China vows to purchase more American products, ends tariffs

[Prefect]

Despite all of the naysayers it appears our President and his administration continue to make things happen. China has agreed to halt tariffs and will spend an unspecified amount on American imports. I guess all the talk of China economically crushing the US has proven to be false.

Its great to have a strong leader that doesn't fold to foreign pressure in office. The winning just doesn't stop!

https://www.bbc.com/news/amp/business-44190169

http://money.cnn.com/2018/05/19/news/china-united-states-trade-announcement/index.html

I also got an unspecified amount of poontang in highschool,too.

People don't say the actually number when it is known it will be extremely low or non-existent.

 

[ShadowRun]

Don’t worry just let your hate of Trump keep clouding your judgement people

 

[machidafan99]

He wanted an even playing field

 

[MiniCraque]

He's getting credit for altering China's unfair policies by threatening a trade war. Are you really so committed to the idea that the guy can't do anything right that you can't understand what happened here?

I think it'd be smarter to shrug and chalk it up to a broken clock being right twice a day or some such. But Trump did well here.

What are China's unfair policies? Please describe what's being changed. If you're trying to claim Trump accomplished something, it would be good to know what that is.

All we have so far is a ceasefire on new sanctions (again, Trump ending a war he started) and US officials saying the Chinese pinky promised to buy more American goods. I don't know why you'd be bothered by the fact that people aren't exactly ready to call this a win.

If China is going to buy more (and thus reduce the deficit), how is that being accomplished? What American companies will be given greater access to the Chinese market? How will that be done, with lower tariffs? How do we know it's going to work? If it does, by how much? All fair questions, with no answers.

The only measurable thing done so far is bailing out ZTE.

 

[Ultra O’Dia]

Trump is great. I don’t agree with all of his policies, but he sticks to his guns and compromises once the compromise is acceptable. It’s just how he does business, and everyone bending over backwards to criticize him at every step is a fucking bitch.

 

[MadSquabbles500]

They mean, once they get their hands on our products, they can rip it off, copy it, and offer at a much lower price point, but we are still welcome to try and sell our more expensive product in their country.

 

[bobgeese]

It’s amazing to see the left rustled over American success.



It’s almost like they hate America...

 

[Throwin Bombs]

Are trumpites pro- free trade now?

Good.

If you consider me a "Trumpite", and yes I have always been free trade. I think most supporters of the President are. We are not the Neocons of yesteryear.

 

[Rod1]

If you consider me a "Trumpite", and yes I have always been free trade. I think most supporters of the President are. We are not the Neocons of yesteryear.

Weird, i was pretty certain that Trumpites back in the day were bitching about Globalism, TPP and NAFTA.

 

[Rod1]

It's a silly question. Trump's views on the issue have been the same for decades: trade barriers are bad, and if you raise barriers against our goods/services we will respond in kind or with other measures until you relent.

Im pretty sure that Trump pulled out of the TPP and vowed to renegotiate NAFTA because it was unfair.

Im also sure that he called China a currency manipulator.

 

[ocfightfan]

We will see. China does what is in China's interest and is constantly pushing the line. We can't just assume that this is a win and that's the end of it. We need to keep on top of our interests and not just sit back and assume that they will play fair.

 

[uppercutbus]

He addressed a long standing issue. He threatened a trade war. China backed down.

Good for America.

 

[V-2]

What are China's unfair policies? Please describe what's being changed. If you're trying to claim Trump accomplished something, it would be good to know what that is.

All we have so far is a ceasefire on new sanctions (again, Trump ending a war he started) and US officials saying the Chinese pinky promised to buy more American goods. I don't know why you'd be bothered by the fact that people aren't exactly ready to call this a win.

If China is going to buy more (and thus reduce the deficit), how is that being accomplished? What American companies will be given greater access to the Chinese market? How will that be done, with lower tariffs? How do we know it's going to work? If it does, by how much? All fair questions, with no answers.

The only measurable thing done so far is bailing out ZTE.

"Unfair" is silly, it's a dog-eat-dog world. The PRC's economic development model is based on overbuilding, subsidization, product dumping, intellectual property theft and lack of reciprocity. That works out really well for them, for how long is anyone's guess but a rather extensive case - a snippet of it - against their overextension has been laid out and being that Xi Jinping is no idiot, the consolidation of his power comes just as reforms are going to be accelerated and China's growth is about to be curbed because it simply has to be curbed.

