Trade War with China

Tam said:

The truth of the matter is that China's investment on US tech is remarkably small, and so is US exports of technology to China. The harm that Trump has down is to sour the investment climate for US tech, which hurts the US in the long run, and spur US companies to further move production facilities off shore.

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• Allowing the Yuan to fall, thereby cancelling out some of the effects of US tariffs (and bear in mind China trades with the world, and a depreciation will make Chinese exports more competitive against other regions)
• Giving tariff concessions to a number of other countries for commodities such as soybeans
• Talking with Europe and other trading partners to establish consensus that trade wars should be avoided
• Lowering bank reserve requirements, essentially injecting more money into the economy
• News just came out today that several ministries issued joint measures to curb speculative property buying
• Talking to CEOs of American companies in China to assure them China will not target them specifically but also said that China will fight back. Essentially trying to retain foreign investment and send a message to the US at the same time
• Employing domestic censorship (whether censorship in general is good or bad is another issue) to minimise discussion of the Made in China 2025 plan and discussion of the trade war, and only allowing one official voice over the matter so that there is no market panic and a loss of confidence which could be much more disastrous than a trade war.

Tam said:

The fast growth of American Bourbon in international markets are about to be derailed.

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China didn't weaken the Yuan deliberately but they did not take action and allowed to fall. A trade war could spark a new front, a currency war.

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Drinks
Kentucky Bourbon Warehouse Collapses, Spilling 9,000 Barrels of Whiskey
THE ASSOCIATED PRESS (BRUCE SCHREINER)
June 22, 2018, 12:55 PM CDT Updated on June 22, 2018, 6:27 PM CDT

A section of a bourbon storage warehouse that has collapsed at the Barton 1792 Distillery in Bardstown, Kentucky, on June 22.Source: Chief Billy Mattingly/Bardstown Fire Department/AP Images

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Louisville, Ky. (AP) -- Thousands of whiskey barrels crashed into a massive heap Friday when a large section of a decades-old storage warehouse collapsed at a distillery in the heart of Kentucky bourbon country.



The damaged warehouse at the Barton 1792 Distillery in Bardstown held about 18,000 barrels, and it appeared that up to half the barrels inside were affected, the distillery's owner said.



"We are assessing how many of the impacted barrels can be recovered," said Amy Preske, a spokeswoman for Sazerac, a Louisiana-based spirits company. "A mix of various distilled products at various ages were stored in that warehouse."



No cause had been determined for the late-morning collapse, but no one was injured, Preske said.







It could be days or weeks before the company fully assesses damage to the warehouse, built in the 1940s, she said.

"At this time, we do not know which Barton 1792 brands or customers will be impacted," she said.

The collapse won't affect normal operations at the distillery. It expects to be open for tours Saturday and to resume normal business operations Monday, Preske said in a statement.

The distillery began its normal seasonal shutdown for repairs and routine maintenance last week, she said. The collapse will not affect bourbon production once the distillery's summer shutdown ends, she said.

The distillery is near a waterway, and officials were checking on whether any whiskey had spilled into it. Initial water samples showed no signs of contamination, Nelson County Emergency Management director Joe Prewitt said.

The structure has a 12-foot (3.6-meter) basement to help contain spills, he said.

Officials from the Kentucky Department for Environmental Protection went to the scene, and distillery workers took a number of steps to minimize any environmental risk, Preske said.

About half the structure holding the rest of the barrels was still standing, said Milt Spalding, a spokesman for the local emergency management agency. Engineers who arrived Friday were looking at "trying to secure what was remaining and trying to contain what had fallen," he said.

Bardstown fire Chief Billy Mattingly said crews had been working on the warehouse earlier in the week.

No one was in the building when it collapsed, the company said.

Kentucky's bourbon sector is in the midst of a more than $1.1 billion boom that includes expanded production facilities, more storage warehouses and new tourism centers. Kentucky distillers have more than 6.6 million bourbon barrels aging, according to the Kentucky Distillers' Association, but the warehouse collapse Friday was a first for Prewitt.

"We've had some warehouse fires, but I can't recall having a collapse," he said.

The Barton distillery, established in 1879, includes 29 storage warehouses and 22 other buildings, according to its website.

Bourbon ages for years in charred new oak barrels, where it acquires its color and flavor.

Bardstown is about 40 miles (65 kilometers) south of Louisville.

Sazerac also owns Buffalo Trace Distillery in Frankfort, Kentucky.

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In February 2017, not long after Trump took power of the White House, C.J. Polychroniou had an exclusive interview with Ha-Joon Chang, a world-renowned Cambridge economist. They discussed Trump's proposed economic policy, with a clear touch of neoliberalism that favors the rich, but oddly opposed the "free trade" agreements that have ensured American's prosperity after World War II.

Ha-Joon Chang, a famous economist with a nuanced view of globalization and market economics, predicted that Trump's protectionism would not work for two reasons: first being America is bound by "all sorts of international trade agreements--the WTO, the NAFTA, and various bilateral free-trade agreements." He thought that renegotiations would take years with little chance of success.

And we already knew the end of that story. After Trump's infamously announcements of pulling out various multilateral platforms and took unilateral actions disregarding WTO rules. Ha-Joon Chang clearly underestimated Trump's determination and his nerves.

But his second argument was confirmed as Harley, the famous motorcycle brand in the US decided to move its production line outside of the US, as a response to EU's retaliatory tariffs measures.

As Ha-Joon Chang states, "even if large extra tariffs can somehow be imposed against international agreements, the structure of the US economy today is such that there will be huge resistance against these protectionist measures within the US."

And this is what's happening right now: according to the Washington Post, 51 trade groups have signed a letter calling on legislators to support a bill that would restrict Trump's power to impose any new tariffs, warning that these tariffs could have "serious negative economic impacts."

