What I found dealing with Chinese Factories is that they will reduce the price of goods as much as they can to reduce the impact of tariffs for the customer. Most factories receive a Government subsidy for all goods that are exported (BOL from shipping lines). In some industries it can be as high as 15% of the price charged to the customer, which allows them to be more competitive or in the event of tariffs allows for price adjustments. Eventually if the tariffs get to a point where there is no profit left then any additional cost will be passed on to the customer and could be passed on to the consumer.
I feel this is what is occurring now in the USA. The Chinese are eating the tariffs and will continue until there is no more room to maneuver. At that point US companies will probably eat some of the tariffs by reducing profit. Eventually the consumer might have to pay a little more but that isn't a guarantee. The consumer could luck out and pay what they were always paying.
During the 2008 melt down, all our factories agreed to work at cost as long as we continued to buy so they could keep the work force employed. The Chinese are very tough and very willing to do whatever it takes to stay in the game.
The problem is that margins in manufacturing are usually in the single digits. So you can’t really sustain eating a 10% tariff, to say nothing of a 25% tariff, for that long. Money doesn’t grow on trees. You either have to borrow to cover the tariff or pay out of savings. At some point you run out of money or your creditors come to think that you will.
It depends on the industry but margins in manufacturing are often enormous. I once worked in a factory making action figures. We could make a few dozen for under a penny in energy and material costs. Those sold for ~$19.99 each.
It turns out that all the cost is in marketing and distribution. And for asian manufacturers the internet era has decreased those costs a ton. They can outsource them to eg. western youtube price arbitragers and focus completely on volume to maximize their government subsidy.
> Officials are also taking concrete steps to shift China’s dependence on the United States for certain goods. They have focused efforts on new trade partnerships with countries like Japan and South Korea and lowered trade barriers for other countries. They have also struck deals to import agricultural goods from countries other than the United States. This week, China approved barley imports from Russia.
this is where i expect steve bannon’s idea of favoring bilateral deals instead of large trade blocks (ASEAN, TPP etc) to backfire
in the end china will probably just find other ways to adjust and world economy starts splintering
(personally, i was no fan of tpp because of the non-democratic arbitration clauses, but i also think bringing the world together under harmonious and consistent trade relations is extremely important for peace and stability)
Where will China get the money to buy their agricultural goods? Their food prices jumped 7.7% in June, likely caused by the outbreak of the African swine fever in the country’s pig herd [1]. China has some serious pressure being applied to them, and no wiggle room.
The world will be divided into two parts for sure, one is for China market and one is for US market.
People already started to prepare for this.
G2 and Beyond: Foxconn founder sees 'one world, two systems' leadership framework forming
https://www.digitimes.com/news/a20190624PD205.html
How many things are as good for world's prosperity than low or no tariffs? That's only beaten by lack of armed conflicts. Wishful thinking, but still true.
Tariffs are a way to force local businesses to produce something that's more cheaply available elsewhere. Usually it's exactly in an anticipation of a conflict (even armed) which would sever vital supplies of that stuff.
Open markets work best when there is a common peaceful order, and an enforcer of it. US used to be, and largely continues to be such an enforcer, but not in the China's area of influence.
Free and abundant healthcare and education trump anything commerce-related, in my book. You can argue trade can help in those areas too, but strictly speaking it’s not a prerequisite (often it’s even a problem).
Agreed. It plays right into China's hands because very, very few nations have the size to deal with China. Smaller countries need to band together to negotiate with China as a group. China's foreign policy has always favored bilateral deals rather than dealing with groups of countries because their scale favors them.
I feel the same as you about the TPP. The implementation might not have been great but the idea was good. We need to band together with our smaller allies to negotiate effectively with China.
Tariffs hurt US customers as well. We pay a higher price for sure.
It hurts China, but it does not mean China has to retaliate because it would hurt China customers as well. If China's leaders are wise, they would focus on the economy boost instead of playing this child game with another Child.
On the other hand, it's a great way to drive people away from disposable consumption and guided into more expensive but better built and longer lasting alternatives less damaging to the environment. But I'm afraid this skirmish will not last long enough to shift behavior.
It doesn’t raise consumer prices by much. The tariffs are on cost of good sold, not retail price. For most of the goods you buy at Walmart, the cost of goods sold is a fraction of the retail price. Most of the retail price is paying for shipping, retail presence, etc. So a 25% tariff might only result in 5-10% higher prices for consumers. And that’s only on non-grocery goods, which make up a small fraction of most households’ expenditures. Not really a big deal, in other words.
