For all the craziness that trumps spews, he's actually pretty level headed about this. Why should USA settle for a trade deficit with China? They manipulate the value of their currency, walk all over our IP laws, and systematically destroy the environment. Let the trade war begin!
WTO considers China a "developing" country, thus relieving it from many obligations other developed countries have to fulfill. Simply accepting what WTO says is clearly not a sound strategy for the future.
Accusing China of destroying the environment feels like throwing stones in a glass house when Trump has abandoned the paris agreement and denies human involvement in global warming.
To make it more clear, I am not factoring the number of people in said countries. I thought that was apparent from my comment, since that was the distinguishing factor in the first comment.
Do you experience any of those things you said? I don't think trade war is hurtful unilaterally anyway, and innocent people also suffer. Care to explain why?
You’re right that everyone suffers. The question in a “war” is who can handle the most losses/suffering before routing. The evidence seems to suggest that the Chinese market is already tanking, with the US barely having taken a first few shots. I see minimal impact, if any, on US markets (there are of course localized pockets of suffering, but we’re talking about the whole picture).
So this is more about taking a long term view. When the status quo (pre-Trump-tariffs) continues, the US continues to rack up a deficit, loses a lot of manufacturing expertise, develops a significant dependency on China, while China continues to innovate and raise its standard of living. Of course the US remains engaged in more higher level work, but rampant IP theft renders a large part of it moot, when it can simply be stolen. So a few decades from now, the US is only slightly above its current position while China has advanced considerably. Even better, with China’s large population, and emphasis on STEM, they are better positioned for the next many decades, compared to the US. Now combine that with China’s (or any large power’s) willingness to throw its weight around, and within a century it is not too hard to visualize the US as a secondary power to China.
China (or anyone else for that matter) will continue to steal IP as long as they can get away with it. It’d be stupid not to. The point of this is to really force them to come to the table and come to terms that are amenable to the US. It is trivial to issue a “statement” condemning IP theft, but entirely another matter to take actual steps to prevent it. The ultimate goal of US (or any country’s) foreign policy is to maintain long term geopolitical advantage. Continuation of the status quo did not seem like the most realistic path to doing that, so they’re fighting it.
From a trade perspective, a rising deficit means the US pays for Chinese goods, while barely getting paid for its products. The US would really like to sell more than it buys. This cannot happen when the Chinese have tariffs on just about everything, in addition to making it nigh impossible for foreign firms to operate on their soil. This state of affairs works strongly to their advantage, so they have no reason to do it differently. The US hopes that these (and future) tariffs will convince the Chinese to be more open to US products and companies in mainland China.
> From a trade perspective, a rising deficit means the US pays for Chinese goods, while barely getting paid for its products.
From what I understood this is not accurate. An iPhone built from China is recorded for the full value when shipped to US/Europe/etc. This makes it appear that there's a trade deficit while it's actually the opposite (controlled by Apple).
Europe works in a similar way when I looked at it (ages ago). There's various data collected (Eurostat). But for trade it's on value and it's not always clear who controls it, nor where it is headed.
Thanks for raising that point. I skipped a lot of detail and nuance since I really didn’t want to write an essay.
It is true that trade deficits are calculated on full value, not the “value-added”. Even with this distinction the argument still holds. E.g. in 2014, the "value added" trade deficit was USD 200 Billion while the official “full” value was USD 315 Billion. So it’s not like a tiny fraction, but rather a significant portion. This is one of the reasons people still use the old system - it is inaccurate but not at all grossly misleading (and inveting a new “global” system is really painful). This difference of USD 200 Billion is still too large for the US to willingly accept.
I don't think it's about trade but the wholesale theft of IP, R&D, etc.
According to Marc Goodman, in his book "Future Crimes" he details how China is responsible for the largest transfer of wealth in Human History all through theft of I&P.
I know my companies own experience led to the closing of a factory after it was discovered that the Chinese Military had infiltrated the Factory floor and was actively trying to harvest IP and Financial Information.