Bloomberg has also reported that the Mid-Continent Nail plant in Missouri, the biggest nail producer in the US, has laid off 60 of its 500 employers due to Trump's tariff plan on steel which greatly increased its cost. Forced increased price has led to 50 percent decreasing orders.

Trump's promises made during his campaign trail that he would bring jobs back to America has left to public ridiculing now. No wonder he was so angry with Harley's move on Twitter and even turned his anger into blatant threats.

In the interview, Ha-Joon Chang rightfully points out that the recession of America manufacturing industry "cannot be reversed with simple protectionist measures." He made some sound suggestions to Trump in this regards that the US should focus on "a systematic industrial policy that rebuilds the depleted productive capabilities of the US economy, ranging from worker skills, managerial competencies, industrial research base and modernized infrastructure...rather than going into investment banking or foreign exchange trading."

And we have known the end of that story too. For all kinds of reasons, Trump and his brain trust chose to play out the victim strategy of blaming the perpetrator of the whole world, of which intellectual property rights (IPR) and China's economic model being their powerful weapons.

In a 35-page long document published by the White House last week, it gave a detailed account of how they think China is "stealing" American technology and acquiring unfair advantages through industrial policy.

As early as 2007, in his bestseller book 'Bad Samaritans,' Ha-Joon Chang has already criticized rich countries' obsession with the IPR, which serves as a tool for them to gain a monopoly position in the global market and ripped developing countries' opportunities of developing their own economies. The patent system, which has effectively lowered the originality bar and extended the patent life, was rigged in the rich countries' favor.

"When 97 percent of all patents and the vast majority of copyrights and trademarks are held by rich countries, the strengthening of the rights of IPR-holders means that acquiring knowledge has become more expensive for developing countries."

In a similar vein, 11 years later, James H. Nolt, an Adjunct Professor at New York University, has forcefully argued the IPR as a "euphemism" that grants "legal monopolies."

"US software, internet, pharmaceutical, entertainment, and high-tech corporations absolutely depend on enforceable monopolies to defend their high prices. They employ relatively few ordinary workers but legions of highly-trained and highly-paid engineers, lawyers, designers, and managers to develop high-profit products and marketing strategies."

Internet and information technologies, in which the US still has in the leading role, were developed through military-funded research and the government "continues to subsidize research directly and through its magnificent research universities."

In Ha-Joon Chang's book, he uses the 'Bad Samaritans' as a metaphor that refers to those developed countries who "pretend" to be nice but in fact use its advantages on the global market to hurt the economic development of developing countries. It seems that now the US has torn its mask as being kind and openly bites everyone.

But as both economists have pointed out, unless the Trump administration starts to look inward and consider some serious changes, they could easily get lost in the myth of free trade and a "predatory China" that they themselves create and witness the leaving of more "Harleys."

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Tam said:

The funny thing is, none of the big US tech companies asked for Trump's help. I don't even think any of them wanted him in office in the first place, and US tech is going to be most greatly hurt by Trump's immigration policies.

What are the biggest Chinese purchases of US tech companies of late?

Lenovo bought Motorola from Google --- and Google kept all the Motorola patents. Turns out Motorola was still a big money loser.

Tencent bought out Riot Games, that's right, Tencent now owns League of Legends.

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Accusations that China steals intellectual property rights (IPRs) and forces technological transfers are sheer fabrications out of nothing and groundless, Vice Minister of Commerce Wang Shouwen told a press briefing Thursday.

"China is firm on IPR protection and has taken notable measures which have produced recognized results," Wang said.

Citing surveys by the American Chamber of Commerce in China (AmCham China) and the European Union Chamber of Commerce in China (European Chamber), Wang said IPR protection is far from the most prominent issue for the member enterprises.

According to the AmCham China's business climate survey, member enterprises saw IPR as the 12th issue of major concern for their Chinese operations, while a similar survey by European Chamber listed IPR the 11th.

"If China had forced technological transfers, failed in IPR protection, or even stolen IPRs, the enterprises would have complained directly," the vice minister said.

"The reason enterprises have not complained or listed IPR as their primary concern is because China has done a good job in handling IPR related issues," Wang said.

In terms of IPR legislation, China has enacted laws and regulations which are compliant with the WTO rules and increased law enforcement on this front, he said.

China has set up three IPR courts in Beijing, Shanghai and Guangzhou, and special judicial organs in 15 cities to handle cross-regional IPR cases. Moreover, the State Intellectual Property Office has been restructured to strengthen law enforcement.

As a result, foreign IPR holders have won 80 percent of the infringement lawsuits they filed in China, Wang said.

"China has never stopped promoting IPR protection," Wang said, adding that foreign enterprises have spoken highly of the measures.

Since 2001, intellectual property royalties paid by China to foreign rights holders have registered an annual growth of 17 percent, reaching 28.6 billion U.S. dollars in 2017, according to a white paper titled "China and the World Trade Organization" which was released Thursday.

Last year, China's invention patent applications ranked the first in the world for the seventh consecutive year, another example of China's sound protection of IPRs, Wang said.

"IPR protection in China is not perfect, but this fact does not lend legitimacy to any accusations that China's defects in IPR protection are the root cause of trade frictions," the vice minister said.

"China will continue to work hard in strengthening IPR protection for the interests of not only Chinese but also foreign enterprises," Wang said.

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• Chinese companies’ leadership in some technologies are not the result of theft from the U.S., the former Clinton Treasury secretary says.
• Summers' comments rebut the premise behind President Trump’s Chinese investment crackdown.
• "The real approach to maintaining technological leadership is ... not through trying to hold China down,” Summers says.