> The question is how. China’s imports from the United States only a fraction of the trade going the other way, so it cannot match Washington tariff for tariff. Much of that trade consists of agriculture goods like soybeans, as well as specialized products like Boeing jetliners or the American-made chips for the smartphones China makes.
The question monetary value, but where widgets are physically made made. This simple realisation eludes so many "China Experts" in the West.
Were Beijing to pull an inverse Huawei ban on any company in the West, that company would be dead in a few months no matter what it is. It can crash US stock market, pension funds and assuredly secure the non-election of Trump for the second term.
China is fully capable of economic retaliation against US and can genuinely make it hurt, but it chooses not to because people in Zhongnanhai have no guts for that.
What surprised me most in recent months is that out of all people, the criticism of Xi's overly conciliatory tone with Washington is now coming from people whom you can call Chinese industrialists class. This criticism is quite strong worded, emotional. I never ever saw somebody so up on social ladder here being so openly critical of Xi before.
There's a difference between China banning Google from operating in China, and China sanctioning Google. The latter would prevent any company that does business in China from doing business with Google, effectively cutting Google off from most major companies in the world.
This is what the US did to Huawei. Huawei was already effectively banned from selling in the US market, and it didn't impact them that badly. They could still sell in China, Europe, India, Africa, etc. But being sanctioned by the US meant that they couldn't buy from critical suppliers, meaning they wouldn't even be able to manufacture their products in the first place.
The reason why China hasn't retaliated against a company like Apple, which would be devastated by any Chinese sanctions, is that long term, such a move would scare off other companies. Everyone would try to limit their supply-chain exposure to China, just as Chinese companies are now trying to do with the US.
China did not ban Google. Google is still doing business in China. It has research centers and Android is dominating in China. Plus it earns over a hundred millions of dollars each year from China by selling Ads.
Google abandons its searching services in China because it does not want to cooperate with censorship from the government. They still could re-open if they are willing to cooperate. And they planed to do, then gave-up under pressure from its employees.
Apples and oranges. Banning Google in China meant that its product (user data) couldn't be produced in China. That's unfortunate but they still have users elsewhere in the world and on VPNs. On the other hand ad sales _to_ China have continued growing ever since the ban.
Huawei (or any smartphone company) has no alternative to chips that license US technology.
On BBK's internal mail list, there was a letter from Duan saying that Xi's indecision lets USA to slowly bleed Chinese industry while American companies have sweet time relocating out of China at easy pace, and show US politicians how easy is China for picking, and that doing so is a totally repercussions free way to gain political capital. And that assures that China's troubles will not end with Trump now.
Another sentiment from a forum quite popular by industry oldtimers is beyond unflattering, pretty much a personal rant on Xi, so I can't say the source. The point was that Xi, a very insecure man, and the elites of his generation, were unable to resist influence of Trump's powerful ego, and that they are plainly frightened by him.
From my own view, this is indeed the case. It is hard to explain to somebody who live in the West how it works, but I'll try my best here:
See, that generation of people were risen in the culture dominated by the social class of "Big Men," and all of their social programming and mental processes work around one attaining, securing, maintaining, extracting benefits from, giving or forcefully taking that "Big Man" status from somebody.
In eyes of such people, somebody like Trump may indeed look like a very "top dog" person, more so than even Xi himself. And it is Xi's insecurity that pushes him to seek engagement with Trump, to show his peers that he "can talk on equals even with a big bad boy like Trump."
If he were to break off that engagement, and if he would've lashed out on Trump, many of his peers would've seen that as him going on defensive, and admitting his inferiority to Trump, as if he was skulking away from Trump's intimidating presence.
> Were Beijing to pull the inverse Huawei ban on any company in the West, that company would be dead in a few months no matter what it is.
China can't do any of that because it would harm their own economy far more (what remains of their industrial / trade trust would vaporize further) and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers.
Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself.
The US is one of the least trade dependent nations:
On imports + exports as a share of GDP, the US ranks #6 in the world as least dependent, with those two items making up 27% of the US GDP. China is at 40%. Germany is 87%, France is 63% and the UK is 62% by comparison.
The US is also, essentially, entirely energy self-sufficient, with Canada's help. Something China is nowhere near being. The US could shut off China's access to foreign oil and a lot of coal supply very easily and it would grind up their economy.
