Despite President Trump’s punitive tariffs on Chinese imports to the U.S., American businesses seem bullish on China, with profits up, and few interested in moving manufacturing out of the People’s Republic. But Bill Whittle sees trouble down the road for China’s long-running economic surge, as its middle class swells, wages rise, and the Communist government’s oppression of Hong Kong makes it a stench in the nostrils of the Western world. How long can China keep one foot in free markets and one in centralized control?
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Despite Trump Tariffs U.S. Firms Still Bullish on China, But for How Long?
Despite President Trump’s punitive tariffs on Chinese imports to the U.S., American businesses seem bullish on China, with profits up, and few interested in moving manufacturing out of the People’s Republic. But Bill Whittle sees trouble down the road for China’s long-running economic surge.
6 replies on “Despite Trump Tariffs U.S. Firms Still Bullish on China, But for How Long?”
The companies concerned are in some cases lying to shareholders. They remain in China because if the sell up their Chinese assets they make huge losses, get paid in Yuan which no one wants and because of Chinese law can’t take the money out of China even if they could convert it to US dollars or Bitcoin. China has made it illegal to leave.
Some are silicon valley leftists, google, that expected Hillary to win and did treasonous things for Obama. Like installing the North Korean dictator’s (NOT KIM) censored internet. They did the same for Iran, some parties on the left in Russia, Saudi Arabia and were caught doing it for China.
They are trying to buy a safe place for them to live protected from US extradition orders. Trading with the enemy laws are on the books and do apply in the case of North Korea and Iran.
Bill just quoted Australian manufacturing law without realising it. At the time he was in Australia it was law that if you wanted to sell cars in Australia you had to make part of them here. And it was US law in the 1790’s to the 1840’s. And no it did not work.
I remember, I think in the late 90s or maybe a little later, people thought manufacturing would leave China as the costs went up (possibly Mexico where lower shipping costs could help) and the Indian English speaking call centers would get overtaken by Filipino, and then African locations as the work provided good wages, increased the standard of living and eventually priced the labor force out of work.
One way someone might figure out a “peak China” is looking at the prices of old Chinese and faux Chinese things that were made for export 100-150 years ago (and originals from 200-300 years ago) that the Chinese were buying up as they had money to do so. I remember that being talked about a lot on the Antiques Roadshow shows, that prices were rising because a lot of the stuff was “hot right now” as Chinese were buying. If those prices have dropped significantly but the supply is still there (indicating no supply/demand issues) it would indicate either the money isn’t there, cutting into the demand, or possibly enough people have bought all of the art, vases and statuary they want, satisfying the demand.
Two things have happened. Labour prices in China between city and country equalised in about 2000 resulting in the end of cheap under-employed rural youth. They are no longer going to work in the labour intensive factories. Factory managers are now having to automate like Europe and America. If your a good farmer in China you now earn more that a middle class factory worker.
Secondly China has cracked down hugely on capital flight. All those Chinese purchases of land, houses, Asian trinkets and old Chinese artefacts was really capital flight. Now that’s blocked. China is staving for dollars, no one accepts the Yuan for settlement. The Yuan is 0.14 US$ or 0.21 Australian dollars. They must buy most resources, oil and food with hard currency’s.
Trump is doing to Xi what Ronald Reagan did to Mikhail Gorbachev. And Xi knows it! The Hong Kong banking system is the only remaining way in and out for had currency and with the young bankers on strike and the docks shut down that door is jammed shut. Note: most of the Hong Kong capital flight is party money fleeing the country. Those Hong Kong protesters will know where the parties ill gotten gains went and may be posting it some where.
20% the students at Australian Universities are the children of middle party and military families who think the party is about to die and want their kid out of the country. This is the end game not for China but for the PRC and CCP.
A mother-may-I economy cannot innovate at the rate that genuinely free markets can. Innovation MEANS do what has not been done before and do it better than anyone else can: first, second, and third.
Every mother-may-I requirement gets in the way of never-done-before because the bureaucrats are as imaginative as a block of termite infested wood. Such an economy depends upon taking/stealing new technology, using it, and making products cheaper because of that. That means it will always be behind the curve and running hard just to stay further and further behind. In the long run, that breeds failure.
Keep in mind that during the 1980’s, Japan was considered an unstoppable economic juggernaut. It crashed in the 90’s and still hasn’t regained its former reputation. Why? Because they thought their success was due to a smarter central planning and pushed anything else out of the picture.
The reality was that Japan’s success was adapting effective quality control (invented in the US) and produced high quality products that worked. While too many US manufactures were stuck in the past and made lots of expensive cheap junk that failed before the warranty ended.
The worship of centralized top down heavy handed centralized control ALWAYS fails to deliver the goods. Yet the world still tries to pretend that only it can really work. All rule based systems (top down) eventually fail because actually following the rules ultimately converts the situation into one where the rules no longer apply.
A contradiction cannot long stand. One side or the other will fall.