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stasisLAX
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US And China Engage In Trade War

Mon Sep 14, 2009 6:06 am

Great - just what we need in the middle of the worst economic crisis since the Great Depression - a freakin' trade war with China... terrific! Well, the Chinese do own most of the U.S. federal government debt. I guess we Americans should get used to taking "direction" from Beijing. Here's the most recent details from The Financial Times:

"A full-blown trade row erupted on Sunday night between the US and China after Beijing accused Washington of “rampant protectionism” for imposing heavy duties on imported Chinese tyres and threatened action against imports of US poultry and vehicles. Trade relations between two of the world’s biggest economies deteriorated after Barack Obama, US president, signed an order late on Friday to impose a new duty of 35 per cent on Chinese tyre imports on top of an existing 4 per cent tariff."

Source: http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0.html

[Edited 2009-09-13 23:09:03]
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HAWK21M
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RE: US And China Engage In Trade War

Mon Sep 14, 2009 7:19 am

Amazingly....China protests against Import duty on their products,but does nothing to curb reverse engineering  Smile
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mham001
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 12:38 am

The Chinese want it both ways. They make no pretense of hiding their own protectionism.

A trade war might be just what Obama is looking for. Plays well a home, the trade deficit is over $200 billion, who will be hurt the most? If China tries to dump their treasury notes, it lowers the value of the dollar making our own exports more attractive. They need our resources to make their junk so they can't go too far with tariffs.

It may not be a bad thing to push things, its about time they stopped suffocating the yuan too.
 
geekydude
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 2:52 am

A trade war might be a bit over the top; most likely it's going to be nothing but symbolic skirmishes. You see, the Obama team has to do something to appease the unions, especially in this critical time frame to enlist their support for healthcare reform. What more interesting an bizzare in this particular case is that the tire industry in the US has never said they needed protection; they are not in competition with the low end Chinese imports whatsoever. So will there be many American jobs saved in this case? Highly unlikely. Well, on the Chinese side, the government will have to show some stance to appease the populace as well, at least for the moment; that's why they're reviewing cases against American chicken and auto parts. In all honesty, I don't think either party will want to escalate this to fuel the populous sentitnemt. When Mr. Obama visits China in November, I think things will prolly come back to normal.

Quoting HAWK21M (Reply 1):
Amazingly....China protests against Import duty on their products,but does nothing to curb reverse engineering Smile

If the technology is over 20 years old, there's actually nothing wrong with reverse engineering it, as the patent, if there's one, expires, and no law is broken. This is not to say it is OK to make copy of everything, especially up-to-date orginal designs. On the latter point, I think most people in China can come to an agreement that it's not a decent thing to do. Of course, there are expections like those wearing fake Louis Vittion bags for instance. But you can't always effectively control shameless people, can you?

On a side note, reverse engineering is not always Chinese thing. India, as well all know, has a big generic drug industry that has been reverse engineering pharmaceutical products for decades, regardless of if the drug is still under patent or not. Isn't that true in India that there is a law that does not grant patent protection for the chemical compounds used in drugs?
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stasisLAX
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 3:52 am

As expected, the major labor unions are strongly supporting the trade sanctions against China.

"At the A.F.L.-C.I.O. convention in this city haunted by the ghosts of shuttered steel mills, Thea Lee, the labor federation’s chief economist, praised Mr. Obama’s decision, saying it would help preserve American manufacturing. She said a surge in Chinese tire exports had contributed to the shutdown of several American tire factories and the loss of thousands of jobs."

Furthermore, the trade sanctions against China could be expanded according to the NY Times:

"Last week the Commerce Department, concurring with a commission finding of improper subsidies, said it was imposing duties ranging from 10.9 percent to 30.6 percent on imports of Chinese pipes used to transport oil. The department is also investigating a complaint that Chinese steel manufacturers are selling pipe in the United States at unfairly low prices, with a decision due in November."

Source: http://www.nytimes.com/2009/09/15/business/15labor.html?_r=1&hp
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Flighty
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 3:58 am



Quoting Geekydude (Reply 3):
Isn't that true in India that there is a law that does not grant patent protection for the chemical compounds used in drugs?

Which is an excellent law. We should have the same law here.

Quoting Geekydude (Reply 3):
Well, on the Chinese side, the government will have to show some stance to appease the populace as well, at least for the moment; that's why they're reviewing cases against American chicken and auto parts.

