Without Apologies, China is Now on the Move

[ronwagn + 6,290]

Without Apologies, China Is Now on the Move

 

Victor Davis Hanson / @VDHanson / June 05, 2020 / 78 Comments

• China's economy is falling. The world is seeing it as it is and is laying stumbling blocks around the world. President Trump is the first president to call them out. RCW

[Dan Warnick + 6,100]

7 hours ago, ronwagn said:

Without Apologies, China Is Now on the Move

 

Victor Davis Hanson / @VDHanson / June 05, 2020 / 78 Comments

• China's economy is falling. The world is seeing it as it is and is laying stumbling blocks around the world. President Trump is the first president to call them out. RCW

Great photo.  Are those the PLA soldiers that "peacefully mingled with their crowd in the t-shirts and jeans" (implication: Not in their uniforms)?  It sounded so much more, well, peaceful, in the printed article.  But I can see, that old SOB in the photo had it coming!

Edited June 8, 2020 by Dan Warnick

[Douglas Buckland + 6,308]

Apologies would not be enough, in any case.

[Marcin2 + 725]

@ronwagnI do not observe hard data to back your view.

1.Today Chinese trade data for May 2020 were published: exports and imports are more or less back to normal, Covid 19 took its toll especially in trade with EU, but ASEAN  trade shown growth in comparison to 2019.

World is ( still ) not decoupling from China.

2. Also US-China trade is actually still developing, both exports and imports has grown. So maybe even US- China decoupling is exaggerated.

I am happy with both 1 and 2 cause countries that trade so much with each other never go to war.

Edited June 8, 2020 by Marcin2
Typo

[Hotone + 412]

1 hour ago, Marcin2 said:

@ronwagnI do not observe hard data to back your view.

1.Today Chinese trade data for May 2020 were published: exports and imports are more or less back to normal, Covid 19 took its toll especially in trade with EU, but ASEAN  trade shown growth in comparison to 2019.

World is ( still ) not decoupling from China.

2. Also US-China trade is actually still developing, both exports and imports has grown. So maybe even US- China decoupling is exaggerated.

I am happy with both 1 and 2 cause countries that trade so much with each other never go to war.

CNBC just reported that China’s economic recovery could be 'very impressive', but the U.S. stands in the way

https://www.cnbc.com/2020/06/08/us-could-derail-chinas-economic-recovery-from-coronavirus-deutsche-bank.html

Edited June 8, 2020 by Hotone

[SUZNV + 1,197]

1 hour ago, Marcin2 said:

@ronwagnAny hard data to back this view ?

Today Chinese trade data for May 2020 were published: exports and imports are more or less back to normal, Covid 19 took its toll especially in trade with EU, but ASEAN and US trade shown growth in comparison to 2019.

So narrative is about decoupling but US-China trade is actually still developing.

Also Please guys show me just a few numbers to prove that world is decoupling from China, i do not observe this trend.

I do not say some US allies would not try to decouple from China to toe US line, but only few of them are eager to do Like 5 eyes countries.

IMHO,

Covid19 is not over yet, so any intermediate effect would not occur so only governments say what they will do only, besides the 5 eyes: is Japan

https://asia.nikkei.com/Editor-s-Picks/China-up-close/Xi-fears-Japan-led-manufacturing-exodus-from-China

Pre covid 19:

Taiwan:

https://fortune.com/2019/08/13/trade-war-china-tech-taiwan-manufacturing/

Last year Samsung pull out of China for handset(simply for boosting cost control).

https://marketrealist.com/2019/10/samsung-leaves-china-can-it-regain-its-lost-ground/

Most of the corporations will not say they pull out because of political reasons or trade war. 

In the future maybe HongKong will not be the bridge to China anymore after the new law. Things will not happen overnight but many things happened in the last 6 months and last 2 months all big corps can do is planning, they have lots of time to do that. US investors will less likely to invest in mutual fund that invest in China. US government pension fund halts plan to buy Chinese stocks. 

