Chinese Economics Thread
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AssassinsMace
Lieutenant General
Cramer speaks with forked tongue.
I guess you lose credibility when you spout out wishful thinking more than the facts. In his line of work, not having credibility tends to be bad for business. When Trump's trade war started he said there were already signs China was dropping to its knees to the US begging for a deal. Then he said the CEOs he talked to support Trump's trade war. I'm sure they do because they would love to go back to the good ole days of the East India Company without a conscience of how they got their money. That's the big joke that the corporate world liked the image of a CEO with a conscience that companies like Facebook and Google were given... until all the evil things both Democrats and Republicans charged them of doing. So we're suppose to believe the CEOs Cramer talked to had sage advice? Cramer takes a direct hit when he gives bad advice. Trump doesn't feel it because he gets four-year job review before he gets fired.
I guess you lose credibility when you spout out wishful thinking more than the facts. In his line of work, not having credibility tends to be bad for business. When Trump's trade war started he said there were already signs China was dropping to its knees to the US begging for a deal. Then he said the CEOs he talked to support Trump's trade war. I'm sure they do because they would love to go back to the good ole days of the East India Company without a conscience of how they got their money. That's the big joke that the corporate world liked the image of a CEO with a conscience that companies like Facebook and Google were given... until all the evil things both Democrats and Republicans charged them of doing. So we're suppose to believe the CEOs Cramer talked to had sage advice? Cramer takes a direct hit when he gives bad advice. Trump doesn't feel it because he gets four-year job review before he gets fired.
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Jura The idiot
General
now noticed the tweet
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China's richest man , founder of e-commence giant Alibaba, stepped down as the company's chairman on Tuesday. He announced retirement plans 1 year ago at the age of 54
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China's richest man , founder of e-commence giant Alibaba, stepped down as the company's chairman on Tuesday. He announced retirement plans 1 year ago at the age of 54
Are Foreign Companies Really Leaving China in Droves?
(PIIE)
September 10, 2019 5:00 AM
Photo Credit:
REUTERS/Stringer
President Donald Trump, in defending his trade war with China, has yet again let his Twitter fingers get ahead of reality. He in late August that “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs. They must stem the flow.” This supposed exodus of foreign firms is another element informing his view that China is under increasing economic pressure and thus anxious to accept US terms for a trade agreement. As is the case with Trump’s claim that the US tariffs are and increasing its , the facts fail to support his view.
The trade war has not dampened FDI in China
First, nonfinancial foreign direct investment (FDI) in China is currently running at an annual rate of almost $140 billion, meaning that thousands of new foreign firms are established in China every month. Moreover, as shown in the figure below, since the tariff war broke out in mid-2018 FDI has expanded about 3 percent annually, roughly the same pace as in the previous five years. And the recent data do not reflect massive new investments in chemical plants. China recently approved wholly foreign-owned investments by both ExxonMobil and BASF, each at a record setting $10 billion. Since ground has not yet been broken, these two projects are not yet included in FDI data. Continued large inbound FDI flows are consistent with the expectations of member companies of the US-China Business Council. The Council’s very found that 97 percent reported that their operations in China are profitable, and 87 percent said they had not relocated and had no plans to relocate any of their activities. In short, there is little support for the view that large numbers of foreign firms are fleeing China; the opposite seems to be the case.
A handful of firms leaving China do not confirm a broad trend
A few foreign firms recently have left China, but two points need to be kept in mind. First, foreign firms have been moving out of China for decades. Some firms enter with business strategies that fail and then exit. The best example is Occidental Petroleum, which entered China in 1983 with a flawed business strategy and was forced to write off its $250 million investment when it withdrew in 1990. Other foreign firms, especially those exporting the most labor-intensive consumer goods, flourished in China for many years but eventually, as local wages continued to rise, moved production to other countries with much lower wages, for example Bangladesh. Second, China has over a half million foreign-invested firms. Anecdotes of a handful of firms leaving China do not confirm a broad trend.
Many foreign firms in China, especially US firms, are there to produce goods to sell in China
While some firms report that they are considering alternatives to producing in China, it remains to be seen how many ultimately will leave and, of these, how many will relocate to the United States. A couple of factors are at play here. First, a large share of foreign firms in China, especially US firms, are there primarily to produce goods to sell on China’s still rapidly growing domestic market. These firms have no incentive to relocate within Asia, much less to the United States. Caterpillar, for example, makes construction equipment in more than 30 plants in China, almost all sold on the domestic market. Given the high costs of shipping relative to value, it is not feasible to make excavators, front-end loaders, and similar products in the United States and then export them to China. Caterpillar, like other foreign producers of capital goods in China, is very unlikely to relocate any of its production.
