What Has Turned Trump from Friend to Enemy of China?


What Trump Initially Wanted Are the Transformation China Has to Undergo. As mentioned in my previous posts “Trump’s Trade War Attacks, Xi’s Golden Opportunities” on January 16, initially, Trump only wants reduction of trade deficit, equal treatment for US enterprises in China, protection of technology and intellectual property and no significant devaluation of Chinese currency.

If such had been the case, the trade war negotiations should have ended with a deal satisfactory to Trump long ago. China has promised to substantially increase its imports from the US, better protect intellectual property and allow the exchange rate of its currency to be determined by market. In particular, China has made great efforts to have quickly replaced its three laws on foreign investment with a new foreign investment law that allows foreign parties majority equity holding in their joint ventures with Chinese partners, etc.

The above concessions China has made are in fact what China has to do for its transformation from export- and investment-geared economic growth to innovation-, creation- and consumption-led economic growth. The difficulties the transformation may cause to enterprises and their employees prevent Chinese leaders from conducting the transformation as fast as they want. They have been forced to do so gradually step by step.

Trump’s trade war forced China to give the US the above-mentioned concessions immediately so that it enables Chinese leaders to overcome the resistance and carry out immediately at one stroke the transformation that is indispensable for China’s further growth.

Therefore, there must have been a happy ending of the trade war as the two sides each get what they want. It would have been a win-win cooperation.

The Diametrical Change in Trump’s Attitude toward China

Before the trade war Trump showed his sincere desire for good relations with China. His daughter and granddaughter’s visit to Chinese embassy in Chinese New Year, Trump’s satisfactory telephone conversation with his Chinese counterpart Xi Jinping, his hospitality to Xi when Xi visited the US and his grandchildren’s performance of Chinese song and poem when he visited China all proved that. As he wanted to be China’s friend there had been a honeymoon between China and the US since his Beijing visit.

However, the honeymoon did not last long.

At the beginning of his trade war against China, Trump refrained from large tariff hikes on most Chinese exports to the US. At that time, US Congress wanted to ban US supply of components to Chinese telecom giant ZTE due to its violation of US sanctions against Iran. As US supplies are indispensable for ZTE’s operation, the ban might have killed ZTE, Trump interfered and allowed ZTE to survive by paying a large amount of fine. He did so in spite of the prevailing hostility against ZTE in US Congress.

Later, however, Trump not only imposed large tariff hikes on lots of Chinese exports to the US. He even places great pressure on Huawei in order to subdue China. His attitude towards Huawei was in sharp contrast to what he has done to ZTE. Huawei is a Chinese telecom giant similar to ZTE in scale and weight, but it has not done anything as serious as ZTE to upset the US. Trump, however, has tried hard to ban Huawei’s 5G not only in the US but throughout the world.

Moreover, he has even put Huawei on a blacklist to ban US supplies of components and technology to Huawei in order to kill Huawei. In the last year of his administration, he put over 60 major Chinese enterprises in his blacklist to ban their sales to and purchases from the US and even delist those that have been listed in New York stock exchange.

What Has Caused the Diametrical Change in Trump’s Attitude

While Trump was making efforts to improve relations with China in order to exploit China’s vast market for US economic growth, Americans’ hostility toward China was growing drastically as US media’s propaganda has spread the mentality of Thucydides trap widely among Americans.

There has emerged the widespread hostility against China in the US as described by US China expert Orville Schell, director of the Center on US-China Relations at the Asia Society in New York, that Democrats, Republicans, the White House, the Pentagon, the State Department, senators and representatives’ offices have all joined together to target China.

Trump’s Tragedy

Every US president’s greatest concern in his first term is reelection for his second term. According to US constitution, a president can only serve two 4-year terms. Four years seem quite a long time for common people, but not for a president who shall have some impressive achievements to convince voters to give him a second term.

