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US has ~300B trade deficit with PRC. Flip side is US MNCs pulls about ~300B in revenue in PRC that's not counted in trade balance accounting (because western p

US has ~300B trade deficit with PRC. Flip side is US MNCs pulls about ~300B in revenue in PRC that's not counted in trade balance accounting (because western products made in PRC factories sold to PRC consumers isn't cross borders transaction unless profit timely repatrioted, which is rarely) - most of the KFCs and Nikes and Apples can be replaced with domestic. Whereas there aren't much PRC MNCs in US, and what few there are getting lawfared/stomped out of US, i.e. TikTok divestment and de minimis going to kill Shein/Temu. Dependin on how / where things escalate, lots of US MNCs may lose their 10-40% revenue from PRC. There's also next rung of stupid, i.e. TikTok US getting nationalized, CFIUS forcing PRC divestments in agri, media, blah blah. Or US seize PRC assets, fucking with SWIFT, in which case trillions of US capex in PRC and not repatriated MNC profits goes up in smoke. Then we're stepping stones away from Tesla / Apple getting nationalized. Then who knows.

ericmay 2y ago
> Then we're stepping stones away from Tesla / Apple getting nationalized. Then who knows. Neither company can be "nationalized" because they're American companies. Apple contracts with Chinese suppliers to build their products. Chinese companies already owns the factories. Tesla has their own factories( or factory?) in China but if China "nationalizes" it, that just amounts to Chinese workers in the Chinese Tesla factory losing their jobs and of course Tesla no longer selling their cars in the Chinese market. > most of the KFCs and Nikes and Apples can be replaced with domestic. Why would they replace with domestic companies? Isn't that unfair for trade? Wouldn't European or Latin American companies enter the market with their products now or be better able to freely compete in the Chinese market? Or is there something missing here? > US has ~300B trade deficit with PRC. What's this number based on? I see a lot of figures floating out there, but similarly to your comment about the flip-side of US companies operating in China like Kentucky Fried Chicken not being accounted for here, you're not accounting for Chinese suppliers and manufacturers set up in other countries to bypass tariffs. Unfortunately it seems everyone (not throwing shade your way here) has their own number to fit their narrative and it's hard to get the full impact. > TikTok US getting nationalized Preferably it should be banned (the fewer social media companies and apps that exist the better), but it would be better if it was forced to be sold to a US company, which is a far more likely scenario then nationalization.
- maxglute 2y ago
  >Neither company can be "nationalized In response to shenanigans like TikTok US branch being nationalized, or CFIUS mass reversing PRC MNC portfolios, i.e. shares/purchases of US assets. They can be functionally "nationalized" in retaliation as in just have whatever is in country siezed, as in their presence in PRC. It means WFOE like Tesla losing their factory, whose workers will make domestic cars. Apple losing some R&D centres, all the capex infra build for foxconn can be messed with. Continue hampering capex/engineer export to India or whereever Apple wants to setup their none PRC operation to make process as painful as possible... or simply just kill Apple hardware 90% dead like US tried with Huawei/ZTE. > replace with domestic companies Because it's been ~30 years, foreign MNCs who wanted to be in PRC are in PRC. In the short term domestic companies better positioned to soak up domestic demand, which has been independant trend in past few years. > this number based on Some PRC finance portal reposted #s from Hurun Research report on US enterpises in PRC last year. There was IIRC Macquarie report a few years ago that tallied 3T in revenue in past 15-20 years or something that comports. Like US is fully of Chinese goods, and PRC is full of US brands, and in both cases US captures most of the value, or at least PRC captures very relatively little merely being margin producer. > it's hard to get the full impact Yeah, I'm just pointing out as you did, the situation isn't simple, not because PRC may have 300B more to lose, but potential of US loss maybe closer, not farther accounting diversion, mnc profits... services, ip/patent/licensing fees. I'm highlighting trade diversion/circumvension is not likely going to be on the scale of 100s of billions of US MNC revenue. Hence relative loss likely not as lopsided. > likely Full sale was never likely. Some sort of 51%+ US JV (which afaik US investors already owns majority) maybe. But tarrifs obviously blew everything up. So now it's wierd scenario where Trump seems loath to ban, as in very much want US to own so nationalization of US operations doesn't seem unfathomable.
  - ericmay 2y ago
    > Full sale was never likely. Some sort of 51%+ US JV (which afaik US investors already owns majority) maybe. But tarrifs obviously blew everything up. So now it's wierd scenario where Trump seems loath to ban, as in very much want US to own so nationalization of US operations doesn't seem unfathomable. Trump was very popular on TikTok which is why he's in favor of keeping it or making it a US company so he can sell it to one of his sycophants. But it will be fully sold to a US company or banned. I don't think a JV is on the table. > In response to shenanigans like TikTok US branch being nationalized, or CFIUS mass reversing PRC MNC portfolios, i.e. shares/purchases of US assets. They can be functionally "nationalized" in retaliation as in just have whatever is in country siezed, as in their presence in PRC. It means WFOE like Tesla losing their factory, whose workers will make domestic cars. Apple losing some R&D centres, all the capex infra build for foxconn can be messed with. Continue hampering capex/engineer export to India or whereever Apple wants to setup their none PRC operation to make process as painful as possible... or simply just kill Apple hardware 90% dead like US tried with Huawei/ZTE. Right but those activities harm China too. If China isn't building iPhones in China because China nationalized those specific assets then Chinese workers sort of lose too. Similarly with the Tesla factory - if they keep it running they have to spend money to retool it to make BYD cars, then they have to sell those cars to someone - perhaps domestic consumers, but there's a lot of analysis that would be needed to be done to understand the exact effects. I mostly took issue with your statement that Apple and Tesla would be nationalized, but I think you just meant to say their assets would be nationalized in China which is certainly an option that China has on the table. But like all things there are actions the US can take that China would be very unhappy about, like, perhaps the US decides to build a military base in Taiwan. Now what? I'm not suggesting that's a good idea or on the table, but just saying both countries can get creative. > Because it's been ~30 years, foreign MNCs who wanted to be in PRC are in PRC. In the short term domestic companies better positioned to soak up domestic demand, which has been independant trend in past few years. Sure but now with US ventures like KFC probably being forced to shut down there should be room for European companies or companies from other countries to move in to China, which China will be just fine with right? I'm imagining since tariffs will be higher for Mercedes in the US they'll have to ship those cars to other countries and who better than China?

