Drudge Retort: The Other Side of the News
Monday, July 15, 2019

China's economic growth has slumped to its lowest level in nearly three decades as the world's second largest economy feels the effects of a prolonged trade war with the United States.

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This is the kind of pressure that Lighthizer was predicting several months ago when talks fell apart, Xi and the Politboro are starting to feel internal pressure as their middle class is starting to feel the pinch.

#1 | Posted by Rightocenter at 2019-07-15 03:56 PM | Reply

Record numbers shorting Wal*Mart.

#2 | Posted by REDIAL at 2019-07-15 10:52 PM | Reply

At the bargain price of a trillion dollar US deficit!

Wow. What a stable genius.

#3 | Posted by BruceBanner at 2019-07-15 11:09 PM | Reply

#3

You do realize that those two things aren't directly connected...right?

#4 | Posted by Rightocenter at 2019-07-15 11:59 PM | Reply

*deep bow*

"China ready to talk now"

#5 | Posted by SheepleSchism at 2019-07-16 12:10 AM | Reply

I say keep the tariffs on communist China until more US companies move from there. They've stolen from us for decades. Time for them to pay the piper.

#6 | Posted by willowby at 2019-07-16 12:19 AM | Reply | Newsworthy 1

China's GDP rate has been decreasing since its recent peak (14.23%) in 2006.
China's GDP rate has also been decreasing at a nearly constant rate (0.24% / year) since 2012 when it was at 7.86%.

Meanwhile, the US GDP has remained nearly constant at 2.27%, with fluctuations of +/- ~0.6% since 2010.

While China's current GDP rate might be the lowest in nearly three decades, and slightly lower at 6.2% than a projected 6.4% since 2018, it doesn't seem to be particularly a direct result of the tariffs in the last two years.

data.worldbank.org

#7 | Posted by TrueBlue at 2019-07-16 01:13 AM | Reply

The orange sloth will never stop conning, until he is locked up. China and everyone else is dumping dollars, buying gold and moving forward with investments with its new silk road. Trump is accelerating the trend. Europe never deindustrialized, like the USA, but their austerity programs which limit national debt to 3% of GDP are crushing labor. China will never let private crooks control their money supply. The USA will become isolated and its only card to play will be its 800 foreign military bases, which it will no longer be able to sustain.

#8 | Posted by bayviking at 2019-07-16 01:15 AM | Reply | Newsworthy 2

Bottom line:
China's GDP rate is still twice that of the US.

#9 | Posted by TrueBlue at 2019-07-16 01:15 AM | Reply

As a Chinese friend of mine on another forum said:

No country can maintain double digit growth forever, it'll stablize and even out, that's very natural, China's past 30 years growth was a miracle, not a normal. 6.2-6.3% is still very good, still more than twice of US's.

i.postimg.cc

DOTARDISTAN trade war has nothing to do with this.

#10 | Posted by J_Tremain at 2019-07-16 01:15 AM | Reply

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As a King in England once told the attacking Welsh besieging his castle: Ye shall die before I do!

DOTARDISTAN's economy is the one that needs help. LOL

#11 | Posted by J_Tremain at 2019-07-16 01:17 AM | Reply

"You do realize that those two things aren't directly connected...right?"

The dumbest thing you have ever said on this site. Where do you think Chinese "growth" comes from? Our trade deficit stupid! We shrink while they grow at twice the rate of our growth. It's only been going on for 40 years, one would think you would have figured it out by now.
Instead of a tax cut for corporations we should be punishing them with high taxes right now, they have literally sold out America and we give them a tax cut? How stupid and short sighted.
Republicans are in it only for the quick buck, they don't believe in investing in America. They want quick rewards and don't care how they get them.

#12 | Posted by danni at 2019-07-16 07:14 AM | Reply | Funny: 3

6.2%. Fat Nixon would give his left nut for the US to be in such bad shape.

#13 | Posted by Nixon at 2019-07-16 07:58 AM | Reply

I say keep the tariffs on communist China until more US companies move from there. They've stolen from us for decades. Time for them to pay the piper.

#6 | Posted by willowby

And achieve what? Keeping prices elevated until production can be moved to Vietnam or the Philippines or some other low cost Asian country?

#14 | Posted by jpw at 2019-07-16 08:27 AM | Reply | Newsworthy 1

You can wrongly use a funny" flag but you can't present a real argument. You're the one who is funny....but not in a good way.

#15 | Posted by danni at 2019-07-16 08:29 AM | Reply | Funny: 1 | Newsworthy 1

"And achieve what? Keeping prices elevated until production can be moved to Vietnam or the Philippines or some other low cost Asian country?"

Germany keeps its manufacturing, we could too. Just put in place VAT and it won't matter where it is made, we would still get our cut. Such an obvious fix, done around the world but for corporate profits we pretend not to see it.

