Effects of Trade War on US dollars and treasury notes.

Effects of Trade War on US dollars and treasury notes.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No.30x).

#trade war, #dollar, #treasury note, #bond, #US, #China,

Trade War has begun and the combatants are trying to outsmart their respective opponents [1,2].

1. China is no more the largest holder of US treasury notes.

Japan is. [3,4,5]

2. China and Russia had quietly (using straw men) sold off most of their US treasury notes.

Now they can thrash the US economy with no harm to themselves.

3. The Shanghai Security partners now form a gold-plus-oil based trading block.

They have a robust trading system based on REAL money which are gold and oil.

 

4. China has found other markets for their (low grade) consumable products.

China’s other markets are The Shanghai Security block (Russia, China, former Soviet Republics, Pakistan), Asian, African countries, EU, their raw material suppliers (Australia, Brazil, Pacific Island Nations).[6]

China does not need to keep its currency low relative to US dollars to preserve its outlet in the US, especially after most of US manufacturing industries have moved to China.

5. Soon there will be an about face on China/US exchange rate.

China will force US dollars down after US had LOST all manufacturing CAPABILITIES and NEED to buy Chinese products (This strategy had been previously applied many times in Chinese-Vietnamese trade). That is why tariff and import/export control are ALWAYS NEEDED.

Forcing US dollars down also increase the perceived Chinese national wealth and let China buy more foods and more raw materials.

6. The dollars will lose their massive international reserve-currency holdings.

After they lose their privileged position they will be more volatile relative to US annual budget deficits. There will be more countries dumping US dollars as reserve-currency holdings. The cycle will feed on itself until the dollars reach their real commodity based value which is suspected to be much less than the present value.

… U.S. dollars were convertible to gold. In France, it was called “America’s exorbitant privilege” as it resulted in an “asymmetric financial system” where foreigners “see themselves supporting American living standards and subsidizing American multinationals”. As American economist Barry Eichengreen summarized: “It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one.” In February 1965 President Charles de Gaulle announced his intention to exchange its U.S. dollar reserves for gold at the official exchange rate. He sent the French Navy across the Atlantic to pick up the French reserve of gold and was followed by several countries. (https://en.wikipedia.org/wiki/Exorbitant_privilege)

7. US banning of processing of transactions involving US sanction’s targets quickens de-internationalization of US dollars.

US fiat dollars also suffer from US banning of processing of transactions involving US’ targets.

The Belgium-based SWIFT financial messaging service said on Monday it is suspending some unspecified Iranian banks’ access to its messaging system in the interest of the stability and integrity of the global financial system. (https://www.reuters.com/article/us-usa-iran-sanctions-swift/swift-says-suspending-some-iranian-banks-access-to-messaging-system-idUSKCN1NA1PN)

8. Less people will be willing to buy US treasury notes.

US interest rate will shoot up like those in third world countries after every undisciplined budgetary plan promoted by American (In Name Only?) lefties.

References:

[1]. https://survivaltricks.wordpress.com/2018/09/12/real-life-lessons-on-national-economics/

[2]. https://survivaltricks.wordpress.com/2018/09/12/real-life-lessons-on-national-economics/

[3]. https://truth4freedom.wordpress.com/2019/06/25/americas-adversaries-are-buying-gold-like-a-nuke-is-going-off-tomorrow-zerohedge-news/

[4]. https://ticdata.treasury.gov/Publish/mfh.txt

[5]. https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-us-debt-2018-08-21

[6]. https://chinadailymail.com/2019/07/17/southeast-asia-overtook-us-as-chinas-2nd-major-trade-partner-and-why-it-matters/

[7]. https://en.wikipedia.org/wiki/Exorbitant_privilege

[8]. https://en.wikipedia.org/wiki/Barry_Eichengreen

[9]. https://www.reuters.com/article/us-usa-iran-sanctions-swift/swift-says-suspending-some-iranian-banks-access-to-messaging-system-idUSKCN1NA1PN

[10]. https://www.dw.com/en/germany-urges-swift-end-to-us-payments-dominance/a-45242528

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Trade war tactics, Part 9: Taxing remittances to make effective tariffs

Trade war tactics, Part 9: Taxing remittances to make effective tariffs.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 1xx).

The engagement in the trade war between two opponents countries relies mostly on tariffs. The remittances sent home by immigrants can actually weaken the effect of tariffs. Taxing the remittances is a logical way to extend the effect of tariffs.

#trade war, #tariff, #remittance, #tax

1. Remittances sent home by immigrants.

Every years immigrants sent home remittances to help their relatives still in their poor original (third) countries. These remittances may be used by their relatives to live in some third country V. There (in country V) the cheapest goods may be bought, resulting in remittances from country A can be used to buy goods manufactured by its opponent (country C).

If the remittances sent home by immigrants in country A is significant then the currency from country A still support the export of its opponent (country C).

2. Taxing remittances to make tariffs more effective.

Immigrants may not like it [1,2,3] but taxing of those remittances may be necessary. It is reasonable for country A to tax the remittances leaving its soil. It is quite reasonable if the tax is reimbursed to the payees when their relatives can produce proof that they used that money to purchase solely goods exported from country A with proof of TRACEABILITY.

3. Numerical example.

Immigrants from country V come to A and work there. The immigrants send back to country V an amount of $100,000. Country A should make a tax of $10,000 on that remittance, so that only $90,000 leave the the soil of country A.

If the immigrants can give the proof that all the money had been spent in country V  to purchase goods which had been imported from A or made in A then the immigrants can get back their $10,000 tax. Therefore the immigrants had sent $90,000 remittances to their country V with NO tax.

In effect, this tax would make people in country V buy $90,000 of goods imported or made in country A. The money would not be spent on goods made by the opponent country C.

References:

[1]. https://transferwise.com/us/blog/foreign-remittance-meaning-taxes

[2]. https://blogs.worldbank.org/peoplemove/why-taxing-remittances-bad-idea

[3]. https://ourworld.unu.edu/en/why-funding-a-us-mexico-wall-with-a-remittance-tax-is-a-recipe-for-disaster

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Trade war tactics, Part 8: Pressuring opponent until cracks appear to reveal weak points for attack.

 

Trade war tactics, Part 8: Pressuring opponent until cracks appear to reveal weak points for attack.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 181).

The engagement in the trade war between two opponents will reveal some weakness in each of both opponents. Each will do its best to break the other’s strength through the discovered weak points.

Now USA has won the first round of its trade war against China but it has to discover and exploit the weak points of Chinese economy to successfully pursue that war. An analysis of this trade war is offered here following a summary of its time line.

#trade war, #weak point,

Trade war tactics, Part 8: Pressuring opponent until cracks appear to reveal weak points for attack.

1. Time line of current trade war.

2018 January 23:

30% tariff on solar panels (most of them are from China) reducing to 15% after four years. 20% tariff on washing machines for the first 1.2 million units imported during the year.

2018March 22:

President Trump relied on Section 301 of the Trade Act of 1974 to propose tariffs on additional 60 Billion worth of Chinese export (over 1,300 categories including aircraft parts, batteries, flat-panel televisions, medical devices, satellites, and various weapons) to USA as “a response to the unfair trade practices of China over the years“, including theft of U.S. intellectual property.

2018 March 30:

On Monday, Brussels launched a safeguard investigation into how it could combat surges of steel imports… from inflows of Japanese, Chinese, Turkish and Russian steel that would be diverted away from the U.S. [1]

2018 April 2:

China imposed tariffs on 128 products it imports from America: 25% on aluminum, airplanes, cars, pork, and soybeans, 15% on fruit, nuts, and steel piping.

2018 April 5:

Trump responded saying that he was considering another round of tariffs on an additional $100 billion of Chinese imports as Beijing retaliates. The next day the World Trade Organization received request from China for consultations on new U.S. tariffs

2018 June 15,

United States impose a 25% tariff on $50 billion of Chinese exports ( with “industrially significant technology”). $34 billion start July 6, with a further $16 billion to begin at a later date

2018 July 13:

“The S&P 500 on Friday hit a four-month high … the Nasdaq close at a record high. The S&P 500, Nasdaq and the Dow Jones Industrial Average were also tracking for their second straight week of gains.” [2]

2018 July 17:

“Since the White House announced the first tariffs — on washing machines and solar cells on Jan. 22 — the Shanghai Index of Chinese stocks is down nearly 20 percent, while the S&P 500 is off less than 1 percent… Since the end of March,..the yuan has slid nearly 7 percent, again demonstrating the impact the trade war…” [3]

As at 2018 July, America has been the winner in the current trade war.