US trade shown growth is because the lock down compress the demand  as things took longer to arrive US and people in US want to stock up as much as possible because later on the price may increase in the long run. The unemployment benefit state and federal together until July 31st are 900usd a week for an adult, which is more than half people can have while they have jobs.The lockdown make US people save lots of money from dinning out and travelling and petrol. There will be payback time in long run but not until July 31st. 

EU seems don't have much movement because of the lock down but the future 5G will be viewed as an indicator.

I don't think Xi or CCP are stupid to have the national security law in Hongkong out when the anti China-CPP sentiments are high because of Covid19. My guess would be they can no longer keep up the bubble and waiting for Western Countries to  have these moves to make their people think the US (or the Western Countries) are afraid of China and  the whole Western world try to make China their victim, so they can have sympathy from their people and CCP can keep the power, Xi will have to pull the whole CCP share responsibility with him and he cannot wait for 5 years. All of their public data performance  to buy more time to prepare and allies came to the rescue, and they still have some hope of less pressure in the next US election and EU would do anything to them. 

Edited June 8, 2020 by SUZNV

[ronwagn + 6,290]

3 hours ago, Marcin2 said:

@ronwagnI do not observe hard data to back your view.

1.Today Chinese trade data for May 2020 were published: exports and imports are more or less back to normal, Covid 19 took its toll especially in trade with EU, but ASEAN  trade shown growth in comparison to 2019.

World is ( still ) not decoupling from China.

2. Also US-China trade is actually still developing, both exports and imports has grown. So maybe even US- China decoupling is exaggerated.

I am happy with both 1 and 2 cause countries that trade so much with each other never go to war.

I actually agree with you. I have mixed motives. I want Americans to benefit from low priced goods as we have for many decades. I do think it is mandatory that we make our own pharmaceuticals to protect people like me. I take eight meds every day plus a lot of supplements. I am in good health but want to stay that way. About half of those meds are pretty important to my survival. I could get by without the low priced goods, but would have to cut back on things. I do want us to deal with countries we can depend on in a pinch. China just showed us how they can act by grabbing all the medical supplies around the world while withholding medical information from the world.

Anything we can make in America is the first choice. Automation should allow a lot of that. Our people can keep the machines and computers humming. 

I live in soybean and corn country. I realize that we need the Chinese market if our farmers are going to survive. I love our farmers and their well being is very important to me. Those grains and others go toward producing meat, much of which is purchased by China. 

We certainly don't want a war with China. We do need to deal with them as an adversary however. They are looking for a total win over the long run, not for equal trade or equal anything else. We need to help the whole world stand up to them. They are the new Germany but with the largest population in the world. Germany was a small country and we barely beat them together with their Axis allies. Our own American people did not want war with Germany or Japan. Today's Americans are a big question mark to me. Many would not even show up for selective service IMHO. 

[ronwagn + 6,290]

2 hours ago, Hotone said:

CNBC just reported that China’s economic recovery could be 'very impressive', but the U.S. stands in the way

https://www.cnbc.com/2020/06/08/us-could-derail-chinas-economic-recovery-from-coronavirus-deutsche-bank.html

It sounds like he was saying that our inability to buy Chinese goods would stand in the way. I don't get that. Of course many Americans and people worldwide will try to think twice before purchasing too much from them. The CCP is very adept at bribing various wealthy people, governments and others to do business with them though, so I don't know how this will go. This is what the whole China and its allies vs. the rest of the world amounts to. 

Personally, I am counting on the CCP Dragon being slain eventually and the Chinese people being freed from their yoke. 

[0R0 + 6,251]

2 hours ago, Hotone said:

3 hours ago, Marcin2 said:

@ronwagnI do not observe hard data to back your view.

1.Today Chinese trade data for May 2020 were published: exports and imports are more or less back to normal, Covid 19 took its toll especially in trade with EU, but ASEAN  trade shown growth in comparison to 2019.

World is ( still ) not decoupling from China.

2. Also US-China trade is actually still developing, both exports and imports has grown. So maybe even US- China decoupling is exaggerated.

I am happy with both 1 and 2 cause countries that trade so much with each other never go to war.

