Tariffs, trade war

“China to halt direct freight train service to Lithuania”

Who’s getting hurt by that? China.

Great article on Harvard Business Review on how companies can tackle the challenges of Decoupling from China.

Also this is a notable observation:

”Vietnam’s status as manufacturing powerhouse is shaken by Covid surge”

https://www.ft.com/content/ca37cd50-056a-4a36-9673-49578e184403

“There had been several waves of Covid and each time they were able to contain it, …But this time Delta has proved harder to bring under control.”

Vietnam’s model of meticulously tracking and tracing, then cordoning off people in infection clusters “wastes precious time”, says Alex Vuving, while providing the Delta variant “with a conducive environment to spread”.

focus is on containing infections and keeping business going. Some companies are employing a “three-on-site” model of having factory staff work, eat and sleep at work. But this is hard on employees and costly for companies. Some multinationals have been putting up managers at downtown hotels.

VinaCapital, the Ho Chi Minh City investment manager, said to clients last week that while big foreign companies could afford to pay for hotels, companies making lower value-added products such as garments, shoes, or furniture were “having a hard time maintaining their production”. It noted that Vietnam’s exports of these products plunged in August and said the drop, combined with lower consumption, would be likely to “drag on Vietnam’s gross domestic product growth” this year.

“The restrictions are seriously constraining the manufacturing capacity in the country,” says Nguyen Phuong Linh, associate director at Control Risks. “Some factories have been afraid to take new orders because they were worried they wouldn’t be able to complete them without enough workers.” However, she adds, the disruption is likely to be a “short-term issue because Vietnam is still an attractive option for foreign investors vis-à-vis other countries in Asia”.

It’s clear that China’s strategy is working though — its hard for countries outside of China to run efficient low cost operations now due to covid. Business is going back to China as a result.

The bigger question is whether Vietnam can contain the crisis quickly enough to avoid alienating foreign investors. For now, there are few overt signs of divestment; the dong has been one of south-east Asia’s few currencies to appreciate against the dollar this year. As one economist puts it: “The US-China stuff is not going away.”

China deploys new ASW aircraft at Fiery Cross Reef as tensions escalate in the South China Sea.

Meanwhile Corporate America is on its hands and knees whining and begging the US to drop the tariffs on China…but that’s only one piece of a complex puzzle which includes blacklists, sanctions, retaliation for human rights violations, Hong Kong takeover, and upcoming extradition of Meng Wanzhou for violating sanctions on Iran, as well as the hostage crisis of Canada’s “The two Michaels” being held in China as retaliation for Meng Wenzhou.

We pretty much knew from Day 1 that the Coup was part of China’s grand strategy to secure overland trade routes through Myanmar as SCS tensions rise. The Myanmar Junta are China’s friends.

And now it’s confirmed, as new Chinese Trade Route through Myanmar is announced.

The Tariff, Trade War evolved into a Hot War long ago, whether anyone wants to admit it or not.

Moral of the story, diversify before its too late.

The treasurer believes the ‘relatively modest’ impact of Beijing’s actions may be ‘surprising to many’

https://www.bloomberg.com/news/articles/2021-09-05/australia-touts-resilient-economy-in-face-of-china-trade-curbs

China, Australia’s top trading partner, banned imports including seafood, wine and coal, after diplomatic tensions between Beijing and Canberra flared up last year. While exports of the goods targeted have fallen by around A$5.4 billion ($4 billion), sales to other overseas markets have grown by A$4.4 billion, Frydenberg said.

“Despite China’s wide-ranging actions, our economy has continued to perform very strongly,” Frydenberg said in extracts from a speech to be delivered to a conference in Canberra on Monday. “Australian firms have pivoted, by finding new buyers for their goods.”

Both countries would be better off if markets were allowed to operate freely, Frydenberg said. “But going forward, businesses also need to be aware that the world has changed. And that this creates greater uncertainty and risk. In this respect, they should always be looking to diversify their markets, and not overly rely on any one country.”

The world has entered a new era of strategic competition, in which China is willing to use its economic might as a source of political pressure, Frydenberg said. As such, it is important to build economic resilience “from cyber risks to supply chains and everything in between.

