China is fucked! Trump is the best!

[Leongsam]

China Is Losing The Trade War In Nearly Every Way



Kenneth RapozaSenior Contributor
MarketsI write about business and investing in emerging markets.

China exports fell more than expected in December, signaling more pain ahead as the trade-war fallout starts getting measured by the markets. Photographer: Qilai Shen/Bloomberg © 2018 Bloomberg Finance LP© 2018 BLOOMBERG FINANCE LP

China is still the world’s No. 2 economy and is still the monster of emerging markets, but regardless of those bonafides, Xi Jinping’s country is losing the trade war in nearly every way imaginable.

The arrest of Huawei CFO Meng Wanzhou in Canada last month for breaking U.S. sanctions law, followed by the firing of Huawei sales executive Wang Weijing in Poland last week shows China can be a bad actor, exactly as Washington believes. The Poland story centers around spying allegations, where Wang allegedly sought trade secrets from the government. Huawei’s latest bad headlines show how China tech companies may have risen to prominence by copying foreign technologies in joint venture deals or through white-collar criminal actions such as intellectual property theft and corporate espionage. Huawei is one of China’s most important, private tech firms. It rivals Cisco Systems worldwide.

Thanks in part to Huawei, China is getting beat on the public relations front in the trade war.

Early in the trade war, China thought it get the Europeans as allies. They hate Trump, too. China failed to woo the EU.



The Shanghai Composite is down around 30% in the last 12 months. Only Turkey is doing worse.

China is losing the PR battle. For years, U.S. companies have been complaining that China does not honor intellectual property rights. Washington believes tech powerhouses like Huawei owe much of their growth to IP theft. Photographer: Krisztian Bocsi/Bloomberg © 2018 Bloomberg Finance LP© 2018 BLOOMBERG FINANCE LP
The stock market is a terrible way to measure China growth. Investors know it. So they look to the economic data. Industrial production is still positive but in decline. Quarterly GDP growth is in decline. On Monday, China released weak exports data for the month of December.


China Trade Data in USD (YoY)

Exports: -4.4% versus estimate 2% and November’s 5.4%
Imports: -7.6% versus estimate 4.5% and November’s 3%
Trade Balance: $57 billion versus estimate $51 billion and November’s $44 billion
Exports to the U.S. fell 3.7%, the first nonseasonal decline since October 2016. That would indicate an end to the pre-tariff purchasing rush by U.S. companies in the third quarter and into the fourth. Exports to the U.S. had previously climbed over 12% for three consecutive months.

“The Chinese trade numbers released today got all the alarm bells ringing,” says Naeem Aslam, chief market strategist for Think Markets in London and a Forbes contributor. “If you need any evidence how the trade spat is impacting a country’s economic health then look no further than China trade. The lower export number means lower jobs, which means another direct impact on the (Chinese) economy. Donald Trump can be pleased. His policies have brought China to its knees.”
See: Cold War Reboot Pits Chinese Communism Versus American Capitalism — Forbes

China down. An investor covers his face in front of a stock board in Shanghai as the A-shares continue to be one of the worst places to invest over the last 12 months.

Today’s export growth data also suggest that the recent strength of the Chinese renminbi might be short-lived. Xi may be more eager to strike a trade deal with the U.S. if the economy worsens beyond expectations. Markets expect Xi will have to let real estate and banks loose at the provincial level, something he considers economically unsustainable.

“China needs to take more aggressive measures to stabilize growth,” Nomura economists led by Ting Lu in Hong Kong wrote in a note this morning. Nomura expects China growth to worsen over the next six months.

Recent reports suggest that Beijing will reduce their official GDP growth target to as low as 6% from the current 6.5%. The trade war, a shift in some global business cycles like technology and tighter regulations from Xi’s government are reversing the China growth trend.
Of course, every China bear out there believes the true GDP figure is closer to 2%. Last week’s latest update of China’s inflation showed a drop in prices across the board, not just in oil. Demand is in decline. This is an economy hitting the pause button.

