Trade War with China

Trump has no options but to make the deal. The problem is he could void any deals anytime as he likes ... and China knows it

antiterror13 said:

Trump has no options but to make the deal. The problem is he could void any deals anytime as he likes ... and China knows it

Click to expand...

That’s why they are negotiating for an enforcement mechanism.

China’s side of the deal is basically a 1 time payment, while US must continuously remove it’s barriers and interference. There needs to be a way to ensure they don’t just end the treaty after getting enough purchases.

Excellent article by David Goldman Why the trade war hurt US more than China. No more bragging about Wall Street performance
If the US wants to maintain a predominant position in the world economy, it will have to fix what’s wrong with the US economy rather than try to sandbag the competition.


Why US-China trade deal is coming, in two charts
The tariff battle has left the US bloodied more so than China, a fact that cannot be lost on Trump

ByDAVID P. GOLDMAN

China’s stock market performance continues without taking a breath, and the next round of trade news should keep the momentum going.

There’s no doubt that President Trump is worried about US economic growth. Otherwise, he wouldn’t have sent my friend and former Bear Stearns colleague, Larry Kudlow, to tell CNBC that the Federal Reserve should drop the short-term lending rate by 50 basis points.

And the president is aware that the trade war with China is hurting US output, especially capital investment, which remains low despite the biggest corporate tax cut in US history. I presume he knows that, because everyone knows it. Union Bank of Switzerland economists warned on March 27 of a “sharp, but temporary slump in real growth,” adding, “The main driver from our perspective is the trade war with China, disrupting supply in manufacturing.”


Other factors are slowing the US economy, but trade war is one of the big ones. Big corporations have postponed capital spending plans until they know the rules of the game for international supply chains. As a result, orders for new nondefense capital goods orders have fallen year-on-year. It should have been obvious that this would happen; I warned repeatedly CapEx would suffer.



There’s no doubt, either, that President Trump is aware that China has bounced back from the trade war’s initial shock. Last year he cited the outperformance of the US stock market as evidence that he had the advantage over China.

Now that China’s main stock market index has risen by 33% during 2019, we don’t hear the president saying that China has the advantage over him. Nonetheless, the chatter among the talking heads on financial television now asks whether China will want to make a deal with the US, now that their economy and stock market have bounced back.

I’ve argued for the past year that the tariff war against China will hurt the United States as much as it hurts China, and it is undeniably the case that US growth has fallen while China’s has not. That is all the more remarkable given the damage to China’s export trade.

China’s exports have fallen by more than 20% year-on-year, in the context of a slump in world trade that has also dragged down the exports of all the major trading nations.



Nonetheless, China’s economy appears to be growing at 6.5% a year, the same rate as last year, while the US economy has slowed sharply. The reason is that China is no longer as dependent on exports as it used to be.



Exports comprised a full 36% of China’s GDP in 2005; since then, the proportion has fallen to below 20%. China made a concerted effort to shift from exports to internal consumption even before the great financial crisis of 2008-2009, and has continued to reduce export dependency over time.


Trump’s trade threats to China are ten years late and a trillion dollars short. Through tax cuts, monetary ease, and infrastructure spending, China has managed to create enough new domestic demand to compensate for the decline in its exports. Other big trading nations like Germany, South Korea and Taiwan haven’t been so lucky; their exports are crashing and their economies are at or close to recession, in both cases representing collateral damage in the trade war. That doesn’t do any good for American influence in the world.

China has succeeded in sustaining economic growth for the time being, but it wants an end to the trade war as much as Trump does. from Beijing last October, President Xi Jinping’s economic advisers believe that China will be the world’s largest economy by 2035, far too big to intimidate—so why pick a fight with the United States now?

China will write a check for anything the US wants to sell it. It wants to open parts of its economy to American and other foreign companies, especially in the financial sector, where Germany’s Allianz Insurance and the Union Bank of Switzerland have already obtained licenses for wholly-owned subsidiaries.

It will agree to some form of monitoring for intellectual property protection. There is no simple way to accomplish this, and whatever mechanism might be agreed to will require years of evaluation to determine whether it is a success or a failure. The only issue is whether Trump is willing to declare victory and go home (as the late Senator George Aiken of Vermont proposed during the Vietnam War).

