8 ms·

can someone explain to me this "trade war" between the u.s. and china? as far as i can tell, it is an entirely constructed thing (in terms of how it started) an

can someone explain to me this "trade war" between the u.s. and china? as far as i can tell, it is an entirely constructed thing (in terms of how it started) and is simply the new "war" just like we had the cold war, war against drugs, war against terror, etc. so now the trade war is just the u.s.'s new war fetish. so other than the current administration's idiotic approach to anything, what was the impetus of all of this?

zelon88 7y ago
Trump is convinced that the Chinese have been robbing America blind for decades with lopsided trade agreements which favor Beijing. Specifically, they're worried that the dollars we're buying Chinese products with are being used to purchase liquid American assets, instead of re-investing in America by purchasing commodity items. The Trump administration believes that China is using these funds to slowly "buy up America" [1] One thing he's missing out on is the fact that the Chinese government has devalued their own currency for about as long as they've been buying America specifically to keep the dollar strong. There is no way to convert Chinese currency into many other international currencies. For example, for a long time there was no way to turn Chinese money into Japanese money. To accomplish this investors would buy American dollars with Chinese currency, then use the American dollars to buy Japanese currency. This has held the dollar higher in value compared to other, less compatible currencies. Devaluing also helps keep Chinese buying power out of the hands of the Chinese public and into the hands of Chinese billionaire class, who strictly deal in American cash. Hurting the Chinese dollar doesn't impact the Chinese economy nearly as much as hurting the American dollar does. So our trade war is doing two things. 1) It's pushing China to the table. 2) It's making China reconsider it's reliance on the status quo (The American dollar). If China were to correct the value of their currency; almost overnight the Chinese population would be sipping Starbucks and typing on MacBook Pro's while American's slave away at factories with suicide netting before going home to sleep in dog kennel's. 1. https://en.wikipedia.org/wiki/China%E2%80%93United_States_trade_war https://en.wikipedia.org/wiki/China%E2%80%93United_States_tr...
- deleted 7y ago
  [deleted]
- coliveira 7y ago
  That's exactly correct. There is this notion that the American economy is larger than the Chinese economy, when in fact this is only a product of the strategic and constant devaluation of the Yuan with respect to the dollar. This has only been allowed by the Chinese because they haven't completed the process of moving their surplus to their own economy. In this decade we have already seen the Chinese moving their surplus to create a strong internal economy and when this process is complete they will have every incentive to stop supporting the US dollar and to stop devaluing the Yuan.
  - Theodores 7y ago
    There are different ways of measuring how large an economy is. How much of the US economy is Wall Street and real estate? Does that really deserve to be 'GDP' as nothing is actually made? Some say that a large finance sector and a rentier class is a burden to the main economy. It is hard to deny even if there is the 'trickledown' effect from the 1%. What about militarism? The trillions spent on war is supposed to be good for the economy but I don't see it myself. If all those bullets had been batteries for electric cars then the USA could have sold those electric cars to places like Libya, Iraq and elsewhere blown off the map or crippled with sanctions. In China, regardless of whether they have stolen IP or not, they do actually make stuff. Making stuff definitely counts as GDP. Chinese folk are industrious and 'lazy' is not a word uttered in the context of China, even by the haters. I don't get the feeling that the Chinese economy has developed to the late capitalist stage where everyone who works is paying off rentseekers, monopolists and usurers. For this reason I think the Chinese economy is a lot stronger than the American one even if the GDP metric would lead one to believe otherwise. I also think China are leapfrogging the USA when it comes to education. STEM subjects rule in China, they don't in the USA. When it comes to the fundamentals China is on to something. I am not sure USA Inc has a plan for the future.
    - coliveira 7y ago
mc32 7y ago