ericmay 2y ago

> Then we're stepping stones away from Tesla / Apple getting nationalized. Then who knows. Neither company can be "nationalized" because they're American companies. Apple contracts with Chinese suppliers to build their products. Chinese companies already owns the factories. Tesla has their own factories( or factory?) in China but if China "nationalizes" it, that just amounts to Chinese workers in the Chinese Tesla factory losing their jobs and of course Tesla no longer selling their cars in the Chinese market. > most of the KFCs and Nikes and Apples can be replaced with domestic. Why would they replace with domestic companies? Isn't that unfair for trade? Wouldn't European or Latin American companies enter the market with their products now or be better able to freely compete in the Chinese market? Or is there something missing here? > US has ~300B trade deficit with PRC. What's this number based on? I see a lot of figures floating out there, but similarly to your comment about the flip-side of US companies operating in China like Kentucky Fried Chicken not being accounted for here, you're not accounting for Chinese suppliers and manufacturers set up in other countries to bypass tariffs. Unfortunately it seems everyone (not throwing shade your way here) has their own number to fit their narrative and it's hard to get the full impact. > TikTok US getting nationalized Preferably it should be banned (the fewer social media companies and apps that exist the better), but it would be better if it was forced to be sold to a US company, which is a far more likely scenario then nationalization.

