8 ms·

Many Chinese companies ‘will go bankrupt’, if US delivers on tariff threats

52 points by tptptptptptp 8y ago

ToFab123 8y ago
I guess a lot of American companies will too
ck425 8y ago
Not directly related to the article but could this be updated to link to the full article not the AMP version: https://www.scmp.com/news/china/diplomacy-defence/article/2156810/many-chinese-companies-will-go-bankrupt-if-us-delivers https://www.scmp.com/news/china/diplomacy-defence/article/21... Would be great if we could auto convert submitted amp links.
- consumer451 8y ago
  Counterpoint: I was just traveling and stuck on 2G data for a few days. The only things on the web that were usable were HN, Tildes.net, and AMP pages. I have spoken ill of AMP in the past, but no more. Google is actually doing something about site bloat.
  - ck425 8y ago
    Maybe, but even if it stays AMP can the domain atleast be directly attributed.
    - consumer451 8y ago
      Fair point.
- dang 8y ago
  Thanks. Changed from https://www.google.com/amp/s/m.scmp.com/news/china/diplomacy-defence/article/2156810/many-chinese-companies-will-go-bankrupt-if-us-delivers%3famp=1 https://www.google.com/amp/s/m.scmp.com/news/china/diplomacy....
Bombthecat 8y ago
It is really sad that no one comments here. Discussing topics like this became a line field. Even on hackernews now...
craftyguy 8y ago
I recently heard an argument in favor of more tariffs, its basis was that tariffs 'force' (through incentives, obviously) nations to produce goods locally. This is generally better from an environmental standpoint since goods which could be produced locally but are made thousands of miles away don't have to be transported over vast distances.
- c3534l 8y ago
  Actually, the opposite is true: https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877 https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877 Similar articles found via scholar.google.com show the similar results: a relatively small net reduction in pollution output. Local isn't better for the environment, even though that's the latest California hippy mantra. Efficient is more likely better for the environment.
  - craftyguy 8y ago
    Unfortunately I cannot download that paper to read it.. Got another source?
    - akx 8y ago
      That article "10.1257/aer.91.4.877" is available on Libgen, for instance. You can google for Libgen.
  - coldtea 8y ago
    >Actually, the opposite is true: https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877* https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877* The "opposite is true" or the opposite has been argued by papers and gets grants because it fits some dominant ideological models and interests? Because tariffs have been tried in the past for centuries, including by the US, and have helped in creating a stable internal economy, and the resulting meteoric rise. Not to mention that politics and global power does not begin and end with what makes more profit or produces cheaper goods.
- akvadrako 8y ago
devoply 8y ago
Expect China to get involved in social media meddling and election engineering in the 2020 US election.
- syshum 8y ago
  So when I disagree with the Authoritarian left in 2020 I will be called a racist misogynist Nazi Chinese Bot instead of a racist misogynist Nazi Russian Bot? Or will I be a Russian Chinese Bot? In reality every nation attempts to meddle and influence every other nations elections to get leaders in those nations that are favorable to them. This has happened since the dawn of civilization to believe it is a new or modern activity simply because we have Facebook now is to ignore History. the US is one of the most prolific influencers of elections on the world stage having "peacefully" toppled more governments than any other nation in world history. This modern commentary on Russian bots, and now Chinese Bots is primary away for the Extreme ends of the political spectrum to rationalize away why their idea are unpopular and their arguments fall flat at convincing people Does Russia and China attempt to influence the elections... yes... as does every other nation. Should we care? Maybe, and we should be aware of it and monitor it but personally I am more concerned with Internal meddling by our own institutions than i am about Foreign Influence
astaunton 8y ago
It will be interesting to see how this plays out. Approx 70% of American bonds are owned by Chinese companies. So if America puts the squeeze on the Chinese, they may cash in their bonds....since Mr. Trump feels he needs to upset Asia (making friends with North Korea) and feels the need to upset the EU, i doubt anyone will be plugging that gap
- sonnyblarney 8y ago
  Your debt figures are not correct. https://www.investopedia.com/articles/investing/080615/china-owns-us-debt-how-much.asp https://www.investopedia.com/articles/investing/080615/china... Second, China needs that debt to be able to manage it's own currency. And though the Fed is not supposed play games like international currency war ... it will. The Fed and the USD are well poised to soak up any problems that China tries to play with USD. It's also a game of confidence: do USD holders worldwide think that China can sink the USD with a little bit of war? Or is the global petrodollar resilient? Given the numbers and ratios ... it's clear that China probably won't win, cred remains in the USD etc.. So - it would have to be a coordinated shock - if there were both economic problems in the US, and dollar problems, and shocks in some other way and then China started playing games ... well that's something else.
  - astaunton 8y ago
    i never said China would win, my point was the ripple effect it will have. These games could have major impact for the smaller mom&pop companies in both China and America. So in an effort to re-vitalize businesses it may in fact cause a lot of them to fold (as even medium businesses rely on the smaller one to provide a service)
- akhatri_aus 8y ago
  That debt is the reason the US has a trade deficit with China. China has no economic interest in holding US debt with the exception of funding purchases of its own goods. This is also in line with the twin deficits hypothesis.
sonnyblarney 8y ago
