Update on US-Chinese trade war from a sane angle

[Harpy Eagle]

And then as he always does, Trump says dumb shit and fucks up any progress that had been made...

China Trade Negotiators Cut U.S. Trip Short After Trump Says He Doesn't Need A Deal Now

Chinese trade negotiators cut short their trip to the U.S. after President Donald Trump said Friday he really doesn’t need a trade pact until after the 2020 presidential election.

It's very "emotional" not methodical.

Being methodical takes both maturity and intelligence.

 

[iceberg]

And then as he always does, Trump says dumb shit and fucks up any progress that had been made...

China Trade Negotiators Cut U.S. Trip Short After Trump Says He Doesn't Need A Deal Now

Chinese trade negotiators cut short their trip to the U.S. after President Donald Trump said Friday he really doesn’t need a trade pact until after the 2020 presidential election.

It's very "emotional" not methodical.

Being methodical takes both maturity and intelligence.

Well that leaves out our current gov across the board.

 

[Zorro!]

China can destroy billions of dollars in US equities' values with a single statement. As long as this tariff/currency war continues we will have very high volatility.

In a $14T US economy China's influence is minimal. The US consumer rules the roost. Do you think Santa will not deliver this Xmas? The US economy is a juggernaut even if it slows to below 2% growth. We're at full employment, the Fed is lowering rates, sure we have volatility, but most investors ignore volatility and focus on the long term growth. We're in the longest expansion in history, so a short recession isn't a bad thing, look at the dip the Fed caused last December, no big deal.

Just 10 days ago China decided to weaken their currency and $700 billion dollars was wiped out in the stock market. That seems like influence to me. BTW- the djia is lower today than it was then.

View attachment 280348

The US GDP was 19.5T in 2017 and $20.5T in 2018, it should be even higher in 2019. The Dow fluctuates, no big deal, but the long term trend is up.
The DJIA is shown above, and except for the "boneheads" raising rates too fast at the end of 2018, the Trump economy is still chugging along.
If Trump can get the US and Chinese globalists to part company that would be a good thing, China is becoming way too powerful, and Trump is the only president to do something about it.

Milley
Milley says China will be the biggest military threat for 100 years and warns it is improving 'very, very rapidly'

Pompeo
Pompeo: China Is The Greatest Threat U.S. Faces

Dunford
Gen. Dunford: China to be US' 'greatest threat' by 2025 - CNNPolitics

Intelligence Agencies warn about Chinese spies
Why Intelligence Officials Say China Is Becoming The U.S.'s Biggest Security Threat

Trump's right to make China pay for cheating. They like previous presidents that let them cheat for free.

Trump's given them a choice, stop cheating or pay more in tariffs. Right now they are choosing the tariffs while Trump helps them discover their price point.

Trump's brought the debt down as a percentage of GDP from 104.63% where Obama left it, to 103.80% in just 2.5 years.

The key to the Trumpian Approach, you have to grow GDP faster than debt.

Obama in his last two and half years grew the debt from 101.11 to 104.63%

 

[Zorro!]

China knows how to play the long game . that's the real problem.

"Long Game" China is in a face Pork Inflation and Factory Deflation.

Pork-Panic Sends China CPI To 6 Year Highs As Factory Deflation Deepens

... thanks to the explosion in pork prices (as 'pig ebola' spreads), Chinese consumers are facing the highest inflation since 2013.

Weird how even though they are so much smarter than us, that they have big problems and we are chugging along just fine.

• China Sept CPI +3.0% YoY Retail Inflation
  
  
• China Sept PPI -1.2% YoY Wholesale deflation.

The divergence between CPI and PPI is boxing Chinese officials into a corner, fearful of broad-based rate-cuts to rescue PPI from deflationary hell sending CPI even higher.

 

[Harpy Eagle]

China can destroy billions of dollars in US equities' values with a single statement. As long as this tariff/currency war continues we will have very high volatility.

