
Many Chinese companies ‘will go bankrupt’, if US delivers on tariff threats - tptptptptptp
https://www.scmp.com/news/china/diplomacy-defence/article/2156810/many-chinese-companies-will-go-bankrupt-if-us-delivers
======
chvid
I am afraid it might be the other way around.

The west is running massively expansive monetary and fiscal policy. The only
reason that is not causing extreme inflation is that we import deflation from
China. Were we to stop that prices and interest rates would jump and asset
prices would collapse.

~~~
ced
What do you mean by "import deflation"?

~~~
occamrazor
That we print money, expanding the monetary base, and at the same time China
stockpiles USD and other western currencies, effectively decreasing the same
monetary base.

~~~
echevil
The Chinese government prints much more money though. Inflation is much more
serious in China. The official stats doesn’t reflect this, but it’s clear for
anyone who’s familiar with price changes in China

------
known
Tariffs is lose-lose proposition since China is exporting Inexpensive and High
Quality products and re-investing that money back in US T Bills;
[https://www.economist.com/china/2018/07/12/in-its-trade-
war-...](https://www.economist.com/china/2018/07/12/in-its-trade-war-with-
america-china-dials-down-the-hype)

------
ksec
Just a reminder, mouth pieces for China does not speak the truth nor their
actual intention. They are posted to lead you to think many will bankrupt, (
which they won't ).

~~~
bartkmq
SCMP is an independent newspaper based in Hong Kong and was founded by
foreigners. "China" (mainland regime) is probably not a fan of them.

~~~
dosy
It is now owned by Jack Ma (Alibaba / 1688.com) but it takes a decidedly mixed
editorial stance: some articles are very pro-China, and align with / support
central government position. Other articles are (if not pro-US), aligned with
US-policy positions and norms, and critical of China and the central
government.

I expected SCMP would quickly become way more pro-China, supportive of central
government on every issue after purchase by Ma, but while that has happened to
some extent, it was very gradual.

Ma has stated that he wanted the paper to represent China to the outside world
from more angles and perspectives.

Personally I find the mixed editorial stance annoying. I wish it would be more
decisively one-side like most Western outlets I'm used to. But it really is
mixed and has something for everyone, and it's true that you can find
perspectives from "both sides" or "multiple sides" there, so I think it is
achieving its objective of representing China in a fair way to readers.

For those reasons I think SCMP is a very reliable source for news on the
region if you cannot read Chinese / even if you can. If you combine
perspective across SCMP, a Western outlet, and a Chinese outlet (like:
[http://en.people.cn/](http://en.people.cn/)) you get a much more faithful
idea about China just reading one.

------
janesvilleseo
I suspect this is a promoted post in the sense that someone with an agenda is
gaming the system. The same article right now is on Reddit as a promoted post.

------
devoply
Expect China to get involved in social media meddling and election engineering
in the 2020 US election.

~~~
syshum
So when I disagree with the Authoritarian left in 2020 I will be called a
racist misogynist Nazi Chinese Bot instead of a racist misogynist Nazi Russian
Bot? Or will I be a Russian Chinese Bot?

In reality every nation attempts to meddle and influence every other nations
elections to get leaders in those nations that are favorable to them. This has
happened since the dawn of civilization to believe it is a new or modern
activity simply because we have Facebook now is to ignore History.

the US is one of the most prolific influencers of elections on the world stage
having "peacefully" toppled more governments than any other nation in world
history.

This modern commentary on Russian bots, and now Chinese Bots is primary away
for the Extreme ends of the political spectrum to rationalize away why their
idea are unpopular and their arguments fall flat at convincing people

Does Russia and China attempt to influence the elections... yes... as does
every other nation.

Should we care? Maybe, and we should be aware of it and monitor it but
personally I am more concerned with Internal meddling by our own institutions
than i am about Foreign Influence

------
acd
There is math model Prisoners dilemma that says that both sides is better of
cooperating. So unless Chinas industrial subsidies was a defeat move and the
Us trade tariffs is an answer move everyone both Us and China will be worse
off after the customs tariffs.

There is chance that the tarrifs will lead to higher consumer prices as
economic production will not be optimally allocated. Inflation will follow
higher consumer prices. Central banks have already used zero interest policy
to stimulate the economy so we cannot use that as a tool. Something better
will emerge after this but it might be a rough ride until it’s sorted.

Prisoners dilemma game theory
[https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma](https://en.m.wikipedia.org/wiki/Prisoner%27s_dilemma)

~~~
OscarCunningham
Trade isn't a Prisoner's Dilemma though. Moving from Tariffs to No Tariffs
increases your country's utility even when your opponent is playing Tariffs.

So the Nash equilibrium is free trade, even though cooperation actually isn't
the equilibrium in the Prisoner's Dilemma.

