4 ms·

It ends with China being cut off from SWIFT and correspondent banking. That would probably make them re-think their approach to economic warfare.

devoply 7y ago
Considering how much stuff they produce I don't think that would end with them rethinking anything but rather establishing a different financial order with anyone who was willing to trade with them. And I think a lot of Europe and Asia would be on board for steep discounts.
- internet_user 7y ago
  The US would just need to cut off a few banks to trigger a credit crisis in China, they are already bailing out banks. Who knows how this all will play out, won't be pretty either way. I bet this is all empty brinkmanship.
simonh 7y ago
That would also do crippling damage to US and other foreign companies doing business with China. Even the current tariffs and counter-tariffs have cost US companies many billions. Qualcomm alone is estimated to have lost about a billion dollars in sales.
- internet_user 7y ago
  Boohoo, poor corps. Should we sell ourselves out entirely to China to satisfy the corporate profit motive? Personally, I rather Qualcomm goes bankrupt entirely than see Chinese global hegemony.
  - wahern 7y ago
    Abusing our current structural position in the international monetary system is the surest way to hasten the end of our own hegemony and the beginning of Chinese hegemony--if that ever comes.
    - maps 7y ago
      Huh?? Isn't setting up the structure and abusing the US position what has been happening for the past half century? It actually seems like the recent change has been to let china get away with whatever they want with no struggle and simply accept a nice slow bleed out.
  - landryraccoon 7y ago
    > Chinese global hegemony. Where on earth is this coming from? What does this even mean?
  - simonh 7y ago
    You do know those companies employ workers, right? And pay taxes, and buy goods and services in the US?
  - dang 7y ago
    Please don't use HN for nationalistic battle. Would you mind reviewing the site guidelines? They include: "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
emilsedgh 7y ago
The chances of that happening are really close to zero though. The world economy (and specially US economy) badly relies on Chinese.
- mevile 7y ago
  The chances are not close to zero, they are much higher. The trade war with China is one of the very few topics where many Democrats support the administration. If the US caves now China will have won an enormous victory and will be able to dictate any further terms of trade with the US, which is a really bad outcome. There is very little chance that the current administration will accept a loss here on a fight they started or that Trump cares about how much every day people will be hurt by the trade war. In fact further US economic decline plays to his advantage because he can clearly blame China and blaming foreigners is something that works with his base.
  - emilsedgh 7y ago
    US can barely put sanctions on Iran as of now and the rest of the world is hesitant to follow. It took ~8 years to get the sanctions on Iran to that point. Even if US wanted to go nuclear and push for China being cut from SWIFT: 1. It will be suicide. Cutting China from SWIFT will have very very big impact in the US. 2. US corporations have too much interest to lose in here. No way corporate America allows that to happen. 3. The rest of the world is already pissed at US for pulling out from Iran deal. They are not following US regarding Iran. How do you propose they would follow US' lead to put such sanctions on China and suffocate themselves? Again, the chances of China being cut from SWIFT are close to zero.
    - adventured 7y ago
      > US can barely put sanctions on Iran as of now and the rest of the world is hesitant to follow. The US has crushed the Iranian economy. What are you talking about? Have you seen the collapse of their economy since the US left the nuclear deal and began pursuing sanctions? Have you seen the extreme inflation rate, the plunge in their currency, the plunge in their oil exports, and their increasingly wild behavior? If entirely crushing their economy equates to barely, what would be a successful version of sanctioning Iran? Apr 2019 "Iran inflation could reach 40 percent this year as economy shrinks further" https://www.reuters.com/article/us-iran-economy-imf/iran-inflation-could-reach-40-percent-this-year-as-economy-shrinks-further-imf-idUSKCN1S509Q https://www.reuters.com/article/us-iran-economy-imf/iran-inf... Apr 2019 "Trump's maximum pressure campaign hammers Iranian economy" "The World Bank predicted in an April report that the Iranian economy would "contract sharply," and it expects GDP to shrink by 3.8% in 2019 on the back of U.S. sanctions." "Iran's currency, the rial, lost more than 60% of its value compared to the U.S. dollar last year, and inflation surged fourfold to an estimated rate of more than 40% by the end of 2018. (In 2019, the Central Bank of Iran has stopped publishing inflation data, leading some analysts to believe that the rate has kept rising beyond 40%.)" https://www.axios.com/iran-economy-trump-sanctions-irgcc-0a8f58f1-35f4-4e23-8c17-f55c7baf6175.html https://www.axios.com/iran-economy-trump-sanctions-irgcc-0a8... Apr 2019 "Iran's Latest Inflation Figure Tops 50 Percent - Food Prices Jump 85 Percent" https://en.radiofarda.com/a/iran-s-latest-monthly-inflation-tops-50-percent---food-prices-jump-85-percent/29895099.html https://en.radiofarda.com/a/iran-s-latest-monthly-inflation-...
landryraccoon 7y ago
Why would Europe or the rest of the world go along with this? SWIFT becomes irrelevant if this happens, not China.
- addicted 7y ago
  The EU is looking to build alternative currency mechanisms for Iran. If China is cut off from any global trade structures, I can’t imagine any non US countries would go along with it. The other reason for this is that all the US allies that could possibly have worked with the US on this are all under threats of tariffs from the US themselves.
  - adventured 7y ago
    It's true that Trump is strategically blundering by being overly aggressive with the Europeans, however their economic system is under greater threat from China than the US is. The EU and Eurozone countries openly support what the US is doing in confronting China, even if they have their own disputes with the US on trade. Most of Europe plainly has even more at stake in dealing with China than the US does. The greater European region is far weaker than the US as a whole (half the GDP per capita, far less wealth, less economic growth, greater economic stagnation the past 10-20 years), both economically and militarily. China has in recent years demonstrated its ability to directly purchase votes and influence among weaker European nations. China is an advancing superpower that is pursuing both tech and industrial dominance. Europe has no tech dominance for China to plunder or compete with, however it does have a large amount of high-skill, advanced manufacturing in Western Europe. China wants to own that. What's left of Western Europe's economy if they do? Most of Germany's economy is built on advanced manufacturing and an extreme level of exports (~32% of its economy is exports), resulting in the world's largest national trade surplus. China's goal is to move up the development ladder and to own advanced manufacturing. If China has its way, Germany will be gutted. Most of Europe's interests on China are aligned with the US. The two can likely manage to keep US-Europe trade issues separate from the need to also deal with China.

