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China can outlast the US on this one. Next up, let's crash the price of oil and flip off the Iran sanctions: https://www.cnbc.com/2019/08/05/brent-and-wti-pri

China can outlast the US on this one. Next up, let's crash the price of oil and flip off the Iran sanctions: https://www.cnbc.com/2019/08/05/brent-and-wti-price-could-crash-if-china-buys-iranian-oil.html https://www.cnbc.com/2019/08/05/brent-and-wti-price-could-cr...

sremani 7y ago
Any day, I will take the bet on USA.
lacampbell 7y ago
China can outlast the US on this one. I'd take that bet!
hugh4life 7y ago
China would have a lot more room to move were the Hong Kong protests were not going on. The big problem they face is putting down the protests violently could lead towards pronouncements of them violating the agreement for it being held over. Which will lead toward countries people openly selling heavy weapons to Taiwan and maybe even building bases.
- euroclydon 7y ago
  No one is going to build a base in Taiwan. This is not 1985. China is way too powerful and advanced militarily now for the US to provoke them so directly.
- thefounder 7y ago
  I really doubt China cares a bit about the agreement signed with the UK. They are more concerned alienating HK people which is hard not to do unless they put the integration with the mainland on hold for a few good years.
- gtirloni 7y ago
  How much impact have the Hong Kong protest had on trade? If I had to my guess, exactly zero. And more weapons to Taiwan because of that? What for? Maybe I'm being cynic but I don't see the needle moving here.
- jbigelow76 7y ago
  Hong Kong is China's Crimea, nobody outside of China is going to go to war over it.
rolltiide 7y ago
The entire European Union along with China ignoring US sanctions will make the US re-evaluate its hegemonic ideology and interests To get to a more collaborative world, this would have to happen. The risk being that it could lead to a less collaborative world if the US is seen as a toothless world police. With the EU coming into its own and willing to take a near term economic hit to advance its goals, and China being forced to consider taking an economic hit to maintain its goals, it seems like this is possible now and into 2020.
- lacampbell 7y ago
  With the EU coming into its own In what possible world is the EU 'coming into its own'? It's losing its second largest contributor and still relies on the US to defend its eastern states from Russia. EDIT: to be clear I would love for the EU to provide a credible deterrence, its in the interest of global stability and peace. But the fact remains it can't.
  - matthewmacleod 7y ago
    Coming. Not “is already totally independent”
- thefounder 7y ago
  EU has its own issues such as Brexit, lack of fiscal union, Greece, Italy debt, unemployment, slow growth, no immigration policy, no common foreign policy etc. When you talk about EU you really talk about 27 member states not some kind of United States of Europe. The EU it's not really in the mood of taking short term hits unless is threatened(i.e with tariffs). Not to mention that it supports Trump stance on China as it suffers the same unfair treatment(i.e IP theft, closed markets, dumping etc). If US gets a good deal I'm pretty sure EU will ask and get a very similar one.
  - NicoJuicy 7y ago
    There is also the internal market and that China is threatening it's diplomacy with some eastern countries bribery.
Jorge1o1 7y ago
I think the trade balance is too skewed in favor of the US. It will be painful for both sides, but we have a lot more goods we can tariff than they can. Of course, they could also dump their US treasuries, but it would be a pyrrhic victory for China. They would hurt themselves too much in the process.
- nostromo 7y ago
  The US Fed would simply buy the dumped treasuries as an emergency measure. The Fed already owns twice as many treasuries as does China, so it could also just pause the balance sheet reduction program. It wouldn't dramatically hurt the US long term.
  - tyre 7y ago
    That's a bold statement. We're talking about over $1tn in treasuries. While the US debt is already around $22tn, that's a pretty huge weight
  - topmonk 7y ago
    But what happens to all that cash they would use to buy the treasuries with? Where is that $1.1 trillion going to flow into?
    - LegitShady 7y ago
      Whoever sells the treasuries gets the money. That's how buying and selling works.
      - topmonk 7y ago
        You understand that China is unlikely to just leave the cash sitting around, aren't you? That money will probably end up being dumped on Forex crashing the US dollar.
        LegitShady 7y ago
devoply 7y ago
Would be funny to see Iran get really snug with China like Pakistan has... I don't think Iran would mind at all and neither would China... and would pretty much destroy the US's control over Iran's economy.
- mythrwy 7y ago
  What do you think the result of that would be for Iran? (not saying the result would be "right", just what it would be).
tyre 7y ago
I don't know about that. What makes China's political situation difficult is that the control and censorship they impose on their people is easier to justify when the economic fortunes of the average Chinese person has risen for decades. "Why complain? Life is getting better!" Authoritarianism is a lot less appealing when the ruling party doesn't deliver. In the US there is a sense that the political system is certainly influenced by corporations, lobbying groups, HNI, foreign actors, etc. but generally we are to blame for electing idiots as president. We did this to ourselves.
AnthonyMouse 7y ago
> China can outlast the US on this one. So let's get the story so far. The US put tariffs on China. People complain about this because it's "hurting US importers" and "costing more to American consumers" etc. But it also puts the hurt on China because now their goods are less competitive, and paying 5% more than China to buy manufactured goods from Latin America or some other part of Asia hurts the US a little but hurts China a lot. So China responds by devaluing their currency. Now their prices are competitive again, even with the tariffs, but the result is that now the thing you used to buy from China for $100 that was momentarily $110 (so that you bought it from Mexico for $105) is now back to $100. That gets people buying from China again, and paying the original prices, only now of the $100 China used to get, they only get $90 and the US treasury gets $10. Meanwhile this allows the US to raise the tariffs even more for the same cost to the American consumer. Or just leave them where they are forever and enjoy the 10% China has effectively volunteered to discount its goods by. > Next up, let's crash the price of oil and flip off the Iran sanctions Then OPEC cuts production because they're a cartel and all they need is to keep oil competitive with renewables, not have it cost significantly less than that. But it may come down some and then Trump gets voter support from lower gas prices. And the lower oil prices allow oil to better compete with the batteries and solar panels that are manufactured in China, causing China to lose business. And China is on the "climate change is especially bad for this country" list, so that's not great for them either. Meanwhile it gives more cover for Trump to escalate the trade war in retaliation for violating the Iran sanctions. Not really the biggest win for China.