In fact, a president does not have 4 years as the reelection will be held in November of the fourth, i.e. last year of his 4-year term so that he has to begin his efforts to campaign for reelection well before November of the last year. Therefore, usually to be reelected a president has to have impressive achievements within three years of his first term. He cannot count on an achievement in the fourth year unless the achievement is so sensational as to attract most voters. That was especially true for Trump as he won the first term with an elector instead of popular majority. He must be sure of more votes than his first election to ensure his reelection.

Anxiety for Quick Achievements

Perhaps, Trump wished that his good relations with China would soon obtain concessions promised by China’s Xi on trade, investment, intellectual property and currency and North Korea’s denuclearization. Seeing no immediate results, he resort to maximum pressure as the US always does but always fail to attain its goal by so doing.

However, according to Jesus Christ’s teaching in Christian Bible, one should be kind to one’s enemy. After defeating Germany and Japan in the Second World War, the US did do so to win over its enemies Japan and Germany and turn them into US allies.

Arrogant Way of Extreme Pressure

In spite of the teachings in Christian Bible, Western leaders, however, have long acted on a race-based colonial mindset in treating non-white peiople in Asia, and Africa. It is precisely due to such a mindset that Trump imposes extreme pressure in dealing with other nations, especially China, Iran and North Korea. Extreme severity without any kindness, that is Trump’s approach.

Iran

Iran has accepted the six-nation agreement to restrict its nuclear development but Trump has unilaterally withdrawn from the agreement and imposed severe sanctions as extreme pressure to bring Iran down to its knees. Iran defied the pressure and allied with Russia and China to benefit Russia in the Middle East and facilitated China’s CPEC.

North Korea

One may say that US extreme pressure fails in Iran as Iran is quite a rich country with much oil and gas resources in demand in the world. Then what about North Korea? It is a very poor small and weak country that suffers greatly under US-led UN sanctions. When Trump was working for denuclearization of North Korea, North Korea had developed enough nuclear weapons for its security and wanted to switch its efforts to economic development to feed its people. It accepted US demand for denuclearization but asked for lifting of the sanction in return. Again Trump is obsessed with extreme pressure. He believed that he would be able to get everything he wanted from North Korea without giving anything in return, but ended up in getting nothing.

Trump Loses Votes due to His Trade and Tech Wars with China

As pointed above, Trump’s trade war facilitates China’s transformation from export-and investment-geared economic growth to innovation-, creation- and consumption-led growth. His tariff hikes have not reduce US trade deficit with China as most of China’s exports to the US are goods needed by Americans at low prices and with good quality. Americans simply cannot find alternative sources of such goods. They have to pay the high tariffs for import of such goods. No wonder, it made Trump lose some of voters’ support for his reelection.

As a result, Trump has failed to attract voters by exploiting their hostility at China. He has launched tech war to attack some Chinese enterprises but American voters are not benefited by such attacks. For example, Trump’s attacks at China’s Huawei merely slow and make more expensive US 5G development, which may create some jobs for Americans. His restriction to exports of high technology goods will reduce US exports to China and make US high-tech enterprises suffer. In all, his trade and tech wars have failed to please voters by bringing jobs back to the US.

Since he has failed to get the achievements he has tried hard to obtain, he failed to win enough votes for his reelection. It is sad that he fell among the few losers who failed to serve a second term as president.

Article by Chan Kai Yee


Despite Pains, Trade War Will Make China World Leader in Technology


What Trump Mainly Wants Is the Transformation China Has to Undergo

Initially, Trump only wants reduction of trade deficit, equal treatment for US enterprises in China, protection of technology and intellectual property and no significant devaluation of Chinese currency that may facilitate China’s exports..

China has adopted a new foreign investment law for protection of foreign technology and equal treatment between foreign and domestic enterprises. In addition, it has refrained from devaluing its currency as it wants its currency to become a major international currency.

As mentioned before, the transformation to innovation-, creation- and consumption-led economic growth is indispensable for China. Without that, China’s reformists will not be able to achieve further economic growth for the realization of their China Dream of the grand rejuvenation of China.