The way the Chinese roughshod foreign companies is blatantly anti-WTO and anti-trade. I witnessed this while working at a large Canadian company. China has one leader and they speak with one voice - and they have divided and conquered the West, which speaks with a thousand voices i.e. politicians, businesspeople, academics to the point wherein if anyone tries to say anything against China, they are shut down. Remember when 'Tibet' was all the rage in Hollywood at the turn of the Millennium? Well they shut up pretty quick, didn't they? This has happened everywhere. You just don't find a lot of critical voices about China because someone is always applying pressure (i.e. advertisers etc.) China is acting in rational self interest, and the number of people being brought out of abject poverty there (and elsewhere) is a very good thing, but because they've been able to do this since the dawn of the new era i.e. 1980's, things like IP theft, and direct governmental support of competitive entities is 'normative'. I personally loathe Trump, but trade issue with China have to be resolved, and it's really sad that he's the only leader in the world it seems that is in a situation to do at least something about it. The West has to work together to end particularly the IP rip-off scenarios, or it's not going to work. I actually think China, during this current period of transition would be better off in a more level playing field, one suited for their participation in the world economy, as opposed to the current setup, which is suited to them being a 'developing economy' of previous decades. There should definitely be a tit-for-tat tax on goods from China given some practices there, I very well understand the ostensible damage from tariffs, but as soon as you have to 'internalize' all those things that are externalized in China, many tariffs make sense. The great risk is that China could actually be truly damaged (likely worse for regular folks than for the elite), worse, go into a recession, which would burst the fragile 'rest of the world' situation and we'd have a global problem. In the grand scheme of things, it's better that China 'blinks' in this game, and uses the opportunity to institute some reforms that simply have to happen if they want to play on the global stage. You see this happening more formally with currency; because currency issues are more directly measurable, China has no choice but to reform of they want the RMB to be used in certain ways globally. But on trade ... it's more grey. Now that Trump has fired a volley, it's possible that the EU may find a way to do the same thing, in a more politically nice kind of way - funny enough even though the US is in a 'trade war' with Canada, Europe, UK etc., behind the scenes, they are all already working with Trump on the China file, it's just not highly publicized for obvious reasons.
deleted 8y ago
[deleted]
acd 8y ago
There is math model Prisoners dilemma that says that both sides is better of cooperating. So unless Chinas industrial subsidies was a defeat move and the Us trade tariffs is an answer move everyone both Us and China will be worse off after the customs tariffs. There is chance that the tarrifs will lead to higher consumer prices as economic production will not be optimally allocated. Inflation will follow higher consumer prices. Central banks have already used zero interest policy to stimulate the economy so we cannot use that as a tool. Something better will emerge after this but it might be a rough ride until it’s sorted. Prisoners dilemma game theory https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma
- genericid 8y ago
  Game theory is about rational people, I don't think it applies here.
  - acd 8y ago
    I think it can apply see Wikipedia Game theory # Real world examples. Why would Game theory not apply for world trade?
    - genericid 8y ago
      It does not apply to Trump.
      - OscarCunningham 8y ago
        It doesn't apply to China either.
        baybal2 8y ago
        Game theory does not apply to real world in general and has nothing to do with serious economics studies.
snarfy 8y ago
Why does China buy all of those Treasury notes again?
- neximo64 8y ago
  To keep their currency weaker
  - wpdev_63 8y ago
    Then by artificially deflating their currency for economic benefit.
known 8y ago
Tariffs is lose-lose proposition since China is exporting Inexpensive and High Quality products and re-investing that money back in US T Bills; https://www.economist.com/china/2018/07/12/in-its-trade-war-with-america-china-dials-down-the-hype https://www.economist.com/china/2018/07/12/in-its-trade-war-...
ksec 8y ago
Just a reminder, mouth pieces for China does not speak the truth nor their actual intention. They are posted to lead you to think many will bankrupt, ( which they won't ).
- bartkmq 8y ago
  SCMP is an independent newspaper based in Hong Kong and was founded by foreigners. "China" (mainland regime) is probably not a fan of them.
  - ryanlol 8y ago
    SCMP was sold to the Alibaba group in 2016.
  - dosy 8y ago
    It is now owned by Jack Ma (Alibaba / 1688.com) but it takes a decidedly mixed editorial stance: some articles are very pro-China, and align with / support central government position. Other articles are (if not pro-US), aligned with US-policy positions and norms, and critical of China and the central government. I expected SCMP would quickly become way more pro-China, supportive of central government on every issue after purchase by Ma, but while that has happened to some extent, it was very gradual. Ma has stated that he wanted the paper to represent China to the outside world from more angles and perspectives. Personally I find the mixed editorial stance annoying. I wish it would be more decisively one-side like most Western outlets I'm used to. But it really is mixed and has something for everyone, and it's true that you can find perspectives from "both sides" or "multiple sides" there, so I think it is achieving its objective of representing China in a fair way to readers. For those reasons I think SCMP is a very reliable source for news on the region if you cannot read Chinese / even if you can. If you combine perspective across SCMP, a Western outlet, and a Chinese outlet (like: http://en.people.cn/ http://en.people.cn/) you get a much more faithful idea about China just reading one.
  - T-A 8y ago
    SCMP was acquired by Alibaba in 2016 [1], with predictable consequences [2]. [1] https://en.wikipedia.org/wiki/South_China_Morning_Post#Purchase_by_Alibaba https://en.wikipedia.org/wiki/South_China_Morning_Post#Purch... [2] https://en.wikipedia.org/wiki/South_China_Morning_Post#Controversies https://en.wikipedia.org/wiki/South_China_Morning_Post#Contr...
chvid 8y ago
I am afraid it might be the other way around. The west is running massively expansive monetary and fiscal policy. The only reason that is not causing extreme inflation is that we import deflation from China. Were we to stop that prices and interest rates would jump and asset prices would collapse.
- ced 8y ago
  What do you mean by "import deflation"?
  - occamrazor 8y ago
    That we print money, expanding the monetary base, and at the same time China stockpiles USD and other western currencies, effectively decreasing the same monetary base.
    - echevil 8y ago
      The Chinese government prints much more money though. Inflation is much more serious in China. The official stats doesn’t reflect this, but it’s clear for anyone who’s familiar with price changes in China
janesvilleseo 8y ago
I suspect this is a promoted post in the sense that someone with an agenda is gaming the system. The same article right now is on Reddit as a promoted post.