When Clinton granted China MFN status and then was allowed into WTO there were some (perhaps naive) assumptions of working in good faith and that while it was expected China would be granted some breaks as it caught up, eventually it would play nice abide by the rules everyone else respects. Well, it’s been 30 years and China is still not playing fair in trade (ownership requirements, IP transfer, IP theft, market access, etc.) The admin is doing something the Busch admin should have done, or at least the first Obama, but neither did because it would be too upsetting to multinationals and would also “upset” China. Now we have someone who says times up, do what you signed up for or deal with the consequences of ignoring the rule set out. And, to a great degree, I agree with this. Blue collar labor was thrown under the bus. That little Texan was right. A giant sucking sound did take the jobs, but not Mexico but rather China chiefly, among other labor outsourcing, to our detriment (their own too) and environmental degradation. Now, I’m glad and it’s great China took this opportunity to lift its people from abject poverty but we took too much of a hit. It should have been more measured and more fair.
- nikofeyn 7y ago
  but my guess is that the period of china stealing ip (which is an obvious fact that has happened over decades) is only temporary in the grand scheme of things in that it won't last forever. this is because china has stolen ideas, concepts, and direct designs to catch up but is now in many areas surpassing product design in the u.s. so this idea that u.s. design and development > chinese design and development won't last and is already breaking down. thus, the u.s. is in real danger since china has all the manufacturing ability. so yea, china has stolen and ignored ip laws, but that soon won't even matter. that's at least my prediction. i have a friend in a u.s. technology company, and they simply cannot beat the chinese version of their product in both price and features despite being the creator of the product category decades ahead of others. the chinese companies copied the design but have now exceeded it, so the u.s. product does very poorly in china. so what it sounds like to me is that the u.s. sees the writing on the wall, which is all due to their own actions and corporate greed over the past few decades, and so now is making a hail mary in a trade war. it doesn't seem like a good idea when it likely won't be long until china has the upper hand. so it seems it basically comes down to trump taking his poor understanding of dynamics and abusing the u.s. government's and people's need for a "war".
AimForTheBushes 7y ago
It's a response to China not fulfilling their promises and not playing fair. IP theft, lack of market access, the benefits they receive of being labeled a third world country, possible currency manipulation, the list goes on. It may be disagreeable to this administration's approach but there is bipartisan and foreign support for addressing China. Personally, I agree and rather see tariffs implemented now rather than continuing the status quo.
- yhoneycomb 7y ago
  It's so funny hearing Americans talk about China as if the Chinese government is somehow "cheating" As if America doesn't do all of that and more
lnanek2 7y ago
Why do you think there needs to be one besides a politician wanting to look tough in front of constituents?
tepidandroid 7y ago
It’s a good question, and one has to wonder why issues such as ownership requirements, IP transfer, IP theft and market access have never been made an issue of until now. The answer is that American corporations have benefited immensely from doing business in China over the last 30 years, regardless of these issues. It cannot be denied that American corporations are some of the largest and most profitable businesses this planet has ever seen, much of which can be traced back to its outsourcing of labor/manufacturing to China. Anything that even minutely threatens to disrupt these absurd profits is perceived as an existential threat. This white paper [1] from a large private equity / investment banking firm can at least partially provide a glimpse into what is going on right now. The current situation has its roots in the financial crisis of 08-09, the repercussions of which nearly brought China to its knees. The key takeaways are that China’s reliance on global trade has been declining consistently since the financial crisis. The GFC made them realize the systemic risk posed by the reliance on external demand and ever since then, the central government has made a conscious decision to shift towards insourcing goods and services. Pre-2007, there existed a symbiotic relationship between China and the US whereby China exported goods to America in return for US dollars, which it then in turn used to buy hundreds of billions of dollars worth of US Bonds. It was a win-win situation: China benefits by profiting off of exports, America benefits with cheap goods, access to cheap and highly available credit and a very strong dollar. Now that China is focused on recycling surpluses into its own economy (for example, by moving up the supply chain into higher value-added exports previously dominated by American corporations), this symbiotic relationship is being tested. The fact is, the trade deficit (that has been characterized by Trump as "stealing" from America, a laughable notion), actually shrinks to almost nothing