I think he will. It’s in his personal interest as a 2020 presidential candidate, and it’s in the interest of the United States, which has taken as much pain as it has dished out in the course of the tariff war.

If the US wants to maintain a predominant position in the world economy, it will have to fix what’s wrong with the US economy rather than try to sandbag the competition.

now I read
13:07, 06-Apr-2019
Will China-U.S. trade disputes be seriously addressed this time?

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Chinese and U.S. officials continued to meet in Washington in an effort to end the nearly year-long trade war.

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According to media reports, a new consensus was reached on the text of a trade agreement between Beijing and Washington. After a meeting with Chinese Vice Premier Liu He at the White House's Oval Office, U.S. President Donald Trump reportedly said, "We're getting very close to making a deal. That doesn't mean a deal is made, because it's not, but we're certainly getting a lot closer. We'll know over the next four weeks if the two countries have a deal."

Although an agreement may be within reach, the two sides reportedly remain apart on some key issues. Many are expecting a summit between Trump and Chinese President Xi Jinping in the future to make actual moves.

Jeff Moon, an American international trade consultant, believes that the negotiation is very helpful and constructive, as it helps to process the issues that require a mechanism and clear benchmarks. According to Moon, before Trump came into office, there was an annual joint commission on commerce and trade that handled trade issues. "It was very similar in process to what has been described by [Robert] Lighthizer," Moon said.

In terms of the tariff issue, Moon believes that consequences are the bone of contention. In his opinion, the principle cause of the failure of previous trade agreements between China and the U.S. was the lack of consequences. "There need to be consequences," Moon said.

"It is not to the advantage of the American businesses or consumers to keep paying for these tariffs," said Yan Liang, head of Willamette University's Department of Economics. "China has made many concessions in many important fronts, and I think it's important for the United States to phase out the tariffs."

The U.S. reportedly wants to keep China happy because the ultimate goal is to have a nuclear deal with the Democratic People's Republic of Korea (DPRK). Some are expecting China to help with the DPRK issue while trying to calm the trade war with the U.S.

"Linking those two [issues] was an enormous mistake," Moon said, adding the U.S. should keep the DPRK issue and trade issue in separate lanes similar to what was so before the Trump administration.

While it is increasingly difficult for both countries to cooperate in research and I&D, John Gong, a research fellow at the Charhar Institute and professor at the University of International Business and Economics, thinks that the U.S. government is already adopting a decoupling strategy in the technology area. MIT just announced that it will sever ties with ZTE and Huawei, which he considers a result of the U.S. government, and the trend is likely to continue regrettably, Gong said to CGTN.

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now this
Commentary: China, U.S. trade talks enter crucial stage, require more efforts
Xinhua| 2019-04-05 15:01:12

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With streamlined process and straightforward focus on major topics, the latest round of China-U.S. economic and trade consultations serves as a clear indication that the talks have entered a crucial stage.

In his meeting with U.S. President Donald Trump on Thursday at the White House, Chinese Vice Premier Liu He, also head of the Chinese negotiation team, said the two sides have achieved new consensus regarding important issues like the text of the potential trade deal, and will keep working hard to conclude the trade negotiations as soon as possible.

During the on-going talks, the two sides have engaged in intensive exchanges through all means of communication.

At this important stage, the two sides need to value the hard-won accomplishments they have made so far and stand ready to make further efforts to push the talks going forward.

Following the Xi-Trump summit in Argentina in December, negotiation teams of the two sides have shuttled back and forth between Washington and Beijing on rounds of high-level talks in four months. Under joint guidance of the two presidents, the two countries have delivered new substantial progress on key issues like the text of the economic and trade agreement.

Like climbing a mountain, the closer one approaches the peak, the harder and more complex the challenges would be. For China and the United States, the remaining issues are all hard nuts to crack. Therefore, it requires both sides to better comprehend the long-term and complex nature of the consultations, and get fully prepared for a difficult mission.

Meanwhile, for two nations to get along with each other, they need to maintain mutual respect and seek common grounds while reserving their differences.

Over the past 40 years since the establishment of China-U.S. diplomatic ties, the two countries, despite some twists and turns, have seen their relationship always moving forward, and their bilateral cooperation always outshining differences.

