Showing posts with label trade war. Show all posts
Showing posts with label trade war. Show all posts

Friday, May 31, 2019

Will The Trade War Force A New Equilibrium?



The pain from the trade war has only just started. And so the two sides might feel like there is some wiggle room, that they can afford to wait a little. But in a year things might look different. If the two sides stay at only increased tariffs for a year or so, that is one thing. But if there is escalation and the US tries to kill Huawei and China clamps down on its rare earth minerals exports, we will move into the territory of unintended consequences.

High tech is not made for self-sufficiency. Only when countries and companies come together can privacy and security issues be tackled. And even then it is hard. But countries going solo is simply not an option. In the field of tech and innovation, the more cross-pollination the better.

Since the US has similar beef with Europe, among others, you could see some realignment.



There is a great chance that a protracted trade war will lead to major domestic political complications for Donald Trump. The impeachment train is independent of the trade war train. The impeachment might or might not happen, but the investigations surely will.

That is not to say China's capacity for pain is substantially greater. A full-fledged trade war could lead to mass unrests. But there are numerous steps to that stage. The markets will jitter and react to every step in between and that will roil the political spheres.

If both sides decide to stay on this side of sanity and do engage in a trade tussle but not a full-blown trade war, then that could lead to a new equilibrium, both between the two powers, and also the powers of the world.

American exceptionalism has never been the same as white supremacist thinking. Every country is unique. In that way, America is also exceptional.

The march towards a new equilibrium is not going to be pain-free, but it need not be too disruptive. The primary hope is that the two powers cut a deal and spare the global economy unnecessary hiccups. The secondary hope is that they don't go too far in their tussle and stay on this side of sanity.



In The News (7)
In The News (6)
In The News (5)
Trump And Xi Should Cut A Deal In Japan
China In Latin America
In The News (4)
Mueller Drops A Bomb
In The News (3)
In The News (2)
In The News (1)
A Sanders-Warren Ticket
Donald Trump Is Messing Up A Good Thing
5G Challenges US Hegemony
India 2050: Amitabh Kant
Brexit, Aexit, And Trump
African Economic Union
Understanding China (2)
Trump's Prospects In 2020
Understanding China
Political Fallout For Xi
Made In China 2025
Trade War: The Spiral Down Scenario
Three Crises: China, Iran, DC Two Out Of Three: Kamala, Andrew, Pete
Modi 2.0 And The 5G Question
Trade War Commentaries
One Million Uighurs
The Mighty Dollar
India 2019: Looks Like A TsuNAMO
2020: The Year Of The Social Democrat
Andrew Yang: Universal Basic Income, Elizabeth Warren: Wealth Tax
Trade War: Intellectual Property
Trade War Endgame Scenarios: Look At Canada, And North Korea For Hints
The US And The Chinese Economies Are Super Well-Connected
Trade War Endgame Scenarios
US China Trade War: A Meeting Of The Hot And Cold Fronts



Trump’s trade wars have cost the stock market $5 trillion and counting: Deutsche Bank
Trump's threat of Mexico trade war sends markets lower
Trade War Starts Changing Manufacturers in Hard-to-Reverse Ways

The new front in Trump’s trade war could cost consumers at least $93 billion But the figures don’t take into account all the impact: That’s because in the critical auto industry, many parts crisscross borders multiple times....... “Production processes would have to be changed in substantial ways to reduce the impact of the tariffs, reducing productivity in a significant way,” said Carlos Capistran, Canada and Mexico economist at Bank of America Merrill Lynch. “This could eventually lead many firms that currently produce in Mexico to relocate to the U.S., significantly impacting growth in Mexico.”..... vehicles are the top U.S. imports from Mexico, worth $93 billion last year. They are followed by electrical machinery ($64 billion), machinery ($63 billion), mineral fuels ($16 billion) and medical instruments ($15 billion) ..... “The big question at the end of the day though is can we really fight two trade wars at the same time?”

Trade war could trigger a ‘global financial crisis,’ says ex-China central bank chief The former central bank chief also attributed recent weakness in the yuan to the market’s reaction to trade tensions, while noting that Beijing would not devalue the currency in response. He said that fundamentals, such as economic growth and foreign exchange reserves, support a stable yuan...... “It can be said, that the U.S. this time has at the wrong time, fought a wrong war, and chosen a wrong opponent” ...... it might be America’s greatest mistake since World War II, or even the country’s founding, all out of unwillingness to accept China as a rising power........ the trade tensions could last 30 years or more, especially since he expects the U.S. will keep on with its investigations — even if a deal is reached in the near term. ...... “I’m confident that time, reason and truth are on our side,” he said. “Our Chinese people will most certainly win, peace will most certainly win.”

John Negroponte: Trump’s new tariff on Mexico is ‘bad politically and bad economically’ “I think it’s both bad politically and bad economically and I don’t think it’s really going to help solve the immigration problem, either, which is what Mr. Trump said he’s trying to attack” ...... U.S. Senate Finance Committee Chairman Chuck Grassley, a Republican who represents Iowa, slammed the move. He called it a “misuse of presidential tariff authority.”

