Trade War with China

Tam said:

Airbus might be getting more orders from China.

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At this point, it’s ‘will’ not ‘might’.

I also find it interesting for Boeing to follow suit with Airbus in not disclosing customer names. I suspect that in Boeing’s case, it less (read noting) to do with ‘protecting Chinese customers’,(I would be amazed if any Chinese company would dare to place new orders with Boeing in the current climate, and even if they did, Boeing not holding a press release about it is not going to prevent the Chinese government from knowing about such deals and making their displeasure felt in very explicit ways for the Chinese companies and individuals invloved) but rather Boeing seizing on an opportunity to mast their utter lack of new Chinese orders.

With how important a market China is to commercial aviation, news that Boeing has been effectively wiped out in China as far as new orders goes, would cause Boeing stocks to plummet.

So Boeing has a massive incentive to not make that disclosure, and instead hope that this trade war blows over quickly and they can mask their current state of sales in China with future contracts further down the line.

now saving US families' money etc. inside
China never deliberately seeks trade surplus with U.S.: ambassador
Xinhua| 2018-07-19 21:27:14

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Chinese Ambassador to the United States Cui Tiankai said Wednesday that China has never deliberately sought a trade surplus with the United States.

In an article published in the USA Today daily, Cui said China's trade surplus, the issue at the center of U.S. criticism against China, was not produced intentionally, since "the flow of trade is determined by the market."

Also, "the fact that the U.S. government curbs high-tech exports to China makes the deficit even bigger," Cui said.

"Deficits are not products of ill intention, nor are they necessarily bad for an economy," he explained.

"Generally, they result from how resources are allocated in a globalized economy and are natural reflections of the global value chain," he said. "Besides some structural reasons, such as the low savings and high consumption rates America maintains, the role of the U.S. dollar as the international reserve currency inevitably leads to trade deficits."

But having a deficit does not mean the United States is losing, Cui said. "On the contrary, thanks to the trade with China, American families have access to more, higher quality, lower cost products."

As an example, he said in 2015 alone, trade with China lowered prices in the United States by up to 1.5 percent, saving each family 850 dollars on average.

Cui's article came as the world's two biggest economies have been locked in a trade dispute. The United States has also triggered trade tensions with other economies.

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now I read
China rebuffs US trade adviser’s ‘zero-sum’ comment
2018-07-20 22:30 GMT+8

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China on Friday refuted the remarks made by Trump’s trade adviser who said China is in a "zero-sum game" with the rest of the world when it comes to trade.

Peter Navarro, one of Donald Trump's top trade advisers, said that it's a zero-sum game now between China and the rest of the world, and what the US needs to do is to work with the rest of the world to ensure prosperity and high stock markets.

Hua Chunying, China's Foreign Ministry spokesperson, said that US officials have recently made a lot of ridiculous remarks that distort the truth. Their needs to appease the uneasiness of their people caused by the US-initiated trade war is understandable, but everyone knows the truth.

First of all, China always calls for the abandonment of the Cold War mentality and zero-sum game. It can be seen in the idea of "Promoting the building of a community of shared destiny," which has been written into the Party Constitution and the Constitution of the People's Republic of China.

Second, thanks to China's fast-growing economy and huge consumer market, many US companies have earned a lot in the Chinese market. China is the largest consumer market for Apple and General Motors.

In 2017, the GM Group earned 13.33 billion yuan (1.97 billion US dollars) from its two joint ventures in China despite a global loss of 10.98 billion yuan (1.62 billion US dollars).

US company Qualcomm’s sales in China accounted for 58 percent of its total revenue.

An iPhone 7 tags a minimum price of 649 US dollars, but the processing costs in China account for less than one percent.

Third, US unilateralism and protectionism are the biggest threat to today's international rules and the world economic order. A number of American citizens and US allies have made the above comments, rejecting the bullying behaviors of the US.

"As the largest country in the world today, the US should have a minimum sense of responsibility for policies, words and deeds, which should be conducive to the governance of the world rather than bring chaos," said Hua.

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Latest I heard was that Trump's imposing 500 billion on all China's imports to balance US trade deficit of 500 billion with China....the trade war's really on because of Trump...the world's nations, big or small, will suffer because of this despicable idiot...

davidau said:

Latest I heard was that Trump's imposing 500 billion on all China's imports to balance US trade deficit of 500 billion with China....the trade war's really on because of Trump...the world's nations, big or small, will suffer because of this despicable idiot...

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Well, let’s see what they actually does.