when adjusted for services and goods manufactured and sold by US firms in China [1, ex.16]. This is comparing four categories of goods and services exchanged between the US and China (1: services sold through subsidiaries, 2: services imports, 3: goods through subsidiaries and 4: goods through trade), which is a much more complete and honest comparison than simply focusing on goods sold through trade alone. When adjusted for U.S sales of goods and services within China, the trade deficit actually amounts to a US _surplus_ of something in the ballpark 20B a year [1, ex.17]. The problem is, this headline is not nearly as polarizing as the headline “China has taken advantage of the United States and cheated the American people for far too long”. It also shifts the blame for the current wealth disparity in America from where it belongs (American corporate greed) squarely onto the shoulders of China, the convenient scapegoat and whipping boy du jour. All this is not to say China is without fault and completely innocent of certain accusations. There are many other factors also involved. However, I believe what I've mentioned above can explain the lion's share of it. [1] https://www.kkr.com/sites/default/files/KKR_White_Paper_51-1902.pdf https://www.kkr.com/sites/default/files/KKR_White_Paper_51-1...
coliveira 7y ago
You're completely right. The "trade war" is something that came out of Trump's sick mind, influenced by Bannon. Not only a trade war is stupid, because it hurts the US economy, it is also morally unjustified: the US has spent the last 100 years or more preaching open markets. The thing that makes me more sick is seeing that the US-based media buys the whole argument and runs with it without critically analyzing what they're doing. In fact the biggest power Trump has is to plant an idea in the minds of journalists and let them run and expand on that idea without ever criticizing what they're doing.
- creato 7y ago
  > the US has spent the last 100 years or more preaching open markets Do you think China had an open market before the trade war?
  - coliveira 7y ago
    Even if it was not open, do you thing that the answer is for the US to close its economy raising tariffs in most developed countries?
- AimForTheBushes 7y ago
  "The "trade war" is something that came out of Trump's sick mind, influenced by Bannon." This is incorrect. Peter Navarro is the main driver for addressing China's practices. He wrote the book on it. "it is also morally unjustified: the US has spent the last 100 years or more preaching open markets." China's markets are not open? How many foreign companies had to do 51/49 split ventures to access Chinese markets? Do you think they wanted do that? Do you honestly think that is 'open'?
nitwit005 7y ago
It's not that there aren't real issues, but the American attitude is strange due to Trump seeming mostly interested in political benefits at home, rather than actual economic gains.
- briandear 7y ago
  American economic gains are political benefits. But to get there, trade might have to go through a tougher period. It’s a long game rather than simply looking for quick political wins. When the EU tariffs were proposed, EU leaders were really quick to come to the bargaining table, while before that, America just endured whatever tariffs the EU cooked up. https://m.dw.com/en/trump-forces-brussels-hand-on-trade-despite-tariffs-backlash/a-48388912 https://m.dw.com/en/trump-forces-brussels-hand-on-trade-desp...
sonnyblarney 7y ago
Terrorism, hard drugs, the Soviet Empire with 1000's of nuclear warheads on the table, and every nation draw into the post-WW2 vacuum ... are not 'fetishes'. There are very real and material issues between the US and China with respect to governmental intervention, externalization of costs, theft of IP, anti-competitive acts, capital controls, state-sponsored espionage, politicization of monetary policy - etc.. It's a wide and expansive set of issues that were essentially ignored for 30 years because it didn't so much matter, moreover, it was probably beneficial for everyone anyhow for China to have done what it did (except obviously the environmental and humanitarian externalizations). But China wants to play in the advanced league now, so a different set of rules is going to have to apply, or there'll have to be permanent tariffs. Trump is playing mostly 'big stick' and not nuance on this, but it seems to actually be working, and many of his would-be detractors (me included?), particularly the Dems are quiet on the issue because everyone has wanted to take up this issue for some time, but nobody has the power to. Every foreign office in the West right now has a big 'China file' of issue to contend with, and they're all happy this is happening on some level. I'm not hugely hopeful there will be big reforms anywhere, I think we're going to see tariffs on a bunch of things, but that won't be so bad. In the grand-grand scheme of things I don't think the end result will be hugely noticeable to most people.

