China

[TGHusker]

We have a Russia thread, a NK thread and I thought it would be good to start a China thread.

China just changed its constitution to allow the current leader to become leader for life.   Think dictatorship.  Can't help but to think of Mao at this point.  The thing about the Chinese culture is that they think in era's not in short term monthly or quarterly or even years.  There's is a  patient society, they have been around for thousands of years while we are still a young nation in comparison. 

I personally believe in free trade and that Trump's short sighted tarriff's will in the end back fire in the long term.  They may have some short term benefit (after the market recovers) but not long term.  Our world has gone based the day of trade being regulated by tariffs.   However, with that said, I've often wonder if we've feed a tiger that may ultimately eat us.  I've often wondered why we choose China to be our big source of cheap goods - why not build up a country that is more democratic in nature if we were to do so. 

Pat Buchanan use to be a person I would read regularly. Not so much anymore due to some of his positions on various topics I won't get into here.  He is too nationalistic (in a prejudice way) for me.  However, occasionally I will read to see what he is up to.  Therefore I offer this article as a discussion point from him. 

His argument is that the neocons starting wt GHWB began to appease the Chinese by turning them into a trading partner with the hopes of re-making them like us.  Refer back to my comment above about the Chinese culture being a patient.   GWB made the same mistake in the ME by thinking Iraq would become a democratic stronghold. 

Buchanan argues that the result is that we have built up the tiger while our manufacturing centers in our cities deteriorate.   At the same time our economy is now built on cheap goods from overseas.

This has all  allowed China to beef up its military and become a threat regionally and globally. 

So my poll question is  Was free trade with China a good thing long term or bad?

http://buchanan.org/blog/fatal-delusions-western-man-128823

Some quotes to comment on.  

“We got China wrong. Now what?” ran the headline over the column in The Washington Post.

“Remember how American engagement with China was going to make that communist backwater more like the democratic, capitalist West?” asked Charles Lane in his opening sentence.

America’s elites believed that economic engagement and the opening of U.S. markets would cause the People’s Republic to coexist benignly with its neighbors and the West.

We deluded ourselves. It did not happen.

The elites of both parties. Bush Republicans from the 1990s granted China most-favored-nation status and threw open America’s market.

Result: China has run up $4 trillion in trade surpluses with the United States. Her $375 billion trade surplus with us in 2017 far exceeded the entire Chinese defense budget.

We fed the tiger, and created a monster.

George W. Bush, with the U.S. establishment united behind him, invaded Iraq with the goal of creating a Vermont in the Middle East that would be a beacon of democracy to the Arab and Islamic world.

Ex-Director of the NSA Gen. William Odom correctly called the U.S. invasion the greatest strategic blunder in American history. But Bush, un-chastened, went on to preach a crusade for democracy with the goal of “ending tyranny in our world.”

What is the root of these astounding beliefs — that Stalin would be a partner for peace, that if we built up Mao’s China she would become benign and benevolent, that we could reshape Islamic nations into replicas of Western democracies, that we could eradicate tyranny?

Today, we are replicating these historic follies.

Adhering religiously to free trade dogma, we have run up $12 trillion in trade deficits since Bush I. Our cities have been gutted by the loss of plants and factories. Workers’ wages have stagnated. The economic independence Hamilton sought and Republican presidents from Lincoln to McKinley achieved is history.

 

[RedDenver]

China is experiencing similar economic growth as the Soviet Union did for about 50 years, so like the Soviets in the Cold War, they look at like an economic powerhouse. And right now they are, and they are educating their people and spending massively on infrastructure. But what will happen to them when a vast part of their population goes from poor and uneducated to middle-class and educated? Authoritarian governments don't usually survive an educated population for long. The Soviets didn't, and I don't think the Chinese government will either, but what that society develops into economically and militarily, I have no idea.

 

[TGHusker]

Excellent points RD and good historical perspective.   That is the Trojan horse in their political house - the seeds of democracy can be found in education and a economically secure populace.  

Reagan always said the the cry of liberty is in the heart of every individual and will eventually overthrow the tyranny of despotism (my paraphrase).   

 

[BigRedBuster]

I honestly can't choose between those three. I would probably lean the most towards free trade with China being a bad thing.  But, that varies widely depending on the industry or product we are talking about....and, I think there are very different ways of accomplishing what Trump thinks he's doing with these tariffs.  

I would really need to study the issue more.  But, here are two things that come to mind.