2018 Sept 23:

USA imposed new 10% tariffs on $200 billion of Chinese goods, spanning thousands of products, including food seasonings, baseball gloves, network routers and industrial machinery parts.

China retaliated immediately with new taxes of 5% to 10% on $60 billion of US goods such as meat, chemicals, clothes and auto parts.

2018 October 03:

The trade war is accompanied by a war maneuvering in the South East Asian sea. Chinese Navy unsuccessfully tried to cause a collision at sea with USS Decatur. USS Decatur (DDG-73) is an Arleigh Burke-class destroyer in the United States Navy, of the same class as USS Fitzgerald (DDG-62) which collided with a Phillipine registered ship MV ACX Crystal near Tokyo around 2017 June 17; US Navy had also suffered another collision between USS McCain (DDG) and Liberian merchant ship on 2017 August 21 [3b].

2018 October 08:

China has lowered its required reserve ratios, meaning its banks run low on cash. The problem began some time 2 years ago, before the beginning of the current trade war [4,5]. China now directs its activities to domestic home construction market [6].

2018 October 03:

China Wants To End Trade War [7],

2018 October 11:

China needed to borrow money and launched debt offering [7b, 7c, 7d].

2. American economy is self-sufficient while Chinese economy is all relying on trades.

After the trade war and the take jobs home movement, US economy has become strongest in 40 years. China is not doing well with import and export restrictions by the US [8,9].

3. China is running out of financial liquidity.

That is a sign of over-investment on foreign-dependent economic activities that has been non-voluntarily throttled down.

4. American tariffs on Chinese steel, aluminum, washing machines and Chinese junks are effective.

Currently the US may consider that solar panels and washing machines should provide an opportunity for American manufacturing industry. The current tariff are designed to give American solar panel and washing machine makers a chance to establish themselves. Tariffs on other Chinese junks will guide American consumers toward the use of more durable, environment friendly goods.

5. Chinese tariff on American soybeans is ineffective

They cannot reduce the consumption by Chinese people. China needs cheap soybeans from the US more than the US needs to sell them to China.

Conservation requires an increase in soybean prices: rising demand for meat has driven soy production to nearly 10 times what it was 50 years ago. A full 80 percent of the world’s soybean crop is fed to livestock.[10]

Sixty percent of all soybeans grown worldwide are now exported to China, [11]

6. Chinese tariff on American LNG has been ineffective

It cannot reduce the consumption of US LNG. Rather Chinese purchasers of US LNG ship their cargo to Europe, swap for a non-US cargo and ship the latter to China to avoid any tariff. In this way Europe will consume US LNG while sending its purchased LNG to China.

7. Chinese tariffs on American luxury goods are ineffective

Chinese tariffs on American luxury goods like hand phones, designer hand bags, airplanes, cars, etc…[12] only turn them into items for “status symbol” and may ultimately promote their sale to Chinese super-rich people.

So ultimately Chinese tariffs give free promotion to American luxury goods.

8. Plotting new course for economic attack.

a- Boycotting marketers of environmentally unfriendly products.

The tariff on washing machines also put a brake on the wasteful short life cycle assigned by Americans on their washing machines. The Green and the conservation movement are now conspicuously absent in their protest against the wasteful American habits of retiring their washing machines early.

The rethink on this wasteful practice may also encourage a reduction of American thirst on Chinese throw away (short life) junks. Reduction on the consumption of short life junks may even activate some conservation laws requiring products to be environment friendly and wear resistant, properties Chinese junks don’t have.

b- Boycotting spying equipment marketers.

The rethink on electronic espionage also dampen enthusiasm for Chinese electronic equipment. [12b-12i]

c- Boycotting markets with non-reciprocal access.

Americans have to wake up to any unfair trade practice and uneven playing fields in trade. [13]

d- Growing maize instead of soybeans

This move protects the environment.

E15 petrol has 15% alcohol content which comes from maize. In this way soybean farmers are less effected by any fluctuation in the soybeans market, they can rotate crops and produce maize instead of soybeans. Hence farmers can demand substantially higher price for soybeans.

e- Establishing alternative competing foreign manufacturing bases

Trump’s government even call for manufacturers exporting to US to move out of China to avoid tariff. [14,14b]

9. Employing patriotism to support the trade war.

President Trump can ride on the patriotism wave for his economic war and direct consumers to consume goods from allies while skipping goods from potential adversaries. [15].

9. Conclusions

America is winning on most economic fronts. It should press on with this war to force China to live within the accepted rules of the international world.

With its stronger economic position, America can require China to rectify both its unfair trading policy and its policy of land grabbing from its weaker neighbors and trading counter-parties [16,17,18,19,20,21,22]. This will earn praise on America and may reverse the erosion of its international standing for the last 40 years.

References:

[1]. https://www.politico.eu/article/president-donald-trump-winning-the-trade-war-for-now-steel-aluminum-tariffs/

[2]. https://www.cnbc.com/2018/07/13/cramer-trump-winning-china-trade-war-and-the-stock-market-confirms-it.html

[3]. https://thehill.com/opinion/finance/397447-trump-is-winning-the-trade-war-because-china-has-more-to-lose

[3b]. http://mobile.abc.net.au/news/2018-10-03/south-china-sea-encounter-between-us-warship-and-chinese-vessel/10333096?pfmredir=sm

[4]. China moves to boost liquidity amid US trade war, 8 October 2018, https://www.bbc.com/news/business-45780726

[5]. Global banking watchdog warns over Chinese banks, 18 September 2016, https://www.bbc.com/news/business-37403363

[6]. https://johnib.wordpress.com/2018/10/10/chinas-helicopter-money-to-support-homes-and-apartments-expected-to-keep-social-stability/

[7]. China Wants To End Trade War But ‘U.S. Position Keeps Changing,’ Ambassador Says, October 3, 2018 6:17 PM ET, Steve Inskeep Twitter, https://www.npr.org/2018/10/03/654084691/china-wants-to-end-trade-war-but-u-s-position-keeps-changing-ambassador-says

[7b]. https://www.wsj.com/articles/china-aiming-to-borrow-as-cheaply-as-apple-and-microsoft-launches-u-s-dollar-debt-offering-1539231229

[7c]. https://thedefenstar.com/2018/10/12/disclose-all-chinese-dept-if-you-want-a-bailout-package-imf-to-pakistan/

[7d]. https://www.devdiscourse.com/Article/headlines/214110-imf-asks-for-absolute-transparency-of-debts-from-pakistan

[7e]. https://nation.com.pk/15-Oct-2018/pakistan-to-share-china-debt-details-with-us-before-imf

[7f]. https://thedefenstar.com/2018/10/15/pakistan-finally-agrees-to-share-chinese-debt-details-with-us-to-get-imf-loans-approved/

[8]. Trump’s trade war advantage: The US economy is ‘firing on all cylinders,’ says expert, https://www.cnbc.com/2018/08/13/us-china-trade-war-us-economy-gives-trump-an-advantage-expert-says.html

[9]. How a US-China trade war could hurt us all
Karishma Vaswani Asia business correspondent @BBCKarishma, https://www.bbc.com/news/business-44706880

[10]. Blinding consumers to the true cost of soy?, https://superforest.blog/2018/10/08/blinding-consumers-to-the-true-cost-of-soy/

[11]. https://us-issues.com/2018/10/02/china-in-water-crisis/

[12]. https://wentworthreport.com/2018/07/02/the-china-trade/

[12b]. https://www.darkreading.com/attacks-breaches/chinese-intelligence-officer-under-arrest-for-trade-secret-theft/d/d-id/1333025