zelon88 7y ago

Trump is convinced that the Chinese have been robbing America blind for decades with lopsided trade agreements which favor Beijing. Specifically, they're worried that the dollars we're buying Chinese products with are being used to purchase liquid American assets, instead of re-investing in America by purchasing commodity items. The Trump administration believes that China is using these funds to slowly "buy up America" [1] One thing he's missing out on is the fact that the Chinese government has devalued their own currency for about as long as they've been buying America specifically to keep the dollar strong. There is no way to convert Chinese currency into many other international currencies. For example, for a long time there was no way to turn Chinese money into Japanese money. To accomplish this investors would buy American dollars with Chinese currency, then use the American dollars to buy Japanese currency. This has held the dollar higher in value compared to other, less compatible currencies. Devaluing also helps keep Chinese buying power out of the hands of the Chinese public and into the hands of Chinese billionaire class, who strictly deal in American cash. Hurting the Chinese dollar doesn't impact the Chinese economy nearly as much as hurting the American dollar does. So our trade war is doing two things. 1) It's pushing China to the table. 2) It's making China reconsider it's reliance on the status quo (The American dollar). If China were to correct the value of their currency; almost overnight the Chinese population would be sipping Starbucks and typing on MacBook Pro's while American's slave away at factories with suicide netting before going home to sleep in dog kennel's. 1. https://en.wikipedia.org/wiki/China%E2%80%93United_States_trade_war https://en.wikipedia.org/wiki/China%E2%80%93United_States_tr...

deleted 7y ago
[deleted]
coliveira 7y ago
That's exactly correct. There is this notion that the American economy is larger than the Chinese economy, when in fact this is only a product of the strategic and constant devaluation of the Yuan with respect to the dollar. This has only been allowed by the Chinese because they haven't completed the process of moving their surplus to their own economy. In this decade we have already seen the Chinese moving their surplus to create a strong internal economy and when this process is complete they will have every incentive to stop supporting the US dollar and to stop devaluing the Yuan.
- Theodores 7y ago
  There are different ways of measuring how large an economy is. How much of the US economy is Wall Street and real estate? Does that really deserve to be 'GDP' as nothing is actually made? Some say that a large finance sector and a rentier class is a burden to the main economy. It is hard to deny even if there is the 'trickledown' effect from the 1%. What about militarism? The trillions spent on war is supposed to be good for the economy but I don't see it myself. If all those bullets had been batteries for electric cars then the USA could have sold those electric cars to places like Libya, Iraq and elsewhere blown off the map or crippled with sanctions. In China, regardless of whether they have stolen IP or not, they do actually make stuff. Making stuff definitely counts as GDP. Chinese folk are industrious and 'lazy' is not a word uttered in the context of China, even by the haters. I don't get the feeling that the Chinese economy has developed to the late capitalist stage where everyone who works is paying off rentseekers, monopolists and usurers. For this reason I think the Chinese economy is a lot stronger than the American one even if the GDP metric would lead one to believe otherwise. I also think China are leapfrogging the USA when it comes to education. STEM subjects rule in China, they don't in the USA. When it comes to the fundamentals China is on to something. I am not sure USA Inc has a plan for the future.
  - coliveira 7y ago

mc32 7y ago

When Clinton granted China MFN status and then was allowed into WTO there were some (perhaps naive) assumptions of working in good faith and that while it was expected China would be granted some breaks as it caught up, eventually it would play nice abide by the rules everyone else respects. Well, it’s been 30 years and China is still not playing fair in trade (ownership requirements, IP transfer, IP theft, market access, etc.) The admin is doing something the Busch admin should have done, or at least the first Obama, but neither did because it would be too upsetting to multinationals and would also “upset” China. Now we have someone who says times up, do what you signed up for or deal with the consequences of ignoring the rule set out. And, to a great degree, I agree with this. Blue collar labor was thrown under the bus. That little Texan was right. A giant sucking sound did take the jobs, but not Mexico but rather China chiefly, among other labor outsourcing, to our detriment (their own too) and environmental degradation. Now, I’m glad and it’s great China took this opportunity to lift its people from abject poverty but we took too much of a hit. It should have been more measured and more fair.

