Posted on 12/13/2019 7:24:38 AM PST by Zhang Fei
Link only, per Bloomberg restrictions:
Now the cheating begins.
They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder....
“I suspect that this deal will keep the economy soaring for a while and then new economic ties with England will follow throughout the election season. Masterfully done, Mr. President. What he has, and is doing should be shouted from every housetop.
And as soon as this election is over, we need to identify a candidate for 2024 who can keep the ball rolling. All the historical models are now dead. The Trump era ended all those and a new economic world is now in place.”
^THIS! Amen! KAG! :)
I’m going to put another check-mark in the WINNING column! :)
> “…. China might divert export, impose own tariffs and so on”
Divert export to where?
And what percentage of the $557.9B export to the US (2018) has been or can be diverted?
Don’t you know they already imposed their own tariffs, and have been increasing, decreasing, or removing them at will as the negotiations go on?
> “Better tactic is to discourage own businesses to do business with China. And to improve business climate in the first place.”
Tariffs on China is a way to discourage our own businesses to do business with China, why are you against it?
Improve business climate? Yeah, it’s all well and good, except it is pretty useless when it comes to the massive trade imbalance with China. It is akin to telling a patient with a serious infection to just follow a healthy diet and exercise more.
> “China won’t collapse because of US tariffs”
You don’t know that. All we know is their economy has suffered greatly even with the relatively low tariffs, and that they have been desperate to get all the tariffs removed.
> “and if US would push too hard they have an ace or two in their sleeves too.”
Like what?
What have they been waiting for if they have an ace or two to play?
That’s arrogant take. They have Europe, Russia, Africa to divert. Their export to Russia believed approaching 20% of export to US from near zero in 2013.
Also it makes sense to take into account a mimicry between US and China. The point is US consumers are buying Chinese goods with money lent by China.
If you want to go nuclear they might dump the US debt and ruin $.
> “That’s arrogant take. They have Europe, Russia, Africa to divert. Their export to Russia believed approaching 20% of export to US from near zero in 2013.”
So these are not new but existing and mature markets where China has been exporting to for years. Meanwhile China was still exporting >500B to the US in 2018. Do you truly believe Europe, Russia, Africa, can or are willing to take 500B more in exports among them?
> “The point is US consumers are buying Chinese goods with money lent by China.”
Disagree. China is not the only one lending us money and they are not doing us a favor by buying treasuries. They need a safe place to park their reserves where they can earn decent interests. And besides, what does their lending us money have to do with US consumers and with trade?
> “If you want to go nuclear they might dump the US debt and ruin $.”
That is such a myth. They cannot recall or sell their US debt before the debt matures. All they can do is try to sell in the secondary market. Depending on how much they want to dump, it can only result in a great loss to them and the US couldn’t care less because there’s no shortage of buyers of our debt.
There is a good reason to suspect China is not about to honor their purchase commitments, not just because of their past behavior. They are running seriously low on their foreign reserves and will soon have to prioritize how to spend the money.
China’s reserves comprises three parts: money they have earned, money they have borrowed, and money belonging to foreign companies, i.e., the capital these companies brought when opening their businesses in China because China has strict currency control. When a foreign company leaves China, the original investment along with any operating profits will be returned by China drawing down its reserves.
As of last September, China has about US$3.09 Trillion in reserves, with about 2T in foreign debt (1.2T short-term and 0.8T medium-term), and about 600B in foreign capital. That leaves only about 400B. Other estimates give a slightly different breakdown: 1.2T in debt and 1.48T in foreign capital, arriving at a similar result of about 400B freely available for use by the CCP. That is not even enough to cover 3 months of imports of goods and services by China (666B for 2018).
But they have been very profligate with their reserves believing they can count on the hundreds of billions contributed by the US annually.
Now it is a very grave situation but, obviously, not all foreign companies are rushing for the exit at the same time. That is why the CCP is desperate trying to stem any capital outflow and at the same time to attract foreign investments by opening the financial sector, etc. But foreign companies are not likely to give them the much needed reserves because with China’s economic downturn and the tight reserves situation, companies will rightly worry if they can get their money back.
Your view is dogmatic. I believe no reason would fix it. Let’s see how it ends.
One thing for sure you need more than tariffs to fix trade imbalance when you are exporting corn, raw materials and scrap metal and importing manufactured goods.
There is no reason for a trade war because the pain is self-inflicted. China didn’t put US in uncomfortable position. And I am saying it as a person who don’t like China.
As for parking reserves and no shortage of buyers there is only so much liquidity in the markets. You can print more of it but it would make money worthless at one point.