52 points by tptptptptptp 8y ago

I guess a lot of American companies will too

Not directly related to the article but could this be updated to link to the full article not the AMP version: https://www.scmp.com/news/china/diplomacy-defence/article/2156810/many-chinese-companies-will-go-bankrupt-if-us-delivers https://www.scmp.com/news/china/diplomacy-defence/article/21... Would be great if we could auto convert submitted amp links.

consumer451 8y ago
Counterpoint: I was just traveling and stuck on 2G data for a few days. The only things on the web that were usable were HN, Tildes.net, and AMP pages. I have spoken ill of AMP in the past, but no more. Google is actually doing something about site bloat.
- ck425 8y ago
  Maybe, but even if it stays AMP can the domain atleast be directly attributed.
  - consumer451 8y ago
    Fair point.
dang 8y ago
Thanks. Changed from https://www.google.com/amp/s/m.scmp.com/news/china/diplomacy-defence/article/2156810/many-chinese-companies-will-go-bankrupt-if-us-delivers%3famp=1 https://www.google.com/amp/s/m.scmp.com/news/china/diplomacy....

Bombthecat 8y ago

It is really sad that no one comments here. Discussing topics like this became a line field. Even on hackernews now...

craftyguy 8y ago

I recently heard an argument in favor of more tariffs, its basis was that tariffs 'force' (through incentives, obviously) nations to produce goods locally. This is generally better from an environmental standpoint since goods which could be produced locally but are made thousands of miles away don't have to be transported over vast distances.

c3534l 8y ago
Actually, the opposite is true: https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877 https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877 Similar articles found via scholar.google.com show the similar results: a relatively small net reduction in pollution output. Local isn't better for the environment, even though that's the latest California hippy mantra. Efficient is more likely better for the environment.
- craftyguy 8y ago
  Unfortunately I cannot download that paper to read it.. Got another source?
  - akx 8y ago
    That article "10.1257/aer.91.4.877" is available on Libgen, for instance. You can google for Libgen.
- coldtea 8y ago
  >Actually, the opposite is true: https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877* https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877* The "opposite is true" or the opposite has been argued by papers and gets grants because it fits some dominant ideological models and interests? Because tariffs have been tried in the past for centuries, including by the US, and have helped in creating a stable internal economy, and the resulting meteoric rise. Not to mention that politics and global power does not begin and end with what makes more profit or produces cheaper goods.
akvadrako 8y ago

devoply 8y ago

Expect China to get involved in social media meddling and election engineering in the 2020 US election.

