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The agreement was never a symmetric "free trade" agreement. Everyone knew China wasn't going to be as open to imports as the US was. Chinese consumers, in the l

The agreement was never a symmetric "free trade" agreement. Everyone knew China wasn't going to be as open to imports as the US was. Chinese consumers, in the late 70s, were so poor that it didn't matter anyway. Mcdonalds and Coke were symbolic outliers, but all the negotiators knew these things. US negotiators did get what they actually wanted, US "FDI" investments in China protected by western style corporate laws. Foxcon-Apple stuff is exactly what both parties had in mind. Foxconn (Taiwan is pax americana) invest in building the factory, funded by Western/US banks. Apple own the IP and gain most of the equity. China gets jobs, a trade surplus, and builds foreign currency reserves. The game has been played for a while, and all parties got a lot of what they wanted. Foxconn really does generate a ton of equity for Apple. China really has built up a ton of foreign currency reserves. Etc. I'm not saying this is good. China should stop being so surplus oriented and let salaries rise. The US should give some attention to domestic labour, etc.... That's my opinion though. It was not the opinion of negotiators in the 70s and 80s.

MperorM 5y ago
Trade agreements don't need to be symmetric to be beneficial for both parties. Even if China didn't buy a single American good, it is beneficial for US to sell to china. Export is what you pay for import. If China sells goods to US they will get dollars in return. These dollars are worthless except for buying American goods. Even if China can't buy American goods, they can buy some other country's goods using their newly acquired dollars. Eventually someone somewhere will use those dollars to buy American goods.
- nradov 5y ago
  Those dollars aren't necessarily used to purchase American goods but rather to acquire ownership stakes in American assets.
- tooltalk 5y ago
  Sure, the USD is the world's reserve currency. And, while it's also the currency of the international trade, the US's share of China's import isn't as significant -- in 2019, China imported over $2T, or $2,000B, worth of goods and services globally and, of that, only $163B, came from the US. In fact, the US is not even the biggest import nation, it's South Korea, followed by Japan and Taiwan.
FooBarWidget 5y ago
This is one of the best HN comments I've read on the China issue. Finally a fair comment.
- dalbasal 5y ago
  Cheers. This topic actually really depresses me. The whole "crisis" is unnecessary. The US and China can easily, and probably should renegotiate trade terms amicably. It just seems to be politically impossible to say "we got what we wanted then, but now we have different priorities." It doesn't seem possible to actually spell out priorities, or admit that in a negotiation, the other party has priorities too. Geopolitics, or humans rights issues are a different matter. There are real dangers at play, now that the two countries are equal rivals. China's way of disciplining companies (eg Nike when they made a Xinjiang, or John Cena's little speech) is directly at odds with the US' MO. It's quite zero sum. I don't see how that gets resolved, in a way that doesn't (for example) have the potential knock a whole $trn off Apple's market cap.

MperorM 5y ago

Trade agreements don't need to be symmetric to be beneficial for both parties. Even if China didn't buy a single American good, it is beneficial for US to sell to china. Export is what you pay for import. If China sells goods to US they will get dollars in return. These dollars are worthless except for buying American goods. Even if China can't buy American goods, they can buy some other country's goods using their newly acquired dollars. Eventually someone somewhere will use those dollars to buy American goods.

nradov 5y ago
Those dollars aren't necessarily used to purchase American goods but rather to acquire ownership stakes in American assets.
tooltalk 5y ago
Sure, the USD is the world's reserve currency. And, while it's also the currency of the international trade, the US's share of China's import isn't as significant -- in 2019, China imported over $2T, or $2,000B, worth of goods and services globally and, of that, only $163B, came from the US. In fact, the US is not even the biggest import nation, it's South Korea, followed by Japan and Taiwan.

FooBarWidget 5y ago

This is one of the best HN comments I've read on the China issue. Finally a fair comment.

dalbasal 5y ago
Cheers. This topic actually really depresses me. The whole "crisis" is unnecessary. The US and China can easily, and probably should renegotiate trade terms amicably. It just seems to be politically impossible to say "we got what we wanted then, but now we have different priorities." It doesn't seem possible to actually spell out priorities, or admit that in a negotiation, the other party has priorities too. Geopolitics, or humans rights issues are a different matter. There are real dangers at play, now that the two countries are equal rivals. China's way of disciplining companies (eg Nike when they made a Xinjiang, or John Cena's little speech) is directly at odds with the US' MO. It's quite zero sum. I don't see how that gets resolved, in a way that doesn't (for example) have the potential knock a whole $trn off Apple's market cap.