> “Your view is dogmatic.”
Did I not give you real world situations and figures when making my points, whereas you only have opinions and nothing more?!
> “I believe no reason would fix it. Let’s see how it ends.”
Especially when you cannot give any reason to substantiate your opinions, like why you’re against tariffs on China, why you think China can easily replace the US market, etc.
> “One thing for sure you need more than tariffs to fix trade imbalance when you are exporting corn, raw materials and scrap metal and importing manufactured goods.”
Please don’t try to change the subject. Nobody is saying tariffs will fix everything.
> “There is no reason for a trade war because the pain is self-inflicted. China didn’t put US in uncomfortable position.And I am saying it as a person who don’t like China.”
Regardless of whose fault it is for the trade imbalance and whether you like China or not, you seem to be against the US taking action to correct the situation with China. That is what needs to be explained the most, and which I can tell you will not/cannot do, but it’s okay.
> “As for parking reserves and no shortage of buyers there is only so much liquidity in the markets. You can print more of it but it would make money worthless at one point.”
And with that, you have the audacity to call me dogmatic in my view? I don’t like our debt situation either, but anyway, I see you have no choice but to accept China dumping US debt is not an ace in its sleeve.
You don’t expect China to dump the debt because you assume they are rational and it makes sense. But then the other side needs to be rational too.
Fixing trade balance but forcing another side into collapse and forcing it into buying your products they don’t really need at the same time is not right and irrational too.
It is obviously an unprovoked hostile act as well and it prompts counter-reaction of all sorts. It also produces bad blood with a billion people many pro-American just yet.
At this point I believe it is arrogant for US to act in this manner since US is not the king of the world.
The founders never envisioned US as an empire.
In order to fix trade disbalance US should produce incentives for the producers to make things in US and punish whose who move production abroad. That’s more sensitive and more effective way.
He answered you and others point by point. Made other good points provided facts and wrote cogent posts. For that you respond calling them arrogant in one post and dogmatic in another. You need a mirror because as far as arguing goes sun7 is way better. I don’t know if I agree with them but I appreciate them taking the time to write thoughtful points of view without any personal bs. This is a wierd situation with China.
Besides President Trump, the Chicoms have nother problem. That problem can be labeled Chicaps
Chicaps are not just in Hong Kong
Want to help America. Buy American. It can be done. Allamericanclothing.com has great menswear, for example.
If we want to get serious about rebuilding America, stop buying from China, don’t allow illegals on your property, and get your children out of government schools!!
Trump is still winning, and Dems are still whining.
If you hit Excerpt when posting the article you should be able to post 300 words from sites on the Updated FR Excerpt and Link Only or Deny Posting List due to Copyright Complaints .
China and the U.S. agreed on the text of a phase one trade deal that includes the removal of tariffs on Chinese goods in stages, Vice Commerce Minister Wang Shouwen said, as President Donald Trump confirmed that some levies will be reduced and said the next round of talks will start immediately.
China will increase imports from the U.S. and other countries, Wang said at a briefing in Beijing Friday. Vice Chairman of the National Reform and Development Commission Ning Jizhe added that the specifics of agricultural purchases would be released later, as the text of the agreement is still under review.
Trump and his aides have promised that the partial deal the president first announced on Oct. 11 will be followed by others. That’s because while the initial accord may see China increase its agricultural purchases to as much as $50 billion annually and make commitments on currency and intellectual property enforcement, it includes nothing on more potent structural issues such as the vast web of subsidies that has fueled the global rise of many Chinese companies.
While Trump has insisted that as many as two further phases will follow, many analysts are skeptical much more progress can be made going into an election year in the U.S. That could allow the Chinese to run out the clock.
That Trump appears ready to offer tariff relief in return has agitated China hawks in Washington who fear that after daring to take on Beijing in a way no prior president has with his tariffs, Trump is giving up leverage that might extract future concessions.
Were it up to me, I’d have continued to apply pressure with tariffs rather than require them to make big agricultural purchases, which can only lead to more low-skilled work and bigger farm subsidies for us down the road.
But as you said, we’re not the king of the world and we did not put a gun to China’s head, maybe by pondering why China decides to agree to the terms of ‘an unprovoked hostile act’, you could find some resolution to your complaints/objections.
Thank you for the very kind words.
You think farmers are unskilled?
Sheesh, where have you been this last decade?
Farming is a highly skilled occupation requiring not only a lot of smarts, but wisdom and courage to help make good long term decisions.
I’d wager most farmers are a lot smarter, far more skilled and better informed than you.
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