Opinion: China is fine, Trump should focus on America

[TaiShang]

23-Jan-2019

Opinion: China is fine, Trump should focus on America

He Weiwen

Editor's Note: He Weiwen is a senior research fellow at the Center for China and Globalization. The article reflects the author's views, and not necessarily those of CGTN.


U.S. President Donald Trump tweeted immediately after China's official GDP data was released by saying: "China posts slowest economic numbers since 1990 due to trade tensions and new policies. Makes so much sense for China to finally do a Real Deal, and stop playing around!"

Trump's tweet is a real surprise as he is struggling with the federal government shutdown which is bringing down the American GDP growth by 0.1 percent every two weeks.

According to the official data released by the State Statistics Bureau on Monday, China had real GDP growth of 6.6 percent in 2018, 0.2 percent lower than in 2017 (6.8 percent), still twice as fast as the U.S. (estimated at 2.9 percent). The main reason lies in the slowdown in fixed investment which grew by only 5.9 percent as compared to 7.0 percent growth in 2017.

The key reason was further deleveraging, as part of the supply-side reform. M2 supply grew more slowly than GDP for the first time in many years and a strict ceiling was imposed on local government debt. Further cutting down over capacity (30 million tons of steel capacity shut down over the year) also dragged down the investment. Both are necessary for transforming China's growth from quantity to quality.

In 2019, China will accelerate consumption and infrastructure investment, with the latter alone expected to lift GDP growth rate by 0.6 percent. For 2019, China's GDP growth rate will stay above 6.0 percent, again more than twice as fast as the U.S.

The growing deterioration in world trade, caused to a large extent by Trump Administration's unilateralism and protectionism, increased China's economic difficulties. Nonetheless, the actual performance of China's trade in 2018 was beyond expectation. The total trade volume in goods hit 4.62 trillion U.S. dollars, 12.6 percent over 2017, with exports up 9.9 percent and imports up 15.8 percent.

Ironically, the trade tensions launched by the U.S. did not hurt China much but hurt the U.S. badly. According to Chinese customs statistics, in 2018, Chinese exports to the U.S. grew by 11.3 percent, faster than its exports to the world. Its imports from the U.S., however, grew by a meager 0.7 percent.

VCG Photo


The sharp downturn happened since the White House imposed massive tariffs on 250 billion U.S. dollars of Chinese goods. In the first half of 2018, U.S. exports to China grew by a hefty 11.8 percent. It slowed abruptly to 2.1 percent in Q3 and turned to a cliff fall in Q4, with 1.8 percent off in October, 25 percent off in November and 35.8 percent off in December.

U.S. imports from China still had 13.3 percent growth year-on-year in October and grew by 9.8 percent in November, only fell by 3.6 percent in December. Apparently, it has been difficult to find alternate suppliers for a large part of Chinese goods.

As a result, the whole year of 2018 saw the China-U.S. bilateral trade volume hit a new historic high at 633.52 billion U.S dollars. The U.S. deficit swelled to 323.33 billion U.S dollars, 47.51 billion U.S dollars up on 2017. Trump's attempt to bring down trade deficit with China failed once again.

An export-oriented textile mill in Chengtou Town, Lianyungang City, Jiangsu Province, January 12, 2019. /VCG Photo


The more serious worry is the weakening of the U.S. economy. Although the U.S. managed a 3.4percent annual GDP growth rate in Q3, 2018, its fundamentals – personal consumer expenditure and private fixed investment combined, contributed 2.65 percentage points to Q3 GDP growth, a full percentage lower than in Q2. Most of the estimates put the Q4 growth below 3 percent.

The latest IMF estimate put U.S. GDP growth at 2.5 percent for 2019 (compared to 2.9 percent in 2018), and 1.8 percent in 2020. The U.S. stock market, once the pride of Trump, saw the worst December performance ever since the Great Depression, with Dow Jones Industrial Average (DJIA) fell by 6.39 and S&P 500 fell by 6.91 percent for the year.

The Democrats control of the House means that there will not be virtually further fiscal stimulus, nor tax cut 2.0 in 2019, or very few tools available for Trump to head off the weakening of the economy. If the government shutdown continues, the U.S. GDP growth rate might quickly fall to below 2 percent, the lowest since the global financial crisis.

VCG Photo‍

Trade tensions have also hurt the U.S. multinational companies badly. Apple mobile, once the pride of the U.S. technology, saw a clear drop in its China sales which caused a sharp fall in its stock price, which in turn, pulled down the DJIA by 3 percent in a single trading day.

