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Questions and thoughts on trade war
30-12-2018, 12:22 PM.
Post: #31
RE: Questions and thoughts on trade war
For the past 500 years, China has been the market where numerous Western powers have tried to enter. The last time China was forced to open its markets was probably during the Opium Wars from 1839 to 1860, where they surrendered in humiliation to British guns.

This time, the weapon used is trade, which China has become so reliant upon as a key pillar of its long-term development strategy. But Xi looks like an aggressive leader who will not easily bow to demands which may cause embarrassment/humiliation to China. One possible way for Xi to gain the upper hand in negotiation is to threaten violent conflict. This is not impossible since it now appears to posses the weapons that equals in quantity and quality to US.

Trump seems to have made the correct moves so far, by bringing North Korea to his side. This leaves China with one less bargaining chip. The choice of a trade war, rather than conventional armed conflicts which the US are quite used to, also appears to be a wise one as the Chinese military is no longer as undeveloped.

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30-12-2018, 09:17 PM.
Post: #32
RE: Questions and thoughts on trade war
(30-12-2018, 12:22 PM)karlmarx Wrote: For the past 500 years, China has been the market where numerous Western powers have tried to enter. The last time China was forced to open its markets was probably during the Opium Wars from 1839 to 1860, where they surrendered in humiliation to British guns.

This time, the weapon used is trade, which China has become so reliant upon as a key pillar of its long-term development strategy. But Xi looks like an aggressive leader who will not easily bow to demands which may cause embarrassment/humiliation to China. One possible way for Xi to gain the upper hand in negotiation is to threaten violent conflict. This is not impossible since it now appears to posses the weapons that equals in quantity and quality to US.

Trump seems to have made the correct moves so far, by bringing North Korea to his side. This leaves China with one less bargaining chip. The choice of a trade war, rather than conventional armed conflicts which the US are quite used to, also appears to be a wise one as the Chinese military is no longer as undeveloped.

dont think anything will come of it. Trump has bigger troubles back home with the house now lost to the democrats. China will no way concede to intellectual property rights demand and thats the main thing US wants. Chinese will just pretend to negotiate and drag things out whilst copying technology and try taking over more of the world. Its a slow push/creep, just like what Isreal doing in middle east.
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31-12-2018, 10:04 AM. (This post was last modified: 31-12-2018, 10:04 AM by karlmarx.)
Post: #33
RE: Questions and thoughts on trade war
(30-12-2018, 09:17 PM)BlueKelah Wrote: dont think anything will come of it. Trump has bigger troubles back home with the house now lost to the democrats. China will no way concede to intellectual property rights demand and thats the main thing US wants. Chinese will just pretend to negotiate and drag things out whilst copying technology and try taking over more of the world. Its a slow push/creep, just like what Isreal doing in middle east.

If the behaviour of Chinese politicians towards American politicians is not too different from the behaviour of Chinese factory owners towards American importers, then I am inclined to also think that the situation will remain more or less the same. Perhaps in the short-term China will concede in some areas, but over the longer-term it certainly will not take its eyes off global supremacy.

https://www.goodreads.com/book/show/5116...e-in-china

If Trump and the American people are willing and able to prolong the trade war -- thereby increasing consumer prices (and inflation) back home -- then Trump may get what he wants. But it could take a long time for the Chinese to capitulate. Who is going to blink first? And how long before they do?

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31-12-2018, 10:37 AM.
Post: #34
RE: Questions and thoughts on trade war
(31-12-2018, 10:04 AM)karlmarx Wrote:
(30-12-2018, 09:17 PM)BlueKelah Wrote: dont think anything will come of it. Trump has bigger troubles back home with the house now lost to the democrats. China will no way concede to intellectual property rights demand and thats the main thing US wants. Chinese will just pretend to negotiate and drag things out whilst copying technology and try taking over more of the world. Its a slow push/creep, just like what Isreal doing in middle east.

If the behaviour of Chinese politicians towards American politicians is not too different from the behaviour of Chinese factory owners towards American importers, then I am inclined to also think that the situation will remain more or less the same. Perhaps in the short-term China will concede in some areas, but over the longer-term it certainly will not take its eyes off global supremacy.

https://www.goodreads.com/book/show/5116...e-in-china

If Trump and the American people are willing and able to prolong the trade war -- thereby increasing consumer prices (and inflation) back home -- then Trump may get what he wants. But it could take a long time for the Chinese to capitulate. Who is going to blink first? And how long before they do?

