Tariffs, trade war

China disputing US chip restrictions

“If this is the response to the export controls, it suggests that China has limited options,”
“Given that WTO has exceptions for national security concerns, which can be defined broadly, it’s unlikely to result in any policy changes.”

China re-escalates Taiwan ADIZ incursions

Tik Tok Ban coming soon…

Another India-China border clash…

Meanwhile China has wrapped up a visit with Saudi Arabia to bolster energy imports and “one-China-policy”. At the same time China has lifted restrictions immediately following protests across the country and a 40% drop in exports – a massive hit for China’s economy.

China’s quick lifting of restrictions confirms that Zero-Covid has always been about the Trade War and nothing to do with “protecting the people”. Just a month ago China was “in an all out war with Covid” and did not want to “pay the same price America did” – now China is happy to open up, and let the virus run rampant on a Non-MRNA vaccinated population.

the government wants growth via domestic consumption, and this will be the top priority in 2023.

China transitioning to Domestic Consumption for economic growth…

State Dept press statement - US Support for Philippines in South China Sea

The reported escalating swarms of PRC vessels in the vicinity of Iroquois Reef and Sabina Shoal in the Spratly Islands interfere with the livelihoods of Philippine fishing communities, and also reflect continuing disregard for other South China Sea claimants and states lawfully operating in the region. Furthermore, we share the Philippines’ concerns regarding the unsafe encounter that the PRC Coast Guard initiated with Philippines naval forces in the South China Sea, as documented before the Senate of the Philippines on December 14.

20 Years of Chinese Market Distortions

The Biden administration will continue to press Beijing on its “state-centred and non-market trade practices”, US Trade Representative Katherine Tai told a forum on Monday.

The USTR’s office last Friday announced it was extending China Section 301 tariff exclusions for another nine months on 352 Chinese import product categories

Notebook supply chain in China has seen COVID infections in their plants affect up to 50% of workers, leading to shutdowns and delays

Is this Xi Jinping’s intent? It is possible the CCP continues to hold its people & exports hostage as leverage against the west.

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It’s becoming clear that China is pivoting from weaponizing extremist Zero-Covid Policy as a tool to fight the Trade War, to the new strategy of weaponizing “China’s Decline” under the guise of mass infections. At least for the immediate future.

As noted in DigiTimes, one example is Notebook suppliers losing up to 50% of their workforce in a recent wave of infections. This was totally preventable.

China has intentionally not prepared its population during the lockdown period - with majority of the population never receiving the high tech MRNA Vaccinations, opting for its home grown non-MRNA tech vaccine. The CCP handling of this is criminal.

Looking into 2023, we can expect China re-employing prior year strategies of targeted “Power Outages” and ongoing infections to artificially suppress export supplies.

Predictably, the US and West will continue on the path of suppressing consumer Demand, specifically on Chinese made goods. We can expect sustained inflation and continued Fed Rate Hikes to multiply the effect on global economies.

U.S. sourcing elsewhere?

Gone are the weekslong backlogs of cargo ships at large ports. Ocean shipping rates have plunged below prepandemic levels…In the U.S., retailers have ample inventory. Railroads averted a labor strike and package delivery trucks have plenty of spare capacity…Parcel carrier FedEx Corp. and other regional carriers are having an easier time delivering packages this peak season, with additional capacity and steady parcel volume.
Procter & Gamble Co. expects to spend $100 million less than it had anticipated on transportation and warehousing in the fiscal year ending in June 2023…After more than a year of paying ever-higher prices for goods, Walmart Inc. and other large retailers are canceling manufacturer orders, resisting price increases and in some cases asking suppliers to provide discounts…Dollar General Corp., after years of citing high transportation costs as a drag on the business, said in December that falling transit prices could begin lifting the company in 2023.

-WSJ

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Many Taiwanese companies are moving on from China.

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Bong Bong to meet Xi.

Philippines hopes for smooth trade relations with China.

“When you look at the trade numbers quoted… we always use the words ‘strong trade relationship’ but that ‘strong trade relationship’ is always biased for China, that’s why we have a trade deficit so these are the things I think we should take note of and learn from that mistake,” Manhit said in an interview over at the ABS-CBN News Channel on Tuesday.

US will keep the pressure on China. No other options.

