Author: knox1234

China-US relations has come to a crossroads [Copy link] 中文

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Post time 2019-8-26 19:04:49 |Display all floors
US citizens themselves have concluded:

The problem is that governing is complicated. If Trump's feelings are hurt, he seems to feel justified in throwing a temper tantrum. That tendency to bluster in an effort to intimidate may work for male gorillas, but leaders of governments ought to know better.

In his case, the personal becomes political in addition to the inversion of macro and micro resulting in an unintended consequence - loss of restraint on behavior and action, resulting in only obsessive concern over personal image.

Trump’s personal problems will leave a national scar.  He lacks the temperament to be President.

More like an open wound that won't heal. 60 million citizens have succumbed to his bombast, and to date there seems to be no weakening of their support.  

That will take years if not decades to heal. It may never.

The message the world is hearing is a president who either can't make up his mind - EVER - or a president who has no real handle on what he is doing or what direction his actions are taking this country towards.

Trump is a narcissist and one of the things that narcissists do is constantly draw attention to themselves.

Trump's "maybe I will, maybe I won't" approach is his way of doing business. Of course it's a terrible way of conducting national policy both economic and diplomatic. But he doesn't care. As long as he is president he believes he has a carte blanche to do whatever he wants.

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Post time 2019-8-26 19:53:19 |Display all floors
It's instructive that the UK Bank Governor, M Carney, has now come out to suggest a new trade currency that is not the US dollar. It's easy to see why.

The US economy grew last year because of one tax relief; the growth created demand for the US dollar which increased its strength relative to other currencies, thereby enabling it to import more goods from other countries, hence increasing its trade deficits, at the same time increasing the prices and reducing the demand of US exports so that using trade deficits as an excuse to wage trade wars is to be unhinged from the empirical reality of international trade.

Trump's latest tirade telling US companies to get out of China is just tantrum wrapped around delusion covered by belligerence.

If they move out, the time they will need to relocate will be time they will not be producing; during that hiatus, other companies will win over their customers and market share so that, if they are publicly-listed concerns, their revenues and earnings will be hit which will lower their share prices as premium to get more investment funds for development and expansion.

And if they move back to the US, their machinery and systems, stocks and parts, will be tariffed as punishment for following the orders of the tariff king. In other words, the tariffs to force them to reshore back to the US are the same tariffs they have to pay in order to follow the home command.

If they underdeclare the value of the reshored assets, that action will be illegal besides impacting on their next balance sheets which if they are public-listed will attract fiduciary legal charges; furthermore, they will devalue their worth if planning to sell-off once they find they can't get enough US workers to work their productions to the same level of quality consistency and throughput. Most importantly, the higher wages to be paid out will mean higher prices, thus lower sales, hence high risks of bankruptcy. Their potus can advise on what to do since he has had six, including a casino.

Furthermore, if they move to other countries, say Indo-China countries, those countries will grow their trade surplus with the US - since the anomaly of computing deficit and surplus is not based on value-add but ex-factory or FOB prices. The US trade deficits will remain and by the same reasoning those countries will also be tariffed soon enough; in Vietnam's case, by next year.

For the bigger US companies, it is nigh impossible without incurring ruinous costs not recoverable even in the long-term because of the opportunity-cost factor. Their sales are integrated with China's supply chains which have no equal anywhere else in the world which is why China remains the world's factory. They should be proud of that; after all, they helped created it.

While all this is on the table, Trump's trade tirades are causing huge uncertainties across the globe - affecting producers, traders, financiers, and consumers. If the collateral damage hits hard, recession may become depression and those countries which alliance with the US will be dragged down with it.

Forcing Powell to lower interest rates in order to fuel future consumption means if something goes south, he will run out of interest rates to reduce so that when reality finally hits home, he may even have to raise interest rates which will cause US borrowing costs to surge, deficits to balloon, housing industry to fall, revenues to weaken, and consumer demand to wane.

It is the worst thing that can happen to an slow growing economy that is dependent of further debt expansion just to sustain current growth. Lower rates are not the solution, they are the problem.

And since Trump thinks his lower rates are needed to fuel his trade war, his trade war is thus logically and economically the problem, not any solution.

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Post time 2019-8-26 19:58:51 |Display all floors
Here's a thought.

Suppose China surrenders and gives Trump whatever he wants.

Then US companies will want to produce even more in China.

Which means more China-US exports to the US.

