"We're Not Going to Negotiate Anymore"

[Zhong Lu + 845]

Question: if there's no further negotiation or agreement on trade between US and China, what next? 

I agree that China loses.  But how exactly does the US "win?" 

[SKEP + 229]

16 minutes ago, Zhong Lu said:

Question: if there's no further negotiation or agreement on trade between US and China, what next? 

I agree that China loses.  But how exactly does the US "win?" 

They will come to agreement.

People getting too worked up over this. 

Relax.

Edited August 11, 2019 by SKEP

[Zhong Lu + 845]

No, I'm pretty sure China at this point won't come to an agreement.  At least not with the current administration.  

"We'll just wait you out. If there's some economic pain, then so be it."

So: what next? 

Edited August 7, 2019 by Zhong Lu

[Tom Kirkman + 8,860]

Subject: Remarks by President Trump Before Marine One Departure

The White House
Office of the Press Secretary
FOR IMMEDIATE RELEASE
August 7, 2019

... THE PRESIDENT:  ... Our country is doing incredibly well. China is not doing well, if you look at the trade situation.

China just admitted yesterday that they've been a currency manipulator. First time they've ever been called out. Companies are moving out of China by the thousands, and our country is doing very well. We're going to see how it all works out. Somebody had to do this with China because they were taking hundreds of billions of dollars a year out of the United States. And somebody had to make a stand. So, I think our country is doing really well.

Q What's your reaction to the market reaction to the trade war? And what's next with China?

THE PRESIDENT: I think the market -- I think the market reaction is anticipated. I would have anticipated. I would have maybe anticipated even more. But ultimately, it's going to go much higher than it ever would have gone because China was like an anchor on us. China was killing us with unfair trade deals. The people that allowed that to happen are a disgrace. China, what they were doing to us, for years and years, taking hundreds of billions of dollars out, stealing intellectual property, targeting our farmers. All of that is ending, and they understand that.  ...

 

... Q Are you watching the stock market's reaction to China, sir?

THE PRESIDENT: I am. I think the market reaction is to be expected. I might've expected even more.

At some point, as I just said, we have to take on China. They've been taking -- look, they've been taking us to the cleaners for 25 years. This should've been done long before me as a President. You know the story better than anybody. You know it better than I do, frankly. Hundreds of billions of dollars a year taken out of our country. Stealing intellectual property.

And you know what? We, right now, we're sitting on top. We have money pouring in. We have powerful companies, strong companies. China is losing so many -- they're losing -- thousands and thousands of companies are leaving China now because of the tariffs. And we're in a very good position as to whether or not a deal will be made. I will tell you this: China would like to make a deal very badly.  ...

[Zhong Lu + 845]

China does not particularly want a deal, at least not with this administration.  

Trump may believe the Chinese government wants a deal.  But that's not the same as the Chinese government actually wanting a deal, now, does it? 

Personally I'm wondering how long it takes before the real message (China is not going to negotiate) behind the yuan devaluation sinks in, that China isn't budging on trade. 

Obviously it hasn't sunk in yet.  

Edited August 7, 2019 by Zhong Lu

[Enthalpic + 1,496]

27 minutes ago, Tom Kirkman said:

China is losing so many -- they're losing -- thousands and thousands of companies are leaving China now because of the tariffs. And we're in a very good position as to whether or not a deal will be made. I will tell you this: China would like to make a deal very badly.  ...

How about a list instead of a made up number?

[Jan van Eck + 7,558]

Let's remember that, in fact, China is NOT a currency manipulator, as charged by the inflammatory press and others.  What is happening is that the traders, those guys sitting in the exchange pits, have traded the Yuan down.  Now in the past when this has happened, or started to happen, the Chinese govt through their central bank has purchased yuan with dollars in their exchange reserves, thus supporting the currency  (and keeping the exchange rate within a narrow band.  This practice is called "defending the ____" (pick your currency:  UK pound, US Dollar,  China yuan).  Well. obviously, if you don't defend it, then it will float and find its own level.  Right now that level, as determined by traders, is lower than it was previously.  

