China… USA… Breaking bones!
By: Syrializm Analytics
In March last year, US President Donald Trump announced a 25 percent tariff on US steel imports and 10 percent on US aluminum imports.
Trump’s decision has targeted number of countries such as Canada, Mexico, Turkey, the European Union and China.
A period of time has elapsed since the United States began to exclude all those countries in order to allow China to be the only one to impose such a tariff.
As if the US decision was directed primarily at China.
In April of the same year, China responded to the US decision to impose a 15 to 25 percent tariff on 128 US products imported by China worth $ 3 billion.
China’s response seemed to be to leave room for negotiations between the two sides, without further escalation.
But the Trump threat in September of 2018 raised tariffs on other Chinese products worth $ 267 billion.
In the course of these exchanges between the two countries during the past year, matters have reached a serious escalation.
The United States has raised customs duties by up to 25% on Chinese products worth 250 billion dollars.
In return, China has done the same on US products worth $ 110 billion.
If the US president seeks to rectify the trade balance of the United States with China, the current situation will be reversed.
US imports from China is around $ 545 billion, while exports is not exceed $ 122 billion.
Everyone remembers that one of the most important electoral promises made by Donald Trump to his voters is to strengthen the economic issue in the country by bringing in more resources and increasing the number of jobs and jobs in the US producing companies in various fields.
As the US trade deficit with China continues to rise, this situation will weaken the US economy by stopping US factories from being unable to compete with Chinese products in a cost-effective way.
US exports and the ability of US companies will fall, combined with negative indicators that will result from the trade balance deficit and the US economy in general, which will result in a decline in the number of American jobs.
Of course, the actions taken by the US president in his view will encourage domestic producers in the United States to promote and raise production and thus increase the number of jobs for Americans.
Undoubtedly, these measures will affect China and its companies, especially IT companies, especially Huawei, which is now facing the United States, whose war against the Chinese company is continuing.
The problem now is that the US president’s decisions will hurt a large number of US companies and possibly cause more damage than Chinese companies will suffer.
Trump apparently doesn’t know that 60% of the products imported from China are in fact products manufactured in China in US companies, which have factories producing those products in China due to known reasons, which are low labor costs and cost of operation in general, and therefore those decisions and raising tariffs on products imported from China are in fact directed against US and European companies working to produce those products in their factories located in China.
These companies will therefore raise the value of these products, which will result in lower sales and damage to market share, thus contributing to raising inflation in the US economy.
But even if one of them suggested moving US companies to other countries with similar features in China, such as low operating costs and labor costs, such as some Asian countries such as Vietnam and India, the move would force companies to relocate to other countries, Will grow for several years, so that companies can re-produce.
In contrast, China remains the best among those countries in providing a practical environment that enhances the work and productivity of these companies and therefore, it is impossible for US companies to transfer their work outside of China.
For example, Apple’s US sales of iPhone devices in the Chinese market are more than 155 million devices, roughly the number of devices sold in the United States.
Therefore, Apple in this case will be affected by this trade war between China and the United States, as is the case with the Chinese company Huawei.
Apple has competing international companies, and a Chinese subsidiary, the closest one is Samsung South Korea, which will certainly take advantage of this situation in its favor.
Boeing, which employs more than 150,000 workers in the United States and contracts with China to supply more than 6800 aircraft over the next 20 years, worth $ 1 trillion.
Here, we say, what if China makes a decision to abandon these contracts and turn them into European Airbus, which is currently building factories to assemble its large aircraft in China.
There are also American companies that deal with various products, such as Wal-Mart, which imports large numbers of cheap Chinese products worth billions of dollars, and thus sells them at low prices to the American consumer who was elected Mr. Trump.
In the end, these measures will certainly raise the level of inflation in the US economy, which is a very negative sign.
Here, too, we will recall that US wages will result in the imposition of sanctions on the United States by the World Trade Organization, which will result in the treatment of American products in the same way, by imposing high tariffs not only within China but also in all member countries of the World Trade Organization.
Here we must ask the question … What means or weapons can China use?
China possesses three weapons China can use to respond to the United States:
- Continue the process of raising tariffs on all imported American products on the principle of reciprocity.
- China follows the same US approach by fighting US companies operating in China as Apple, also on the principle of reciprocity as Huawei is.
- Finally… the US Debt!
China has about $ 1.210 trillion in US debt, which has exceeded $ 22 trillion, and China continues to buy US debt on a regular basis.
Here we say:
What if China decided to stop buying US debt?
What if China decided to start selling US debt to other countries that might be hostile to the United States?
It is the disaster that will destroy the world economy and destroy the Chinese economy itself, but in return the US economy will be hit by the death of the full annihilation.
All of us know that what protects the US economy is only the confidence of the global market, and when this confidence goes, the American economy will go with it forever.
On the other hand, and back to the issue of war on Huawei, which began US companies pay back to them by withdrawing the Android operating system from the Huawei’s upcoming phones, plus many other IT and US social media and web applications companies started to go with the US war against China, so they started to stop providing services and work with Huawei.
Currently Huawei negotiating with Russia for Aurora operating system for its phones to find an alternative to Google’s Android system, which has committed itself to US sanctions.
Through the system, Huawei hopes to allow its mobile phone users to access the Internet safely, as Aurora, the operating system developed by Sailfish, based on Linux systems, which is known to be one of the lowest operating systems dedicated to computers vulnerable to penetration.
The system is expected to allow Huawei to deal with various types of electronic devices and laptops, especially since it was developed from the beginning to work with some types of computers, especially those produced by Asus, and received many updates to comply with the various types of computers in the market, and Sailfish owns current versions are capable of handling many smart phone models.
The most important advantage of this operating system for Huawei is the liberalization of the Chinese company from the pressure exerted by the United States and companies such as Google and Facebook and others, after most of the companies decided to boycott and deny the software.
The Ministry of Digital Development, Communications and Mass Media, Konstantin Noskov, discussed with Huawei’s CEO, Ren Zhengfei, the possibility of Chinese smart phones moving to the Russian operating system.
Huawei and Russia’s MTC recently signed a partnership agreement to develop and launch the 5G Internet network in Russia at a ceremony attended by Russian President Vladimir Putin, Chinese President Xi Jinping and a number of Russian and Chinese personalities.
The news came with assurances that the Chinese company is also developing its own operating system, also called Hongmeng
Thus, the real dilemma, in this economic war between the two countries, a futile war aimed at both countries and drain their capabilities together, and there is no beneficiary, even detrimental to the global economy as a whole.
It is natural and even logical that the current Taiwan conflict will not be resolved at the negotiating table between the two countries.
But the strength here lies in the length of the same side.
Without a doubt, it is China that has the longest term in the long term.