sremani 7y ago

Any day, I will take the bet on USA.

lacampbell 7y ago

China can outlast the US on this one. I'd take that bet!

hugh4life 7y ago

China would have a lot more room to move were the Hong Kong protests were not going on. The big problem they face is putting down the protests violently could lead towards pronouncements of them violating the agreement for it being held over. Which will lead toward countries people openly selling heavy weapons to Taiwan and maybe even building bases.

euroclydon 7y ago
No one is going to build a base in Taiwan. This is not 1985. China is way too powerful and advanced militarily now for the US to provoke them so directly.
thefounder 7y ago
I really doubt China cares a bit about the agreement signed with the UK. They are more concerned alienating HK people which is hard not to do unless they put the integration with the mainland on hold for a few good years.
gtirloni 7y ago
How much impact have the Hong Kong protest had on trade? If I had to my guess, exactly zero. And more weapons to Taiwan because of that? What for? Maybe I'm being cynic but I don't see the needle moving here.
jbigelow76 7y ago
Hong Kong is China's Crimea, nobody outside of China is going to go to war over it.

rolltiide 7y ago

The entire European Union along with China ignoring US sanctions will make the US re-evaluate its hegemonic ideology and interests To get to a more collaborative world, this would have to happen. The risk being that it could lead to a less collaborative world if the US is seen as a toothless world police. With the EU coming into its own and willing to take a near term economic hit to advance its goals, and China being forced to consider taking an economic hit to maintain its goals, it seems like this is possible now and into 2020.

