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Phase one is now in the books. It seems to be an impressive achievement by the much-maligned Trump administration, especially after Trump's affirmation of the Hong Kong protesters.
Next is phase 2, part of which is an effort to stop China from giving subsidies to state run companies.
Quote:
Looking ahead, the most difficult issue to resolve relates to Chinese government subsidies of state-controlled businesses. When China entered the World Trade Organization at the end of 2001, the U.S. government was hopeful China’s economy would become more market-oriented.
I understand that US companies would not like to have to compete with Chinese companies that are heavily subsidized by their government. But in the big picture, this has to weaken the Chinese economy. Subsidies stifle competitiveness and weaken economic dynamism.
China now appears to be our number one rival for at least the remainder of the century. They clearly have ambitions of hegemony. They are engaged in such things as forced organ harvesting of prisoners, cracking down on religious freedom, etc.
I see the US and China as Athens and Sparta (see the Peloponnesian Wars. Hopefully it will not come to military conflict as it did in ancient Greece, but human nature being what it is, it may be inevitable.
Trade that benefits us is one thing, but why would we want to push for a measure that would strengthen their economy?
Phase one is now in the books. It seems to be an impressive achievement by the much-maligned Trump administration, especially after Trump's affirmation of the Hong Kong protesters.
Next is phase 2, part of which is an effort to stop China from giving subsidies to state run companies.
I understand that US companies would not like to have to compete with Chinese companies that are heavily subsidized by their government. But in the big picture, this has to weaken the Chinese economy. Subsidies stifle competitiveness and weaken economic dynamism.
China now appears to be our number one rival for at least the remainder of the century. They clearly have ambitions of hegemony. They are engaged in such things as forced organ harvesting of prisoners, cracking down on religious freedom, etc.
I see the US and China as Athens and Sparta (see the Peloponnesian Wars. Hopefully it will not come to military conflict as it did in ancient Greece, but human nature being what it is, it may be inevitable.
Trade that benefits us is one thing, but why would we want to push for a measure that would strengthen their economy?
Sure we should if we want to remain as top global dog!
But of course China will not comply. No matter what you or I think or are told.
Cheap or free central fiat money has obviously worked to bolster their economic expansion.
It is the Chinese way, not ours. More modern, but of course not democratic. IMO they will pass us, and not crump due to any 'stifled competitiveness or weaken dynamism'.
Those aren't subsidies. Those are loans made from China's Big 4 banks (largest in the world) to commodity industrial concerns that aren't performing....except when additional loans are made. The one subsidizing things is the Federal Reserve bailing out the banking industry....which in turn makes loans on acquisitions and stock buybacks.
Kettle meet Pot.
We can ask for it in Phase II, but we won't get it.
Those aren't subsidies. Those are loans made from China's Big 4 banks (largest in the world) to commodity industrial concerns that aren't performing....except when additional loans are made. The one subsidizing things is the Federal Reserve bailing out the banking industry....which in turn makes loans on acquisitions and stock buybacks.
Kettle meet Pot.
We can ask for it in Phase II, but we won't get it.
'But because the Chinese government owns most of the banks, and it prints the currency, it can technically keep those banks alive and lending forever.'
No, the US should not attempt to dictate how another country functions economically. That said, the US should tariff unfair trade practices like dumping product at prices below cost. That is what I've read the Chinese steel industry has done.
The US heavily subsidizes agriculture. It has made the US a world behemoth in the sector. Subsidies do work. Look at the Asian tigers. They subsidized and protected certain industries which allowed them to grow until the could compete globally (Toyota, Honda among others).
Trump's trade policies are primarily about gaining a better environment for US companies to operate IN China. That doesn't help US workers. Better patent protection and protection of IP (no more JV requirements), imply the current barriers that make CEO's hesitate to relocate to China, will be lowered if not removed. We'll see more job losses, not less.
'But because the Chinese government owns most of the banks, and it prints the currency, it can technically keep those banks alive and lending forever.'
I was being a bit salacious. China has done several things that put the full power of their government behind their industry at the same time the US left herself wide open for China to export to her. They've done exactly as you note above. They know exactly what to lend into based upon what is coming through the ports, and they know the costs and who is buying. The entire world couldn't hand China their entire supply chains fast enough. And what wasn't handed over (aka fast rail from Siemens) was blatantly copied.
China is a Communist country. Giving subsidies to businesses is like the least they can do. And is it really any worse than our banks getting bailouts? How is that fair to anyone else?
Those aren't subsidies. Those are loans made from China's Big 4 banks (largest in the world) to commodity industrial concerns that aren't performing....except when additional loans are made. The one subsidizing things is the Federal Reserve bailing out the banking industry....which in turn makes loans on acquisitions and stock buybacks.
Kettle meet Pot.
We can ask for it in Phase II, but we won't get it.
That is absurd on so many levels.
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