[12c]. Personnel on US military bases can no longer buy phones and other gear manufactured by Chinese firms Huawei and ZTE, after the Pentagon said the devices pose an “unacceptable” security risk.by AFP on May 05, 2018 Tweet, https://www.securityweek.com/us-military-bans-huawei-zte-phones

[12d]. https://www.theverge.com/2018/8/13/17686310/huawei-zte-us-government-contractor-ban-trump

[12e]. Chinese spy chips are found in hardware used by Apple, Amazon, Bloomberg says; Apple, AWS say no way, https://www.cnbc.com/2018/10/04/chinese-spy-chips-are-said-to-be-found-in-hardware-used-by-apple-amazon-apple-denies-the-bloomberg-businessweek-report.html

[12f]. China allegedly infiltrated US companies through implanted hardware backdoors,
Zeljka Zorz, Managing EditorOctober 4, 2018, https://www.helpnetsecurity.com/2018/10/04/implanted-hardware-backdoors/

[12g]. https://irishinfosecnews.wordpress.com/2018/10/04/china-allegedly-infiltrated-us-companies-through-implanted-hardware-backdoors/

[12h]. Report: In Huge Hack, Chinese Manufacturer Sneaks Backdoors Onto Motherboards, https://www.darkreading.com/network-and-perimeter-security/report-in-huge-hack-chinese-manufacturer-sneaks-backdoors-onto-motherboards/d/d-id/1332977

[12i]. https://irishinfosecnews.wordpress.com/2018/10/04/report-in-huge-hack-chinese-manufacturer-sneaks-backdoors-onto-motherboards/

[13]. https://www.reuters.com/article/us-usa-trade-china-diplomacy/u-s-ambassador-accuses-china-of-bullying-with-propaganda-ads-idUSKCN1MA0HW

[14]. Trump calls on Apple to move production from China to US, September 8, 2018, https://m.phys.org/news/2018-09-trump-apple-production-china.html

[14b]. Why foreign companies are shutting shop in China, Jane Li, Thu, 2 Feb 2017, https://www.cnbc.com/2017/02/02/why-foreign-companies-are-shutting-shop-in-china.html

[15]. https://ukgovernmentwatch.wordpress.com/2018/10/07/china-shonky-steel-rogue-chips-in-computers-what-else/

[16]. https://wentworthreport.com/2018/07/02/the-china-trade/

[17]. China Reshapes The Vital Mekong River To Power Its Expansion, https://superforest.blog/2018/10/06/china-reshapes-the-vital-mekong-river-to-power-its-expansion/

[18]. Vietnamese Worry About China’s “Slow, Creeping Invasion” from Tibet to Australia and Pakistan, https://johnib.wordpress.com/2018/10/07/320212/

[19]. https://johnib.wordpress.com/2018/09/26/south-china-sea-do-china-and-the-u-s-know-each-others-intentions/

[20]. http://www.abc.net.au/news/2016-07-13/rothwell-south-china-sea-verdict-explained/7624120

[21]. http://www.abc.net.au/news/2017-11-29/south-china-sea-why-is-australia-worried-about-chinas-stance/9206998

[22]. China’s Dream of a China-Dominated World May Be Fading (At Least For Now) Because of Donald Trump, https://johnib.wordpress.com/2018/10/07/chinas-dream-of-a-china-dominated-world-may-be-fading-at-least-for-now-because-of-donald-trump/

Added after 2018 November 01:

[23]. Trump administration says U.S. mistakenly backed China WTO accession in 2001, https://www.reuters.com/article/us-usa-trade-china/trump-administration-says-u-s-mistakenly-backed-china-wto-accession-in-2001-idUSKBN1F82U1

[24]. The WTO still considers China a ‘developing nation.’ Here’s the big problem with that, https://www.cnbc.com/2018/04/25/what-trump-gets-right-about-china-and-trade.html

[25]. https://theconservativetreehouse.com/2018/11/01/president-trump-talks-many-subjects-with-chairman-xi/

[26]. Private Businesses Built Modern China. Now the Government Is Pushing Back , https://www.nytimes.com/2018/10/03/business/china-economy-private-enterprise.html

[27]. https://wentworthreport.com/2019/01/03/china-cracks-manufacturing-sector-contracts-for-first-time-since-trade-war-began/

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Trade war tactics, Part 7: Reviving tariffs and quotas.

 

Trade war tactics, Part 7: Reviving tariffs and quotas.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 174).

There are always countries which disregard social justice and international laws. Other countries cannot declare wars against them but they can engage in economic activities called “trade wars” that are also effective in putting pressure on the transgressors.

For example, some transgressor may use its economic strength to destroy domestic industries of other nations through predatory pricing, disregard laws on intellectual properties of other nations and give no reciprocity to its market access.

#trade war, #predatory pricing, #product dumping, #tariff, #quota, #Green movement, #conservation,

Trade war tactics, Part 7: Reviving tariffs and quotas.

1. Time line of current trade war.

2018 January 23:

30% tariff on solar panels (most of them are from China) reducing to 15% after four years. 20% tariff on washing machines for the first 1.2 million units imported during the year.

2018March 22:

President Trump relied on Section 301 of the Trade Act of 1974 to propose tariffs on additional 60Billion worth of Chinese export (over 1,300 categories including aircraft parts, batteries, flat-panel televisions, medical devices, satellites, and various weapons) to USA as “a response to the unfair trade practices of China over the years”, including theft of U.S. intellectual property.

2018 April 2:

China imposed tariffs on 128 products it imports from America: 25% on aluminum, airplanes, cars, pork, and soybeans, 15% on fruit, nuts, and steel piping.

2018 April 5:

Trump responded saying that he was considering another round of tariffs on an additional $100 billion of Chinese imports as Beijing retaliates. The next day the World Trade Organization received request from China for consultations on new U.S. tariffs

2018 June 15,

United States impose a 25% tariff on $50 billion of Chinese exports ( with “industrially significant technology”). $34 billion start July 6, with a further $16 billion to begin at a later date

2018 Sept 23:

USA imposed new 10% tariffs on $200 billion of Chinese goods, spanning thousands of products, including food seasonings, baseball gloves, network routers and industrial machinery parts.

China retaliated immediately with new taxes of 5% to 10% on $60 billion of US goods such as meat, chemicals, clothes and auto parts.

2. Argument against free-loaders.

A restaurant spent its effort to make fine food to attract eaters. It then sells beverage to those eaters at high mark ups. Is it fair to let customers buy and bring in their own beverage from the discount store next door ? Is it unfair for the restaurant to impose a surcharge on any “bring your own” beverage ?

A country spent its own money to build its national roads. Is it fair for any other country to make profits from the sale of cars driven on those roads, robbing the opportunity of making and selling cars by domestic industries of that nation?

America had been nurturing its democracy, innovation and free economy to the point that now its population has an actual need on digital technology. Is it fair to deny its domestic population the opportunity to establish its own digital technology and to enjoy its profits?

3. Has America oppressed China in the current trade war?

China may have said that it is being oppressed by a stronger American economy, with “a knife held to the throat” [3]. People should not forget that currently China is oppressing ALL its neighbors except Russia. [4, 5, 6, 7].

There are many Asian people supporting President Trump (openly or quietly) in this trade war.

4. Justification for tariffs and quotas.

Tariffs and quotas are used to reduce (wasteful and inefficient) consumption of some imported products (from the point of view of the ruling government). It is the right of each nation to define what is its desirable consumption pattern.

France had been criticized for placing virtual quota on its import of Video Cassette Recorders. With the benefit of hindsight, that restriction may have saved France a lot of money.

Currently the US may consider that solar panels and washing machines should provide an opportunity for American manufacturing industry. The current tariff are designed to give American solar panel and washing machine makers a chance to establish themselves.

The tariff on washing machines also put a brake on the wasteful short life cycle assigned by Americans on their washing machines. The Green and the conservation movement are now conspicuously absent in their protest against the wasteful American habits of retiring their washing machines early.

Tariffs and quotas can also redirect consumer and industrial spending toward supporting ally and friendly nations (who are imposed zero or lower tariffs than unfriendly countries).

