Chinese think tank warns US it will emerge as loser in trade war

[Francesca9]

Source: Telegraph (UK)

A State Council think-tank in China has warned Washington that the US will come off worst in a trade war if it imposes sanctions against Beijing over the two nations' currency spat.

Read more: http://www.telegraph.co.uk/finance/currency/8002719/Chinese-think-tank-warns-US-it-will-emerge-as-loser-in-trade-war.html

---

This is not on the US news anywhere that I can find

[smiley_glad_hands]

1. As soon as they start to dump our treasuries their value drops.

Then the fed can scoop them up at a discount. Way to go china, you need us more than we need you. Bring on the trade war already.

[Downwinder]

17. Sounds like a teaparty. n/t

[smiley_glad_hands]

23. What exactly are you trying to infer? Nt

[pampango]

18. And the value of the dollar drops which makes our exports cheaper. Heck, Japan wants China to stop

buying its debt, so the value of the yen will drop making things better for their exporting industries. Buying US, Japanese and other competitors' debt helps keep China's currency low and others' high.

[mbperrin]

31. Why not stop turning the treasuries over and use the proceeds to buy

US assets, instead? Companies, businesses, resources, hard items.

[HEyHEY]

2. China is full of shit, and they know it

As soon as sanctions come and jobs are lost China will freak out. I live here now, and what you never really here outside of China is that this place could collapse at any moment. It's a fucking ponzi scheme. It's like Dubai.

And they know that if it does collapse civil war is possible as well. They are merely acting tough to attempt to save face. It's a joke.

Their own country doesn't spend money, so their domestic demand is crap. Those who do have money buy foreign brands for better quality. Wages are so low, and kept that way to attract manufacturing jobs, that so many people can't afford shit anyway.

Meanwhile the government spends money on things like BUILDING CITIES FROM NOTHING thinking that these places will just attract investment. All these glamour projects come at the expense of healthcare and education. (Healthcare is not socialized here, BTW)

China will go down hard one day, I'm telling you.

[madmax]

3. Hope you're right HEyHEY nt

[HEyHEY]

4. I am

This place is a big scam. As soon as they hit a bad economic point, they will implode.

[Marengo]

24. He is, I' ve seen it firsthand also.

All the talk of China's ecomomic strength and power is fantasy. It's built on a foundation of sand.

[madmax]

26. Then there is hope. Not being

remotely savy regarding economics I hear a lot of fear amongst those like myself who aren't knowledgeable and it scares the crap out of us. The big bad bogey man is China. So you guys keep posting and sharing your insight and knowledge. I for one appreciate your input.

[Marengo]

27. The exploitation of labor, of Chinese by Chinese is brutal

And reliant on desperate, poorly educated workers mostly from the countryside. The rural poverty in China is shocking, and the sheer numbers, in the hundreds of millions, staggering. There is little in the way of a social safety net. Some of my unemployed or elderly family members receive a small stipend from the state, but inflation is rendering it almost worthless. Central government spends enormous sums on developing key cities. However, most of those who built the high-rise condo apartment buildings can't even hope to ever afford to purchase one. In fact, they may consider themselves to lucky to receive pay at all. From what I am told, many of these construction workers are peasants, present in the city illegally, as apparently permission is required to work and/or reside in most cities unless you were born there. Not like in the U.S. where you can freely move to another place and find a job. The Bosses have complete control over them, and sometimes disappear after the project is complete without remitting full wages due. In rare cases, without paying at all, having issued IOUs to the workers for the duration of the project. Also, in many (again, so I have been informed)workers live on the building site and receive food from a commissary, the costs of which are deducted from their wage. They may end up with very little in the end and they have no recourse being technically illegal.

Just a sampling of what I learned in my two years of residence in the PRC.

[madmax]

30. That's heartbreaking

my brother in law has been buying stock in Chinese companies for a few years now and is making money. He knows what's going on but, he doesn't care as long as he's making money. I'm lucky that his brother doesn't think that way. Our savings and IRA's are stuck on naught but, I sleep at night and consider myself very lucky to have a roof over our heads, a job and food on the table.

[TheMadMonk]

7. And exactly why? There are other markets out there. AND it's a given...

...that Walmart and probably most of the rest of the big box retailers will simply parallel import through a trade partner (Mexico/Mauritias/etc.) and continue on with business as usual.

