The CCP doesn’t allow the us companies the same.
Why our government let that happen. Letting so much business leave to the CCP will be one of the greatest failings of the us government.
Many of the biggest companies in China are from the US. This is a Fox News tier talking point that gets mindlessly parroted without any logical scrutiny.
Hundreds of billions are earnt yearly by US domiciled companies. Google alone brings in $50 billion from China to the US and they have been "banned" there for years.
Some others: Nike, Intel, GM, Walmart, Coke, KFC, McDonalds, Proctor and Gamble, Qualcom, Boeing, Lockheed Martin, 3M, Texas Instruments, Starbucks, Nvidia, AMD, the list goes on and is extensive.
Starbucks has around 70% marketshare. Have any of the people commenting here even step foot inside China before making comments like "US companies can't compete there"?
Who exactly in the us(sic) is locked out again? Garbage social media companies like Facebook and Twitter? Who cares? The world in general needs less of them.
Now they're a global power and, gasp, they act like one. Nobody could have seen this coming.
Anyone who was critically thinking saw this coming a long way out.
No one with half a brain thought anything else would happen. Even if China was a liberal democracy, this would still happen.
It was just arrogant and short term thinking.
I read a dozen books on post-Nixon US politics.
The amount of allegations from both sides of US politics that the other benefitted in the personal capacity from trade with China is staggering.
At least some of them must be genuine.
It comes to a very simple explanation that communists have indeed been influencing US politics for decades with very crude means, and that they were successful in that.
This is an embarrassing admission US has to do first before any recovery can be started.
Here's what lead me to come back to HN:
https://www.moonofalabama.org/2021/03/is-china-hacking-rando...
Like, actually impressive.
It has nothing to do with infiltration or influence. It's simply the basic structure of the American political system that, since its very founding (who was able to vote?) oriented the government into the facilitation of profit above all else.
That is actually the realization the US has to do, but it seems somehow even more embarrassing than the conclusion that the US government is infiltrated by commies, for some odd reason.
But... but one can't believe into any other explanation as any much credible.
Do hundreds of US political insiders lobby for China in one voice just for nothing?
You don't have closet communists, just a lot of very greedy, amoral, and easy to exploit power holders.
American legal system prohibits jailing people for anything but being caught red handed in cases of political corruption.
I have no idea what you can do about that without doing political persecution, but on other hand if you leave it be it will keep being exploited like hell.
Lol you’ve just described capitalists.
Capitalism vs Communism is a useless debate if the will isn't there to hold the corrupt accountable and ensure that the average citizen is empowered (with said power secured both physically and legally.)
- The US needs access to China's goods to be viable. For half a century US companies improved their efficiency/competitiveness by moving their process to China. They now have too many dependencies in the form of Chinese manufacturing and development capabilities and do not have the skills/knowledge/talents/infrastructure in the US. Because of this China can dictate their rules with zero pressure (though India and other countries will surely be a difficult competition at some point, or maybe already are).
- China owns more than 1 trillion of US debt. In the past the country bought a massive amount of US debt to inflate USD vs RMB and boost their own economy. Currently China has no reasons to sell their reserve as that would impact their economy negatively. If the US blocks them they may start massively selling US debt, which would impact USD and the US economy.
I think you have this backwards. China bought US treasuries to weaken their currency and increase demand for their goods. If they now sell, they will face significant appreciation of the yuan and become uncompetitive. At the same time the US would become more competitive. There would be short term disruption but China would suffer more.
I was answering to someone talking about cutting China off the US market (or at minimum adding strong restrictions). In that situation China’s economy is already suffering.
My response was that such an act by China would actually help the US economy, not hurt it (while simultaneously hurting China).
Some replacements might be slower and more expensive to spin up than people and industries have wanted or been willing to do, but there's literally nothing unique in China.
The cost advantage, at this point, has eroded greatly and is on trajectory to continue doing so (especially if they are to meet their own stated and industrial policy goals).
Also, China is dependent on lots of thing from other countries, including the US, so the notion that they can dictate rules "with zero pressure" is wrong.
Finally, the debt piece is not something I understand well, but I almost exclusively see that addressed by experts as a faulty notion. At least, the notion that all China has to do to cripple the US suddenly start selling tons of US debt or dollars is total fantasy.
Realistically, what would china do? If you "start massively selling US debt", what does that mean? Someone has to buy it. You're increasing the supply while demand probably stays pretty constant. But realistically, I don't think it could go below 90-cents on the dollar. I mean, who wouldn't take US government debt at a 10% discount? Compared to commercial debt from a company with way more risk than the US government, that's way better. So, are we talking about raising the US government's cost to borrow by a few percentage points for a few months?
