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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Wed Feb 03, 2010 6:01 am Post subject: China threatens US sanctions over arms sale |
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http://www.smh.com.au/world/china-threatens-us-sanctions-over-arms-sale-20100202-nb28.html
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GUANGZHOU: China will erect trade sanctions against Boeing and other large US companies unless the US Congress blocks the Obama administration's planned $US6.4 billion ($7.2 billion) weapons sales program to Taiwan, a senior defence strategist said.
Rear Admiral Yang Yi told the Herald yesterday China was prepared to hurt itself in order to teach the administration a lesson.
''We're waiting for the reaction from US Congress and if they don't have a U-turn then the follow-up of sanctions will come soon,'' said Admiral Yang, who previously co-wrote Chinese defence white papers while director of international strategic studies at the National Defence University.
''We are clear this action will harm ourselves but we don't care,'' he said. ''We are going to give a lesson to the US government that harming others will harm yourself. This will not only affect Boeing but all companies involved in this.''
The theme of teaching the US a lesson has emerged in China since it strengthened its economic and strategic standing after the global financial crisis. Last month China's climate change ambassador, Yu Qingtai, told the Herald that ''the key lesson'' developed countries should learn from his team's aggressive diplomacy at Copenhagen was that China could not be pushed around.
Yesterday China opened up yet another challenge to President Barack Obama warning that he would ''threaten trust and co-operation'' between the two countries if he met with the Dalai Lama.
On Friday the administration presented Congress with its first weapons sale package to Taiwan.
Chinese trade sanctions against companies involved in the sales could trigger counter-measures from the US under World Trade Organisation rules. Or it could cause US companies, perhaps including Boeing, to lobby the US Congress to dilute the Taiwan arms package - which would be a milestone in China's rising economic and diplomatic power.
Boeing, which plans to sell Harpoon Block anti-ship missiles to Taiwan, accounts for 53 per cent of the planes in China's current commercial fleet. The company estimates the Chinese market will be worth $US400 billion over the next two decades.
Analysts had previously speculated that China would sanction smaller companies that would not be so disruptive to China's economy.
Another exposed company is Sikorsky Aircraft, which plans to sell 60 helicopters to Taiwan, whose parent company has 16,000 employees in China selling elevators and air-conditioning systems. Admiral Yang told the Herald he was pleased the Chinese Government ''has adopted my idea'' of trade sanctions, which he first floated in the Global Times on January 5. He wrote that China should now ''dare'' to set the rules with the US.
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Good. Let them "dare" to set the rules.
I welcome a trade war. China is mercantilist far beyond anything the US does. Her currency is undervalued. She doesn't play by the rules. Detroit needs some manufacturing jobs back. Start the trade war. |
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Panda
Joined: 25 Oct 2008
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| Posted: Wed Feb 03, 2010 7:29 am Post subject: Re: China threatens US sanctions over arms sale |
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| mises wrote: |
Good. Let them "dare" to set the rules.
I welcome a trade war. China is mercantilist far beyond anything the US does. Her currency is undervalued. She doesn't play by the rules. Detroit needs some manufacturing jobs back. Start the trade war. |
I don't think American people know how to make singing stuffed puppy or magic light clock...   |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Feb 03, 2010 8:19 am Post subject: |
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| Larry Summers, the chief economic adviser in the White House, was rather more subtle in his flirtation with protectionism. He told the Davos audience that one in five American men aged between their mid-20s and their mid-50s is now out of work. In the 1960s, he pointed out, 95 per cent of this age cohort had been employed. Mr Summers was careful to say that the US remains committed to open trade and can gain from globalisation. But he also pointed out that Paul Samuelson, a famous economist (and uncle of Mr Summers), had argued that the case for free trade might not apply when countries were trading with nations that were pursuing mercantilist policies. The reference to China did not need to be spelled out. |
http://www.ft.com/cms/s/0/2ef85ee4-0f9b-11df-b10f-00144feabdc0.html
Exactly. Samuelson. Free trade is an academic idea that assumes the absence of mercantalist policy. It assumes, essentially, no states (and their lobbyists).
