Chinese markets plunge more than 5% as US-China trade tensions escalate

[bmann025]

In theory it would push up the prices. But the truth is much more complex than that. Inflation is still very low considering the strength of the US economy even as the trade war ranges on for almost a year. The truth is that it is a global supply chain and it is possible to avoid tariffs by having the goods produced from low cost countries such as Vietnam. EU has slapped tariffs on many china goods and the supply chain adapted to it. More complex manufacturing of durable goods such as autos take longer, many years to adapt. Then again we are in a world where there is a clear case of over supply of goods and services, where there are no lack of alternatives.

What also supports Marc Faber saying the root of the American trade deficit is US overconsumption. If the deficit between the US and China would be closed the US would have that deficit with someone else.

[weijian]

Didn't Chairman Xi watch The Apprentice last time? (it was 1 of my fav reality TV shows!) Trump is the one sitting on side of the executive seats with his old man Alfred and the blondie firing the persons facing them, not the other way around!

How Xi’s Last-Minute Switch on U.S.-China Trade Deal Upended It

Xi Jinping miscalculated President Trump’s willingness to accept a changed deal. Now angry rhetoric could complicate efforts to return to negotiations.

https://www.nytimes.com/2019/05/16/world...tates.html

[bmann025]

The trade deal is a side show. This is a struggle for power, as revealed by Jimmy Carter:

https://www.npr.org/2019/04/15/713495558...8306576889

Hence, there will be no trade deal which would benefit China and allow it to prosper.

Pretty confident though, that Japan & Korea won't allow a destructive cold war establishing in East Asia, not so sure about Sing, HK, Taiwan with all the US Deep State influence in their assets.

[bmann025]

Japanese Prime Minister Shinzō Abe said on May 17 that he is eager to work with Chinese President Xi Jinping to bring the two nations into “a new era” of cooperation.

https://www.thetrumpet.com/20686-china-a...urai-sword

[BlueKelah]

Unfortunately for China, it is too reliant on USA as the main exporter. Just like Australia is too reliant on China for commodity exports. USA can increase trade and source cheaper alternative goods from south american nations like Brazil/Mexico/which have low labor cost, though that might require some further investment from american companies to get the factories going. Then there are some cheaper manufacturers from poorer european countries as well. There will be a revival/boom in many local manufacturing sectors as well.

American farmers who are hardest hit will need subsidies from the government, but thats only on 60billion - 100billion of exports , the revenue from tariffs of 300-400 billion china imports into USA should more than cover for that.

It's hard to see how China can come out in better shape than USA, especially if there are mass layoffs from companies shutting down from the 25% tariffs. From what I read, Chinese businesses were not really that affected by 10% tariffs but 25% on everything is another matter.

As evident from the recent Huawei hoo hah, technology is a big thing. Were it not for the unfair restrictions in China, pretty sure we would not have Baidu/Taobao/etc.. They would have been bought over or outcompeted by the likes of Amazon/Google. More importantly in military sectors, the leak of new technology which China has been acquiring easily via "forced technology transfers" can ultimately result in China having more advanced weapons and posing even more of a bigger threat, especially when you consider they already have some high-tech stuff from Russia previously.

The Chinese probably trying to drag things out till next USA Presidential election till they can make an easy deal without Trump around. Will be interesting to see if they can survive till then. Now that 25% tariff in play, I expect next few months a big downturn in Chinese PMI numbers.

[AQ.]

think the biggest mistake for china is to have Xi ignoring Deng's 韬光养晦 and flex its muscle so much b4 effective de-dollarising, be it South China Sea or MIC 2025.

It's not just US alone whacking China - see the chain of Japan's Panasonic, German's Infineon, UK's ARM ganging up; perhaps TSMC will jump in soon.

[BlueKelah]

think the biggest mistake for china is to have Xi ignoring Deng's 韬光养晦 and flex its muscle so much b4 effective de-dollarising, be it South China Sea or MIC 2025.

It's not just US alone whacking China - see the chain of Japan's Panasonic, German's Infineon, UK's ARM ganging up; perhaps TSMC will jump in soon.

Its not really ganging up, I believe they are just complying with US restrictions. They all have business in the USA and need to comply with their legal obligations.

Should Huawei have to close up shop, it would be hard to chase them for payment, especially since they are based in China and there is usually very limited avenue for recourse. I would think many big companies will want to limit their losses.

And agreed, China has been flexing its muscles quite a bit. But then again the moment trump came into power, they were in trouble, it is very obvious they have been doing some dodgy things like manipulating their yuan and subsidizing their SOEs in order to flood markets with cheap product, monopolize and kill off competitors.

[Big Toe]

If we look at back the history of China, the lessons learnt in the past is of foreign countries trying to take control of china.
Now that China is economically strong, it is only natural that they built up their military. Whether they are over doing it is another story for another day.

The trade war can be seen in a similar light in the US taking a hard stance to impose restrictions and regulations on China. China probably understands why US is doing it and probably will work with the US but the harsh approach that US chooses to take is not going down well with China. China is very much predicable in the manner they work and react, it is the trump administration that probably needs to tone down and display a more consolidatory stance.

It is unlikely China will yield, the more taxes US impose, the further away from a trade pact. The Chinese are used to the suffering anyway. They have a much longer timeline. Trump on the other hand dont have time on his side, he might not be around after 2020, the chinese know that.

[bmann025]

Peter Schiff thinks, the US has been benefiting from China and not vice versa.

He says China did the hard work and over-consuming US payed with freshly printed paper money.

Now China will keep the products for themselves and the US keep their paper money.

https://www.youtube.com/watch?v=cqMr3_wEi1Y

[bmann025]

Trump's former adviser Steve Bannon thinks, taking out Huawei is "10 times more important" than a trade deal.

So here we have the real battleground.

Huawei's technology is 2-3 years ahead of the US pack and threatens US tech monopolies and oligopolies. And despite so many clever Chinese people now working and inventing in Silicone Valley, the gap appears to broaden.

On the other side, the US has lost its moral credit among a significant part of the world's population for its catastrophic wars in the last 2 decades. These people want to have an alternative to google, facebook, twitter, microsoft, amazon and mainstream media.