China can't really disrupt the US economy via its debt holdings. Actually cutting China off from the US would have a far greater impact. Heck, Trump's tariffs were a tiny move and created intense disruption in a lot of industries like bicycle sales. That's not even cutting off China or anything. Imagine if smartphones couldn't be imported into the US for a year or two?
But I don't think the original poster is talking about "cutting China off" in whole. I think the issue in question is about a company like ByteDance/TikTok getting to operate in the US while Google, Facebook, Clubhouse, etc. get blocked from accessing China. If TikTok doesn't need to compete with US companies in China, but Twitter/Instagram/Clubhouse need to compete with TikTok in the US, it means that Chinese companies will have double the market to sell into.
China's GDP is around $24T and the US's is around $21T so a service like TikTok can get access to all $45T while a US-based company like Facebook can't get access to the Chinese market. If you're able to service both countries, your investment in software, infrastructure, etc. goes further.
I don't think it's about cutting China off, but rather wanting a more level playing field. When we're talking about something like smartphones, Apple, Samsung, and others sell into the Chinese market a lot and while China might do things to help its own companies like Huawei, it's open enough to placate a lot of people. That's very different from Facebook and Twitter which are banned in the country. Apple is 20% of the Chinese smartphone market.
If a US company makes the Next Big Thing in social networking, a Chinese company gets to copy it for the Chinese market. If a Chinese company makes the Next Big Thing, they can launch it in the US market as TikTok did.
I don't think this is about cutting Chinese manufacturing off. I think this is a question of whether firms like ByteDance/TikTok should be allowed to come into the US while US firms like Facebook or Twitter can't enter China.
If Facebook created a similar sibsidiary social network for China, and called it '脸书' would China care about the distinction?
Better question, who wants to be the guy that goes, "I have a great idea. It'll really piss off those yanks. It'll just cost us about $100 billion (the price of like 7 Gerald Ford class carriers) along with the interest payments. A small price to pay to piss them off and have their private corps and allies buy their debt at a discount."
That's borderline a scenario like that comic meme at a board meeting for ideas and the dude gets thrown out the window.
We just printed four trillion dollars out of thin air and the sky didn't fall.
What makes you think that printing one quarter of that amount in order to sterilize a dump of treasuries will cause the sky to fall?
Treasury bonds are issued and put on the bond market. When purchased, those funds are the "money printer go brrrr". It's not so much printing money, just getting deeper into debt. Call it what it is, so it can be approached properly. Calling a tiger a duck isn't going to save you from getting mauled to death.
No, they aren't.
You are confusing fiscal deficits with monetary expansion. Worse yet, seem to be complaining that GP is failing to confuse monetary expansion with fiscal deficits, when suggesting use of the former to deal with the adverse effects of a particular source of constraints on the ability to leverage the latter.
All of these treasuries are sold to primary dealers and the secondary market transactions are of little interest to any macro variable. Some treasuries are held by China in its Federal Reserve account. Should China sell the treasuries to another buyer, they will be transferred to a different account in the same bank. The nationality of the account holder makes no difference to the price of the asset.
The real issue is can China force the price of treasuries to be lower than it is? The answer to that is, maybe a little on the margin. Treasuries are priced as the expectation of average short term rates which are policy decisions by the Federal Reserve. So the real question is can China force the Federal Reserve to raise short term rates over a prolonged period? The Fed does this as part of an inflation fighting policy so this is a question about inflation and has nothing to do with China "dumping" anything.
Trying to guess the inflationary effects of something is hard, so I will throw out some theories and you can decide which one you like:
1. To the degree that US (and global) corporations have been outsourcing manufacturing to China to avoid paying higher wages to first world workers, then this results in driving down wage increases which could create an inflationary spiral, depending on your theory of inflation. Old school people thought inflation was the result of wages being too high. So if they are right, then yes, a very tight labor market could increase inflation more than expected and perhaps the Fed would need to keep rates a bit higher, but again to fight inflation, not because nation X no longer wants access to the US capital markets. I think most Americans would welcome this greatly, although stock prices would take a hit.
2. At the same time this would create an economic shock and the Fed may lower rates to stimulate the economy during the shock. So the short run effects are really mixed.