In a $14T US economy China's influence is minimal. The US consumer rules the roost. Do you think Santa will not deliver this Xmas? The US economy is a juggernaut even if it slows to below 2% growth. We're at full employment, the Fed is lowering rates, sure we have volatility, but most investors ignore volatility and focus on the long term growth. We're in the longest expansion in history, so a short recession isn't a bad thing, look at the dip the Fed caused last December, no big deal.

Just 10 days ago China decided to weaken their currency and $700 billion dollars was wiped out in the stock market. That seems like influence to me. BTW- the djia is lower today than it was then.

View attachment 280348

The US GDP was 19.5T in 2017 and $20.5T in 2018, it should be even higher in 2019. The Dow fluctuates, no big deal, but the long term trend is up.
The DJIA is shown above, and except for the "boneheads" raising rates too fast at the end of 2018, the Trump economy is still chugging along.
If Trump can get the US and Chinese globalists to part company that would be a good thing, China is becoming way too powerful, and Trump is the only president to do something about it.

Milley
Milley says China will be the biggest military threat for 100 years and warns it is improving 'very, very rapidly'

Pompeo
Pompeo: China Is The Greatest Threat U.S. Faces

Dunford
Gen. Dunford: China to be US' 'greatest threat' by 2025 - CNNPolitics

Intelligence Agencies warn about Chinese spies
Why Intelligence Officials Say China Is Becoming The U.S.'s Biggest Security Threat

Trump's right to make China pay for cheating. They like previous presidents that let them cheat for free.

Trump's given them a choice, stop cheating or pay more in tariffs. Right now they are choosing the tariffs while Trump helps them discover their price point.

Trump's brought the debt down as a percentage of GDP from 104.63% where Obama left it, to 103.80% in just 2.5 years.

The key to the Trumpian Approach, you have to grow GDP faster than debt.

Obama in his last two and half years grew the debt from 101.11 to 104.63%

and Trump is now back above 104%. But as with most things Trump, you worshipers will say that 104% is good when Trump does it.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

CRACKS IN THE COLOSSUS: Long Game China’s Latest Bond Scare Casts Doubt on a $1.3 Trillion Market.

The latest bond failure by a Chinese local government investment arm has rekindled concerns about a group of borrowers whose outlook is closely tied to Beijing’s shifting definition of its implicit backing.

The debt woes faced by Hohhot Economic & Technological Development Zone Investment Development Group, a local government financing vehicle from Inner Mongolia, have sent chills among investors holding other such LGFV bonds, driving prices sharply lower for some.

The development also came just as onshore corporate bond defaults in China rose to a record high this year as the worst economic slowdown in three decades constrains Beijing’s ability to bailout failing borrowers.

Companies such as the LGFV from Hohhot have until now emerged as major beneficiaries of the surge in defaults as investors feared debt from ailing private businesses and on expectations that Beijing wouldn’t let these government-linked firms ever go bust.

The borrower ions, missed repaying principal on 1 billion yuan ($142 million), five-year privately placed note on Friday after investors exercised a put option on the paper, according to research notes by several Chinese brokerages published Saturday. Investors have been assuming that the Chinese government would never let these government affiliated borrowers default.... Whoops!

The issuer has a 10-day grace period to make good on the debt obligations, according to a bond issuance prospectus seen by Bloomberg. Failure to do so would make it the first LGFV bond default in China.

Calls to the bond issuer went unanswered while the clearing house declined to comment on the matter. Given that the note was privately placed with select institutional investors, information related to it isn’t usually made public.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

"LONG GAME" CHINA: Fissures in the Facade.

