariffs in place since 2018 cut U.S. GDP by about 0.1 percent this year. The country would see its GDP growth shrinking to below 2 percent and lose nearly 200,000 jobs if Trump insists the tariff hikes on 200 billion U.S. dollars worth of Chinese imports and if Beijing retaliates.

Trump's aggressive approach on China, in a large part, was to reduce the U.S. trade deficit with China, but the endeavor was met with a widened trade gap with China.

If Trump's tariff threat is a big gamble, then the businessman-turned-president is losing it.

The global value chain is determined by the market law, which means different segments of the chain – research, manufacturing, assembly, and distribution – are designated to countries in accordance with their comparative advantages. This is how globalization works, and any violation of it will backfire.

With its extensive labor force and abundant resources, China can provide countries at the higher end of the value chain less-expensive but better-quality products. While U.S. exports to the Chinese market plummeted by 26.8 percent in the first four months of 2019, Chinese exports to the U.S. dipped by only 4.8 percent.

This is vivid evidence of American customers' heavy dependence on Chinese imports. Trump may need to figure out how the global value chain works before advising that Americans buy alternatives from non-tariffed states or domestic market.

Also, don't forget China's market with 1.4 billion consumers, which means the country is also one of the most sought-after destinations of export across the globe. Iowa's biggest newspaper, Des Moines Register is straightforward about the pains of losing the Chinese market – "It can't get any worse."

The price of American soybeans, as a result of the tit-for-tat U.S.-China trade war, is hovering at the lowest level in more than a decade. "It's a physical and mental challenge," the newspaper quoted American farmer Renner.

Yes, Trump promised new aid package to farmers. But the 15 billion U.S. dollars to 20 billion U.S. dollars that Trump announced earlier is far from enough to compensate farmers' losses, considering China's purchases of 60 percent American soy exports in 2017.

Earlier, the National Retail Federation and the American Soybean Association explicitly voiced their opposition to Trump's tariff-driven attack against the biggest buyer of American corps.

Imposing additional tariffs on Chinese products is against the rulebook of global trade. Admittedly, China may be responsible for job losses in certain sectors, for instance, manufacturing, but this is an inevitable outcome of global integration.

Before accusing China of stealing jobs, hawkish American politicians may need to calculate the benefits the U.S. has reaped from exporting goods to and manufacturing in China. Goldman Sachs' 2018 report shows that Apple's production costs would see a 37-percent raise if it moved its production and assembly plants to the United States.

Launching a trade war against the Asian giant in the hope of remedying U.S. trade problems is too simplistic. The "billions of dollars" that Trump boasted are pouring into the United States is paid by the country's long-term economic well-being.

"The most basic lesson of trade theory, practice and policy is not to stop trade – which would lead to falling living standards, economic crisis and conflict," Jeffrey Sachs, a professor and director of the Center for Sustainable Development at Columbia University, wrote on CNN.

The Trump administration may need to work harder on homegrown solutions to aid those left behind in the globalization. This is much more realistic to solve the country's economic problems than lashing out at China for rising inequality.

Beijing has shown no sign of capitulating and, as its state news agency Xinhua reported, is ready to embark on a new "Long March." Is the U.S. prepared for the same Long March? This is perhaps what Trump needs to ponder before escalating the trade frictions.

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When the United States used an unprecedented scale of trade bullying and blackmailing tactics against China, the latter had no choice but to fight back forcefully to defend its core national interests.

After more than ten rounds of consultations with the U.S. side, China gained a deeper understanding of the capriciousness America has shown and the flip-flop tactics it used when the U.S. administration suddenly announced that it would add more tariffs on imported Chinese products, regardless of progress made in the previous consultations.

China has fully prepared for a protracted trade war with the United States, as it seems highly possible that the trade frictions between China and the United States are far from over. All of the Chinese people are ready to embark on a new "Long March" journey with greater courage and resilience and will never yield to foreign bullying and assault.

The "Long March" spirit was vital for the Communist Party of China to win the liberation war before the People's Republic of China was founded. It highlights the firm faith, strong will, and never-give-up attitude of the whole Party and all people to overcome major challenges in the revolutionary days.

Such long-standing spirit makes a special significance today when China is fighting against U.S. trade bullying, as the country is engaged in a tough and protracted trade war with the United States. Difficult as it is, it offers China a chance to sharpen its ability to steer its economy through daunting external challenges.

