U.S. President Donald Trump (3rdL) holds a bilateral meeting with China's President Xi Jinping (2ndR) at Trump's Mar-a-Lago estate in Palm Beach, Florida, U.S., April 7, 2017. REUTERS/Carlos Barria
SCMP: China needs to put its house in order as the trade war goes from bad to worse
Aidan Yao says the China-US trade war is likely to continue, if not worsen, since it is rooted in a competition much deeper than trade imbalances, and therefore the Chinese side needs to prepare for the worst.
In contrast with the progress seen in United States-European Union negotiations, there are no signs of trade talks resuming between the US and China since the breakdown of negotiations in June.
This underscores a fundamental difference between the US-EU and US-China disputes. The former is genuinely about trade between two allies, while the latter is a structural conflict – disguised as a trade spat – between two adversaries. That structural conflict is centred on China’s rapid catch-up in technology and innovation, which, in the eyes of the Trump administration, has been achieved via illegal technology transfer and lax protection of intellectual property.
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WNU Editor: Here are some more articles from SCMP ....
China should cut its losses in the trade war by conceding defeat to Donald Trump (August 10, 2018)
Did China think Donald Trump was bluffing on trade? How Beijing got it wrong (July 27, 2018)
China has no idea how to play Trump, and is doing what it always does when it smells trouble (July 27, 2018)
As to what is my take. When President Trump was elected, this blog warned that if China continued doing what they have always been doing .... promising to curb their U.S. trade deficits with the U.S. but doing nothing to make it happen .... China Offers "Concessions" To Avoid A Trade War With The U.S. (April 9, 2018) .... we were going to enter into a trade war. And as this blog predicted, we are now in a trade war. This trade war is also not being properly covered by the North American press, but in Asia this story is receiving coverage that is 24/7. On a side note, I had some friends from China passing through Montreal to the U.S. this week. They represent a large state company in China, and they told me that they have completely underestimated President Trump's resolve on this issue. They also believe that China will need to compromise on key issues, but the problem they see is that for now there is no political will in Beijing to do so. Bottom line .... my Chinese friends do not think this is going to end well for China when this trade war is finally over, and their only hope right now is that the Democrats win the Congress later this year and make President Trump's political life difficult, or President Trump is defeated in 2020.
Hat tip to Don Surber for this story.
6 comments:
If indeed it is a "war" then yes, America will win but as in all wars, both sides will suffer great consequences during the battle
exporters from China will not have to absorb the costs of the tariffs, but will be able to pass them on to their customers in the US. The result is likely to be higher inflation in the US, higher interest rates, and slower real economic growth.
In short, even though China may find it difficult to retaliate in the coming trade war, it could still emerge the winner in relative terms, as Trump’s import tariffs may well do more harm to the US economy than they do to hurt China. ■
That's not quite how it works.. it's not just consumers making decisions. .it's first and foremost the big buyers. And big buyers/importers, buy less and less from China. Why? Because you get the same things (with a few exceptions like rare earth minerals etc) from Thailand Vietnam and you don't get extorted or spied on like in China. I think wnu is right. I'm im SE-Asia and I can tell you there's no love for China in any of the countries I visit. They all are being threatened (and I mean militarily) in the south China Sea by radical Chinese claims. So they are not only competing and offering the same products under much more favorable conditions but they make it a point of pride to offer better quality and prices especially than china and in my industry many have switched already and I think it is way under reported what's happening. Wnu is correct that this won't end well for China and that in Asia this is covered in much more detail (also because they all hate China here, so the knives for China are out and that's why the markets here also react differently. .everyone knows some Chinese businessmen who were rich last year and suicide or in prison for fraud this year. ..this is all lost in the western media and China is suppressing so much info still. On top the gdp manipulation China did is much more known here and not covered in the western press at all. By up to 30% faked gdp! This is not even factored in the trade war yet either. It will not end well for China...this lift is racing to the bottom and fast. We left China a few months back for production and won't go back for sure
I think there is more to this than just Asian competitors picking up new business from the Chinese. I think Trumps big vision is to get American based companies offshoring in China to return their manufacturing operations to the United States. He wants to resurrect manufacturing in the USA. He is on a binge slashing federal regulations, particularly in the DC agency most associated with running manufacturing offshore, the EPA. He is reducing federal regulatory costs on energy production, a key input for manufacturing. He has slashed corporate taxes. Of course all of this benefits Trump country, aka fly over America.
I don't think American media has honestly analyzed the multifaceted attack that Trump has mounted on those country's he's labeled as predatory. Plenty of blog owners with deep knowledge on economics offer good reporting, like this one, but not from the brain numbing giants that own the airwaves.
So then American made goods are more Attractive and the rest of the world still can't afford the Chinese junk...
It depends on what you buy. Some things Americans can produce very competitively, some things the Chinese, Vietnamess or Germans or Japanese or you name it. My point is that China does a) no longer have a cornered market when it comes to any production or materials with the before mentioned exception of rare earths, b) China has made so many enemies in Asia that people here in SE-Asia not just compete but make it a point of pride to be better than China c) you don't get extorted when doing business in Singapore or Vietnam or Thailand. .in China you often do.. and it costs you. .so yeah I just don't see any great future in China until they reform ..in my industry it's no longer an unspoken secret to stay away from china (as a production market not as selling ofc) but it's almost essential to avoid issues down the road that can cost you your competitive edge and a foot
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