“The anger on social media was also indicative of new insecurity among members of China’s middle class, who have never experienced an economic downturn and have always thought they had more protections than lower-paid migrant workers. People said they could see themselves in Mr. Li.” Plus:​

The most subversive, explosive message you tell the Chinese people is something different. It goes like this:​

The Party is a racket. The guys at the top are not any different from the ones you deal with at the bottom. The Party exists to make sure their kids have a spot at the front of the line no matter how much more your kids deserve it. You are not forced to call Xi all these fancy titles because it will help him restore China to its ancestral glory: you are forced to do all of that so Xi Jinping’s daughter gets into Harvard and his family racks up homes in Hong Kong. All of the taxes, the censorship, the ridiculous rules and regulations, the blustering about war, the hero-worship and the propaganda, the detention centers and the cameras—it is all a racket. You live a slave so that someone else’s children can get ahead.​

That is the fissure in the facade. It is whispered of. It is wondered at. Sooner or later, it will explode.​

Well, that’s because it’s the truth. Though the anxieties of the middle class vs. the professional class in China sound awfully familiar.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

Long Game CHINA: Balance of Terror.

The trade war with the Americans has prompted China to accelerate its plan to eliminate dependence on American technology. This includes abandoning the U.S. dominated SWIFT bank transfer system, computer operating systems and the Internet. China is also hustling to replace all the American computer hardware (mainly key components) and software. This won’t happen quickly and may cost the economy more than expected.​

More:

Ignoring the official optimism of the Chinese government, a growing number of Chinese government and business leaders believe China is headed for the same fate as Japan in the 1990s, when a real estate bubble triggered a violent and continuing halt in economic growth. The Japanese had allowed a huge real estate bubble to develop and, when economic growth stalled for a bit, a lot of the real estate loans became bad debt and that created an economic crisis Japan is still dealing with. Japanese were angry and being a democracy they elected new politicians. China is not a democracy and a banking crisis like the Japanese went through in the 1990s will create a lot of angry Chinese who cannot, as the saying goes, “vote the rascals out (of office)”.​

Japan went into endless recession when we moved our trade to China.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

CHANGE: Long Game China will lower import tariffs on over 850 products from January 1, finance ministry says.

“The finance ministry said the tariff rate for frozen pork will be cut to 8% from the most-favored-nation duty of 12%, as China copes to plug a huge supply gap after a severe pig disease decimated its hog herd.”​

Quoth Don Surber: “Red China is hungry.”

 

[Zorro!]

China knows how to play the long game . that's the real problem.

NONSENSE, SOCIALIST ECONOMIES NEVER COLLAPSE, AND TOM FRIEDMAN SAYS THE CHINESE ARE GENIUSES: China’s $13 Trillion Problem Is Becoming Everyone’s.

These last 12 months produced the slowest mainland growth since the early 1990s, the biggest pro-democracy protests in Hong Kong’s history and mounting criticism of Beijing’s human rights record. By taking such an authoritarian stance, Taiwan has slipped further away from Beijing’s grip, while some political wags questioned whether Communist Party members were losing faith in President Xi’s governing style.

But Xi has an even bigger challenge on his hands, and not just Donald Trump. Make that 13 trillion challenges.

This figure refers to the size, in U.S. dollar terms, of China’s onshore bond market. And generally, its growth and development have long been touted as a vital rite of passage for the second-biggest economic power. The trouble with debt markets, though, is they tend to expose cracks in financial systems.

Herein lies Xi’s biggest problem. Keeping growth north of 6% is reasonably easy for a command economy. Even amid the trade war, Xi’s party can order up giant infrastructure projects, slash taxes and cajole local governments to ramp up fiscal stimulus. It has its own ATM—the People’s Bank of China.

Trouble is, the more you borrow, the more investors can push back and the more even the most authoritarian of governments can lose control as punters vote with their feet. That risk is increasing along with a recent jump in private-sector debt defaults to a record high.

According to Fitch, 4.9% of private companies missed bond payments from January to November, up from 4.2% for all of 2018. When you combine state and private companies, China Inc.’s onshore defaults risks are growing apace—from none a few years back to at least $18 billion so far this year.

Signs of stress are also emerging in the offshore debt market. So are this year, there have been at least $75 billion defaults. With well over $200 billion of debt maturing over the next 24 months, Standard and Poor’s warns of increasing missed payments episodes.