Sure, but it is a shame to treat such serious business as a faux moral-equivalent pissing match. Charles Manson could engage in such games with an innocent person. The process was originally a serious thing, not just a caricature and a joke to be cynical about. China's WTO membership should be up for termination, in any case. I am still not sure why it was ever activated.
 
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 4:00 am



Quoting Geekydude (Reply 3):
On a side note, reverse engineering is not always Chinese thing. India, as well all know, has a big generic drug industry that has been reverse engineering pharmaceutical products for decades, regardless of if the drug is still under patent or not. Isn't that true in India that there is a law that does not grant patent protection for the chemical compounds used in drugs?

The Indian subject is that of process vs product patents; India only granted the former, not the latter. In other words drugs created by other processes were legally above board. It was left to the ingenuity of the drugmakers to figure out how to create and industrialize entire new drugmaking processes.

The case of outright fakes are rather more different. As a case in point, a large consignment of Chinese fake malarial drugs labeled 'Made in India' were intercepted by the Nigerian government recently:
'China-made' fake drugs investigated
Fake 'Made In India' drugs: China admits its cos' involvement

I believe countries should do what is in their best interest with regard to IP (as India did), but there's a qualitative difference between process/product patents and outright low quality, if not dangerous, forgery.
 
geekydude
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 4:35 am

Quoting Flighty (Reply 5):
China's WTO membership should be up for termination, in any case. I am still not sure why it was ever activated.

This shows what the popular press can do to you. If you ever read Joe Stiglitz, one of the best known economists on trade and other issues, as well as a Nobel Laureate, you will find that there are so many cases where the US and the EU so blatantly break the rules that have directly or indirectly caused mass sufferings elsewhere in the world. If you still do not know what I am talking about, here a hint, start with your agricultural subsidies. And it's just the tip of the iceberg. By comparison, China's offense at any rate would seem really trivial.

So before you become so indignant about China's WTO membership, you can start by looking at your own country's trade policies and see who should get termininated first.

[Edited 2009-09-14 21:49:45]
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geekydude
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 4:47 am



Quoting BarfBag (Reply 6):
The case of outright fakes are rather more different. As a case in point, a large consignment of Chinese fake malarial drugs labeled 'Made in India' were intercepted by the Nigerian government recently:

I agree with you. It's no joking matter that people in China are suffering from fake drugs and contaminated foods. The average person is very aware and extremely careful when they make daily purchases, which is unfortunate. But this is the reality. Foreign buyers too need to be aware of this and be extra cautious when dealing with shady companies. You get what you pay for. The lowest price is sometimes too good to be true. China is no paradise or an easy gold mine. You need to know what you're doing.

But if you compare the situation of counterfeit products 15 years ago and today, there has been a real noticable improvement, which is a positive developement. Also comnsumer awareness has been increasing, and people are less and less tolerant of counterfeiters. It's not too long ago that the chief of China's FDA was executed. Hopefully this wiil ward off some of the new risk takers in the near future.
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 5:31 am

Cooler heads will prevail. This isn't going to "blow up" into a trade war. Each country is very much dependent on the other, especially in this economic environment. This is just the dance that is world trade. Look at the "war" the USA and Canada have been in constantly for the lst two decades, its just been devastating to both.....

Simply put, the USA needs the cheaper production environment available in China and China needs the export market that the USA is. This article gives a decent, simple insight to it:
http://www.businessweek.com/globalbi...tent/sep2009/gb20090914_482219.htm

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Flighty
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 5:47 am



Quoting Geekydude (Reply 7):
here a hint, start with your agricultural subsidies. And it's just the tip of the iceberg. By comparison, China's offense at any rate would seem really trivial.

Not really. If China has a specific complaint on agriculture, they should make it. And I hope they do, if we are being unfair. I was thinking of Chinese industrial and currency policy in general, not this issue in particular. The issues are monumental.

Just because China has a little hot rhetoric, doesn't arouse my interest that much. Chinese people know how to read between the lines of their government; don't expect me to be any different. Yes, our agriculture subsidies are (much reduced) but still a source of some trouble I suppose. But our main crime against the developing world is CO2. I wish China would press us more on that. And, maybe go ahead and pay us for those copies of Microsoft Windows and Sex and the City. That's what trade is about. It's about being fair to both sides. Otherwise they can have my Unflinching Constant Vigil against Ribald and Scurrilous Double-Talk. Haha  Smile  champagne 
 
geekydude
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 6:46 am



Quoting Flighty (Reply 10):
If China has a specific complaint on agriculture, they should make it.

