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ECON China's economy hit the brakes even before the new Trump tariffs
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  1. #1
    Join Date
    May 2004
    2004 Soviet of Washington

    China's economy hit the brakes even before the new Trump tariffs

    Definite and sudden drops.

    China's economy hit the brakes even before the new Trump tariffsBy business reporter Stephen Letts

    Posted yesterday at 11:36pm

    China's economy appears to have slowed abruptly, even before the recent escalation of trade hostilities with the US.
    Key points:

    China's economy appears to be slowing again after stabilising earlier this year
    Retail sales, industrial production and infrastructure investment in April were all much weaker than expected
    Chinese authorities are expected to unleash more stimulus as heightened trade tensions drag economic growth down further

    The monthly release of key economic data showed widespread weakness across the important domestic drivers in retail and the industrial heartland during April.

    Retail sales grew at their slowest pace since during the SARS outbreak in 2003.

    Sales lifted 7.2 per cent over the month, but that was a big step down from the 8.7 per cent in March and much lower than analyst expectations.

    Housing-related consumption — including furniture, home appliances and construction & decoration material — slowed dramatically, as did sales of clothes, phones and cosmetics.

    Industrial output slowed from 8.5 per cent growth to 5.4 pre cent, also far weaker than expected, while fixed-asset investment — a proxy for infrastructure and property spending — also headed south.

    The rapidly cooling domestic economy doubles down on weaker than expected export demand putting further pressure of Chinese officials to consider increased stimulatory measures — particularly as the far tougher US trade restrictions are yet to bite.

    ANZ's Betty Wang said the big pullback in April appears to have originated from China's manufacturing sector, with automobile and electrical machinery production noticeably lower.

    About the only sector holding up was property.

    Property investment since January has grown by almost 12 per cent on a year-on-year basis, t
    he most intense spending in the sector since 2015.

    Tens of millions of vacant apartments potentially pose a much greater long-term risk to China's economy than US tariffs, writes Michael Janda.

    The rebound has been driven by banks being encouraged to lend more.

    "During the same period, growth of developers' funding, which holds the key to property investment, also jumped to 8.9 per cent year-on-year, the fastest in 20 months, as bank loans, advance payments, and mortgages grew at a quicker pace," Ms Wang said.

    However, another spurt in residential building investment has some analysts worried, given more than 20 per cent of Chinese dwellings were vacant at the end of 2017, and there is now as much as 6.4 billion square metres of empty residential floor space.
    New stimulus needed

    "Today's data suggests the need for proactive policy support, especially amid an escalation in the China-US trade disputes," Ms Wang said.

    "The renewed tensions may pose further uncertainties to China's manufacturing sector, and the data today may trigger market concerns about the sustainability of China's recovery [late in the first quarter]."

    Ms Wang said Chinese policymakers will more likely favour targeted monetary policies, industrial subsidies, and fiscal policy — including more tax cuts — to counter the mounting risks to growth.

    Whenever the Chinese economy slows, authorities inject more cash. But with debt at eye-watering levels, has the time for more stimulus passed?

    The new round of tit-for-tat tariffs saw the US bump up the effective tariff rate on $US200 billion worth of Chinese imports from 10 to 25 per cent. China retaliated, albeit on a smaller scale.

    The big investment bank Citi said the new regime of tariffs will lop around 0.5 percentage points off Chinese GDP, cut exports by 2.7 per cent and see more than 2 million Chinese workers lose their jobs.

    Capital Economics senior China economist Julian Evans-Pritchard argued that, given the budgetary restraints of local governments, central authorities would have to act again.

    "We had warned that economic momentum risked weakening again in the near-term as the prop from this year's fiscal front-loading faded," Mr Evans-Pritchard said.

    "Assuming we see further easing soon, we think growth should stage a mild recovery in the second half of this year. But with the scale of stimulus likely to remain smaller than in previous downturns, we don't anticipate a strong recovery."
    “Then the creatures of the high air answered to the battle, .., and the woods trembled and the wind sobbed telling them, the earth shook,; the witches of the valley, and the wolves of the forests, howled from every quarter and on every side of the armies, urging them against one another.”
    ― Lady Gregory, Gods and Fighting Men: The Story of the Tuatha De Danaan and the Fianna of Ireland

  2. #2
    Join Date
    May 2001
    S.W. Mich. near South Bend, IN
    I feel that this article should have its own thread, but since the OP is about China and tariffs, I'm including it. On a different vein, tho.....and I expect to get some vitriolic replies, but I 'm a believer in hearing "the other side of the story"...that's how we learn!
    I'm also a fan of Paul Craig Roberts...he brings up a side of the story few of us have considered! MMJ

    The Tariff Issue
    May 14, 2019
    Paul Craig Roberts

    Wherever I look at US policy, foreign or domestic, I see only insanity, ignorance, and incompetence.

    Take the issue of tariffs, which is Trump’s mistaken approach to bringing the jobs back home. The tariff “solution” overlooks that offshored US production counts as imports when US firms bring their goods into the US to be marketed.