How China Wins

China plays the long game. There are no elections on the calendar that threaten to upend Xi’s rule. Unless his economy tanks and unemployment gets out of control, Xi can take a little bit of pain. He’ll be around longer than Trump, who has less than two years left in his first term. Current polls, while early, suggest Trump loses to most Democratic challengers in November 2020. The two biggest China hawks in the Democratic Party—Nancy Pelosi and Chuck Schumer—are not running for president. Xi may be able to assume things return to the status quo, even if current tariffs remain. The previous Democratic administration of Barack Obama preferred only to complain about intellectual property and only used tariffs to target a handful of products, like Chinese tires, under World Trade Organization rules. Trump can care less about the WTO, so China wins if a new Democratic president leaves the trade dispute up to those guys instead of the President. Xi would love that.

Perhaps China's biggest “win” on the trade front is Vietnam’s membership in the Comprehensive and Progressive Transpacific Partnership. For those who have forgotten, Vietnam is an authoritarian country run by Communist Party chief Nguyễn Phú Trọng. Vietnam has become an outpost of Chinese businesses, especially manufacturing and exporters looking for cheaper labor and less regulations. The trade deal is essentially the old TPP, which Trump killed upon entering the White House in 2017.
Like U.S. companies in the past, Chinese manufacturers are shifting some of their supply chains to southeast Asia. This is good for some Chinese companies, but unless they bring Chinese workers with them, it is a headwind for blue-collar workers in China and therefore a brewing problem for Beijing.

China knows the U.S. is slowing, too. U.S. companies like Apple are losing money. Today’s trade data points to evidence that more companies trading with China brought in much less money in December.

Trade analysts from Panjiva research, part of the S&P Global Market Intelligence group, believes the U.S is a net loser from the tariffs because of this. Chinese imports from the U.S. declined 35.8% in December from 10.3% gains in the prior three months. As a result, Chinese imports brought in around $5.8 billion less in December while exports lost $1.53 billion, for a net balance of $4.28 billion of trade value lost, based on Panjiva’s analysis.

China exports account for only 14% of the industrial sector’s revenues, notes Brendan Ahern, CIO of KraneShares, a China-centric ETF firm in New York. That means China is not as export-dependent as the market thinks. “It will be interesting if analysts, who got scorched on the trade data, dial down their expectations for next week’s data dump on retail sales, GDP, industrial production and fixed asset investment,” Ahern says.

They might lower their expectations. China bulls are a dying breed.

“The (trade) numbers suggest that we’re starting to see the impact of the trade war finally feeding into China’s macro-economic data,” says Nick Marro, China analyst for The Economist Intelligence Unit.

The stock market means everything to Trump. If companies report weaker than expected fourth-quarter earnings and blame tariffs, the stock market will fall. Trump may be forced to go easier on China. Xi Jinping would love to keep the status quo, in hopes he can wait out the Trump presidency, now halfway through the first term.
If fourth-quarter earnings show companies getting squeezed because of tariffs and issuing warnings about lower profit margins in the first quarter because of it, then a weaker stock market could put Trump over the edge.

Should the U.S. economy buckle further, and the stock market is taken down with it, Trump might be more inclined to do end the trade war despite his team’s long-term goals to lessen China’s role in the U.S. corporate supply chain. If that happens, Xi will get more time to adjust and ultimately keep things as they were pre-Trump.

I've spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes.

My work has appeared in The Boston Globe, The Nation, Salon and ...

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For media or event bookings related to Brazil, Russia, India or China, contact Forbes directly or find me on Twitter at @BRICBreaker

 

[winnipegjets]

China will have the last laugh when it is later revealed that China and Russia are working in cahoots to sink America.

 

[Leongsam]

2 losers combined does not make them winners. They are both fucked.

 

[winnipegjets]

2 losers combined does not make them winners. They are both fucked.

You calling Putin a loser? He is Trump's boss, in case you are not aware. You worship Trump, by extension you should kowtow to Putin.