This trajectory collides with U.S. President Trump’s trade war. Ignore all that excitement over Trump’s “phase one” deal with Xi. It’s a polite ceasefire than won’t hold.

It means that Xi’s annus horribilis won’t end even as calendars switch to 2020. The year ahead may very well be the one in which China’s debt troubles supersede all else.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

I've long wondered at how the Left paints smiley faces all over the Chi-Coms but then I discovered just how much Chinese Cash, that they accumulated by raping The American Worker, flows into the pockets of the US Left.

COLLUSION: Number of professors in cahoots with communist China quickly mounts.

American researchers from schools like Harvard and Boston University have been charged with lying about their ties to Chinese information efforts.

More and more professors and university faculty are being revealed to be linked to Chinese government information efforts.

Wholesale Theft:

In recent months, U.S. authorities have discovered Chinese operatives compromising American interests through the university system, including plots to steal missile technology and cancer research.

Ye Yanqing, a student at Boston University, fled the country last month, as the FBI was investigating her position as a Lieutenant in the Chinese People’s Liberation Army (PLA), Washington Times.

Ye was taking orders to gather intelligence from “senior leaders of the PLA while conducting research at Boston University.” In addition to committing espionage, she also failed to disclose her position as an active-duty PLA officer, earning her charges of visa fraud in addition to charges of acting as a foreign government agent, making false statements to investigators, and conspiracy.

This criminal collusion isn’t limited to Chinese-born student-spies. Charles Lieber, the chair of Harvard’s chemistry department was taken into custody and charged Jan. 28 for making false statements to investigators about his financial ties to China.

Lieber, who has been described as “one of the most distinguished scientists of our time,” received undisclosed 7-digits payments after he agreed to work as a “Strategic Scientist” at the Wuhan Institute of Technology between 2012 and 2017, according to his federal indictment.

The Harvard academic helped China “cultivate high-level scientific talent in furtherance of China’s scientific development, economic prosperity and national security,” according to the Department of Justice.

Lieber’s indictment was announced alongside that of another academic, Zaosong Zheng, who was caught attempting to smuggle 21 vials of cancer research to China in a sock.

Zheng was allowed to enter the U.S. in 2018 to conduct cancer research at Beth Israel Deaconess Medical Center in Boston, according to the U.S. Attorney's Office, but was arrested in December 2019 as he attempted to steal valuable research samples.

After he was caught, “Zheng stated that he intended to bring the vials to China to use them to conduct research in his own laboratory and publish the results under his own name,” according to the Justice Department.

The Department of Justice also uncovered a similar plot in July, when it was revealed that UCLA professor Yi-Chi was involved in a scheme to illegally send American semiconductor computer chips to China. The chips Yi-Chi sought to export are most commonly used in missile and fighter jet design. He is now facing more than 200 years in prison.

Prosecutors say the University of Texas professor Bo Mao also attempted to steal U.S. technology, using his position as a professor to obtain access to protected circuitry then handing it over to the Chinese telecommunications giant, Huawei, reported NBC.

A researcher at the University of Kansas, a student at the Illinois Institute of Technology and a young prodigy working directly under the acclaimed scientist Dr. David Smith of Duke University have also all been at the center of investigations into Chinese academic espionage in recent months.

China chooses to spy on colleges for a reason. Top security officials believe that it’s a dangerous combination of low security and the presence of valuable information that makes schools a ripe target for foreign eyes.

Schools are “where the science and technology originates — and that's why it's the most prime place to steal [from],” the most senior counterintelligence official in the Office of the Director of National Intelligence told NBC. “A lot of our ideas, technology, research, innovation is incubated on those university campuses.”

Lee Bollinger, president of Columbia University penned a recent op-ed stating that while he recognizes the sensitivity of the information stored in schools, he opposes increased efforts to identify student-spies.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

CORONAVIRUS: A Digital Uprising in "Long-Game" China.

Li Wenliang is the doctor to be the first person to sound the alarm over the coronavirus. The Chinese government responded by detaining and silencing him for spreading “false rumors.” The authorities’ lockdown on information about the virus increased significantly the magnitude of the epidemic that now plagues China and threatens other countries.