5. Ineffective retaliation measures by China.

China has imposed its tariffs on American soy beans. Note that soy beans are a basic staple food of Chinese people, from which they make soy-milk, tofu, bean sprouts and soy-sauce. The tariff cannot reduce soy beans consumption by Chinese people, it can only redirect their purchase preference. Can China buy soy-beans elsewhere ? If the trade war drags on for too long, American farmers may decide to stop producing soy-beans and China may be the ultimate loser for having to pay higher price to buy soy beans outside America.

Chinese tariffs on American luxury goods like hand phones, designer hand bags, airplanes, cars, etc…[5c] only turn them into items for “status symbol” and may ultimately promote their sale to Chinese super-rich people.

6. Naming winner and loser.

2018 March 30:

On Monday, Brussels launched a safeguard investigation into how it could combat surges of steel imports… from inflows of Japanese, Chinese, Turkish and Russian steel that would be diverted away from the U.S. [8]

2018 July 13:

“The S&P 500 on Friday hit a four-month high … the Nasdaq close at a record high. The S&P 500, Nasdaq and the Dow Jones Industrial Average were also tracking for their second straight week of gains.” [9]

2018 July 17:

“Since the White House announced the first tariffs — on washing machines and solar cells on Jan. 22 — the Shanghai Index of Chinese stocks is down nearly 20 percent, while the S&P 500 is off less than 1 percent… Since the end of March,..the yuan has slid nearly 7 percent, again demonstrating the impact the trade war…” [10]

As at 2018 July, America has been the winner in the current trade war.

7. Conclusions

Trade wars are bloodless and are preferable to military wars to put pressure on those countries that disregard international laws and social expectation.

a. Tariffs are not nice to advocates of free-trade but they are really useful to shape a national economy.

b. Tariffs are necessary, only their appropriate levels have to be determined.

c. Once countries enter trade war, there will be a reduction in international trade and a number of countries may enter their recession. Countries with self-sufficiency will outlast their competitors, free-loaders usually lose.

America is winning the current trade war and should prosecute its well chosen war to its end.

References:

[1]. https://survivaltricks.wordpress.com/2018/06/20/trade-war-tactics-part-1-predatory-pricing-and-tariffs/

[2]. https://edition.cnn.com/2018/09/23/politics/trump-trade-war-china/index.html

[3]. https://www.telegraph.co.uk/business/2018/09/25/china-says-cant-hold-us-trade-talks-knife-throat/

[4]. https://thediplomat.com/2015/08/pentagon-denounces-excessive-maritime-claims-in-the-south-china-sea/

[5]. https://www.bloomberg.com/quicktake/territorial-disputes

[5b]. https://superforest.blog/2018/10/08/blinding-consumers-to-the-true-cost-of-soy/

[5c]. https://wentworthreport.com/2018/07/02/the-china-trade/

[6]. http://www.abc.net.au/news/2016-07-13/rothwell-south-china-sea-verdict-explained/7624120

[7]. http://www.abc.net.au/news/2017-11-29/south-china-sea-why-is-australia-worried-about-chinas-stance/9206998

[8]. https://www.politico.eu/article/president-donald-trump-winning-the-trade-war-for-now-steel-aluminum-tariffs/

[9]. https://www.cnbc.com/2018/07/13/cramer-trump-winning-china-trade-war-and-the-stock-market-confirms-it.html

[10]. https://thehill.com/opinion/finance/397447-trump-is-winning-the-trade-war-because-china-has-more-to-lose

Added after 2018, Sept 26:

[11]. https://johnib.wordpress.com/2018/09/26/south-china-sea-do-china-and-the-u-s-know-each-others-intentions/

Sixty percent of all soybeans grown worldwide are now exported to China,

[12]. https://us-issues.com/2018/10/02/china-in-water-crisis/

Conservation requires an increase in soybeen prices: rising demand for meat has driven soy production to nearly 10 times what it was 50 years ago. A full 80 percent of the world’s soybean crop is fed to livestock.

[13]. Blinding consumers to the true cost of soy?, https://superforest.blog/2018/10/08/blinding-consumers-to-the-true-cost-of-soy/

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Trade war tactics, Part 6: Using gold based trading and refusing opponent’s currency.

 

Trade war tactics, Part 6: Using gold based trading and refusing opponent’s currency.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 161).

A trade war combatant may have to weaken and destabilize its opponent by refusing both to accept or to hold the currency of that country. That refusal is a defensive move and it may start snowballing into an international refusal of that currency beyond its national border. This will create additional problems and costs to the economy of the opponent country.

#trade war, #de-internationalize, #national currency, #gold currency, #dollar,

Trade war tactics, Part 6: Using gold based trading and refusing opponent’s currency.

1. Refusal to hold opponent’s currency is defensive.

Hologram

It is very risky for one trade war combatant country to hold the currency of its opponent.

The simple basis for citizens accepting the fiat money of their own country is that those who had done works for the government have the fiat money (a form of certificates) and the population at large have to exchange goods and service for those certificates to pay their own tax (those who don’t pay will be jailed) and buy some goods or service from the government. [1,2]

So why should any non-citizen not living in that country accept the fiat money from that government? Especially any sovereign country should not hold fiat currency of any of its trade war opponents. Doing so is very risky for the following reasons:

a- The country issuing fiat money may require all holders of its fiat money to switch to new versions within 48 hours at the banks. This will invalidate any old version of fiat money held outside its territory or inside its territory but without adequate documentations proving the legality of its possession. This has recently been carried out in India. [3]

b- The country issuing fiat money may intentionally dilute the value of the money to reduce the entitlement of foreign countries with large holding of its fiat currency.

For example, let a country C hold USD 1,200bn worth of fiat currency of another country A [4,5,6] while the current GDP of country A is worth USD 19,000bn [7]. In this example, country A owes (1200/19000) of its GDP to country C.

If country A decided to give one bonus dollar to every dollar currently held inside the country by its citizens then after this issuance A would owe C only (1200/(2*19000)) of its GDP ! (This is a standard technique of stock market, called “shares dilution”.)

So holding a large amount of foreign currency always carry with it some risk. Trade war combatants should not hold large amount of opponent’s currency (or treasury notes, which are equivalent to “currency in the coming years”). Although France and USA were not in trade war at the time, French President Charles De Gaulle demanded that the US ship back their dollars in converted gold to France [8] and subsequently many other countries followed France’s example, leading to the US abolishing the gold base for its US dollars [9].

2. Refusing a national currency reduces its base and its perceived stability.

When US dollars are not held in the central banks of other countries there will be less demand of US dollars and there will be less US dollars in circulation.

As there are less dollars in circulation their values will be more sensitive to inflation or deficit figures from US treasury and government.

Knowing this, China is trying to establish its gold and oil backed yuan. [10-11]

3. Returning to gold or commodity certificates

To be safe, each country should not hold much fiat currency of any other country. Any country which has large holding of fiat currency of another country has to divest that amount. The problem is more urgent if that country hold the fiat currency of its opponent [12-15].

The problem is even worse for opponents of USA in its economic war when the Bank for International Settlement is involved in the processing to transfer US dollars to countries on USA’s sanction list [16-18].

The inevitable solution to international trading is an obvious old method used by the USSR: All trades are to be settled in gold !

4. Conclusion.

The current trade war will lead to the de-internationalization of US dollars and gold will have to be again used as an international trading medium that is free of manipulation.