3. But there is another aspect here, which is that the trade deficit with China creates a loss of income for the US, which is made up for by increased government spending, whether disability payments to laid off workers, or welfare payments or other costs. Thus a reduction in the trade deficit will drive a reduction in the government deficit and thus a reduced demand to sell treasuries that moves in lockstep with the reduced demand to buy treasuries. So if you are of the newer school that says euler consumption trade offs are going to control investment demand, and sticky prices cause nominal interest rates to generate inflation, then once you adjust for the reduced government deficits created by trade deficits, you end up with a model that predicts higher short run rates and then stable long run rates.
4. There is the issue of international capital flows. Let's say we block China from purchasing dollar assets, so investment demand for the dollar decreases, therefore the dollar itself depreciates against the global basket, which causes US exports to be more competitive and we export more, which increases domestic income, which threatens an increase in inflation, which causes a small increase in rates as the economy is booming, up until the higher rates offset the depreciated dollar and things are back into equilibrium. This is why nations such as China intentionally devalue their dollar when they want to stimulate the economy.
Note that financial market beauty contests has zero impact on the US risk-free rates and thus on the price of treasuries. US treasuries are priced by arbitrage against the time path of future short rates, not by how popular the US is or whether some nation wants to hold treasuries.
You can pick among all of these or make your own scenario, but the bottom line is that rates go up only because the Fed raises rates in response to inflation. They do not go up because China decides to give away a bunch of its dollar assets.
China, of course, can sell the treasuries at a discount. Hell, they can give them away. That wont change the equilibrium price, it will just give windfalls to someone else at China's expense.
Capital markets are pretty elastic -- they will not run out of money to lend someone who is buyig treasuries from China on the cheap. Absolutely every bank will be willing to lend you money if you have treasuries as collateral, and the haircuts are small indeed. Hell, you can even borrow from the Fed itself to buy treasuries. Life-Pro Tip: If someone is offering to sell you treasuries at a discount, then buy them!
There will be no shortage of buyers ready and eager to relieve China of the burden of having treasuries.
No, it really isn't. The thing the US is indeed does very little for an economy of its size.
Washington can slam fist on the table, and US industry will be out of China by tomorrow, without much impact at home besides no iToys this season, and few percents off its stock market.
Lack of consumer goods would of course be upsetting, but people wouldn't die from lack of them.
Yeah, I think you're under estimating the interconnectedness of the supply chain there. Would definitely make the pandemic disruption look small.
And you're assuming China won't retaliate. I wouldn't like to be a US national in China when that happened.
Pandemic disruption is small. A disruption on this scale was nothing unheard of historically. Infectious diseases were taking millions of lives in the developed world before the advent of antibiotics, and to lesser extend until the bio-technological revolution of seventies.
What was unheard of was world's biggest power being rendered utterly impotent, and in complete stupor by such minor events.
I see a country like US being otherwise fully capable of dealing with a crisis on this scale easily.
> And you're assuming China won't retaliate. I wouldn't like to be a US national in China when that happened.
Of course they will! You will be cutting into personal coffers of their highest elites. It will be a very personal challenge to them. Having them eat watery gruel like lowly peasants will infuriate them.
That's exactly the POINT. You see a bad guy, you challenge him to beat him. You don't beat a bad guy by avoiding him.
Nobody wins a fight without fighting it to the end. Escalate until you win.
The old Cold War was very clear that final victory involved civilian deaths in the millions. Be very clear: are you advocating for that?
I'm advocating for people to understand that not being ready for this will be their demise.
Tell me, what would've been a better solution for WW2.
Let Adolph, Stalin, Hirohito, or worse both of them together, have Europe, and then have their free way to use the completely overwhelming resource advantage to kill you, or go and fight to the bitter end before they have it?
The most logical action to do if you can't win, is to fight. One must be ready to fight, even if it is a completely hopeless battle.
Second, I want to make you guys understand that, for now, NATO has 100% genuine ability to do something about its adversaries. Wait just a few more years at the current pace, and it wouldn't.
Third, if you chicken out, your weakness will rile the beast(s) even more, and fire up its appetites. It's showing your back to the tiger, an invitation for disaster.
Also, it's funny you bring up the Axis powers considering that America would have entirely sat out the entire war if it wasn't for Pearl Harbour and Japan constantly provoking a response with their actions in the pacific. I have also never seen the US ever go into a war where they did not have overwhelming power advantage over their enemies. By the time D-Day happened, the supply lines for the Axis were crippled beyond repair and the war was essentially already lost. It was just a matter of time before supplies ran out.