 

[Leongsam]

You calling Putin a loser? He is Trump's boss, in case you are not aware. You worship Trump, by extension you should kowtow to Putin.

As usual you have been watching too much fake news.

 

[winners]

I'd love to see how China will eventually be brought down to its knees. Otherwise, Winnie The Pooh is getting too arrogant and thinks nobody can touch China under his rule. A big fuck to him.

 

[Hypocrite-The]

The article has already stated...in the long term ah tiong land will come out on top n beat the yanks hands down. In terms of potential n resources etc...ah tiong land has more advantages than Yankee land. Also what makes me upset about the trade war is there is no effort to reduce the yanks trade deficits. The tiongs just moved the production to Vietnam etc...how does that solve the trade deficit? The main important thing is to get tiongland to open up it's markets. Which is not happening. For example tit for tat trade barriers. If ah tiongs don't allow FDI into tiong land . Do the same to the tiongs...best is ban alipay n wechat in Yankee land. Target the tiong big companies. The good step was to banned Huawei...hope the yanks continue...

 

[PTADER]

China Is Losing The Trade War In Nearly Every Way

It is incredibly fucking stupid to think that only one party can "lose" in a trade war, be it China or the US.

Let's assume that China collapses and all the 1.4 billion Chinese return to becoming impoverished farmers living only on one yuan a month. Who the fuck is going to replace these 1.4 billion as consumers of American, European or the rest of the world's production of manufactured or agricultural goods?

Just ask American manufacturers whether they would like to see China "lose" in a trade war, become impoverished and hence, will no longer have money to purchase their goods.

 

[Hypocrite-The]

I'd love to see how China will eventually be brought down to its knees. Otherwise, Winnie The Pooh is getting too arrogant and thinks nobody can touch China under his rule. A big fuck to him.

Ah tiong land will outlast Yankee land. Yankee land is loosing it's competitiveness etc. And with Yankee land confrontational politics etc. How can Yankee land grow?

 

[PTADER]

I'd love to see how China will eventually be brought down to its knees. Otherwise, Winnie The Pooh is getting too arrogant and thinks nobody can touch China under his rule. A big fuck to him.

Typical ah neh crab in a bucket mentality. Instead of a win-win attitude, it's pull down the winner attitude. That's why the land of your forefathers will never succeed. Each time they try to emerge out of their shithole of a country, their fellow ah neh crabs will pull them down.

It's a deep rooted cultural problem amongst ah nehs, as observed by ah nehs themselves, and as explained to me by ah nehs themselves.

 

[Boliao]

I have no idiot which imbecile wrote the article but he/she is clearly reading off the press and making assumptions without looking at other data and supporting facts. Huawei just won more than half of EU's 5G contracts and now own at least 50% of the world's telco market. The leading authority in US just told Ericsson to get their acts together as Huawei is the only vendor in the market that has true 5G technology as their performance outspeed competitors by ridiculous margins. How does one steal technology from others when no one else is even close?

 

[Leongsam]

It is incredibly fucking stupid to think that only one party can "lose" in a trade war, be it China or the US.

Let's assume that China collapses and all the 1.4 billion Chinese return to becoming impoverished farmers living only on one yuan a month. Who the fuck is going to replace these 1.4 billion as consumers of American, European or the rest of the world's production of manufactured or agricultural goods?

Just ask American manufacturers whether they would like to see China "lose" in a trade war, become impoverished and hence, will no longer have money to purchase their goods.

China does not have to go backwards. All that is needed is a realignment of the balance of payments. That's not too much to ask.

 

[steffychun]

China will nuke the US allies the Japs!

 

[PTADER]

China does not have to go backwards. All that is needed is a realignment of the balance of payments. That's not too much to ask.

That's too simplistic. A large reason for the disparity is cultural. Americans tend to spend like there's no tomorrow. No money, no problem. Let's use credit. That is why the whole country, and not just citizens, are in debt.

Asians, OTOH, tend to save a fair bit for that rainy day. Hence, their spending is affected.

