Can Trump back away from trade war in time to avoid recession?

neverfail
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Re: Can Trump back away from trade war in time to avoid recession?

Post by neverfail » Sat Oct 05, 2019 4:28 am

cassowary wrote:
Sat Oct 05, 2019 1:37 am

We cannot pick and choose a few countries.
I did not do that Cassowary. As you do not trust PRC statistics then mindful of the lack of PRC cutbacks of orders for raw materials and fuels (except for coal - and that's another story) from my country and then likewise doing as double check against imports from other supplier countries, I find that it support's David Goldman's case that the trade war is hurting the US economy worse than it is hurting China's.

Apparently you do not trust David Goldman's take on this.

cassowary wrote:
Sat Oct 05, 2019 1:37 am
Another (easier) way is to read the studies done by reputable organizations who presumably have more resources than we do.

How about this (old) article from Citibank:

Trade War Damage to China is already done
The damage to China’s economy from the trade war with the U.S. can’t be immediately made good even in the case of a resolution with President Donald Trump, Citigroup economists say.

That’s because the tariff war is underlining China’s rising cost of labor at a time when the job market is under pressure, Citi economists led by Liu Li-Gang said in their 2019 economic outlook report.
That's the point. China's labor (and other production) costs have been rising for years - even well before Trump inaugurated his ill-advised "trade war" with the PRC. Factories that specialized in producing low value goods with a high labor input were closing even before it started. Yet it seems that even with rising costs in China it is still more cost effective to manufacture a range of goods there and import these into the United States than to manufacture these in the USA. Meantime, supply chains to otherwise profitable US manufacturing businesses are being disrupted driving these towards non-profitability while US consumers are finding their purchasing powers under assault. A lose-lose situation is ever there was one.

cassowary wrote:
Sat Oct 05, 2019 1:37 am
The trade war with the U.S. could cut China’s export growth by almost half next year, putting around 4.4 million jobs at risk, the economists wrote.
"Could" (not will) is the operative word.

What is 4.4 million jobs in a nation of 1.4 BILLION? A drop in the Ocean.
cassowary wrote:
Sat Oct 05, 2019 1:37 am
“It is a reality that China is losing some of its cost competitiveness, especially in labor-intensive and low-value-added sectors,” according to the report.
Yet according to Spengler it is training more people with high-tech and engineering skills than any other country on Earth -far more than the USA. The PRC is likely to have outgrown the need for low value, high labor input exports in favour of higher grade stuff. Cost pressures would be driving it in that direction. Japan and South Korea in their turn went through the same mill several years ago. It is a culling process brought on by rising average incomes and rising production costs that go with it.

cassowary wrote:
Sat Oct 05, 2019 1:37 am
Doesn't this carry more weight than your conclusion based on Australia's exports to China? That's just one data point. I presume that Citibank has a team to study these things and must have taken Australian exports into considertion as well. There seems to be real damage done to China.
Not necessarily. As you concede it is an OLD study likely by now superseded by changing events since. If China's economy is currently slowing down then so is everyone else's at present - including Ours, Singapore's and that of the USA. I don't think that US tariffs on Chinese goods have much to do with China's slowdown but a lot to do with America's.
cassowary wrote:
Sat Oct 05, 2019 1:37 am
Or how about this (new) one:

US-China trade war could slow global manufacturing activity into start of 2020, economists warn
China’s manufacturing activity contracted for a fifth straight month in September, while Germany and the United States dropped to their lowest levels since June 2009
So everybody is suffering. To think that China is somehow exempt from the ill effects of the trade war is mistaken.

I know you don't like the US and especially Trump. So your desire for US failure may be wishful thinking.

Here is another one, this time from SCMP:

China data shows economic growth slowing as impact of trade war with US intensifies
Year-on year car sales down by 11.7 per cent as consumer confidence drops
Real estate, e-commerce and electronics sectors suffer weaker demand
This 11.7% number comes from the Chinese government, which are notoriously unreliable. Maybe the real number is 20%?
Similar trends in a loss of consumer confidence worldwide - in case you are unaware that the world is currently on the brink of a major recession.

So CASSOWARY: what the f*** are you trying to prove? :? :?:

Jim the Moron
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Re: Can Trump back away from trade war in time to avoid recession?