1)  I know for a fact, Chinese made products are being imported into my industry with lead as a raw material.  This is a much cheaper process for them to produce it with and it leave lead in the product to potentially end up with a problem with lead poisoning.  I am banned from using lead in my products for which I fully support.  However, the unknowing public can't see the difference and some buy the cheap Chinese products with lead.  They are allowed to do this because it's illegal to produce the products in the US with lead....but, not illegal to import products with lead.  THIS is an example of something that should be easily changed.  Luckily, the Chinese have not been able to get any firm hold on our market.

2)  It is a well known fact that labor and environmental laws are basically non-existent in many countries and it's a major problem in China.  I support fairly strong labor and environmental laws in the US (even though they could be improved).  But, this puts us at a disadvantage in many industries.  If we are going to put a Tariff on products, I would prefer it to be a tariff on products that are produced in facilities around the world that don't hold up to our labor and environmental laws.

Typically, protectionist policies don't work out like they are sold to the public as.

 

[ZRod]

Watch Rotten on Netflix and then tell me we don't need to correct something with China. The problem is, even when we do create tariffs and regulations they find a way around them. 

The episode on honey highlighted how the US implemented anti dumbing laws so that China couldn't drive down the price of honey any longer. There was a tariff on all honey from China. But somehow Malaysia, or some Indian Ocean country, started producing and shipping to the US, like 30 times as muh honey as it was capable of producing. The barrels from China were shipped to another country, relabel to make this new location the country of origin, and shipped to the US for sale at a low price with out a tariff

Another episode on garlic highlights how prison labor is used to cheaply peal garlic (which is illegal in the US).

These are just the food industry. I know in automotive it is cheaper to have a giant multi-ton block of metal milled in China and shipped to the US than it is to have it done in the States. 

I believe there are stock piles of Aluminum in Mexico that are actually from China. They keep them there to avoid tariffs since somehow Mexico can now be considered the country of origin.

Things are whack right now...

 

[Mierin]

China's been top dog for much of human history. It was just a matter of time before it happened again.

 

[TGHusker]

China tariffs will be announced this week.  Unlike the steel tariff, these may be needful and hopefully well targeted. 

https://www.axios.com/trump-will-announce-anti-china-tariffs-tomorrow-1521655581-d2005e93-6b2e-42ba-a35f-3ad558da950a.html

The big picture: Two sources with direct knowledge tell me Kevin Hassett has been crunching the numbers, and the dollar value of the tariffs will likely be around $50 billion per year — or slightly less. The administration has used an algorithm to select a batch of Chinese products and then apply tariff rates to those products in a way that will hopefully limit the harm to American consumers. 
 
Why it matters: The Trump administration is cracking down on intellectual property theft by the Chinese, and the president has publicly expressed his interest in reducing the U.S. trade deficit with China. The administration is looking at range of options, from clothing and shoes all the way to consumer electronics, sources told Bloomberg for a story earlier this week.

 

[BigRedBuster]

Tariffs targeting specific value added products make way more sense than tariffs on raw materials.

But, to be successful, they need to be done in a way that doesn't piss off the rest of the world.

For instance, when I have to raise prices, I don't go to our customers yelling at them and accusing them of ripping us off.

I have zero faith in that this administration can accomplish that.

 

[Mierin]

Tariffs targeting specific value added products make way more sense than tariffs on raw materials.

But, to be successful, they need to be done in a way that doesn't piss off the rest of the world.

For instance, when I have to raise prices, I don't go to our customers yelling at them and accusing them of ripping us off.

I have zero faith in that this administration can accomplish that.

And I'm assuming if your business has any loans, you didn't get those loans from your customers.

 

[Danny Bateman]

This administration is obviously composed of a bunch of ham-fisted boneheads with approximately zero diplomatic savvy. But they understand they like protectionism.

I'm actually pretty sure you could make a national security case for tariffs against China, because intellectual property theft on their part is actually a very real problem. That would likely make the tariffs legitimate in the eyes of the World Trade Organization (my understanding is they would block tariffs if done specifically for economic advantage rather than NatSec).

However, this does nothing to protect us from reciprocal tariffs from the Chinese. That trade war is starting to look more real.

 

[RedDenver]

However, this does nothing to protect us from reciprocal tariffs from the Chinese. That trade war is starting to look more real.

This.

Nobody wins in a trade war.

 

[BigRedBuster]

Oh this is going to get so interesting with all these Nebraska farmers that think trump is awesome. 

And dont even start talking about corn and Mexico. 


Good thing we aren’t pissing people off that actually buy our products. 

 

[Danny Bateman]

It begins...


Edit: AP corrected tweet saying China MAY raise those tariffs. Freakin' fake AP news!

 

[BigRedBuster]

This is not going to end well.