Shares of US automakers plunge because they have major production in Mexico The big three automakers each have billions of dollars at stake due both production and suppliers in Mexico.....Shares of General Motors, Fiat Chrysler and Ford dropped in trading Friday. ...... Fiat Chrysler dropped 4.9% while General Motors was down 4.5% and Ford skidded 3.1%...... tariffs on Mexico’s imports “threaten the jobs of tens of thousands of Americans here in the United States.” .... GM and Fiat Chrysler import 29% and 24%, respectively, of the total parts for its cars and trucks from Mexico. Ford has the second highest total imported vehicles from Mexico at 17% ...... the host of auto industry suppliers at risk to tariffs on Mexico, including Aptiv, Adient, Dana, Lear, Visteon, Goodyear Tire & Rubber and BorgWarner.



Trump’s trade war polls badly in key states like Pennsylvania, threatening his support for 2020
Surprise Mexican tariffs hurt China agreement chances: ‘How can you trust Trump to honor a deal?’

The US slipped to third place in a ranking of most competitive economies Singapore’s immigration laws, advanced technological infrastructure, availability of skilled labor and efficient ways to set up new businesses helped it advance to the top..... For the first time in nine years, Singapore surpassed the United States and Hong Kong to clinch the title of the world’s most competitive economy ...... With regard to the ongoing U.S.-China trade war, Bris said he “would call it a tantrum in the sense that it is hurting companies in the United States more than in any other country.”...... Indonesia, in particular, leapfrogged 11 places to become the 32nd most competitive economy in the world. Thailand also advanced five places to the 25th position.



France’s health-care system was ranked as the world’s best—Here’s how it compares with the US’ With the Democrats pushing for a government-funded model and President Donald Trump campaigning on repealing Obamacare without a clear alternative, Americans are considering what kind of health care system they may want.



Ray Dalio warns China restricting rare earth metals would be ‘major escalation’ of trade war
China is establishing an ‘unreliable entities’ list that will include companies and people “Foreign enterprises, organizations and individuals that do not comply with market rules, violate the spirit of contract, block or cut supplies to Chinese firms with non-commercial purposes, and seriously damage the legitimate rights and interests of Chinese enterprises, will be added to the list of unreliable entities”

Cramer: Trump no longer cares if his China policies hurt American businesses That tanked the shares of a group of chipmakers — Qualcomm, Skyworks Solutions, Broadcom, Micron, and Xilinx — as much as 7.3% ...... Walmart has warned that it will have to raise its prices if Trump goes through with his promises to slap another 25% tariff on $300 billion, on top of the existing $200 billion, worth of Chinese imports...... he’s more concerned about the strong American dollar’s negative impact on the chain’s international sales.

Stocks slump after US expands trade war to Mexico



As U.S.-China tensions escalate, the trade war has morphed into a deeper, harder conflict the conflict with China has widened beyond the original trade-based issues..... Officials on both sides of the Pacific have begun to portray the U.S.-China relationship in nationalistic and emotion-charged terms that suggest a much deeper conflict. ...... Recently, for example, a private group of American economists and trade experts with long-standing experience in China traveled to Beijing, expecting their usual technical give-and-take with Chinese government officials........ Instead, a member of the Chinese Politburo harangued them for almost an hour, describing the U.S.-China relationship as a “clash of civilizations” and boasting that China’s government-controlled system was far superior to the “Mediterranean culture” of the West, with its internal divisions and aggressive foreign policy..... Nothing short of a deal struck directly by the two leaders is likely to avert new rounds of punches and counter-punches over economic and financial ties ...... whether either leader is interested in a stand-down is unclear....... China.. will probably “hunker down and try to get by until either the second term of the Trump administration or the incoming new administration.” ..... the domestic politics, for now, seem to favor conflict, not compromise. ...... The political risk for Trump from potential Democratic opponents in 2020 isn’t from hitting China too hard, but treading too softly or coming away with a weak deal...... the best one might hope for is a temporary truce, and even that will be hard to come by if Trump keeps piling on the pressure. ..... Already one in five U.S. firms operating in China say they face increased inspections and slower customs clearances ........ Beijing also could spur boycotts of popular American products such as Apple iPhones or curtail tourism to the United States, which would be particularly painful for states such as California. And American universities already are fretting about a potential drop-off in full-tuition-paying Chinese students...... Boeing, the single biggest American exporter to China .. Sales to China last year accounted for more than 20% of the company’s commercial aircraft revenue. ...... the next escalation could come in mid-August. That’s when the Commerce Department's 90-day reprieve for Huawei runs out and the Chinese start to find out how long and well Huawei can manage without key Android software updates from Google, as well as crucial chips and other hardware from American suppliers. ..... the possibility of a limited trade deal by fall ..... they’ll need to reset the tone a little bit and try to manage a de-escalation” of the trade war