Fed to continue rate hikes to suppress demand of Chinese imports. February could see a 25 to 50 point hike. This could set the trend for the rest of the year with consecutive 25 point hikes over the course of 2023.

I’ll bet the Feb hike will be 50 points, then downshift to 25 pt hikes for the rest of the year. Can check in a few weeks if I was wrong :laughing:

On Military front, US and Allies bolster defenses…

Also trending – “War Gaming a Chinese invasion of Taiwan”

“China would fail. Heavy toll on all sides.”

Japan bolstering military (and supply chain) with the US to deter China, and to be prepared in case Japan is cut off from access to Asia.

The US and Allies will need to find ways to supply energy and resources to Japan, Korea, and Taiwan amid an invasion or disruption in the shipping lanes. There is no great option, but still workable.

China rounding up protesters

China bars entry to US tourists

Chinese outbound travel only 15% of pre-pandemic level travel, despite “surge”

South China Sea is critical to Trade, but also a potential supply of energy for China:

  • China is trying to secure its energy independence via the SCS
  • Even though the Philippine Court voided energy deal, after Xi and Marcos meeting, China and Philippines to continue joint exploration operations
  • Overlapping territorial claims spark tensions between China and other countries in energy exploration projects
  • Ukraine invasion has sharpened China’s focus on energy security (afraid of US sanctions)

Insight on how military operations tie into trade, in this case grain exports. China is learning from Russian military guided export control and snap-inspection strategies.

Moscow is “playing a game of throttling” grain exports from Kyiv through snap inspections despite an agreement between Russia, Ukraine and Turkey to guarantee the safe passage of these vessels through the Black Sea.

“There is great concern” globally about a food crisis brought on by the war.

Studeman said this gives Russia “an opportunity to sell their own wheat” while keeping Ukrainian harvests in port.

Also, China undergoing largest military build-up in history. Chinese anti-ship missiles could wreak havoc on the shipping lanes.

Ha! CNBC a little too on-point!

Though of course it skirts the real reason which is the ongoing economic warfare between China and the West.

Rates will rise above 5% because China is seeking to boost demand and the U.S. must suppress it as much as possible, and for as long as possible in order to squeeze the Chinese Communist Party. World leaders are hoping and praying behind closed doors that internal party strife brought on by Chinese economic conditions gets Xi Jinping removed from office.

US applying Force-Multipliers to its China policies.

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’ Sony Has Moved 90% of its Camera Production from China to Thailand’

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“Only” a quarter point hike, expect more. Allied nations continue to strangle demand from the Axis of Evil. Xi shows no signs of changing course.

Chinese Spy Balloon(s) which floated in across Alaska, Canada, and eventually continental US last week created a few issues:

  1. Secretary of State Blinken was set to meet with China on repairing dialogue and “ensuring a steady pipeline for trade” but…
  1. Blinken cancelled the meeting with a new date which is TBD. This sets trade talks back and further escalates tensions.
  1. The US spent a week justifying why not to shoot down the balloon - eventually the balloon was shot down by F22 fighter aircraft using Sidewinder missiles once safely off the coast of the Carolina’s.
  1. A second and possibly third spy balloon have been tracked across South America. Insight being that China is monitoring vast swaths of land – what are they preparing for?
  1. The Chinese Spy Balloon is tangible evidence for the world to see China as an adversary

  2. The US Navy is in the process of collecting the Chinese Spy Balloon remnants off the coast in what is about 45-50 feet of water. Operation is said to be a fairly easy and straight forward recovery.

  1. China vows retaliation – we shall see if this has implications for satellites over China or low-orbit objects like StarLink. Ultimately, how will this tie into latest round of blacklists, technology bans, and Chinese trade talks.

Let’s see how these age :laughing:

All signs point to No.

Ignoring the US for a moment, we can see successive rate hikes globally – Bank of England, Bank of Japan, Reserve Bank of Australia, etc the list goes on. We will see continued tightening this year on consumer demand and this will put a tremendous strain on China’s export-driven-economy. This is why Xi Jinping has been championing “Dual-Circulation” economy - he will soon find out it will be incredibly challenging.

Example: “Reserve Bank of Australia hikes rate to 3.35% in record ninth consecutive hike” “further rate hikes to come”

Give them a balloon to shoot down!