References:

[1]. https://survivaltricks.wordpress.com/2017/01/09/your-fiat-money/

[2]. https://survivaltricks.wordpress.com/2017/01/12/your-fiat-money-part-2/

[3]. https://survivaltricks.wordpress.com/2016/12/01/demonetizing-in-india-robs-the-poors/

[4]. https://www.bloomberg.com/news/articles/2018-06-15/china-s-holdings-of-u-s-treasuries-fell-5-8-billion-in-april

[5]. https://www.ft.com/content/93e1dcda-41ca-11e8-93cf-67ac3a6482fd

[6]. https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

[7]. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US

[8]. https://livinginabubbleblog.wordpress.com/2013/02/23/ex-french-president-charles-de-gaulle-predicted-a-us-monetary-crisis-in-1965/

[9]. https://livinginabubbleblog.wordpress.com/2012/12/19/the-nixon-shock-and-the-end-of-gold-convertibility/

[10]. https://www.cnbc.com/2017/10/24/petro-yuan-china-wants-to-dethrone-dollar-rmb-denominated-oil-contracts.html

[11]. https://www.globalresearch.ca/chinas-gold-backed-petro-yuan-challenges-us-dollar-hegemony/5634034

[12]. https://www.bloomberg.com/news/articles/2018-03-15/china-s-holdings-of-u-s-treasuries-drop-to-six-month-low

[13]. https://www.cnbc.com/2018/06/18/russia-cuts-treasury-holdings-in-half-as-foreigners-start-losing-appetite-for-us-debt.html

[14]. https://www.rt.com/business/433566-russia-dumps-us-treasury-holdings/

[15]. https://wolfstreet.com/2018/07/17/russia-dumped-most-all-its-us-treasury-holdings-disappeared-from-list/

[16]. https://www.cfr.org/backgrounder/what-are-economic-sanctions

[17]. https://ggiforum.com/law/corporate-and-commercial/596-why-american-economic-sanctions-matter-to-non-us-banks.html

[18]. https://www.reuters.com/article/us-bnp-paribas-settlement/u-s-imposes-record-fine-on-bnp-in-sanctions-warning-to-banks-idUSKBN0F52HA20140701

[19]. https://www.haaretz.com/world-news/europe/russia-says-dollar-s-days-numbered-as-global-trade-currency-1.6382199

[20]. http://www.informationclearinghouse.info/50031.htm

[21]. https://sputniknews.com/analysis/201808131067163999-turkish-currency-crisis-solutions/

[22]. https://intelligentblogsite.com/2018/04/10/china-and-russia-looking-to-drop-us-dollar-for-oil-payments/

[23]. https://socioecohistory.wordpress.com/2018/08/22/dollar-out-yuan-in-iran-changes-benchmark-currencies/

[24]. https://astutenews.com/2017/09/11/venezuela-is-about-to-ditch-the-dollar-in-major-blow-to-us-heres-why-it-matters/

[25]. https://tomluongo.me/2018/07/30/turkey-is-getting-off-the-u-s-reservation/

[26]. https://dailyreckoning.com/you-should-fear-the-emerging-market-debt-bubble/

[27]. https://socioecohistory.wordpress.com/2018/09/08/india-getting-rid-of-us-treasury-securities-and-buying-gold/

[27]. https://www.rt.com/business/442410-gold-demand-up-dollar/

[28]. https://socioecohistory.wordpress.com/2018/10/27/gold-demand-up-42-as-countries-abandon-us-dollar-in-expectation-of-geopolitical-shift/

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Trade war tactics, Part 5: Forming alliance to cripple opponent’s economy.

 

Trade war tactics, Part 5: Forming alliance to cripple opponent’s economy.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 156).

A trade war combatant may try to line up other countries to form an alliance to cripple a target country. With cooperation from suitably selected allies a combatant can easily win the economic war.

#trade war, #alliance, #Chinese yuan,

Trade war tactics, Part 5: Forming alliance to cripple opponent’s economy.

1. Forming alliance from suitably selected allies.

Some country may have been drunk on its economic growth, then aimed to become a master of the World. It consequently behaves in an aggressive and provocative way towards its neighbors and competitors like demanding laws and order but with only laws drafted by only itself. The suffering neighbors and competitors may decide to form an alliance to fight against a target country which is the aggressor. They may decide to employ an economic war rather than a military war.

In a trade war, the belligerents close their borders to cut off dependency on opponents and maintain its existing superiority over opponents. All sides in a trade war suffers but the self-sufficient countries with individual self-developed economies only suffer some inconvenient, slight increase in prices and costs of living while the traders may suffers near mortal wounds.

Trade war is just one facet of the inseparable multi-pronged (including military) attack to weaken the target country. The aim of a trade war is to weaken the economy of a target country. The strategy is to attack that economy at its weakest points.

2. Typical weak points of a target country.

For example, if the targeted country has been propelled up by being given free access to technology (fine details of technology need to be and had been painstakingly developed in some countries, they never appear out of the blue sky) from the aggrieved countries, they may decide to cut their supply of technology to the targeted country.

If the economic base of the targeted country is trading, transporting, licensed manufacturing then it is easy for the alliance to bypass the targeted country making it nearly mortally wounded.

3. Current alliances set up for the 2018 trade war.

In the current situation, Chinese economy is based on trading, transporting, licensed manufacturing, while USA, EU and UK had been given China free access to technology, licensed manufacturing and trading. USA, EU and UK now feel that they are aggrieved by the lawlessness of China’s action on many fronts:

– Refusing to recognize the Permanent Court of Arbitration‘s ruling on the case of Philippines versus China [1].

– Making unfair trade practice against Western companies operating in China by imposing red tapes as a form of invisible tariffs.

– Making unjustified requirements for transfer of knowledge from Western companies operating in China.

– Disregarding the claims on patents and copyrights from USA, EU and UK.

So USA, EU, UK are banding together and may invite smaller neighbors of China to join them in an economic war against China.

USA has already imposed steel and aluminum tariff from China while USA and EU will have no tariff against each other [2].

On the other hand, China, North Korea, Russia, Belarus, some former Soviet Republics, Iran, some Silk Road countries may form an economic alliance centered on China.

Russia and former Soviet Republics are not sharing the same ideology as China. Silk route countries may have their own disputes with China and are not too eager to be on China’s side.

3. Early results from the current trade war.

China share markets have fallen some 20% from its peaks

“The Hang Seng China Enterprises Index and Shanghai Composite have both fallen more than 20 percent from January highs, putting them among the worst performing stock indexes worldwide”[4d].

Chinese currency yuan has come down [3-4d].

US share markets are still hanging tough [5],[6]. US’s GDP increased 4% under Trump’s leadership [7].

EU, UK share markets have decreased slightly.

China, Russia sold out their holding of US treasury bonds and are buying gold for their treasuries [8].

4. Conclusions

Economic war is an interesting war without bloodshed and it is hopeful that great powers will stick to it to settle their disputes. It looks like USA is winning this war and China is losing.

References:

[1]. https://en.wikipedia.org/wiki/Philippines_v._China

[2]. https://us-issues.com/2018/07/30/trump-juncker-forge-deal-to-pull-back-from-us-eu-trade-war/

[3]. http://www.abc.net.au/news/2018-07-01/chinese-currency-stockmarket-just-had-one-worst-months-on-record/9920626

[4]. http://www.abc.net.au/news/2018-07-01/chinese-currency-stockmarket-just-had-one-worst-months-on-record/9920626

[4b]. https://www.businessinsider.in/the-chinese-yuan-slides-to-a-13-month-low/articleshow/65121414.cms

[4c]. https://apnews.com/d23c3d29b84341f79dbc6678eaaae7ca

[4d]. https://www.bloomberg.com/news/articles/2018-07-17/china-shares-in-hong-kong-fall-toward-lowest-level-in-a-year

[5]. https://www.usatoday.com/story/money/2018/07/26/stock-market-says-u-s-winning-trade-war/832596002/

[6]. https://seekingalpha.com/article/4185884-sentiment-speaks-trade-wars-really-good-stock-market

[7]. https://nypost.com/2018/07/28/gdp-report-proves-trump-is-turning-the-economy-around/

[8]. https://wolfstreet.com/2018/07/17/russia-dumped-most-all-its-us-treasury-holdings-disappeared-from-list/

[9]. https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

Added after 2018 July 31st:

[10]. https://www.msn.com/en-us/news/other/treasury-department-data-shows-russia-is-offloading-its-us-debt-holdings-at-breakneck-speed/ar-BBLdsLq

[11]. https://johnib.wordpress.com/2018/07/31/chinese-economy-starts-to-feel-tariff-impact/

[12]. https://economicprism.com/all-the-makings-of-a-major-economic-fiasco/#more-6159

[13]. https://johnib.wordpress.com/2018/08/01/west-begins-to-close-door-on-chinese-investment/

[14]. https://finance.yahoo.com/news/china-holding-treasuries-keeps-nuclear-044546767.html

[15]. https://www.sprottmoney.com/Blog/has-the-pboc-taken-control-of-the-gold-market.html

[16]. https://bcnn1wp.wordpress.com/2018/07/29/russia-mysteriously-liquidates-all-of-its-u-s-treasury-holdings/

[17]. https://reclaimourrepublic.wordpress.com/2018/08/03/video-trump-pa-rally-business-owners-tariffs-are-awesome-intel-officials-support-revoking-brennan-clapper-clearances/

[18]. https://www.zerohedge.com/news/2018-08-05/china-now-left-just-three-options-and-they-are-all-equally-bad

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Trade war tactics, Part 4: Sabotaging competitor’s economic base.