I just finished speaking to someone who is in the plastic injection molding industry and they are carefully managing the technology they send to China and don't allow dies to be manufactured there because of the extent of IP Theft.
This is about survival and trade will be used to fight the war.
> don't allow dies to be manufactured there because of the extent of IP Theft
What do you mean practically with intellectual property? Trademark is out, copyright as well, maybe trade secrets or patents? In case of a trade secret, don't share it with someone whom is able to compete with you. Regarding patents, IMO they've overused plus something artificially created. If China doesn't abide by patents, then maybe the short term financial benefit should've been investigated a little bit more.
Japan improved greatly (many years ago) using somewhat the same method (copy + improve) and seems they're respected for that.
Well it is in that the trade deficit lowers the value of our currency. The problem is that China has been manipulating the currency value to be lower than it actually is. Which means they can sell a product for less than American companies with the same costs.
If this trade war was brought to you by BHO, we would have columns from the esteemed press that finally some one with courage.
Since it is DJT, this is a horrible idea. Some times, its impossible to separate the message from messenger, even for the bright minds of HN.
US has got China by the balls 130 - 505 billion difference in trade, makes it so much important for the over-leveraged Chinese companies to have access to a market that is about quarter of world GDP.
Whether you like DJT or not, US has massive leverage against China. We have already entered into the era of US being a transactional rather than systemic, which is good for some not so good for some.
BHO would never have done it. The USA makes too much money on trade with China given the way the deficit is calculated.
For example, an iPhone made in China is only assembled there. All the IP is American, an American company realizes almost all the profit. This trade war is going to cripple us because we make so much money on even the deficit, even with the IP theft.
BHO wasn’t stupid, DJT sees an opportunity in simplistic messaging that gets his based riled up. What is weird is that we are at the peak of an economic cycle, it’s not like unemployment numbers could go any lower, and the jobs he is after with this trade war are all low value.
Not only are your tone and diction off-key, but your framing of this as a two-party domestic issue belies your myopic view of the world. My experience is that Americans grossly overestimate their advantage versus Asia, and are generally blind to the cues that several of the top economies in the world are laying the groundwork to free themselves from America’s increasingly confusing and belligerent influence. When the opportunity presents itself, the myopic West will have to admit that they missed clear signals like Japan’s decision to pursue TPP without the USA, and the warming of Sino-Japanese relations, including overtures by China to flip TPP to an “Asia First” bloc, and China’s inevitable domination of innovation and so-called intellectual property (a fundamentally flawed premise) in the coming decades. Not to mention the roles of Russia, India, Indonesia, Vietnam, etc. in the New New World Order. China is openly talking about colonizing Africa and Eastern Europe. It’s all there in the news, if you choose to pay attention. The world is lining up for America’s Julius Ceasar moment.
I will give you list of sources I pay attention to, not because of your hollow diatribe but since you can really use some education.
If you are willing to "pay" for subscriptions
1. Stratfor
2. Geopolitical Futures
If you are not willing to pay,
1. realclearworld (do not read posts there from traditional news papers and foriegnpolicy.com which is consistently wrong)
2. Caspian Report (on Youtube)
There you go. For my off-key tone and diction, I know a thing or two about the world, especially since I carried an Indian passport before I swapped it for American.
You are certainly uniquely qualified as a jingoist! Since only time will prove me right, I’ll wait. And meanwhile, I’ll continue to put my money where my mouth is. Since we’re all ultimately on the same team, I hope you and your collaborators find a way to allow everyone to win.
The US manages the value of its currency indirectly but the market sets the price. China controls its currency value by fiat (well, beyond a small currency market in HK), but must still do the same indirect management to avoid carry trade issues.
What makes the RMB inappropriate for international trade is that it isn’t fully convertible like the US dollar is.
> The US manages the value of its currency indirectly but the market sets the price.
The market sets the price based on (amongst other things) interest rates, and the US sets the interest rates however it's more convenient for its trade.