Relocating out of China is costly
Second, relocating production out of China is easier said than done. Foreign affiliates operating in China draw on an extensive local supply chain that has been built up over the decades and employ about 25 million Chinese workers, a significant share of which are skilled engineers and managers. Vietnam is commonly mentioned as an alternative, but it is too small to absorb more than a tiny fraction of production by foreign enterprises now operating in China. Its total nonfarm employment is only 44 million, and foreign firms operating there already report shortages of skilled engineers and managers. Relocating a significant number of foreign firms from China to Vietnam would put further upward pressure on its already rising wages, intensify existing skilled labor shortages, and stretch Vietnam’s limited logistical capacity to the breaking point.
Apple contracted with Taiwanese manufacturer Foxconn to produce 220 million iPhones in China in 2018. Think of the difficulties Foxconn would face if Apple asked the firm to relocate from China. Foxconn employs hundreds of thousands of factory workers and tens of thousands of skilled engineers and managers in China and draws on a network of more than 1,500 local suppliers. As Arthur Kroeber, the editor-in-chief of China Economic Quarterly, puts it: “It is fantasy to imagine that such an operation can be quickly replicated in Vietnam or India.”
Despite US tariffs on China’s exports to the United States, it appears, at least so far, that multinational firms, including those based in the United States, continue to find China an attractive environment for new investment. Thus, Trump’s claim that an exodus of foreign firms will force China to capitulate to US demands to settle the trade war is wishful thinking at best. Moreover, few US multinationals already in China are likely to shift their production back to the United States. The president’s claim that his tariffs on Chinese goods will reverse the decades-long decline in the share of US employment in manufacturing very likely also will go unfulfilled.
(PIIE)
September 10, 2019 5:00 AM
Photo Credit:
REUTERS/Stringer
President Donald Trump, in defending his trade war with China, has yet again let his Twitter fingers get ahead of reality. He in late August that “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs. They must stem the flow.” This supposed exodus of foreign firms is another element informing his view that China is under increasing economic pressure and thus anxious to accept US terms for a trade agreement. As is the case with Trump’s claim that the US tariffs are and increasing its , the facts fail to support his view.
The trade war has not dampened FDI in China
First, nonfinancial foreign direct investment (FDI) in China is currently running at an annual rate of almost $140 billion, meaning that thousands of new foreign firms are established in China every month. Moreover, as shown in the figure below, since the tariff war broke out in mid-2018 FDI has expanded about 3 percent annually, roughly the same pace as in the previous five years. And the recent data do not reflect massive new investments in chemical plants. China recently approved wholly foreign-owned investments by both ExxonMobil and BASF, each at a record setting $10 billion. Since ground has not yet been broken, these two projects are not yet included in FDI data. Continued large inbound FDI flows are consistent with the expectations of member companies of the US-China Business Council. The Council’s very found that 97 percent reported that their operations in China are profitable, and 87 percent said they had not relocated and had no plans to relocate any of their activities. In short, there is little support for the view that large numbers of foreign firms are fleeing China; the opposite seems to be the case.
A handful of firms leaving China do not confirm a broad trend
A few foreign firms recently have left China, but two points need to be kept in mind. First, foreign firms have been moving out of China for decades. Some firms enter with business strategies that fail and then exit. The best example is Occidental Petroleum, which entered China in 1983 with a flawed business strategy and was forced to write off its $250 million investment when it withdrew in 1990. Other foreign firms, especially those exporting the most labor-intensive consumer goods, flourished in China for many years but eventually, as local wages continued to rise, moved production to other countries with much lower wages, for example Bangladesh. Second, China has over a half million foreign-invested firms. Anecdotes of a handful of firms leaving China do not confirm a broad trend.
Many foreign firms in China, especially US firms, are there to produce goods to sell in China
While some firms report that they are considering alternatives to producing in China, it remains to be seen how many ultimately will leave and, of these, how many will relocate to the United States. A couple of factors are at play here. First, a large share of foreign firms in China, especially US firms, are there primarily to produce goods to sell on China’s still rapidly growing domestic market. These firms have no incentive to relocate within Asia, much less to the United States. Caterpillar, for example, makes construction equipment in more than 30 plants in China, almost all sold on the domestic market. Given the high costs of shipping relative to value, it is not feasible to make excavators, front-end loaders, and similar products in the United States and then export them to China. Caterpillar, like other foreign producers of capital goods in China, is very unlikely to relocate any of its production.