China Has Rare Earths Plan Ready to Go If Trade War Deepens





There are temples and shrines everywhere – honouring Gods and deities – but none more important than Brahma, the creator, Vishnu, the preserver and Shiva, the destroyer. It’s also the land of the Ramayana and the Mahabharata – echoes of which have reverberated across Southeast Asia. And on the Ganges plain, you can trace the life and death of the Buddha – a vital bond with Southeast Asia’s 150 million or so Buddhists........ India’s US$9.449 trillion economy (currently the third-largest in Purchasing Power Parity terms) and a 7.3 per cent GDP growth rate (the fastest among the G20 nations)..... with China becoming increasingly heavy-handed, Southeast Asia desperately needs India to play a larger role in our future – economics and business is just the beginning.
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Thursday, May 30, 2019

In The News (6)



This Is Not a Great-Power Competition Great-power competition describes a specific pattern of relations between states—the sort practiced by the great empires and nation-states from the seventeenth through the early twentieth centuries. China’s rise as an economic and political power and Russia’s increasing assertiveness on the world stage have understandably fueled analogies to that time. But the emerging era does not match the patterns of the past. Treating it as though it does risks misunderstanding both the character of today’s threats and the source of the United States’ competitive advantages. .............. Great powers from Napoleon’s France to Bismarck’s Prussia to Wilhelmine Germany to the revisionists of the 1930s threatened one another with invasion and war. Military strength was the ultimate arbiter of such contests. ........ Each of these three elements—a multipolar system, a general disregard for rule-based constraints on behavior, and dominantly political-military forms of rivalry—is present during periods of great-power competition. Yet none of them accurately describes world politics today. ....... Today’s world thus reflects a complex mixture of unipolar, bipolar, and multipolar elements that does not match the classic vision of a colliding set of roughly equivalent great powers. ........ when states compete today, they do so mediated by institutions, rules, and norms that differ starkly from the conditions during most periods of true great-power competition. Most major powers today are firmly established industrial democracies that want stability and prosperity and harbor no meaningful territorial ambitions. A dense network of organizations, treaties, informal processes, and many other constraints regulates their relations. The postwar order, although imperfect, has produced the most highly institutionalized and norm-bound international system in history. Critically, this order is not imposed on an unruly set of troublemakers—it reflects deeply embedded economic preferences for peace, stability, and prosperity. ........ Japan, for example, does not fear India. ...... The European Union does not fear Brazil, which does not fear Mexico....... Today’s versions of rivalry and competition almost always play out in the economic, political, cultural, and informational spheres—not on the battlefield. ...... The strategy of the United States’ leading rival—China—is therefore to advance its interests primarily through economic, geopolitical, and informational means. ...... To see the state of international relations today as a new great-power competition is not only inaccurate but dangerous. ....... The United States would do far better to continue leading the group of nations that holds the predominant share of global economic and military power, is bound together by a dense network of institutions, and remains committed to certain norms, such as those against military aggression and economic predation. To abandon this role would be to walk away from the greatest competitive advantage any great power has ever known.



Netanyahu 'weaker' as Israel heads for new election For the first time in Israel's history, it will hold two national votes in a single year....... No single party has ever won a majority of 61 out of 120 seats in the Israeli Knesset, or parliament, making coalition governments the norm.



Saudi Arabia gathers Arab leaders over attacks on oil assets
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Trump And Xi Should Cut A Deal In Japan



The two should pull back a little and cut a deal. Escalating the trade war will bring bad news all around.

A trade deal where the tariffs simply stay in place is no trade deal at all.

On the other hand, China should give credible assurances on some much-needed reforms. These are reforms that it would want to carry out anyways. Some of the state-run companies in China are capital sinkholes. Reform would only add to China's competitiveness.

The US buying or not buying 5G equipment from Huawei is a decision any customer can make. But to go after Huawei's supply chain puts companies like Apple at grave risk. 5G will give Global South the infrastructure that will transform countries. The US better not mess that up.

A trade deal would be one where both countries agreed to pull back on all tariffs, take their hands off high-tech supply chains, and China commits to some major structural reforms to its economy, to be subjected to review every two years or so.

I am for talks in general. I supported the idea of Donald Trump meeting Kim of North Korea. I support the idea of Trump meeting the Iranian leader. On the idea of holding talks, I agree with Trump. Leaders should talk to each other in person instead of posturing and signaling through media.

If China offers to buy just a few more bags of soybeans, there will be no deal. If the US insists the tariffs must stay in place to ensure China delivers on its promises, there will be no deal.