Are you saying that one is acceptable and the other one isn't? To me it seems that the difference is one of degree. I'm highly suspicious of anyone who says that this difference is a good justification for tariffs.
The Fed sets interest rates, not the US government. It’s not like DJT or Congress can lower or raise interest rates themselves, they can’t even apply pressure to the Fed beyond making appointments.
I’m not making any value judgements. As a once holder of RMB, I find inconvertibility to be a huge PITA, definitely unfair for those that have to hold it. As for trade issues, I don’t think the RMB is artificially valued in a way that seriously benefits Chinese trade, quite the contrary actually (it is artificially high, not low, ATM).
> The Fed sets interest rates, not the US government.
Who said anything about US gov? If I say "the US sets USD interest rates", responding that "it's not the US gov, it's the Fed" sounds likes you're using an argument that's often used in a different conversation.
And you use it as if it's some singular person, and of course it isn't, just like I use "the US" as if it's some singular person, which it also isn't. So we're both doing the same thing, and you're pointing that thing to me whilst doing the same thing. You used "the Chinese government", I used "the US", we both used it as if it's some singular person, and of course it isn't. Not sure how many more ways I can say this until you get it.
Yes, that is exactly a reasonable assessment of how the Chinese government works. The assessment you get from the Chinese media, which I look at a lot having been a long term foreigner in china, is much much worse than that, of course.
I wonder whether it's the right timing though, how much IP does the US have left? Serious question, does anyone have a good source on IP per industry and whether the lead has changed?
43 comments
[ 2.0 ms ] story [ 108 ms ] threadI agree that China has a poor history of stealing IP, but that’s what the WTO is for. Trade disputes make us all poorer now.
https://www.cnbc.com/2018/04/25/what-trump-gets-right-about-...
So,
> China produces twice the amount of CO2 as the U.S. does
1,415,045,928 / 2 = 707,522,964
And
707,522,964 > 326,766,748
People in the US, please save some energy will you?
China produces 10,641,789 US Produces 5,172,336
To make it more clear, I am not factoring the number of people in said countries. I thought that was apparent from my comment, since that was the distinguishing factor in the first comment.
So this is more about taking a long term view. When the status quo (pre-Trump-tariffs) continues, the US continues to rack up a deficit, loses a lot of manufacturing expertise, develops a significant dependency on China, while China continues to innovate and raise its standard of living. Of course the US remains engaged in more higher level work, but rampant IP theft renders a large part of it moot, when it can simply be stolen. So a few decades from now, the US is only slightly above its current position while China has advanced considerably. Even better, with China’s large population, and emphasis on STEM, they are better positioned for the next many decades, compared to the US. Now combine that with China’s (or any large power’s) willingness to throw its weight around, and within a century it is not too hard to visualize the US as a secondary power to China.
China (or anyone else for that matter) will continue to steal IP as long as they can get away with it. It’d be stupid not to. The point of this is to really force them to come to the table and come to terms that are amenable to the US. It is trivial to issue a “statement” condemning IP theft, but entirely another matter to take actual steps to prevent it. The ultimate goal of US (or any country’s) foreign policy is to maintain long term geopolitical advantage. Continuation of the status quo did not seem like the most realistic path to doing that, so they’re fighting it.
From a trade perspective, a rising deficit means the US pays for Chinese goods, while barely getting paid for its products. The US would really like to sell more than it buys. This cannot happen when the Chinese have tariffs on just about everything, in addition to making it nigh impossible for foreign firms to operate on their soil. This state of affairs works strongly to their advantage, so they have no reason to do it differently. The US hopes that these (and future) tariffs will convince the Chinese to be more open to US products and companies in mainland China.
From what I understood this is not accurate. An iPhone built from China is recorded for the full value when shipped to US/Europe/etc. This makes it appear that there's a trade deficit while it's actually the opposite (controlled by Apple).
Europe works in a similar way when I looked at it (ages ago). There's various data collected (Eurostat). But for trade it's on value and it's not always clear who controls it, nor where it is headed.