The Pains May Be Caused by China’s Economic Transformation

The economic slowdown and unemployment in the course of such transformation are the costs China has to incur for further economic growth. China will recover its fast economic growth when the transformation has been completed. However, due to the pains of mass layoff of uneducated or poorly educated workers that may be caused by the transformation, reformists cannot conduct their further reforms and opening-up as quickly as they want. They have to do so step by step in order to make people adapt to the changes.

Trump’s trade war attacks of tariff hikes, etc. enable China’s reformists to conduct the transformation at one stroke and thus greatly speed up the transformation. Trump believes that the hardship caused by his attacks will be the pressure heavy enough to bring China down to its knees. He is entirely ignorant that the hardship is what China has to suffer in the course of its economic transformation.

Trade War Enables Chinese People to Suffer the Pains Patiently

Without the trade war, it would be hard for Chinese people, especially uneducated and poorly educated ones, to suffer patiently the hardship caused by the transformation but it is now caused by a war, a trade war launched by the US. The hardship is caused by a strong enemy’s attacks at China. It is now very easy for Chinese reformists to rouse people’s patriotism to endure the hardship and fight back with innovation, creation and domestic consumption.

All other countries in the world will be benefited by China’s transformation, i.e. China’s further reform and opening-up without any cost except the Americans who have to pay higher tariffs for import of the Chinese goods of their daily needs. They have no alternative sources for such goods at similar low prices and good quality. If the US had waited patiently for China to conduct its transformation gradually, it would also have been benefited without any effort or costs. Now, it helps China achieve the transformation but has caused Americans to pay higher prices for their daily necessities due to its tariff hikes. Moreover, the US is making a great people of 1.4 billion hostile to it.

Trade War Will Boost China’s Development of Technology

Anyway, having achieved the transformation, China will make even greater efforts and contribute even more resources to its development of advanced technology. Judging by the trend of its fast catching-up and surpassing of some US best technology, after the transformation, China will catch up and surpass the US in technology even faster and may replace the US as world leader in technology.

Article by Chan Kai Yee


Some 3,500 U.S. companies sue over Trump-imposed Chinese tariffs


By David Shepardson

SEPTEMBER 26, 202010:35 AMUPDATED 44 MINUTES AGO

WASHINGTON (Reuters) – About 3,500 U.S. companies, including Tesla Inc TSLA.O, Ford Motor Co F.N, Target Corp TGT.N, Walgreen Co WBA.O and Home Depot HD.N have sued the Trump administration in the last two weeks over the imposition of tariffs on more than $300 billion (£235.35 billion) in Chinese-made goods.

The suits, filed in the U.S. Court of International Trade, named U.S. Trade Representative Robert Lighthizer and the Customs and Border Protection agency and challenge what they call the unlawful escalation of the U.S. trade war with China through the imposition of a third and fourth round of tariffs.

The legal challenges from a wide variety of companies argue the Trump administration failed to impose tariffs within a required 12-month period and did not comply with administrative procedures.

The companies challenge the administration’s “unbounded and unlimited trade war impacting billions of dollars in goods imported from the People’s Republic of China by importers in the United States,” according to a suit filed by auto parts manufacturer Dana Corp DAN.N.

The suits challenge tariffs in two separate groups known as List 3 and List 4A.” List 3 includes 25% tariffs on about $200 billion in imports, while List 4A included 7.5% tariffs on $120 billion in goods.

One suit argues the administration cannot expand tariffs to other Chinese imports “for reasons untethered to the unfair intellectual property policies and practices it originally investigated.”

Companies filing suit include heavy truck manufacturer Volvo Group North America VOLVb.ST, U.S. auto parts retailer Pep Boys, clothing company Ralph Lauren, Sysco Corp SYY.N, guitar manufacturer Gibson Brands, Lenovo’s 0992.HK U.S. unit, Dole Packaged Foods, a unit of Itochu Corp 8001.T and golf equipment manufacturer Callaway Golf Co.