Something like this? Zeihan's analysis is pretty bleak.

China’s regions have little in common and do not naturally cohere. Getting nationalist, security-minded northerners to cooperate with the business-savvy central Chinese as well as the occupied southerners is not an easy task. And that is before you take into account that the interior is a chunky, seething morass of dissatisfaction or that the primary hub of the south is Hong Kong, until recently part of the free world.

China needs a social binding agent. It needs to be a strong adhesive and applied in huge volumes. Without it China not only spins out into its constituent fragments, but large numbers of its citizens tend to gather into large groups and go on long walks together. None of this is a surprise to the Communist Party. After all, its founders took advantage of China’s many regional and socioeconomic cleavages in their rise to power in the first place. Rather than deny contemporary China’s origin story, they instead have used the opportunities presented by Bretton Woods to forge a solution.

It comes down to money. The Chinese government starkly limits what its citizens can do with their savings. Rather than allowing a wealth of investment options as exists in the capital-rich American or British system, private savings are instead funneled to state goals in a manner somewhat similar to the German system. Specifically, there are very few banks in China, with some three-quarters of all deposits held in four large state-owned institutions: the Agricultural Bank of China, the Bank of China, the Construction Bank of China, and the Industrial and Commercial Bank of China.

Those four banks have very clear mandates. They are to use the citizenry’s deposits to maximize bank lending to the economy as a whole. The goal of the policy is a simple one: maximum possible employment. While this is technically a lending model, it is more accurately thought of as a system of subsidization. Since Chinese citizens have so few investment options, the banks have access to their deposits at rates that are ridiculously low. Consequently, internal interest rates in China are artificially held well below global norms and are certainly far below what they would normally be in an economy at China’s level of development.

Loans are available for everything. Want to launch a new product? Take out a loan to finance the development, to pay the staff, to cover marketing expenses, to build a warehouse to store output that doesn’t sell as planned. Find yourself under the burden of too many loans? Take out another to cover the loan payments. The result is an ever-rising mountain of loans gone bad and ever less efficient firms, held together by nothing more than the system’s bottomless supply of cheap labor and cheap credit.

The distortions this system creates are ones very familiar to all of us living in the contemporary world:

• The Chinese financial system subsidizes prices for finished outputs. This drives down the price of Chinese finished goods and allows their exports to displace most global competition. Normally such price crashes would induce producers to reduce output, but in China profits and even sales are not the driving rationale for business. Employment is. And Bretton Woods, by its very design, gives the Chinese access to a bottomless global market.

• The Chinese financial system subsidizes the consumption for inputs. In effect, the Chinese system doesn’t care whether oil costs $8 a barrel or $180 a barrel. Everything is paid for with borrowed money you don’t have to pay back anyway, so demand builds upon itself. Chinese demand is the primary cause for the drastic price increases of the past fifteen years in everything from oil to copper to tin to concrete. It’s not just happening abroad, but at home as well. The Chinese property boom is ultimately caused by huge volumes of loans chasing a fixed supply of a product, in this case housing.

• When you don’t care about prices or output or debt or quality or safety or reputation, your economic growth is truly impressive. China has achieved over 9 percent economic growth annually now for thirty years, elevating it to its current status as the world’s second largest economy.

• China has expanded so much that in some sectors its demand has swallowed up all that remained of several industrial commodities in the world at large, forcing its state-owned firms to venture out and invest in projects that otherwise wouldn’t have happened—LNG in Australia, copper in Zambia, soy in Brazil. Chinese overseas investments are a who’s who of what is technically possible but economically ridiculous.

• Finally, as cheap and plentiful as Chinese capital is, it isn’t available for everyone. Because the Chinese system is ultimately managed by the Communist Party and because the leaders of localities hold so much power versus the center, there is extreme collusion between bank management and the local Communist Party leaderships. This collusion funnels capital to local state firms affiliated with friends and family of the local governing elite, often depriving smaller—and typically more efficient—firms of the loans that they need to expand. The result is a system skewed toward larger firms that, from an employment point of view, become too large to fail. Any meaningful reform of the Chinese system will not only break the links between national and local authorities, but gut the very firms that are achieving social placidity.