Trump’s rhetoric intensity seems inversely proportional to his power.

When he is in a strong enough position and can do something, he does it (bombing Syria, scrapping the Iran and Paris deals etc), when he is not, in tends to overcompensate for his lack of options with ever more incendiary bluster.

If America was really in such a strong position to ‘easily win’ the trade war with China, why is the likes of Navarro now belatedly trying to find allies against China?

If he does actually follow through with such preposterous moves as putting a tarrif on everything that comes from China, he will hurt the US way more than he damages China.

A significant part of those 500bn are goods made by American companies in China to be shipped back to be sold in the US. Trump should know since his own companies does it.

To impose a blanket tarriff would be for the US to tax itself, and still get Chinese retaliation.

What more, another sizeable part of that 500bn ‘Chinese’ exports to the US will be made up of EU and other nation’s companies’ goods. So if the rest of the world is to jump in this fight, it is not likely to be on America’s side. The US is already effectively in a trade war with the EU.

I doubt even Trump is that stupid.

The trade war bad for the US companies, the billionaires and the donors of the big parties.

It is good for the workers/average middle class families.

Same in China : )
Trade war with the US will be very bad for the Chinese companies, billionaires , party officials.

But (at least long term) it will be good (or at least neutral) for the average Chinese.

Anlsvrthng said:

The trade war bad for the US companies, the billionaires and the donors of the big parties.

It is good for the workers/average middle class families.

Same in China : )
Trade war with the US will be very bad for the Chinese companies, billionaires , party officials.

But (at least long term) it will be good (or at least neutral) for the average Chinese.

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how is good for average Chinese and Americans?

for millionaires .. doesn't matter what happen .. would be just fine for them

The US workers have to compete with the Chinese workers, for the same job at the GM.
Who will loose?

And for the average Chines, if he make things for the US consumers, or if he does anything else for the same money what is the difference?

The trade surplus means there is more goods made in China than the need of the Chinese.

So , if they just stop to make those stuff the level of living can stay the same ( and they can make say warships instead of iphones)

Anlsvrthng said:

The US workers have to compete with the Chinese workers, for the same job at the GM.
Who will loose?

And for the average Chines, if he make things for the US consumers, or if he does anything else for the same money what is the difference?

The trade surplus means there is more goods made in China than the need of the Chinese.

So , if they just stop to make those stuff the level of living can stay the same ( and they can make say warships instead of iphones)

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Both will lose, eventually and inevitably, to robots.

4 powerful weapons China has in its arsenal to win the US-China trade war

• Last week the U.S. launched a trade war with China revealing a list of tariffs it could slap on $200 billion worth of Chinese goods.
• Today President Trump says he is willing to put tariffs on all $505 billion of Chinese goods imported into the U.S.
• China can retaliate beyond instituting tariffs on U.S. goods.
• China holds $1 trillion worth of U.S. treasury bonds. If it stops buying new bonds, or sells off its holdings, it would trigger a hike in yields putting pressure on America's debt load.
• Devaluing the yuan by 8 percent could make tariffs moot.
• The Chinese government could make it harder for U.S. companies to operate in China.

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Published 8:48 AM ET Fri, 20 July 2018 Updated 8:53 AM ET Fri, 20 July 2018



Last week, the U.S. fired the latest shot in its trade war with China, revealing a list of tariffs that it could slap on $200 billion worth of Chinese goods. While has, to this point, been matching U.S. tariffs dollar-for-dollar – both countries instituted tariffs on $34-billion of items in June — if the U.S. forges ahead, China will have to use a different, and more damaging, set of weapons.

In theory, the U.S. could place tariffs on $505 billion worth of Chinese items, which is the total dollar value of goods imported from China into the U.S. in 2017. . China only imports $130 billion worth of U.S. goods, so there’s no way it can match President Trump’s latest tariff threat.

That doesn’t mean it can’t retaliate, though. In fact, when it comes to non-tariff measures, it can do much more to hurt America than vice-versa, says Kristina Hooper, Invesco’s chief global market strategist. “China has a much larger arsenal of weapons than the U.S.,” she said. “Tariffs are just the tip of the iceberg in terms of what China has.”

How can China retaliate if it can’t do tit-for-tat tariffs anymore? Here are four ways the Red Giant can hit back.