Home Depot’s suit noted it faces tariffs on bamboo flooring, cordless drills and many other Chinese-made products. Walgreen, a unit of the Walgreen Boots Alliance, said it is paying higher tariffs on products like “seasonal novelties; party, first aid, and office supplies; and household essentials.”

Lighthizer’s office did not immediately respond to requests for comment.

On Sept. 15, the World Trade Organization found the United States breached global trading rules by imposing multibillion-dollar tariffs in Trump’s trade war with China.

The Trump administration says tariffs on Chinese goods were justified because China was stealing intellectual property and forcing U.S. companies to transfer technology for access to China’s markets.

Reporting by David Shepardson; Editing by Tom Brown

Source: Reuters “Some 3,500 U.S. companies sue over Trump-imposed Chinese tariffs”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Americans, not Chinese, pay Trump tariffs: NY Fed study


Howard Schneider

November 26, 2019 / 3:17 AM / Updated 12 hours ago

WASHINGTON (Reuters) – When the Trump administration imposed tariffs on Chinese imports last year, officials insisted China would pay the cost – implying Chinese firms would have to cut their prices to absorb import “taxes” of up to 25% when the goods hit U.S. shores.

Instead, the prices Chinese firms charge have barely budged, meaning U.S. companies and consumers are paying the tariff costs, estimated at around $40 billion annually, New York Fed Reserve Bank researchers found in a study released on Monday.

As a result of the U.S.-China trade war, U.S. Customs and Border Protection adds as much as 25% to the import price as Chinese goods enter the country. If Chinese companies were absorbing that cost, they would have to cut their prices as much as 20% – a level that would allow U.S. retailers, manufacturers, or wholesalers to keep their own prices and profits stable.

That is not what is happening.

Import data from June 2018 to September 2019 shows Chinese import prices fell only 2%, the Fed study found, in line with price declines seen in many other nations as global trade slowed.

The continued stability of import prices for goods from China means U.S. firms and consumers have to pay the tariff,” the Fed research team wrote.

The researchers did not estimate how those costs were split between lower profits for U.S. companies or higher consumer prices.

The research did find, however, that China is feeling the impact of higher tariffs.

China’s share of U.S. imports of machinery and electrical equipment has fallen by around 2 percentage points since 2017, and its share of U.S. electronics imports has fallen by 6 percentage points.

That market share “has gone largely to Europe and Japan for machinery and to Malaysia, South Korea, Taiwan, and Vietnam for electronics and electrical equipment,” the study found.

The research did not address how much market share may have been gained by U.S. suppliers, or whether other countries are charging higher prices than Chinese firms.

The fact that dollar prices of Chinese goods have not fallen also means that the roughly 10% drop in the value of China’s currency since the first tariffs were imposed has not been used by its exporters to keep a competitive edge, as some U.S. officials allege.

Instead, the currency drop serves “to pad profits on each unit of sales” for Chinese exporters, the research team concluded.

Reporting by Howard Schneider; Editing by Dan Grebler

Source: Reuters “Americans, not Chinese, pay Trump tariffs: NY Fed study”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China to no longer prioritize controlling trade war scale: Global Times editor in chief


August 2, 2019 / 5:26 AM / Updated 3 hours ago

(Reuters) – A trade deal between the United States and China is now “further away,” the editor in chief of China’s Global Times newspaper said early on Friday, after U.S. President Donald Trump moved to impose a 10% tariff on a remaining $300 billion list of Chinese imports starting Sept. 1.

I think the Chinese will no longer give priority to controlling trade war scale, they will focus on the national strategy under a prolonged trade war,” Hu Xijin wrote in a tweet.

Global Times is a tabloid published by the Ruling Communist Party’s People’s Daily.