China historically has purchased US dollars in order to prop up the dollar, and have the USA have more dollars with which to buy Chinese goods.  If the US did not have access to those dollars, which China has provided by buying US Treasury notes, then the US would be printing more, leading to an inflation and a devaluation of the US dollar.  That would make Chinese products more expensive to US buyers, and would tamp down the sales of Chinese goods to the USA.  SO the Chinese have been buying up these torrents of US notes and handing over US dollars for them.  IT was a lousy investment, incidentally, with very low interest rates of return. 

By allowing their currency to float, China is letting the market price the tariffs in into their goods.  And yes, this acts to counter the tariffs.  Can China continue to do that?  Sure they can.  The lower value of Chinese currency also makes US exports to China that much more difficult, as the currency revaluation will price those goods out relative to say machinery from Japan or Korea.  And China could also simply not purchase more US Notes at maturity, scrapping the roll-over of debt upon which the US, and particularly the Trump Administration, has relied.  At that point, the US economic expansion goes into recession.  That gets ugly fast. 

Edited August 10, 2019 by Jan van Eck
capitalization needed

[Jan van Eck + 7,558]

18 minutes ago, Zhong Lu said:

China does not particularly want a deal, at least not with this administration.  

Trump may believe the Chinese government wants a deal.  But that's not the same as the Chinese government actually wanting a deal, now, does it? 

Personally I'm wondering how long it takes before the real message (we're not going to negotiate) behind the yuan devaluation sinks in.  Obviously it hasn't sunk in yet.  

I think your analysis is correct.  This Chinese Government has written off "deals" with the Trump Administration.  It will be interesting to watch what happens at the next Treasury Bills auction.  The Chinese may be conspicuous for their absence. 

[Uvuvwevwevwe Onyetenyevwe Ugwemuhwem Osas + 96]

13 minutes ago, Zhong Lu said:

Personally I'm wondering how long it takes before the real message (China is not going to negotiate) behind the yuan devaluation sinks in, that China isn't budging on trade. 

As China devalues it's currency, it means China earns less hard currency for exporting the same things.
The purpose of Trump's trade war is not to "bring back manufacturing jobs"
but to "send less US dollars to China" (aka correct the trade deficit)

Devaluation of China's currency will help accomplish Trump's goal (to correct the trade deficit).
Chinese trolls in social media seem to think that china devaluing it's currency is a win for China. Ha Ha.
https://tradingeconomics.com/china/food-inflation

 

[Zhong Lu + 845]

Just like how the Trump trolls think the tariffs are a win for the US.  

What I'm also wondering is how long American farmers are going to put up with this.  Now that I think about it, I should have bough Brazilian soybean contracts several months ago.  Too bad there isn't an etf for that.  

Edited August 7, 2019 by Zhong Lu

[footeab@yahoo.com + 2,190]

2 hours ago, Zhong Lu said:

Question: if there's no further negotiation or agreement on trade between US and China, what next? 

I agree that China loses.  But how exactly does the US "win?" 

Not much to negotiate.  China has to at minimum follow WTO trade rules:

China along with EVERY OTHER NATION when joined WTO agreed to:

1) Foreign businesses able to buy property and run their business without a domestic partner

2) IP protection

3) Rule of law

4) Publishing of rules in several languages

5) I forget but something about subsidies etc regarding energy and shipping .

So, from my perspective: All of this must be adhered to at minimum before ANYTHING gets "negotiated. 

☝️ This☝️ was Already negotiated and China has not followed through. 

HOW does USA win?  Short term you do not "win".  Long term you and others who have adhered to standards, win.  How? By upholding a nation to what they already agreed to do to join the "club" creating mutual respect through adherence to standards that most other nations have also done.  If you wish to call these "morals", ok. 