1. Stop buying U.S. Treasurys
China is one of the largest holders of , owning about $1 trillion of bonds in 2017, according to the Federal Reserve. Like most investors, it wants to stash greenbacks in something safe and U.S. bonds are still solid investments. However, if the Chinese government gets pushed too far, it could decide to sell off its holdings or stop buying new U.S. bonds — and that could have a significant impact on the U.S. economy. “It’s the nuclear option,” Hooper said.

If China floods the market with U.S. Treasurys, bond yields could climb. That’s problematic: Treasury holders around the world, including the U.S. government and the average citizen, will see their bond prices drop. Higher yields also make it more expensive for the U.S. government to borrow through new debt issues, while companies that issue corporate debt, would have to pay higher borrowing costs, too.

There are many reasons as to why China wouldn’t do this — it would make China's own holdings lose value and there’s no good safe alternative for their dollars, but if they really want to hurt America then this will do just that. “This will take away revenues at a time when the government is already running large deficits, so it places more pressure on the U.S.,” Hooper said. The U.S. deficit is expected to hit $804 billion for fiscal year 2018, according to the .

2. Devalue the yuan
If China really wants to annoy , and make tariffs moot, it could devalue the yuan. In fact, this might be the best tool it has to get back at the U.S. “Currency is the most effective lever to offset the impact of tariffs,” said Salman Baig, a multi-asset investment manager at Unigestion, a Geneva-based investment firm.

If the falls by about 8 percent, which it has done since mid-March — one U.S. dollar now equals 6.77 yuan — U.S. importers would only see a 2 percent rise in the cost of Chinese goods. Why? Because if the cost to buy Chinese items falls then any tariffs added on to the price tag will bring the total value of that item to where it is today. Companies won’t feel much of a difference, Baig said.

US Dollar per Chinese Renmibi (Yuan)($USDCNY) - Rate ValueUS Dollar per Chinese Renminbi (Yuan) ($USDCNY) - Rate ValueOct '17Jan '18Apr '18Jul '180.1450.150.1550.160.165Source: S&P Capital IQ
While China could take measures to devalue the currency itself — it could lower interest rates, says Hooper, which would push down the yuan — Baig says it probably won’t have to do much on its own. A falling currency is a natural consequence of tariffs. The more tariffs that get slapped on, the more the currency will fall.

Still, China doesn’t want its currency to drop too far too quickly, and it is trying to move to more of a free-floating foreign exchange rate, but, at least in the short-term, it’s happy to let a falling yuan counteract tariffs. “What they don’t want is a lot of volatility in their currency,” Baig said. “But they’re perfectly happy to devalue another 2 percent to 5 percent, as long as the devaluation is orderly.”


3. Make life harder for U.S. companies
The Chinese government has a lot of sway over its people. If it wants its citizens to stop traveling to the U.S. or to quit buying American goods, it can make that happen, says Gerardo Zamorano, director of Brandes Investment Partners’ investments group. When South Korea agreed to host a missile defense system, Korean car companies lost market share in China. In 2016, when people in Hong Kong began protesting for more independence from China, tourism to the country from China dried up. The Chinese government didn’t introduce any new rules banning people from buying cars or visiting Hong Kong, but Chinese citizens stopped supporting these countries anyway.

“There’s no prohibition in place, but the Chinese government says ‘wink wink’ and then tells the state media to make certain comments, and all of a sudden businesses are losing market share,” Zamorano said. “That could happen to or Burger King, symbols of the U.S.”

It could also make it harder for U.S. companies to cash out of China — cash transfers need to be approved and it can slow down that processes, he said. And China can make it more difficult for Americans to get visas, prop up domestic companies financially or it could increase the regulatory burden on American companies, Hooper said. It might tax certain businesses, implement anti-monopoly investigations or institute environmental regulations. “A lot can fall under regulations, which can really slow down U.S. business,” she said.

4. Isolate the U.S.
China can play the waiting game — plans to stay in power indefinitely, which means he can take his time forging trade partnerships with other countries around the world and isolate the U.S. We’re already seeing , while Canada and China have had trade talks, too.

If China really wants to make a splash, it could join the , which the U.S abandoned when Trump took office and then have more open trade with 11 countries. Tariffs between China and these countries would be reduced or eliminated, and it would get much easier to move goods from one place to another after trade deals get put in place. “Imagine if China decides to come in,” Baig said. “That would be a big global trade agreement.”

This is a long-term play as trade deals don’t happen overnight, but Baig said it might be the most effective from China’s perspective. With the U.S. also fighting trade wars with Canada, Europe and others, countries across the globe may be more willing to form new trade alliances — and leave the U.S. behind.