Reporting by Kanishka Singh and Shubham Kalia in Bengaluru; editing by Jonathan Oatis

Source: Reuters “China to no longer prioritize controlling trade war scale: Global Times editor in chief”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Trump hits China with more tariffs, says Xi moving too slow on trade


Andrea Shalal, Alexandra Alper

August 1, 2019 / 3:38 PM / Updated 10 minutes ago

By Andrea Shalal and Alexandra Alper

WASHINGTON (Reuters) – U.S. President Donald Trump said he plans to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1 and could raise tariffs further if China’s President Xi Jinping fails to move more quickly to strike a trade deal.

The announcement on Thursday extends Trump’s trade tariffs to nearly all China’s imports into the United States and marks an abrupt end to a temporary truce in a trade war that has disrupted global supply chains and roiled financial markets.

I think President Xi … wants to make a deal, but frankly, he’s not going fast enough,” Trump said.

Trump made the announcement in a series of Twitter posts after his top trade negotiators briefed him on a lack of progress in U.S.-China talks in Shanghai this week.

Trump later said if trade negotiations fail to progress he could raise tariffs further – even beyond the 25 percent levy he has already imposed on $250 billion of imports from China.

The news hit U.S. financial markets hard.

Oil prices plummeted 7%, with Brent crude registering the biggest daily percentage drop since February 2016. The benchmark S&P 500, which had been in solidly positive territory on Thursday afternoon, closed down 0.9%. Benchmark U.S. Treasury yields also fell.

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Retail associations predicted a spike in consumer prices. Target Corp tumbled 4.2%, Macy’s Inc fell 6% and Nordstrom Inc was down 6.2%.

Asked about the impact on financial markets, Trump told reporters: “I’m not concerned about that at all.”

Moody’s said the new tariffs would weigh on the global economy at a time when growth is already slowing in the United States, China and the euro zone.

The tariffs may also force the Federal Reserve to again cut interest rates to protect the U.S. economy from trade-policy risks, experts said.

Raising tariffs would lower the prospects of a deal rather than expedite it, China’s Global Times newspaper said. Beijing would focus more on efforts to survive a prolonged trade war, Hu Xijin, editor-in-chief of the Communist Party-backed newspaper, said on Twitter.

New tariffs will by no means bring closer a deal that the U.S. wants; it will only make it further away,” Hu said.

FRUSTRATED

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin briefed Trump on their first face-to-face meeting with Chinese officials since Trump met Xi at the G20 summit at the end of June and agreed to a ceasefire in the trade war.

When my people came home, they said, ‘We’re talking. We have another meeting in early September.’ I said, ‘That’s fine, but until such time as there’s a deal, we’ll be taxing them,” Trump told reporters.

A source familiar with the matter said Trump grew frustrated and composed the tweets shortly after Lighthizer and Mnuchin told him China made no significant movement on its position.

Previous negotiations collapsed in May, when U.S. officials accused China of backing away from earlier commitments.

American business groups in China expressed disquiet over the latest round of U.S. tariffs. The U.S.-China Business Council said on Friday it was concerned the action “will drive the Chinese from the negotiating table, reducing hope raised by a second round of talks that ended this week in Shanghai.”

We are particularly concerned about increased regulatory scrutiny, delays in licenses and approvals, and discrimination against U.S. companies in government procurement tenders,” said the U.S.-China Business Council’s President Craig Allen in an e-mail.

Ker Gibbs, the president of the American Chamber of Commerce in Shanghai, urged both sides to keep talking.

Gibbs said that as market access in China “remains unnecessarily restricted,” the United States should continue its dialogue with Beijing, and “also work with like-minded countries to persuade China that fair and reciprocal trade and investment benefits all.”

CROPS AND DRUGS

Trump said Beijing had failed to stop sales of the synthetic opioid fentanyl to the United States, as it had promised to do. He also said Beijing had not fulfilled a goodwill pledge to buy more U.S. agricultural products.

Trump has failed to make good on a goodwill gesture he said he would make after the G20 meeting to relax restrictions on sales to Chinese telecommunications giant Huawei.

