Trade War with China

The China-US trade talks have fallen back into a stalemate. The US has pushed a negotiation that was approaching cooperative equilibrium back to a prisoner's dilemma that could harm both sides. The US unilaterally lifted tariffs on Chinese imports and upgraded the trade war into a technology war.

It not only undermines bilateral economic interests and the global industrial chain, but also brings huge challenges to the world's technological advances and human development.

China has held its bottom line and stands on three issues including completely canceling the tariffs, a reasonable purchasing amount and safeguarding the country's core interests and dignity.

The US' use of the Section 301 investigation report as evidence for punitive tariffs on China is unsound. The accusation of China's forced technology transfer made in the report lacks professional and substantial evidence. Also, the report didn't distinguish between government behavior and companies' behavior. Besides, technology related requirements are not limited to foreign companies. They work the same way with the Chinese firms. And the US accused China of taking key technology as consideration during the approval process of Chinese companies investing overseas. This is also not true.

China is not afraid of the US' tariff threat. A research team from the College of Economics and Management at China Agricultural University has simulated the economic effects of the US tariffs on $200 billion worth of Chinese products and found economic indicators on both sides are damaged.

Chinese GDP could be down 0.657 percent while it could drop 0.004 percent for the US. The world GDP will decrease 0.123 percent as a result. Manufacturing jobs in China will be reduced by 1.028 percent, 0.652 percent in the US and 0.28 percent in the world.

The agriculture industry is one key area that was targeted by the US, but agricultural products make up minimal shares of China's total exports to the US. Another target is light industries such as textile, chemistry, machinery and daily commodities. Those sectors, however, have foreign investment elements and often obtain bigger portions of added value. The negative influence on Chinese companies is reduced.

Overall, before taking China's countermeasures into account, China lost more than the US, but the US economy absolutely will not stay intact. Moreover, the move will hurt the world economy.

China announced retaliatory measures by raising tariffs on $60 billion of US products. The modeling analysis showed the counterattack will damage the US economy by a large margin.

China's retaliation will cause the US GDP to drop 0.067 percent, while China's will dip 0.622 percent. The spread of reduction on manufacturing jobs between the two countries significantly narrows with the US decreasing 0.907 percent and China 1.046 percent. The world economy will suffer more with a GDP decrease of 0.134 percent.

The large purchasing orders the US demands that China make have violated rules of market rules and international trade. Looking back in history, the US and Japan had trade frictions in the 1980s and 90s. There was a short period of time when the US asked Japan to adopt voluntary export restraints due to the then US president Bill Clinton pushing for a result-oriented solution. However, the proposal was widely criticized.

Imposing an export or import restraint by itself is very random and discriminatory. It challenges the open and free trade and international trade system. The restraint was aborted due to strong opposition from Japan.

China actively expanded its imports from the US because it meets China's need for economic development and Chinese people are consuming more. Meanwhile, China is making efforts to open its market since the country is trying to shoulder the responsibility of being a major player.

Moreover, the combination of purchases should be in line with China's market demand. The US has set up barriers for China to purchase high-tech products, intellectual property and educational services. This is the real reason that limits China importing from the US.

The China-US trade and economic conflict contains two components - one part can be resolved and the other cannot. If the two parties can come back to the table, they should work out the conflicts that can be resolved and hold onto the conflicts that may not be settled any time soon.

Since 1974, The US has initiated 125 cases of Section 301 investigations into its trade partners. The focusing issue of investigations has moved from tariffs, quota and discriminatory treatments to more policy related issues such as government procurement, industrial policy and subsidies, as well as institutional issues such as intellectual property right (IPR) protection and monopoly.

China-US trade talks have gone beyond the tariff issue and structural problems, halting China's technology development and bilateral communication. In fact, China has been opening even faster, taking action on state-owned enterprise reforms, new investment laws, market entry and IPR protection. The US government, on the other hand, ignores efforts China has been making and is trying to force China to meet their unreasonable demands, though the trade conflict did not fill the trade gap as the US expected.

With China enforcing its countermeasures, the US will most likely end up with an empty hand. To make matters worse, due to the US deviating from negotiation consensus, it has dragged both sides to a bad equilibrium of the prisoner's dilemma. Only if two countries meet each other halfway, address each other's concerns based on mutual respect and reach a deal that benefits both, can they achieve the best outcome for both and the world.