Investors grow anxious over Trump-Xi G20 meeting US President Donald Trump and Chinese President Xi Jinping have downplayed the chances of a breakthrough in talks ..... Bond yields have already plummeted, stock prices have fallen and the Vix index of market volatility has risen as hopes of a quick end to the dispute have been dashed. Investors are now using derivatives markets to position themselves for further turbulence at the two-day summit......The increased investor caution comes as 10-year US Treasury yields plunged to their lowest level in 20 months on Wednesday as fears over slowing global growth have intensified after trade talks between the US and China broke up in acrimony this month, leading to an escalation of tariffs....... That encounter is at most expected to result in a new truce, setting the stage for a further round of negotiations. Mr Trump this week said the US was “not ready” for a deal at this stage....... the increased trading activity around the meeting could come both from investors seeking protection from a sharp downturn in stock prices ..... The Vix index — sometimes called Wall Street’s fear gauge .... The Vix level implied by prices of options expiring between June 28 and the following Friday currently stands at 17.6, compared with just 14.4 for the week after and 14.7 earlier in the month
A Political Economist on How China Sees Trump’s Trade War Authoritarian regimes, because they’re not elected, can, in theory, impose a great deal of hardship on their population without suffering political repercussions. ....... Both leaders see themselves as uniquely capable of reviving greatness in their respective countries. For Trump it may be partly rhetoric and partly politics, but, I think for Xi Jinping, also partly politics—he needed to innovate a new ideology that was very different from his predecessors’ ideologies, so he picked national greatness. ....... clearly Xi Jinping would like China to continue on this trajectory of economic growth ..... of course, in the official media they’re beginning to try to portray this scenario where China is going to suffer economic hardship to fight this war with the U.S. I just don’t believe it. I think it’s propaganda. ........ China suffers from a deficit of true expertise about the U.S. ....... The problem faced by Xi is the same one that is faced by Trump, which is that they’re not economic experts. ...... If one is given great advantages in various commercial deals, it’s not difficult to get rich...... the concentration camps in Xinjiang really have inaugurated a new era for Chinese repression of its population. And, indeed, we have not seen such a large-scale mass internment since the Mao period, when Mao put millions of Chinese Communist Party members in labor camps and reëducation camps. This is targeted toward a particular ethnic group...... In Xinjiang, there were no active insurgencies; there were isolated terrorist incidents. I don’t know why the leadership approved such an unnecessary step..... there is some kind of information asymmetry. You have these interest groups within the government—high terrorism officials, officials in Xinjiang—who gain enormously from these very extreme measures, because it costs billions and billions of dollars to build up these camps. Somebody got these contracts.
Trump says he will meet China's Xi at G20 next month US president also says he'll meet Russia's Putin, but Kremlin says no such arrangements have been made so far...... "China hopes the US will get back to the right track of bilateral trade and economic consultations and meet with China halfway." ...... The prospect that the US and China were spiralling into a no-holds-barred dispute that could derail the global economy has rattled investors and led to a sharp selloff on equities markets in the past week.



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In The News (4)

Why is Kamala Harris running for president? Joe Biden is offering a return to normalcy. Elizabeth Warren aims to bring big corporations to heel and prop up the working class. Bernie Sanders wants a political revolution. ...... She’s pitching herself as the kitchen-table realist of the field ..... Harris’ plans include big raises for public school teachers, a proposal to pay women equally to men and a tax plan that calls for a $500 monthly credit for families earning less than $100,000 a year. ..... Harris is calling for direct payments to families to ease their paycheck-to-paycheck burdens........ Nearly half of American families are one unexpected $400 expense away from financial distress, she often says, and in 99 percent of the counties in America, a minimum-wage worker can’t afford market rate price of a one-bedroom apartment. ....... But if she makes it far enough, Trump is certain to yoke Harris to "Medicare for All" and the "Green New Deal," no matter how she talks about them...... Trump, who is trying to paint all Democrats as radicals and socialists. ..... Harris’ plans call for spending $315 billion over 10 years to boost teacher salaries, which amounts to a raise of $13,500 for the average teacher, a 23 percent increase in base pay. ...... Another plan would mandate that companies prove they aren’t discriminating against women and would fine corporations that don’t close their pay gaps between women and men. ..... She also has promised to take unilateral action on sweeping gun control measures that have stalled in Congress. ....... Harris said she also plans to release criminal justice reform and immigration proposals.



As trade war heats up, China threatens clampdown on "rare earths" Rare earths are a group of 17 elements used in everything from mobile phone cameras and automobile catalytic converters to wind turbines and MRI machines....... China dominates the global supply of rare earths and accounted for almost 80% of exports to the U.S. last year. ...... rare earths are ubiquitous in modern life, and their use is likely to spread as technology advances. ...... One rare earth element, lanthanum, makes up as much as 50 percent of digital camera lenses, including cell phone cameras. ....... One reason China is the global leader -- it's been pulling rare earths out of the ground for a long time. The country spent a century perfecting the refining method for extracting and refining rare earths in large enough quantities to keep costs manageable. ....... JJ Kinahan, chief marketing strategist at TD Ameritrade, said China's threat to use rare earths as a weapon against the U.S. is worrisome. "What it shows to me is that there is a little bit of a worsening relationship here," he said. "They went pretty deep in the bag to throw out something that would hurt." ...... China's goal is to paint the U.S. as a "lawless actor" that disrupts economic growth ...... China blocked some rare-earth exports to Japan after a maritime dispute in 2010. That led some countries to search for alternatives -- and a protest by Japan with the WTO, which ruled in 2014 that the restrictions on rare-earth exports were illegal.

‘Don’t say we didn’t warn you’: A phrase from China signals the trade war could get even worse The phrase “Don’t say we didn’t warn you” has been used by the People’s Daily in 1962 before China’s border war with India and ahead of the 1979 China-Vietnam War. ...... China threatened it would cut off rare earth minerals as a countermeasure in the escalated trade battle. The materials are crucial to the production of iPhones, electric vehicles and advanced precision weapons ...... The S&P 500 has lost nearly 6% this month.