A thief, a briber, a liar is going to continue being a thief, briber, and liar until "persuaded" otherwise.  We would all love to never have to call anyone to account for their actions: This is not reality.

[Zhong Lu + 845]

Wastral, are you the type of person who believes borrowed money has to be paid back, especially if the borrowed money is in the tune of trillions of dollars? 

Isn't a person (or a country) that borrows money (and never pays it back except in the form of more IOUs) a thief, too? 

Edited August 7, 2019 by Zhong Lu

[footeab@yahoo.com + 2,190]

27 minutes ago, Zhong Lu said:

Just like how the Trump trolls think the tariffs are a win for the US.  

What I'm also wondering is how long American farmers are going to put up with this.  Now that I think about it, I should have bough Brazilian soybean contracts several months ago.  Too bad there isn't an etf for that.  

And the people who bought Argentinian/Brazilian/Paraguayan soybeans are going to starve in your world? 👍

This is as stupid as those who said that when the USA forbade people in the USA from buying Venezuelan crude oil that the rest of the world would not do so(assuming it was of equal quality of crude around the world).  In this case, USA soybeans is of equal quality to S. American soy of which Ven oil, was not.  So, the EU will come knocking on the door for soybeans VERY shortly.  Otherwise they have no chicken/pig/cattle feed. 

[Zhong Lu + 845]

In the meantime American soy commodities are in a bear market.  "Very soon." Sure.  Tell that to the farmers.  

[footeab@yahoo.com + 2,190]

2 minutes ago, Zhong Lu said:

Wastral, are you the type of person who believes borrowed money has to be paid back especially if the borrowed money is in the tune of trillions of dollars? 

Isn't a person (or a country) that borrows money (and never pays it back except in the form of more IOUs) a thief, too? 

A loan is not theft until default.  In my world It has to be paid back.  I would love to see the USA federal government pruned by 50% tomorrow. 

[Zhong Lu + 845]

Sure. I don't mind because I can short the market and make money that way. 

But tell that to the millions of other people who aren't as lucky as us.  

[footeab@yahoo.com + 2,190]

Just now, Zhong Lu said:

In the meantime American soy commodities are in a bear market.  "Very soon." Sure.  Tell that to the farmers.  

So? Said farmers can twiddle their thumbs for a couple weeks till someone wakes up in the EU and decides they do not want to starve. 

Here is a thought: Dear farmer: do not base your farming based on exports.  USA is exporting ~100Billion in agriculture products.  How about you grow them?  Hrmm?

[footeab@yahoo.com + 2,190]

1 minute ago, Zhong Lu said:

Sure. I don't mind because I can short the market and make money that way. 

But tell that to the millions of other people who aren't as lucky as us.  

WHo are these so called millions?  And who are us?

[Zhong Lu + 845]

They've been twiddling their thumbs for the last 2 years.  Now many of them are going bankrupt.  

[Zhong Lu + 845]

The top 10%.  

[footeab@yahoo.com + 2,190]

5 minutes ago, Zhong Lu said:

They've been twiddling their thumbs for the last 2 years.  Now many of them are going bankrupt.  

Nice try, no they are not anymore than usual, and so what?

 

4 minutes ago, Zhong Lu said:

The top 10%.  

Just wondering, do you know how to use a quote button so anyone knows WHAT THE HELL you are talking about

Edited August 7, 2019 by Wastral

[Zhong Lu + 845]

If a person is discussing stuff on this forum, I'm going to assume they're in the economically top 10%.  

What I do know is that it's a good bet to bet against Trump this election cycle.  The math isn't adding up for Trump.  

[Tom Kirkman + 8,860]

1 minute ago, Zhong Lu said:

What I do know is that it's a good bet to bet against Trump this election cycle.  The math isn't adding up for Trump.  

Good luck with that bet.  You may wish to pay a bit less attention to Mainstream Media.  Your choice.