So how big is this problem? Pretty big. In 2007, total Chinese lending topped 3.6 trillion RMB ($600 billion). How much is that really? Well, that’s more than total lending into the U.S. economy when the U.S. subprime bubble was at its maximum inflation, and that in a year when the Chinese economy was less than one-third the size of the U.S. economy. As the 2007–9 global financial crisis bit, the Chinese government discovered that demand for goods was collapsing on a global scale, with Chinese goods being no exception. In other countries, the drop in demand for goods forced companies out of business along with the expected impact upon employment levels. Not in China. Following such a normal business cycle in China would have resulted in unemployment and social unrest (or worse).

Instead of the credit crunch that the rest of the world suffered, Chinese companies were encouraged to borrow ever larger volumes, allowing them to finance their way through the downturn. Overall lending not only increased, it tripled in just two years. Normally, such a credit explosion would generate massive inefficiencies, bubbles, and other distortions that would be damning to an economy—but such problems were already embedded in the Chinese system, so the change didn’t really register.

Nevertheless, the Chinese government isn’t actively looking for problems, and it dialed back the credit expansion… or at least it tried to. Since the banks operate just like the rest of the country—on throughput rather than profit—they needed to keep forcing money through the system. The result was a proliferation of new methods of lending, ranging from bogus insurance policies to corporate bonds. None of these programs work in China the way that they do elsewhere.

For example, in most countries, firms seeking to raise money issue corporate bonds that are purchased by interested investors. In China, the large banks issue bonds to each other and use the money raised to support their own phalanx of corporate customers. It is simply another means of force-feeding capital through the system to maximize short-term economic activity.

The various means of capital profusion had become so many and so lax that the government actually lost control of its own financial network. The government knew it had to somehow rein in credit, but it wanted to find a way of doing so that wouldn’t actually cause a recession, much less an economic crash and the unemployment that would go along with it. The government dared not risk changing the fundamental method of handing out credit, nor the large-scale absence of quality checks, nor the absence of due diligence. The “solution” was to issue a centrally imposed quota on bank lending every month. In most months, the quota was reached well before month’s end, causing the entire financial sector to seize up when the credit suddenly dried up.

This led to two outcomes. First, the central bank had to (repeatedly) pump in emergency credit the day after the quota was reached, or else face the sort of systemic financial crash that U.S. subprime caused in late 2007. Second, banks, firms, and retail investors, appalled by the idea that the government might actually deny them credit because of something as silly as a lending quota, built their own financial network to run in parallel to the existing system.

This shadow system includes everything from loan-sharking to financial products with even fewer quality controls than official bank lending (after all, they were formed expressly to bypass government authority). By the first quarter of 2013, China’s own central bank estimated that such shadow lending was exceeding all other forms of credit combined.

Just as the United States meted out access to its market to bribe its way into the world’s largest ever alliance, the Chinese used finance to bribe both its often conflicting regions and ever restive populations into quiescence and even cooperation. It is a brilliant strategy, but it has limits.

Japan followed a similar system in the 1950s through the 1980s, eventually reaching a level of overextension that brought the entire system to its knees. In the quarter century since the Japanese crash, the Japanese banking sector has retreated completely from the global system, and the Japanese economy as a whole has not grown. Such stagnation is China’s best-case-scenario future.

Unfortunately, it is also not a very likely one. The Japanese economy is largely domestically held and demand-driven, so while loose credit certainly helps, it is not the hedge against doomsday that it is in China. Additionally, Japan is over 98 percent ethnically Japanese, and over four-fifths of the population lives on the island of Honshu. China is considerably less unified regionally, ethnically, and spatially.

The United States even experimented with this system: the idea that growth and throughput were more important than profitability and a positive rate of return on capital. The result was a mess of graft, abuse, and unwise lending that created the failed company we knew as Enron, and the property bubble we now know as subprime. Both experiments created impressive growth for years. But such investments were geared to maximized throughput, not profits or efficiency. And so they collapsed. In essence, the entire Chinese system is subprime, in every economic sector.

 

[VivaRevolution]

Lol, so now, like with North Korea, words mean something huh?

China has the best words.

Wake me when our trade deficit with China is actually cut in half.

