Trade War with China
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Hendrik_2000
Lieutenant General
Trump and his many minion in media crow too early But listen to this guy if you look at sector by sector it is not too promising say
Auto industry have you seen the stock performance of Ford and GM lately
industry?
American carmakers are missing their chance to gain a foothold in the market of the future, and investors have noticed
By SEPTEMBER 22, 2018 5:15 AM (UTC+8)
Economic historians will cite July 9, 2018 as the date on which the US lost the trade war with China – before the war began.
That was when Germany’s top manufacturing companies – Volkswagen, BMW, Daimler, BASF and Siemens – announced tens of billions of dollars of new investments in China as Chinese Premier Li Keqiang posed for a photo op with German Chancellor Merkel in Berlin.
BMW will expand its joint venture with Brilliance Auto to produce 519,000 vehicles a year. It also set up a joint venture to produce an electric version of the Mini together with Great Wall Auto. And it agreed to buy US$4.7 billion worth of batteries from Chinese producer CATL, which just announced a new plant in southern Germany. Volkswagen earlier this year announced that it would invest US$18 billion in China by 2022 and construct six plants to build electric vehicles. BMW will move some of its SUV production out of its South Carolina plant in response to auto tariffs.
Since then the prices of US automakers have tanked, and German auto stocks have rallied. The future of the auto industry lies in electric vehicles, for which China will be the world’s largest market by far. China also has the world’s most advanced battery technology as well as the most robust supply chain for battery production.
China’s response to American tariffs has been to offer German and Japanese industrial companies a privileged position in joint ventures with Chinese manufacturers. China also is reportedly planning to reduce import tariffs for America’s competitors. Toyota and Honda also announced plans to expand Chinese production in July.
The US administration often cites the relative performance of equity prices as a gauge of its success in the present trade confrontation with China. At the sector level, though, equity prices tell a different story.
President Trump apparently believes that tariffs will bring auto production back to the United States, as he suggested on Twitter in early September:
Ford’s North American production manager Mike Levine tweeted in reply, “It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units and its competitive segment.”
The fate of the Ford Focus, though, is the least of the problems of the American auto industry. China has prepared a supply chain for electric vehicles in depth, and it is extremely difficult for automakers who are not entrenched in the Chinese market to compete.
China also holds the keys to the future of self-driving cars. Rather than attempt to design autonomous vehicles to negotiate the poor infrastructure of American cities, China is designing cities around the concept of autonomous vehicles, with roads fenced off from pedestrians and 5th-generation mobile broadband.
China is not only the largest auto market in the world, and likely to grow as a percentage of the world auto market, but it is the center of auto industry innovation.
Wall Street analysts are busy calculating the prospective advantages to European and Japanese exporters. As I wrote in August (), America’s trade war on China portends a global shift in trading relationships away from the US.
Alicia Garcia Herrero, an economist at the French bank Natixis, summarized the potential shift on September 14:
“For the first batch of import tariffs ($50 billion from each side), the key beneficiaries in Europe from substituting Chinese exports into the US would be general purpose machinery. As for China’s market, European car manufacturers, followed by aircraft and aerospace, would be the key winners from potentially replacing the US exporters…For the second batch of import tariffs (on $200 billion from US side and $60 billion from China’s side), Europe’s potential gains in the US are extended to many more sectors, including office, accounting & computing machinery as well as furniture […] European gains in China will also be more widespread, covering sectors such as medical & precision products, basic chemicals and general purpose machinery.”
Must-reads from across Asia - directly t
Auto industry have you seen the stock performance of Ford and GM lately
industry?
American carmakers are missing their chance to gain a foothold in the market of the future, and investors have noticed
By SEPTEMBER 22, 2018 5:15 AM (UTC+8)
Economic historians will cite July 9, 2018 as the date on which the US lost the trade war with China – before the war began.
That was when Germany’s top manufacturing companies – Volkswagen, BMW, Daimler, BASF and Siemens – announced tens of billions of dollars of new investments in China as Chinese Premier Li Keqiang posed for a photo op with German Chancellor Merkel in Berlin.
BMW will expand its joint venture with Brilliance Auto to produce 519,000 vehicles a year. It also set up a joint venture to produce an electric version of the Mini together with Great Wall Auto. And it agreed to buy US$4.7 billion worth of batteries from Chinese producer CATL, which just announced a new plant in southern Germany. Volkswagen earlier this year announced that it would invest US$18 billion in China by 2022 and construct six plants to build electric vehicles. BMW will move some of its SUV production out of its South Carolina plant in response to auto tariffs.