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| Lawrence Summers, Mr Obama�s principal economic adviser, also stressed that �what we are seeing in the US and perhaps in other places, is a statistical recovery and a human recession�. In his view, the combination of high unemployment with �mercantilist policies� in parts of the world makes it hard to defend liberal trade politically or perhaps even intellectually. Unless the recovery proves far stronger than expected, high unemployment will persist in western countries, with all the political dangers it brings. |
http://www.ft.com/cms/s/0/c7682f76-1034-11df-841f-00144feab49a.html
Glad to see it. The mass unemployment and hollowing out of manufacturing is partially the result of a naive set of trade policies.
China needs to be "taught a lesson". China is a big boy now. Currency floats or a tariff equivalent to the distortion is applied. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Feb 03, 2010 8:51 am Post subject: |
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Amazing.
I ran into another American who was getting his X visa (student) at one of my workplaces (a language school). He was talking about how scared he was about the Taiwan situation. I told him it would be fine, China wasn't going to do anything, the world would keep moving.
And then the paradigm shifted.
This happens. I remember when the unofficial Black Cat, White Cat policy ended in 2008, and foreign companies were not given notice that the laws would be enforced. People were arrested, and they were criminals, but still, a Shanghainese jail cell is where human rights goes to die.
Things are deteriorating very rapidly in Chinese-American relations these days. This is not a game for those of us inside the Great Firewall. I was doing very well this past week, but I just woke up from a panic attack (or something, dunno what) a few hours ago. As an American, I feel invincible here, but I worry for my Chinese friends and loved ones. I know from experience that when push comes to shove, my influence here is nothing. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Feb 03, 2010 8:55 am Post subject: |
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I don't understand. What are you worried about?
A buddy of mine is in Shanghai doing the esl thing. He's been there 18 months. He keeps telling me about how his students and the wider society are growing more and more hostile to him due to his citizenship (US). You feel that Kuros?
At bottom, the US (and her cold brother up north) need to take care of their own. Our globalization policy has involved hollowing out our economic base (replacing it with building/selling houses) and allowing China to grow at our expense. This must end. I assume it won't.
Last edited by mises on Wed Feb 03, 2010 9:01 am; edited 1 time in total |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Feb 03, 2010 9:01 am Post subject: |
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| mises wrote: |
| I don't understand. What are you worried about? |
Not myself. Then again, I do have a lot invested in this place.
The past few years have seen the biggest Leftist-nationalist shift since Mao's Cultural Revolution. I'm worried about China's recurring self-destructive, revolutionary tendencies. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Feb 03, 2010 9:03 am Post subject: |
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| Kuros wrote: |
| mises wrote: |
| I don't understand. What are you worried about? |
Not myself. Then again, I do have a lot invested in this place.
The past few years have seen the biggest Leftist-nationalist shift since Mao's Cultural Revolution. I'm worried about China's recurring self-destructive, revolutionary tendencies. |
Ah, yes. I read some forecaster recently who made the argument that China is seeing a shift back to Maoism. That wouldn't be positive. Though it would be easily contained with sensible economic policy. |
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young_clinton
Joined: 09 Sep 2009
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| Posted: Wed Feb 03, 2010 4:40 pm Post subject: |
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| China is going to embargo the US? Good..........we can start manufacturing the embargoed items ourselves, or get them from some other more deserving nation. Hey! I'm thinking, how about taiwan, south korea? |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Feb 03, 2010 4:45 pm Post subject: |
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| young_clinton wrote: |
| China is going to embargo the US? Good..........we can start manufacturing the embargoed items ourselves, or get them from some other more deserving nation. Hey! I'm thinking, how about taiwan, south korea? |
I think manufacturing them ourselves would be best. The United States really needs to start producing tangible things again in substantial quantity. China blackballing the United States would be awesome. |
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catman
Joined: 18 Jul 2004
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| Posted: Wed Feb 03, 2010 7:54 pm Post subject: |
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| Is it wise to start a trade war with a country you are heavily indebted too? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Feb 03, 2010 8:01 pm Post subject: |
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| catman wrote: |
| Is it wise to start a trade war with a country you are heavily indebted too? |
When you own the bank 100$, that's your problem. When you owe the bank 3 trillion $, that's the banks problem. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Feb 03, 2010 9:05 pm Post subject: |
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WASHINGTON, Feb 3 (Reuters) - President Barack Obama should formally label China a currency manipulator to get Beijing's attention that it needs to raise the value of its yuan, a top U.S. senator said on Wednesday.