Just as Chinese President Xi Jinping has indicated in his message to Trump delivered on Thursday, a healthy and stable development of China-U.S. relations concerns the interests of both Chinese and American people, as well as the interests of people of other countries around the world, and it needs, in particular, their strategic leadership.

Such a leadership should, as always, be the loadstar guiding bilateral negotiations to overcome all remaining conundrums so as to promote a healthy and stable development of bilateral economic and trade ties.

As long as the two sides can keep up with the spirit of mutual respect, and stay committed to consultations on an equal basis, it is believed that they will find a solution to any difficult problem that is acceptable to both sides.

It is fair to say that in order to explore new grounds of collaboration after 40 years, time has come for Beijing and Washington to adjust to the new realities, manage their differences properly, focus more on cooperation, and build a relationship featuring coordination, cooperation and stability. That should be a shared task for the two sides.

As for China, it will always stick to its own path. In its endeavor to realize high-quality development, China will not pause on its journey of reform and opening up.

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Given historical trade-imbalance between Qing China and British empire that lead to the Opium Wars (British got tired of paying silver taels so they paid with Indian Opium instead) to correct the silver-trade deficit, leading to the Century of Humiliation and loss of Hong Kong and semi-colonization.

Given historical Western powers imposing "Unequal Treaty" and forced "Open Door policy" to open China up to trade. The CCP cannot afford to look like it was bullied into an unequal treaty on trade or give up too much concessions.

China is no North Korea, economic sanctions/tariffs will not work (they don't really work on NK either).

Phead128 said:

The CCP cannot afford to look like it was bullied into an unequal treaty on trade or give up too much concessions.

Click to expand...

While it is important to remember and learn from the past, it is even more important not to be chained by it. The Chinese people should give the CCP an advantage that Americans would never give their current administration, which is trust and the ability to focus on the problem. While Trump's group are troubled with making a deal that looks good, sounds tough, and can maximize election chances, Xi's team should have the advantage to negotiate with only one purpose, which is to better China's economic position. If Chinese people don't force Xi's team to get terms that sound tough, they can use it as leverage, allowing the US to get tough-sounding news headlines while China keeps the substance to grow stronger silently. If Chinese citizens scream about unequal treaties and historical humiliation, heaping such pressure onto China's negotiators, then they are disallowing Xi's team to use a softer approach for real results, and they will have taken that advantage away. This is how to keep China chained by its past. Negotiations will be tougher and likely not as favorable to China in substance if China's team has to divert its focus to getting superficial, tough-sounding terms. The important thing now is to allow the US team to retreat while saving face knowing that their actions so far have caused far more damage to the US economy than China's. In business, victories are never won by being tougher, only by being smarter and (seeming) nicer.

Trust the power of China's negotiators, give them silent strength and support with real actions by buying Chinese and staying away from American options whenever Chinese or even European companies can offer an alternative. Let Team China fight this war with focus by keeping a stable and supportive base. As the Chinese proverb says, "No general can fight well the battle in his front lawn if he must also tend to the fires in his backyard."

now I read
China, U.S. smoothly conclude 9th round of high-level trade talks
Xinhua| 2019-04-06 21:47:11

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China and the United States concluded here the ninth round of high-level economic and trade talks which ran from Wednesday to Friday.

Chinese Vice Premier Liu He, also a member of the Political Bureau of the Communist Party of China Central Committee and chief of the Chinese side of the China-U.S. comprehensive economic dialogue, co-hosted the talks with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The two sides discussed the agreement text on technology transfer, protection of intellectual property rights, non-tariff measures, services industry, agriculture, trade balance and enforcement mechanism, and achieved new progress.

The two sides also decided to continue their consultations regarding the remaining issues through various effective means.

Click to expand...

Trump is making all the wrong moves. He's expanding US military spending and retaining a huge troop footprint abroad.
There is a good chance the US economy will implode in a decade if this goes on.

Hendrik_2000 said:

Excellent article by David Goldman Why the trade war hurt US more than China. No more bragging about Wall Street performance
If the US wants to maintain a predominant position in the world economy, it will have to fix what’s wrong with the US economy rather than try to sandbag the competition.

Please, Log in or Register to view URLs content!