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• Russia, Brazil, South Korea all said explicitly that they are not going to ban Huawei equipment for their countries' 5G network.
• The UAE just awarded Huawei a multi-billion dollar 5G contract.
• Malaysia even went so far as to say that they "will adopt as much Huawei technology as possible".
• French President Macron said France will not ban Huawei, while Germany also made similar statements, saying they don't target individual companies.
• Singaporean Foreign Affairs Minister and Prime Minister came out to say that the US should "accept China's rise".
• TSMC said they will continue to supply Huawei, Panasonic, Toshiba all refuted the fake news that they are cutting supply.
• WiFi, SD and Bluetooth Association all reinstated Huawei membership after a short period of taking it down.
• IEEE restored Huawei employees' right to be editors after banning them for a few days.
• China started commercialisation of its 5G network, which could possibly give Huawei some of the largest 5G contracts in the world.
• Google put Huawei's Mate 20 Pro back onto its list of devices supporting Android Q, while lobbying the Department of Commerce to allow it to continue servicing Huawei.

xiabonan said:

Recently there's been quite a number of positive news coming out for Huawei, including but not limited to

• Russia, Brazil, South Korea all said explicitly that they are not going to ban Huawei equipment for their countries' 5G network.
• The UAE just awarded Huawei a multi-billion dollar 5G contract.
• Malaysia even went so far as to say that they "will adopt as much Huawei technology as possible".
• French President Macron said France will not ban Huawei, while Germany also made similar statements, saying they don't target individual companies.
• Singaporean Foreign Affairs Minister and Prime Minister came out to say that the US should "accept China's rise".
• TSMC said they will continue to supply Huawei, Panasonic, Toshiba all refuted the fake news that they are cutting supply.
• WiFi, SD and Bluetooth Association all reinstated Huawei membership after a short period of taking it down.
• IEEE restored Huawei employees' right to be editors after banning them for a few days.
• China started commercialisation of its 5G network, which could possibly give Huawei some of the largest 5G contracts in the world.
• Google put Huawei's Mate 20 Pro back onto its list of devices supporting Android Q, while lobbying the Department of Commerce to allow it to continue servicing Huawei.

But interestingly, all of the above gets no mentioning or very little of it in Western Media. ...

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China Summons Tech Giants to Warn Against Cooperating With Trump Ban

SAN FRANCISCO — The Chinese government this past week summoned major tech companies from the United States and elsewhere to warn that they could face dire consequences if they cooperate with the Trump administration’s ban on sales of key American technology to Chinese companies, according to people familiar with the meetings.

Held on Tuesday and Wednesday, the meetings came soon after Beijing’s announcement that it was assembling a list of “unreliable” companies and individuals. That list was widely seen as a way of hitting back at the Trump administration for its decision to cut off Huawei, the Chinese electronics giant, from sales of American technology. The United States has accused Huawei of stealing trade secrets and conducting surveillance on behalf of Beijing.

Details about the meetings, the latest move in two weeks of high-stakes economic brinkmanship between the United States and China, were shared by two people familiar with them, who asked not to be named because they were not authorized to discuss them and could face retribution. The companies summoned by Chinese officials included a number of the world’s most important semiconductor firms, as well as other tech giants.

The breakneck unraveling of the world’s most important trade relationship has left companies and governments around the world scrambling. While the dispute had already been nettlesome for Chinese-U.S. relations, the sudden ban on Huawei last month caught many by surprise, raising the stakes by striking at the heart of China’s long-term technological ambitions.

Now, each of the two superpowers appears to be crafting new economic weapons to aim at the other. What was once a fraught, but deeply enmeshed, trade relationship is threatening to break apart almost entirely, raising the specter of a new geopolitical reality in which the world’s two superpowers would compete for economic influence and try to freeze each other out of key technologies and resources.

“This is now extremely delicate because the Trump administration, through its brinkmanship tactics, has destabilized the entire relationship, commercial and otherwise,” said Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy.

The meetings this week were led by China’s central economic planning agency, the National Development and Reform Commission, and attended by representatives from its Ministry of Commerce and Ministry of Industry and Information Technology, who addressed their remarks to a broad range of companies that export goods to China, according to the two people familiar with the gatherings.

The involvement of three government bodies suggested a high level of coordination and likely approval from the very top of China’s opaque leadership structure. The intervention seemed designed to rally support for Huawei, though the company was not specifically mentioned, the two people said.

“There is a strong perception in Beijing that the U.S. government is intent on blunting China’s technology rise, and that if this process is not slowed or stopped, the future of China’s entire digital economy is at risk,” said Paul Triolo, the head of geotechnology at the consultancy Eurasia Group, adding that the spat had major political implications for Xi Jinping, China’s president and the head of its ruling Communist Party.