CNBC just reported that China’s economic recovery could be 'very impressive', but the U.S. stands in the way

https://www.cnbc.com/2020/06/08/us-could-derail-chinas-economic-recovery-from-coronavirus-deutsche-bank.html

Edited 2 hours ago by Hotone

The Chinese trick of serf migrant labor and subsidized investment for exporters to produce in China is very enticing for global companies. It compensates for many disadvantages in their market. But the growth is not necessarily an indication of a continuation of the old trend, but a symptom of its reversal. If there is a large movement to produce outside of China, that means that a large number of people will be taken off their current occupations to build the new industrial capacity and flush with this income and having less current production goods because of this employment transition, they will be importing more from current export producers in the interim, i.e. China.

The thing to look at is where the new investment is heading.

The process of decoupling does not show up in trade data during the buildout stage but at the ramp up of new duplicate production going online. A matter of at least a year and probably two or more.

It is a change in trade terms among countries that DO trade with each other heavily that leads to wars. You need only look into WWI and WWII in your own front yard. Do you think those wars started with all these economies isolated from each other? Do all those railroad tracks criscrossing from well inside Germany to all of Europe including separate lines in the North and South of Poland somehow indicating that there was no trade between Poland and Germany at the start of the war in 1939?

The months of April and May only had China as somewhere you can get an order filled. June is not going to be like that. Yet exports PMI is not an improving sector.

https://www.markiteconomics.com/Public/Home/PressRelease/e2faca3a3cc549e88b9091439705c8fa

Export orders are still falling in May, Employment is lagging as businesses report caution on hiring and emphasis on cost cutting.

But at the third month of having opened their economy, business finally improved on both demand and supply, primarily in services. The componsite PMI was 54.5 vs. 47 in Apr. Note that it is a diffusion index, reporting % of businesses with improved reports.Not the level of output or activity.

Overall new work also rose for the first time in four months. The solid rise was due to a sharp increase in sales at services companies, as new orders declined slightly across the manufacturing sector. Employment trends remained subdued, however, as both sectors reported slight falls in staffing levels amid signs of spare capacity. Notably, backlogs of work fell for the first time in a year.

Average input costs fell slightly for the second month running, while efforts to attract new orders led to a further drop in output charges.

The downside is that output prices are falling further relative to input prices for a 3rd month. Meaning that profitability has not recovered at all. Demand only shows up on lower prices, meaning that demand is still lagging. Also seen in the backlog shrinking, which is a forward indicator, meaning things may not continue to grow longer term after the recovery. But the economy in China is first to emerge from the CV19 crisis so we have no model to indicate what a recovery looks like.

 

In the US, recovery seems to include a huge pop in purchases of real estate out of town. I don't know how far the work from home trend will go in China, but I expect it would be stronger in effect than in the US as real estate costs in city centers are that much higher relative to incomes than in the US, where it has been a perennial problem

[ronwagn + 6,290]

3 hours ago, SUZNV said:

IMHO,

Covid19 is not over yet, so any intermediate effect would not occur so only governments say what they will do only, besides the 5 eyes: is Japan

https://asia.nikkei.com/Editor-s-Picks/China-up-close/Xi-fears-Japan-led-manufacturing-exodus-from-China

Pre covid 19:

Taiwan:

https://fortune.com/2019/08/13/trade-war-china-tech-taiwan-manufacturing/

Last year Samsung pull out of China for handset(simply for boosting cost control).

https://marketrealist.com/2019/10/samsung-leaves-china-can-it-regain-its-lost-ground/

Most of the corporations will not say they pull out because of political reasons or trade war. 

In the future maybe HongKong will not be the bridge to China anymore after the new law. Things will not happen overnight but many things happened in the last 6 months and last 2 months all big corps can do is planning, they have lots of time to do that. US investors will less likely to invest in mutual fund that invest in China. US government pension fund halts plan to buy Chinese stocks. 