I share the same thinking that nothing much will progress after their meeting in Jan 2019. Knowing Trump - who is keen to get credit for everything, he will exaggerate the progress made (either by kicking the can down the road or by saying China has given in to the concession). Most investors will be none the wiser and perhaps the market will then rally for 3 days before everyone wakes up to the same old reality. Subsequently, market will continue the familiar downtrend.    

In another few weeks we will see all the ugly data being revealed due to the trade war impact.............. lots of companies have cut down their manufacturing operations due to these uncertainty => which translates to reduced revenue & earnings for all involved parties in the supply chain.
There are no good stocks. Stocks are only good when they go up after you bought them.

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31-12-2018, 11:31 AM.
Post: #35
RE: Questions and thoughts on trade war
(30-12-2018, 12:22 PM)karlmarx Wrote: For the past 500 years, China has been the market where numerous Western powers have tried to enter. The last time China was forced to open its markets was probably during the Opium Wars from 1839 to 1860, where they surrendered in humiliation to British guns.

This time, the weapon used is trade, which China has become so reliant upon as a key pillar of its long-term development strategy. But Xi looks like an aggressive leader who will not easily bow to demands which may cause embarrassment/humiliation to China. One possible way for Xi to gain the upper hand in negotiation is to threaten violent conflict. This is not impossible since it now appears to posses the weapons that equals in quantity and quality to US.

Trump seems to have made the correct moves so far, by bringing North Korea to his side. This leaves China with one less bargaining chip. The choice of a trade war, rather than conventional armed conflicts which the US are quite used to, also appears to be a wise one as the Chinese military is no longer as undeveloped.

The "weapon" is not trade. The objective as usual is "openness" to trade.

This time round instead of guns it is semicon design and IP expertise, as evidenced by ZTE debacle. To me this is equivalent to the 70s US oil shock as a wake up call and catalyst to restrategise.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

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31-12-2018, 11:19 PM.
Post: #36
RE: Questions and thoughts on trade war
The first trade war in USA happened at the Boston Tea Party :

The Boston Tea Party was a direct protest by colonists in Boston against the Tea Tax that had been imposed by the British government. Boston patriots, dressed as Mohawk Indians, raided three British ships in Boston harbor and dumped 342 containers of tea into the harbor.

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10-02-2019, 04:30 PM.
Post: #37
RE: Questions and thoughts on trade war
An interesting story about garlic, import duties, corruption, surplus value, and how there are no good guys on either sides.

One of my takeaway is to be mindful of the biggest competitor in any industry, and understand how they are able to maintain their market share. Instead of asking what your portfolio company's moat is, find out instead your competitor's moat. If their moat is unlikely to be eroded -- perhaps maintained through unfair, corrupt, or illegal practices -- then it may be best not to bet against them.

https://www.scmp.com/economy/china-econo...and-prison

This story is also available as a documentary on Netflix.

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12-02-2019, 11:45 AM.
Post: #38
RE: Questions and thoughts on trade war
(10-02-2019, 04:30 PM)karlmarx Wrote: ..

One of my takeaway is to be mindful of the biggest competitor in any industry, and understand how they are able to maintain their market share. Instead of asking what your portfolio company's moat is, find out instead your competitor's moat. If their moat is unlikely to be eroded -- perhaps maintained through unfair, corrupt, or illegal practices -- then it may be best not to bet against them.

..

I love this quote. In the same vein, that's how I think about, not necessary competitors, but competing/substitute technology, and industry trends as well.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger

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09-03-2019, 10:33 AM. (This post was last modified: 09-03-2019, 10:33 AM by weijian.)
Post: #39
RE: Questions and thoughts on trade war
Trump's tax cuts seem to have given him the leverage (a good economy back home) to cause China to blink 1st. The trade deficit probably not going to change much since it is structural in nature (maybe the only way for US to reduce its trade deficit is to lose their dollar dominance and so they can't print more money and consume more. There is also nothing better than a collapsed value of your currency to boast your exports!).

While all other major media seems to have some "bias" towards him, he has earned my respect for these unorthodox daring moves that seems to have achieved his aim of getting China to do a deal to open up (whether intentional or unintentional it may be).

In a blow to Trump, America’s trade deficit hit record US$891b

It is a case of textbook economics catching up with some of Trump's unorthodox economic policies. Economists have long warned that Trump's tax cuts would ultimately exacerbate a trade deficit he has vowed to reduce, as Americans, flush with extra cash, bought more imported goods.

https://www.businesstimes.com.sg/governm...ord-us891b

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