And at the same time lobby for and get a tax break to "invest" in sourcing locally. Which when all is said and dusted will be used to cover the extra cost of the double handling.


In the meantime China will continue the practice of inviting in foreign business, infesting it with spies and then setting up an exact duplicate, often with a counterfeit copys of the original businness's products.

You are right about them not spending much money internally. They don't need to. The rest of the world is keeping the Chinese economy ticking over nicely. Meanwhile Chinese money is being used to subside produce sales to the world. Subsidies which drive our shelf prices below local production costs. A little latter another wave of Chinese money follows buying up the bankrupt businesses. In fact China is doing this sort of thing in every primary industry anywhere it can around the world including the USA.

All the ruthlessness of capitalism combined with the legendary generational thinking of the Orient.

[HEyHEY]

11. What people fail to see is the massive flaws in this system

When you're economy is so reliant on "the future" and the consumption of OTHER countries it is always shaky. If the USA throws up some trade embargoes and other nations follow suit, this China is left holding its dick in the air. Your comment talked alot about what China does now and how they are successful now, but it doesn't address what they will do when many of their products aren't allowed to be sold in the USA.

As well there are many other countries already nipping at China's heals to be selling en masse to the USA. If a trade war happens, wal-mart will go to them, and with lower wages already in those nations, they ain't coming back.

China doesn't invent, it only copies. That's it's problem. Innovation is what gives your economy true strength. The Chinese don't have any, they are trying but there are fundamental ways of thinking in this country. One of them is that "the tallest trees catch the most wind" IE: If you stand out, you're gonna get shit for it.

The education system has always been a "shut up and learn" policy where free thought is discouraged as well. That's why there's no innovation here.

Also, the only reason China HAS done so well is because of politicians steering government contracts and foriegn investors to certain people and places. As well, as threatening foreign companies. For instance, Carlsberg beer wanted to close a brewery in Tibet cause it was losing money. The government made it clear that if they did that, it'd be harder to import Carlsberg to China.

Once a trade war comes, they won't be able to afford to conduct themselves as such thugs. And they haven't the domestic backbone to sustain themselves as is now. They are merely making our trinkets.

Once that dries up, the fear of starvation comes back... with that the labour riots, anti-government behaviour. Xinjiang and TIber separatists see some weakness and start up more hardcore, the provincial governments become more ruthless with themselves, the economy suffers more. The US dollar's decline after the Chinese dump their money makes manufacturing in the USA viable again and eventually chaos ensues.

[Hosnon]

53. I often see the claim made that growth of 9%+ is required to keep the Chinese citizens from

revolting against the government.

When that economy slows down, all hell might break loose.

Your thoughts?

[Vehl]

14. They also face a huge "ageing population" problem

In a decade or two, the situation would be so dire that every working person would be supporting at least 2 elderly people (via taxes,etc etc) apart from their own expenses...


The One Child policy was stupidity at its best....It should have been 2 children per couple...so the population growth would have ceased without resulting in such a lopsided age-group spread.

[HEyHEY]

15. Yeah, that plus the lack of social safety nets, could be nasty.

[Marengo]

28. Yes, so much so in fact...

That the Ministry of Public Security is, or will be soon, offering a temporary residency visa (2 years, which IIRC is renewable)to former Chinese citizens who wish to care for their parents over the age of 60 residing in China, providing the parents don't have any other children in China. Central government wants to tap into the resources held by Chinese expatriates to help with the cost of caring for the elderly.

[quakerboy]

5. Too late

There not a choice about a trade war. Its happening whether anyone in particular wants it or not. The only question remaining is whether we will fight or passively accept defeat.

[HEyHEY]

6. How are you going to be defeated?

There has been no real trade war yet. China depends on us to buy their shit cause their population doesn't.

[Marengo]

25. Especially Considering They Export The Good Quality Goods

As I'm sure you've noticed, what's made for the domestic market is often dreadful.

Several of my favorites:
1. A "noodle" product made by boiling the leather scraps obtained from a shoe factory
2. Garbage used as filler in upholstered furniture
3. Road-side weeds, dried and shredded, replacing tobacco in cigarettes

[HEyHEY]

34. Oh yeah, the domestic stuff is absolute garbage

You live here too?

[Marengo]

36. I did for two years

And despite the negatives, I loved it and hope to return. There's just something about the place, something I can't articulate, that draws me back. I visit for a couple of weeks about every other year, and it's tough to leave.