Since then the prices of US automakers have tanked, and German auto stocks have rallied. The future of the auto industry lies in electric vehicles, for which China will be the world’s largest market by far. China also has the world’s most advanced battery technology as well as the most robust supply chain for battery production.
China’s response to American tariffs has been to offer German and Japanese industrial companies a privileged position in joint ventures with Chinese manufacturers. China also is reportedly planning to reduce import tariffs for America’s competitors. Toyota and Honda also announced plans to expand Chinese production in July.
The US administration often cites the relative performance of equity prices as a gauge of its success in the present trade confrontation with China. At the sector level, though, equity prices tell a different story.
President Trump apparently believes that tariffs will bring auto production back to the United States, as he suggested on Twitter in early September:
Ford’s North American production manager Mike Levine tweeted in reply, “It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units and its competitive segment.”
The fate of the Ford Focus, though, is the least of the problems of the American auto industry. China has prepared a supply chain for electric vehicles in depth, and it is extremely difficult for automakers who are not entrenched in the Chinese market to compete.
China also holds the keys to the future of self-driving cars. Rather than attempt to design autonomous vehicles to negotiate the poor infrastructure of American cities, China is designing cities around the concept of autonomous vehicles, with roads fenced off from pedestrians and 5th-generation mobile broadband.
China is not only the largest auto market in the world, and likely to grow as a percentage of the world auto market, but it is the center of auto industry innovation.
Wall Street analysts are busy calculating the prospective advantages to European and Japanese exporters. As I wrote in August (), America’s trade war on China portends a global shift in trading relationships away from the US.
Alicia Garcia Herrero, an economist at the French bank Natixis, summarized the potential shift on September 14:
“For the first batch of import tariffs ($50 billion from each side), the key beneficiaries in Europe from substituting Chinese exports into the US would be general purpose machinery. As for China’s market, European car manufacturers, followed by aircraft and aerospace, would be the key winners from potentially replacing the US exporters…For the second batch of import tariffs (on $200 billion from US side and $60 billion from China’s side), Europe’s potential gains in the US are extended to many more sectors, including office, accounting & computing machinery as well as furniture […] European gains in China will also be more widespread, covering sectors such as medical & precision products, basic chemicals and general purpose machinery.”
Must-reads from across Asia - directly t
If I was an Indian defence planner, I would be very nervous about ever buying more military equipment that depends on the USA.
It wasn't that long ago that the US placed economic sanctions on India after India went nuclear in 1998.
And with Trump, the US has now proven that it is no longer a reasonable, rational or consistent partner.
At least with Russia, India knows that it will never have serious strategic disagreements with Russia. And that Russia really needs the money from selling weapons.
Plus don't forget about how Turkey-USA relations are awful, and that Turkey also wants to buy S-300 SAM systems from Russia.
The sanctions are meant to cut the knees off the Russian defense industry, intended as a warning for would be customers of Russian arms not just India, but countries like Vietnam and the Philippines which is considering buying Russian subs. I do think this approach is going to have significant blow back for the US, like reversing the trend with Vietnam relations, or making the Philippines into an ex-US ally. This has blow back with countries that have purchased Sukhoi, like Malaysia and Kazakhstan.
MAGA fan
Jura The idiot
General
Friday at 8:43 PM
Chinese military lodges solemn representations against U.S. sanctions
Xinhua| 2018-09-23 02:08:42
and now I read
Chinese military lodges solemn representations against U.S. sanctions
Xinhua| 2018-09-23 02:08:42
It is good for China, the Vietnamese Kilos with Kalibrs was on inconvenience for her.
And I am sure the US will be able to replace Russia as India mayor arm supplier, starting with say lending a Virginia sub for them : D
Trump target is to decrease the USA banking reach, and decrease the international reach of the US corporations / banks.
He has limited freedom of move, so he works with the material he has.
Push if the direction is at least partially to the way where he wants to go, and pull where it would go to the worn direction.
China is totally wrong in retaliating US farmers for current trade war!!
Based on Trump past interviews, he wants balance trade no doubt. He's a businessman looking at trade surplus and minus. I believe if Trump hasn't influenced by its advisors, China $70 billion purchase of US goods will be good enough to avoid the trade war.
According to Steve Bannon, it was the constant complaining from Silicon Valley Folks lead by John Neffuer , Semiconductor Association and his representing silicon valley tech companies. They complain constantly afraid of China development of semiconductor that will undermine their industry and therefore US global economic leadership.
So, Trump advisors like Steve Bannon, Peter Navarro, Robert Lighthizer formulated for current trade war.
It's Not about trade surplus and deficit anymore but do away China state sponsorship of tech development. They want change to China economic structurally.