Survivors Of Sexual Abuse By Nuns Want Greater Visibility For Their Claims Now in her late 60s, Cahill has struggled with PTSD and addiction to drugs and alcohol for decades, both fueled by having been sexually exploited as a minor......."To say, 'I was sexually abused by a nun' without immediately the cloud of, 'You're a sinner, this was a lesbian relationship, you tempted her...I'm not living in shame any longer," she said.

Escalating Iran crisis looks a lot like the path US took to Iraq war half of all Americans believe the U.S. will go to war with Iran "within the next few years" ..... Is Iran doomed to be an Iraq redux? This is just one of the questions raised by a crisis that has eerie parallels to the missteps that led to the Iraq War in 2003, where the buildup to conflict was precipitated by faulty intelligence and confrontational foreign policymakers such as John Bolton in President George W. Bush's administration. ....... In an opinion article in The Guardian in 2013, Bolton wrote: "Overthrowing Iraqi dictator Saddam Hussein in 2003 achieved important American strategic objectives. Our broad international coalition accomplished its military mission with low casualties and great speed, sending an unmistakable signal of power and determination throughout the Middle East and around the world. Despite all the criticism of what happened after Saddam's defeat, these facts are indisputable." ...... Meanwhile, with the failed outcome of the 2003 Iraq War still plain to see, Bolton started ramping up his outspoken criticism of Iran's Islamic Republic. In 2009, as President Barack Obama's administration entered into what would turn out to be almost five years of negotiations with Iran over its nuclear program, Bolton said: "Ultimately, the only thing that will stop Iran from getting nuclear weapons is regime change in Tehran." As the deal entered its final stages, Bolton advocated in a New York Times opinion piece that the U.S. join forces with Israel: "Time is terribly short, but a strike can still succeed. Such action should be combined with vigorous American support for Iran's opposition, aimed at regime change in Tehran," he wrote. The articled was headlined: "To Stop Iran's Bomb, Bomb Iran."....... Bolton calls Iran "the central banker of international terrorism" and accuses Tehran of pursuing nuclear weapons and missiles to deliver them and of "tyrannizing its own people and terrorizing the world." The video ends with a direct threat to Ayatollah Ali Khamenei, Iran’s Supreme Leader: "I don’t think you’ll have many more anniversaries to enjoy," Bolton says. ..... Speaking in Abu Dhabi, Bolton said Wednesday that there had been a previously unknown attempt to attack the Saudi oil port of Yanbu as well. "Who else would you think is doing it? Somebody from Nepal?" .......... As for Trump's position on Iran, nobody seems to know the president's mind, not even, perhaps, the president.

Space internet maybe end of year, says SpaceX This new batch of satellite-driven internet systems, if they work and are eventually switched on, could provide broadband to most places, including previously internet-barren locations, such as rural areas. That would be good for high-bandwidth, low-latency remote-internet of things (IoT) and increasingly important edge-server connections for verticals like oil and gas and maritime. Data could even end up getting stored in compliance-friendly outer space, too. Leaky ground-based connections, also, perhaps a thing of the past........ Laser technical progress, where data is sent in open, free space, rather than via a restrictive, land-based cable or via traditional radio paths, is partly behind this space-internet rush. “Bits travel faster in free space than in glass-fiber cable,” LeoSat explained last year. Additionally, improving microprocessor tech is also part of the mix...... Global penetration of the “populated world” could be obtained after 24 launches, it thinks.



Why astronomers are worried that SpaceX’s satellite network will pollute the night sky The satellites, strung out like a line of glowing army ants, shone brightly as they moved along their orbit around Earth, clearly visible to the naked eye. Now, many in the astronomy community are concerned that this mega constellation might be too bright, and the sheer number of satellites that SpaceX wants to launch could muck up their telescope observations of the Universe. ...... Satellites can be seen for a few hours around dusk and dawn when they catch the light from the Sun as the sky dims, but they won’t reflect light for many hours of the night whenever they are in the shadow of the Earth. However, in higher latitudes during the summer, satellites can be seen throughout the evening. ...... at a latitude of 52 degrees north (about where London is located), there will be 84 Starlink satellites above the horizon at all times. ...... “So what something like Starlink will do, it’ll shut off some of those frequencies from the possibility of study.” Lonsdale also argues that there is a possibility that there will be some level of transmission that spills outside the intended frequency bands....... it’s unusual to have not consulted on this kind of impact.”