It is true that trade deficits are calculated on full value, not the “value-added”. Even with this distinction the argument still holds. E.g. in 2014, the "value added" trade deficit was USD 200 Billion while the official “full” value was USD 315 Billion. So it’s not like a tiny fraction, but rather a significant portion. This is one of the reasons people still use the old system - it is inaccurate but not at all grossly misleading (and inveting a new “global” system is really painful). This difference of USD 200 Billion is still too large for the US to willingly accept.
Here’s a link in case you wanna check a couple of figures. https://www.bloomberg.com/view/articles/2018-03-18/big-u-s-c...
Every attempt at import substitution historically has led to stagnant growth.
According to Marc Goodman, in his book "Future Crimes" he details how China is responsible for the largest transfer of wealth in Human History all through theft of I&P.
I know my companies own experience led to the closing of a factory after it was discovered that the Chinese Military had infiltrated the Factory floor and was actively trying to harvest IP and Financial Information.
I just finished speaking to someone who is in the plastic injection molding industry and they are carefully managing the technology they send to China and don't allow dies to be manufactured there because of the extent of IP Theft.
This is about survival and trade will be used to fight the war.
What do you mean practically with intellectual property? Trademark is out, copyright as well, maybe trade secrets or patents? In case of a trade secret, don't share it with someone whom is able to compete with you. Regarding patents, IMO they've overused plus something artificially created. If China doesn't abide by patents, then maybe the short term financial benefit should've been investigated a little bit more.
Japan improved greatly (many years ago) using somewhat the same method (copy + improve) and seems they're respected for that.
Since it is DJT, this is a horrible idea. Some times, its impossible to separate the message from messenger, even for the bright minds of HN.
US has got China by the balls 130 - 505 billion difference in trade, makes it so much important for the over-leveraged Chinese companies to have access to a market that is about quarter of world GDP.
Whether you like DJT or not, US has massive leverage against China. We have already entered into the era of US being a transactional rather than systemic, which is good for some not so good for some.
For example, an iPhone made in China is only assembled there. All the IP is American, an American company realizes almost all the profit. This trade war is going to cripple us because we make so much money on even the deficit, even with the IP theft.
BHO wasn’t stupid, DJT sees an opportunity in simplistic messaging that gets his based riled up. What is weird is that we are at the peak of an economic cycle, it’s not like unemployment numbers could go any lower, and the jobs he is after with this trade war are all low value.
If you are willing to "pay" for subscriptions 1. Stratfor 2. Geopolitical Futures
If you are not willing to pay, 1. realclearworld (do not read posts there from traditional news papers and foriegnpolicy.com which is consistently wrong) 2. Caspian Report (on Youtube)
There you go. For my off-key tone and diction, I know a thing or two about the world, especially since I carried an Indian passport before I swapped it for American.
That you're repeating an attack that applies exactly to you means you're either ignorant or dishonest.
What makes the RMB inappropriate for international trade is that it isn’t fully convertible like the US dollar is.
The market sets the price based on (amongst other things) interest rates, and the US sets the interest rates however it's more convenient for its trade.
Are you saying that one is acceptable and the other one isn't? To me it seems that the difference is one of degree. I'm highly suspicious of anyone who says that this difference is a good justification for tariffs.
I’m not making any value judgements. As a once holder of RMB, I find inconvertibility to be a huge PITA, definitely unfair for those that have to hold it. As for trade issues, I don’t think the RMB is artificially valued in a way that seriously benefits Chinese trade, quite the contrary actually (it is artificially high, not low, ATM).
Who said anything about US gov? If I say "the US sets USD interest rates", responding that "it's not the US gov, it's the Fed" sounds likes you're using an argument that's often used in a different conversation.
In China, the government control everything, there are no independent bodies. That is a huge difference between the way things work in each country.
Yes, the Chinese government is vast, but the power structure is very hierarchical with no checks.
The world needs to build a global economy less dependent in the U.S. This confrontation will only engage China (and the EU) into doing it.
Besides, this will also help Brazil sell more orange juice, soybeans and iron to China and the EU.