If China doesn't comply, they will try to drive away manufacturing industry from China. Make US outsourced elsewhere like SEA and India and Empty out China industries.
Trump is just a surplus and deficit guy but it was his advisors who designed the current trade war.
And it was the Silicon Valley people , Semiconductor association constant complaining in Washington to lawmakers that causes Trump Advisors make such actions, which supported by bipartison.
It's totally wrong for China to target the farmers who voted Trump but should retaliate against Silicon Valley folks, the Semiconductor Association, who is the real culprit of current trade war!!
Based on Trump past interviews, he wants balance trade no doubt. He's a businessman looking at trade surplus and minus. I believe if Trump hasn't influenced by its advisors, China $70 billion purchase of US goods will be good enough to avoid the trade war.
According to Steve Bannon, it was the constant complaining from Silicon Valley Folks lead by John Neffuer , Semiconductor Association and his representing silicon valley tech companies. They complain constantly afraid of China development of semiconductor that will undermine their industry and therefore US global economic leadership.
So, Trump advisors like Steve Bannon, Peter Navarro, Robert Lighthizer formulated for current trade war.
It's Not about trade surplus and deficit anymore but do away China state sponsorship of tech development. They want change to China economic structurally.
If China doesn't comply, they will try to drive away manufacturing industry from China. Make US outsourced elsewhere like SEA and India and Empty out China industries.
Trump is just a surplus and deficit guy but it was his advisors who designed the current trade war.
And it was the Silicon Valley people , Semiconductor association constant complaining in Washington to lawmakers that causes Trump Advisors make such actions, which supported by bipartison.
It's totally wrong for China to target the farmers who voted Trump but should retaliate against Silicon Valley folks, the Semiconductor Association, who is the real culprit of current trade war!!
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Right now, top level government in China is so confused, they just invite top executives in wallstreet , who are pro business to China for meeting in China to discuss the trade war and strategy invitation includes former treasurer, Paulson . All of them declined the invitation. Hah, those guys are longer have relevance in Trump admin!
China targeted farmers for retaliation when it was John neuffer Semiconductor Association causing all those troubles in Washington.
Frankly, China needs someone real understanding to give them advises on going in inside US. (Me, included, at least I got more understanding than whoever give them advises currently)
They thought Trump was big talker, bluffing at beginning too.
China targeted farmers for retaliation when it was John neuffer Semiconductor Association causing all those troubles in Washington.
Frankly, China needs someone real understanding to give them advises on going in inside US. (Me, included, at least I got more understanding than whoever give them advises currently)
They thought Trump was big talker, bluffing at beginning too.
Hendrik_2000
Lieutenant General
Well they already do it by massive state support for semiconductor industry because chinese industry is lazy and take the easy way out by investing in high margin low capital investment like Tencent , Baidu, Alibaba
China Said to be Raising $47 Billion Semiconductor Fund
5/8/2018 00:21 AM EDTAN FRANCISCO — A second fund to bolster China's domestic semiconductor industry — a government-backed investment firm set to be launched soon — is believed to be much greater than original thought
The Wall Street Journal, citing unnamed sources, reported that the government-backed China Integrated Circuit Industry Investment Fund would allocate the funding to — among other things — improving China's ability to design and manufacture advanced processors and GPUs. The size of the fund, which had previously may have been increased as the result of boiling trade tensions between China and the U.S.
State-backed funding of China's semiconductor industry has emerged as one focus of the trade tensions that have bubbled up between the two nations, with each poised to impose tariffs on billions of dollars worth of products. The U.S. claims that China's government support for its semiconductor industry is anticompetitive
The Chinese government has, in recent years, stepped up efforts to create a domestic semiconductor industry to help supply its massive electronics market, signaling its intention to spend $161 billion over 10 years to further that effort. China currently imports more than $100 billion worth of semiconductors every year.
The latest China Integrated Circuit Industry Investment Fund will follow a similar fund launched in 2014 that raised about $22 billion, according to the Wall Street Journal report.
Handel Jones, CEO of International Business Strategies, said that the recent trade disputes with the U.S. have created increased urgency for China to bolster its domestic semiconductor industry. The U.S. recently slapped an export ban on Chinese telecommunications provider ZTE, preventing U.S. suppliers of semiconductors and other components from selling devices to ZTE, a major customer of Qualcomm and other U.S. chip vendors.
"China needs to establish mega center design capabilities in order to be able to have a stronger design and IP ecosystem," Jones told EE Times. He added that some of Chinese fabless chip vendor HiSilicon's Kirin applications processors are, however, already competitive in global markets
- — Dylan McGrath is the editor-in-chief of EE Times
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