Tag Archives: China

The US-China Decoupling, by Patrick Lawrence

Posted on May 28, 2019 | Leave a comment

It looks like the US and China will acrimoniously be going their separate ways. From Patrick Lawrence at consortiumnews.com:

The long, dense economic relationship appears to have passed its peak, writes Patrick Lawrence.

President Donald Trump’s trade war with China is swiftly taking a decisive turn for the worse.

Step by step, each measure prompting retaliation, a spat so far limited to tariff increases, now threatens to transform the bilateral relationship into one of managed hostility extending well beyond economic issues. Should Washington and Beijing define each other as adversaries, as they now appear poised to do, the consequences in terms of global stability and the balance of power in the Pacific are nearly incalculable.

The trade dispute continues to sharpen. Later this week Beijing is scheduled to raise tariffs already in place on $60 billion worth of American exports — the latest in a running series of escalations Washington set in motion nearly a year ago. Two weeks later the U.S., having increased tariffs on $200 billion worth of Chinese products earlier this month, is to consider imposing levies on an additional $325 billion worth of imports from the mainland.

Xi and Trump: In lighter mood.  (YouTube)

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Tariffs on China Do Not Solve Lack of U.S. Competitiveness, by Tom Luongo

Posted on May 26, 2019 | Leave a comment

Maybe China does some things better than the US. From Tom Luongo at tomluongo.me:

I’ve been making arguments for months that Donald Trump’s trade war with China is the height of stupidity. While Trump has the power to do what he’s been doing — sanctioning actors and applying tariffs — some power is best left not used.

The simple fact is that America is uncompetitive. This is at a deep and structural level. It’s at an education level. And this is something Trump’s trade team and his adherents refuse to admit.

When it comes to manufacturing and assembly, U.S. workers are not worth the money they are paid. Period.

Don’t take my word for it. Take Tim Cook’s. In an eye-opening interview from the end of 2017 Cook explains the basic problem with the U.S.

And China has an abundance of skilled labor unseen elsewhere, says Cook:
“The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the US you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields.”

Cook credits China’s vast supply of highly skilled vocational talent:

“The vocational expertise is very very deep here, and I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said this is a key thing and we’ve got to correct that. China called that right from the beginning.”

Is this Tim Cook talking or Mike Rowe?

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Workers of the World, Unite! by MN Gordon

Posted on May 25, 2019 | Leave a comment

The real cause of the US’s massive trade imbalance with China is the US’s depreciation of the dollar. From MN Gordon at economicprism.com:

The dawn of war is a time of simple clarity and purpose.  Good guys vs. bad guys.  Cowboys vs. Indians.  Confederates vs. Yankees.  Coppers vs. robbers.  It’s a time when lines are drawn, songs are sang, and drums are beaten with gaiety and confidence.

Indeed, calls for ‘a jolly little war’ are always greeted with merriment and optimism.  This also goes for the dawn of a trade war.  Regardless of whether you’re from Scranton or Suzhou, the escalating  Trump vs. Xi standoff all seems so virtuous.  “We’re right, they’re wrong,” and vice versa.

Here in the USA, the perspective is crystal clear.  America’s rightful bounty is within reach.  After several Presidents that were light in the loafers, there’s finally a leader of the free world with the brass fortitude to reach out and grab it for his fellow countrymen.  And why not?

Several decades of getting spanked by Chinese grunt laborers have American workers longing for reprisal.  This ain’t their granddaddy’s economy.  They’ve been repurposed from well-paying manufacturing jobs to low-level service workers.  The relentless progression has been demoralizing.  Given a fair shake, American workers just know they’ll kick tail and take names.

Yet, as far as we can tell, Trump’s fight is a day late and a dollar short.  The time to stand up for the American worker came and went while Ray Dalio was busy getting absurdly rich from the financialization of the economy.  What’s more, the means to stand up for the American worker had – and still has – little to do with slapping tariffs on Chinese made doohickeys.

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Posted in Business, Currencies, Debt, Economics, Foreign Policy, Geopolitics, Governments, Trade, Uncategorized

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Rural America Is On The Verge Of Collapse, by Tyler Durden

Posted on May 25, 2019 | Leave a comment

Farm country USA is not in good shape, and Trump’s trade wars are certainly not helping. From Tyler Durden at zerohedge.com:

The Economic Innovation Group’s (EIG) Distressed Communities Index (DCI) shows a significant economic transformation (from two distinct periods: 2007-2011 and 2012-2016) that occurred since the financial crisis. The shift of human capital, job creation, and business formation to metropolitan areas reveals that rural America is teetering on the edge of collapse.

Since the crisis, the number of people living in prosperous zip codes expanded by 10.2 million, to a total of 86.5 million, an increase that was much greater than any other social class. Meanwhile, the number of Americans living in distressed zip codes decreased to 3.4 million, to a total of 50 million, the smallest shift of any other social class. This indicates that the geography of economic pain is in rural America.