Let's run the hypothetical though. Ok, do it to Microsoft, Google, Facebook and Oracle. Those are three of the five largest US companies and four of the largest tech companies.
Might as well also hit Netflix, Adobe, Intuit, Salesforce, Workday, ServiceNow, Uber, Lyft, Twitter, Snap, Pinterest, Slack, Dropbox, etc.
Also Exxon, Chevron, ConocoPhillips, Occidental, Phillips 66, Valero, Marathon, EOG.
Run it against JPMorgan, Citi, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, BlackRock, NY Mellon, Fidelity, Vanguard, etc.
Next up do Visa, PayPal, Mastercard, Discover, Amex, Square, Stripe.
Then do it to Pfizer, Amgen, Merck, AbbVie, Gilead, Bristol-Myers Squibb, Biogen, Eli Lilly.
Maybe Lockheed, Raytheon, Northrup and General Dynamics.
How about Comcast, AT&T, Verizon, T-Mobile / Sprint.
Also McDonald's, Yum Brands, Kraft, Mondelez, Coca Cola, Pepsi.
Total result: barely a scratch overall, if that.
Few of these companies, many of which are among the largest corporations on the planet, have a critical (threat-of-death type) exposure to China. A few would lose 5-10% of their businesses and life would continue just fine.
This is the fundamental mistake China made by keeping its economy so restricted and locked down to foreign companies. Most of the US economy doesn't have a critical dependency on China. That's also why the large China tariffs are having near zero inflationary effect and that will continue to be the case. The only serious effect it's having is that it's pushing manufacturing out of China, which was one of the goals.
> China can't do any of that because it would harm their own economy far more (what remains of their industrial / trade trust would vaporize further)
I'll invert your argument. China can close all trade with USA tomorrow, and it will only be few percents of its GDP gone. Trade is not as big part of Chinese GDP as most people think, and trade with US is even smaller.
Moreover, do you think that China has any trust to loose to begin with? Even 10 years ago, the biggest headache of an MNC in China was plain theft and petty extortion by low tier officials. If those companies had a chance to move elsewhere, they would've done so years ago.
They plainly have no alternative.
> and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers.
China does not need allies to pull that out. Just any widget around has part/material/labour that is passing through China at some point. China can say companies to stop selling parts to server makers selling to, say, Google, and Google would not be able to do a thing about that. It is humanly impossible to recreate all and every critical component that goes into a computer these days apart from Chinese supply chains.
> Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself.
Sure, that's the thing, it will be the biggest trade battle ever. The current administration is too soft bodied to even contemplate fighting.
But they have no other option to win this trade war. If Xi has no guts for that, my feel is that somebody will either force him, or do that for him.
> The US is one of the least trade dependent nations:
This is an illusion. USA is one of nations most dependent on Chinese light industry goods. Just any everyday item, and household good on US shelves comes from China. Many kinds of essential components and materials for US domestic industry are near 99% imports.
For example, US may simply be left without half of all kinds of plastics on the market. China has near 100% monopoly on a lot of plastic types,especially higher performance ones. And people were saying that Dow Chemicals was ruling the world...
There are less domestically manufactured everyday goods in US than even in Russia or the Gulf countries.
Surely, USA has banks, funds, and law companies, but does it have manufacturers of trousers?
> The US is also, essentially, entirely energy self-sufficient, with Canada's help. Something China is nowhere near being. The US could shut off China's access to foreign oil and a lot of coal supply very easily and it would grind up their economy.
China can import as much energy as it wants from Central Asia and Russia, it chooses not to because Saudi oil is cheaper.
China also is not as dependent on fossil fuels, due to extensive rail links between their major cities. Its just convenient to use jet planes, also the CCP actively wants to create a Boeing alternative.
If we do end up in a situation that becomes an existential threat to CCP:
- China would aggressively dump US treasuries.
- China stops exporting rare earths that even the US military depends on.
- China starts importing Iranian crude ( providing navy escort ).
- Chinese nationals are forced to sell their holdings in the US.
All of these things would cause a major financial crisis in the US, the Baby Boomers do not have the stomach for it and would vote Trump right out.
Anyway, you are right, the US doesn't depend on trade.
But 44% of US corporate sales happens overseas. A shutdown of global trade would be quite bad for the Chinese, but it would be worse for the "richest nation on earth".
> This is the fundamental mistake China made by keeping its economy so restricted and locked down to foreign companies. Most of the US economy doesn't have a critical dependency on China.