Trade war tactics, Part 4: Sabotaging competitor’s economic base.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 154).

This blog describes in details the current tricks employed by China to sabotage the economy of Vietnam in recent decades. They tricked the ignorant farmers into growing highly invasive species.

#trade war, #Chinese tricks, #China versus Vietnam, #economic sabotage, #superworms, #golden apple snails, #leech cultivation, #invasive,

Trade war tactics, Part 4: Sabotaging competitor’s economic base.

1. Chinese traders provided invasive superworms Zophobas morio as food for singing canary birds.

In the years following 1980, Chinese traders sold beautiful singing canaries (Serinus canaria domestica) [1], [2] to Vietnamese bird keepers. They then teach Vietnamese bird keepers to make low cost food for these birds from “superworms”, the larvae of the invasive Zophobas morio beetles [3,4,5,6].

178px-Zophobas_morio_larva_-_top_(aka)

Figure: Picture from author André Karwath, licensed under the Creative Commons Attribution-Share Alike 2.5 Generic license. Original file https://commons.wikimedia.org/wiki/File:Zophobas_morio_larva_-_top_(aka).jpg

The original instructions in Vietnamese for growing “superworms” are printed below [6]

Sâu mua ở cửa hàng về cho ăn cám gà, bột ngô, yến mạch, các loại rau củ quả rồi để sâu gạo ở nơi tối và thoáng mát ( chú ý để không khí cho nó thở ) sau khoảng 1 tuần thì sâu gạo sẽ hóa nhộng.
Nhộng này mình cho vào 1 khay khác, cho thức ăn vào và để nơi yên tĩnh, thoáng mát sau 1 tuần sẽ thành bọ cánh cứng màu đen
Sau khi thành bọ màu đen thì ta cho hết bọ này qua cái khay lúc này làm. Lưu ý bọ này rất thèm nước nên cần phải bổ sung các loại rau củ quả chứa nước để nó sinh sản dưa hấu, bí đao, rau muống.
Cho bọ vào khay để sinh sản
Khi bọ đen ăn đầy đủ,đủ nước thì nó sẽ bắt cặp và sinh sản. Sau 1 tuần thì nhìn dưới khay thức ăn có nhiều con sâu gạo con lúc nhúc nhỏ như cây kim may.Thì anh em bắt đầu chuyển khay chứa bọ này sang khay chứa thức ăn khác để bọ tiếp tục sinh sản,khi nó đẻ hết trứng sẽ chết.
Khoảng 1 tháng thì sâu con này đã trưởng thành và có thể thu hoạch được rồi. Nếu không tiêu thụ thì nó lại thành nhộng rồi thành bọ. Theo vòng đời cứ như vậy, thông thường nó sống được 3 tháng là chết.

The prohibition notices against growing “superworms” [3] by Vietnamese government are also reproduced here:

Nghiêm cấm việc nhân nuôi, vận chuyển và phóng thích Super worm 

Công văn số 617/BVTV-KD ngày 24/4/2014 của Cục Bảo vệ thực vật, Cục Bảo vệ thực vật chỉ đạo:
- Sâu Super worm là loại côn trùng ăn tạp, phàm ăn, chưa có tên trong danh sách vật nuôi nông nghiệp và có nguy cơ gây hại đến sản xuất nông nghiệp cũng như ảnh hưởng xấu đến môi trường sinh thái. Vì vậy việc nhân nuôi, vận chuyển và phóng thích sâu super worm là hành vi vi phạm pháp luật.
- Tăng cường thanh tra, kiểm tra, phát hiện và xử lý nghiêm túc các tổ chức, cá nhân có hành vi nhân nuôi, vận chuyển và phóng thích sâu Super worm (Zaphobas morio). Quy định xử phạt các hành vi này theo Nghị định 114/2013/NĐ-CP ngày 3/10/2013 của Chính phủ Quy định về xử phạt vi phạm hành chính trong lĩnh vực giống cây trồng, bảo vệ và kiểm dịch thực vật.

As can be seen, the beetle growers can make their profits but those invasive beetles that can escape into the wild may cause an agricultural havoc for Vietnam.

2. Chinese traders buy cultivated invasive golden apple snails from Vietnamese farmers.

pomacea

Figure: Original picture from author Stijn Ghesquiere. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license. Original file https://commons.wikimedia.org/wiki/File:Pomacea.jpg.

320px-Pomacea_canaliculata_01

Figure: Picture from author H. Zell. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license. Original file https://commons.wikimedia.org/wiki/File:Pomacea_canaliculata_01.JPG

Beginning from 1988, Chinese traders wanted to buy at high price the highly invasive alien golden apple snails from Vietnamese farmers. Vietnamese farmers then cultivate them to sell to their “wholesale buyers”.

However this species from South American is considered to be “in the top 100 of the “World’s Worst Invasive Alien Species“. It is also considered as about the 40th the worst alien species in Europe and the worst alien species of gastropod in Europe.” [7]

As can be predicted, this whole business of cultivating highly invasive golden apple snails is just a scheme to sabotage the Vietnamese agricultural base for rice production. Even Chinese University of Peking had highlighted the risks of parasites (Angiostrongylus cantonensis) infection from eating golden apple snails.

 

3. Chinese traders buy cultivated leeches from Vietnamese farmers.

Figure: Picture from author GlebK. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license. Original file  https://commons.wikimedia.org/wiki/File:Sucking_leech.jpg

Around the year 1996 [12] then again around 2010 [13], there were wholesale buyers from China offering to buy at high prices leeches from Vietnamese farmers. Naturally the Vietnamese ignorant farmers would want to make fast money by growing leeches in their paddy field.

Some of them do make money, some ends up with paddy field full of leeches with no buyers. Their neighbors and the environment are the sufferers [13-19]. Leeches are invasive and make dangerous infection when getting into the bodies of field workers. It also takes few decades to eradicate leeches from infested paddy field [20-27].

4. Conclusions

Chinese traders enjoyed enormous advantage over the ignorant farmers of a smaller Vietnamese agriculture. They have fooled them at every step. Their behaviors in the Vietnamese market does not speak well for China’s intention in other small countries.

References:

[1]. https://en.wikipedia.org/wiki/Domestic_canary

[2]. https://vi.wikipedia.org/wiki/Chim_y%E1%BA%BFn_h%C3%B3t

[3]. http://dantri.com.vn/kinh-doanh/dung-de-sau-gao-thanh-dai-dich-nhu-oc-buou-gian-dat-1404385629.htm

[4]. https://en.wikipedia.org/wiki/Zophobas

[5]. https://vi.wikipedia.org/wiki/S%C3%A2u_g%E1%BA%A1o

[6]. https://kythuatnuoitrong.edu.vn/chim-canh/cach-nuoi-sau-gao-lam-thuc-an-cho-chim-canh.html

[7]. https://en.wikipedia.org/wiki/Pomacea_canaliculata

[8]. https://vi.wikipedia.org/wiki/%E1%BB%90c_b%C6%B0%C6%A1u_v%C3%A0ng

[9]. https://vtc.vn/su-that-gay-choang-sau-tiet-lo-cua-trum-oc-buou-vang-o-ha-noi-d132975.html

[9]. https://baomoi.com/lam-giau-tu-hiem-hoa-oc-buou-vang/c/20253776.epi

[10]. https://news.zing.vn/nong-dan-nuoi-oc-buou-vang-ban-cho-thuong-lai-trung-quoc-post360114.html

[11]. http://soha.vn/chuyen-gia-tq-canh-bao-moi-hiem-hoa-khon-luong-neu-ban-an-nham-phai-loai-oc-nay-20170920115537543rf20170920115537543.htm

