"We're Not Going to Negotiate Anymore"

[J.mo + 165]

2 minutes ago, Zhong Lu said:

The US has 250 million people.  China has 1.2 billion people.  Compared to China's internal market, the US is auxiliary.  

The US was necessary for a source of foreign currency.  But now thanks to the Treasuries China has accumulated, that's not a problem anymore.  Losing access to the US market will hurt, but the US overestimate their market's importance.  

Well, I'm hopeful yall dont need us. Because the goods you fellows manufacture are awful lol. I'm tired of cheap Chinese shit. 🤣

[Zhong Lu + 845]

"Cheap."  That's the key word.  If China stopped selling goods to the US, everything here gets more expensive.  

The goal of capitalism is to produce the greatest quantity of saleable goods at the lowest price.  I don't see why capitalists would complain about this.  

How would you like it if everything you bought doubled in price? 

Edited August 12, 2019 by Zhong Lu

[Jan van Eck + 7,558]

7 hours ago, Enthalpic said:

Probably using the superior metric system! Luddites use inches.

This is classic Canadian superciliousness.  For readers unaware of the matter, Canada did a forced conversion from inches to metric, mostly because bureaucrats in the Federal Government in Ottawa thought it would be a great idea, and because inches were, well, "American" and centimeters were, well, "progressively European" and not American!  The brilliance of this was demonstrated when those bureaucrats demanded that Air Canada start buying their 767 jets from Boeing calibrated in metric.  The result of that folly was demonstrated by Air Canada flight 146, from Montreal to Edmonton, where the tanks were "sticked" with the insertion of a wooden rod calibrated in centimeters, which the ground-crew flunky then had to manually convert into gallons and pounds fuel using a conversion table.  You already know that that is going to get all screwed up.  Sure enough, that plane ran out of fuel at 41,000 feet over the (very rocky and heavily forested) Canadian shield North of Lake Superior, not enough to float to WInnipeg, and headed for disaster, now a massive 350,000 lb. glider. 

Fortunately both pilots were, by pure chance, also proficient glider pilots, they did that in their time off duty.  One was a former RCAF pilot, and remembered an old abandoned RCAF base located at the sleepy rural town of Gimli, Manitoba.  They dead-sticked that big beast down to the old field, found it, and side-slipped the monster down onto the old runway.  Here is what it looked like  (neat landing!):

 

Canadians are very good at, indeed skilled at, dumping on others, especially Americans, and making denigrating remarks about being "Luddites."  They are not so hot at running their own country, as I have observed here on several occasions.  Don't take those Canadians so seriously;  a lot of what they say is a function of envy. Are the Americans "better at it"?  You bet! 

Edited August 12, 2019 by Jan van Eck

[Jan van Eck + 7,558]

30 minutes ago, Tom Kirkman said:

I don't agree, but upvoting your comment because it is well argued and well presented.

Actually, it is not.  The argument is rubbish, and that is noted by observing that all of Africa, including the Arab countries along the Mediterranean, comprise only 2% of world GNP.  And most of that is from South Africa (#1) and Nigeria (#2).  The reality is that there is simply not enough purchasing power in Africa to be much of a market for anything.  Africa has traditional trading partners and industrial-good suppliers from Europe, going back to the colonial days.  Chinese consumer goods have no market in Africa, not even motorcycles, which are imported from Japan.  The idea that Africa, impoverished, is going to substitute for the US market so the Chinese can continue growing their manufacturing base is just ludicrous.  It is so ridiculous that it merits no further comment. 

Now, I am not trying to dump on Zhong Lu.  What I am saying is that his ideas do not mesh with reality.  It is wishful thinking. I take for granted that Zhong Lu is a very nice guy.  But that does not create a license to create a fantasy out of thin air. Sorry, Zhong. 

[Jan van Eck + 7,558]

17 minutes ago, J.mo said:

Well, I'm hopeful yall dont need us. Because the goods you fellows manufacture are awful lol. I'm tired of cheap Chinese shit. 🤣

J.mo, you might want to be cautious in making assumptions.  Mr. Lu has stated he lives in America.  Likely just as much an American as you are.  Just saying.

