Trade War with China

Here's some food for thought:
1. China's trade surplus with world is not that high.
2. China has significant deficit with Germany, Japan, SK, Australia, and many other OECD countries.
3. In the end, US products are not competitive enough in the eyes of the Chinese.

The whole fixing the trade deficit is just an excuse to make China help stimulate ailing US sectors. Right now US auto is having trouble, Intel is struggling against TSMC, farmers need China bad, and only China has the growing wealthy consumer base to save these expansion dependent companies.

Trump breaks the "hard deadline" on tariffs.

Proof that this is all faux-drama after all.

I wouldn't be surprised if the 10% on $200bn is eventually rolled back, while only keeping 25% on steel. All it takes is a photo ops with Xi Jinping, and Trump will be satisfied.

Max Demian said:

This part of your statement is false. Huawei doesn't manufacture its chips. It outsources that to foundries such as TSMC and others. Moreover, Huawei through Hisilicon purchases licences for CPU designs from ARM.

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Nope, it makes it own in it’s own factories.

Some of them are joint venture with other companies, but literally every company does that. The important part is that all the factories are located in China, providing jobs and revenue within the country.

And TSMC is located in China.

Biscuits said:

Nope, it makes it own in it’s own factories.

Some of them are joint venture with other companies, but literally every company does that. The important part is that all the factories are located in China, providing jobs and revenue within the country.

And TSMC is located in China.

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Strawman. No one said China doesn't produce ICs.

According to you all is well and PRC shouldn't be concerned about its strategic dependency on foreign chip manufacturers. Good thing you're not in charge.

Max Demian said:

Strawman. No one said China doesn't produce ICs.

According to you all is well and PRC shouldn't be concerned about its strategic dependency on foreign chip manufacturers. Good thing you're not in charge.

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PRC, as in the state and military, are banned to even use any foreign stuff unless specially approved (such as imported weapons).

The row is over private companies sending factories away from China. I think you have misinterpreted if you think I said that was a good thing, but it is only a danger due to loss of jobs and industrial strength. The idea of some sort of factory hostage taking is far fetched, as it will be a heavy blow to the credibility of that nation's industrial reliability. China itself controls a lot, if not the most industrial shares, but it has abstained from stupid moves like taking Apple's factories hostage, because that will lead to loss of credbility as an industrial power.

Commentary: US trade negotiators risk underestimating China
The US economy’s current strength appears fleeting. Its short-term resilience is already faltering and, in view of worrisome long-term fundamentals, may fade further, says Stephen Roach


Read more at

Highly recommended reading.

Another highly recommended reading. China reducing its holdings not the best time for the US who now needs to sell a lot more of it to overcome ballooning deficits.



Here's what's 'more disturbing' to Larry Fink about the future of US-China trade than anything else

• The trade war and ongoing negotiations between the world's two largest economies is a looming danger, Larry Fink says — but not for its immediate impact on markets or growth.
• The threat the CEO says we are not talking about is the long-term impact of the U.S.-China trade war on U.S. Treasury bonds.
• China, the largest holder of U.S. sovereign debt, has cut its Treasury holdings to $1.123 trillion as of last December, down from $1.184 trillion in the same month of 2017, according to U.S. Treasury Department data.

Back in the days when US had trade war with Japan under Reagan, Toshiba was prosecuted for exported 5 axis CNC machine to Soviet. Kind of similar to Huawei , but Huawei is much more severe as US now mobilized all the resources to stop Huawei internationally.

Majority of US think-tank proposes decoupling from China if it can't extract the type of concessions out of China.

So, the current job of China is to prepare US decoupling slowly from China in upcoming years. Even Trump out of office, this will continue as it has bipartisan full agreement

I think that will be the trend.

it's perhaps happening: economical and technological cold war between the " eastern " and " western " blocs.
Eastern blocs: China, Asia, Russia, Africa, and hopefully India. (That's why it is imperative for China to be seen as being neutral in the latest Indo-Pak clash to woo the Indian population into accepting Huawei and its 5G.)
Western blocs: America, Australia, Canada, NZ, and Japan. ?? South America
Fence sitters: Europe, UK, SK.
very interesting times indeed.

Choice quotes from Lighthizer about the trade war/deal with China:

"We have to be number one. We just have to stay number one. And by the way most people in the world want us to be number one." -Lighthizer

Skip to 2:21:00 to see the quote.