[12]. http://thuysanvietnam.com.vn/dia-moi-nguy-hai-voi-moi-truong-article-1716.tsvn

[13]. https://m.baomoi.com/chuyen-gia-huong-dan-xu-ly-canh-dong-ngap-dia/c/7364642.epi

[14]. https://nongdan24g.wordpress.com/2011/11/04/ro-nhung-thuong-vu-la-cua-lai-buon-trung-quoc/

[15]. https://en.m.wikipedia.org/wiki/Leech

[16]. https://vi.m.wikipedia.org/wiki/%C4%90%E1%BB%89a

[17]. http://m.vietnamnet.vn/vn/kinh-doanh/thi-truong/thuong-lai-trung-quoc-mua-dia-gia-toi-600-000-dong-kg-de-lam-gi-382968.html

[18]. http://nhanong.netnews.vn/trung-quoc-nuoi-dia-cong-nghiep-mid-4-6-0-8350.html

[19]. https://news.zing.vn/5-loai-bi-cam-nguoi-viet-van-nuoi-va-mua-ban-post718751.html

[20]. http://m.doisongphapluat.com/tin-tuc/video-can-canh-gap-con-dia-dai-10cm-con-song-ra-khoi-mui-nguoi-phu-nu-a233734.html

[21]. https://suckhoe.vnexpress.net/tin-tuc/suc-khoe/con-dia-dai-10-cm-bo-trong-mui-nguoi-phu-nu-3766566.html

[22]. https://m.baomoi.com/ho-ra-mau-vi-con-dia-4-cm-chui-vao-song-trong-co-hong/c/26781956.epi

[23]. https://giadinh.vnexpress.net/tin-tuc/to-am/bi-dia-trau-chui-vao-vung-phoi-2269444.html

[24]. https://news.zing.vn/hang-hoa-lien-tiep-dinh-tin-don-ve-dia-post280300.html

[25]. http://www.vba.com.vn/index.php?option=com_content&view=article&id=5805:dia-co-the-ton-tai-trong-hop-sua-duoc-khong

[26]. http://giaoduc.net.vn/Xa-hoi/Thong-tin-dia-trong-qua-trung-ga-o-Thai-Nguyen-la-khong-co-co-so-post92690.gd

[27]. https://news.zing.vn/sinh-vat-la-trong-trung-ga-la-san-la-post278321.html

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Trade war tactics, Part 3: Chinese tricks against Vietnam in ancient time.

 

Trade war tactics, Part 3: Chinese tricks against Vietnam in ancient time.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 148).

#trade war, #Chinese tricks, #China versus Vietnam, #export restriction, #female bufferlos, #iron plough points

Trade war tactics, Part 3: Chinese tricks against Vietnam in ancient time.

This blog describes in details the tricks employed by China against Vietnam in ancient time (from 200BC to AD1600). Those tricks include export restrictions as has been found in the letters of complaints from some Kings of Annam (ancient Vietnam, which was at times a neighbor State paying tributes to China) to the Emperor of China.

1. Restriction of exports by China in ancient time.

China is now complaining that the USA do not want to allow the export of CPU’s for the production of smart phones by Chinese company ZTE.

In ancient time, as can be found in history of Vietnam [1], and can be verified in ancient Chinese history [2], some Kings of Annam (ancient Vietnam, which was at times a neighbor State paying tributes to China) had complaint in their letters to the Emperor of China that:

a. When iron was first discovered (around 200BC), China banned the export of iron plough points to Vietnam to prevent Vietnam from being a efficient rice producer.

b. China only sold male bufferlos to Vietnam but banned the sale of female bufferlos. This makes Vietnam dependent on China for the supply of bufferlos.

2. USA restriction of export to China of CPU’s for smart phone is well justified.

China is now complaining that USA is employing a restriction of exports against Chinese smart phone company ZTE. However it should be noted that:

a. ZTE is owned by Chinese Government and is loyal to Chinese Government.

b. Smart phone technology can be adapted and used for robotic controls keeping in mind that the next World War may be a war by robots (currently known as lethal drones).

c. Chinese Information Technology companies have engaged in a number of practices which are worrying to Westerners: Making the Great Firewall, Making devices succeptible to Malwares, etc…

4. Economic is only a facet to a Perpetual War by China to conquer the whole World.

The revered, 2000 years old manual “The Art of War” by Sun Tzu is always practiced by China. It considers military attacks, foreign affairs and trades as only different facets of one single thing. (This is not much different from the view by Clausewitz[3,4,5,6]). The following shows Chinese success with its Perpetual Expansionism.

The vast area of current China is the result of such Forever Expanding policy starting from a Zhou dynasty (1046BC-256BC) with an area only comparable to Japan.

Zhou_dynasty_1000_BC Châu

Figure: The approximate territory of the Zhou dynasty in China. Drawn by Ian Kiu.The approximate territory of the Zhou dynasty in China. Drawn by Ian Kiu. Derived from China_map.png by Nat. https://en.wikipedia.org/wiki/Zhou_dynasty#/media/File:Zhou_dynasty_1000_BC.png Date 15 February 2011, Territories_of_Dynasties_in_China.gif: Albert Herrmann (1935). History and Commercial Atlas of China. Harvard University Press. from “The Chou Dynasty, 11th-9th Centuries B.C.” Author Territories_of_Dynasties_in_China.gif: Ian Kiu. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Figure: China Map, Qin State, 260BCE https://en.wikipedia.org/wiki/Qin_(state)#/media/File:EN-QIN260BCE.jpg , Date 31 October 2010
Source Own work, Author Philg88, Licensing
Creative Commons attribution share alike. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported, 2.5 Generic, 2.0 Generic and 1.0 Generic license.

Figure: Map of Three Kingdoms period of China, as of 262 A.D., Date1 1 August 2017, Author SY, file https://commons.wikimedia.org/wiki/File:Three_Kingdoms.png. File is licensed under the Creative Commons Attribution-Share Alike 4.0 International license.

Figure: Map of Song Dynasty 1141, By Ian Kiu, Based on a map in Albert Herrmann (1935). History and Commercial Atlas of China, Harvard University Press , file https://en.wikipedia.org/wiki/Jin%E2%80%93Song_Wars#/media/File:Sung_Dynasty_1141.png. This file is licensed under the Creative Commons Attribution 3.0 Unported license.

Figure: Map of Qing Dynasty China in 1765., File: https://upload.wikimedia.org/wikipedia/commons/9/9c/18_century_Qing_China.png . Date 1-8-2011 Source Originally from CIA, taken from commons. Author CIA (Background map) Derivate work: User:Soewinhan. This image is a work of a Central Intelligence Agency employee, taken or made as part of that person’s official duties. As a Work of the United States Government, this image or media is in the public domain in the United States.

Figure: Map of China on a Chinese glass Globe made around the year 2000.

References:

[1]. Su Ky, Le Van Huu,

[1b] Viet Nam Su Luoc, Tran Trong Kim,

[2]. Sima Qian, Records of History by the grand historian (translated by Burton Watson), Qin Dynasty, Han Dynasty I (Rev. Ed.) and Han Dynasty II (Rev. Ed.), the Res. Cent. for Transl. The Chinese Univ. of Hong Kong and Colubia Univ. Press, Hong Kong and New York, 1961.

[3]. Sun Tzu, The Art of War. First published in Chinese before 200BC.

[4]. Carl von Clausewitz, Principles of Wars, Translated by Hans W. Gatzke, The Military Service Publishing Company, 1942.

[5]. Clausewitz, On War, Translated by Colonel James John Graham N. Trübner, London, 1873. Original is Carl von Clausewitz, Vom Kriege, Dümmlers Verlag, Berlin, 1832.

[6]. Carl von Clausewitz, Principles of Wars, The Clausewitz home page, https://www.clausewitz.com/mobile/principlesofwar.htm

[7]. https://irishinfosecnews.wordpress.com/2018/07/09/android-devices-with-pre-installed-malware-sold-in-developing-markets/

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Trade war tactics, Part 2: Exploitation of an economy by a foreign monopoly

 

Trade war tactics, Part 2: Exploitation of an economy by a foreign monopoly.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 147).

