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US Fed: US export controls to China wiped out $130B

MattGaiser 2y ago
> However, we find no evidence of reshoring or friend-shoring Between how specialized a lot of the tech is and a lot of things only being worth doing if it is cheap, was this surprising?
- refurb 2y ago
  These are export control from the US to China. As in US exports. Why would their be onshoring?
roenxi 2y ago
There is quite a lot of circumstantial evidence that the US's industrial capabilities have mean-reverted from the middle of the century where they were a stand-out superpower (partly because the other industrialists, Europe, engaged in something that looked like a big civil war). Things like energy trends, growth rates, locus of new industries, the decline of the US to using money printing strategies, environmentalism in the West, etc. It is plausible that China is the economy in the global drivers seat now. If they are, then attempts to limit their economy will probably bounce off - unless violence is used, the laws of economics favour those who work hard, invest and are honest about what is affordable. The evidence suggests China does those things better than the US (although it is probably fairly knife-edge, both countries have out-of-control levels of government intervention in markets but at some point China will probably do something stupidly authoritarian). This report is interesting in light of that frame.
- User23 2y ago
  Economic might comes down to productive capacity. Unfortunately most of the US’s “productivity” has transitioned the so-called services sector. Which is nice and all until you can’t produce strategically necessary resources. Ultimately speaking the US dollar’s reserve status rests on the US economy’s productive capacity. Chinese dollar denominated exports are what’s propping up the dollar. Their accumulation of treasuries is merely a necessary consequence of the necessary accounting operations to dollar denominate those exports.
  - beautifulfreak 2y ago
    China is actually dumping US treasuries, as of the start of 2023. https://www.youtube.com/watch?v=SSbzefh0VEM https://www.youtube.com/watch?v=SSbzefh0VEM They've found new ways to trade in dollars without using US or European banks, so their assets can't be frozen (such as by the use of Tether) so US banks aren't getting paid. As for cross-border trade, 53% of it is now conducted in RMB, with USD falling to 41% (and continuing to decline). US economic policy towards China is backfiring on many fronts, the worst being that Chinese companies have adapted and now produce what they used to import, even advanced technologies. If the export controls were lifted, Chinese companies would not resume business with US companies, because they don't need them anymore. https://www.zerohedge.com/geopolitical/start-de-dollarization-chinas-move-away-usd https://www.zerohedge.com/geopolitical/start-de-dollarizatio...
    - User23 2y ago
      The question is dumping for what? If they’re selling treasuries to buy reserves or US equities then they’re still long USD. To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. No doubt they can do that to the tune of a few billions, but who’s the counterparty looking to buy hundreds of billions of dollars that way? The only obvious (to me anyhow) candidate is Japan, but they would both have to overcome some historical baggage to pull off that play. And even then it’s not just a matter of selling. The game changes when you’re big enough to be a marginal price setter.
      - chii 2y ago
        > To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. why not gold? surely, you can see that china is continuously buying more and more gold reserves. At some point, china would also be able to convince the global south to start trading in the chinese yuan.
        blackhawkC17 2y ago
- deleted 2y ago
  [deleted]
vessenes 2y ago
> However, we find no evidence of reshoring or friend-shoring I have no real horse in the race about export controls with China or elsewhere, but some notes: timelines matter here — rebuilding industrial capacity is .. not fast. Especially in the US today, much more safety-conscious, labor-rights oriented, etc, than when much of our on-shore industry got build in WW2 era. To my mind, especially with US political cycles providing a fair amount of policy whiplash, it’s too early to see what total impact these rules have had — let’s check in on these numbers in 20 years. If export controls continued unabated over that period, I imagine we’ll have seen a fair amount of on-shoring of former supply chains.
- andrewjl 2y ago
  > If export controls continued unabated over that period, I imagine we’ll have seen a fair amount of on-shoring of former supply chains. That's been the trend across the past several administrations.
mensetmanusman 2y ago
Do what China does and incentivize the creation of the on shoring entity.
- MaxPock 2y ago
  This is not about onshoring but finding new customers.
- personomas 2y ago
  [dead]
logicalfails 2y ago
Is there any other forum source that focuses on economic/central banking news, similar to Hacker news? I know that economics often appear in the feed, but I am looking for one where that's a larger focus.
- ganeshkrishnan 2y ago
  you can use twitter and subscribe to just economics. I worked in the financial world for a long time and this is what I do currently. do note that the financial world is much more pessimistic and doom-gloom than the current geopolitical wars with USD/JPY carry trade unwinding, US treasury debts being dumped and USD loosing sheen slowly in global trades.