On Friday, Dr. Li died from the virus. According to the Washington Post, within hours of his death millions of Chinese tried to bypass censors to post the hashtag #WeWantFreedomOfSpeech. The censors eventually prevailed, but deleted sentiments are still real sentiments.

The link between the government’s suppression of speech — the lack of freedom — and the public health disaster in China could not be more clear. Li has become the symbol of that link.

Rulers in China rely on The Mandate of Heaven for legitimacy.

If a Government ruled unfairly they could lose this approval, which would result in their downfall. Overthrow, pestilence, natural disasters, and famine were taken as a sign that the rulers had lost the Mandate of Heaven.

Plague Pushes China To Breaking Point.

He was persecuted and silenced when he warned early on of the danger, how many will this bad judgment by the government kill?​

Are they incinerating the bodies?

 

[Zorro!]

China knows how to play the long game . that's the real problem.

"Long Game China's} Central Bank Orders Lenders To "Tolerate" Higher Bad Debt Levels To Avoid Financial Cataclysm

"We will support qualified firms so that they can resume work and production as soon as possible, helping maintain stable operations of the economy and minimizing the epidemic's impact."

As part of a stress test conducted by China's central bank in the first half of 2019, 30 medium- and large-sized banks were tested; In the base-case scenario, assuming GDP growth dropped to 5.3% - nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth dropped to 4.15%, more than half of China's banks, or 17 out of the 30 major banks failed the test. Needless to say, the implications for a Chinese financial system - whose size is roughly $41 trillion - having over $20 trillion in "problematic" bank assets, would be dire.

With GDP set to print negative as China's economy remains completely paralyzed

Every single Chinese bank is set to fail a "hypothetical" stress test, and the immediate result is an exponential surge in bad debt. The result is that the bad loan ratio at the nation's 30 biggest banks would soar at least five-fold, and potentially far, far more, flooding the country with trillions in non-performing loans, and unleashing a tsunami of bank defaults.

China's banks are already suffering record loan defaults as the economy last year expanded at the slowest pace in three decades while bankruptcies soared. The slump tore through the nation’s $41 trillion banking system, forcing not only the first bank seizure in two decades as Baoshang Bank was nationalized , but also bailouts at Bank of Jinzhou, China's Heng Feng Bank, as well as two very troubling bank runs at China's Henan Yichuan Rural Commercial Bank at the start of the month, and then more recently at Yingkou Coastal Bank.

All that may be a walk in the park compared to what is coming next.

"The banking industry is taking a big hit," You Chun, a Shanghai-based analyst at National Institution for Finance & Development told Bloomberg. "The outbreak has already damaged China’s most vibrant small businesses and if it prolongs, many firms will go under and be unable to repay their loans."

According to a recent Bloomberg report, S&P estimates that a worst-case scenario (one which however saw GDP remain well in positive territory) would cause bad debt to balloon by 5.6 trillion yuan ($800 billion), for an NPL ratio of about 6.3%, adding to the already daunting 2.4 trillion yuan of non-performing loans China’s banks are sitting on (a number which, like the details of the viral epidemic, is largely massaged lower and the real number is far higher according to even conservative skeptics).

S&P also expects that banks with operations concentrated in Hubei province and its capital city of Wuhan, the epicenter and the region worst hit by the virus, will likely see the greatest increase in problem loans. The region had 4.6 trillion yuan of outstanding loans held by 160 local and foreign banks at the end of 2018, with more than half in Wuhan. The five big state banks had 2.6 trillion yuan of exposure in the region, followed by 78 local rural lenders, according to official data.

 

[Zorro!]

China knows how to play the long game . that's the real problem.

How Does "Long Game" China Keep It's Economy Running With 750 Million in Quarantine?

“The ‘demon virus’ threat has rattled the confidence of many Chinese in the regime’s ability to protect people’s lives and jobs.”​