[Douglas Buckland + 6,308]

19 minutes ago, Zhong Lu said:

The US has 250 million people.  China has 1.2 billion people.  Compared to China's internal market, the US is auxiliary.  It might not feel like that to Americans flooded with cheap Chinese goods, but the vast majority of Chinese goods produced nowadays are for internal consumption.   They export to the US as a source of extra income.  

The US was necessary for a source of foreign currency.  But now thanks to the Treasuries China has accumulated, that's not a problem anymore.  Losing access to the US market will hurt, but the US overestimate their market's importance.  

If what you say is true, why did China even bother with ANY negotiations? Apparently the Chinese are set financially due to the Treasuries and as their internal market is so robust that the American market is of no concern, why even sit at the table initially?

[Zhong Lu + 845]

3 minutes ago, Jan van Eck said:

Actually, it is not.  The argument is rubbish, and that is noted by observing that all of Africa, including the Arab countries along the Mediterranean, comprise only 2% of world GNP.  And most of that is from South Africa (#1) and Nigeria (#2).  The reality is that there is simply not enough purchasing power in Africa to be much of a market for anything.  Africa has traditional trading partners and industrial-good suppliers from Europe, going back to the colonial days.  Chinese consumer goods have no market in Africa, not even motorcycles, which are imported from Japan.  The idea that Africa, impoverished, is going to substitute for the US market so the Chinese can continue growing their manufacturing base is just ludicrous.  It is so ridiculous that it merits no further comment. 

Now, I am not trying to dump on Zhong Lu.  What I am saying is that his ideas do not mesh with reality.  It is wishful thinking. I take for granted that Zhong Lu is a very nice guy.  But that does not create a license to create a fantasy out of thin air. Sorry, Zhong. 

That's about to change.  I didn't say now.  I said "within a generation."  

The entire point of Silk and Road and the Chinese expansion into Africa is to find alternative markets for trade

https://www.youtube.com/watch?v=zQV_DKQkT8o

Edited August 12, 2019 by Zhong Lu

[Zhong Lu + 845]

11 minutes ago, Douglas Buckland said:

If what you say is true, why did China even bother with ANY negotiations? Apparently the Chinese are set financially due to the Treasuries and as their internal market is so robust that the American market is of no concern, why even sit at the table initially?

1. Politeness.

2.  Losing the US market would still hurt.  The US market is no longer critical.  But it remains important.  

[Zhong Lu + 845]

Here's one on China and Africa from BBC:

https://www.youtube.com/watch?v=MrVzFSXqn3w

If the US under Trump wants to retreat from the world, China is happy to fill the void.  

Edited August 12, 2019 by Zhong Lu

[JR EWING + 123]

20 hours ago, Douglas Buckland said:

Of course, that wrench is a piece of junk and likely is not 7/8 of an inch between the jaws!

The fact is that the Chinese manufacture junk. Yes, things like these wrenches sell to folks who just have the odd job around the house, but real tradesmen or craftsmen will not touch Chinese tools and equipment.

Out in the drilling arena I cannot tell you how many times my clients decided to 'go cheap' with Chinese equipment only to have it fail in weeks.

There is little real QA/QC in China. I was forced to have a drilling spool manufactured in China. I used a third party Chinese inspector to confirn that it was fit for purpose. When it arrived in Kurdistan it was riddled with radial cracks - useless.

You order two identical mud pumps from China...you cannot interchange parts due to shoddy machining...and on and on.

China sells by artificially lowering the cost/dumping. They can do this due to low cost, low skilled labor. As China develops a middle class, they will demand higher wages, time off, pension plans, etc... and this advantage will disappear.

The Chinese economy is a house of cards.

there is little QA/QC in China. was a true statement 15 years ago. its much improved now.

[JR EWING + 123]

3 hours ago, J.mo said:

Well, I'm hopeful yall dont need us. Because the goods you fellows manufacture are awful lol. I'm tired of cheap Chinese shit. 🤣

you buy the cheap Chinese shit, why don't you patriotically buy the very expensive American shit

[J.mo + 165]

5 hours ago, JR EWING said:

you buy the cheap Chinese shit, why don't you patriotically buy the very expensive American shit

I do when possible. But let's get realistic. very little options allow for that on the scale of availability. 

[ronwagn + 6,290]

11 hours ago, Jan van Eck said:

That is unlikely.  