FedEx also ascribed its China sales fall to the trade war. Kevin Hassett, Chairman of the White House Council of Economic Advisors, told CNN on January 3 that many leading American companies have considerable sales in China, and will see a fall in their revenue in the coming year unless the U.S. hit an agreement with China.

Facts prove once again that Trump shot a boomerang on China, but hurt the U.S. business, consumers and economy altogether. True, the trade tensions “make so much sense for” the U.S. “to finally do a Real Deal, and stop playing around!”

https://news.cgtn.com/news/3d3d674d31416a4d32457a6333566d54/index.html

 

[Feng Leng]

The Chinese state is fine. The upper class and upper middle class are mostly a bunch of idiots who are going to lose their shirts in the upcoming economic turmoil.

 

[zectech]

The Chinese state is fine. The upper class and upper middle class are mostly a bunch of idiots who are going to lose their shirts in the upcoming economic turmoil.

Hopefully trump's recession in Amerika is as big as the Great Depression.

If China plays it correctly and rightly, they can continue to grow and leave Amerika in the dust.

 

[Daniel808]

Yes mister trump, better take care your "Shutdown" government first.
Already reach 35th Days, The Longest in History

Good Job, lol

a shutdown government is not reliable partner.

 

[TaiShang]

Yes mister trump, better take care your "Shutdown" government first.
Already reach 35th Days, The Longest in History

Good Job, lol

a shutdown government is not reliable partner.

Trump's short message is soaked in declining confidence and an urge to change discourse in his backyard.

This is how most of my Mainland colleagues read into his tweeter message.

I feel China is making the US feel every bit of pain available in trade negotiations.

 

[Han Patriot]

Trump's short message is soaked in declining confidence and an urge to change discourse in his backyard.

This is how most of my Mainland colleagues read into his tweeter message.

I feel China is making the US feel every bit of pain available in trade negotiations.

It's all rhetoric, Trump needs a show, we are the antagonist, he is the hero, the voters are his audiences. He is desperate for a deal...hahahahah

 

[Kyle Sun]

Trump is a capricious and brutally candid child.
We won't have a rational talk before he gets his butts kicked. He just doesn't know what is give and take.

 

[TaiShang]

It's all rhetoric, Trump needs a show, we are the antagonist, he is the hero, the voters are his audiences. He is desperate for a deal...hahahahah

Trump might as well be in collusion with China as he is with Russia.

In the end, he does not need the smart of the US people. He just needs their vote. Usually, in US democracy, vote is acquired through deception and marketing, not real content.

Trade war is just a political game.

 

[zectech]

The only benefit of trade is that it supports the Chinese from experiencing a recession. So long as demand for Chinese goods continue. But if the goal is economic warfare, benefit is gone. trump destroyed the only reason why China need trade.

If China makes everything herself, then even a war won't hurt China, imagine the upheaval a war would have on the Chinese economy with 10T+ yuan in trade. Blockades. And when trade stops, war begins, so say some. China is not stopping trade, US is, China wants trade, US doesn't. So made in China 2025 is the solution to economic warfare by trump and soon to be a possible military conflict 10 years+ down the road.

And dumping trade imbalances to China (2 year plan) would only weaken China for a future US war, China would have the recession and problems and lack of funds for military. A weak China doing what Washington wants. That is not the solution or any solution.

A 6 year plan with Made (Everything) in China 2025 is the solution.

It would decouple China from the US, and continue Chinese strong growth. And buy gold along the way to support Chinese currency.

When fanatical dictators like trump are gone, then China can resume trade, but so long as it is a 2 year plan and no made in China 2025, no deal. And China needs Made in China 2025 soon, and trump's fanaticism proves it.

 

[TaiShang]

24-Jan-2019

CEOs sour on Trump policies, warn they hurt investment
CGTN

From center stage in Davos last year, U.S. President Donald Trump told the world's corporate bosses that America is a great place to invest. It hasn't quite turned out that way.

Foreign direct investment (FDI) to the United States fell in 2018, and companies gathered at the World Economic Forum in the Swiss Alps this year say they are worried Trump's trade war with China will dampen the U.S. economy itself, global economy and business investments even further.

One key complaint here this week: Companies increasingly reliant on consumers in China have had to lower their earning's outlooks as the world's second-largest economy cools.

U.S. is losing foreign investment

While the U.S. administration has cut taxes and regulations to attract new investment, FDI to the U.S. in 2018 decreased.

Foreign investment in the United States, which includes cross-border mergers and acquisitions and intra-company loans, fell by about 18 percent in 2018 from the prior year, according to the United Nations Conference on Trade and Development (UNCTAD).