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In The News (3)

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In The News (2)

Huawei asks US courts for summary judgment on its move to get federal ban on its gear overturned
Why satellite mega-constellations are a threat to the future of space
As with Huawei, China thinks it can split the US and EU. It’s wrong
For both Xi Jinping and Donald Trump, the trade war is a test of political will and ideology
Pentagon said to be eyeing 5G solutions with Huawei rivals Ericsson and Nokia
Why low profile Huawei founder Ren Zhengfei has grabbed the microphone to defend telecoms giant
US braces for future 5G world largely built with mobile network gear from China’s Huawei
Jacinda Ardern makes progress in China, but does Huawei have cause for optimism?
If friends of Huawei want to hit the US where it hurts, they should tackle the legitimacy of US sanctions Beijing’s supporters won’t have a strong case against Washington if they focus on legal rights of individuals. They need to ask different questions, like: what gives the US the right to ban foreign companies from doing business with Iran? ...... the judicial systems of the US and Canada are far from perfect. I’d need a separate column to begin to show how these systems have let down minorities in both countries....... The economic transformation China has achieved gives Beijing the right to raise its voice on the international stage and question the American order. Why does it hesitate?
China’s middle class growing desperate and anxious about US trade war impact Rising food prices and unemployment levels adding to concerns despite state and social media urging nation to stand strong in face of adversity ...... China’s middle class, particularly better-educated white collar workers, are growing increasingly confused and anxious over how the trade war with the United States will affect the lives of ordinary citizens, in contrast to official press and social media which have been dominated by messages urging the country to stand strong in face of the adversity....... pushing citizens to scramble for any information about the trade war away from the official propaganda rhetoric...... the adverse effects of the trade war have started to be felt and are rapidly becoming known throughout Chinese society. ....... “In just two weeks, the mentality of my friends around me has changed. We used to think [a trade war] to be absolutely impossible. Now I start to fear there will be a devaluation of the [yuan] in the near future, and even a more horrible situation ahead if the two sides engage in a full-scale war, not only in trade and technology, but also in finance and the currency market...... Food prices jumped 6.1 per cent in April due to higher pork and fruit prices, with pork price increases accelerating to 14.4 per cent from 5.1 per cent in March ...... “The yuan is sliding towards 7 to the US dollar, a 500-gram package of grapes has soared to 30 yuan (US$4.3) ....... As a technologist, I have a full understanding that if Sino-US relations continue to deteriorate, or if China loses more orders from Western countries, many of the industrial supply chains developed in the past will soon be scrapped,” said Li Yue........“The business is not profitable yet. I just pray that the trade war will end as soon as possible,” Mai said. “But on the other hand, I think it will be far from a happy ending.”
Donald Trump warns China tariffs could rise ‘very substantially’ as US isn’t ready for deal to end trade war Analysts say a consensus will be difficult to reach on key issues such as Chinese state subsidies, intellectual property theft and an enforcement mechanism before a possible meeting between Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Osaka next month....... the White House said it would delay for six months plans for tariffs on Japanese and European Union car makers to allow more time for negotiation. ........ Huawei’s chief executive Ren Zhengfei told Bloomberg on Monday that he would protest against possible Chinese government retaliation against the US for targeting his firm and rejected Trump’s suggestion a trade deal between China and the US could involve Huawei......... “I see his tweets and I think it’s laughable because they’re self-contradictory,” he said.
China’s industrial profits post biggest drop in nearly three and a half years
The US-China technology war aside, SMIC has a practical reason for delisting from New York: its ADRs are hardly traded
Huawei chief Ren Zhengfei dismisses Donald Trump’s suggestion tech giant could play role in China trade deal Company’s founder tells interviewer that ‘even if the US wants to buy our products I may not sell to them’ ...... Huawei founder Ren Zhengfei has dismissed Donald Trump’s suggestion that the company be included in a trade deal between the United States and China....... In an interview with Bloomberg Television, Ren said the idea was a “big joke”, adding that the Chinese telecoms giant had nothing to do with the US-China trade war. ...... “I will ignore Trump. Then with whom can he negotiate? ....... I see his tweets and think it’s laughable because they’re self-contradictory,” he told the network. “How did he become a master of the art of the deal?” ....... both sides have dramatically escalated the dispute, by imposing punitive extra tariffs on each other’s exports, accusing each other of frequently changing positions and with no sign of renewing the talks. ....... what will be certainly the largest trade deal ever made ...... the US president had the “ultimate discretion” to decide on whether to pursue or drop a federal case
The US and China take their rivalry into more dangerous waters after collapse of trade talks Since the breakdown of the latest round of trade negotiations, the Trump administration has signalled that all-out containment, rather than competition, now guides its dealings with China ...... hardliners on both sides have now gained the upper hand over those seeking to find an agreed way forward. ....... Historians will debate whether China reneged on understandings reached between the negotiators, or US President Donald Trump decided it was politically more in his interest to campaign for his re-election by railing against China rather than defending a compromise agreement his opponents would pick apart. ...... Advocates of delinking who believe China must be actively prevented from catching up with US advanced technology won the day, rather than trusting that US competitiveness would eventually outpace China’s. Containment beat out competition........ Some US officials who are not in the hardliner camp continue to hold out hope that Trump and President Xi Jinping might reach agreement before the upcoming G20 meeting in Osaka, Japan, at the end of June. ........ But barring another radical turnabout by Trump himself – not impossible – there does not appear to be enough time to work through the remaining disagreements........ US Trade Representative Robert Lighthizer has a full agenda dealing with other festering trade agreements and disputes........ But Beijing has also taken subsidies, state-owned enterprises, tech transfer and enforcement off the table, making talks probably pointless. ....... The unrelated but concurrent examples of Iran and Venezuela do not give me confidence in the Trump team’s capacity........ The end of the trade talks seems likely to be the beginning of something much worse.