Trump had been pressing Xi to crack down on a flood of fentanyl and fentanyl-related substances from China, which U.S. officials say is the main source of a drug blamed for most of more than 28,000 synthetic opioid-related overdose deaths in the United States in 2017.

China had pledged that from May 1 it would expand the list of narcotics subject to state control to include the more than 1,400 known fentanyl analogues, which have a slightly different chemical makeup but are addictive and potentially deadly, as well as any new ones developed in the future.

The U.S. Department of Agriculture on Thursday confirmed a small private sale to China of 68,000 tonnes of soybeans in the week ended July 25.

It was the first sale to a private buyer since Beijing offered to exempt five crushers from the 25% import tariffs imposed more than a year ago. Soybean futures opened lower on Thursday as traders shrugged off the purchase because of the small volume involved, and losses accelerated after Trump’s tweets.

RETAIL IMPACT

The new tariffs will jack up prices for consumers at the start of the back-to-school buying season, four large retail trade associations said on Thursday.

President Trump is, in effect, using American families as a hostage in his trade war negotiations,” said Matt Priest, president of the Footwear Distributors and Retailers of America.

Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said his group’s members were shocked that Trump had not allowed the resumed U.S.-China trade talks to proceed further before acting.

The measure will hit U.S. consumers far harder than Chinese manufacturers, who produce 42% of apparel and 69% of footwear purchased in the United States, Lamar said.

Reporting by Andrea Shalal and Alexandra Alper; Additional reporting by Stella Qiu and Beijing Monitoring Desk, and Brenda Goh in Shanghai; Steve Holland, David Lawder, Tim Ahmann, Susan Heavey, Makini Brice, Nandita Bose and Jonathan Landay in Washington, Chris Prentice in New York, and Mark Weinraub and Karl Plume in Chicago; Editing by Sonya Hepinstall, Grant McCool & Shri Navaratnam

Source: Reuters “Trump hits China with more tariffs, says Xi moving too slow on trade”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China’s Strategy to Defeat the US in the Non-military War


Plan for Long-term Victory
In the long run, China’s Belt and Road initiative (BRI) will bring economic growth to developing countries and expand China’s market there. It will enable China to switch lots of its exports from the US to those countries. Moreover, BRI will enable China to move the industries that produce goods for export to the US to the industrial parks built by BRI to avoid US tariff hikes and reduce labor costs. China will thus establish its invincible position in its trade war with the US.

According to Sun Tze, in a war one has to establish one’s invincible position and do not miss the opportunity to defeat one’s enemy.

Regarding to trade war, China is an entirely different country. Its government has centralized power to ban the import of enemy’s goods without tariff hikes. Its reduction in purchase of US agricultural products can do much greater damages than US tariff hikes on Chinese exports.

Trump’s Ingenious Move without Surprise
Seeing that tariff hikes are unable to subdue China, US President Trump tries another way to attack China. He remembers well that China’s telecom giant ZTE would have been killed by US Congress if he had not interfered in its favor. He saw his opportunity to subdue China through attacking Huawei, another Chinese telecom giant.

Americans have already been jealous at Huawei’ leading position in 5G in the world. Trump took the lead in banning Huawei’s 5G in the US and has been telling other countries also to boycott Huawei’s 5G with the lie about Huawei’s espionage on behalf of the Chinese government. Failing to make others ban Huawei’s 5G, Trump invents a much more evil way to kill Huawei by placing Huawei in US trade blacklist to cut US supplies of components and technology that Huawei needs for its survival.

Now tariff hikes are the frontal engagement in Trump’s trade war with China, but banning and placing Huawei in US trade blacklist are indeed an ingenious move that may do real harm to China..

US government’s large amount of tariff revenue from the hikes proves that the tariff hikes have failed to reduce Chinese exports to the US. It proves that the harm caused by tariff hikes to China is limited. Killing Huawei and threatening further killing of other major Chinese tech companies might have really made China suffer.