Recently, the trade frictions have been drastically escalated by the U.S. restrictions on Chinese high-tech companies such as Huawei. It is not surprising to hear that as it sounds like an old story. Huawei, among other Chinese technology firms, has come under excessive U.S. scrutiny and restrictions time and time again. Sadly, Chinese companies have become an easy target in the trade battle between the two countries.

However, it has become all too clear that the U.S. restrictions on Chinese companies are based on groundless accusations. The U.S. government has never released compelling evidence to prove Huawei was engaged in backdoor spying activities. But it continues to attack Chinese companies not because they have done anything wrong, but because they are too outstanding for the United States to accept.

Blocking and restricting Huawei becomes an easy and immediate approach for the U.S. to win against China. It nevertheless sounds like wishful thinking. The Chinese companies will not be intimidated, and will not be held back from further development.

A great lesson provided by the trade war for the Chinese people is that only when we concentrate on our own affairs and excel in them, can we have a way out in the face of external bullying. We should be confident that the Chinese companies will properly manage their own businesses and finally emerge victorious amid U.S. bullying and grow stronger than ever.

It is utterly absurd to see in the era of globalization, the United States still harboring the old-fashioned Cold War mentality. Blocking Chinese companies will not make America stronger. It only underlines America's sheer political arrogance and prejudices against China.

Throughout history, the Chinese nation has survived and thrived amid difficulties and hardships. It will continue to fight U.S. trade bullying fearlessly before the protracted trade war comes to an end. We have already embarked on this new "Long March."

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styx said:

The idea of chinese government is deflating housing and other bubbles bubbles through inflation, so its good for them the soaring of food prices.

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Tariff hikes by the United States will to some extent result in an increase of enterprise operation costs, lower competitiveness and fewer orders, but their impact on China's manufacturing sector is generally controllable, a senior official told Xinhua in an interview.

The 200 billion U.S. dollars worth of Chinese goods on which the United States imposed additional tariffs accounts for 41.8 percent of China's exports to the country, but only 8 percent of China's total exports, said Wang Zhijun, vice minister of industry and information technology.

Moreover, about half of the affected enterprises are foreign-funded enterprises, including many American companies, said Wang.

In other words, the tariff hikes hurt not only the interests of Chinese enterprises and consumers, but also U.S. companies and consumers as well as the global supply chain, said Wang.

Latest statistics from the National Bureau of Statistics (NBS) showed that the value added by China's major industrial firms increased 5.4 percent year on year in April, beating market expectations and posting an optimized structure.

In addition, the purchasing managers' index for the manufacturing sector held steady at 50.1, remaining within the expansion range.

NBS statistics also showed that profits of China's major industrial firms fell 3.7 percent year-on-year in April, thanks to a higher base in April last year and an earlier unleash of the market demand in March as lower value-added tax rate was implemented on April 1.

Li Chao, an analyst with Huatai Research Institute, said that industrial profits would return to the positive territory, but how fast will depend on market demand, prices and the policy incentives of tax cuts and fee reductions.

"Trade frictions may amplify short-term fluctuations but will not impact the long-term trend of asset prices based on what happened during the U.S.-Japan and U.S.-EU trade frictions," Li said.

As enterprises may continue to foreload their exports, the data will not worsen in the second quarter, he said.

BETTER STRUCTURE

Based on figures from April, China's manufacturing sector has seen improving structure and efficiency. Among the 41 sub-sectors, 27 saw higher profits and 14 reported lower earnings in April.

On the positive side, consumer product manufacturers and equipment producers maintained relatively fast profit growth, reflecting structural improvement.

In the period, major special-purpose equipment producers recorded a 17.9 percent profit growth, while electrical machinery and device producers' profits climbed 14.5 percent.

The structural change was in line with a shift in China's economic growth drivers from exports and investment to domestic consumption and high-end industries, analysts said.

For every 100 yuan of revenue they generated, the costs they bore fell by 1.1 yuan from a year earlier to 88.7 yuan in April.

Wang said that manufacturing firms' confidence had been enhanced thanks to the gradual unleashing of policy dividends as a result of the country's lower value-added tax rate.

INNOVATION ENCOURAGED

In the long run, innovation will be the main engine to propel the expansion of China's manufacturing industry. To encourage corporate innovation, China unveiled various measures, including establishing a series of innovation centers and laboratories, increasing support for enterprises in key fields and optimizing innovation-oriented policies.

Wang said China will place greater emphasis on innovation in enterprises' development and urge them to increase research and development investment with more tax cuts and fund and loan issuances for innovation projects.