“While the overall population in distressed zip codes declined, the number of rural Americans in that category increased by nearly 1 million between the two periods. Rural zip codes exhibited the most volatility and were by far the most likely to be downwardly mobile on the index, with 30 percent dropping into a lower quintile of prosperity—nearly twice the proportion of urban zip codes that fell into a lower quintile. Meanwhile, suburban communities registered the greatest stability, with 61 percent remaining in the same quintile over both periods. Urban zip codes were the most robust—least likely to decline and more likely than their suburban counterparts to rise,” the report said.

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From False Hope to False Flags, Trump Sets the Stage for Global War, by Tom Luongo

Posted on May 25, 2019 | Leave a comment

Trump wages economic, political, and military wars on multiple fronts, so multiple they’re difficult to count. From Tom Luongo at strategic-culture.org:

At this point Trump is fighting a war with everyone not named Israel and Saudi Arabia. Even allies are not to be spared Trump’s wrath for all of their slights against his beloved United States.

In the greatest television series of the 1990’s, Babylon 5, one of the main characters, Londo, a weak and venal man, makes a deal with the devil and unleashes his dying empire’s worst impulses, to restore it to its former glory.

At one point he realizes things have spiraled out of control. The deal he made is having consequences far beyond his original ambitions. So, he confronts one of his allies within the Royal Court telling him,

“Only an idiot fights a war on two fronts. Only an heir to the throne of the kingdom of idiots fights a war on twelve fronts!”

If that observation is true, then Donald Trump is the grandsire of that heir. At this point Trump is fighting a war with everyone not named Israel and Saudi Arabia. So, I’d call that waging war on at least thirty different fronts. Even allies are not to be spared Trump’s wrath for all of their slights against his beloved United States.

This is all in service of his vanity to be remembered as the greatest president in US history, who brought peace to the Middle East and Made America Great Again.

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The Lost War, by Sven Henrich

Posted on May 15, 2019 | 1 comment

Is China winning the trade war? From Sven Henrich at northmantrader.com:

Did the US just lose the trade war? It seems like a ludicrous question to ask at this time as the US just raised tariffs on China to increase pressure on the negotiation process. The accepted conventional wisdom is that the US has the stronger hand to play as China would suffer more from tariffs than the US. That sounds good on paper, but is that really true in a three dimensional world with moving parts and conflicting timelines?

In many a fight match up the audience can get a sense of shift in momentum during a fight and as this trade war just shifted gears I can’t help but wonder if the momentum has shifted in China’s favor.

Let’s start with the reason for the sudden tariffs. Those came about because the US side was surprised, surprised by China’s apparent withdrawal from previous commitments. At least that’s the public narrative that is spun. Unless you’re in the negotiation yourself it’s hard to know. Fact is Trump, Kudlow and team led the world believe that a trade deal was imminent. It wasn’t. This move to escalate was not planned, it happened because team Trump realized they couldn’t get the deal they wanted or expected.

Being surprised and being forced to be reactive to escalate does not indicate a position of strength, but rather a position of weakness. And by reacting with tariffs Team Trump may have actually weakened their own position. Why? Because of inflation, time, and pain.

Let’s start with inflation: Despite Donald Trump’s repeated claims that China will pay the tariffs it simply is not so. US businesses and consumers are paying for tariffs which causes consumer inflation on the one hand and margin compression on the other, and perhaps a mix of both depending on what can be passed on.

But conceptually it’s literally shooting yourself in the foot.

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Posted in Business, Economics, Economy, Foreign Policy, Geopolitics, Governments, Trade

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US-China: the hardcore is yet to come, by Pepe Escobar

Posted on May 15, 2019 | Leave a comment

Try as it might, the US will not stop China’s emergence as a super power. From Pepe Escobar at atimes.com:

US-China: the hardcore is yet to come

A container ship unloads cargo at the port terminal in Long Beach, California on May 10, as talks to resolve the US-China trade battle ended Friday with no deal, but no breakdown. Photo: Mark Ralston / AFP

The Trump administration’s response to China’s emergence has been to throw all sorts of spanners in the works, but tariffs won’t bring back manufacturing jobs

Let’s start with the “long” 16th Century – which, as with the 21st, also saw a turbulent process of marketization. At that time, the Jesuits and the Counter-Reformation were trying to rebound across Asia – but within a context where the rivalry between the Iberian superpowers of the age, Spain and Portugal, still lingered.

The Reformation first attached itself to the Dutch trade thalassocracy – a seaborne empire, under which commerce was paramount – over strict propaganda of religious dogma. Britain’s maritime realm was still biding its time. The emergence of Protestantism proceeded in parallel to the emergence of neo-Confucianism in East Asia.

Fast forward to our turbulent times. Marketization – renamed as globalization – seems to be in crisis. But not in the Middle Kingdom, which is now investing in globalization 2.0 amid increasing rivalry with the other superpower, the US.

The American thalassocracy is being superseded by the Revenge of the Heartland, in the form of the Russia-China strategic partnership – for whom Eurasian trade integration, as expressed by the New Silk Roads, or Belt and Road Initiative (BRI), is paramount over the Make America Great Again (MAGA) dogma.

Meanwhile, the re-emergence of Right populism in the West mirrors the re-emergence of pragmatic neo-Confucianism across Asia.

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