devoply 7y ago

Considering how much stuff they produce I don't think that would end with them rethinking anything but rather establishing a different financial order with anyone who was willing to trade with them. And I think a lot of Europe and Asia would be on board for steep discounts.

internet_user 7y ago
The US would just need to cut off a few banks to trigger a credit crisis in China, they are already bailing out banks. Who knows how this all will play out, won't be pretty either way. I bet this is all empty brinkmanship.

simonh 7y ago

That would also do crippling damage to US and other foreign companies doing business with China. Even the current tariffs and counter-tariffs have cost US companies many billions. Qualcomm alone is estimated to have lost about a billion dollars in sales.

internet_user 7y ago
Boohoo, poor corps. Should we sell ourselves out entirely to China to satisfy the corporate profit motive? Personally, I rather Qualcomm goes bankrupt entirely than see Chinese global hegemony.
- wahern 7y ago
  Abusing our current structural position in the international monetary system is the surest way to hasten the end of our own hegemony and the beginning of Chinese hegemony--if that ever comes.
  - maps 7y ago
    Huh?? Isn't setting up the structure and abusing the US position what has been happening for the past half century? It actually seems like the recent change has been to let china get away with whatever they want with no struggle and simply accept a nice slow bleed out.
- landryraccoon 7y ago
  > Chinese global hegemony. Where on earth is this coming from? What does this even mean?
- simonh 7y ago
  You do know those companies employ workers, right? And pay taxes, and buy goods and services in the US?
- dang 7y ago
  Please don't use HN for nationalistic battle. Would you mind reviewing the site guidelines? They include: "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

emilsedgh 7y ago

The chances of that happening are really close to zero though. The world economy (and specially US economy) badly relies on Chinese.