To understand the instability of the currently-structured Chinese economy, note that it has been pushed to extraordinary lengths by what is generally referred to as "infrastructure spending."  Fully 25% of the Chinese-calculated GNP is the pouring of concrete.  The purpose of that construction is not to build something useful today for benefit today; it is to absorb human capital, the millions of otherwise unemployed.  Some of that work has some immediate benefit, such as the construction of new train routes into the vast hinter and and up into the Tibet Plateau.  Other projects with immediate benefit include the network of waterway canals, intended as aqueducts, to move stupendous amounts of water from the rivers of the South up to the parched North.  Still other projects include massive port improvements, dredgings, containership piers, airports, and haulage roads. 

One biggie has been the building of entire cities, with vast numbers of streets, high-rise apartment buildings (where the apartments are sold), and shopping malls - all empty of people.  You can have a city of 500,000 and there is nobody home.  Who built all that?  And why?  It baffles the outsider.  But one large purpose of that construction is to absorb resources and push up the growth. The Chinese are not alone in that folly; in Spain, a vast new airport was built a hundred miles South of Madrid, for billions, and the total number of flights scheduled when opened up was - zero.  

None of that "infrastructure spending" in China brings in any real return, other than the port spending.  The canals and the railroads will incrementally contribute, but not proportionate to the money spent. So the real engine of growth to prosperity is exports, to the wealthy countries, and of those, the prize is the USA.  Remember that the US market comprises fully 25% of the planet GNP, so if you cannot play in that vast US sandbox you are shut out and shut down.  China absolutely need access to that market in order to absorb the flood of goods it has capacity to manufacture in all those new factories with those hundred of millions of workers.  Who else can absorb that?  Australia?  No chance; not enough people.  India?  No chance; the place is awash in poverty, 500 million people who poop at the side of the street don't have the money to buy any serious quantity of Chinese product.  Europe?  No chance; Europe with its aging and declining population has at best already reached saturation and volumes will stagnate there for decades.  Africa?  No money.  Argentina?  Peru?  Not enough consumers and not enough money.  

If you have displaced factory employees with no output for the goods, a situation that will face China if quotas are imposed, then that economy starts to come apart at the seams.  It handles tariffs by forced imposition of effective wage taxes by reduction of purchasing power, done by letting the currency devalue.  The Chinese worker then ends up with a little less pork and a little less chicken in his diet, and less protein and more rice for carbohydrates,  because the Chinese leadership, to save face, shuts down purchases of US and Canadian soybeans, pork and beef cattle.  The Chinese worker takes a decrease in his standard of living.  Can that go on indefinitely?  No.  And the reason is that, additional to lowered food intake, millions of Chinese factory workers will end up laid off.  That unemployment will create its own social unrest, and China is too unstable to handle it.  So no, the Chinese economy will stop growing, will shrink, will become unstable, and will develop internal fissures, that repression will not be able to oppress.  That is the price of running afoul of US patience with trade dumping. 

Please read an interesting new article on the flaws of the Chinese economy and how it could crash: https://www.cnbc.com/2019/08/05/kyle-bass-chinas-currency-would-drop-30percent-to-40percent-without-support.html?recirc=taboolainternal

[Hotone + 412]

On 8/10/2019 at 11:39 PM, Jan van Eck said:

The real problem is that Americans are put out of work, and the money velocity inside the USA suffers from that and the shuttered US factories.  You can have all the trade deficits you want as long as it is not whacking US factories and employment; if they are at full capacity, purchasing additional goods from abroad simply elevates the US standard of living.  Unfortunately, those Chinese manufactures directly compete with US manufactures, and it is that direct substitution of goods that is the root of the problem. 

Just for example, I invite you to go into any hand-tool sales outlet, such as "National Tools," and look at a set of wrenches, the kind you use to go work on your car or truck.  Stamped on that big 7/8'inch combination wrench will be the word  "CHINA".   See, that big wrench is not being forged in the USA.  That US factory got shut down, and its workers are on the street, doing opioids instead of supporting their families.  And that, my friends, is the problem. For that, there is only one solution:  tariffs and quotas.  Nothing else works. 

The tariffs on China are causing factories to mostly relocate elsewhere other than America.  Does this mean that you have to start tariffing the next country and the next and next, until those factories come back?