lacampbell 7y ago
With the EU coming into its own In what possible world is the EU 'coming into its own'? It's losing its second largest contributor and still relies on the US to defend its eastern states from Russia. EDIT: to be clear I would love for the EU to provide a credible deterrence, its in the interest of global stability and peace. But the fact remains it can't.
- matthewmacleod 7y ago
  Coming. Not “is already totally independent”
thefounder 7y ago
EU has its own issues such as Brexit, lack of fiscal union, Greece, Italy debt, unemployment, slow growth, no immigration policy, no common foreign policy etc. When you talk about EU you really talk about 27 member states not some kind of United States of Europe. The EU it's not really in the mood of taking short term hits unless is threatened(i.e with tariffs). Not to mention that it supports Trump stance on China as it suffers the same unfair treatment(i.e IP theft, closed markets, dumping etc). If US gets a good deal I'm pretty sure EU will ask and get a very similar one.
- NicoJuicy 7y ago
  There is also the internal market and that China is threatening it's diplomacy with some eastern countries bribery.

Jorge1o1 7y ago

I think the trade balance is too skewed in favor of the US. It will be painful for both sides, but we have a lot more goods we can tariff than they can. Of course, they could also dump their US treasuries, but it would be a pyrrhic victory for China. They would hurt themselves too much in the process.

nostromo 7y ago
The US Fed would simply buy the dumped treasuries as an emergency measure. The Fed already owns twice as many treasuries as does China, so it could also just pause the balance sheet reduction program. It wouldn't dramatically hurt the US long term.
- tyre 7y ago
  That's a bold statement. We're talking about over $1tn in treasuries. While the US debt is already around $22tn, that's a pretty huge weight
- topmonk 7y ago
  But what happens to all that cash they would use to buy the treasuries with? Where is that $1.1 trillion going to flow into?
  - LegitShady 7y ago
    Whoever sells the treasuries gets the money. That's how buying and selling works.
    - topmonk 7y ago
      You understand that China is unlikely to just leave the cash sitting around, aren't you? That money will probably end up being dumped on Forex crashing the US dollar.
      - LegitShady 7y ago

devoply 7y ago

Would be funny to see Iran get really snug with China like Pakistan has... I don't think Iran would mind at all and neither would China... and would pretty much destroy the US's control over Iran's economy.

mythrwy 7y ago
What do you think the result of that would be for Iran? (not saying the result would be "right", just what it would be).

tyre 7y ago

I don't know about that. What makes China's political situation difficult is that the control and censorship they impose on their people is easier to justify when the economic fortunes of the average Chinese person has risen for decades. "Why complain? Life is getting better!" Authoritarianism is a lot less appealing when the ruling party doesn't deliver. In the US there is a sense that the political system is certainly influenced by corporations, lobbying groups, HNI, foreign actors, etc. but generally we are to blame for electing idiots as president. We did this to ourselves.

AnthonyMouse 7y ago

> China can outlast the US on this one. So let's get the story so far. The US put tariffs on China. People complain about this because it's "hurting US importers" and "costing more to American consumers" etc. But it also puts the hurt on China because now their goods are less competitive, and paying 5% more than China to buy manufactured goods from Latin America or some other part of Asia hurts the US a little but hurts China a lot. So China responds by devaluing their currency. Now their prices are competitive again, even with the tariffs, but the result is that now the thing you used to buy from China for $100 that was momentarily $110 (so that you bought it from Mexico for $105) is now back to $100. That gets people buying from China again, and paying the original prices, only now of the $100 China used to get, they only get $90 and the US treasury gets $10. Meanwhile this allows the US to raise the tariffs even more for the same cost to the American consumer. Or just leave them where they are forever and enjoy the 10% China has effectively volunteered to discount its goods by. > Next up, let's crash the price of oil and flip off the Iran sanctions Then OPEC cuts production because they're a cartel and all they need is to keep oil competitive with renewables, not have it cost significantly less than that. But it may come down some and then Trump gets voter support from lower gas prices. And the lower oil prices allow oil to better compete with the batteries and solar panels that are manufactured in China, causing China to lose business. And China is on the "climate change is especially bad for this country" list, so that's not great for them either. Meanwhile it gives more cover for Trump to escalate the trade war in retaliation for violating the Iran sanctions. Not really the biggest win for China.