Post by Jim the Moron » Sat Oct 05, 2019 4:57 am

". . . the world is on the brink of a major recession."

Well, if not this month, then maybe next month. The world-famous economist Jim the Moron predicts a major recession will hit in April, 2023, give or take a month or two.

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cassowary
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Re: Can Trump back away from trade war in time to avoid recession?

Post by cassowary » Sat Oct 05, 2019 8:05 am

neverfail wrote:
Sat Oct 05, 2019 4:28 am
cassowary wrote:
Sat Oct 05, 2019 1:37 am

We cannot pick and choose a few countries.
I did not do that Cassowary. As you do not trust PRC statistics then mindful of the lack of PRC cutbacks of orders for raw materials and fuels (except for coal - and that's another story) from my country and then likewise doing as double check against imports from other supplier countries, I find that it support's David Goldman's case that the trade war is hurting the US economy worse than it is hurting China's.
Yeah, you only pick a few countries to support your views. I gave you a few articles to show that China is also affected by the trade war. Here is the (new) article again:

US China trade war could slow global manufacturing activity
China’s manufacturing activity contracted for a fifth straight month in September, while Germany and the United States dropped to their lowest levels since June 2009
So China is also hurt by the trade war.
Apparently you do not trust David Goldman's take on this.
Well, I presume Goldman is also human. Being human, he too can be wrong - just like everybody else.

cassowary wrote:
Sat Oct 05, 2019 1:37 am
Another (easier) way is to read the studies done by reputable organizations who presumably have more resources than we do.

How about this (old) article from Citibank:

Trade War Damage to China is already done
The damage to China’s economy from the trade war with the U.S. can’t be immediately made good even in the case of a resolution with President Donald Trump, Citigroup economists say.

That’s because the tariff war is underlining China’s rising cost of labor at a time when the job market is under pressure, Citi economists led by Liu Li-Gang said in their 2019 economic outlook report.
That's the point. China's labor (and other production) costs have been rising for years - even well before Trump inaugurated his ill-advised "trade war" with the PRC. Factories that specialized in producing low value goods with a high labor input were closing even before it started. Yet it seems that even with rising costs in China it is still more cost effective to manufacture a range of goods there and import these into the United States than to manufacture these in the USA. Meantime, supply chains to otherwise profitable US manufacturing businesses are being disrupted driving these towards non-profitability while US consumers are finding their purchasing powers under assault. A lose-lose situation is ever there was one.
No one denies that China's costs have being going up. But the trade war has added to their problems.
cassowary wrote:
Sat Oct 05, 2019 1:37 am
The trade war with the U.S. could cut China’s export growth by almost half next year, putting around 4.4 million jobs at risk, the economists wrote.
"Could" (not will) is the operative word.

What is 4.4 million jobs in a nation of 1.4 BILLION? A drop in the Ocean.
You are comparing apples with oranges. You need to compare jobs with the entire work force and not the entire population. I don't know what is China's labor force. Maybe you can do some research and tell me. Then we can see what the percentage is.
cassowary wrote:
Sat Oct 05, 2019 1:37 am
“It is a reality that China is losing some of its cost competitiveness, especially in labor-intensive and low-value-added sectors,” according to the report.
Yet according to Spengler it is training more people with high-tech and engineering skills than any other country on Earth -far more than the USA. The PRC is likely to have outgrown the need for low value, high labor input exports in favour of higher grade stuff. Cost pressures would be driving it in that direction. Japan and South Korea in their turn went through the same mill several years ago. It is a culling process brought on by rising average incomes and rising production costs that go with it.
Ever since the trade war began, I noticed that China's Yuan has declined against the US$. This will of course reduce labor cost in US$ terms even if it rises in Yuan terms. So this has ameliorate the problem of rising wages.

As I said earlier, the trade war adds a new layer of difficulty to China's rising wage cost as compared to cheaper countries like say Vietnam. You can blame China's economic slowdown solely on rising labor costs so as not to give Trump any credit for causing China economic distress, much as you dislike him.