nikofeyn 7y ago
but my guess is that the period of china stealing ip (which is an obvious fact that has happened over decades) is only temporary in the grand scheme of things in that it won't last forever. this is because china has stolen ideas, concepts, and direct designs to catch up but is now in many areas surpassing product design in the u.s. so this idea that u.s. design and development > chinese design and development won't last and is already breaking down. thus, the u.s. is in real danger since china has all the manufacturing ability. so yea, china has stolen and ignored ip laws, but that soon won't even matter. that's at least my prediction. i have a friend in a u.s. technology company, and they simply cannot beat the chinese version of their product in both price and features despite being the creator of the product category decades ahead of others. the chinese companies copied the design but have now exceeded it, so the u.s. product does very poorly in china. so what it sounds like to me is that the u.s. sees the writing on the wall, which is all due to their own actions and corporate greed over the past few decades, and so now is making a hail mary in a trade war. it doesn't seem like a good idea when it likely won't be long until china has the upper hand. so it seems it basically comes down to trump taking his poor understanding of dynamics and abusing the u.s. government's and people's need for a "war".

AimForTheBushes 7y ago

It's a response to China not fulfilling their promises and not playing fair. IP theft, lack of market access, the benefits they receive of being labeled a third world country, possible currency manipulation, the list goes on. It may be disagreeable to this administration's approach but there is bipartisan and foreign support for addressing China. Personally, I agree and rather see tariffs implemented now rather than continuing the status quo.

yhoneycomb 7y ago
It's so funny hearing Americans talk about China as if the Chinese government is somehow "cheating" As if America doesn't do all of that and more

lnanek2 7y ago

Why do you think there needs to be one besides a politician wanting to look tough in front of constituents?

tepidandroid 7y ago

It’s a good question, and one has to wonder why issues such as ownership requirements, IP transfer, IP theft and market access have never been made an issue of until now. The answer is that American corporations have benefited immensely from doing business in China over the last 30 years, regardless of these issues. It cannot be denied that American corporations are some of the largest and most profitable businesses this planet has ever seen, much of which can be traced back to its outsourcing of labor/manufacturing to China. Anything that even minutely threatens to disrupt these absurd profits is perceived as an existential threat. This white paper [1] from a large private equity / investment banking firm can at least partially provide a glimpse into what is going on right now. The current situation has its roots in the financial crisis of 08-09, the repercussions of which nearly brought China to its knees. The key takeaways are that China’s reliance on global trade has been declining consistently since the financial crisis. The GFC made them realize the systemic risk posed by the reliance on external demand and ever since then, the central government has made a conscious decision to shift towards insourcing goods and services. Pre-2007, there existed a symbiotic relationship between China and the US whereby China exported goods to America in return for US dollars, which it then in turn used to buy hundreds of billions of dollars worth of US Bonds. It was a win-win situation: China benefits by profiting off of exports, America benefits with cheap goods, access to cheap and highly available credit and a very strong dollar. Now that China is focused on recycling surpluses into its own economy (for example, by moving up the supply chain into higher value-added exports previously dominated by American corporations), this symbiotic relationship is being tested. The fact is, the trade deficit (that has been characterized by Trump as "stealing" from America, a laughable notion), actually shrinks to almost nothing when adjusted for services and goods manufactured and sold by US firms in China [1, ex.16]. This is comparing four categories of goods and services exchanged between the US and China (1: services sold through subsidiaries, 2: services imports, 3: goods through subsidiaries and 4: goods through trade), which is a much more complete and honest comparison than simply focusing on goods sold through trade alone. When adjusted for U.S sales of goods and services within China, the trade deficit actually amounts to a US _surplus_ of something in the ballpark 20B a year [1, ex.17]. The problem is, this headline is not nearly as polarizing as the headline “China has taken advantage of the United States and cheated the American people for far too long”. It also shifts the blame for the current wealth disparity in America from where it belongs (American corporate greed) squarely onto the shoulders of China, the convenient scapegoat and whipping boy du jour. All this is not to say China is without fault and completely innocent of certain accusations. There are many other factors also involved. However, I believe what I've mentioned above can explain the lion's share of it. [1] https://www.kkr.com/sites/default/files/KKR_White_Paper_51-1902.pdf https://www.kkr.com/sites/default/files/KKR_White_Paper_51-1...