> However, we find no evidence of reshoring or friend-shoring Between how specialized a lot of the tech is and a lot of things only being worth doing if it is cheap, was this surprising?

refurb 2y ago
These are export control from the US to China. As in US exports. Why would their be onshoring?

roenxi 2y ago

There is quite a lot of circumstantial evidence that the US's industrial capabilities have mean-reverted from the middle of the century where they were a stand-out superpower (partly because the other industrialists, Europe, engaged in something that looked like a big civil war). Things like energy trends, growth rates, locus of new industries, the decline of the US to using money printing strategies, environmentalism in the West, etc. It is plausible that China is the economy in the global drivers seat now. If they are, then attempts to limit their economy will probably bounce off - unless violence is used, the laws of economics favour those who work hard, invest and are honest about what is affordable. The evidence suggests China does those things better than the US (although it is probably fairly knife-edge, both countries have out-of-control levels of government intervention in markets but at some point China will probably do something stupidly authoritarian). This report is interesting in light of that frame.

User23 2y ago
Economic might comes down to productive capacity. Unfortunately most of the US’s “productivity” has transitioned the so-called services sector. Which is nice and all until you can’t produce strategically necessary resources. Ultimately speaking the US dollar’s reserve status rests on the US economy’s productive capacity. Chinese dollar denominated exports are what’s propping up the dollar. Their accumulation of treasuries is merely a necessary consequence of the necessary accounting operations to dollar denominate those exports.
- beautifulfreak 2y ago
  China is actually dumping US treasuries, as of the start of 2023. https://www.youtube.com/watch?v=SSbzefh0VEM https://www.youtube.com/watch?v=SSbzefh0VEM They've found new ways to trade in dollars without using US or European banks, so their assets can't be frozen (such as by the use of Tether) so US banks aren't getting paid. As for cross-border trade, 53% of it is now conducted in RMB, with USD falling to 41% (and continuing to decline). US economic policy towards China is backfiring on many fronts, the worst being that Chinese companies have adapted and now produce what they used to import, even advanced technologies. If the export controls were lifted, Chinese companies would not resume business with US companies, because they don't need them anymore. https://www.zerohedge.com/geopolitical/start-de-dollarization-chinas-move-away-usd https://www.zerohedge.com/geopolitical/start-de-dollarizatio...
  - User23 2y ago
    The question is dumping for what? If they’re selling treasuries to buy reserves or US equities then they’re still long USD. To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. No doubt they can do that to the tune of a few billions, but who’s the counterparty looking to buy hundreds of billions of dollars that way? The only obvious (to me anyhow) candidate is Japan, but they would both have to overcome some historical baggage to pull off that play. And even then it’s not just a matter of selling. The game changes when you’re big enough to be a marginal price setter.
    - chii 2y ago
      > To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. why not gold? surely, you can see that china is continuously buying more and more gold reserves. At some point, china would also be able to convince the global south to start trading in the chinese yuan.
      - blackhawkC17 2y ago
deleted 2y ago
[deleted]

vessenes 2y ago

> However, we find no evidence of reshoring or friend-shoring I have no real horse in the race about export controls with China or elsewhere, but some notes: timelines matter here — rebuilding industrial capacity is .. not fast. Especially in the US today, much more safety-conscious, labor-rights oriented, etc, than when much of our on-shore industry got build in WW2 era. To my mind, especially with US political cycles providing a fair amount of policy whiplash, it’s too early to see what total impact these rules have had — let’s check in on these numbers in 20 years. If export controls continued unabated over that period, I imagine we’ll have seen a fair amount of on-shoring of former supply chains.

andrewjl 2y ago
> If export controls continued unabated over that period, I imagine we’ll have seen a fair amount of on-shoring of former supply chains. That's been the trend across the past several administrations.

mensetmanusman 2y ago

Do what China does and incentivize the creation of the on shoring entity.

MaxPock 2y ago
This is not about onshoring but finding new customers.
personomas 2y ago
[dead]

logicalfails 2y ago

Is there any other forum source that focuses on economic/central banking news, similar to Hacker news? I know that economics often appear in the feed, but I am looking for one where that's a larger focus.

ganeshkrishnan 2y ago
you can use twitter and subscribe to just economics. I worked in the financial world for a long time and this is what I do currently. do note that the financial world is much more pessimistic and doom-gloom than the current geopolitical wars with USD/JPY carry trade unwinding, US treasury debts being dumped and USD loosing sheen slowly in global trades.