#trade war, #predatory pricing, #product dumping, #tariffs, #monopoly, #exploitation, #security,

Trade war tactics, Part 2: Exploitation of an economy by a foreign monopoly.

This blog describes in details the exploitation of a market by a foreign monopoly.

1. Dumping goods to become a monopoly in a foreign market.

A country C with a larger economy can subsidize the production of its goods (for example steel) for export to another country A with a smaller economy. Country C would use its deep pocket to make very low sale prices so that all its competitors in country A cannot sell any of their products and had to go bankrupt.

This blatant method of grabbing market may work with compliant vassal neighbors of a country C but may not be viewed favorably by any other sovereign country.

A number of steel manufacturers in Vietnam faces the danger of bankruptcy by such method of disruption [1,2,3,4].

The method would certainly be prevented in the USA where there is a Federal Trade Commission [5,6,7,8,9].

(Other examples can be found with food processing in Vietnam).

2. Achieving a monopoly by subtle taking-over of competitors.

With a deep pocket and enough patience a large monopoly producer/manufacture can enter a foreign market and gradually reduce the prices of its products so that its competitors can just make very small profits. After a few years, it can offer a take-over on its own terms (acquiring assets and market shares at low costs) to become an even more powerful monopoly without much backlash of public opinion in country A.

This type of take-overs would be favorably viewed by Anti-competition Authorities as a form of desirable “rationalization in a crowded market” and is usually approved [10-19].

3. Exploiting monopoly grip without losing it.

If any competitor set up new facilities in country A to produce same goods at local costs, country C would use its deep pocket to subsidize its reduced sale prices so that the new competitor cannot sell any of its products and had to go bankrupt.

On the other hand, while there is no competitor, country C can sell its goods to country A at considerably higher prices than could be justified if using local costs. With this artificially higher level of profit, country C can build up a war chest to fight against any new entry to its monopoly market in country A [20,21,22].

(Other examples can be found with Australian food producer market, Australian energy distribution market, Australian recycling industry).

4. Supply concern for manufacturing industries caused by dependence on a foreign monopoly.

As country A is wholy dependent on country C the latter can cause artificially periodic draught and floods of manufacturing supplies to force the former to hold massive stocks for its manufacturing base or to divest out of that manufacturing activity.

(Other examples can be found with, Phllipino fruit export market,Vietnamese trade through China)

5. Technological concern caused by dependence on a foreign monopoly.

Besides giving country C the option to raise or lower prices at their convenience to exploit its citizens, country A also face the risk of having C setting the standards for its food and technology [23].

Country C may also throttle the economy of country A by supplying it with only some of its needed raw and specialty materials/products [24-34].

6. Security concern beside trade and finance concern.

A country A has to worry about its military security if its communication and information technology, electricity power and strategic materials are supplied by foreign companies owned by its potential adversary [35,36].

7. Conclusions.

In peace time, traders from each country may carry their goods across the borders to other countries to make their own profits from the difference in prices. This cross border trade supplies people in different countries with goods at lowest prices and benefits all countries.

Unfortunately, there are always aggressive rulers who want to use their dominant trading positions to disrupt their neighbors.

The inescapable position is that each vulnerable nation needs to have a self-sufficient economy so that in time of imminent war that nation can close its border (for fear of attack, infiltration and espionage from its neighbors). It has been an established practice of closing the border when there is any possibility of war (This has also been a teaching by Sun Tzu in his ancient text Art of War [37]).

References:

[1]. https://en.m.wikipedia.org/wiki/List_of_countries_by_steel_production

[2]. https://en.m.wikipedia.org/wiki/History_of_the_steel_industry_(1970%E2%80%93present)

[3]. http://vietnamnet.vn/vn/kinh-doanh/dn-thep-pha-san-ma-khong-dam-cong-khai-89828.html

[4]. https://baodautu.vn/doanh-nghiep-thep-truoc-nguy-co-pha-san-d39873.html

[5]. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost

[6]. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws

[7]. http://www.adcommission.gov.au/Pages/default.aspx

[8]. https://en.wikipedia.org/wiki/World_Trade_Organization

[9]. https://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm

[10]. http://www.abc.net.au/news/2017-10-24/chinese-investors-sink-teeth-into-pet-food-company/9081298

[11]. https://www.theguardian.com/business/2013/may/31/chinese-takeover-smithfield-shuanghui-food-supply

[12]. https://dealbook.nytimes.com/2013/07/10/lawmakers-have-concerns-over-chinese-takeover-of-smithfield/

[13]. https://www.businessinsider.com.au/china-alarming-food-problem-2017-6?r=US&IR=T

[14]. https://www.ft.com/content/66802104-18d3-11e8-9e9c-25c814761640

[15]. https://www.afr.com/news/politics/national/chinese-bastards-want-to-take-over-australia-palmer-20140818-j8vpx

[16]. https://www.telegraph.co.uk/news/world/china-watch/business/chinese-takeovers-of-overseas-brands/

[17]. https://www.weeklytimesnow.com.au/agribusiness/decisionag/china-to-become-biggest-foreign-owner-of-australian-farmland/news-story/ba27742491380f55568bc3d5ada296cb

[18]. https://www.businessinsider.com.au/chinese-outbound-acquisitions-concerns-2016-2?r=US&IR=T

[19]. https://www.smh.com.au/politics/federal/china-now-owns-10-times-the-amount-of-australian-land-it-did-last-year-20170930-gyrxia.html

[20]. https://www.bbc.com/news/business-34513287

[21]. https://www.telegraph.co.uk/news/2016/09/17/chinese-farmers-take-over-former-white-owned-farms-in-zimbabwe-t/

[22]. http://www.politicsweb.co.za/news-and-analysis/chinese-take-over-farms-stolen-from-whites-in-zimb

[23]. https://www.independent.co.uk/news/world/asia/china-fake-food-sector-unlicensed-products-knock-offs-supply-chain-contamination-public-health-a7880341.html

[24]. http://mobile.abc.net.au/news/2016-08-21/chinese-investment-in-the-australian-power-grid/7766086

[25]. http://fortune.com/2015/06/18/china-is-utterly-and-totally-dominating-solar-panels/

[26]. https://www.theguardian.com/environment/2017/jan/06/china-cementing-global-dominance-of-renewable-energy-and-technology

[27]. https://theconversation.com/gas-crisis-or-glut-why-japan-pays-less-for-australian-lng-than-australians-do-74438

[28]. https://www.bloomberg.com/news/articles/2017-09-27/now-one-of-the-world-s-energy-powerhouses-has-a-coal-squeeze

[29]. https://www.nytimes.com/2018/05/23/business/canada-china-aecon-block.html

[30]. https://www.cbsnews.com/news/china-u-s-m-a-its-a-one-way-street/

[31]. https://www.forbes.com/sites/douglasbulloch/2016/10/27/why-foreign-companies-are-increasingly-resistant-to-chinese-takeovers/#2734aa21145f

[32]. https://www.pbs.org/newshour/show/whos-behind-chinese-takeover-worlds-biggest-pork-producer

[33]. https://finance.yahoo.com/news/china-kill-qualcomm-takeover-nxp-030100535.html

[34]. https://www.bloomberg.com/news/articles/2018-03-27/u-s-said-to-weigh-use-of-emergency-law-to-curb-china-takeovers

[35]. https://www.businessinsider.com.au/national-security-issues-flagged-with-huawei-for-australian-5g-network-2018-6?r=US&IR=T

[36]. https://abcnews.go.com/International/wireStory/huawei-executive-warns-australia-risks-economy-5g-ban-56191847

[37]. Sun Tzu, The Art of War. First published in Chinese before 200BC.

Added after 2018 July 12:

[38]. https://asweetdoseofreality.com/2018/07/11/chinas-human-robot-labor-force-the-highest-rate-of-surplus-value-in-the-history-of-capitalism/

[39]. https://us-issues.com/2018/07/12/how-china-is-muscling-in-on-lithium-ion-batteries/

[40]. https://johnib.wordpress.com/2018/09/19/philippines-man-made-rice-crisis-worse-than-typhoon/

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