US trade shown growth is because the lock down compress the demand  as things took longer to arrive US and people in US want to stock up as much as possible because later on the price may increase in the long run. The unemployment benefit state and federal together until July 31st are 900usd a week for an adult, which is more than half people can have while they have jobs.The lockdown make US people save lots of money from dinning out and travelling and petrol. There will be payback time in long run but not until July 31st. 

EU seems don't have much movement because of the lock down but the future 5G will be viewed as an indicator.

I don't think Xi or CCP are stupid to have the national security law in Hongkong out when the anti China-CPP sentiments are high because of Covid19. My guess would be they can no longer keep up the bubble and waiting for Western Countries to  have these moves to make their people think the US (or the Western Countries) are afraid of China and  the whole Western world try to make China their victim, so they can have sympathy from their people and CCP can keep the power, Xi will have to pull the whole CCP share responsibility with him and he cannot wait for 5 years. All of their public data performance  to buy more time to prepare and allies came to the rescue, and they still have some hope of less pressure in the next US election and EU would do anything to them. 

Yes, the globalist machine is all doing its best to destroy Trump. It has been for four years. Only God can save him. 

[BLA + 1,666]

4 hours ago, SUZNV said:

IMHO,

Covid19 is not over yet, so any intermediate effect would not occur so only governments say what they will do only, besides the 5 eyes: is Japan

https://asia.nikkei.com/Editor-s-Picks/China-up-close/Xi-fears-Japan-led-manufacturing-exodus-from-China

Pre covid 19:

Taiwan:

https://fortune.com/2019/08/13/trade-war-china-tech-taiwan-manufacturing/

Last year Samsung pull out of China for handset(simply for boosting cost control).

https://marketrealist.com/2019/10/samsung-leaves-china-can-it-regain-its-lost-ground/

Most of the corporations will not say they pull out because of political reasons or trade war. 

In the future maybe HongKong will not be the bridge to China anymore after the new law. Things will not happen overnight but many things happened in the last 6 months and last 2 months all big corps can do is planning, they have lots of time to do that. US investors will less likely to invest in mutual fund that invest in China. US government pension fund halts plan to buy Chinese stocks. 

US trade shown growth is because the lock down compress the demand  as things took longer to arrive US and people in US want to stock up as much as possible because later on the price may increase in the long run. The unemployment benefit state and federal together until July 31st are 900usd a week for an adult, which is more than half people can have while they have jobs.The lockdown make US people save lots of money from dinning out and travelling and petrol. There will be payback time in long run but not until July 31st. 

EU seems don't have much movement because of the lock down but the future 5G will be viewed as an indicator.

I don't think Xi or CCP are stupid to have the national security law in Hongkong out when the anti China-CPP sentiments are high because of Covid19. My guess would be they can no longer keep up the bubble and waiting for Western Countries to  have these moves to make their people think the US (or the Western Countries) are afraid of China and  the whole Western world try to make China their victim, so they can have sympathy from their people and CCP can keep the power, Xi will have to pull the whole CCP share responsibility with him and he cannot wait for 5 years. All of their public data performance  to buy more time to prepare and allies came to the rescue, and they still have some hope of less pressure in the next US election and EU would do anything to them. 

U.S. has financed China's impressive 20 year growth.  Most of that funneled thru Hong Kong.  

If China goes thru with September planned autocratic rule over Hong Kong Trump will cancel their special status.  

Not a small consideration.   This would hurt China.  

[Dan Warnick + 6,100]

6 minutes ago, ronwagn said:

Yes, the globalist machine is all doing its best to destroy Trump. It has been for four years. Only God can save him. 

I don't think he's waiting on God (sorry Geoff).  People forget or fail to realize the crowd Trump has been exposed to all of his life.  The very people that he is fighting, on behalf of the never-socialists among us, are the people that he has been around all his life.  He has a better understanding of what their global plans are than your average bear.  My feeling is that his goals in the Presidency are two-fold:  One, that he goes out with a great big FxxK YOU to all that think they are better than him, and Two, that he is at least going to be remembered by the flyover states as the president that tried to get their finances and futures back for them and their kids/grandkids.

Does he care what the Left thinks?  Nope.  Like I said, that is why he ran for office.  He wants to at least delay their global agenda, or kill it if he can.