Relocating out of China is costly
Second, relocating production out of China is easier said than done. Foreign affiliates operating in China draw on an extensive local supply chain that has been built up over the decades and employ about 25 million Chinese workers, a significant share of which are skilled engineers and managers. Vietnam is commonly mentioned as an alternative, but it is too small to absorb more than a tiny fraction of production by foreign enterprises now operating in China. Its total nonfarm employment is only 44 million, and foreign firms operating there already report shortages of skilled engineers and managers. Relocating a significant number of foreign firms from China to Vietnam would put further upward pressure on its already rising wages, intensify existing skilled labor shortages, and stretch Vietnam’s limited logistical capacity to the breaking point.
Apple contracted with Taiwanese manufacturer Foxconn to produce 220 million iPhones in China in 2018. Think of the difficulties Foxconn would face if Apple asked the firm to relocate from China. Foxconn employs hundreds of thousands of factory workers and tens of thousands of skilled engineers and managers in China and draws on a network of more than 1,500 local suppliers. As Arthur Kroeber, the editor-in-chief of China Economic Quarterly, puts it: “It is fantasy to imagine that such an operation can be quickly replicated in Vietnam or India.”
Despite US tariffs on China’s exports to the United States, it appears, at least so far, that multinational firms, including those based in the United States, continue to find China an attractive environment for new investment. Thus, Trump’s claim that an exodus of foreign firms will force China to capitulate to US demands to settle the trade war is wishful thinking at best. Moreover, few US multinationals already in China are likely to shift their production back to the United States. The president’s claim that his tariffs on Chinese goods will reverse the decades-long decline in the share of US employment in manufacturing very likely also will go unfulfilled.
Maine lobster being rerouted through Canada to China.
The US lobster industry latest to get caught in the US-China trade war
CNBC's Contessa Brewer reports from Kennebunkport, Maine on how the U.S. lobster is the next item to get caught up in the U.S.-China trade war.
The US lobster industry latest to get caught in the US-China trade war
CNBC's Contessa Brewer reports from Kennebunkport, Maine on how the U.S. lobster is the next item to get caught up in the U.S.-China trade war.
Cramer is not incorrect in saying that China's consumer economy is in great shape (to continue that sentence), and should remain a prime target that US companies should try to export to.
But you know Cramer in my view likes to flip flop. But its better to flip flop if you know you are in the incorrect path.
Lets go back to some older SCMP articles like this one.
China wants consumers to drive economic growth, but they are already being squeezed
- Trade war with United States over Beijing’s technology ambitions is adding to anxiety about job losses and hitting sales of cars, property and consumer goods
Yes, Chinese consumers are getting squeezed. Like this kind of getting squeezed.
JPMorgan Tells Staff: Make It Clear Taiwan Is Part of China
This is great, I know sooner or later, the capitalist will have to confrom or risk missing out on the world's largest market (PPP)!
But it is still funny how the propaganda is still being play out by the MSM. They are still maintaining the line, that "it is China's pressure" that leads to these companies to conform!
Gee, talk about deliberately distorting the facts! The truth is any companies operating anywhere in the world would have to abide by the rules and law of that country. And if the law says it is unlawful to state the three "self governing areas" as a separate country. Than China reserve the rights to stop companies operating in China if they do not comply.
Let's be clear, if any foreign firms operating in the UK or USA should disrespect their respective laws, they would be on the first plane home.
It is, the rule of law! At the end of the day, if these companies feel strongly about it, they can always leave!
This is great, I know sooner or later, the capitalist will have to confrom or risk missing out on the world's largest market (PPP)!
But it is still funny how the propaganda is still being play out by the MSM. They are still maintaining the line, that "it is China's pressure" that leads to these companies to conform!
Gee, talk about deliberately distorting the facts! The truth is any companies operating anywhere in the world would have to abide by the rules and law of that country. And if the law says it is unlawful to state the three "self governing areas" as a separate country. Than China reserve the rights to stop companies operating in China if they do not comply.
Let's be clear, if any foreign firms operating in the UK or USA should disrespect their respective laws, they would be on the first plane home.
It is, the rule of law! At the end of the day, if these companies feel strongly about it, they can always leave!