Interesting follow up to the Blackrock investment:

George Soros calls it “tragic mistake”

It’s a good bet if you’re a foreign investor who can get your gains out again. As it is now, it looks like the land of lost fortunes for anybody outside of China.

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China approaches a pivot point. US threatened to decouple last year, now China basically saying “okay we’re ready, are you?”

A twist! — “Apple accused of copying Chinese company” - Patent infringement claim threatens to stop iPhone production in China.

Days before Apple event — Legitimate claim or Trade War tactic? both?

First call in 7 months. Maybe the Apple threat scared Biden?

The Call comes at a time where US Corporations are begging for tariffs to be dropped, Wall Street is split on whether to invest (Blackrock) or divest (Soros) in China, meanwhile the world suffers from a pandemic and strained supply chains of which China could have prevented 90% of the effects from the start.

China asks for cooperation and “no suppression of China’s growth and expansion” while at the same time having launched a global multi-lingual propaganda campaign blaming the US for the virus.

"to ensure ‘competition does not veer into conflict’"
^^^ Except it already has veered into conflict… over 4.5 million dead.

I don’t see this ending well unless China undergoes a regime change – a complete removal and replacement of the entire Chinese Communist Party with a transparent Democratic government – it’s going to take a global response.

This is pretty incredible news, looks like someone finally woke up in the Biden Admin.:

The Biden administration is reportedly looking to investigate Beijing’s rampant use of industrial subsidies in a move that could place even more tariffs on Chinese goods with the aim of increasing pressure in the trade war.

Also this ominous analysis – Forbes writer thinks continued Trade pressure on China may trigger kinetic War: (of course in my opinion China has already committed multiple acts of War including the virus release which has claimed 4.6 million lives)

If there is to be a war, an open war, with China – and we may stipulate that this scenario is at the far end of the spectrum of possibilities, and yet not an impossibility – if there is to be a war, it will not arise from Western outrage at human rights violations in Xinjiang, or Chinese outrage at Western outrage, or cyber-crime, or technology theft, or currency manipulation, or security crackdowns in Hong Kong, or indignities visited upon the Filipinos or the Vietnamese or the Australians.

It will arise from acute economic pain, inflicted on China by actions of the United States to deprive them of the most essential physical resource of the 21st century: semiconductors .

The semiconductor problem, and the increasing vulnerability of China’s economy – and its military – to supply constraints, is what will lead China to consider, finally, outright military action against Taiwan.

In fact, there is a strong historical parallel: China in 2021 finds itself in a situation very much like the situation of Japan in 1941 .

Like Japan in 1941, China now finds itself in a position of acute strategic vulnerability, intolerable in light of its geopolitical ambitions.

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Biden Admin also noted they are “seriously considering” changing the TECO/ “Taipei Economic and Cultural Office” name to the “Taiwan Representative Office” in the US as economic tensions continue following Biden-Xi Phone call 3 days ago.

China warns of “severe” military measures if the name change happens. On Global Times they even suggested the Chinese Ambassador would be recalled:

Strong message from the IPAC:

China still blocking Lithuanian exports, and piling on more threats.

I fully expect China to invade Taiwan to take over the vital semiconductor mines.

Party knows this will be the end and whole China will become dangerously chaotic. A place where party members will be executed publicly in streets.

Japan was a rising nation with democracy and strong discipline, conquering economically unimportant parts of world.

On another side Taiwan is technological hub and has a own capable military. And it is democracy

This can only work when Taiwanese surrendere in a week!

:face_with_raised_eyebrow: :idunno:

Yea is for debate. A lot of weird accidents lately.

Taiwan’s military is completely untested. When their navy starts training alongside Japan, they’ll be somewhere.

US announced it will share secret advanced Submarine technology with Australia.

China is not happy about this development.

Also France is not happy since they will miss out on hundreds of billions of dollars due to their 12-submarine development project being cancelled in favor of US subs. France was not consulted prior to “sudden” AUUKUS alliance.

Either way, the west is shifting a lot of weight into the Indo-Pacific to secure shipping lanes. More presence means greater chance of accidents and potential conflict. China is getting increasingly aggressive — like they are trying to pick a fight on purpose…

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