Trade War with China

Status
Not open for further replies.
O

ougoah

Brigadier
Registered Member
tidalwave said:

Shanghai composite lost 20% stock value. China economy is a ponzi sch

Not quite the same.
Today you got internet, you can get ideas of what others doing without even leave your home.
Click to expand...

Then 2008 revealed US economy is a bigger ponzi scheme? Wont even bother with dozens of other examples. Tying any and all negative fluctuations to effective trade war waged by US is dishonest. It may have been directly caused by, it may not. Of course Chinese businesses and economy will be hit but the thing is they can and should hit back. Too many Chinese people paying money for overpriced US junk. Trade war is a double edged sword. It will have both negative and positive consequences for both sides, the one that adapts faster and better wins and these days, the Americans are just not made of the same stuff as the past generations. They will almost certainly lose. Just look at how they moan and whine and waste time about the most trivial of problems. Of course the Chinese aren't much stronger these days either but at least they're already quite used to tough times and adversity. That's how the revolution started! It is their bread and butter.
 
Last edited:
O

ougoah

Brigadier
Registered Member
upload_2018-7-23_2-59-42.png

Looks like typical Chinese stock market to me. Poorly informed gambling with state enforced rules like always. Clearly drawn out dip followed by bounce (dead cat? haha)..... pure speculative :rolleyes: but that's aside from the topic of this thread. Either way not the end of days for PRC as the China haters have been crying for 3 decades and counting. It'll come one day boys, just keep stroking it.
 
A

Anlsvrthng

Captain
Registered Member
Yodello said:
That's not how trade works in this globally-connected economy. There are numerous China-made products that are bought by nations all over the world, the Chinese consumers alone wouldn't be able to fulfill the productive capacity of the Chinese producers. The export market is huge for China. At the same time China imports products from those nations as well, be it Hi-Tech equipments, agri products, Aerospace equipments, etc etc. Trading with nations is a far better option than closing off the economy. One can write pages on the benefits of trading and an open economy......!

A closed economy will only bring a nation down. Think of Zheng He and his expeditions, and the subsequent destruction of the Chinese fleet and closing up of China to the rest of the World. Some centuries later, when the Europeans came with their much advanced technology and war-fighting capability, China was trampled, because China did not have a clue as to the developments and advancements the Europeans had made because China was literally bottled up in a cocoon of self-centered world-view, and pandered to by smaller tributary states . China missed the boat during Zheng He's time. China had the opportunity to take the lead in global expeditions, trading, expanding her knowledge by exchange with various cultures, and gaining technology and warcraft etc. It was arrogance that made the Chinese think the world had nothing to offer them. That same arrogance should not even be contemplated. History is a lesson to be learned. China is doing a great job of trading with nations all over the world, and she should continue doing just that.
Click to expand...

It is not answer for the basic "question".

China is way bigger than every western country together.

She needs these countries only to learn the company and country/law system organisation.
I think the main reason of it is because the soviet style reorganisation failed, so Mao decided to try the open and copy method.

However it is easy to argue about that it can be done without trade, and in that case it can be more effective.

And the leftover of your post is simply propaganda.

If you are a billionaire/big company the international market make lot of accessible ( only for big fishes: / ) opportunity .

But these opportunities are not beneficial for the society.

C'mon, the manufacturing only the 10% of the USA economy.

Who cares about the manufacturing/ trade of items by ships?

There is no industrial policy in the US, so even if they have 100% customs on every items who cares? That has less effect on the economy than the slight changes in the housing financing.

If there is no "transfer of ideas" then what, the US /EU will need say 11% instead of 10% for manufacturing?
 
Hendrik_2000

Hendrik_2000

Lieutenant General
Anlsvrthng said:
Wait a second.

The Chinese central bank GUARANTEE the exchange rate of the dollar.

So, if I want to but one thousand rubber duck from china, then the central bank of china will exchange it on the pre-defined exchange rate.

I will take this money, and I will buy the ducks.
Now, I have the ducks, the manufacturer has the yuan, and the central bank has the dollars.

What can she do with the dollars?

IF the exchange rate float, then probably I will not buy the rubber ducks, because if there is too many person buying Chinese goods then the xchg rate will be unfavourable, and the trade would be not profitable.

So, what can do china with my dollars?
.
Click to expand...

Buy the treasury , stabilize yuan from fluctuation, or invest in BRI or mine concession That is what is all about China does not have to buy treasury bill And if nobody buy treasury somebody has to buy it AT HIGHER INTEREST
Worst if China dump the treasury how the US is going to finance the deficit and printing fiat money?

Please, Log in or Register to view URLs content!

Russia is dumping US Treasuries. Will China be next?
Moscow is offloading dollar assets at a record pace amid questions about how Beijing will respond to escalating trade war
By Asia Times staff July 21, 2018 1:48 AM (UTC+8)

Despite US President Donald Trump’s best efforts to make nice with Russia, it seems the Kremlin is not putting all of its eggs in the détente basket. As a hedge against the success reproachment – and possible accompanying sactions relief – Moscow is reportedly dumping US government debt, and doing so fast.