"China is a big beneficiary of international trade, yet it fails to allow its currency to float freely," Senator Charles Grassley, an Iowa Republican, said in a statement, noting he had criticized former President George W. Bush for repeatedly deciding not to label Beijing a currency manipulator.
"President Obama has the opportunity to change course. His administration can label China a currency manipulator in its upcoming biannual report ... Maybe that will finally get China's attention and lead to a more level playing field for U.S. exporters," Grassley said.
U.S. manufacturers complain that China's undervalued currency effectively subsidizes Chinese exports and inflates the price of foreign goods in China's market. |
http://www.reuters.com/article/idUSN0347926320100203?type=marketsNews
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Currency Dispute Likely to Further Fray U.S.-China Ties
By MARK LANDLER
WASHINGTON � To the growing list of grievances between the United States and China, add one more: the Obama administration is reviving American pressure on China to stop artificially depressing its currency, a policy that fuels its persistent trade gap with the United States.
The administration has told Chinese officials that currency policy will be high on its agenda this year for economic talks with China, a senior official said on Wednesday. The White House is also weighing whether to designate China as a country that manipulates its currency, when the Treasury Department issues its semiannual report on foreign currencies in April.
President Obama signaled the tougher line on Wednesday, telling Democratic senators that the United States needed �to make sure our goods are not artificially inflated in price and their goods are not artificially deflated in price; that puts us at a huge competitive disadvantage.�
Reopening the battle with Beijing over its currency may pay political dividends for Mr. Obama at a time of double-digit unemployment and growing fears that China is stealing American jobs. But experts say the president will have even less leverage over Beijing than President George W. Bush did. Mr. Bush prodded China for years to adjust its exchange rate with little success. |
http://www.nytimes.com/2010/02/04/world/asia/04diplo.html?pagewanted=print |
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bacasper
Joined: 26 Mar 2007
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| Posted: Wed Feb 03, 2010 10:43 pm Post subject: |
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| mises wrote: |
| catman wrote: |
| Is it wise to start a trade war with a country you are heavily indebted too? |
When you own the bank 100$, that's your problem. When you owe the bank 3 trillion $, that's the banks problem. |
If the yuan were allowed to float, presumably rising in value, wouldn't that hinder China's ability to buy our debt/bonds? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Feb 04, 2010 6:43 am Post subject: |
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| bacasper wrote: |
| mises wrote: |
| catman wrote: |
| Is it wise to start a trade war with a country you are heavily indebted too? |
When you own the bank 100$, that's your problem. When you owe the bank 3 trillion $, that's the banks problem. |
If the yuan were allowed to float, presumably rising in value, wouldn't that hinder China's ability to buy our debt/bonds? |
Yes. A good argument can be made that the foreign reserves are the spread between the yuan's fair value and established value, against the dollar. Not entirely, but generally. (how's that for non-committal econ-talk).
Here's a Bloomberg piece from this morning about the reserves:
http://www.bloomberg.com/apps/news?pid=20601039&sid=a4mPCXeGTl4Y
And another from Chinese Financial Markets (the comments are good too):
http://mpettis.com/2010/02/never-short-a-country-with-2-trillion-in-reserves/
The Chinese reserves might be destabilizing for China. But who knows. China has been avoiding historical norms for a long while. There is a widely held assumption that our system of a global dollar standard demands unbalanced trade (persistent trade deficits by a single or group of nations). |
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Kuros
Joined: 27 Apr 2004
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| Posted: Thu Feb 04, 2010 7:20 am Post subject: |
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| mises wrote: |
I don't understand. What are you worried about?
A buddy of mine is in Shanghai doing the esl thing. He's been there 18 months. He keeps telling me about how his students and the wider society are growing more and more hostile to him due to his citizenship (US). You feel that Kuros? |
No, but I live in Beijing. Shanghainese are not as warm and welcoming, along with a whole lot of other differences. I'm trying to stay positive about the Chinese people. The nongmin (farmers) are of course nongmin, but there are lots of well-educated, decent local Chinese with good morals and values, who will treat an American like a fellow human being. |
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