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US China Trade War


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The ascendancy of Asia and in particular China is due to Western short term outlook whereas China takes a long term perspective. At the moment, China enjoys an unfair playing field. Why would they want to change this? As US China trade talks have been going on for decades, it is obvious that they are following a similar strategy to the Roman commander Scipio Africanus. Delay, delay until the time is right to strike. This is obvious what they are doing with their trade talks with the US. It is just impossible to have the current trade imbalance forever. Ceteris Paribus, China will become the technological superpower that could easily eclipse the US as they don't look at quarterly bottom lines but 10, 20 or even 100 years ahead. The western powers could easily be likened to Hannibal whereas the Chinese to Scipio. Hannibal was a brilliant tactician and had initial gains in Spain and in Italy. But  the better strategist, Scipio ultimately prevailed leading to the total destruction of the Cartheginians. So perhaps the West should learn from history if it wants to remain the dominant economic world powers.

I am not a fan of Trump but in his position vs China I support his stance. If unchecked, China will soon become the world's largest economy and all that entails like being able to outspend the US on defence. Will the world be a better place with China as the dominant super power? Think the Uighur community and the Tibetans might disagree that it would.

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High stakes poker. Neither China, nor USA could afford a protracted trade war which would lead to short term and medium term negative market sentiment. USA and China are nursing considerable debt, which would only increase in the advent of tariff wars. A war of attrition also benefits no one in the long term.  Not to mention halting and reversing market gains and sentiment. Compound this with the politics of big oil, the significance of successful and fair outcome to the current negotiations is doubly important, both for the present recovery and future well-being of the global economy. 

You are correct I feel, in suggesting Trump thinks and acts for the Now and XI has the luxury of time.

Interesting times. 

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If you haven't it already seen this Steve Bannon interview it's worth a watch. From a month ago and he foresaw that Trump would need to ratchet up the pressure and increase the 10% tariff to 25%, as he says, 'soybeans is a sideshow'. This is about much more as he explains and remember he was on Trump's staff at the beginning when this whole trade war was planned out.

 

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14 minutes ago, Caseynotes said:

If you haven't it already seen this Steve Bannon interview it's worth a watch. From a month ago and he foresaw that Trump would need to ratchet up the pressure and increase the 10% tariff to 25%, as he says, 'soybeans is a sideshow'. This is about much more as he explains and remember he was on Trump's staff at the beginning when this whole trade war was planned out

 

@Caseynotes

Thanks very interesting.

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Indices were doing well this morning until the extent of the Chinese backtracking became clear.

"In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation."

https://www.devdiscourse.com/article/international/507051-exclusive-china-backtracked-on-nearly-all-aspects-of-us-trade-deal-sources

image.thumb.png.be93819e5c19defe9ab0f7e2a497571f.png

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It is not often I agree with the President, but he has a point where China is concerned. Experience tells that in China a deal today is today's deal. Tomorrows deal can be different. The dragon thinks only of itself.  I may suggest that only the USA raising Tariffs may not be enough and it may require concerted effort from the West plus Japan, to convince China to change its ways. However, the President has a way of isolating America that previous presidents did not. Also, not many countries are brave enough to tell Mr Xi to go take a big tariff. 

These tariffs, if implemented for the medium or long term will certainly create inflationary pressure. In turn raising rates and affecting growth both domestic and global.  A war no one wins, neither farmers, workers, traders or bankers.

Should this stretch to 2020 then reaping what one sows will be the order of the day both for USA and China, not to mention the rest of the world (recession).

China needs to accept it is no longer an economically developing nation  and accept its new responsibilities and America needs to understand that no one likes being told to change their laws to suit American business. 

Deals are based on trust, compromise and mutual gain. That's just good business. Or used to be.

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Guest Chunster
On 07/05/2019 at 09:51, Eurobonus said:

The ascendancy of Asia and in particular China is due to Western short term outlook whereas China takes a long term perspective. At the moment, China enjoys an unfair playing field. Why would they want to change this? As US China trade talks have been going on for decades, it is obvious that they are following a similar strategy to the Roman commander Scipio Africanus. Delay, delay until the time is right to strike. This is obvious what they are doing with their trade talks with the US. It is just impossible to have the current trade imbalance forever. Ceteris Paribus, China will become the technological superpower that could easily eclipse the US as they don't look at quarterly bottom lines but 10, 20 or even 100 years ahead. The western powers could easily be likened to Hannibal whereas the Chinese to Scipio. Hannibal was a brilliant tactician and had initial gains in Spain and in Italy. But  the better strategist, Scipio ultimately prevailed leading to the total destruction of the Cartheginians. So perhaps the West should learn from history if it wants to remain the dominant economic world powers.

I am not a fan of Trump but in his position vs China I support his stance. If unchecked, China will soon become the world's largest economy and all that entails like being able to outspend the US on defence. Will the world be a better place with China as the dominant super power? Think the Uighur community and the Tibetans might disagree that it would.

I for one would prefer China to take the lead. The US has been an outright warmongering nation. China has so far kept it's conflicts to within's own borders.

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