How To Achieve An Avoidance-Impervious, $14TR+/yr. Global Wealth Tax
A devastating analysis of the tax cut shows it’s done virtually no economic good The nonpartisan Congressional Research Service ...... finds that the cuts have had virtually no effect on wages, haven’t contributed to a surge in investment, and haven’t come close to paying for themselves. Nor have they delivered a cut to the average taxpayer. ........ The tax cuts did almost nothing for ordinary Americans and may even have cost them money. The apparent gains in their income were negligible and short-lived. Wealthy Americans reaped the benefits of lower taxes and higher dividends. The cuts had a negligible effect on U.S. economic growth while depriving the government of revenue. .......Put it all together and this massive restructuring of the U.S. tax system should prompt average Americans to ask Republicans in Congress and the White House that age-old question: Who are you really working for?

India plants 66 million trees in 12 hours as part of record-breaking environmental campaign
Modi Has United India Like No Prime Minister in Decades The last time an Indian Prime Minister was re-elected with a parliamentary majority was in 1971. His coalition won just under 50% of the national vote. ....... Modi has managed to transcend India’s greatest fault line: the class divide...... Narendra Modi was born into one of India’s most disadvantaged social groups. In reaching the very top, he personifies the aspirational working classes and can self-identify with his country’s poorest citizens ........ His second consecutive term is a victory for meritocracy, and for opportunity, thanks to a slate of welfare policies for the country’s extreme poor. Through socially progressive policies, he has brought many Indians, both Hindus and religious minorities, out of poverty at a faster rate than in any previous generation........ Modi pledged to improve the country’s sanitation and he has more than delivered; from fewer than 40% of households having access to a toilet, almost 95% do now. Close to all Indian villages now have access to electricity, when less than 40% did when he took office...... Intuitively he has understood, like no other predecessor, how the much-admired tech skills of Indians can be used to transform society. ....... The tax base in India has almost doubled, and with it, the amount of tax collected — but with a lower tax burden on individual citizens. ....... an unprecedented 200 million plus new bank accounts opened........ Digitization has empowered the poor, eliminating corrupt middle-men and allowing direct deposits of state benefits, social security and pension payments into the hands of the poor. Modi has also succeeded in bringing the whole of India into one tax union, through the implementation of the Goods and Services Tax, and thereby making India at last a truly single market........ His reforms have helped bring inflation under control, from a record high of more than 12% at the tail end of Manmohan Singh’s government, to below 3% in April 2019; and has reduced the deficit down to 3.42%, when a decade ago it was staggering 6.46%....... he must deliver on his promise to create the world’s largest start-up eco-system ......

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In The News (1)



China or the US? Europe’s ‘impossible choice’ in the trade war Chinese Vice-President Wang Qishan, a close ally of President Xi Jinping who formerly led trade talks with the US, is visiting Germany and the Netherlands this week, just days after another top Xi aide, Li Zhanshu, the Communist Party’s third-most powerful cadre, wrapped up a trip to Hungary, Austria and Norway........ Wang’s trip will coincide with US Secretary of State Mike Pompeo’s arrival in Berlin for talks with Chancellor Angela Merkel on Friday. The US State Department said Pompeo would also visit the Netherlands, Switzerland and Britain........ In a landmark shift in its policy on China, the European Commission – the executive arm of the EU – for the first time labelled it an “economic competitor” and “a systemic rival” in a policy paper in March...... ...with the return of trade war tensions, Europe – already caught in the middle of the unfolding US-China rivalry – will become an important battlefield for the two giant nations’ geostrategic political machinations. .....

Huawei asks US courts for summary judgment on its move to get federal ban on its gear overturned


Under Modi 2.0, Will India Embrace Tough Economic Reforms? Unemployment is at a 45-year high; acute agrarian distress has caused farmer suicides; the banking system is weak and undercapitalized with poor credit disbursements; and the economy continues to suffer painful effects of the November 2016 demonetization of high-value currencies and the introduction of a unified indirect tax regime in mid-2017. ..... The BJP won 303 seats, 21 more than it did in 2014; the NDA added 17 seats between the two elections........ The Congress-led United Progressive Alliance won just 90 seats, though these were 30 more than in 2014...... The unemployment rate reached a 45-year high of 6.1% in 2017-2018...... the record voter turnout of 67%. ...... 32% of BJP voters would not have voted for the NDA if Modi had not been the prime ministerial candidate ....... “This idea that Modi is a decisive leader, who is incorruptible, who operates with clean intent and with national interest at heart, is something many voters latched onto” ....... Muslims account for about 14% of India’s population. In a speech after the elections, Modi stressed that minorities in India should not have to live any longer in fear......... “The business community is thrilled [at BJP’s win] because above all, it values stability and certainty.”...... “the BJP took in more than 73% of the donations declared by India’s seven largest political parties in 2017-18. The ruling party spent more than 260 million rupees on advertisements on Facebook, YouTube, Google and Instagram compared with 35 million rupees by the Congress.” ....... and that he will renew some of those reform efforts such as in the land markets and labor markets........ measures “to improve the status of agriculture” and address agrarian distress.........labor reforms; divestment and privatization of state-owned enterprises; and unwinding protectionist policies that restrict foreign direct investment........ inflexible labor laws [that] have choked the growth of manufacturing labor in India for more than 40 years now........ divestment and privatization of some two dozen public sector undertakings (PSUs) that already has cabinet approval. ........ “Sectoral ministries such as the ministry of fertilizers, mines, heavy industries, IT, textiles and steel are targets for regulatory capture by well-organized industry interests” ....... in the World Bank’s Ease of Doing Business index....... India’s now ranks 77th among 190 countries compared with 134th in 2014......... American companies that have invested heavily in China over the last 30 years are now looking for other places to put their investments and to put their supply chains,” he says. “India could benefit enormously from that new situation. But it’s going to need to move very aggressively to make that possible.”........ “A lot of economic policy is implemented at the state level in India ........ high debt loads have saddled many banks, especially public sector banks, with nonperforming assets large enough to prevent substantial new lending. ....... “It should be in the 8% or 9% or even 10% bracket.” .......... Not surprisingly, the government’s interim budget unveiled weeks before the election included a Rs. 75,000 crore ($10.6 billion) package of cash handouts to small farmers, where each would get Rs. 6,000 ($88) a year.