maxglute 2y ago
>Neither company can be "nationalized In response to shenanigans like TikTok US branch being nationalized, or CFIUS mass reversing PRC MNC portfolios, i.e. shares/purchases of US assets. They can be functionally "nationalized" in retaliation as in just have whatever is in country siezed, as in their presence in PRC. It means WFOE like Tesla losing their factory, whose workers will make domestic cars. Apple losing some R&D centres, all the capex infra build for foxconn can be messed with. Continue hampering capex/engineer export to India or whereever Apple wants to setup their none PRC operation to make process as painful as possible... or simply just kill Apple hardware 90% dead like US tried with Huawei/ZTE. > replace with domestic companies Because it's been ~30 years, foreign MNCs who wanted to be in PRC are in PRC. In the short term domestic companies better positioned to soak up domestic demand, which has been independant trend in past few years. > this number based on Some PRC finance portal reposted #s from Hurun Research report on US enterpises in PRC last year. There was IIRC Macquarie report a few years ago that tallied 3T in revenue in past 15-20 years or something that comports. Like US is fully of Chinese goods, and PRC is full of US brands, and in both cases US captures most of the value, or at least PRC captures very relatively little merely being margin producer. > it's hard to get the full impact Yeah, I'm just pointing out as you did, the situation isn't simple, not because PRC may have 300B more to lose, but potential of US loss maybe closer, not farther accounting diversion, mnc profits... services, ip/patent/licensing fees. I'm highlighting trade diversion/circumvension is not likely going to be on the scale of 100s of billions of US MNC revenue. Hence relative loss likely not as lopsided. > likely Full sale was never likely. Some sort of 51%+ US JV (which afaik US investors already owns majority) maybe. But tarrifs obviously blew everything up. So now it's wierd scenario where Trump seems loath to ban, as in very much want US to own so nationalization of US operations doesn't seem unfathomable.
- ericmay 2y ago
  > Full sale was never likely. Some sort of 51%+ US JV (which afaik US investors already owns majority) maybe. But tarrifs obviously blew everything up. So now it's wierd scenario where Trump seems loath to ban, as in very much want US to own so nationalization of US operations doesn't seem unfathomable. Trump was very popular on TikTok which is why he's in favor of keeping it or making it a US company so he can sell it to one of his sycophants. But it will be fully sold to a US company or banned. I don't think a JV is on the table. > In response to shenanigans like TikTok US branch being nationalized, or CFIUS mass reversing PRC MNC portfolios, i.e. shares/purchases of US assets. They can be functionally "nationalized" in retaliation as in just have whatever is in country siezed, as in their presence in PRC. It means WFOE like Tesla losing their factory, whose workers will make domestic cars. Apple losing some R&D centres, all the capex infra build for foxconn can be messed with. Continue hampering capex/engineer export to India or whereever Apple wants to setup their none PRC operation to make process as painful as possible... or simply just kill Apple hardware 90% dead like US tried with Huawei/ZTE. Right but those activities harm China too. If China isn't building iPhones in China because China nationalized those specific assets then Chinese workers sort of lose too. Similarly with the Tesla factory - if they keep it running they have to spend money to retool it to make BYD cars, then they have to sell those cars to someone - perhaps domestic consumers, but there's a lot of analysis that would be needed to be done to understand the exact effects. I mostly took issue with your statement that Apple and Tesla would be nationalized, but I think you just meant to say their assets would be nationalized in China which is certainly an option that China has on the table. But like all things there are actions the US can take that China would be very unhappy about, like, perhaps the US decides to build a military base in Taiwan. Now what? I'm not suggesting that's a good idea or on the table, but just saying both countries can get creative. > Because it's been ~30 years, foreign MNCs who wanted to be in PRC are in PRC. In the short term domestic companies better positioned to soak up domestic demand, which has been independant trend in past few years. Sure but now with US ventures like KFC probably being forced to shut down there should be room for European companies or companies from other countries to move in to China, which China will be just fine with right? I'm imagining since tariffs will be higher for Mercedes in the US they'll have to ship those cars to other countries and who better than China?