    The Chinese did not steal American jobs by selling below US cost. The jobs were taken to China by US global corporations, along with the technology and business know-how, for the sole reason of maximizing US corporate profits. Labor, made as productive as US labor by offshored US capital, technology, and business know-how, could be hired at much less cost in China and elsewhere in Asia due to the enormous excess supply of labor that overhangs Asian labor markets. The enormous cost savings went directly into US corporate profits, capital gains for shareholders, and bonuses for executives. Half and perhaps more of the “cheap goods” imported from China are the goods of American firms, such as Apple, Levi, Nike. They are products of US firms that are made in China for sale in the US. They are not “cheap Chinese goods.” Do you think an iPhone is cheap or a MacBookPro is cheap?

    The tariffs fall on American goods produced offshore by American firms for sale in America. For example, on May 13 the office of the US Trade Representative (USTR) released a list of “Chinese” products subject to a 25% ad valorem duty. The list includes cell phones, footwear, textiles. Do the cell phone imports from China exclude Apple’s iPhone? Do the footwear imports from China exclude Nike’s shoes? Do the textiles exclude Levis? I have not seen any information that Trump’s tariffs are only for Chinese owned exports to US markets.

    The tariffs will reduce the profits of American overseas production exported to the US and raise prices to US consumers, who have already lost the incomes from the manufacturing jobs that American companies moved abroad.

    In other words, tariffs are not a solution.

    The only way to bring home the offshored American jobs is to change the way US corporations are taxed. No, this does not mean to lower corporate taxes. The way to bring the jobs home is to tax corporations on the basis of the geographical location in which they add value to their products. If US corporations produce in the 50 states for their US market, the tax rate would be low. If they produce abroad in China or elsewhere for sale in the US, the tax rate would be high.

    The tax rate on offshored production for US markets would be calculated to offset the lower labor and regulatory costs abroad.

    Americans, as they always do, got sold a bill of goods called “globalism.” Globalism is the deception used to destroy labor unions, deprive the American work force of middle class jobs, and strip them of their bargaining power. It is also the deception used by transnational agri-business to drive self-sufficient third world peoples off their land and convert the country’s agriculture into the production of a mono-crop export commodity.

    The evil done by globalism has taken a toll on both first and third worlds. It is entirely the result of first world capitalist profit-maximizing. It has nothing to do with China.

    China is being blamed not because its industry produces cheaper than our industry, but as a scapegoat to hide from view the fact that US global corporations alone are the cause of the lost American jobs.

    Tariffs cannot bring back the jobs.

    On January 6, 2004, more than 15 years ago, US Senator Charles Schumer (D,NY) and I raised the issue in the New York Times whether jobs offshoring was in fact an exercise in free trade. A televised conference was called in Washington, D.C., to hear us out. Unsuccessful attempts were made to poke holes in our argument. With Schumer in the lead there was hope that something could be done, but he was silenced by his corporate and Wall Street campaign contributors. In the years since, I have many times explained the issue in my columns, interviews, and in my book, The Failure of Laissez Faire Capitalism. I testified before the China Commission and made clear what was occuring and the consequences, including the impact on state and local budgets and pension obligations.

    It did no good. The greedy, grasping capitalists silenced every member of Congress, every economist, every financial journalist, and the right and left wings. The consequence is that the United States, once an opportunity society, is now polarized between a tiny immensely wealthy billionaire class and a work force deep in debt and surviving on two or more part time jobs with no benefits. The Trump regime is now blaming this catastrophe on China. War could result.

  3. #3
    Chinese authorities would laugh at what Trump is doing more or less. Putting an extra tax on the prices importers pay is funny when one considers what is paid to China and what Chinese goods are sold for in the West.

    Two million losing jobs in China means that two million farmers go home to their farms where the Chinese government does not pay anything to them.

    The big worry for China is seeing the West collapse and exports crash. That is in fact what is happening these days.

    China does not have the drug problem of the West either.

    China has water problems and has destroyed a lot of its fertile soil. The West is not far behind China but.

  4. #4
    From #2:

    Americans, as they always do, got sold a bill of goods called “globalism.” Globalism is the deception used to destroy labor unions, deprive the American work force of middle class jobs, and strip them of their bargaining power. It is also the deception used by transnational agri-business to drive self-sufficient third world peoples off their land and convert the country’s agriculture into the production of a mono-crop export commodity.


    That "bill of goods" has a goal for a lot more than that, although those points sound valid. A Safe Alternative to Harmful 5G Wireless

    Psalm 94:1 O Lord, the God of vengeance, O God of vengeance, let your glorious justice shine forth! 2 Arise, O Judge of the earth. Give the proud what they deserve. 3 How long, O Lord? How long will the wicked be allowed to gloat?

  5. #5
    Join Date
    May 2005
    North Georgia Mountains
    Not a very well written article based on the title but china is starting to prepare its people to support the country and government in its trade war with the US.