Why the Fed Has a Hidden Influence on Foreign Affairs the Fed quietly exercises enormous influence on U.S. international financial policy. One eye-popping example: During the financial crisis the Fed had swapped currencies with various countries worth $583 billion....... the Fed was able to essentially influence foreign affairs without oversight by Congress or the executive branch....... a relatively young central bank — it was founded in 1913 — that this interest in foreign affairs and foreign policy was right there at the founding. ....... One of the reasons to create an American central bank was to take on the Bank of England, which had its own global currency of last resort. It was something that American policymakers very much were interested in maybe displacing. ......... the Fed is an institution that’s really neither accountable to Congress nor the president — it’s self-funded. It was created by Congress, but it acts on its own. The president is not supposed to intervene. ......... It never gets reviewed in court. ......the Fed went out there and spent hundreds of billions of its own dollars on these swap lines, and it did it of its own accord. So that’s why we think it increasingly looks like the Fed has its own foreign policy priorities that may be different from those of Congress and the president. ........ at one point the Fed had swapped currencies worth $583 billion. ... the entire Foreign Development Assistance budget for USAID is only $22 billion........The Fed is a really cosmopolitan entity. It views the global financial system and economy as extremely interlinked. ....... We want the Fed to make decisions for technocratic, smart reasons. We think that that’s most likely to keep inflation under control, which is one thing that a central bank wants to do........ “Sunlight is the best disinfectant.” Disclosure is a good way to regulate — especially when it comes to things like capital markets......... the advantages of sunlight, disclosure, and communication. ...... We are looking for a Goldilocks solution — something that gets the Fed more public about what it wants to do with its foreign affairs policy, but not something that takes away its independence, which we value, along with everyone else......... gives you disclosure without taking away flexibility, and without giving the president or Congress too much control over the foreign affairs of the financial regulators.

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Wednesday, May 29, 2019

Donald Trump Is Messing Up A Good Thing



Donald Trump is America's Boris Johnson. The two admire each other greatly. Trump is rooting for Boris to become Prime Minister of Britain. This is hubris melting into recklessness.

If America had three dollars in 2001, it made one of those three dollars in the 1990s. Something like the Internet can give you a marked rise in productivity. But the technology on its own is agnostic. It does not innoculate you against harmful inequality. That the people get to do through the democratic process.

If America has five dollars today, it stands to have another 10 dollars by something like 2035. The new technologies are about to bring forth massive gains in productivity. But left to its own devices you could end up with a society like portrayed in The Hunger Games. There is a tiny rich elite. And the masses can barely get by.


Inequality has to be thought of in the same breath as climate change. It will take civilization to a cliff.

Trump's attitude towards it is (1) denial, (2) deliberate misdiagnosis (The Mexicans! The Chinese!), and (3) Pied Piper leadership (read my tweets!).

Projections that put China at number one in 2050 and India at number two also put the US at number three. For the tiny population that the US is in comparison, that is not a bad slot to be in. Measured by per capita income, the US might still be number one.

But that whole projection has to be taken with a grain of salt. Which projection in 1980 put China in 2019 where it is today? The leading economy in 2050 might as well be a country not even on the radar right now.

Boris Johnson will wreck the British economy. Given the chance, Donald Trump will do the same thing on this side of the pond.




Inequality And Climate Change Are Existential: A Blueprint For Survival
Towards A World Government
30-30-30-10: A More Thoughtful And Egalitarian Formula For Equity Distribution In Tech Startups For The Age Of Abundance
The Blockchain: Fundamental Like The Internet
The Character Called The Tech Entrepreneur



India 2050: Amitabh Kant
5G Challenges US Hegemony
Brexit, Aexit, And Trump
African Economic Union
Understanding China (2)
Trump's Prospects In 2020
Understanding China
Political Fallout For Xi
Made In China 2025
Trade War: The Spiral Down Scenario
Three Crises: China, Iran, DC

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