 

[VivaRevolution]

I also got an unspecified amount of poontang in highschool,too.

People don't say the actually number when it is known it will be extremely low or non-existent.

China is winning Trump’s trade war

It was easy to miss the U.S.-China trade statement that the White House released Saturday, right in the midst of royal wedding mania. But it's hard to hide that China looks as if it's winning President Trump's trade skirmish — so far.

The statement said that, after several days of talks, the Chinese agreed to “substantially” reduce the United States' $375 billion trade deficit with China and that the details would be worked out later. It was noticeably vague.

Notice China didn't agree to a specific amount. On Friday, Trump's top economic adviser, Larry Kudlow, was telling reporters that the Chinese had agreed to reduce the deficit by “at least” $200 billion.China quickly denied that, and, a day later, the official statement didn't have a concrete number, a seeming victory for the Chinese.

https://www.google.com/amp/s/www.wa...2018/05/20/china-is-winning-trumps-trade-war/

 

[waiguoren]

Are trumpites pro- free trade now?

Good.

It's a silly question. Trump's views on the issue have been the same for decades: trade barriers are bad, and if you raise barriers against our goods/services we will respond in kind or with other measures until you relent.

Im pretty sure that Trump pulled out of the TPP and vowed to renegotiate NAFTA because it was unfair.

Im also sure that he called China a currency manipulator.

Yes. How does that conflict in any way with what I wrote?

 

[InternetHero]

Trump gets credit for ending a trade war he started.

Question:

If one starts a war, and then wins that war, how much less of a victory is it?

Especially if the war "were" over unfair and uncivil practices?

-----------------------------------------

That question is more about the logic, because really, I could care less about Trump's political and economic blather on the subject.

He does not understand, and probably should have held out longer and targeted more state companies, not less at the behest of China.

---------------------------------------

That said, and said again... I really hope some of this parlays into the negotiations with North Korea.

We should be using economics to influence society and culture, and not surrendering both for unfettered wealth, and often in unfair ways.

 

[Rod1]

Yes. How does that conflict in any way with what I wrote?

NAFTA is about zero barriers between all these 3 countries, so was the TPP.

 

[WTF2008]

Trump gets credit for ending a trade war he started.

What trade war?
The trade deficit with China is ridiculous.
Please tell me you actually see that.

 

[MiniCraque]

Question:

If one starts a war, and then wins that war, how much less of a victory is it?

Especially if the war "were" over unfair and uncivil practices?

That depends on what you "win" out of it. The reason you don't see most governments start mudslinging when they feel they are at a disadvantage is because it's politically taxing (specially in terms of diplomacy) and creates market instability. Right now all we have is the end of the conflict (which is no win in and off itself) and US officials saying "we won fellas... trust me on this". Without anything concrete to offset the costs, calling this a win is just cheerleading.

What trade war?
The trade deficit with China is ridiculous.
Please tell me you actually see that.

Define ridiculous. It's certainly large, but what makes it ridiculous? China's "unfair" practices today are mostly in the realm of intellectual property (which was not addressed at all here), and that doesn't have a significant effect on the balance of trade.

There are a few reasons for the deficit:

1. China can produce consumer goods very cheaply and the US internal consumer market is a giant fucking behemoth (I think most people have no clue on how big it actually is). It needs all the imports it can get and China is the best at providing that.

2. They don't need America's biggest exports (they make their cars domestically and get their oil from the Saudis and Russia), at least not to the extent that would offset what America imports.

3. (most importantly) A large part of the deficit is due to the import of basic goods and raw materials whose production was offshored by American companies. That counts as a China import (mostly because of the jobs created), but you have too look at it kinda differenly.

To be clear, I do think the deficit could be made smaller. China is very protective of it's car industry and for geopolitical reasons prefer to get their oil from other sources (even though it still buys a lof of US oil). You can always make some progress in certain markets. But even then the deficit will still be huge and anyone who thinks it can be significantly changed is fooling themselves. It's not really a case of fair/unfair as much as it is a case of tough luck, pal. Specially if this boneheaded fixation with low-tech products being made domestically - "buy (shitty and expensive) American" - or even *gasp* exported keeps going. Some US industries are simply going the way of the dodo and unwillingness to adapt like other countries did will not change it.