[
quote=cassowary post_id=26003 time=1570264642 user_id=60]Doesn't this carry more weight than your conclusion based on Australia's exports to China? That's just one data point. I presume that Citibank has a team to study these things and must have taken Australian exports into considertion as well. There seems to be real damage done to China.
Not necessarily. As you concede it is an OLD study likely by now superseded by changing events since. If China's economy is currently slowing down then so is everyone else's at present - including Ours, Singapore's and that of the USA. I don't think that US tariffs on Chinese goods have much to do with China's slowdown but a lot to do with America's.[/quote]

Well, I also gave you a new article. It pretty much says the same thing.
cassowary wrote:
Sat Oct 05, 2019 1:37 am
Or how about this (new) one:

US-China trade war could slow global manufacturing activity into start of 2020, economists warn
China’s manufacturing activity contracted for a fifth straight month in September, while Germany and the United States dropped to their lowest levels since June 2009
So everybody is suffering. To think that China is somehow exempt from the ill effects of the trade war is mistaken.

I know you don't like the US and especially Trump. So your desire for US failure may be wishful thinking.

Here is another one, this time from SCMP:

China data shows economic growth slowing as impact of trade war with US intensifies
Year-on year car sales down by 11.7 per cent as consumer confidence drops
Real estate, e-commerce and electronics sectors suffer weaker demand
This 11.7% number comes from the Chinese government, which are notoriously unreliable. Maybe the real number is 20%?
Similar trends in a loss of consumer confidence worldwide - in case you are unaware that the world is currently on the brink of a major recession.

So CASSOWARY: what the f*** are you trying to prove? :? :?:
I am trying to prove that China is hurt by Trump's trade war, same as the rest of the world.

You seem to think that China's economy is doing OK or even well, an impression you got just by looking at Australia's exports of minerals to China.
The Imp :D

neverfail
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Re: Can Trump back away from trade war in time to avoid recession?

Post by neverfail » Sat Oct 05, 2019 2:48 pm

cassowary wrote:
Sat Oct 05, 2019 8:05 am
Yeah, you only pick a few countries to support your views.
No, I did not select those countries for the purpose of supporting my views Cassowary. ( :shock: May God forgive me that I should be ever so proud.) I selected those countries because they supply China with bulk commodities it actually NEEDS for its own economic well being - as distinct from goods that other countries (like the USA for instance) would ideally want to sell it to balance up their trade defects. I treat that as indicative of the current state of economic activity within the PRC.


cassowary wrote:
Sat Oct 05, 2019 8:05 am
China’s manufacturing activity contracted for a fifth straight month in September, while Germany and the United States dropped to their lowest levels since June 2009

So China is also hurt by the trade war.
Is is; but more marginally than is the United States (and others such as our 2 countries).

Apparently you do not trust David Goldman's take on this.
cassowary wrote:
Sat Oct 05, 2019 8:05 am
Well, I presume Goldman is also human. Being human, he too can be wrong - just like everybody else.
But is he wrong in THIS instance?
cassowary wrote:
Sat Oct 05, 2019 1:37 am
Another (easier) way is to read the studies done by reputable organizations who presumably have more resources than we do.

How about this (old) article from Citibank:

Trade War Damage to China is already done

The trade war with the U.S. could cut China’s export growth by almost half next year, putting around 4.4 million jobs at risk, the economists wrote.
If China's growth rate were to be cut in half it would still be growing at a rate of better than 3% p.a. or better. If the USA's current rate of growth were to be halved it would plunge into recession. That is the difference!

cassowary wrote:
Sat Oct 05, 2019 1:37 am
As I said earlier, the trade war adds a new layer of difficulty to China's rising wage cost as compared to cheaper countries like say Vietnam. You can blame China's economic slowdown solely on rising labor costs so as not to give Trump any credit for causing China economic distress, much as you dislike him.
Let us not personalize this Cassowary. That I regard Trump and his accursed trade wars as a menace I make no secret of. But that does not mean that (contrary to your earlier allegation) that I post out of malice towards either him or the USA. Like the esteemed pundit Spengler I am as much as issuing pleas along the lines of: Trump, pull your bloody horns in and America, lift your game.

MY fear is that the PRC will emerge from the coming global recession sooner and in better shape than the USA (and associated economic dependencies) will just as it rode through the (post 2008 GFC) recession without plunging into recession itself. Now, won't that be a real kick in the nuts for the image of Western democracy globally? :(

Just because the USA has the bigger of the two economies does not mean that it owns the stronger of the two.