#16 | Posted by danni at 2019-07-16 08:31 AM | Reply | Newsworthy 1

You can wrongly use a funny" flag but you can't present a real argument.

OF COURSE I can give you a very convincing argument.

But you will be too dumb/emotional to get it and will argue in loops.

Logical arguments are wasted on you. You only deal with emotional ones and I don't do emotions.

#17 | Posted by J_Tremain at 2019-07-16 08:38 AM | Reply | Funny: 1

Germany keeps its manufacturing, we could too. Just put in place VAT and it won't matter where it is made, we would still get our cut.

You realize that this line is equivalent to "The sky is blue so I like turtles".

Such an obvious fix, done around the world but for corporate profits we pretend not to see it.

Write your Congressman. I'm sure they'd love to hear from you.

As for a VAT, it's something I'm just coming to understand so I have never advocated for it.

#18 | Posted by jpw at 2019-07-16 09:04 AM | Reply | Newsworthy 1

How much of China's manufacturing industry exists for the benefit of consumers NOT in the USA?

How much, for example, do European countries buy from them?

#19 | Posted by eberly at 2019-07-16 09:27 AM | Reply | Newsworthy 1

How much of China's manufacturing industry exists for the benefit of consumers NOT in the USA?

How much, for example, do European countries buy from them?

Exactly.

But hyperventilating grannies living in trailers won't get that.

#20 | Posted by J_Tremain at 2019-07-16 09:53 AM | Reply

China sells to the world, not just to the US.

Everyone runs a deficit against China, not just the US.

#21 | Posted by J_Tremain at 2019-07-16 09:55 AM | Reply

#7

China is still a developing country, those types of growth rates are typical for emerging markets. The US, on the other hand, is fully developed, so 2-4% is an expected range for a healthy economy.

#12

Our 2018 total trade deficit was $621 Billion, Bruce was referring to our overall operating deficit, two completely different things.

#13

Agreed, but see my response to #7 for a dose of reality.

#22 | Posted by Rightocenter at 2019-07-16 11:56 AM | Reply | Funny: 2

China knows how to deal with austerity. Austerity makes republiclown's whine... which is why we are were we are on this road.

#23 | Posted by RightisTrite at 2019-07-16 12:20 PM | Reply

#18

Here is a hugely simplified explanation of VAT with some of the pros and cons that I have pointed people to, it massively understates the problems that it would wreak with our Federal and State Tax Codes and the IRS and each State's Tax Boards, but helps frame the issues.

The Benefits and Drawbacks of a Value Added Tax (VAT)

#24 | Posted by Rightocenter at 2019-07-16 01:13 PM | Reply

#19

If you include Hong Kong as an importer, we buy about 19% of China's exports, remove Hong Kong (a chinese territory) and we jump to 24%. The EU imports about 9% with HK, about 11% without.

China Exports By Country

#25 | Posted by Rightocenter at 2019-07-16 01:19 PM | Reply

And as a follow on to #25, with the current unrest in Hong Kong, who knows what is going to happen there if the Chinese PLA steps in to "maintain order", but that is a subject for a different thread.

#26 | Posted by Rightocenter at 2019-07-16 01:22 PM | Reply

"it massively understates the problems that it would wreak with our Federal and State Tax Codes and the IRS and each State's Tax Boards"

You mean the "problem" of those bureaucracies being made redundant and ceasing to exist.
The "problem" of smaller, more streamlined government.
Bad news for lawyers!

#27 | Posted by snoofy at 2019-07-16 01:26 PM | Reply | Newsworthy 1

#27

I think that is incorrect, the bureaucracies would merely adapt (and in states without income or sales tax would grow) and the Tax Lawyers Bar would consider a change to a VAT to be a full employment act.

#28 | Posted by Rightocenter at 2019-07-16 01:29 PM | Reply

Wouldn't it eliminate 50 state bureaucracies and replace them with 1 federal bureaucracy?

This would be a huge win in the business world.

#29 | Posted by snoofy at 2019-07-16 01:42 PM | Reply

#29

Not at all, the States get their cut of the VAT and are the primary collector, with enforcement mostly at the Federal level. In Germany, for example, all of the VAT revenue goes through the various States first before getting to the Federal level.

#30 | Posted by Rightocenter at 2019-07-16 01:56 PM | Reply | Newsworthy 1

The only hard part, and I agree it's hard, is that the current tax regime is so inequitable between the states, there will have to be winners and losers, if we replace each state's sales tax with a national VAT.

But it would still be worth it, in my opinion, to harmonize the tax code, for pretty much the same reasons we invented a Uniform Commerce Code.