Which means a bigger trade deficit for the US.

So... Trump and his hawks should be happy China is resisting.

Why - Aren't - They?

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Post time 2019-8-26 20:34:56 |Display all floors
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Post time 2019-8-26 20:47:23 |Display all floors
Which must come first - food or freedom?

A free man can die of hunger. A fed man can work progressively to be free. So food before freedom.

China's population is, say, four times the US'. She has many millions yet to be lifted up from poverty. That poverty eradication is central to President Xi's agenda bespeaks him as global statesman. That diminishing China is central to President Trump's agenda bespeaks him as global mischief-maker and disparity creator.

When state policies are directed to national stability in order to create a climate of progress and reduction of risk, more jobs can be created so that the poor will be gainfully employed. Not only in China herself but also across the globe, China has been doing her best to help lift up the poor of the world left in the abyss of western colonial exploitation of the past from which those countries are still trying to unshackle.

In that regard of prioritizing the help-out of all, China is already exhibiting the first remit of true democracy - caring for the development of individuals so that they can progress to their nextstage of development.

That all this is being done by a meritocratic body called the CPC does not in any way denigrate its capability and character so one fails to see why so many of the west - which has only prosecuted wars and crimes onto the poor of the world - should think the CPC is something they should hate with virulence and be used as the excuse and license to malign China, her government and her peoples.

Next, hook all the above as the backdrop on manufacturing. China's vast population and domestic market means global economies-of-scale - for manufacturing, marketing, sales and services.  Add her modern infrastructure, huge talent pool, clear national programs and central systems - and you have the best bet for a better and more progressive future for one which is an emerging economy.

The US, on the other hand, is already an advanced economy. This means the wages of its workers will always exceed those in emerging economies. Therefore in no way can it compete its products on price against those from those economies unless it can increase its worker productivity manifold over theirs.

Soon enough, automation will render such a target superfluous.

Which must mean all countries - whether advanced or emerging - will have to cooperate to build stronger markets in which trade wars, for that matter trade blocs, will become redundant and counterproductive.

The US hardliner mindset is that if the US doesn't counter countries like China, then they will dominate the US in some macabre orwellian way.

Since trade, technology, currency, physical and hybrid wars all don't and won't work, what then should the only solution be that will avoid the ruin of decoupling? Logically, it has to be recoupling.

In trying to decouple the US from China, Trump is digging his own deeper hole. Many of his own citizens have already suggested giving him a shovel if not an excavator.

Instead of counterproductive approaches, countries should hold both hands together with another. Then what was one-hand handshakes before will now become both hands shaking the other pair . It's important 'cos you can't reach for a gun, then.

There's a flick on Netflix called American Factory. It portrays how a Chinese investor has revived a GM factory in the US, helping American workers out of work to get back their livelihoods, making life-long friends across two cultures in the process.

Last one checked, GM automobiles are not national security threats. Neither are Nike air-sole sports shoes or metro rail-car carriages, for that matter China 5G network equipment populated by US chips and cybersecurity software.

And that's how the US can get more rust-belt jobs and better infrastructure. By treating all of China as strategic partner and friend, not ideological enemy, existential threat, what not.

If not this solution, suggest another - now, next year, next century...

Just note a couple of things. When Nasa blocked China's participation, she built her own space program. When Germany blocked China's participation in the comet probe project, she landed a probe on the dark side of the moon.

And she has superb talents for agriculture including solar energy and climate control. Both are now intertwined and as the world's population grows, the matter will become a global concern.

To feed the world, we have to grow 10,000 years' worth of food in the next 30 years, which means farmers worldwide must increase food production by 60 to 70 percent.

How the hell can that be done without climate control if plants need good climate? By buying Greenland, eh?

(And i am handsomer than the other mark wu in harvard).

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Post time 2019-8-26 20:58:53 |Display all floors
One has already written extensively on IP even before Trump ascended (as "The Chosen One"?) to his presidency.

Yet, whenever the US hardliners lose an argument about trade, technology, currency etc, they run to focus on China and IP.

There are numerous peer-reviewed works which have extensively discussed the legal ramifications of IP as applied to/by China.

The following are referenced:

China IP Payments.png


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Post time 2019-8-26 21:02:22 |Display all floors
There is another Macrobond/Gavekal graph which shows China has been the top payer of foreign IP, exceeding even Japan, South Korea, etc. for many years past.

Alas, one can't find the license to reference it here.


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