China has been prepared for Trump’s Ingenious Move
No surprise!

However, the Huawei move though Ingenious lacks surprise. At the very beginning of Trump’s trade war last year, Xi Jinping told Chinese firms to rely on themselves. He made Chinese firms realize the danger of dependence on US supplies of technology and components. Since then Chinese enterprises have been working hard to free from their dependence on US supplies.

It has especially been the case for Huawei. Trump’s banning and telling others to ban Huawei and US efforts to extradite Huawei CFO Meng Wanzhou have caused Huawei to develop substitutes for US supplies since long ago. When Trump placed Huawei on the blacklist, Huawei had already developed substitutes for US supply of components and been developing its own operation systems so that Trump is unable to win with that ingenious move.

China’s Ingenious Surprise Move
Banning supply of rare earth materials for the US may be China’s ingenious move but it also lacks surprise. There has now been too much media report on that now to warn the US about that. China bought rare earth technology from the US so that I do not think it is difficult for the US to develop the technology to produce substitutes.

In his recent visit to Russia, Chinese President Xi Jinping and his Russian counterpart President Putin concluded an agreement to develop bilateral trade and cross-border payments using the ruble and the yuan in order to bypass the US dollar. That is an ingenious surprise move that hits the US where it is most vulnerable.

US economy will soon be surpassed by China. Its military is being caught up by China and Russia. The financial dominance of US dollar is the only strong point that the US still maintains. If it has lost that dominance, there will be no US hegemony at all.

The agreement between China and Russia may set an example for other countries so that trade balance settlement everywhere may gradually be conducted through other currencies not only Russian and Chinese currencies. As a result, US dollar will not longer be the major currencies for trade and financial reserve.

In fact, most countries in the world want to put an end to US dollar’s dominance now. EU has developed Euro for trade settlement in EU. Malaysian PM Mahathir has suggested the use of gold as substitute for US dollar.

The US is hard up now. It does not have enough revenue to make ends meet so that it has to borrow lots of funds from other countries. However, it has no financial problem as it can issue as much US dollars as it needs due to the financial dominance of US dollars.

If US dollar is no longer the dominant trade and reserve currency in the world, the US will not be able to borrow as much as it will for its excessive military spending to maintain its military hegemony.

Article by Chan Kai Yee


Banning Huawei, Ingenious Trade War Move, but Lacks Surprise


This blogger has mentioned Sun Tze’s teaching “In any war, win with ingenious surprise move while conducting frontal engagement. (凡戰者,以正合,以奇勝。)”

US President Trump’s tariff hikes are frontal engagement in his trade war with China, but the large amount of tariff revenue from the hikes proves the tariff hikes are paid by US importers instead of Chinese exporters. The hikes cannot hurt China so that Trump takes the ingenious move to kill Huawei and threaten further killing of other major Chinese tech companies.

Ingenious though, the move lacks surprise. At the very beginning of Trump’s trade war late last year, the US threatened to kill ZTE but refrained. It only punished ZTE with heavy fines.

Xi stressed self-reliance at that time. Chinese firms are thus aware of the danger in relying on US supplies of technology and components. Since then they have work hard to free from their dependence on US supplies.

Huawei especially has long been aware of US attempt to ban it so that according to SCMP’s report “Huawei set to find out if consumers will still buy its phones without Google services under US trade ban” on May 21, Huawei has already developed substitutes for US supply of components and operation system so that Trump is unable to win with the ingenious move.

Now, some people believe banning supply of rare-earth metals for the US may be China’s ingenious move but Xi Jinping’s recent visit to major producer of the metals make such a move lack surprise. However, such visit may scare the enemy. I know that China can have quite a few ingenious surprise moves. Wiser than me, Chinese generals are able to design more such moves than me. Due to the surprise, China can win the war with those moves as US trade war commanders simply do not know what ingenious moves Chinese general may make.

