Trade War with China

Max Demian said:

Financial Times quoted Ren Zhengfei stating that Huawei is cutting its 2019 revenue forecast by $20 billion. They expect no growth (but no further drop either) in 2020, with revenue staying around $100 billion for both 2019&2020. In 2018 their revenue was $105 billion.

Sounds quite ugly in the short term, but they remain optimistic about the future. They will need the full support of the Chinese government to replace the embargoed supply chains in the short term. I doubt that even someone as big as Huawei can slug this one out alone, given how massive the R&D expenditures will need to be.

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Doesn't look ugly at all. 2018 was a record year; I thought this ban would significantly drop them for a year or 2 way into the red but staying at the $100B level is really very good considering what they are facing. Companies go up and down, shedding 4% revenue on a regular basis in completely healthy economic/political environments; if Huawei can actually stay at the $100B level while under what is definitely the largest siege ever seen on a tech company in history, it's just unbelievable.

And a couple of points: firstly, most of the R&D is done as they are referring to these as spare tires they've been working on for years. They are at the polishing phase. Secondly, there should be no illusion that Huawei must remain overall in the green every year. It can blitz massive resources into R&D and come up with a net loss for the year and it wouldn't be a problem because just like the growth, losing money in the short term happens to companies all the time. Thirdly, the US and EU know how to subsidize their big companies with bailouts and stuff all the time when they're in trouble. There should be no doubt that China's government has Hauwei's back in this should Huawei need it.

tidalwave said:

That's the problem, Chinese people admiring US for long long time to its own detriment.

If I were in charge at the 80s I will not let US Semiconductor firms completely dominate Chinese market especially the state purchase IT goods. Even if have to use backward tech couple generation behind. The Western embargo means China can use older generation equipment but that's OK as long as tech is its own

China joined WTO after 2000, so from 80s to 2000, it has more than 20 years to hone it domestic Semiconductor tech but it didn't do it.

People in China admired US advanced tech too much and to the detriment of China. And hence what we looking at today.

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I won't underestimate Chinese people. Like I said, I know what we are. We admire the strong and powerful in a very "female" type of way. If you read the I Ching, the second hexagram (which is also the second chapter of the book), which is the hexagram of "坤", you will see what I meant by the "female" type of way. Dr. Jordan Peterson mention an idea of "the devouring mother", I think this most clearly describe the main aspects of the spirit of this hexagram.

Chinese people's admiration of the USA is not a type of cult following like many other people (i.e. Japanese, Korean, etc). It's more of a possessive, devouring type, very close to the notion of female lust for a desirable male. I am sorry if this sound erotic or weird. But this is very different type of admiration from what the Japanese or Koreans, etc,

CMP said:

the debate you linked to also spells out pretty clearly how canada values strategic coordination with the americans much more than economic coordination with china. that being the case, i think china should jettison the economic relationship with canada entirely once the meng debacle is over, one way or the other.

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I don't think jettison economic relationship with Canada is a good ideal in the short to medium term.

But China should be aware of the closely linked relationship (a kind of vassal state) of the US and Canada. And take strategic steps accordingly.

localizer said:

Meh I can't see China wanting to hold trillions dollars/US treasuries in the future if the US deficit's going to grow at $1 trillion a year and $2-$4 trillion if QE happens during the next recession. It might be best to never buy another US treasury note, buy up all the gold, brace for impact.

I'm personally diversifying my portfolio into foreign currencies and commodities in case of a dollar disaster.

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Agreed, but it is much easier said than done.

localizer said:

Why not just invade China ¯\_(ツ)_/¯

you know, to free the people from the dictatorship

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Don't you just love this kind of thinking from a regime (AKA Taiwan).

Presumably, Taiwan news is speaking on behalf of Taiwan that is.

The jounalist seem happy that Taiwan is finally back in play in the world arena because Trump, through its defence secretary, etc seem to recognised Taiwan. Rejoice"

They can't even see that the reasons they are back into play in "realpolitik" is because they are being used as a PAWN in Geopolitic between two superpowers. Lol

localizer said:

Why not just invade China ¯\_(ツ)_/¯

you know, to free the people from the dictatorship

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Nah man. That's never the game plan with powerful rivals. The game plan is to trick the people into overthrowing their own government. That way it would be like China collectively cutting off its own legs to spite their toes. American hegemony preserved for another hundred years.

Max Demian said:

Financial Times quoted Ren Zhengfei stating that Huawei is cutting its 2019 revenue forecast by $20 billion. They expect no growth (but no further drop either) in 2020, with revenue staying around $100 billion for both 2019&2020. In 2018 their revenue was $105 billion.

Sounds quite ugly in the short term, but they remain optimistic about the future. They will need the full support of the Chinese government to replace the embargoed supply chains in the short term. I doubt that even someone as big as Huawei can slug this one out alone, given how massive the R&D expenditures will need to be.

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No one said it was going to be easy. Oh sorry, Trump did! And how easy is it for the US companies loosing revenue from Huawai?

jimmyjames30x30 said:

Stop joking, I am serious!

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Now he's being sarcastic, doesn't help. Don't let it get to you.

manqiangrexue said:

Doesn't look ugly at all. 2018 was a record year; I thought this ban would significantly drop them for a year or 2 way into the red but staying at the $100B level is really very good considering what they are facing. Companies go up and down, shedding 4% revenue on a regular basis in completely healthy economic/political environments; if Huawei can actually stay at the $100B level while under what is definitely the largest siege ever seen on a tech company in history, it's just unbelievable.

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Obviously they are very optimistic about the domestic market. However, they said nothing about their net income forecast. Planning to grow 20% YoY and then suddenly reversing to negative growth does leave their investments exposed and their credit repayment capacity stressed. They didn't say anything about increasing their R&D spending, but rather reassuring they would not be lowering it. Let's wait and see.

Max Demian said:

Obviously they are very optimistic about the domestic market. However, they said nothing about their net income forecast. Planning to grow 20% YoY and then suddenly reversing to negative growth does leave their investments exposed and their credit repayment capacity stressed. They didn't say anything about increasing their R&D spending, but rather reassuring they would not be lowering it. Let's wait and see.

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You're so "hopeful". LOL.