China has more than enough nuclear capability to cripple the entirety of NATO and they also are well aware that NATO has the capability to do likewise. Hence, neither parties are ever going to even contemplate an outright war with each other despite the wet dreams of war mongers from both sides.
First, no it isn't. Second, in a few more years, China will be the only country in the world with material, and military capacity to take the second strike, and keep on offence.
Third, you haven't learned anything if you ever studied WWII. While Germany was running on vapours in the late war, it was still running. They had few years more of small arms supplies, and still some food, which was indeed better than what union's officers had even in reich's final days. Last reserves of fuel were enough for more than a year of low intensity warfare. And yes, Germany fought to the bitter end. Otherwise, where did you thing hundred of thousand American casualties came?
Please don't comment on this matter anymore. You don't know anything about war.
What isn't? That China has enough nuclear capability to cripple the entirety of NATO or vice versa? I'd like to see you justify that tall claim. Your second "point" just sounds like fear mongering without substance. If any country could develop that capability, it is Russia with the largest land area of any country.
Also, my point about the Axis having essentially already lost the war thanks to crippled supplies was incorrect because "they had a few years more of small arms supplies, and still some food" and enough fuel to "last more than a year of low intensity warfare"? That's just an inevitable loss but with extra steps in between! I might not know anything about war but clearly you don't know anything about my argument if you thought this was an actual rebuttal.
Low intensity warfare? The Allies had enough bombers to collapse entire cities! Even the hundreds of thousand Americans dead were minor compared to the millions of Germans that perished.
That's kind of why we don't engage in these kinds of large scale ground invasion type wars anymore (at least without one side being completely overwhelmingly more powerful) - the costs are so astronomically high, both in money and in causalities.
Lack of consumer goods means lack of jobs for people who transport, warehouse, and sell consumer goods.
Lack of jobs means lack of money to pay for things like food, shelter, medical care, etc, only some of which the US has adequate safety nets for.
People will, indeed, die from lack of consumer goods.
Your comment makes it seem like this would lead to catastrophe or collapse.
It would more likely lead to industry rotation and employment change.
Yes, you can reduce any macro factor to a death count, but those are always trading off in all directions. It's meaningless to categorically single out a particular scenario of swapping production as more deadly than the others.
I'd like to regain industrial capacity too but we're missing an entire population base of expertise and relationships.
People barely making ends meet aren't very interested in those kinds of political statements.
You could, of course, try to lie to them about what the consequences of your policies are going to be.
If you can't do this, you can't do this.
And you certainly wouldn't be able to do even more painful things which are truly needed for the West to have any chance to put the genie back into the bottle.
China, and Russia have effectively conditioned the NATO countries over the decades into "self-beneficial inaction." Now, seeing words like yours proves their strategy worked.
What has the US really lost? No territory, no people; there's no stream of refugees to the "winning" Chinese side.
Trump was anything but. Your writing just makes no sense.
This isn't some insurmountable problem. Yes, there are scenarios where you go "too fast" and raise too many prices too quickly and piss people off. Or, you go slower and make it more palatable.
We need in total embargo China. She are largest threat among existence for continuing America.
https://en.wikipedia.org/wiki/Holding_Foreign_Companies_Acco...
https://en.wikipedia.org/wiki/EQUITABLE_Act
https://news.cgtn.com/news/2020-12-03/China-slams-new-audit-...
https://journals.library.columbia.edu/index.php/CBLR/announc...
In 2015, the SEC reached a settlement with the Chinese branches of the Big Four accounting firms on non-compliance with the PCAOB’s regulation, and the administrative proceeding against these firms was dismissed for four years.[15] Now, four years have passed, and the conflict of regulation remains unresolved.
You can’t have $5 T-shirts and also a $15 minimum wage.
with $15 minimum wage there is no need for $5 T-shirts.
When that is not the case, it's usually in sectors where Chinese companies don't have full access to the Chinese market either. If Facebook or Google were Chinese companies but hosted the same content, do you think they'd be allowed inside the Great Firewall? Actually, we don't need to guess: when Qihoo 360 tried to provide censored access to Western social media, they were quickly shut down: https://www.cnbc.com/2020/10/12/chinese-app-that-let-users-a...
Western companies who don't operate in China aren't shut out because the government treats them differently. On the contrary, the government would treat them like Chinese companies, and some aren't willing to put up with that. Chinese companies don't get a choice.
"Made in China" is exactly the type of curse that the global elite like to put on people. It's plain as day what's coming next and yet, everybody has just accepted it since the 70s. China will be the world superpower to replace the US and apparently we're all fine with that.