Why should the Chinese open their economy to US companies without getting something big in return ? US firms are not entitled to free access to anything outside their borders.
We know what Facebook, Google can do to a country, it's better for humanity if US companies are not given completely access to every market.
Its all about huiwei and the technology, that’s the ultimate bottom line. They are fighting for the long shot prize. Retaliation is only to show face. Unless they can spin non retaliatory action as something better. Ultimately they seem to be fixated at 5G deployment
> “We don’t know how to deal with this either,” Tu Xinquan, the president of the China Institute for W.T.O. Studies at the University of International Business and Economics.
> “Is he a sane person at all?” Professor Tu said of the latest move by Mr. Trump. “It’s quite surprising. Didn’t the White House just announce that the trade talks were constructive?”
I'm afraid that Beijing still did not realise that all of the above is pretty much planned. Trump will keep "nightmaring" them, keeping them tense, showering them with unending negative publicity of them keeping failing the trade talks time and time again, while propping up his profile.
Things like this keep showing just how inept and naive are the people making the Chinese elite class.
In a sharp contrast, Chinese business elites are the real sharks, all very sharp people.
Sooner or later, this will end up in conflict in between the two.
I think that Trump has a particular negotiating style, which is to be all over the map. You're a wonderful person, and he's delighted to have the opportunity to do something wonderful with you; then you're the dirt under his shoe and there will never ever be a deal with someone as wretched as you; the terms of the deal will be one thing, then something else much less favorable to you, then the deal is off, then it's back on but the terms are different. I think it's a schtick that he's used in real estate for a very long time, to get the best deal he can out of people who get tired of being yanked around and just want a deal to get done. I think it's very much improvisational and seat-of-the-pants.
What you're asking (whether Trump knew this as a consequence and pushed for it) would be much more like deep strategic thinking. I don't think that's his style.
Again [1] this narrative of the protectionist US vs. free-trade champion China. Yet China has been heavily protectionist since long before the US started firing back [2].
I cannot imagine these journalists lack this very basic knowledge, which makes me think they are being deliberately deceptive in their framing.
That's clearly not what this article is about. Please focus on what's new and interesting about an article instead of hauling in old links to restart old flamewars. Repetition is the enemy of curiosity. We want the latter. Edit: one can see this problem in the very first word of your comment: "Again".
"Eschew flamebait. Don't introduce flamewar topics unless you have something genuinely new to say. Avoid unrelated controversies and generic tangents."
I agree that "they started it!" won't make for a very interesting discussion, but talking about which facts the press focuses on, and which it ignores, could be.
Readit News
I feel this is what is occurring now in the USA. The Chinese are eating the tariffs and will continue until there is no more room to maneuver. At that point US companies will probably eat some of the tariffs by reducing profit. Eventually the consumer might have to pay a little more but that isn't a guarantee. The consumer could luck out and pay what they were always paying.
During the 2008 melt down, all our factories agreed to work at cost as long as we continued to buy so they could keep the work force employed. The Chinese are very tough and very willing to do whatever it takes to stay in the game.
It turns out that all the cost is in marketing and distribution. And for asian manufacturers the internet era has decreased those costs a ton. They can outsource them to eg. western youtube price arbitragers and focus completely on volume to maximize their government subsidy.
this is where i expect steve bannon’s idea of favoring bilateral deals instead of large trade blocks (ASEAN, TPP etc) to backfire
in the end china will probably just find other ways to adjust and world economy starts splintering
(personally, i was no fan of tpp because of the non-democratic arbitration clauses, but i also think bringing the world together under harmonious and consistent trade relations is extremely important for peace and stability)
1. https://www.counterpunch.org/2019/07/19/china-and-the-swine-...
Deleted Comment
Open markets work best when there is a common peaceful order, and an enforcer of it. US used to be, and largely continues to be such an enforcer, but not in the China's area of influence.
I feel the same as you about the TPP. The implementation might not have been great but the idea was good. We need to band together with our smaller allies to negotiate effectively with China.
It hurts China, but it does not mean China has to retaliate because it would hurt China customers as well. If China's leaders are wise, they would focus on the economy boost instead of playing this child game with another Child.
Dead Comment
The question monetary value, but where widgets are physically made made. This simple realisation eludes so many "China Experts" in the West.
Were Beijing to pull an inverse Huawei ban on any company in the West, that company would be dead in a few months no matter what it is. It can crash US stock market, pension funds and assuredly secure the non-election of Trump for the second term.