Why US-China trade deal is coming, in two charts
The tariff battle has left the US bloodied more so than China, a fact that cannot be lost on Trump

ByDAVID P. GOLDMAN

China’s stock market performance continues without taking a breath, and the next round of trade news should keep the momentum going.

There’s no doubt that President Trump is worried about US economic growth. Otherwise, he wouldn’t have sent my friend and former Bear Stearns colleague, Larry Kudlow, to tell CNBC that the Federal Reserve should drop the short-term lending rate by 50 basis points.

And the president is aware that the trade war with China is hurting US output, especially capital investment, which remains low despite the biggest corporate tax cut in US history. I presume he knows that, because everyone knows it. Union Bank of Switzerland economists warned on March 27 of a “sharp, but temporary slump in real growth,” adding, “The main driver from our perspective is the trade war with China, disrupting supply in manufacturing.”


Other factors are slowing the US economy, but trade war is one of the big ones. Big corporations have postponed capital spending plans until they know the rules of the game for international supply chains. As a result, orders for new nondefense capital goods orders have fallen year-on-year. It should have been obvious that this would happen; I warned repeatedly CapEx would suffer.

There’s no doubt, either, that President Trump is aware that China has bounced back from the trade war’s initial shock. Last year he cited the outperformance of the US stock market as evidence that he had the advantage over China.

Now that China’s main stock market index has risen by 33% during 2019, we don’t hear the president saying that China has the advantage over him. Nonetheless, the chatter among the talking heads on financial television now asks whether China will want to make a deal with the US, now that their economy and stock market have bounced back.

I’ve argued for the past year that the tariff war against China will hurt the United States as much as it hurts China, and it is undeniably the case that US growth has fallen while China’s has not. That is all the more remarkable given the damage to China’s export trade.

China’s exports have fallen by more than 20% year-on-year, in the context of a slump in world trade that has also dragged down the exports of all the major trading nations.

Nonetheless, China’s economy appears to be growing at 6.5% a year, the same rate as last year, while the US economy has slowed sharply. The reason is that China is no longer as dependent on exports as it used to be.

Exports comprised a full 36% of China’s GDP in 2005; since then, the proportion has fallen to below 20%. China made a concerted effort to shift from exports to internal consumption even before the great financial crisis of 2008-2009, and has continued to reduce export dependency over time.


Trump’s trade threats to China are ten years late and a trillion dollars short. Through tax cuts, monetary ease, and infrastructure spending, China has managed to create enough new domestic demand to compensate for the decline in its exports. Other big trading nations like Germany, South Korea and Taiwan haven’t been so lucky; their exports are crashing and their economies are at or close to recession, in both cases representing collateral damage in the trade war. That doesn’t do any good for American influence in the world.

China has succeeded in sustaining economic growth for the time being, but it wants an end to the trade war as much as Trump does.

Please, Log in or Register to view URLs content!

from Beijing last October, President Xi Jinping’s economic advisers believe that China will be the world’s largest economy by 2035, far too big to intimidate—so why pick a fight with the United States now?

China will write a check for anything the US wants to sell it. It wants to open parts of its economy to American and other foreign companies, especially in the financial sector, where Germany’s Allianz Insurance and the Union Bank of Switzerland have already obtained licenses for wholly-owned subsidiaries.

It will agree to some form of monitoring for intellectual property protection. There is no simple way to accomplish this, and whatever mechanism might be agreed to will require years of evaluation to determine whether it is a success or a failure. The only issue is whether Trump is willing to declare victory and go home (as the late Senator George Aiken of Vermont proposed during the Vietnam War).

I think he will. It’s in his personal interest as a 2020 presidential candidate, and it’s in the interest of the United States, which has taken as much pain as it has dished out in the course of the tariff war.

If the US wants to maintain a predominant position in the world economy, it will have to fix what’s wrong with the US economy rather than try to sandbag the competition.

Click to expand...

I’ve always been perplexed about this idea of becoming less dependent on exports. Germany uses the Euro and is competitive and the export income allows them to fund their high quality of life. A drop in exports can indicate many things but it shouldn’t be something that a country aims for. The only reason your exports are dropping should be a loss in technological competitveness and saturation of market. Never do it just so you can develop a consumption based economy.