mevile 7y ago
The chances are not close to zero, they are much higher. The trade war with China is one of the very few topics where many Democrats support the administration. If the US caves now China will have won an enormous victory and will be able to dictate any further terms of trade with the US, which is a really bad outcome. There is very little chance that the current administration will accept a loss here on a fight they started or that Trump cares about how much every day people will be hurt by the trade war. In fact further US economic decline plays to his advantage because he can clearly blame China and blaming foreigners is something that works with his base.
- emilsedgh 7y ago
  US can barely put sanctions on Iran as of now and the rest of the world is hesitant to follow. It took ~8 years to get the sanctions on Iran to that point. Even if US wanted to go nuclear and push for China being cut from SWIFT: 1. It will be suicide. Cutting China from SWIFT will have very very big impact in the US. 2. US corporations have too much interest to lose in here. No way corporate America allows that to happen. 3. The rest of the world is already pissed at US for pulling out from Iran deal. They are not following US regarding Iran. How do you propose they would follow US' lead to put such sanctions on China and suffocate themselves? Again, the chances of China being cut from SWIFT are close to zero.
  - adventured 7y ago
    > US can barely put sanctions on Iran as of now and the rest of the world is hesitant to follow. The US has crushed the Iranian economy. What are you talking about? Have you seen the collapse of their economy since the US left the nuclear deal and began pursuing sanctions? Have you seen the extreme inflation rate, the plunge in their currency, the plunge in their oil exports, and their increasingly wild behavior? If entirely crushing their economy equates to barely, what would be a successful version of sanctioning Iran? Apr 2019 "Iran inflation could reach 40 percent this year as economy shrinks further" https://www.reuters.com/article/us-iran-economy-imf/iran-inflation-could-reach-40-percent-this-year-as-economy-shrinks-further-imf-idUSKCN1S509Q https://www.reuters.com/article/us-iran-economy-imf/iran-inf... Apr 2019 "Trump's maximum pressure campaign hammers Iranian economy" "The World Bank predicted in an April report that the Iranian economy would "contract sharply," and it expects GDP to shrink by 3.8% in 2019 on the back of U.S. sanctions." "Iran's currency, the rial, lost more than 60% of its value compared to the U.S. dollar last year, and inflation surged fourfold to an estimated rate of more than 40% by the end of 2018. (In 2019, the Central Bank of Iran has stopped publishing inflation data, leading some analysts to believe that the rate has kept rising beyond 40%.)" https://www.axios.com/iran-economy-trump-sanctions-irgcc-0a8f58f1-35f4-4e23-8c17-f55c7baf6175.html https://www.axios.com/iran-economy-trump-sanctions-irgcc-0a8... Apr 2019 "Iran's Latest Inflation Figure Tops 50 Percent - Food Prices Jump 85 Percent" https://en.radiofarda.com/a/iran-s-latest-monthly-inflation-tops-50-percent---food-prices-jump-85-percent/29895099.html https://en.radiofarda.com/a/iran-s-latest-monthly-inflation-...

landryraccoon 7y ago

Why would Europe or the rest of the world go along with this? SWIFT becomes irrelevant if this happens, not China.

addicted 7y ago
The EU is looking to build alternative currency mechanisms for Iran. If China is cut off from any global trade structures, I can’t imagine any non US countries would go along with it. The other reason for this is that all the US allies that could possibly have worked with the US on this are all under threats of tariffs from the US themselves.
- adventured 7y ago
  It's true that Trump is strategically blundering by being overly aggressive with the Europeans, however their economic system is under greater threat from China than the US is. The EU and Eurozone countries openly support what the US is doing in confronting China, even if they have their own disputes with the US on trade. Most of Europe plainly has even more at stake in dealing with China than the US does. The greater European region is far weaker than the US as a whole (half the GDP per capita, far less wealth, less economic growth, greater economic stagnation the past 10-20 years), both economically and militarily. China has in recent years demonstrated its ability to directly purchase votes and influence among weaker European nations. China is an advancing superpower that is pursuing both tech and industrial dominance. Europe has no tech dominance for China to plunder or compete with, however it does have a large amount of high-skill, advanced manufacturing in Western Europe. China wants to own that. What's left of Western Europe's economy if they do? Most of Germany's economy is built on advanced manufacturing and an extreme level of exports (~32% of its economy is exports), resulting in the world's largest national trade surplus. China's goal is to move up the development ladder and to own advanced manufacturing. If China has its way, Germany will be gutted. Most of Europe's interests on China are aligned with the US. The two can likely manage to keep US-Europe trade issues separate from the need to also deal with China.