coliveira 7y ago

You're completely right. The "trade war" is something that came out of Trump's sick mind, influenced by Bannon. Not only a trade war is stupid, because it hurts the US economy, it is also morally unjustified: the US has spent the last 100 years or more preaching open markets. The thing that makes me more sick is seeing that the US-based media buys the whole argument and runs with it without critically analyzing what they're doing. In fact the biggest power Trump has is to plant an idea in the minds of journalists and let them run and expand on that idea without ever criticizing what they're doing.

creato 7y ago
> the US has spent the last 100 years or more preaching open markets Do you think China had an open market before the trade war?
- coliveira 7y ago
  Even if it was not open, do you thing that the answer is for the US to close its economy raising tariffs in most developed countries?
AimForTheBushes 7y ago
"The "trade war" is something that came out of Trump's sick mind, influenced by Bannon." This is incorrect. Peter Navarro is the main driver for addressing China's practices. He wrote the book on it. "it is also morally unjustified: the US has spent the last 100 years or more preaching open markets." China's markets are not open? How many foreign companies had to do 51/49 split ventures to access Chinese markets? Do you think they wanted do that? Do you honestly think that is 'open'?

nitwit005 7y ago

It's not that there aren't real issues, but the American attitude is strange due to Trump seeming mostly interested in political benefits at home, rather than actual economic gains.

briandear 7y ago
American economic gains are political benefits. But to get there, trade might have to go through a tougher period. It’s a long game rather than simply looking for quick political wins. When the EU tariffs were proposed, EU leaders were really quick to come to the bargaining table, while before that, America just endured whatever tariffs the EU cooked up. https://m.dw.com/en/trump-forces-brussels-hand-on-trade-despite-tariffs-backlash/a-48388912 https://m.dw.com/en/trump-forces-brussels-hand-on-trade-desp...

sonnyblarney 7y ago

Terrorism, hard drugs, the Soviet Empire with 1000's of nuclear warheads on the table, and every nation draw into the post-WW2 vacuum ... are not 'fetishes'. There are very real and material issues between the US and China with respect to governmental intervention, externalization of costs, theft of IP, anti-competitive acts, capital controls, state-sponsored espionage, politicization of monetary policy - etc.. It's a wide and expansive set of issues that were essentially ignored for 30 years because it didn't so much matter, moreover, it was probably beneficial for everyone anyhow for China to have done what it did (except obviously the environmental and humanitarian externalizations). But China wants to play in the advanced league now, so a different set of rules is going to have to apply, or there'll have to be permanent tariffs. Trump is playing mostly 'big stick' and not nuance on this, but it seems to actually be working, and many of his would-be detractors (me included?), particularly the Dems are quiet on the issue because everyone has wanted to take up this issue for some time, but nobody has the power to. Every foreign office in the West right now has a big 'China file' of issue to contend with, and they're all happy this is happening on some level. I'm not hugely hopeful there will be big reforms anywhere, I think we're going to see tariffs on a bunch of things, but that won't be so bad. In the grand-grand scheme of things I don't think the end result will be hugely noticeable to most people.