syshum 8y ago
So when I disagree with the Authoritarian left in 2020 I will be called a racist misogynist Nazi Chinese Bot instead of a racist misogynist Nazi Russian Bot? Or will I be a Russian Chinese Bot? In reality every nation attempts to meddle and influence every other nations elections to get leaders in those nations that are favorable to them. This has happened since the dawn of civilization to believe it is a new or modern activity simply because we have Facebook now is to ignore History. the US is one of the most prolific influencers of elections on the world stage having "peacefully" toppled more governments than any other nation in world history. This modern commentary on Russian bots, and now Chinese Bots is primary away for the Extreme ends of the political spectrum to rationalize away why their idea are unpopular and their arguments fall flat at convincing people Does Russia and China attempt to influence the elections... yes... as does every other nation. Should we care? Maybe, and we should be aware of it and monitor it but personally I am more concerned with Internal meddling by our own institutions than i am about Foreign Influence

astaunton 8y ago

It will be interesting to see how this plays out. Approx 70% of American bonds are owned by Chinese companies. So if America puts the squeeze on the Chinese, they may cash in their bonds....since Mr. Trump feels he needs to upset Asia (making friends with North Korea) and feels the need to upset the EU, i doubt anyone will be plugging that gap

sonnyblarney 8y ago
Your debt figures are not correct. https://www.investopedia.com/articles/investing/080615/china-owns-us-debt-how-much.asp https://www.investopedia.com/articles/investing/080615/china... Second, China needs that debt to be able to manage it's own currency. And though the Fed is not supposed play games like international currency war ... it will. The Fed and the USD are well poised to soak up any problems that China tries to play with USD. It's also a game of confidence: do USD holders worldwide think that China can sink the USD with a little bit of war? Or is the global petrodollar resilient? Given the numbers and ratios ... it's clear that China probably won't win, cred remains in the USD etc.. So - it would have to be a coordinated shock - if there were both economic problems in the US, and dollar problems, and shocks in some other way and then China started playing games ... well that's something else.
- astaunton 8y ago
  i never said China would win, my point was the ripple effect it will have. These games could have major impact for the smaller mom&pop companies in both China and America. So in an effort to re-vitalize businesses it may in fact cause a lot of them to fold (as even medium businesses rely on the smaller one to provide a service)
akhatri_aus 8y ago
That debt is the reason the US has a trade deficit with China. China has no economic interest in holding US debt with the exception of funding purchases of its own goods. This is also in line with the twin deficits hypothesis.

sonnyblarney 8y ago

The way the Chinese roughshod foreign companies is blatantly anti-WTO and anti-trade. I witnessed this while working at a large Canadian company. China has one leader and they speak with one voice - and they have divided and conquered the West, which speaks with a thousand voices i.e. politicians, businesspeople, academics to the point wherein if anyone tries to say anything against China, they are shut down. Remember when 'Tibet' was all the rage in Hollywood at the turn of the Millennium? Well they shut up pretty quick, didn't they? This has happened everywhere. You just don't find a lot of critical voices about China because someone is always applying pressure (i.e. advertisers etc.) China is acting in rational self interest, and the number of people being brought out of abject poverty there (and elsewhere) is a very good thing, but because they've been able to do this since the dawn of the new era i.e. 1980's, things like IP theft, and direct governmental support of competitive entities is 'normative'. I personally loathe Trump, but trade issue with China have to be resolved, and it's really sad that he's the only leader in the world it seems that is in a situation to do at least something about it. The West has to work together to end particularly the IP rip-off scenarios, or it's not going to work. I actually think China, during this current period of transition would be better off in a more level playing field, one suited for their participation in the world economy, as opposed to the current setup, which is suited to them being a 'developing economy' of previous decades. There should definitely be a tit-for-tat tax on goods from China given some practices there, I very well understand the ostensible damage from tariffs, but as soon as you have to 'internalize' all those things that are externalized in China, many tariffs make sense. The great risk is that China could actually be truly damaged (likely worse for regular folks than for the elite), worse, go into a recession, which would burst the fragile 'rest of the world' situation and we'd have a global problem. In the grand scheme of things, it's better that China 'blinks' in this game, and uses the opportunity to institute some reforms that simply have to happen if they want to play on the global stage. You see this happening more formally with currency; because currency issues are more directly measurable, China has no choice but to reform of they want the RMB to be used in certain ways globally. But on trade ... it's more grey. Now that Trump has fired a volley, it's possible that the EU may find a way to do the same thing, in a more politically nice kind of way - funny enough even though the US is in a 'trade war' with Canada, Europe, UK etc., behind the scenes, they are all already working with Trump on the China file, it's just not highly publicized for obvious reasons.