More efforts will be made to facilitate research on core technologies, accelerate the intelligent, green and service-oriented upgrading of the manufacturing industry, and advance the integrated development of the manufacturing industry and industrial internet, Wang said.

While enhancing resource sharing on various research platforms, the country will promote the application of scientific achievements, encourage domestic enterprises to carry out international innovation cooperation and intensify the protection of intellectual property.

Despite the disruptions from the increased tariffs imposed by the United States, Wang said the country's manufacturing industry has a bright prospect.

Official statistics showed that from January to April, actual foreign investment in China's manufacturing sector jumped 11.4 percent year on year.

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Key Points

• A commentary piece published this weekend by state news agency Xinhua says U.S. requests for China to address economic issues is an infringement on Beijing’s core interests.
• The term “core interests” has usually been used by China to refer to Beijing’s territorial claims — such as those on Taiwan.
• The escalating trade dispute between the U.S. and China has focused on Washington’s complaints about state-owned enterprises, allegations of the coerced surrender of proprietary technology, and the trampling of intellectual property rights.

As trade talks between the U.S. and

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increasingly center on Chinese treatment of foreign companies, Beijing says major American complaints about structural aspects of its economy are running up against “core interests.”

The implication: Those matters are not up for negotiation.

Previously, the vague “core interest” term was generally understood as referring to Beijing’s territorial claims, such as those on Taiwan. But a

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by state news agency Xinhua emphasized that China will not yield on its prerogative about how to manage its economy.

The Chinese-language article published Saturday claimed there were five ways in which the U.S. is harming the growth of the global economy by launching a trade war with the Asian giant.

“At the negotiating table, the U.S. government has made many arrogant requests, including restricting the development of state-owned enterprises,” the commentary said, according to a CNBC translation. “Obviously, this is beyond the field and scope of trade negotiations, (and) touches upon China’s fundamental economic system.”

“This demonstrates, that behind the trade war the U.S. has launched against China, there is an attempt to violate China’s economic sovereignty, (and) compel China to damage its own core interests,“ the article said.

China’s giant state-owned enterprises control strategic industries such as energy, telecommunications and defense. Since those companies benefit from favorable policies and subsidies, foreign companies complain of an unfair advantage. The escalating trade dispute between the U.S. and China has focused on allegations of the

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.

Critics say China has been able to benefit economically from joining the World Trade Organization in 2001 without following through on commitments to reduce state control. For its part, Beijing has made some effort to increase the role of the market in its economy and allow foreign companies greater access — but many outside observers say it’s too little, too slowly.

Core interests
The government has also tended to point to gradual progress in economic areas, while drawing a hard line in geopolitical matters. That has led some to read this weekend’s commentary piece as a major expansion in policy to include technology and economics.

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published an English-language commentary piece that said: “Territorial integrity is China’s core interests. Hong Kong, Macao, Taiwan and Tibet are all indispensable parts of China. These facts are beyond doubt and challenge.” The article criticized

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listing them as

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.

Public statements from China’s Foreign Ministry have echoed the same concept.

However, some analysts pointed out the Chinese government has previously said economic development is among the country’s core interests.

In September 2011, when Hu Jintao was president of China, the government released a

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The document, according to a CNBC translation, said China’s core interests include: “national sovereignty, national security, territorial integrity, national unity, the stability of the national political system and society at large as established by the Chinese Constitution and the basic guarantee of sustainable economic and social development.”

Beijing also has a track record of being loose with English terminology. The common phrase for President

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plan to build out regional infrastructure and trade routes used to be “One Belt, One Road,” which implied to many that China wanted to use the program to increase its global dominance. In the last few years, the term “Belt and Road Initiative” has emerged, implying a concept wherein China is leading but not dominating.

But the country has remained opaque on what the program specifically covers. Analysts noted that this year’s Belt and Road Forum held in Beijing made it clear that the China-led program is looking

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tidalwave said:

What irks China the most are two things.
1)change in Chinese laws to reflect protection of foreign IPs.
2) US to put agents inside Chinese government branch to monitor and audit the finance as whether sudsidies being given to state firms especially for tech development.

Holy Smoke, that's pretty wild demands.
Lighthizer will retire soon and will be remembered as someone threw out extreme demand that China refuses to accept.

Lighthizer being praised by lawmakers in Congress for being tough on China, yeah, but he will be remembered as get nothing done.

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