The long term solution for the Americans is to teach their people to save. They can start with their kids. Just like how Singapore schoolkids in the 60s and 70s bought 10 cents stamps to affix on a card. When the card was completed with $2 (or $5?) worth of stamps, they would bring the card to POSB to bank in. The amount was small. But what was important was inculcating the savings habit amongst the young (thank you Lee Kuan Yew!).

Blaming the Chinese and even others for their deficit problems will not resolve their trade deficit issues. This is since the problem is cultural, not economic. No one is putting a gun to the head of any Americans to force them to spend or to buy a made-in-China product.

If there is no demand from the Americans, there will be no supply from the Chinese and such deficits won't even exist.

 

[PTADER]

I have no idiot which imbecile wrote the article but he/she is clearly reading off the press and making assumptions without looking at other data and supporting facts. Huawei just won more than half of EU's 5G contracts and now own at least 50% of the world's telco market. The leading authority in US just told Ericsson to get their acts together as Huawei is the only vendor in the market that has true 5G technology as their performance outspeed competitors by ridiculous margins. How does one steal technology from others when no one else is even close?

These Americans fuckers will constantly demonise everyone they dislike or see as challenge. First, it was the 1.5 billion Muslim world. Now the 1.4 billion Chinese.

Good luck to them if they think they can handle 2.9 billion people who hate them. That 2.9 billion figure does not include the 111 million Russians or the Africans, South Americans, etc yet.

 

[Leongsam]

That's too simplistic. A large reason for the disparity is cultural. Americans tend to spend like there's no tomorrow. No money, no problem. Let's use credit. That is why the whole country, and not just citizens, are in debt.

Asians, OTOH, tend to save a fair bit for that rainy day. Hence, their spending is affected.

The long term solution for the Americans is to teach their people to save. They can start with their kids. Just like how Singapore schoolkids in the 60s and 70s bought 10 cents stamps to affix on a card. When the card was completed with $2 (or $5?) worth of stamps, they would bring the card to POSB to bank in. The amount was small. But what was important was inculcating the savings habit amongst the young (thank you Lee Kuan Yew!).

Blaming the Chinese and even others for their deficit problems will not resolve their trade deficit issues. This is since the problem is cultural, not economic. No one is putting a gun to the head of any Americans to force them to spend or to buy a made-in-China product.

If there is no demand from the Americans, there will be no supply from the Chinese and such deficits won't even exist.

I don't think anyone is arguing along cultural lines.

The issue is tariffs.

I chose this article to highlight the issue as it was written during the Obama era before the MSM started generating large volumes of fake news for obvious reasons.

https://www.forbes.com/sites/baizhu...is-wall-the-chinese-tariff-wall/#172f76667209

The Obama Administration recently took up the anti-dumping duties imposed by China on imported American-made cars and trucks with the World Trade Organization (WTO), as a violation of the WTO rules. These duties were imposed in 2011 presumably as retaliation against American’s anti-dumping duties on Chinese made solar panels (another move which was highly politically motivated). Heavily affected American cars include Cadillac, with penalty of 21.8 percent, and Jeep Cherokee at 18 percent, on top of other duties (figures are pulled from a report that references data provided by China’s Ministry of Commerce—see the link here

http://auto.ifeng.com/news/domesticfinance/20111215/731107.shtml )

Given that these cars are manufactured in some important election battle states, the Obama administration’s action in an election year is clearly political, but I still want to applaud Obama’s effort to raise awareness of tariffs on car imports to China.

The automobile industry in China is still heavily protected behind a “tariff wall” even though this wall has come down significantly since China’s entry into the WTO. Cars imported to China face a tariff duty of at least 25 percent. In comparison, American duties on cars imported into the US are only 5 percent. Taking into account the 17 percent of VAT and other levies, imported cars and foreign-brand cars produced in China are substantially more expensive than the same type of cars in the United States. A new Cadillac SLS made in China will set a Chinese household back between $71,000 and $110,000, without the anti-dumping duty. A better performing Cadillac STS, on the other hand, costs an American household between $47,000 and $56,000.