No, Flighty my friend, China does not have any beef with US agricultural policies. China is a big importer of US soybeans, corn, and wheat, so basically the more you subsidize the better. But this means a totally different story for the abjectly poor folks in Africa whose only means of living is agriculture that would have a place in world market in the absence of US and EU subsidies. And do not think they have not raised complaints; they have been doing that to the top of their voice for virtually decades. You just happen to have missed all that screaming thanks to the lack of coverage in mainstream media.

The industrialized countries have successfully knocked down trade barriers in most developing countries through previous rounds of trade talks within the framework of the GATT and the WTO by making them to drastically reduce import tariffs on manufactured goods; meantime, rich countries made lots of wild promises to poor countries saying that they would in turn cut ag subsidies so that African, Latin American, and Asian agricultural products can compete in the world market. But few of the promises have ever been fulfilled so far. Whenever there's new trade talks @ the WTO, the rich countries always find excuses not to reform their ag policies, much to the chagrin of the poor countries. So basically, the poor folks now have nothing, their nascent industries have been destroyed thanks to developed countries knocking down their tariff on manufactured good; and their ag sector can't compete either due to the vast oversupply of ag products due to the generous subsidies in rich countries. And still you think you're the one that's hurt by unfair play?

Quoting Flighty (Reply 10):
And, maybe go ahead and pay us for those copies of Microsoft Windows and Sex and the City.

That may be a good idea. But, the average Chinese may earn 200 dollars a month or less. So if the law was 100% strictly enforced, I don't think realistically most people would have the money to pay for a copy of genuine Windows. Bill Gates seems to be well aware of this as well. That's why MS has been quite tolerant of illegal copies in poor countries. A game is being played here in case you have not noticed already. MS tolerates the use of illegal software in poor countries because they want to create a "network externality". MS knows perfectly well poor folks don't have the money to pay, but by letting them use MS products nonetheless, more and more people will be familiar with and dependent on MS. So in the future, hopefully, they will buy genuine products, or at least someone rich enough will buy full featured authentic products.

If let's say right now there was a way piracy could be stopped and everyone would have to buy genuine windows, then I guess the most likely outcome would be people in poor countries dumping Windows altogether and start using Linux en mass. I don't think MS would truly like that to happen.
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geekydude
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 7:25 am



Quoting Tugger (Reply 9):
Cooler heads will prevail. This isn't going to "blow up" into a trade war. Each country is very much dependent on the other, especially in this economic environment.

That's right. Hopefully the union people won't take this act of "protection" as another "entitlement" program that's going prevail in the future and grow too comfortable under it.
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TheCol
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RE: US And China Engage In Trade War

Tue Sep 15, 2009 8:04 am



Quoting Flighty (Reply 5):
China's WTO membership should be up for termination

What's the point? The WTO is useless as hell. Each country is going to protect their own interests, no matter what the negative effects may be.

Quoting Flighty (Reply 10):
If China has a specific complaint on agriculture, they should make it.

Again, what would be the point? Canada has already beat this dead horse to no end, and nothing has changed.

Everyone else in the world, especially North America, knew protectionism was going to be an issue with Obama. This is only the beginning of what will become a major issue with a number of countries. As far as China goes, they haven't been trustworthy in nearly 60 years. We let them run the gauntlet for far too long, and now it's totally pointless to slap duties on them and expect it to make a difference.
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Asiaflyer
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RE: US And China Engage In Trade War

Tue Sep 22, 2009 2:15 pm



Quoting TheCol (Reply 13):
Everyone else in the world, especially North America, knew protectionism was going to be an issue with Obama. This is only the beginning of what will become a major issue with a number of countries. As far as China goes, they haven't been trustworthy in nearly 60 years. We let them run the gauntlet for far too long, and now it's totally pointless to slap duties on them and expect it to make a difference.

I see two interesting facts here.

1. U.S. consumers will be paying the bill for this. Most tiremakers has their production in China nowadays and the import duty will only make tires more expensive for the US consumers. The only winners will be those US tire workers who are under-productive and should be doing something else.

2. The transition away from low value work, that a developed country not should do anymore, will take even longer time to go through for US if Obama will continue preserve not competitive industry. U.S. will not be able to keep its welfare if people there will continue to make tires etc.
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