As far as he's concerned, he was elected, he is the President, and he's performing his duties as he believes those that elected him want him to.  And he's right about that.

What does it tell you when the opposition cannot depend on an election to remove him from office?  The left claims elections are absolutely fair and mail-in ballots are just peachy, so what's the problem?  Is it that pesky little detail that he might, just might, win re-election fair and square once again?  Hmm.

[ronwagn + 6,290]

6 minutes ago, BLA said:

U.S. has financed China's impressive 20 year growth.  Most of that funneled thru Hong Kong.  

If China goes thru with September planned autocratic rule over Hong Kong Trump will cancel their special status.  

Not a small consideration.   This would hurt China.  

I would like to know more about how that financing has worked. Is it somewhat like money laundering?

[ronwagn + 6,290]

10 minutes ago, BLA said:

U.S. has financed China's impressive 20 year growth.  Most of that funneled thru Hong Kong.  

If China goes thru with September planned autocratic rule over Hong Kong Trump will cancel their special status.  

Not a small consideration.   This would hurt China.  

That is good timing for Xi, either way. If he reverses the move he looks good. He can always do it later. It will impact the election results one way or the other. 

[Dan Warnick + 6,100]

6 minutes ago, ronwagn said:

That is good timing for Xi, either way. If he reverses the move he looks good. He can always do it later. It will impact the election results one way or the other. 

FWIW:

Hong Kong eases travel restrictions—but only for its business elite

The policy also reflects the interdependence of the two economies. Mainland China is Hong Kong’s largest trading partner and accounts for 51% of its total trade volume. Hong Kong is mainland China’s fourth-largest trading partner, but the city is more important for its financial markets. Hong Kong’s relatively open and free markets in comparison to the mainland’s make it particularly attractive to Chinese companies looking to access foreign capital, and Chinese companies make up roughly half of all companies listed on the Hong Kong stock exchange.

---

In recent days, large companies in Hong Kong and international banks like HSBC and Standard Chartered have voiced support for China’s new measure, even as some foreign businesses look to scale down operations in the city because of the law.

In the Sing Tao interview on relaxing the restrictions for cross-border business travel, Hui voiced support for China’s national security law. “The social unrest that started a year ago shows there is a need for a security law to bring stability, and to strengthen the confidence of the business sector,” Hui said.

Edited June 8, 2020 by Dan Warnick

[BLA + 1,666]

10 minutes ago, ronwagn said:

I would like to know more about how that financing has worked. Is it somewhat like money laundering?

Wallstreet Journal 

Why Hong Kong Matters

https://www.wsj.com/articles/all-about-the-money-why-hong-kong-matters-so-much-to-china-11571736607

[SUZNV + 1,197]

Most of positive or not too bad reports or predictions about China economy  came from Chinese propaganda or from the investments fund how are playing by CCP rules in China and want to attract more investment fund. Even foreign banks or the world big 4 accountants firms in HK wouldn't have negative views about China economics or short term hardship but long term prosperous. Even for experience analysts in big 4 or HSBC bank who send emails to their colleagues about negative views from any CCP intervention will lose his jobs. Recently CCP asked any HK businesses and banks to publicly support for their new national security law and HSBC was warned by former HK Governor.

https://www.bloomberg.com/news/articles/2020-05-29/former-hong-kong-leader-lashes-out-at-hsbc-over-security-law

The negative reports or predictions will be perceived as bias from investment funds attraction to  or from people in the US who don't want to be ripped off unfairly.  So if we do research by google financial reports to have negative predictions about China, there is no reputable sources except the positive ones whose their benefits have been bundled up with CCP unless they plan to get out but then they wouldn't want to burn bridges. It is as one way source as depend on mainstream for independent unbiased news.

Edited June 9, 2020 by SUZNV
typo

[ronwagn + 6,290]

Thanks BLA but I hit their paywall. Maybe you could give me a short synopsis. 