“Mr. Xi and the party will be seen as unable to defend China’s economic future” if the confrontation with the United States does major damage to Huawei and throws off China’s rollout of the next generation of wireless technology, called 5G, Mr. Triolo added.

More broadly, the warnings also seemed to be an attempt to forestall a fast breakup of the sophisticated supply chains that connect China’s economy to the rest of the world. Production of a vast array of electronic components and chemicals, along with the assembly of electronic products, makes the country a cornerstone of the operations of many of the world’s largest multinational companies.

As the trade relationship between the United States and China has broken down, fears have risen in China that major companies will seek to move production elsewhere to avoid longer-term risks. In the meetings this week, Chinese officials explicitly warned companies that any move to pull production from China that seemed to go beyond standard diversification for security purposes could lead to punishment, according to the two people.
The Chinese officials appeared to have differing messages for the companies, depending on whether they were American or not, the people added.

To those from the United States, they warned that the Trump administration’s move to cut off Chinese companies from American technology had disrupted the global supply chain, adding that companies that followed the policy could face permanent consequences. The Chinese authorities also hinted that firms should use lobbying to push back against the government’s moves.

“The Chinese government has regularly resorted to jawboning multinationals to try to keep them in line when there are disputes between China and others that could lead these companies to reduce their business in China,” Mr. Kennedy said.

The Chinese agencies did not respond to requests for comment.

In the past, China has used America’s tech behemoths as a tool of diplomacy. For example, during a high-profile visit to the United States in 2015, Mr. Xi stopped in Seattle before heading to Washington. There, he met with a who’s who of American and Chinese tech executives as a way to emphasize the depth of the countries’ economic ties, even as President Barack Obama’s administration sought to chart a course that would push back against China’s anticompetitive trade practices and investment rules.

This time, such a play is less likely to be effective, said Mr. Kennedy, because it forces the companies to choose between complying with pressure from Beijing and violating U.S. law.

“American companies aren’t going to violate American laws, especially in such a high-profile context where their actions are scrutinized,” he said. “The companies are between a rock and a hard place, but that hard place will win out.”

The Chinese officials told companies from outside the United States that as long as they kept up their current relationships and continued to supply Chinese companies normally, they would face no adverse consequences. They also stressed China’s commitment to open trade and its protections of intellectual property, according to the people familiar with the meetings.

The Trump administration’s ban on sales to Huawei was a blow to semiconductor companies that supply parts used in Huawei’s telecom gear. Several American companies slashed tens of millions of dollars from their quarterly revenue expectations. About 60 percent of all semiconductors sold are connected in some way to China’s supply chain, the consulting firm KPMG estimates.

Resolving the mercantilist standoff may be difficult, said Mr. Triolo, because progress in the trade talks has become linked to progress on the Huawei tech ban, but the Huawei issue cannot be dealt with through the official trade channels. For example, the dispute has been inflamed by fraud charges the United States has brought against the Huawei executive Meng Wanzhou, who is awaiting extradition proceedings in Canada, and obstruction and other charges against the company itself.

A separate negotiation between high-level officials over Huawei is probably the only way forward, Mr. Triolo said — that, or an even less likely possibility: “Huawei would have to send a team to Washington to admit guilt and negotiate what could be a humiliating agreement with U.S. authorities.”
“So far, there is no sign that either Beijing or Huawei is considering that option,” he said.

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Trump Mixes Economic and National Security, Plunging the U.S. into Multiple Fights

WASHINGTON — President Trump is increasingly blurring the line between America’s national and economic security, enabling him to harness powerful tools meant to punish the world’s worst global actors and redirect them at nearly every trading partner, including Mexico, Japan, China and Europe.

Over a few weeks, Mr. Trump has declared European and Japanese cars, Chinese telecom equipment and Mexican immigrants national security threats. Those declarations have given the president authority to use Cold War powers to inflict economic pain on countries through tariffs, government blacklists and other restrictions.

While previous administrations tried to deal with economic and security threats separately, Mr. Trump has deliberately mixed the two, viewing another country’s trade practices as dangerous to the United States as its military abilities.

It is a view he has espoused since the 2016 campaign trail, where he pushed his “America First” agenda and vowed to protect companies that he believed were on the losing end of global trade. Once in office, Mr. Trump immediately pulled the United States out of the multinational Trans-Pacific Partnership and initiated investigations into imported goods, like washing machines and solar panels, that he believed were flooding the American market.