Where in China are you?

[HEyHEY]

37. Beijing

But I'd rather be in Qingdao or some other NICE place. Most of the people who have been here for years and years end up in Kunming and places that are off the beaten path and they say they prefer it to Shanghai and such.

[Vehl]

38. Cool

One of my best buddies is from Harbin. I hear that its one of the north-easternmost cities in China and has really icy winters.She also likes spicier food than my other Chinese friends, apparently different regions have different culinary tastes.
I have some Chinese relatives (One of my grand-uncle's is married to a Chinese from HongKong but none of them live in China.)
Ive always planned to visit East Asia one day (China, Japan)...maybe i can in a few years (keeping fingers crossed). :)


Apart from the Major attractions I hope to visit the Shaolin temple, both as a Fan of Kung Fu, and also because Bodhidharma came to China from my region of India. :). India and China always had close cultural ties over Millenia and i hope maybe the recent bad blood between them would not take away the close bond both our people had over centuries.


I'm really saddened by the lack of respect the government gives to preserving ancient Chinese heritage sites...i hear quite a few were lost during construction/use of the Three Gorges dam :(

[HEyHEY]

39. My GF is from near Shaolin temple

As for Asia, China is interesting, but I prefer Korea and Vietnam. Most of China's historical sites were destroyed in the 60s during the cultural revolution. If you want to see the old Chinese cultural, i'm told Taiwan is your best bet.

[Vehl]

41. Thanks for the tips

I never realized that Taiwan would have an older-China feel, but when I think about it, I get it. The communists don't hold sway over Taiwan. And yeah...its a crying shame indeed..that the so called "cultural revolution" destroyed most of China's culture.

How is the Shaolin temple area? i hope its not a very touristy place?

[Marengo]

44. The Guomindang did some pretty heinous things in Taiwan

Google the "228 Incident", and that's just one of several such not much publicized. However, it is true that Taiwan was spared the destructive insanity of the Cultural Revolution.

[HEyHEY]

49. I find everything in China that COUL be touristy IS

They pave hiking paths here, man, it sucks!

[Marengo]

40. I lived in Wuhan, and survived two of it's infamous summers

Haven't visited Qingdao yet, but it's on the to-see list for next time. I enjoyed Beijing, but Shanghai was just too much to bear. Have you been to Guangzhou? I tried to like it, but the entire city has a damp, moldy feel to it. My wife's cousin is a PLA soldier stationed in Yunnan and loves it. That region has quite a bit of drug smuggling issues though, and I found a fair number of inland Chinese have a negative opinion of it for that reason.

We took a trip to Hunan to visit Mao's birthplace. The rural scenery was quite a welcome respite. I most enjoy the overnight train journeys. A bottom bunk on a hard sleeper and I'm one happy guy.

[HEyHEY]

42. I've only been to Shenzhen, Shijiazhuang, Qingdao and Beijing

I will hopefully be heading to Urumqi this year as my GF is going there for work for four months. I had a stopover in Wuhan in may on a flight, only saw the airport.

Qingdao is really cool, strange place, it's true it looks like europe!

[Marengo]

46. Color me envious! I would love to visit Urumqi

And all of Xinjiang. Hopefully, I'll see Kashi before it's "modernized" beyond recognition.

[HEyHEY]

48. Yeah

She works for Lonely Planet and is doing the book on it! I am currently writing a book on Qingdao, and, sadly didn't get the Kashgar one cause another person had already been... DOH!

[Vehl]

43. Welcome to the forum

I just noticed that you are kinda new to DU
Welcome :hi:

[Marengo]

45. Thanks! N/T

[Hawkowl]

8. Bring it on motherfuckers

Slap a 50% tariff on all Chinese goods. They make everything shittier anyways. The multinationals will simply move their plants eleswhere, or more likely, the Chinese will fold like a cheap suit.

[Psephos]

9. You forgot about the other side of that: we also sell huge amounts to them.

Of US Treasury debt, that is.

We stop buying their stuff, they stop buying ours.

Given that in the current budget, 40 cents of every dollar spent is borrowed, the government would be on its knees in about a week.

[Francesca9]

10. There are no winners

The debt China owns would also drop in value.