I wonder whether they have learnt Sun Tzu’s teaching as most translators have translated the teaching wrong due to their failure to understand it.

If a translator had read Chinese history of war, they would not have committed such absurd mistake in translating the strategy.

Moreover, even if the translation is faithful and correct, can readers read with understanding without knowledge of Chinese history of war?

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at https://www.scmp.com/tech/big-tech/article/3010937/honors-new-smartphone-launch-london-become-immediate-test-reported.


Huawei Prepares ‘Alternative Chips’ to Cope With U.S. Ban


By Zhao Runhua and Qin Min / May 17, 2019 12:23 PM

Wartime generals plan for the worst. And the head of Huawei’s chip unit has drawn up her battle plan, according to a recently leaked document.

The chip unit’s CEO — He Tingbo — said Huawei foresaw years ago that the U.S. government might “suppress” the company and cut channels for it to acquire chip-related technology from the U.S.

And indeed, this fear has become a reality.

The U.S. Department of Commerce said Wednesday it was putting Huawei on a blacklist that could ban it from doing business with its American suppliers. The company responded that it will pursue “remedies immediately and find a resolution” if its business is banned in the United States.

The move may especially disrupt Huawei’s chip production, which depends heavily on American components. Therefore, the chip unit, called HiSilicon, has developed “alternative chips” for just such a scenario — though it did not expect the situation to actually happen, the letter reveals.

As the U.S. made the “insane” decision to put Huawei on the blacklist “with no evidence,” and “history has made the choice” to put all reserved alternative chips into formal use “in one night,” the letter said.

Meanwhile, Huawei’s smartphone business is plowing forward. It unveiled its 5G smartphone Mate 20 X in London on Thursday, state-run Xinhua News Agency reported. The Mate 20 X uses the Balong 5000 chip, which was released in January before Huawei’s shift toward using “alternative chips.”

Source: caixinglobal.com “Huawei Prepares ‘Alternative Chips’ to Cope With U.S. Ban”

Comment: This is Huawei’s ingenious surprise move in the trade war. It will thus put an end to US chip producer’s exports to it. If China retaliates US ban with tariff hikes, Chinese consumers and industries will have to pay the increase in tariffs while US producers will continue to make profits in Chinese market. Production of import substitutes to deprive US producers’ market share in China is much better. It benefits China itself while hurting the US.

Huawei’s move is so sudden that the US simply has no time to respond.

The US shall be aware that due to the trade war China’s Made in China 2025 will first of all focus on production of high-tech goods to replace imports from the US.


Trump’s Tariff Hikes Make US Consumers instead of China Suffer


If China is unable to export goods to the US due to Trump’s tariff hikes, China will suffer. Some export-oriented manufactures will suffer losses and may lay off quite a few their employees. As a result US government’s tariff income will be greatly reduced. In such case, Trump’s tariff hikes work.

However, CNBC says in its report “Trump says he has not decided whether to put tariffs on remaining $325 billion in Chinese goods” on May 13, “‘We’re taking in tens of billions of dollars’ in tariffs, Trump said at a White House meeting with visiting Hungarian Prime Minister Viktor Orban. Trump did not mention that the tariff dollars are being paid by U.S. consumers, not by China.”

Trump tells the truth that as most Chinese exports to the US are indispensable for US consumers and as there are no alternative sources at comparable prices, US consumers have to pay the hiked tariffs to import the Chinese goods.

Trump may be happy at the increase in his government’s tariff income, but his words prove that his tariff hikes do not work. He has thus made clear that he has failed to attain his goal of causing difficulties to China with his tariff hikes. Instead he has caused difficulties to US consumers. Is his trade war aimed at raising US tariff income?

I would not believe that a great country the US has a moron as its president but Trump’s words do give me the impression that he is a moron.

Comment by Chan Kai Yee on CNBC’s report, full text of which can be viewed at https://www.cnbc.com/2019/05/13/trump-says-he-will-meet-with-xi-and-putin-at-g20-summit.html.