Neither was East Germany or the old Soviet Union. China is already miles ahead of where they were as far as opening up. Further, China’s political system is not compatible with Chinese culture built over centuries. Even Chinese mythology is built around good fortune, good luck, and prosperity. It’s only a matter of time before the entire country is a “Special Economic Zone”. And if you think my “anti Trump tirade” is without merit, feel free to demonstrate his huge trade successes since he began his idiotic Trade wars. The fact is, his trade blunders have been a drag on the US economy and have largely negated the boost from his deficit financed tax cuts. But I’ll leave the ball in your court to show me what I’ve missed. (And note: calling USMCA “the greatest trade deal in US history” like the moronic President won’t cut it)
China’s Economy, by the Numbers, Is Worse Than It Looks
- Thread starter onthebottom
- Start date
essguy_ is bemoaning the fact that the US finally has a president with the balls to confront China on their egregious theft of Intellectual property. Plus, their disregard for patents and copyright.
The liberals hate him (Trump) cause he's taking a stand against China who should never been admitted to the WTO. I think it was Clinton who naively believed the Chinese would keep their word which they never do. They only respect strength and ruthlessness. Trump knows this
The liberals hate him (Trump) cause he's taking a stand against China who should never been admitted to the WTO. I think it was Clinton who naively believed the Chinese would keep their word which they never do. They only respect strength and ruthlessness. Trump knows this
It's not a stretch at all. Deng opened China in mid eighties. What year is it currently? In all that time the Chinese economy and its leadership failed to develop an effective domestic market. They made huge strides from the Maoist hell, but this is as good as it gets. And, most importantly, for all their posturing they remain a play thing for the first world.
Old video from 2013, length 30 minutes. The Chinese running another version of the old imperial system of governance.
https://www.youtube.com/watch?v=s0YjL9rZyR0
As for the trade war, it has reached the final stage as far as the Chinese are concerned.
The issue is China 2025. When implemented, it will decouple the Chinese economy from the American economy with regards to high tech inputs (or factors of production). This will occur slowly and over time. Naturally the Americans want a piece of this action. Hence the trade war.
The trade war is 2 parts. One is ordinary goods. Two is the high tech products. We know of the two, China is only interested in talking about one of them.
The offer to buy $1 trillion dollars of US commodities and agricultural products, is the final Chinese offer, the take it or leave.
If there is no trade deal, then the Chinese side will accelerate the decoupling of the Chinese and American economies.
:deadhorse:
Oh, you mean your point about narrowing the trade gap? Just think about the possibilities for doing this: 1. China buys more US goods.
2. US buys less Chinese goods
3. Combination of both
Absent tariffs and trade wars, China will only buy more US goods (or any other country) if their economy demands it. Thus any policies meant to weaken China go against this. Hence, any bilateral efforts by the US that involve weakening China are bound to fail. Trump’s boasting about the relative economic strength of the US vs China indicate that he thinks a weaker China means he is winning. The record China trade deficit numbers (despite the tariffs) tell the real story.
But let’s imagine that China does what Trump wants and somehow buys enough US goods to balance trade. First of all: Under what timeframe? Currently, the US does not have the quick spare capacity to balance trade with China without huge inflationary wage pressures (US unemployment being at record lows). So again, no free lunch. Wage pressures and an export boom mean the Fed will need to hike rates - which brings up the the elephant in the room: The US deficit and how to fund new and existing debt (not to mention the dangerously high levels of consumer debt). Meanwhile, China’s current account (already shrinking) goes into a deep deficit - meaning they will have less money for domestic stimulus and for the Govt’s foreign investments (including US Treasury purchases, where they remain the largest single foreign purchaser at auction). Again, no free lunch.
If the US buys less Chinese goods, then the US consumer (addicted to less expensive foreign products) must pay more. Or shift demand to another developing country, meaning they just shift their trade deficit to another place. Again, no free lunch.
The whole problem with Trump’s approach to trade (not just with China, but with all countries - including Canada) is that it is simplistic to the point of being almost child-like. This is because the President is a moron on trade and has no background in it outside of shady real estate dealings. And he relied too much on Ross and Navarro for his early strategy. Plus his clueless base believe and accept simple, child-like “solutions” (I.e. they swallow any Trump bullshit without question). One hopeful sign is that both Ross and Navarro appear as if they have been shoved into the background. This is a very good thing, if true. Ross is a dinosaur (with his fucking soup cans) and Navarro a dangerous kook.
As another example: Canadian Steel does not really compete with US Steel. Thanks to NAFTA, steel production has evolved naturally so that Canadian steel products serve entirely different industry demand than US steel. That is why US steel consumers are having such a difficult time - they can’t simply change suppliers so must pay the tariffs to continue to produce. Trump’s notion that this is a security threat ignores the fact that this system evolved because of Canada’s (and Mexico’s) long history as allies and trusted trade partners. And as further proof of his cluelessness - he granted tariff exemptions to South Korea, Brazil, Argentina, and Chile who already had a combined 25% of the steel import market (and now growing). Under what Universe are any of those countries a greater or more trusted ally than Canada?
I don’t expect you’ll understand any of this but that’s not my fault.