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cassowary
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Re: Can Trump back away from trade war in time to avoid recession?

Post by cassowary » Sun Oct 06, 2019 8:49 pm

neverfail wrote:
Sat Oct 05, 2019 2:48 pm
cassowary wrote:
Sat Oct 05, 2019 8:05 am
Yeah, you only pick a few countries to support your views.
No, I did not select those countries for the purpose of supporting my views Cassowary. ( :shock: May God forgive me that I should be ever so proud.) I selected those countries because they supply China with bulk commodities it actually NEEDS for its own economic well being - as distinct from goods that other countries (like the USA for instance) would ideally want to sell it to balance up their trade defects. I treat that as indicative of the current state of economic activity within the PRC.
OK. Fair enough. What I know is that Singapore, along with other Asian countries like Korea and Japan are suffering because of lower exports to China. So my impression is that China must also be suffering from the trade war.
Shipments to China fell 16.3%, while semiconductor exports sank just over 28%.
Referring to Korea.
TOKYO (Reuters) - Japan’s exports slipped for an eighth month in July, while manufacturers’ confidence turned negative for the first time in over six years as China-bound sales slumped again in a fresh sign the Sino-U.S. trade war could tip the economy into recession.
You judge the situation based on basic goods like iron ore, coal etc, (naturally because your country is a primary producer) while I judge the situation based on manufactured goods (again naturally). But those link I gave from reputable organizations say that China is also suffering from the trade war.
cassowary wrote:
Sat Oct 05, 2019 8:05 am
China’s manufacturing activity contracted for a fifth straight month in September, while Germany and the United States dropped to their lowest levels since June 2009

So China is also hurt by the trade war.
Is is; but more marginally than is the United States (and others such as our 2 countries).

Apparently you do not trust David Goldman's take on this.
cassowary wrote:
Sat Oct 05, 2019 8:05 am
Well, I presume Goldman is also human. Being human, he too can be wrong - just like everybody else.
But is he wrong in THIS instance?
I don't know because I don't have to means to analyse this very complex question. All I can tell you is that those links I gave you suggest that China is suffering mightily and thus Goldman is wrong.

It appears from our discussion that China is importing more raw materials and at the same time importing less manufactured goods. What does it mean? Could they be stockpiling in preparation for war? Because they expect the US navy will cut off their supplies?
cassowary wrote:
Sat Oct 05, 2019 1:37 am
Another (easier) way is to read the studies done by reputable organizations who presumably have more resources than we do.

How about this (old) article from Citibank:

Trade War Damage to China is already done

The trade war with the U.S. could cut China’s export growth by almost half next year, putting around 4.4 million jobs at risk, the economists wrote.
If China's growth rate were to be cut in half it would still be growing at a rate of better than 3% p.a. or better. If the USA's current rate of growth were to be halved it would plunge into recession. That is the difference!
No, that is incorrect logic. If China's growth is cut by half, it is still growth. If US growth is cut by half, it too is still growing at 1.5%. A recession is negative growth. China typically grows at about 6%, according to "official statistics." Since Chinese statistics are unreliable, we don't really know how much or how little, they are being affected.

Despite the introduction of capitalism (ie private ownership), Xi is still, at heart, a communist. So he is used to thinking in terms of a command economy. Thus he commands that the economy will grow next year at say 6% and his minions will struggle mightily to give him 6%.

We end up seeing strange things happening. For example, they will demand property developers to build more apartments, even if they are not selling. So where do they get the cash flow? State controlled banks of course. These are compelled to lend money to them.

So they build and build whether there is demand or not. At the end of the year, hey presto, Xi's minions report to the Big Boss that the construction industry has grown at the targeted growth rate. Result? They end up with ghost cities - beautiful apartment blocks with very few people living there. Here is a picture of China's "ghost cities":

Image

More pictures here.

Are they still building ghost cities with the iron ore they are importing to keep the construction industry growing and thus give overall GDP a boost?
The Imp :D

neverfail
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Re: Can Trump back away from trade war in time to avoid recession?

Post by neverfail » Mon Oct 07, 2019 1:29 am

Recalling the housing "bubble" in the USA that brought on the GFC a decade ago, these ghost cities look like a latter-day PRC equivalent to that. You could be right in in another sense than that you display an aversion for anything that looks left wing :lol: .