[BLA + 1,666]

On 6/8/2020 at 6:22 PM, Dan Warnick said:

 

In recent days, large companies in Hong Kong and international banks like HSBC and Standard Charter have voiced support for China

The large international Corporations are "Soldiers of Fortune" .   .   .   their Fortunes.

Very little if any allegiance to their founding country.  That stands for Investment Banks, Oil Companies and tech companies like Apple.  

For much of the 20th century U.S.  manufacturing and agriculture might was no match for the countries of the world.  These countries put tariffs, fees and set up value added tax systems  to protect themselves from the a strong competitive U.S. economy. 

The U.S. sponsored the establishment of the World Trade Organization (WTO) in order to level the playing field.  The U.S. Clinton administration pushed to allow China's admission into the WTO.

Only problem was the U.S. is the only country that fulfilled their WTO bylaws and rule obligations.  U.S. filed numerous complaints against China, Germany and others and won ! Even with a U.S. win the offending country just ignored the verdict and continued as is. 

Ex: Germany 25% tax on imported cars while they are charged a measly 2% to export into U.S. 

The WTO  started as a great idea for free trade but was turned on the U.S. and used as a club to bludgeon U.S. manufacturing economy.  

U.S. followed the WTO rules.  U.S. companies used foreign cheap labor to lower mfg costs and transfer pricing to avoid paying any corporate income tax.  Can't blame them our useless legislators let them.  The international trade, taxes, tariffs need to be overhall.

Example: Apple wanted to sell iPhones to the millions of consumers in India.  So India said sure . . . . with a 17% tax/fee on all imported iPhones .  Guess what  ?  Apple is building a mega factory in India to mfg iPhones.

The U.S. does nothing.  

Example: Germany is the cornerstone of the EU economy.  Now that Britain has departed Germany dominates the EU economy.  The mainstay of the German economy is the auto industry.  

Pre coronavirus Germany was teetering on the edge of a recession. 

German auto industry is in a difficult situation.  German number one market is China.  It's second is U.S. (1) How long will China will allow Germany auto industry to thrive in China ?  (2) U.S. hasn't yet but will address the unfair German tariffs they have long enjoyed.  (3) Then on top of that the world is moving toward electric vehicles.  Will the German auto brands have any advantage in this new paradigm ? Don't think so. 

Now the globalist Bankers, Oil Companies and Tech Companies chant FREE TRADE.  It is not free trade if only the U.S. practices it.

Free Trade must be Fair Trade.

The acceleration of manufacturing automation presents the U.S. a opportunity.  But less dependence on cheap labor is not enough.

Ex: If Apple mfg an iPhone in the U.S. for $100 + $50 marketing and administration expense then sells it to mobile phone company for $500 they would pay corporate income tax on $350 profit. 

Now thru Mfg overseas and "transfer pricing tax Loophole" they pay ZERO U.S. corporate income tax on iPhones mfg in China.  

This administration wants to help companies move back to U.S.  That helps a little.  However, the overwhelming reason manufacturing will not return in volume is exposure to U.S. corporate  income .

Note: I realize the U.S. new Corp tax rate is dropped to 20% vs China's 10% .  BUT DON'T GET FOOLED.  It is not the rate as much as it is dollar amount of taxable profit.  Think about it.  Most don't understand this.  

In the Apple (overly simplified) example above the iPhone mfg in China is sold to intermediary company domiciled in a no tax haven at cost. Who then sells it to a U.S. firm at full retail.  

A 20% tax rate is worthless if the profits are shielded in an offshore.  Apple pays no taxes anywhere. 

One problem is your profits are stranded offshore .  .  .  until you elect a president like George W. Bush to give you a "one time" tax amnesty or like Donald Trump whom passes law to allow profits to be repatriated without being taxed. 

 

The only cure for that is an import duty or tariff on select industries product  This could be enhanced with special tax relief incentives and rebates.  Or even work some overall plan with our USMCA trading partners.  

The U.S. has to get creative.  The U.S. has to get focused.  If not China will continue to eat our lunch.  

Footnote: Just a few months ago Joe Biden said, "Come on, China is not bad folks.  Their prosperity is good for us."