[Hawkowl]

12. Oh I didn't forget

It would be similar to the Wall Street banks. They hold trillions of shit and can't get rid of it. The Chinese have hundreds of billions of our debt and would be unable to dump it all without incurring massive losses. Also, unlike docile, sheeplike, placid Americans, the Chinese people go apeshit crazy and riot, strike and generally shut down the whole country.

Also, China has almost stopped buying our new debt having reached their comfort limit. We are rapidly running out of buyers anyway. We need to get our economy making actual products instead of debt. By confronting the Chinese and insisting on at least a level playing field, the US would go a long way towards fixing it's STRUCTURAL economic problem. The fiscal problem will follow.

In short, China has much, much more to lose and consequently would be willing to negotiate.

[Vehl]

13. A trade war by China would result in Economic Hara Kiri

The Chinese Economy is conjoined to the American one...does China really think it can survive if it engages in a trade war with America?

talk about scoring an own goal.



PS: I think its high time for America/American companies to look for other potential manufacturing bases.There are a lot of south East Asian, South Asian nations that can provide a viable alternative.Furthermore some of the manufacturing done in China could be done on US soil if only the people are willing to pay a bit more dough for far better quality products.



Its silly to put all the eggs in one basket

[comtec]

16. Wrong! We can move ALL manufacturing back to the US

We should impost a 100% tariff on anything coming from asia (Japan, our good friend, the exception).
Not hard to enforce since they all come into our western ports (you know... LA and Oakland)

That's the thing about the US.... we don't NEED anyone else, as our country has all the supplies we need!
Our population is small enough, our land area large enough, We can be self-sustaining.... god forbid Americans learn to do without a little too!

We can close our borders and survive... can China?

[pampango]

20. And isolationism as the answer pops up again. FDR wouldn't be happy.

http://en.wikipedia.org/wiki/Isolationism

Isolationism is a foreign policy which combines a non-interventionist military policy and a political policy of economic nationalism (protectionism). In other words, it asserts both of the following:

1. Non-interventionism – Political rulers should avoid entangling alliances with other nations and avoid all wars not related to direct territorial self-defense.
2. Protectionism – There should be legal barriers to control trade and cultural exchange with people in other states.

A 100% tariff on anything Asian (3.78 billion people), though you generously exempted Japan <127 million> which many would not have done 3 or 4 decades ago, would apply to more than 1/2 of the world's population (6.8 billion). Does this mean that you wouldn't put up 100% tariffs against African and Central/South American products? Those folks are as poor as Asians, you know. Perhaps the answer is that we should trade with "rich" countries but not with "poor" ones. But where do you draw the line?

Of course the US could survive on our own, but why should we? I guess Ohio could survive on it own (maybe my town and/or county could build walls and not let anything in or out and "survive"), but my guess is that most Ohioans will not choose that course.

"In the wake of the First World War, the isolationist tendencies of US foreign policy were in full force. Isolationism took a new turn after the Crash of 1929. With the economic hysteria, the US began to focus solely on fixing its economy within its borders and ignored the outside world. The war in Europe split the American people into two distinct groups: isolationists and interventionists.

However, there were still many who held on to the age-old tenets of isolationism. Although a minority, they were well organized, and had a powerful presence in Congress. Ultimately, it came down to the moral and physical separation of the United States from the rest of the world. “If we have strong defenses and understand and believe in what we are defending, we need fear nobody in this world,” Robert Hutschins, President of the University of Chicago, wrote in a 1940 essay.

"He (FDR) used these two programs (‘Cash and Carry’ and the Lend-Lease Act) to side economically with the British and the French in their fight against the Nazis. In doing so, he made the American economy dependent upon an allied victory. In terms of policy, the United States was on a path to war but the American people still wished to avoid it at all costs, a wish that would come untrue."

http://en.wikipedia.org/wiki/United_States_non-interventionism

FDR and Truman were the ones who promoted engagement with the world (UN, NATO, GATT, etc.) after WWII through trade and diplomatic agreements. I don't think they would view the Democratic imperative as calling for us to withdraw from the world.

[Doremus]

32. "a wish that would come untrue." Ugh.

Anonymous Wikipedia writer needs crash course in sentence structure.

Carry on...

[Prometheus Bound]

21. I guess both you and China are just too heavily dependent on imported oil and gas.

You both need big exports to pay the energy import bill.