China is fully capable of economic retaliation against US and can genuinely make it hurt, but it chooses not to because people in Zhongnanhai have no guts for that.
What surprised me most in recent months is that out of all people, the criticism of Xi's overly conciliatory tone with Washington is now coming from people whom you can call Chinese industrialists class. This criticism is quite strong worded, emotional. I never ever saw somebody so up on social ladder here being so openly critical of Xi before.
I don't remember any major panic about it, and not even a spectacular NASDAQ crash due to that.
I see that a trade war is a war of attrition, but I don't see US industry as more vulnerable than Chinese in this regard.
This is what the US did to Huawei. Huawei was already effectively banned from selling in the US market, and it didn't impact them that badly. They could still sell in China, Europe, India, Africa, etc. But being sanctioned by the US meant that they couldn't buy from critical suppliers, meaning they wouldn't even be able to manufacture their products in the first place.
The reason why China hasn't retaliated against a company like Apple, which would be devastated by any Chinese sanctions, is that long term, such a move would scare off other companies. Everyone would try to limit their supply-chain exposure to China, just as Chinese companies are now trying to do with the US.
Huawei (or any smartphone company) has no alternative to chips that license US technology.
Another sentiment from a forum quite popular by industry oldtimers is beyond unflattering, pretty much a personal rant on Xi, so I can't say the source. The point was that Xi, a very insecure man, and the elites of his generation, were unable to resist influence of Trump's powerful ego, and that they are plainly frightened by him.
From my own view, this is indeed the case. It is hard to explain to somebody who live in the West how it works, but I'll try my best here:
See, that generation of people were risen in the culture dominated by the social class of "Big Men," and all of their social programming and mental processes work around one attaining, securing, maintaining, extracting benefits from, giving or forcefully taking that "Big Man" status from somebody.
In eyes of such people, somebody like Trump may indeed look like a very "top dog" person, more so than even Xi himself. And it is Xi's insecurity that pushes him to seek engagement with Trump, to show his peers that he "can talk on equals even with a big bad boy like Trump."
If he were to break off that engagement, and if he would've lashed out on Trump, many of his peers would've seen that as him going on defensive, and admitting his inferiority to Trump, as if he was skulking away from Trump's intimidating presence.
China can't do any of that because it would harm their own economy far more (what remains of their industrial / trade trust would vaporize further) and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers.
Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself.
The US is one of the least trade dependent nations:
https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-...
And: https://i.imgur.com/7JIIX8Q.jpg
On imports + exports as a share of GDP, the US ranks #6 in the world as least dependent, with those two items making up 27% of the US GDP. China is at 40%. Germany is 87%, France is 63% and the UK is 62% by comparison.
The US is also, essentially, entirely energy self-sufficient, with Canada's help. Something China is nowhere near being. The US could shut off China's access to foreign oil and a lot of coal supply very easily and it would grind up their economy.
Let's run the hypothetical though. Ok, do it to Microsoft, Google, Facebook and Oracle. Those are three of the five largest US companies and four of the largest tech companies.
Might as well also hit Netflix, Adobe, Intuit, Salesforce, Workday, ServiceNow, Uber, Lyft, Twitter, Snap, Pinterest, Slack, Dropbox, etc.
Also Exxon, Chevron, ConocoPhillips, Occidental, Phillips 66, Valero, Marathon, EOG.
Run it against JPMorgan, Citi, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, BlackRock, NY Mellon, Fidelity, Vanguard, etc.
Next up do Visa, PayPal, Mastercard, Discover, Amex, Square, Stripe.
Then do it to Pfizer, Amgen, Merck, AbbVie, Gilead, Bristol-Myers Squibb, Biogen, Eli Lilly.
Maybe Lockheed, Raytheon, Northrup and General Dynamics.
How about Comcast, AT&T, Verizon, T-Mobile / Sprint.
Also McDonald's, Yum Brands, Kraft, Mondelez, Coca Cola, Pepsi.
Total result: barely a scratch overall, if that.
Few of these companies, many of which are among the largest corporations on the planet, have a critical (threat-of-death type) exposure to China. A few would lose 5-10% of their businesses and life would continue just fine.
This is the fundamental mistake China made by keeping its economy so restricted and locked down to foreign companies. Most of the US economy doesn't have a critical dependency on China. That's also why the large China tariffs are having near zero inflationary effect and that will continue to be the case. The only serious effect it's having is that it's pushing manufacturing out of China, which was one of the goals.