Of course. Joe is one of the leaders the Chinese bought off to advance their agenda by giving "Hapless Hunter" $ millions.

 

NOTE: Now JOE  BIDEN is compromised when it comes to China.  The Chinese own him and son Hunter.

 

Wallstreet / Hedgefunds have  started filling Biden's campaign coffers for two paybacks (1) don't touch our "Carried Interest" huge Tax Loophole.  (2) Don't confront the Chinese Communist Party and their hegemony  goals.  

 

Edited June 11, 2020 by BLA

[SUZNV + 1,197]

30 minutes ago, ronwagn said:

I would like to know more about how that financing has worked. Is it somewhat like money laundering?

CCP when joined WTO has no finance credit (Communism) and HongKong was kind of their "reserved gold". Businesses all over the world didn't trust China back then  but they trust HK and the pact between UK and China.

Secondly China is a Communism since 1951 and Mainland Chinese People back in 1990s didn't have any experiences in Capitalism finance, accounting, management and very behind technologies and HK and Taiwan and Singapore were the middle man to introduce  these into China. 

And HK has a unique political "adapter" position and one of the biggest financial capitals, in the order:

New York City (USA) – 794. Newyork is known as the financial capital of the world. ...

London (UK) – 787. London was the best financial city in the world previously. ...

Hong Kong (Hong Kong) – 783. ...

Singapore (Singapore) – 772. ...

Shanghai (China) – 770. ...

Tokyo (Japan) – 756. ...

Toronto (Canada) – 755. ...

Zurich (Switzerland) 

 

Edited June 8, 2020 by SUZNV

[waltz + 140]

44 minutes ago, ronwagn said:

I would like to know more about how that financing has worked. Is it somewhat like money laundering?

I am not to knowledge about the specifics, hopefully 0R0 will correct me if I am wrong.  I would answer, foreign direct investment (FDI) and the purchasing of intermediate and finished goods.  Basically the trade imbalance but also the transfer of technology.  Worked great for the stock holders, the purchasers for an intermediate amount of time but for the American worker (US worker), long term it could be considered harmful.
 

 This view does not take into consideration automation or productivity increases.  US percentage of GDP from manufacturing is on par as of twenty years ago, we just employ a hell of a lot less people whom are a hell of a lot more productive in terms of GDP, 

[0R0 + 6,251]

48 minutes ago, SUZNV said:

Most of positive or not to bad reports or predictions about China economy and came from Chinese propaganda or from the investments fund how are playing by CCP rules in China and want to attract more investment fund. Even foreign banks or the world big 4 accountants firms in HK wouldn't have negative views about China economics or short term hardship but long term prosperous. Even for experience analysts in big 4 or HSBC bank who send emails to their colleagues about negative views from any CCP intervention will lose his jobs. Recently CCP asked any HK businesses and banks to publicly support for their new national security law and HSBC was warned by former HK Governor.

https://www.bloomberg.com/news/articles/2020-05-29/former-hong-kong-leader-lashes-out-at-hsbc-over-security-law

The negative reports or predictions will be perceived as bias from investment funds attraction to  or from people in the US who don't want to be ripped off unfairly.  So if we do research by google financial reports to have negative predictions about China, there is no reputable sources except the ones whose their benefits have been bundled up with CCP unless they plan to get out but then they wouldn't want to burn bridges. It is as one way source as depend on mainstream for independent unbiased news.

Exactly the case. The bank assets  in HK and through HK in China are worthless without support from the CCP, which can just take them away at will. Last year it became obvious that China is reading HK emails and bank records. So as far as anyone with a brain is concerned, they are heading out, so they have to support the CCP and pretend to be investors, but they are just looking to unload their HK and China business before it becomes worthless. Financial flows are keeping China's finances afloat as capital flight is no longer stopping in HK but just moves on to Taiwan and Singapore or Tokyo, where Chinese spyware is not deliberately installed by the government.

Basically, capital in China is trapped, it is only as valuable as a Chinese with expat money or another fool would be willing to pay for it. Otherwise, the only value of China investments is what you gain from exporting out of it, and whatever cash flows you are allowed to take out.