“A US Treasury report this week appears to show Russia liquidating dollar assets at a record pace, selling four-fifths of its cache of US government debt, $81 billion worth, over a two-month period. It started in April, when the U.S. imposed the most onerous sanctions yet on allies of Putin,” Bloomberg reported Friday.

The move is “the obvious way to limit a country’s exposure to US sanctions,” according to Brad Setser, a former Treasury Department official who is now at the Council on Foreign Relations in New York.

“I would never underestimate the reach of US sanctions. That said, it would be a major step for the US to contemplate blocking a country’s dollar reserves as opposed to sanctioning a bank or a firm.”

Russia’s decision to drop US bonds begs the question: why not China? There has been widespread speculation, amid an escalating trade war and a ballooning US deficit, that China might consider doing it.

In response to an unconfirmed report in Bloomberg early this year that China was eyeing the move, there was a deluge of articles arguing that it wouldn’t be an effective way to challenge Washington in a trade war. But America’s massive deficit, which is set to expand under Trump’s tax cut, has led to increased speculation about the move.

“On the surface, it looks like the US is extraordinarily vulnerable,”
Please, Log in or Register to view URLs content!
in a recent blog post. “The stock of Treasuries that the market has to absorb to fund the rising US fiscal deficit is objectively quite large, as the US has ramped up issuance while the Fed is reducing its Treasury holdings…

“And if China started to sell, the amount of US paper that non-Chinese investors would need to absorb would be extremely large,” Setser went on.

Please, Log in or Register to view URLs content!
 
Last edited:
A

Anlsvrthng

Captain
Registered Member
manqiangrexue said:
And once again, just like how your belief that the EU is the world's largest economy draws doubt on your knowledge, L
Click to expand...
Interesting, I've checked back the rank of countries, and looks like by nominal (useless) $ data the EU second to the US, by PPP (more useful) second to China.

More interestingly, by the 18 prognosis the advantage of US will be 4 %. Nominal again : D.

I think it is quite safe to say if Germany won't run a devastation fiscal policy then the EU should be 10-30% bigger : ( .
 
A

Anlsvrthng

Captain
Registered Member
Hendrik_2000 said:
Buy the treasury or invest in BRI or mine concession That is what is all about China does not have to buy treasury bill And if nobody buy treasury somebody has to buy it AT HIGHER INTEREST
Worst if China dump the treasury how the US is going to finance the deficit and printing fiat money?
Click to expand...

Please ,consider the next: IF China will not buy treasury THEN what will it does with the dollars that she receive for the goods sold to the US?

China invested money into (example) Venezuela , just to see as the US scraping all investment.

Russia lent $ to Ukraine, just to see the US forced them to default (selectively ) on the Russian loan.

So, the non-US , dollar based investments hasn't got too good past.

There is no another deep and liquid dollar based security market like the US. Naturally : D

And many cases the non-US dollar investments are nothing else just buying treasuries thought third party.

That is good to keep the face, but will not change anything.
 
manqiangrexue

manqiangrexue

Brigadier
Anlsvrthng said:
Interesting, I've checked back the rank of countries, and looks like by nominal (useless) $ data the EU second to the US, by PPP (more useful) second to China.
Click to expand...
That's not that interesting; it's just a statistic and you didn't have to check because that's exactly what I told you when you said that the EU is the largest economy; it is not by any measure because it is second to the US in nominal and second to China in PPP. Someone who actually had a great understanding of economics and trade wouldn't have to check to get this information; to someone who keeps up with global economics, this is a basic ABC fact, just like a professional electrician wouldn't need to check google to find the correct standard US voltage.
Anlsvrthng said:
More interestingly, by the 18 prognosis the advantage of US will be 4 %. Nominal again : D.

I think it is quite safe to say if Germany won't run a devastation fiscal policy then the EU should be 10-30% bigger : ( .
Click to expand...
When you're mumbling irrelevant thoughts to yourself, try not to type them =P
 
Hendrik_2000

Hendrik_2000

Lieutenant General
Anlsvrthng said:
Please ,consider the next: IF China will not buy treasury THEN what will it does with the dollars that she receive for the goods sold to the US?

China invested money into (example) Venezuela , just to see as the US scraping all investment.

Russia lent $ to Ukraine, just to see the US forced them to default (selectively ) on the Russian loan.

So, the non-US , dollar based investments hasn't got too good past.

There is no another deep and liquid dollar based security market like the US. Naturally : D

And many cases the non-US dollar investments are nothing else just buying treasuries thought third party.

That is good to keep the face, but will not change anything.
Click to expand...

