Category: Trade (Page 1 of 4)

Trade

China is flexing its muscles

large apartment buildings in city

Is anyone suprised that Donald Trump is bungling the China relationship?

This WSJ article sums it up well:

China is flexing its muscles, showing new confidence fueled by a belief that President Trump’s retreat from overseas commitments and his focus on the Western Hemisphere and trade deals create unique opportunities for Beijing.

As bonds between the U.S. and other democracies come under strain, Beijing’s new assertiveness also stems from pride over China’s prowess in future-defining technologies, from artificial intelligence to high-speed rail and clean energy. Those achievements come in parallel with a rapid military buildup.

The author points out that China’s leadership is growing more confident and assertive, convinced that Donald Trump’s “America First” shift—away from global alliances and toward the Western Hemisphere and trade deals—creates a historic opening for Beijing.

Chinese analysts say a turning point came after a fierce trade confrontation over tariffs and rare earths ended in a Trump–Xi truce in South Korea. Beijing views this “climbdown” as proof it can hit back hard, earn peer status, and force Washington to compromise. Many in China’s foreign-policy circles now argue the U.S.-China relationship has undergone a “structural change,” with America showing more “respect” for Chinese power.

We’re seeing more assertiveness, and the Trump administration destroying relationships around the world. This is a huge opening for China and you know they will press this advantage. Meanwhile Trump continues to create chaos. The damage will be hard to undo.

Donald Trump vs China

With Donald Trump’s call with the president of Taiwan, the China issue is front and center with the new Trump administration as we all expected. There are many different reactions to this call, but the key here is that Trump is going to challenge this relationship, but most of us have no idea where this can go. He will push them on trade, and we have the North Korea issue, and now he is tweaking the Chinese government about Taiwan. Expect chaos . . .

Will Trump start a trade war with China?

With the unlikely election of Donald Trump as President of the United States, the outlook for global trade has suddenly become much more unpredictable. The US has some very legitimate grievances when it comes to China’s trade practices and currency manipulation, but just how far will Donald Trump push these issues. Will he overplay his hand? Will we have a trade war between the US and China? Will China retaliate by dumping US Treasuries?

2017 will be an interesting year . . .

U.S. won’t cite China as currency manipulator

China undervalues its currency in order to gain competitive advantage around the world. Everyone understands that and it needs to change, but the question in the United State is how to effectively change it. The Obama administration is taking the gradual approach:

The Obama administration on Tuesday declined to label China a currency manipulator after seeing recent increases in the value of the yuan compared to the dollar.

The decision angered some manufacturing groups, which have accused Beijing of artificially holding down the value of its currency to gain trade advantages. A cheaper yuan makes Chinese goods less expensive when they are shipped to the United States. It also makes U.S. goods more expensive in China. Both could increase the U.S. trade deficit with China, which is on pace to hit a record high this year.

The Treasury Department said the yuan has appreciated 12 percent against the dollar in the past 18 months, after adjusting for inflation. In addition, the department said in a semi-annual report that China promised at two high-level meetings last month to make the yuan’s exchange rate more flexible.

Still, yuan is “substantially undervalued” and its appreciation “is insufficient and more progress is needed,” the report noted. The department will “press for policy changes that yield greater exchange rate flexibility” and “level the playing field.”

This will likely end up being a campaign issue as Mitt Romney and other GOP candidates are hammering Obama over China. But progress is being made.

Infiniti puts headquarters in Hong Kong

Executive Vice President Andy Palmer announces that Nissan will establish a global headquarters for Infiniti in Hong Kong from April 2012. This is a big move for the automaker and demonstrates the huge importance of the Chinese car market, particularly for luxury brands like Infiniti.

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