deleted 8y ago

[deleted]

acd 8y ago

There is math model Prisoners dilemma that says that both sides is better of cooperating. So unless Chinas industrial subsidies was a defeat move and the Us trade tariffs is an answer move everyone both Us and China will be worse off after the customs tariffs. There is chance that the tarrifs will lead to higher consumer prices as economic production will not be optimally allocated. Inflation will follow higher consumer prices. Central banks have already used zero interest policy to stimulate the economy so we cannot use that as a tool. Something better will emerge after this but it might be a rough ride until it’s sorted. Prisoners dilemma game theory https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma

genericid 8y ago
Game theory is about rational people, I don't think it applies here.
- acd 8y ago
  I think it can apply see Wikipedia Game theory # Real world examples. Why would Game theory not apply for world trade?
  - genericid 8y ago
    It does not apply to Trump.
    - OscarCunningham 8y ago
      It doesn't apply to China either.
      - baybal2 8y ago
        Game theory does not apply to real world in general and has nothing to do with serious economics studies.

snarfy 8y ago

Why does China buy all of those Treasury notes again?

neximo64 8y ago
To keep their currency weaker
- wpdev_63 8y ago
  Then by artificially deflating their currency for economic benefit.

known 8y ago

Tariffs is lose-lose proposition since China is exporting Inexpensive and High Quality products and re-investing that money back in US T Bills; https://www.economist.com/china/2018/07/12/in-its-trade-war-with-america-china-dials-down-the-hype https://www.economist.com/china/2018/07/12/in-its-trade-war-...

ksec 8y ago

Just a reminder, mouth pieces for China does not speak the truth nor their actual intention. They are posted to lead you to think many will bankrupt, ( which they won't ).

bartkmq 8y ago
SCMP is an independent newspaper based in Hong Kong and was founded by foreigners. "China" (mainland regime) is probably not a fan of them.
- ryanlol 8y ago
  SCMP was sold to the Alibaba group in 2016.
- dosy 8y ago
  It is now owned by Jack Ma (Alibaba / 1688.com) but it takes a decidedly mixed editorial stance: some articles are very pro-China, and align with / support central government position. Other articles are (if not pro-US), aligned with US-policy positions and norms, and critical of China and the central government. I expected SCMP would quickly become way more pro-China, supportive of central government on every issue after purchase by Ma, but while that has happened to some extent, it was very gradual. Ma has stated that he wanted the paper to represent China to the outside world from more angles and perspectives. Personally I find the mixed editorial stance annoying. I wish it would be more decisively one-side like most Western outlets I'm used to. But it really is mixed and has something for everyone, and it's true that you can find perspectives from "both sides" or "multiple sides" there, so I think it is achieving its objective of representing China in a fair way to readers. For those reasons I think SCMP is a very reliable source for news on the region if you cannot read Chinese / even if you can. If you combine perspective across SCMP, a Western outlet, and a Chinese outlet (like: http://en.people.cn/ http://en.people.cn/) you get a much more faithful idea about China just reading one.
- T-A 8y ago
  SCMP was acquired by Alibaba in 2016 [1], with predictable consequences [2]. [1] https://en.wikipedia.org/wiki/South_China_Morning_Post#Purchase_by_Alibaba https://en.wikipedia.org/wiki/South_China_Morning_Post#Purch... [2] https://en.wikipedia.org/wiki/South_China_Morning_Post#Controversies https://en.wikipedia.org/wiki/South_China_Morning_Post#Contr...

chvid 8y ago

I am afraid it might be the other way around. The west is running massively expansive monetary and fiscal policy. The only reason that is not causing extreme inflation is that we import deflation from China. Were we to stop that prices and interest rates would jump and asset prices would collapse.

ced 8y ago
What do you mean by "import deflation"?
- occamrazor 8y ago
  That we print money, expanding the monetary base, and at the same time China stockpiles USD and other western currencies, effectively decreasing the same monetary base.
  - echevil 8y ago
    The Chinese government prints much more money though. Inflation is much more serious in China. The official stats doesn’t reflect this, but it’s clear for anyone who’s familiar with price changes in China

janesvilleseo 8y ago

I suspect this is a promoted post in the sense that someone with an agenda is gaming the system. The same article right now is on Reddit as a promoted post.