The firs rule of investment is diversify, diversify. the second rule is is investing for the long term
The third rule is you loose some and you win some but individual lost of win is not important. As long as the agregate investment is a profit

China has wide portfolio of investment Venezuela is just small part of the overall investment.Plus it is not lost some day Venezuela will get a good government and if she can't [pay back then China will own the oil field

No There is other investment right now China is busy building connectivity in central asia . Land port need to built ,railway must be modernized, feeder road need to be built .China is planning for the long term
There is better project that can use dollar that china accumulate other than park it in treasury bill
 
T

Tam

Brigadier
Registered Member
Hendrik_2000 said:
Buy the treasury , stabilize yuan from fluctuation, or invest in BRI or mine concession That is what is all about China does not have to buy treasury bill And if nobody buy treasury somebody has to buy it AT HIGHER INTEREST
Worst if China dump the treasury how the US is going to finance the deficit and printing fiat money?

Please, Log in or Register to view URLs content!

Russia is dumping US Treasuries. Will China be next?
Moscow is offloading dollar assets at a record pace amid questions about how Beijing will respond to escalating trade war
By Asia Times staff July 21, 2018 1:48 AM (UTC+8)

Despite US President Donald Trump’s best efforts to make nice with Russia, it seems the Kremlin is not putting all of its eggs in the détente basket. As a hedge against the success reproachment – and possible accompanying sactions relief – Moscow is reportedly dumping US government debt, and doing so fast.

“A US Treasury report this week appears to show Russia liquidating dollar assets at a record pace, selling four-fifths of its cache of US government debt, $81 billion worth, over a two-month period. It started in April, when the U.S. imposed the most onerous sanctions yet on allies of Putin,” Bloomberg reported Friday.

The move is “the obvious way to limit a country’s exposure to US sanctions,” according to Brad Setser, a former Treasury Department official who is now at the Council on Foreign Relations in New York.

“I would never underestimate the reach of US sanctions. That said, it would be a major step for the US to contemplate blocking a country’s dollar reserves as opposed to sanctioning a bank or a firm.”

Russia’s decision to drop US bonds begs the question: why not China? There has been widespread speculation, amid an escalating trade war and a ballooning US deficit, that China might consider doing it.

In response to an unconfirmed report in Bloomberg early this year that China was eyeing the move, there was a deluge of articles arguing that it wouldn’t be an effective way to challenge Washington in a trade war. But America’s massive deficit, which is set to expand under Trump’s tax cut, has led to increased speculation about the move.

“On the surface, it looks like the US is extraordinarily vulnerable,”
Please, Log in or Register to view URLs content!
in a recent blog post. “The stock of Treasuries that the market has to absorb to fund the rising US fiscal deficit is objectively quite large, as the US has ramped up issuance while the Fed is reducing its Treasury holdings…

“And if China started to sell, the amount of US paper that non-Chinese investors would need to absorb would be extremely large,” Setser went on.

Please, Log in or Register to view URLs content!
Click to expand...


We know that Japan dumped a lot of Treasuries earlier this year, then bought some up. China even bought some up, also in in May.

Please, Log in or Register to view URLs content!


Even if China is buy Treasuries, this can increase the strength of the Dollar --- and ironically negates the effect of the tariffs. This also adds the huge pile of interest the US pays to China.

You really don't want to be dumping Treasuries now. With the stock market low, investors are parking money on Treasuries, and this will make the value of your Treasury holdings go up. But that may also be a good time to sell some of them, bit by bit.

But its not who is going to pick up China, Japan and Russia once they sell US debt. The problem is that no one will.

FDI on US is now a big downward trend. That affects everything from Treasuries, stocks, bonds, and real estate.

Please, Log in or Register to view URLs content!


This maybe due to the trade war, or that US is restricting Chinese investment, or that the Chinese government is restricting capital outflows, which also restricts Chinese investment in the US. Or the negative image overseas investors are picking up on the US ranging from Trump to racism. But another factor is immigration, which the Trump administration has clamped down on, even on legal ones. Immigration affects FDI, the more immigration the more FDI and the less immigration, the less FDI.

I want to add another thing once the shipping volume of imports and exports across the Atlantic and Paicifc are reduced --- all shipping costs will be higher. Shipping costs are volume sensitive. Once shipping costs are higher, and you get a double whammy with the high oil prices, the shipping costs for all goods, including the non tariff products, are all going to go higher. The result is that all imported goods will all be priced higher and at the same time your exports are going to be more expensive due to the shipping.

That's a nice situation you want to be in.
 
A

advill

Junior Member
Very interesting comments by all. I read the recent British Economist Newspaper/Magazine which stated that President Xi is now following similar patterns of the (late) respected Deng Xiaoping, in the face of a serious matters like current pronouncements of Trade War/s. China's President is observed to be very much focused on counter-strategies, and at the same time being civil/diplomatic. Regardless of who that leader is, such a person can be considered a World "Statesman". Besides global traders, economists & politicians etc., experienced and unbiased advisors are also indispensable as they can provide useful advice to the leadership.
 
Status
Not open for further replies.
Top