Also fortunately Taiwan != China
I'll invert your argument. China can close all trade with USA tomorrow, and it will only be few percents of its GDP gone. Trade is not as big part of Chinese GDP as most people think, and trade with US is even smaller.
Moreover, do you think that China has any trust to loose to begin with? Even 10 years ago, the biggest headache of an MNC in China was plain theft and petty extortion by low tier officials. If those companies had a chance to move elsewhere, they would've done so years ago.
They plainly have no alternative.
> and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers.
China does not need allies to pull that out. Just any widget around has part/material/labour that is passing through China at some point. China can say companies to stop selling parts to server makers selling to, say, Google, and Google would not be able to do a thing about that. It is humanly impossible to recreate all and every critical component that goes into a computer these days apart from Chinese supply chains.
> Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself.
Sure, that's the thing, it will be the biggest trade battle ever. The current administration is too soft bodied to even contemplate fighting.
But they have no other option to win this trade war. If Xi has no guts for that, my feel is that somebody will either force him, or do that for him.
> The US is one of the least trade dependent nations:
This is an illusion. USA is one of nations most dependent on Chinese light industry goods. Just any everyday item, and household good on US shelves comes from China. Many kinds of essential components and materials for US domestic industry are near 99% imports.
For example, US may simply be left without half of all kinds of plastics on the market. China has near 100% monopoly on a lot of plastic types,especially higher performance ones. And people were saying that Dow Chemicals was ruling the world...
There are less domestically manufactured everyday goods in US than even in Russia or the Gulf countries.
Surely, USA has banks, funds, and law companies, but does it have manufacturers of trousers?
China can import as much energy as it wants from Central Asia and Russia, it chooses not to because Saudi oil is cheaper.
China also is not as dependent on fossil fuels, due to extensive rail links between their major cities. Its just convenient to use jet planes, also the CCP actively wants to create a Boeing alternative.
If we do end up in a situation that becomes an existential threat to CCP:
- China would aggressively dump US treasuries.
- China stops exporting rare earths that even the US military depends on.
- China starts importing Iranian crude ( providing navy escort ).
- Chinese nationals are forced to sell their holdings in the US.
All of these things would cause a major financial crisis in the US, the Baby Boomers do not have the stomach for it and would vote Trump right out.
Anyway, you are right, the US doesn't depend on trade.
But 44% of US corporate sales happens overseas. A shutdown of global trade would be quite bad for the Chinese, but it would be worse for the "richest nation on earth".
> This is the fundamental mistake China made by keeping its economy so restricted and locked down to foreign companies. Most of the US economy doesn't have a critical dependency on China.
Why should the Chinese open their economy to US companies without getting something big in return ? US firms are not entitled to free access to anything outside their borders.
We know what Facebook, Google can do to a country, it's better for humanity if US companies are not given completely access to every market.
> “We don’t know how to deal with this either,” Tu Xinquan, the president of the China Institute for W.T.O. Studies at the University of International Business and Economics.
> “Is he a sane person at all?” Professor Tu said of the latest move by Mr. Trump. “It’s quite surprising. Didn’t the White House just announce that the trade talks were constructive?”
I'm afraid that Beijing still did not realise that all of the above is pretty much planned. Trump will keep "nightmaring" them, keeping them tense, showering them with unending negative publicity of them keeping failing the trade talks time and time again, while propping up his profile.
Things like this keep showing just how inept and naive are the people making the Chinese elite class.
In a sharp contrast, Chinese business elites are the real sharks, all very sharp people.
Sooner or later, this will end up in conflict in between the two.
Could it be that Trump knows this and is pushing for it?
What you're asking (whether Trump knew this as a consequence and pushed for it) would be much more like deep strategic thinking. I don't think that's his style.
Dead Comment
I cannot imagine these journalists lack this very basic knowledge, which makes me think they are being deliberately deceptive in their framing.
[1] https://www.reuters.com/article/us-imf-worldbank-china/china...
[2] https://www.forbes.com/sites/douglasbulloch/2016/10/12/prote...
"Eschew flamebait. Don't introduce flamewar topics unless you have something genuinely new to say. Avoid unrelated controversies and generic tangents."
https://news.ycombinator.com/newsguidelines.html
I agree that "they started it!" won't make for a very interesting discussion, but talking about which facts the press focuses on, and which it ignores, could be.