That is close to the 19-percent year-on-year drop in foreign investment globally. But it is notable given the deregulation and tax cuts that might have otherwise fed into inward investment. Last January, at Davos, many executives said they planned to spend money in the U.S. in 2018.

While the UN trade agency attributed the global and U.S. declines to the tariffs that the United States and China have imposed on each other's imports since mid-2018, foreign investment in China actually rose by 3 percent last year over the previous year. Foreign investment to India rose by 7 percent.

Alan Jope, chief executive of consumer goods company Unilever (ULVR.L), said the United States remains a good market for its products, which include Dove deodorant, Magnum ice cream and Lipton tea.

But it is China, where Unilever last year joined forces with e-commerce giant JD.com to move its products around the country, that has become the more resilient market.

Jope said China was “one of our most reliable sources of growth. China provides the new stability in consumer consumption.”

Trump looms large, chief executives lose faith

The International Monetary Fund trimmed its global growth forecasts on Monday and a survey by auditing and accounting giant PwC of nearly 1,400 chief executives showed increasing pessimism among business chiefs.

The PwC research showed 27 percent of executives from outside the United States see the United States as the number one place with the most potential for growth, down from 46 percent in 2018.

It's not only economics that is clouding the skies. Foreign companies, mainly Chinese, also face tighter scrutiny when they bring deals to the United States, after the Trump administration last year strengthened the powers of the Committee on Foreign Investment (CFIUS), said Stuart Eizenstat, former U.S. ambassador to the European Union and now head of law firm Covington & Burlington LLP's international practice.

The CFIUS is an intra-agency panel that reviews acquisitions on national security grounds.

Chinese state-owned Sinochem Group, which has been in merger talks with ChemChina to create the world's biggest industrial chemicals firm, said that it did not think it could clinch a U.S. acquisition in the current environment.

“You know what's happening today, so I think you will see there will be less investment going abroad,” Sinochem chairman Ning Gaoning said.

“The Chinese are getting quite confused. They thought they were welcome to invest in other countries. Now they realize they are not being welcomed all the time.”

Takeshi Niinami, chief executive of Japanese brewer Suntory Holdings Ltd, told Reuters in an interview that the world has “very big emotional leaders,” including one in Washington.

“Davos is a body to work on one voice, to give (a message that says): ‘Come on, we have to be rational',” he said. “Business should be the one to let them cool down.”

https://news.cgtn.com/news/3d3d414d78516a4d32457a6333566d54/index.html

 

[zectech]

24-Jan-2019

CEOs sour on Trump policies, warn they hurt investment
CGTN

From center stage in Davos last year, U.S. President Donald Trump told the world's corporate bosses that America is a great place to invest. It hasn't quite turned out that way.

Foreign direct investment (FDI) to the United States fell in 2018, and companies gathered at the World Economic Forum in the Swiss Alps this year say they are worried Trump's trade war with China will dampen the U.S. economy itself, global economy and business investments even further.

One key complaint here this week: Companies increasingly reliant on consumers in China have had to lower their earning's outlooks as the world's second-largest economy cools.

U.S. is losing foreign investment

While the U.S. administration has cut taxes and regulations to attract new investment, FDI to the U.S. in 2018 decreased.

Foreign investment in the United States, which includes cross-border mergers and acquisitions and intra-company loans, fell by about 18 percent in 2018 from the prior year, according to the United Nations Conference on Trade and Development (UNCTAD).

That is close to the 19-percent year-on-year drop in foreign investment globally. But it is notable given the deregulation and tax cuts that might have otherwise fed into inward investment. Last January, at Davos, many executives said they planned to spend money in the U.S. in 2018.

While the UN trade agency attributed the global and U.S. declines to the tariffs that the United States and China have imposed on each other's imports since mid-2018, foreign investment in China actually rose by 3 percent last year over the previous year. Foreign investment to India rose by 7 percent.

Alan Jope, chief executive of consumer goods company Unilever (ULVR.L), said the United States remains a good market for its products, which include Dove deodorant, Magnum ice cream and Lipton tea.

But it is China, where Unilever last year joined forces with e-commerce giant JD.com to move its products around the country, that has become the more resilient market.

Jope said China was “one of our most reliable sources of growth. China provides the new stability in consumer consumption.”

Trump looms large, chief executives lose faith

The International Monetary Fund trimmed its global growth forecasts on Monday and a survey by auditing and accounting giant PwC of nearly 1,400 chief executives showed increasing pessimism among business chiefs.

The PwC research showed 27 percent of executives from outside the United States see the United States as the number one place with the most potential for growth, down from 46 percent in 2018.