#31 | Posted by snoofy at 2019-07-16 02:00 PM | Reply

China knows how to deal with austerity.

When we are poor, we become young again.

Chinese Communist saying. Yes, really. They believe that.

#32 | Posted by J_Tremain at 2019-07-16 02:00 PM | Reply

#31

Agreed, which is why the VAT is such a difficult issue. I think that we will reach a tipping point (but I have no idea what that is) were a VAT becomes necessary, and that will require a wholesale rewriting of both the US Tax Code and each States codes to deal with it.

And as I said, Tax Lawyers will be ecstatic.

#33 | Posted by Rightocenter at 2019-07-16 02:09 PM | Reply | Funny: 1

Yeah, but it blows the 3% US growth to ----. They are not hurting as they have displaced the US as the #1 economy, with India coming up fast.

The US does not live in a vacuum of exclusivity.
Oh, and were they not given reserve currency status not that long ago?

#34 | Posted by gitmboy at 2019-07-16 05:24 PM | Reply

#34

China is still the second largest economy by almost every measure:

Emerging markets, by definition, grow at higher rates, mostly because they don't have the advanced infrastructure, technology, and abundance of developed natural resources of first world economies.

Simple math will show you that China ($12.1T), even at twice the growth of the US, will take almost a decade to catch up to the US ($19.4T) in terms of Nominal GDP. That assumes growth rates over 6.5% for China and 2% for the US.

In terms of Purchasing Power Parity (PPP) GDP, China is slightly ahead of the US, but most economists dismiss that statistic since due to its large population, China's GDP per capita is ranked 73rd in the world, so the PPP number, even though it is large, is virtually meaningless given the disparity in per capita purchasing power with most developed economies. For example, among the top economies, the PPP per capita of the US is $62,606 (10th), while the PPP per capita for China is $18,110, between the Dominican Republic and Botswana.

And yes, the Yuan was automatically designated a reserve currency by the IMF in 2016 when it exceeded 1.0% worldwide holdings, but while the US Dollar is at 61% holdings, the Yuan at 1.89% is still eclipsed by the Euro, Mark, Pound, French Franc, Yen and even the Loonie.

Countries by GDP

#35 | Posted by Rightocenter at 2019-07-16 06:11 PM | Reply

RE:
"#7
China is still a developing country, those types of growth rates are typical for emerging markets. The US, on the other hand, is fully developed, so 2-4% is an expected range for a healthy economy.
#12
Our 2018 total trade deficit was $621 Billion, Bruce was referring to our overall operating deficit, two completely different things.
#13
Agreed, but see my response to #7 for a dose of reality.
#22 | POSTED BY RIGHTOCENTER AT 2019-07-16 11:56 AM"

So? Didn't claim otherwise.

Isn't this thread's topic about how China's economy is feeling the effects of a prolonged trade war with the United States?

Where's the evidence showing that there's been a significant change in China's economy since the start of this prolonged trade war with the United States?

#36 | Posted by TrueBlue at 2019-07-17 01:37 AM | Reply

True story about traveling in China. You can be driving in a car on a 6 lane hwy for hours and see only a couple of cars.

Suddenly, you see traffic cones and orange barriers ahead so you slow down.

You then drive around a crater in the hwy the size of a tractor trailer. This happens about every 30 minutes.

#37 | Posted by SheepleSchism at 2019-07-17 01:42 AM | Reply

"Suddenly, you see traffic cones and orange barriers ahead so you slow down.
You then drive around a crater in the hwy the size of a tractor trailer. This happens about every 30 minutes.
#37 | POSTED BY SHEEPLESCHISM AT 2019-07-17 01:42 AM"

In Wisconsin, they call those potholes.

#38 | Posted by TrueBlue at 2019-07-17 02:55 AM | Reply

Where's the evidence showing that there's been a significant change in China's economy since the start of this prolonged trade war with the United States?

#36 | POSTED BY TRUEBLUE AT 2019-07-17 01:37 AM

Reading the article would edify you tremendously:

"And the Chinese economy will continue to face extreme "downward pressure" in the second half of this year, the country's National Bureau of Statistics said in a statement.

"The Chinese economy is still in a complex and grave situation," it said.

The growth numbers come after China reported a fall in both exports and imports for the first six months of this year, indicating the toll the trade war is having on an economy already suffering from weaker domestic demand.

The country recorded a sharper decline in exports to the United States, which decreased 8.1% for the first six months of 2019. Imports from the United States plunged 30% year on year."

#39 | Posted by Rightocenter at 2019-07-17 11:27 AM | Reply

I did read the article and I don't find it hard to believe that tariffs/trade wars could (COULD!) result in downward pressure. However, as evidenced by China's GDP for the last 10+ years, what ‘downward pressure' there might be has not resulted in a significant change in China's GDP since the tariffs/trade war was initiated.