[Jan van Eck + 7,558]

17 minutes ago, Hotone said:

The tariffs on China are causing factories to mostly relocate elsewhere other than America.  Does this mean that you have to start tariffing the next country and the next and next, until those factories come back?

It is problematic that factories will do some skipping-rope exercise, jumping from country to country.  It gets too difficult to manage in terms of maintaining a supply chain.  In manufacturing, the most vulnerable part is the "tooling," the various dies and castings that act as the foundation for the parts manufacturing chain.  Those cannot be exposed to loss, as then the entire exercise is at large risk.  Replacement of tooling and dies may take months.  So the logical step is for the tools and dies to be repatriated from China back to US shops.  

Once you have control of the tooling, then having that tooling placed in a US manufacturing plant to run the parts is a natural progression, assuming that the manufacturer is not so large that it will do all work in-house (and thus set up a new plant inside the USA or possibly Canada). Nobody is going to want to go skipping their tooling around the rim of Asian countries, you cannot control what happens to it.  If some offshore contractor refuses to surrender the tooling back to you, what are your options?  Go sue him?  In some courtroom in Indonesia?  Hey, good luck with that project. Meanwhile, you are not running your production, and your sales stop cold. 

Manufacturers cannot live like that.  So the tooling has to come back.  The options are just too unstable. Conceivably, parts could be made here and shipped in bulk to a contractor shop somewhere else, if you can handle the long supply chain and the time delays.  But it gets a lot easier to send them to Mexico if it is cheaper lab or you are after, let that labor pool there do that work, then truck it back into the USA.  Lots of companies have done that, and I have sold and drop-shipped parts from my plants for assembly work inside Mexico, and I can tell you that that mostly runs smoothly enough.  It does take hands-on managerial time, but it is within reason.  Having your managers running across the Pacific twice a month to stay on top of your problems is just not realistic.  I don't see tools and dies being left in Asia. 

Edited August 12, 2019 by Jan van Eck

[Boat + 1,324]

Green houses, 3 D metal printing, 5G communication, an electric driven economy along with continued tech advances in millions of applications will take a huge bite out of shipping & handling and physical movement as time marches on. Just like Walmart and the box stores did to mom and pop. 

Someday you’ll want/customize some product and it may be made right in the store or somewhere very close or have your vegetables delivered right from the greenhouse. 

Eliminating infrastructure is the name of the game. Countries they rely on cheap labor like a China for an export advantage may be in trouble.

[SKEP + 229]

On 8/9/2019 at 7:09 AM, Douglas Buckland said:

Everyone seems to enjoy mentioning the US debt. Does anyone have a listing of the debt of other developed countries?

FACT:

U.S. DEBT (all outstanding)  .  .  .  .  .  a little over 1 X GDP

China DEBT ((all outstanding) .  .  .  .  .   IS OVER 3 X GDP .  OVER $40 TRILLION !

China does have large reserves . . . BUT WILL PROBABLY HAVE TO USE SIZABLE PORTION TO STIMULATE ECONOMY AS TARIFFS TAKE THEIR TOLL.

Excessive Debt could be a big problem for China down the road.

Understand Chinese Government, CCP (CHINESE COMMUNIST PARTY) own half the banks, and have control over the other half.  The government has forced the banks to lend more money. 

Edited August 13, 2019 by SKEP

[Hotone + 412]

4 hours ago, Jan van Eck said:

It is problematic that factories will do some skipping-rope exercise, jumping from country to country...  So the tooling has to come back... Conceivably, parts could be made here and shipped in bulk to a contractor shop somewhere else, if you can handle the long supply chain and the time delays.  But it gets a lot easier to send them to Mexico if it is cheaper lab or you are after, let that labor pool there do that work, then truck it back into the USA... I don't see tools and dies being left in Asia. 

So in order to bring the tools and dies back to the US, are you proposing to slap tariffs on all the Asian countries?  Wouldn't that further damage relations with them? 

If the bulk of labor is shifted to Mexico it still doesn't help provide factory employment for American workers.  American companies already generate more than 350 million dollars within the Chinese market. If the trade war continues, America will lose a big part of that market. Is that a worthwhile exchange for bringing a portion of manufacturing back?  Especially if it doesn't generate much employment?