    China voices strength, pushes nationalism around trade war

    China voices strength, pushes nationalism around trade war

    BEIJING (AP) — What do tilapia, Jane Austen and Chinese revolutionary poster art have in common?

    All have been used to rally public support around China’s position in its trade dispute with the U.S., as the ruling Communist Party takes a more aggressive approach — projecting stability and stirring up nationalistic sentiment in the process.

    “If you want to negotiate, the door is open,” anchor Kang Hui said Monday on state broadcaster CCTV. “If you want a trade war,” however, he added, “we’ll fight you until the end.”

    “After 5,000 years of wind and rain, what hasn’t the Chinese nation weathered?” Kang said.

    The toughly-worded monologue on the banner evening news program followed days of muted official responses to President Donald Trump’s decision to hike tariffs on $200 billion worth of Chinese imports. Trump startled financial markets with his May 5 announcement that U.S. tariffs would rise to 25% from 10% as of Friday.

    After negotiations in Washington ended last week with no agreement, China retaliated Monday with higher tariffs on $60 billion worth of American goods, raising duties of 5% to 25%.

    Then came the government’s public relations onslaught.

    “Overnight, we saw official media — in the People’s Daily, China Daily, CCTV — all run spots about the United States as being a problematic negotiating partner,” said Jake Parker, vice president of China operations for the U.S.-China Business Council.

    President Xi Jinping, the ruling party’s most powerful leader in decades, has made China’s foreign policy more assertive while nurturing the growth of a red-blooded but tightly controlled nationalism.

    The approach reflects a new willingness to allow a shift in domestic public opinion where the trade war is concerned, Parker said.

    Weibo, a Twitter-like social media platform which generally censors political discourse, has featured an unusual amount of tariff-related content since Monday. The site’s ranking of “trending topics,” usually dominated by celebrity news, highlighted Kang’s monologue and the subject “American stock market plunges.”

    Internet users shared patriotic memes expressing confidence in China’s economy and contempt for the U.S. The commentary echoes earlier times when the U.S. and China were adversaries in the Korean War and for decades afterward.

    “All the trade wars are paper tigers,” said a riff on a Communist propaganda poster showing People’s Liberation Army soldiers stamping on a pile of skulls. The poster alludes to Mao Zedong’s famous pronouncement that “All reactionaries are paper tigers” — a derogatory term which he also applied to American imperialism.

    Still, the nationalistic bent of social media comment is a poor measure of Chinese public opinion. In the past, the government has paid people to publish posts supporting party policies, and any expression of dissent faces strict censorship. One Weibo post simply asked what impact the trade war will have on ordinary people. A counter at the bottom of the post indicated that it had 1,290 comments, but none were viewable, and further comments were “prohibited.”

    A number of Chinese exporters contacted by The Associated Press refused to comment on the record because they fear government retribution.

    Beijing is trying to reassure worried Chinese businesses and consumers that the country is strong enough to withstand the trade conflict.

    “I think this administration is different from previous ones in its diplomatic policies,” said Li Chanjuan, a manager at an insurance company. “People expect the government to make a tougher gesture.”

    There are limits to how far the party will go in pushing public sentiment.

    David Bandurski, a co-director of the University of Hong Kong’s China Media Project, said the country’s current aim is to promote stability rather than foment patriotic fervor.

    “China is keen to project calm,” he said. “The last thing it needs or wants is to whip up popular anger, which can turn quickly,” sometimes in ways that the party can neither predict nor control.

    People’s Daily, the party’s official mouthpiece, called the trade war “no big deal.” It also paid tribute to Jane Austen’s famed novel “Pride and Prejudice” in a tongue-in-cheek critique of the Trump administration.

    “Pride makes it impossible for other people to love me, while prejudice makes it impossible for me to love others. Today a few American politicians are just like the characters that Austen assailed,” the paper said.

    CCTV on Wednesday aired interviews with both Chinese and American economists who condemned the U.S.’s approach. The state broadcaster also emphasized how the tariffs will hurt American consumers.

    Meanwhile, the Hainan Tilapia Sustainability Alliance, an industry group on the southern island province, is appealing to Chinese taste buds.

    China’s exports of the popular fish are a target of Trump’s tariffs.

    In an article calling for Chinese consumers to eat more tilapia to help the industry survive, the group said: “There’s no problem that eating cannot solve.”

  6. #6
    Americans have a huge tariff already placed on our employers by our government. In average the all in cost to keep a employee on the payroll is at the vary least as much as their take home. Up to two times plus or more for more physical jobs. It's just like hiring two people for each laborer, except one just sits around and its called the all in cost to hire in America.

    And that alone makes most products cheaper to manufacture over seas or down south.

    Remove 99% of all payroll liabilities and China, Korea, Japan, Mexico, etc.. would suddenly start losing all kinds of manufacturing jobs, and one would have to hide to not have a job.
    Last edited by West; 05-16-2019 at 06:35 AM.


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