[Vehl]

22. How about Oil?

As Prometheus and pampango pointed out, isolationism wont work anymore. It would have a century or so ago...but not in today's world

[comtec]

50. the gulf, hemp, corn, sunflower, bio-diesel and moonshine

there's your fuel sources.
most of those are carbon neutral.
there's also oil in shale in the strategic oil reserve.

we stop wasting and burning "excess" natural gas, and start conserving it.

We save the oil from the ground to make plastics, and high-octane jet and rocket fuel

we stop selling to japan our fuel from Alaska for PENNIES on the dollar (I love japan but really...)

We start converting vehicles in good-weather states to more efficient engines, and start mass-recycling all that steel in junk yards.

We increase 100 fold industrial hemp growth, and harvest the fibers and seeds for material, ropes, cereals, and fuel oils.

I never said it would be easy, only that it's possible.
I suppose it's not all that realistic in this world.
But I'm an engineer, give me a problem and I'll give you a solution. YOU figure out the politics of how to make it work.

[pampango]

51. "we stop selling to japan our fuel from Alaska for PENNIES on the dollar"-not according to Snopes

http://www.snopes.com/politics/gasoline/alaskaoil.asp

"Current Alaska production is about 720,000 barrels a day, none of which (as far as we know) is exported outside the United States."

From 1996 to 2000 about 7% of Alaskan oil production was exported (primarily to Japan, China and South Korea). All exports ended in May 2000.

Do you know where the information about current Alaskan fuel exports to Japan came from? It should be quite interesting to prove Snopes wrong.

[Scuba]

19. GW Bush sold our future to the Chinese so he could finance his illegal wars....

...and make his friends richer and richer.

[Pavulon]

29. China's social meltdown would be bad for the party..

disrupting US trade would cause major issues in their system. Their one party system that uses money to appease people into not acting on democratic reform.

[Vehl]

33. Its all about "saving face" for the PRC

Rem the little girl who "sang" for the Olympics? It was a super dick move by China...to hide the actual singer cos she was not "good looking" enough.

Olympic Singer Fails China Cuteness Test

(AP) A 7-year-old Chinese girl was not good-looking enough for the Olympics opening ceremony, so another little girl with a pixie smile lip-synched "Ode to the Motherland," a ceremony official said - the latest example of the lengths Beijing took for a perfect start to the Summer Games.

A member of China's Politburo asked for the last-minute change to match one girl's face with another's voice, the ceremony's chief music director, Chen Qigang, said in an interview with Beijing Radio.

"The audience will understand that it's in the national interest," Chen said in a video of the interview posted online Sunday night.

The news follows reports that some footage of the fireworks exploding across China's capital during the ceremony was digitally inserted into television coverage, apparently over concerns that not all of the 29 blasts could be captured on camera.

China has been eager to present a flawless Olympics image to the world, shooing migrant workers and so-called petitioners who come to the central government with grievances from the city and shutting down any sign of protest.

The country's quest for perfection apparently includes its children

http://www.cbsnews.com/stories/2008/08/12/world/main4344591.shtml

One has to also note that the "Olympic Village" was partly built on land reclaimed from a low-income/slum area....the nearly 10000 inhabitants of that place were simply "told" to move right away. They were whisked away ...their dwellings bulldozed....the area cleaned and the Olympic village built on top.


This need to "save face" and to brush all ills under the carpet seems to reach Nazi-istic intensity under the Communist Party. There would come a day when this carefully stage managed facade would collapse...and the moment this happens, the Chinese people would eat the Communist party commissars for breakfast.

[HEyHEY]

35. Yes, they would... China's whole "Face" thing is what holds them back

It is their major weakness. It will be their downfall.

[proteus_lives]

52. As a history buff I've enjoyed your comments on this thread.

Things you've said about China? They have always been true.

China is headed for something nasty. It's part of their cycle.

[HEyHEY]

54. the CPCC is just another dynasty, man

And all their dynastys fall. It's actually amazing though, they have assimilated communisn.

[proteus_lives]

55. I agree.

Party bosses are just Mandarins without the robes.

I read a great bio about Mao and it's no different then any upstart noble seizing power throughout their history.

[Uncle Joe]

56. That "Face" mentality is just another form of prideful arrogance, isn't it? n/t

[Marengo]

47. In some aspects, the culture is shockingly backwards

Not at all what I expected, having been fed a diet heavy of propaganda favorable to the Gongchandang in my youth.