His approach has grown more aggressive over the past two years, culminating in an expansive view of national security that has plunged the United States into an economic war with nearly every trading partner, including longtime allies.
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Republican lawmakers and business groups are increasingly warning about the administration’s approach, saying that lumping tough, disparate issues together will chill relations with other governments and put American companies at a disadvantage. While many lawmakers are generally supportive of Mr. Trump’s punishing approach to China, they have been outspoken against imposing penalties on allies like Japan, Canada, Mexico and Europe, saying it will hurt American companies — whose supply chains crisscross borders — and create bigger security problems down the road.

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• Currency’s slump is not a coincidence and could be the result of Beijing not intervening in markets, politician says
• Chinese firms are absorbing a large part of the tariff rise to prevent price increases being passed on to US consumers, he says

US Treasury Secretary Steven Mnuchin on Saturday accused China of allowing the value of its currency to slide in a bid to offset the impact of Washington’s trade tariffs on the cost of its goods to American consumers.

“It’s not coincidental in my mind that the currency has moved from approximately 6.30 [yuan to the US dollar] to 6.90,” the official said on the sidelines of the G20 finance leaders’ meeting in Japan.

“Traditionally to manipulate a currency, official intervention in the foreign exchange market has to be conducted in a certain way. Intervening to support the currency’s exchange rate is not regarded as currency manipulation,” he said.

“However, when the market is expecting intervention because there have been interventions to support a currency for a very long time – whether by China or any other country – then when there is no intervention that could create a big market impact,” he said. “The decision not to intervene after intervening for a very long period of time may lead the market to view that there is a desire to have the currency to weaken.”

Mnuchin said also that Chinese companies were absorbing a significant part of the tariff rise to prevent price increases being passed on to US consumers. His comments came after US President Donald Trump said on Twitter on Friday night that the US was collecting billions of dollars because of the higher tariffs.

However, both those views have been challenged by economists, including those from the International Monetary Fund, which said in a report published late last month that the “tariff revenue collected has been borne almost entirely by US importers” and that “some of these tariffs have been passed on to US consumers”.

In its twice-yearly report on foreign exchange policies, the US Treasury said it had “significant” concerns about China’s practices, though once again stopped short of designating the country a currency manipulator.

Mnuchin said that to help reduce the impact of tariffs on US consumers, the government would grant exclusions to companies that were unable to move their production away from China in the short term because of supply chain constraints.

The treasury secretary, who together with US Trade Representative Robert Lighthizer has led the US side in its trade war negotiations with China, said a deal to resolve the dispute was 90 per cent complete but that significant issues remained.

“If China is serious and wants to come back and negotiate a real agreement, then the US is prepared to negotiate to reach a historic deal,” he said. “If not, the US will continue with the plan to proceed with tariffs.”

Mnuchin said he would discuss routine trade issues with People’s Bank of China governor Yi Gang on Sunday, but would leave discussion of the wider trade dispute to Trump and Chinese President Xi Jinping, who are set to meet on the sidelines of the G20 summit in Japan at the end of the month.

That would be the “next important meeting” on the matter, he said.

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Jura said:

saw this news on some Czech main-steam news-server yesterday, but didn't notice it even mentioned here:
Exclusive: Facebook suspends app pre-installs on Huawei phones

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Tam said:

I don't think you and another person understand why Google is legally obligated to make AOSP.

This is because Android itself is based on another operating system --- Linux. Linux is free open source.

Linux license (GNU, GPL, etc,.) requires that if you take Linux, modify it and turn it to your own operating system, you are legally obligated to make your creation free as well, the code open, albeit minus certain proprietary additions.

Android is like an onion. The kernel or core is based on Linux. Android is a layer over Linux that has this virtual machine that executes pseudobyte code. It used to be a VM (interpreter) but now a dynamic runtime compiler and execution. There used to be a native code client for Android but we see less and less use of it as time goes by, probably eliminated altogether since its a security risk.

Then on top of Android is the UI. That's where "stock Android", Samsung "Touchwiz", MIUI, EMUI, OneUI, and so on resides.

So you see, Google cannot simply cut off from AOSP, they are legally obligated to maintain it as long as they operate Android. In addition, Google's ChromeOS is based off Linux as well. So you have been making a lot of money that's based off from an operating system that is basically free and open source.

Android apps are not statically compiled and stored in binary form like Windows .COM and .EXE files. This means they are processor independent. You can run Android apps on an Intel processor like in Chromebooks or in an ARM processor.

So at this point, you can see how ARK OS can be made to work. The dynamic runtime is the part that is important.

Google is at work on a new OS called Fuschia, that is said to be the combination of both ChromeOS and Android into a unified OS. This will run Android apps. Its been tested on devices, ironically, Huawei's.

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