Chinese households are not wealthier than American households. It makes absolutely no sense to me that a less wealthy Chinese consumer should pay more than a much wealthier American consumer for the same American-made products. Repealing the Chinese anti-dumping duties is a first step.

Removing the Chinese tariff wall will carry even bigger benefit. It will benefit thousands of American workers making cars in Michigan and Ohio, as Chinese consumers buy more cars from American car manufacturers. It will benefit thousands of Chinese auto parts companies, employing millions of Chinese workers that supply Detroit and Toledo auto plants. Equally important, it will benefit millions of aspiring Chinese consumers.

A tariff is effectively a combination of two policy tools: a tax on consumer and a subsidy to producer. As foreign automobile imports are stopped by the tariff wall, competition in the Chinese auto market becomes less intense. Car producers in China are thus able to charge higher prices. Millions of Chinese consumers have to take more money out of their pockets as if they are taxed for buying cars to subsidize a few producers in China.

So, who are the main beneficiaries of the high Chinese tariff wall? Mostly, the foreign auto companies and their partnering Chinese State Owned Enterprises (SOEs). The top ten car manufacturers in China are all joint ventures between foreign multinationals and the Chinese SOEs, except three: BYD, Cherry and Geely. The top five automakers are: Shanghai Volkswagen, FAW Volkswagen, Shanghai GM, Beijing Hyundai, and Dongfeng Nissan. The top ten bestsellers in 2011 in China all carry a foreign brand except a budget car made by Tianjin Xiali. These foreign multinationals and their Chinese SOEs are able to sell cars at higher prices and are racking up hundreds of millions of dollars in profits behind the tariff walls at the expense of buyers, including millions of Chinese households and numerous small Chinese companies. In 2010, China became the largest market for GM, with sales of 2.35 million cars, compared with 2.21 million in the U.S. In 2011, GM made a record net income of $7.6 billion, of which 20 percent was contributed by its Chinese joint venture. With high tariffs on car imports, millions of Chinese consumers who are struggling to make ends meet are taxed to subsidize wealthy shareholders of multinational companies as well as cash-rich Chinese SOEs. I call this a “rob-the-poor-to-pay-the-rich policy”.

Some argue that this tariff is necessary to nurture the indigenous Chinese carmakers before they are competitive enough to face those global auto giants. They point out that Geely, a Chinese indigenous car maker, would have gone under without tariff protection. I believe that this is not true. China’s Geely started to manufacture cars in 2001, the year China entered the WTO. Between 2001 and 2011, the Chinese tariff on automobiles was reduced from 100 percent to 25 percent. During the same time when tariffs were reduced, Geely grew from a no-name to a household brand, selling over 300,000 cars a year today, not much less than Honda in China. In 2010, it acquired Volvo Cars from Ford. Further, if support of indigenous auto makers is the objective, direct subsidy to Geely is probably more efficient than a tariff. It makes no sense to tax consumers and subsidize all carmakers, including more efficient Volkswagen and GM in order to support less technologically advanced Geely. The bottom line: The Great Wall of China never worked in history to make China stronger---not even able to protect China from foreign powers. The same is true of the “tariff wall” created--it would not make an industry more competitive. Those who do not believe this just need to take a look at the Brazilian or Indian auto industries.

Some want to keep high tariffs as a policy to alleviate suffocating traffic jams in China’s big cities—which might make sense. Anyone who has visited Beijing recently would probably find Los Angeles traffic to be preferable. As of now, car ownership in China is actually quite low--it is only 47 per 1000 persons. Comparatively, car ownership is 808 in the United States, 589 in Japan, and 379 in Korea, per 1000 persons. Thailand, a country that has a comparable per capita GDP as China, has 165 cars per 1000 persons. China is now the largest auto market in the world, selling 18.5 million cars a year, including 14.5 million passenger cars and 4 million buses and trucks. Imagine what would happen if China reaches the same car ownership as Thailand? But I would still argue against keeping the tariff wall.