The bankers were going to use the US pension funds to unload whatever they can . They can't bad mouth what they need to sell. Just like the CCP itself, they need new fools to buy up their business and portfolios. And they can't afford for the CCP to just take the assets away. Both groups are desperate for financial flows into China.

Companies are still opening up in China in order to tap the market, like Beyond Meat now and Tesla and Popeye's Chicken last year. They are smarter about it as they are using Chinese capital more so than their own. There is some understanding growing in global corporations that their China assets are bookkeeping entries with a questionable future value. So it is a question of realizing cash flows out of China that tells them where they stand. They need exclusions from the capital controls to take money out. The reports from China last year were that they are not getting the permits to take forex out of China, that it takes months of delays and diversions.

The Chinese market looks still like a huge opportunity. But the demographics say otherwise, and consumer retrenchment so far is consistent with 3 months of postponed demand accumulation not being expressed in purchases in size commensurate with the sum. That looks different from the US and apparently Europe (Mark Mobius' observation) - as suburbanites are out at the shops in full force, just not out in the evenings to entertainment and restaurants. US Business looks more intense on goods than it was in China in May, despite them being 3 months out from shutdown. Will have to wait to see how it develops.

 

[frankfurter + 562]

On 6/9/2020 at 3:49 AM, ronwagn said:

I actually agree with you. I have mixed motives. I want Americans to benefit from low priced goods as we have for many decades. I do think it is mandatory that we make our own pharmaceuticals to protect people like me. I take eight meds every day plus a lot of supplements. I am in good health but want to stay that way. About half of those meds are pretty important to my survival. I could get by without the low priced goods, but would have to cut back on things. I do want us to deal with countries we can depend on in a pinch. China just showed us how they can act by grabbing all the medical supplies around the world while withholding medical information from the world.

Anything we can make in America is the first choice. Automation should allow a lot of that. Our people can keep the machines and computers humming. 

I live in soybean and corn country. I realize that we need the Chinese market if our farmers are going to survive. I love our farmers and their well being is very important to me. Those grains and others go toward producing meat, much of which is purchased by China. 

We certainly don't want a war with China. We do need to deal with them as an adversary however. They are looking for a total win over the long run, not for equal trade or equal anything else. We need to help the whole world stand up to them. They are the new Germany but with the largest population in the world. Germany was a small country and we barely beat them together with their Axis allies. Our own American people did not want war with Germany or Japan. Today's Americans are a big question mark to me. Many would not even show up for selective service IMHO. 

many meds have serious side-effects, often affecting cognition.   China is your competitor. If you label China as your adversary or enemy, you are already in a war mentality. Your assertion to have the whole world 'stand up to them' translates into admission your competition is out-competing you and winning, and thus you espouse you need a gang to ensure your bully-position is preserved. Thus your claim, to avoid war, is entirely hypocritical and bodes ill for the world.

 

 

 

 

[Piotr Berman + 82]

On 6/8/2020 at 6:04 PM, BLA said:

U.S. has financed China's impressive 20 year growth.  Most of that funneled thru Hong Kong.  

If China goes thru with September planned autocratic rule over Hong Kong Trump will cancel their special status.  

Not a small consideration.   This would hurt China.  

From the statistic I have seen, China had a huge GDP percentage in investments, more than 30.  US, or more precisely, American and multinational companies, helped by outsourcing to China, and Chinese built very complete supply chain for many industries while American supply chain got fragmented.  I guess, in earlier years, direct investment and literally moving machinery to China had a major role but with booming internal investments, this role declined. 

On the other hand, the whole idea of reducing duties on everything to almost nothing made sense only for multinational corporations that could locate (or order) production according to low wages, best labor discipline (helps if the government is authoritarian), least environment regulations etc.  Much less sense for "working stiffs".  Note that the most fierce battles in negotiations with countries like China are about "intellectual property" and not about preserving or creating jobs that would be relatively uniformly distributed -- there is a lot of little towns in my region with close factories and rather pitiful looks.