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> Were Beijing to pull the inverse Huawei ban on any company in the West, that company would be dead in a few months no matter what it is. China can't do any o

> Were Beijing to pull the inverse Huawei ban on any company in the West, that company would be dead in a few months no matter what it is. China can't do any of that because it would harm their own economy far more (what remains of their industrial / trade trust would vaporize further) and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers. Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself. The US is one of the least trade dependent nations: https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-GDP_ratio https://en.wikipedia.org/wiki/List_of_countries_by_trade-to-... And: https://i.imgur.com/7JIIX8Q.jpg https://i.imgur.com/7JIIX8Q.jpg On imports + exports as a share of GDP, the US ranks #6 in the world as least dependent, with those two items making up 27% of the US GDP. China is at 40%. Germany is 87%, France is 63% and the UK is 62% by comparison. The US is also, essentially, entirely energy self-sufficient, with Canada's help. Something China is nowhere near being. The US could shut off China's access to foreign oil and a lot of coal supply very easily and it would grind up their economy. Let's run the hypothetical though. Ok, do it to Microsoft, Google, Facebook and Oracle. Those are three of the five largest US companies and four of the largest tech companies. Might as well also hit Netflix, Adobe, Intuit, Salesforce, Workday, ServiceNow, Uber, Lyft, Twitter, Snap, Pinterest, Slack, Dropbox, etc. Also Exxon, Chevron, ConocoPhillips, Occidental, Phillips 66, Valero, Marathon, EOG. Run it against JPMorgan, Citi, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, BlackRock, NY Mellon, Fidelity, Vanguard, etc. Next up do Visa, PayPal, Mastercard, Discover, Amex, Square, Stripe. Then do it to Pfizer, Amgen, Merck, AbbVie, Gilead, Bristol-Myers Squibb, Biogen, Eli Lilly. Maybe Lockheed, Raytheon, Northrup and General Dynamics. How about Comcast, AT&T, Verizon, T-Mobile / Sprint. Also McDonald's, Yum Brands, Kraft, Mondelez, Coca Cola, Pepsi. Total result: barely a scratch overall, if that. Few of these companies, many of which are among the largest corporations on the planet, have a critical (threat-of-death type) exposure to China. A few would lose 5-10% of their businesses and life would continue just fine. This is the fundamental mistake China made by keeping its economy so restricted and locked down to foreign companies. Most of the US economy doesn't have a critical dependency on China. That's also why the large China tariffs are having near zero inflationary effect and that will continue to be the case. The only serious effect it's having is that it's pushing manufacturing out of China, which was one of the goals. Also fortunately Taiwan != China

baybal2 7y ago
> China can't do any of that because it would harm their own economy far more (what remains of their industrial / trade trust would vaporize further) I'll invert your argument. China can close all trade with USA tomorrow, and it will only be few percents of its GDP gone. Trade is not as big part of Chinese GDP as most people think, and trade with US is even smaller. Moreover, do you think that China has any trust to loose to begin with? Even 10 years ago, the biggest headache of an MNC in China was plain theft and petty extortion by low tier officials. If those companies had a chance to move elsewhere, they would've done so years ago. They plainly have no alternative. > and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers. China does not need allies to pull that out. Just any widget around has part/material/labour that is passing through China at some point. China can say companies to stop selling parts to server makers selling to, say, Google, and Google would not be able to do a thing about that. It is humanly impossible to recreate all and every critical component that goes into a computer these days apart from Chinese supply chains. > Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself. Sure, that's the thing, it will be the biggest trade battle ever. The current administration is too soft bodied to even contemplate fighting. But they have no other option to win this trade war. If Xi has no guts for that, my feel is that somebody will either force him, or do that for him. > The US is one of the least trade dependent nations: This is an illusion. USA is one of nations most dependent on Chinese light industry goods. Just any everyday item, and household good on US shelves comes from China. Many kinds of essential components and materials for US domestic industry are near 99% imports. For example, US may simply be left without half of all kinds of plastics on the market. China has near 100% monopoly on a lot of plastic types,especially higher performance ones. And people were saying that Dow Chemicals was ruling the world... There are less domestically manufactured everyday goods in US than even in Russia or the Gulf countries. Surely, USA has banks, funds, and law companies, but does it have manufacturers of trousers?
- 7y ago

baybal2 7y ago

> China can't do any of that because it would harm their own economy far more (what remains of their industrial / trade trust would vaporize further) I'll invert your argument. China can close all trade with USA tomorrow, and it will only be few percents of its GDP gone. Trade is not as big part of Chinese GDP as most people think, and trade with US is even smaller. Moreover, do you think that China has any trust to loose to begin with? Even 10 years ago, the biggest headache of an MNC in China was plain theft and petty extortion by low tier officials. If those companies had a chance to move elsewhere, they would've done so years ago. They plainly have no alternative. > and it wouldn't likely kill the company they target (unless it was a small hyper dependent company). The US move against Huawei works particularly well because of the US partners willing to go along with it as a group; the same is true of US sanctions. China has very few allies and few global levers. China does not need allies to pull that out. Just any widget around has part/material/labour that is passing through China at some point. China can say companies to stop selling parts to server makers selling to, say, Google, and Google would not be able to do a thing about that. It is humanly impossible to recreate all and every critical component that goes into a computer these days apart from Chinese supply chains. > Plus, the US would respond very harshly and China knows that. China isn't a gentle flower, it isn't avoiding hammering strategic US companies out of the goodness of its heart; it isn't attempting that maneuver because it knows the cost is too high for itself. Sure, that's the thing, it will be the biggest trade battle ever. The current administration is too soft bodied to even contemplate fighting. But they have no other option to win this trade war. If Xi has no guts for that, my feel is that somebody will either force him, or do that for him. > The US is one of the least trade dependent nations: This is an illusion. USA is one of nations most dependent on Chinese light industry goods. Just any everyday item, and household good on US shelves comes from China. Many kinds of essential components and materials for US domestic industry are near 99% imports. For example, US may simply be left without half of all kinds of plastics on the market. China has near 100% monopoly on a lot of plastic types,especially higher performance ones. And people were saying that Dow Chemicals was ruling the world... There are less domestically manufactured everyday goods in US than even in Russia or the Gulf countries. Surely, USA has banks, funds, and law companies, but does it have manufacturers of trousers?

7y ago