There is no reason to subsidize Volkswagen, GM, Hyundai, or Nissan in order to solve the traffic jam problems in Beijing or Shanghai. If China wants to have less congested roads, there are other better ways to achieve this objective. Increasing the levy on license plate or downtown parking fee is more efficient. Providing more options to motorists to divert traffics is another. A tariff wall which taxes consumers and subsidizes producers at the same time is not a good method to discourage cars on roads.

Removing the tariff wall has an additional benefit. This will force the carmakers in China to be more competitive. Multinational companies will have to bring the most updated designs, instead of selling the last-decade models to Chinese consumers. Indigenous Chinese car companies will not be able to hide behind the tariff wall while simultaneously copying foreign cars to fool Chinese drivers. They will have to be innovative in order to survive the competition.

Chinese households deserve to enjoy better cars at lower prices. They should have the choices of buying cars made in China or made in America, by either Shanghai GM or Detroit GM. Obama’s action to take China’s anti-dumping duty on cars to the WTO should be considered as a first step to generate public attention to the still high Chinese tariff wall. Removing this wall is to the best interest of millions of Chinese households. It is consistent with the grand strategy of the Chinese government to increase domestic consumption. And this will for sure win China a lot of friends in politically influential states in America. So, to China, I say, “Please tear down this wall. Your people deserve a better life.”

 

[PTADER]

I don't think anyone is arguing along cultural lines.”

That, as far as I see it, is the problem since they should be. It's a failure to find the root cause of a problem. It's trying to find an economic solution to a cultural problem.

It's like a doctor treating the symptoms of headache without being aware of, or dealing with, the tumour that is causing the headache.

The trade deficits are the symptoms. They are the headache.

The root cause is the tumour, i.e. the culture. It's the cultural propensity for Americans to spend and splurge without saving that leads to the trade deficit.

Once again, if the Americans don't spend and if there is no demand from them for made-in-China goods, there will be no supply from the Chinese. Such deficits will then cease to exist.

 

[Leongsam]

That, as far as I see it, is the problem since they should be. It's a failure to find the root cause of a problem. It's trying to find an economic solution to a cultural problem.

It's like a doctor treating the symptoms of headache without being aware of, or dealing with, the tumour that is causing the headache.

The trade deficits are the symptoms. They are the headache.

The root cause is the tumour, i.e. the culture. It's the cultural propensity for Americans to spend and splurge without saving that leads to the trade deficit.

Once again, if the Americans don't spend and if there is no demand from them for made-in-China goods, there will be no supply from the Chinese. Such deficits will then cease to exist.

The present day Chinese are no better at saving than their American counterparts. They'll sell their kidneys for money.

 

[greedy and cunning]

China Is Losing The Trade War In Nearly Every Way

2 losers combined does not make them winners. They are both fucked.

aiya , every now and then
we have 'experts' talking about who is winning and who losing in some dispute
they give a generalised ,vague report based upon the data gleaned from sources that are publicly available

their reports are never specific on the outcome.

i am onli interested in what will happened , what is the end result.
in your case , if china lost the trade war what is going to happen ?
china concedes to the evil scheme of opening up the financial markets to any tom dick and hairy ?
china forced to accept a exchange rate of 2 yuan to $1 ? or
china economy 'collapsed' , they start to demolish building and use the land for farming
the high speed rail stop working , massive protest all across the country.
etc etc.
if you cannot provide report with a specific conclusion ,
no need to waste time posting this kind of report.

 

[winners]

Ah tiong land will outlast Yankee land. Yankee land is loosing it's competitiveness etc. And with Yankee land confrontational politics etc. How can Yankee land grow?

In this trade war? No way. The buyer will always be at an advantage. If you study economics you will understand. If by March 2019, Winnie The Pooh will still not give in to the US, China can be prepared to face what Japan had gone through during the 1990s. Thereafter, the Chinks will self implode by themselves via its own civil war and conflicts because when so many will be jobless and without money, they will become desperate and resort to all means. After all, if you don't fight, you'll also eventually die of hunger and famine.