Of course, it might simply be premature to expect a significant effect or it might be because China is doing several things to adjust/compensate or some other unknown reason.

In short: It seems, for right now, the tariffs/trade war "effect" is more wishful thinking than having actual tangible results. Of course, China and the US might work out a new trade deal at anytime. If that does happen, one would do well to not confuse coincidence with causation. The Chinese are not newbies at
this "game". The US would do well not to underestimate them nor fool ourselves into thinking we're going to easily force China to ‘surrender'.

#40 | Posted by TrueBlue at 2019-07-17 12:27 PM | Reply

#40

I have had Chinese clients in Taiwan and Hong Kong for almost 30 years and you are not wrong about their negotiation skills.

However, as I have said repeatedly, I think that Lighthizer knows how they play the game, which is why he walked away when the Chinese changed the deal (as they are often wont to do) at the 11th hour.

I also know that when the Chinese finally concede something is "bad", they usually understate it by a couple of magnitudes.

Xi and the top leaders in the Politboro are heading to their annual meeting at Beidaihe, where they will discuss the trade war and the Hong Kong uprising, among other things. It will be interesting, to say the least, to see what they say in mid-August when the meeting is concluded.

#41 | Posted by Rightocenter at 2019-07-17 01:18 PM | Reply

Sounds like we have had some similar experiences. I negotiated a trade deal with a large company in Beijing when it was still a pretty novel concept (1984) and practically commuted between the US and Taiwan for five years in the early 2000's.

The Chinese will often "ask" for something new when one is close to the final stages of a deal. IMHO, they're not being sleazy, just taking full advantage of the old adage: "it doesn't hurt to ask". That doesn't mean one has to always give in to close the deal. A shrewd negotiator will be aware of their ‘style' and always have a surprise deal ‘sweetener' to grease things along when approaching the final negotiations. No, I'm not an expert nor am I in their league. Hopefully, Lighthizer is!

Oh and NEVER overlook courtesy, respect, and the exchange of small/personal gifts when meeting. It truly is ‘the thought that counts'.
President Trump's blunt style may play well in the USA (especially with his base), but will be disastrous in China. The Chinese think long term and have incredible patience/memories (compared to Americans). They also are painfully still aware of the Boxer Rebellion history and the British occupation of Hong Kong for a century. They will not accept any deal that even hints at releasing that amount of control.

Apologies for the long rant. It's frustrating to watch how the trade deal negotiations are being handled.

#42 | Posted by TrueBlue at 2019-07-17 02:16 PM | Reply

#42

Check out this article from the HBR in 2003, a little dated but still holds true today, I have saved it to my laptop and tablet and refer to it every time I travel to China:

The Chinese Negotiation

#43 | Posted by Rightocenter at 2019-07-17 02:53 PM | Reply

The Chinese will often "ask" for something new when one is close to the final stages of a deal. IMHO, they're not being sleazy, just taking full advantage of the old adage: "it doesn't hurt to ask". That doesn't mean one has to always give in to close the deal. A shrewd negotiator will be aware of their ‘style' and always have a surprise deal ‘sweetener' to grease things along when approaching the final negotiations.

What you are describing is "chiku nailao", or endurance in negotiations. Often a Chinese negotiator will purposefully seek a delay to allow for group consideration of the deal, since he is almost always an intermediary or "zhongjian ren" he cannot ultimately close the deal without approval from his superior(s) and will, to save face and buy time, change the deal at the last second to allow him to review the deal with his boss. When this happens, the best thing to do (and what Lighthizer did) is walk away until they are ready to talk again.

It's really quite interesting but a necessary process to get the best deal. Here in the US we would get things done much faster, but when in China....

#44 | Posted by Rightocenter at 2019-07-17 03:13 PM | Reply

RE: #43 & #44

Thanks for the comments/tips. Even though most of it was not new to me, one always learns something. Much appreciated. Who knows, I might find myself in that arena again.

I definitely concur with much (most?) of the Chinese Negotiation piece. Unfortunately, we had to learn much of that the "hard way" back in 1984.

Interesting tidbit (although I don't know how universal this practice is in China given my limited exposure to their culture):
When the Chinese group came to visit our company in the US in 1983 at the start of negotiations, we were exposed (treated?) to a curious tradition of theirs. While we were all seated together at a large dinner table for the meals we shared, the Chinese would only serve food to each other and us, BUT no one would serve themselves. They explained it was their way of giving respect/honor (forming bonds?) with each other while minimizing each individual's greed/selfishness. We eagerly joined in with their tradition. Gratefully, they saw fit to feed us, too!

#45 | Posted by TrueBlue at 2019-07-18 03:59 AM | Reply

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