The latest copy of the China Matters newsletter identifies the following likely causes of the PRC falling into recession:
external sources, such as:
• a further escalation of the ongoing trade war
with the United States. The immediate disruption
caused by declining demand for PRC exports will
be compounded as corporates re-direct global
supply chains away from the PRC so that its
capacity to export reduces;
• a US recession, which is now seen by many as
a real possibility, would have a negative effect on
PRC exports;
■ internal sources, such as:
• a debt meltdown in the shadow or formal
banking systems. The Governor of the Reserve
Bank of Australia (RBA) has noted that ‘perhaps
the single biggest risk to the Chinese economy …
lies in the financial sector and the big run-up in
debt there over the past decade’;2
• a property market correction;
• political disruption (potentially building on the
pro-democracy unrest seen in Hong Kong).

http://chinamatters.org.au/wp-content/u ... o-copy.pdf

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cassowary
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Re: Can Trump back away from trade war in time to avoid recession?

Post by cassowary » Mon Oct 07, 2019 4:29 am

Neverfail,

While my country is suffering from Trump's trade war, I prefer to take the long view. What I hope will happen is that the supply chain will bypass China so that it will slow down China's rise and maybe even undermine the CCP hold on power.

Let me give you an example of how this supply chain works. Foxconn is the main subcontractor for Apple. It exports Iphones with the marking, "Made in China", to the US.

But that is not entirely correct.

The Iphone is actually made in China, Singapore, S Korea, Taiwan, Japan and other places including the US. Singapore and other countries do the more advanced stuff. We make semi-conductors and export them to China. At the Chinese Foxconn factory, they assemble all the parts to make the Iphone. Then they export them to the US and elsewhere.

Recently, Foxconn opened a factory in India because of the trade war. But relocating takes time to train the workers, learn the ropes of the local conditions and also build the factory. But in time, we will be exporting semi-conductors to India, and less to China - provided Trump has the sense not to impose tariffs on India.

So we will be OK. I think Trump is smart enough to see that it is China that is the geo-strategic threat. And not the others, especially US allies. So he is likely to go easy on the friendly countries.
The Imp :D

neverfail
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Re: Can Trump back away from trade war in time to avoid recession?

Post by neverfail » Mon Oct 07, 2019 2:56 pm

cassowary wrote:
Mon Oct 07, 2019 4:29 am
Neverfail,

While my country is suffering from Trump's trade war, I prefer to take the long view. What I hope will happen is that the supply chain will bypass China so that it will slow down China's rise and maybe even undermine the CCP hold on power.
Yep, I can see your long view and am broadly sympathetic to it. I think that we all want a prosperous China but not a globally powerful PRC able to re-write the rules to its own advantage but to the detriment of others.
cassowary wrote:
Mon Oct 07, 2019 4:29 am
Let me give you an example of how this supply chain works. Foxconn is the main subcontractor for Apple. It exports Iphones with the marking, "Made in China", to the US.

But that is not entirely correct.

The Iphone is actually made in China, Singapore, S Korea, Taiwan, Japan and other places including the US. Singapore and other countries do the more advanced stuff. We make semi-conductors and export them to China. At the Chinese Foxconn factory, they assemble all the parts to make the Iphone. Then they export them to the US and elsewhere.
Thanks for that illuminating explanation Cass. While (as you can see) I am well tuned in to how the international trade of basic resources affect the fortunes of nations I concede that I have not been nearly so well informed about the trade in high-tech products.
cassowary wrote:
Mon Oct 07, 2019 4:29 am
Recently, Foxconn opened a factory in India because of the trade war. But relocating takes time to train the workers, learn the ropes of the local conditions and also build the factory. But in time, we will be exporting semi-conductors to India, and less to China - provided Trump has the sense not to impose tariffs on India.

So we will be OK. I think Trump is smart enough to see that it is China that is the geo-strategic threat. And not the others, especially US allies. So he is likely to go easy on the friendly countries.
With Trump you can never tell. The EU is supposed to be "friendly" yet Trump has picked a tariff-trade war with this colossus while still waging an unresolved one against the PRC. Historically, fighting a war on two fronts has always been a loser's strategy.

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