PS. A prediction I’ve made before and I will repeat. The US and China WILL reach a “deal” on trade that will involve a lot of long term goals, major caves, and policies that will mirror the language of TPP. Trump will declare a great “victory”, similar to his nonsense about USMCA and his ignorant base will cheer. Most others will simply breath a sigh of relief and hope that global trade gets back to the levels before the clueless Trump disrupted things. The market should rebound, Trump will brag about it, and few people will care that the entire year or so of global trade chaos accomplished minimal gains or what a more informed President would have accomplished without the chaos. The US economy will continue to grow, but at Obama levels (hopefully), meaning the $1 Trillion dollar Trump deficit financed infusion will have been squandered for 1 year of boosted growth. Most of the benefits negated by Trump’s trade blunders.
Very interesting Ted talk - thanks for posting.
My belief is not really about the political system, but of the nature of Chinese. I am generalising, but I have spent a lot of time in Asia and my ex-wife was Singaporean, so I have my biases. The typical Chinese person is a rampant capitalist at heart and a total pragmatist when it comes to politics (almost to the point of indifference, so long as it does not interfere with getting ahead). Yes, I realise this is a gross generalisation. There is a reason that many Chinese love to gamble, and why their stock markets are highly speculative - everybody believes in luck, and everybody wants to get rich. Chinese culture and mythology is all centered around luck and good fortune - it has been baked in for far longer than communism. That is why any old style communism is doomed. Eventually China will be one big “special economic zone” with free markets and privately held businesses. It might still be a communist country - with concentrated power in the hands of a single political party but the style of leadership will have to evolve as the country prospers. The US should embrace this (as it’s inevitable) but the future strength or vision of China as an economic super power scares them. I think their worst fear is that China will be as benevolent as they were... LOL.
The Chinese are degenerate gamblers. Their "pragmatism" is what we in the West used to call a lack of moral fiber. The Chinese communist capitalism has failed because they did not create the economic pie large enough for enough to partake in. Ultimately, the Communist government will be blamed for it, but it will not give its power. That is where the indifference to the politics will end.
You’re forgetting that China and capitalism is a relatively new experiment that only began in the 80’s with the creation of special economic zones. And the handover of Hong Kong only happened in ‘97. So the country and “capitalism” have a history shorter than Apple’s been making computers. So again, way too early to say it has failed.
Chinese communism will likely evolve into a quasi democracy, where one party will dominate its opponents and run the country like a benevolent dictatorship - similar to how Singapore was run under Lee Kuan Yew. Success will breed contentment. Of course, being such a massive country, this will be a lot harder to do than a small city-State. If not, then we will see massive protests, crackdowns and possibly revolution. Btw, Chinese pragmatism doesn’t mean a lack of moral fibre - it just means that change is accomplished through means that may seem odd to foreign eyes (eg: ...keep your enemies closer, Sun Tzu, Art of War). And you could hardly say that the Tiananmen Square protestors lacked moral fibre.
All they need to do is shift spend from other countries to the US, hence the $1T commodities offer. I don’t think anyone is expecting no trade imbalance, just a significantly smaller one. US economy, especially commodities, has plenty of capacity. We could provide China with enough Coal to burn for hundreds of years, same with agriculture.
Maybe, but China produces a lot of their own coal (and since Dec have had import restrictions) so not sure how feasible that would be. Maybe The US could sell them a lot of metallurgical coal for their steel factories! Same with agriculture but maybe soybeans and pork (and of course the rice they promised to buy). It’s a huge gap to fill and surely the US would want some higher value add products in the mix, including services. Trump should try to get the foreign ownership limit for financial institutions operating in China lifted or the net asset value requirement dropped.
Of course the Chinese know that all they have to do is give Trump enough that he can crow about a “great deal” which doesn’t even have to be that great. And then there is the IP issue - but Trump could just cut and paste from TPP.
I don’t think we should touch banking in China, I’m not sure they are solvent.
We should get those wavers from Canada though... then you guys could get 30yr fixed rate mortgages with no prepayment pentalties.
The China bond market will be exploding in growth. In April of this year, Chinese Govt bonds will be included in Barclay's Global Aggregate Index and with a weighting of almost 6% - China immediately becomes the third biggest bond market in the index. FTSE and JPM indexes will likely follow with inclusion of China. So for any fixed income fund manager - all of a sudden inclusion of Chinese bonds becomes a necessity or if not - then it's an active decision to underweight. Right now, Foreign investment banks need a partner and the Chinese asset hurdle is quite large - which limits which banks can participate in the Chinese domestic market.
You'll have to ask somebody who cares about the 30 year mortgage. I took out a mortgage after buying out my house during my divorce 2 years ago (3 year fixed) - but I'm going to pay it off. And I'm more apt to downsize than buy a bigger place, especially with my kids at University - so not really following the retail mortgage market.
Um. Considering the difference in how the two nations weathered the crisis when it came to real estate I'll stick to Canadian rules thanks.
We don't loan money to people who can't pay it back. And my house value went up during it.
That protectionist, TD and BMO have no trouble expanding their retail banking presence in the US
You aren't asking to allow services expansion. You are asking to change banking laws to suit banks.
We have numerous foreign banks, on line banks, credit unions who all do business profitably.
But they don't get to Play fast and loose and fuck up. And neither do consumers.
Time for some fake news!
izza:China will overtake the US as the world's biggest retail market this year
By Daniel Shane, CNN Business
Updated 7:00 AM ET, Wed January 23, 2019
https://www.cnn.com/2019/01/23/business/china-retail-sales-us/index.html