[Zhong Lu + 845]

He won the Midwest, barely.  If some of those farmers decide not to turn out, or vote for someone else, he's going to lose because anyone who didn't vote for him last election isn't going to vote for him this election.  

If you won by 1%, and 2% decide to stay home, and you didn't get any NEW voters to vote for you in the meantime, you lose.  Get it? 

EDIT: Let's get back on topic. Even if Trump wins election, what's to stop the Chinese government from stalling out another 4 years?

Trump eventually goes away (if anything he'll die of old age).  Then what? 

Edited August 7, 2019 by Zhong Lu

[Jan van Eck + 7,558]

5 minutes ago, Zhong Lu said:

If a person is discussing stuff on this forum, I'm going to assume they're in the economically top 10%.  

What I do know is that it's a good bet to bet against Trump this election cycle.  The math isn't adding up for Trump.  

Good evening, Mr. Lu, and thank you for starting an interesting discussion.  Might I interject a few thoughts.  I would not be so sanguine about suggesting a Trump electoral defeat.  The US political system has a multi-step process.  First, the candidate has to prevail in the primary contests, which are in every State.  Granted, the incumbent has a large advantage to obtain the nomination for his ticket.  

Then the nominee has to slug it out with whomever is on the other party (parties), and that gets more complicated.  The USA has its voters split down the middle with very small numbers tipping the scales.  Now if a third-party or Independent candidate also runs, then you have the effect of votes being siphoned off.  That last happened in a large way with Ross Perot.  But today the votes are so tight that even a small move by say the Green Party could derail the voting in a particular State.  As a practical matter only about seven States control the outcome in US Presidential elections, as those are the "swing States" who retain the balance of votes in the Electoral College that any candidate must have in order to be elected.  Now if say Ohio is 50-50 and a third-party candidate siphons off 200,000 votes, then it would tip from one camp to the other - and thus tip the election.  So these small parties can exert a huge influence. 

You point out that US soybean farmers have seen their exports to China collapse.  that is so.  The total collapse of US sales to China is down by 98%.  But that is "direct sales."  The soybean is protein, and protein is what is needed for fattening of chickens and pigs.  Given that pork is a staple of the Chinese diet, that demand for soy is not going away.  To suggest that is is all coming from Brasil ignores the logistics of Brasilian transport.  The hinterland of Brasil sits on a plateau, with a sharp, steep drop-off to the sea.  It is such that railroads cannot be built to handle the traffic as the gradients would be way too steep.  So the shippers are left with trucks from farm to market. 

Now the problem with this is that the roads that lead down to the ports are two-lane asphalt off the plateau.  It is simply not possible to move the freight to the ports for loading, if the entire Brasilian crop of soy were to be exported.  So the reality is that China is continuing to buy US soybeans.  I suspect what is happening is that the export freighters sail to Brasil, then the cargo gets re-documented as Brasilian and is continued onwards to China.  Same US beans, just different paperwork. 

The other thing to remember is that the US crop mix tilted towards soy once the Chinese started buying soy.  Go back 30 years and the US crop mix was very different:  lots of corn and wheat.  There is no rational reason the farmers cannot go back to the traditional crop mix. The farmers are also not particularly aggressive or adept at exploiting possible US customers for the soybean, particularly with hog and pig farms. Nothing to stop them from moving in on those feed markets. 

I think you will find that the soy farmers are going to adapt, and rapidly.  The various quantities will stabilize among the crops, and the farming community will continue to do well. 

In the interim Trump will make support payments.  Thus on an economic level, there is little to discourage the farm vote.  And I don't see the Democrats making efforts to court the farm vote, so the remaining impulse for farmers to vote Republican, social issues, still remain. 

When you add it all up, there is no real foundation for the proposition that Trump is headed for defeat in 2020.  Whatever  the election kicker is, it won't be the farmers.  I suspect it will be the US gun issue, but that is just my opinion.  Cheers.