It's not only economics that is clouding the skies. Foreign companies, mainly Chinese, also face tighter scrutiny when they bring deals to the United States, after the Trump administration last year strengthened the powers of the Committee on Foreign Investment (CFIUS), said Stuart Eizenstat, former U.S. ambassador to the European Union and now head of law firm Covington & Burlington LLP's international practice.

The CFIUS is an intra-agency panel that reviews acquisitions on national security grounds.

Chinese state-owned Sinochem Group, which has been in merger talks with ChemChina to create the world's biggest industrial chemicals firm, said that it did not think it could clinch a U.S. acquisition in the current environment.

“You know what's happening today, so I think you will see there will be less investment going abroad,” Sinochem chairman Ning Gaoning said.

“The Chinese are getting quite confused. They thought they were welcome to invest in other countries. Now they realize they are not being welcomed all the time.”

Takeshi Niinami, chief executive of Japanese brewer Suntory Holdings Ltd, told Reuters in an interview that the world has “very big emotional leaders,” including one in Washington.

“Davos is a body to work on one voice, to give (a message that says): ‘Come on, we have to be rational',” he said. “Business should be the one to let them cool down.”

https://news.cgtn.com/news/3d3d414d78516a4d32457a6333566d54/index.html

Nationalize the production of any Amerikan company leaving China due to the economic warfare against China, and leave them with zero. But before this pull all investments out of Amerika due to the trade war and dump treasuries at the same time, important to do both at the same time - to complicate things.

 

[TaiShang]

Nationalize the production of any Amerikan company leaving China due to the economic warfare against China, and leave them with zero. But before this pull all investments out of Amerika due to the trade war.

I think China just needs to wait out the US and simply watch them to dig their own economic grave. This way, China will be saving valuable energy to concentrate on its own domestic priorities of development.

This is an opportune time for China to force the US hand as they are mired in deep regime-related problems.

***

24-Jan-2019

U.S. sees zero Q1 growth due to gov't shutdown: White House adviser
CGTN

A top White House economic adviser told U.S. media on Wednesday that the country could see zero growth in gross domestic production (GDP) in the first quarter due to the ongoing partial government shutdown.

Asked by a CNN reporter whether it is possible that if the shutdown continues beyond March, it could lead to no growth of the U.S. economy in the first quarter, Kevin Hassett, chairman of White House Council of Economic Advisers, said, "we could, yes."

"It is true that if we get a typically weak first quarter and then have an extended shutdown, we could end up with a number that is very very low," Hassett said.

However, he said that he expected the growth to bounce back when the government reopens, and that the number for the second quarter would be "humongous" if the government shutdown ends by then.

The growth rate "would be like 4 or 5 percent," he added.

Adopting an optimistic tone about the current status of the overall U.S. economy, Hassett said the United States is "at a time in the business cycle that is especially good for people who have been separated from society and disadvantaged by the weak economy of the Great Recession," and right now the income at the lower end of society is growing faster than for people as a whole.

A federal employee holds up a sign made with styrofoam plate during a protest at the atrium of Senate Hart Office Building on Capitol Hill in Washington, DC., January 23, 2019. /VCG Photo

With respect to the furloughed federal employees who have missed their paychecks amid the shutdown, the economic adviser said he himself and his staff are "dealing with the very very difficult problem" of not getting a paycheck. And one of his staffers is driving for Uber since that's the only way he can pay his bills and feed his family.

The partial government shutdown, triggered by a partisan impasse over President Donald Trump's demand for funding of a border wall, has been affecting some 800,000 federal workers and has now stretched to the 33rd day, eclipsing all the previous closures.

"I think if people are not getting paid and they face the kind of uncertainty that we are putting them under - and we did it 22 times in a couple of decades - we've got a political system that's not fundamentally serving us," Hassett said.

 

[Pakistani Aircraft]

I don't see China running desperately to the US, however, Mr Twitter is almost begging China for a deal.

Why has the US shot itself in the foot? In the last 50-years when has China changed its policies due to American pressure?

 

[TaiShang]

I don't see China running desperately to the US, however, Mr Twitter is almost begging China for a deal.

Why has the US shot itself in the foot? In the last 50-years when has China changed its policies due to American pressure?

Very good point, indeed. I guess they never study history and learn from it.

If China is strong-willed enough in the 1950s to fight the US head to head under extremely dire conditions, how would the US regime in their sense mind expect today's China to give in their "pressure" in any form?

Has the US regime gone nuts?

If this is not desperation, I do not know what it is.

 

[Menthol]

USA know, after years of difficulty for changing economy model from export orientation to domestic consumption, as well as transforming the low tech industry to high tech.

China finally gain momentum to healthy grow.

That's is the time for USA to attack.