Edited August 12, 2019 by Hotone
Grammar

[footeab@yahoo.com + 2,191]

1 hour ago, Hotone said:

So in order to bring the tools and dies back to the US, are you proposing to slap tariffs on all the Asian countries?  Wouldn't that further damage relations with them? 

If the bulk of labor is shifted to Mexico it still doesn't help provide factory employment for American workers.  American companies already generate more than 350 million dollars within the Chinese market. If the trade war continues, America will lose a big part of that market. Is that a worthwhile exchange for bringing a portion of manufacturing back?  Especially if it doesn't generate much employment?

Most of that "sold to China" is a joke as it is sold, assembled, and sold back. 

[Ward Smith + 6,615]

21 hours ago, Zhong Lu said:

The US has 250 million people.  China has 1.2 billion people.  Compared to China's internal market, the US is auxiliary.  It might not feel like that to Americans flooded with cheap Chinese goods, but the vast majority of Chinese goods produced nowadays are for internal consumption.   They export to the US as a source of extra income.  

The US was necessary for a source of foreign currency.  But now thanks to the Treasuries China has accumulated, that's not a problem anymore.  Losing access to the US market will hurt, but the US overestimate their market's importance.  

Umm no. 

• The current population of the United States of America is 329,351,636 as of Monday, August 12, 2019, based on the latest United Nations estimates.
• The United States population is equivalent to 4.27% of the total world population.
• The U.S.A. ranks number 3 in the list of countries (and dependencies) by population.

So you'll need to go back to your indoctrination tovarisch. More study, less posting? 

Now note where the US stands. Behind China and India. Now, if one wants to avoid penury in the home, the "secret" is to not have too many kids. China and India did, the US didn't. 

[BenFranklin'sSpectacles + 762]

21 hours ago, Zhong Lu said:

That's about to change.  I didn't say now.  I said "within a generation."  

The entire point of Silk and Road and the Chinese expansion into Africa is to find alternative markets for trade

https://www.youtube.com/watch?v=zQV_DKQkT8o

China will be disappointed in Africa's inability to develop itself.

[Ward Smith + 6,615]

1 hour ago, BenFranklin'sSpectacles said:

China will be disappointed in Africa's inability to develop itself.

Years ago I went to a fundraiser for a Christan group digging wells for Africans. I watched their videos, listened to their talks, then made everyone upset when I asked why Africans couldn't dig their own wells? I'd gone there assuming we were sending drilling rigs there and using American tech and ingenuity. Instead I saw they just hired the natives in their own villages to literally dig wells by hand that looked to be 30 feet deep. 

When I was a kid, I'd have dug a well like that myself if I thought I'd hit water. I tried to dig a swimming pool when we lived in the southwest, and only quit because my dad announced we were moving. It was a pretty damn big hole by then. I laughed out loud at Encino Man at apparently an older version of myself  doing the same thing. 

What was wrong with the villagers that they'd rather sit around waiting to be rescued than do it themselves? Never really got a straight answer, but I think it's related to why Africa can't lift itself by its bootstraps. 

[J.mo + 165]

29 minutes ago, Ward Smith said:

Years ago I went to a fundraiser for a Christan group digging wells for Africans. I watched their videos, listened to their talks, then made everyone upset when I asked why Africans couldn't dig their own wells? I'd gone there assuming we were sending drilling rigs there and using American tech and ingenuity. Instead I saw they just hired the natives in their own villages to literally dig wells by hand that looked to be 30 feet deep. 

When I was a kid, I'd have dug a well like that myself if I thought I'd hit water. I tried to dig a swimming pool when we lived in the southwest, and only quit because my dad announced we were moving. It was a pretty damn big hole by then. I laughed out loud at Encino Man at apparently an older version of myself  doing the same thing. 

What was wrong with the villagers that they'd rather sit around waiting to be rescued than do it themselves? Never really got a straight answer, but I think it's related to why Africa can't lift itself by its bootstraps. 

All these years, I thought I lived in California. 

Now I'm realizing, I think I live In Africa!

[Zhong Lu + 845]

There's also the minor point that most of the manufacturing in the future will be automated, so even if manufacturing came back to the US only the rich will benefit.  

[Sl100 + 1]

China is hoping for a Dem president in 2020. They now the Dems will cave. If Trump is reelected there will likely be a deal or tarrifs will rise again.