~~~
james1071
That's not correct. See 'second best'.

~~~
OscarCunningham
Can you explain how that applies here? Are you saying that in the situation
where China has tariffs it's optimal for the US to also have tariffs?

That's just not true. If the US government doesn't set tariffs then all the
gains from trade on the US side go to the US traders. Since these people also
set the price they will set it so as to maximise gains to (themselves and
therefore) the US. So a US tariff can only hurt the US as a whole. This
argument applies whether or not China has tariffs.

~~~
waterhouse
If we imagine both governments are controlled by special interests,
specifically the producers of the goods whose foreign competition is to be
tariffed, then it's prisoner's dilemma for those that are making decisions.
(The domestic buyers of the tariffed goods suffer, but I guess we don't care
about them.) I'm not entirely sure if this is what the others in this thread
mean, though.

~~~
coldtea
> _The domestic buyers of the tariffed goods suffer, but I guess we don 't
> care about them._

Only if we consider the first order effects -- and only if we consider them
simplistically as mere consumers.

Because the wider view is that those "consumers", are also workers, and the
"race to the bottom" effect of modern global trade with the developing world
hurts their bottom line, and leaves them without money to be consumers anyway.

The US, and other western countries, have used tariffs to great effect
throughout their capitalistic development.

------
ToFab123
I guess a lot of American companies will too

------
snarfy
Why does China buy all of those Treasury notes again?

~~~
neximo64
To keep their currency weaker

~~~
wpdev_63
Then by artificially deflating their currency for economic benefit.

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astaunton
It will be interesting to see how this plays out. Approx 70% of American bonds
are owned by Chinese companies. So if America puts the squeeze on the Chinese,
they may cash in their bonds....since Mr. Trump feels he needs to upset Asia
(making friends with North Korea) and feels the need to upset the EU, i doubt
anyone will be plugging that gap

~~~
sonnyblarney
Your debt figures are not correct.

[https://www.investopedia.com/articles/investing/080615/china...](https://www.investopedia.com/articles/investing/080615/china-
owns-us-debt-how-much.asp)

Second, China needs that debt to be able to manage it's own currency. And
though the Fed is not supposed play games like international currency war ...
it will. The Fed and the USD are well poised to soak up any problems that
China tries to play with USD.

It's also a game of confidence: do USD holders worldwide think that China can
sink the USD with a little bit of war? Or is the global petrodollar resilient?
Given the numbers and ratios ... it's clear that China probably won't win,
cred remains in the USD etc.. So - it would have to be a coordinated shock -
if there were both economic problems in the US, and dollar problems, and
shocks in some other way and _then_ China started playing games ... well
that's something else.

~~~
astaunton
i never said China would win, my point was the ripple effect it will have.
These games could have major impact for the smaller mom&pop companies in both
China and America. So in an effort to re-vitalize businesses it may in fact
cause a lot of them to fold (as even medium businesses rely on the smaller one
to provide a service)

------
sonnyblarney
The way the Chinese roughshod foreign companies is blatantly anti-WTO and
anti-trade.

I witnessed this while working at a large Canadian company.

China has one leader and they speak with one voice - and they have divided and
conquered the West, which speaks with a thousand voices i.e. politicians,
businesspeople, academics to the point wherein if _anyone_ tries to say
anything against China, they are shut down.

Remember when 'Tibet' was all the rage in Hollywood at the turn of the
Millennium? Well they shut up pretty quick, didn't they? This has happened
everywhere. You just don't find a lot of critical voices about China because
someone is always applying pressure (i.e. advertisers etc.)

China is acting in rational self interest, and the number of people being
brought out of abject poverty there (and elsewhere) is a very good thing, but
because they've been able to do this since the dawn of the new era i.e.
1980's, things like IP theft, and direct governmental support of competitive
entities is 'normative'.

I personally loathe Trump, but trade issue with China have to be resolved, and
it's really sad that he's the only leader in the world it seems that is in a
situation to do at least something about it.

The West _has_ to work together to end particularly the IP rip-off scenarios,
or it's not going to work.

I actually think China, during this current period of transition would be
_better off_ in a more level playing field, one suited for their participation
in the world economy, as opposed to the current setup, which is suited to them
being a 'developing economy' of previous decades.

There should definitely be a tit-for-tat tax on goods from China given some
practices there, I very well understand the ostensible damage from tariffs,
but as soon as you have to 'internalize' all those things that are
externalized in China, many tariffs make sense.

The great risk is that China could actually be truly damaged (likely worse for
regular folks than for the elite), worse, go into a recession, which would
burst the fragile 'rest of the world' situation and we'd have a global
problem.

In the grand scheme of things, it's better that China 'blinks' in this game,
and uses the opportunity to institute some reforms that simply have to happen
if they want to play on the global stage. You see this happening more formally
with currency; because currency issues are more directly measurable, China has
no choice but to reform of they want the RMB to be used in certain ways
globally. But on trade ... it's more grey.

Now that Trump has fired a volley, it's possible that the EU may find a way to
do the same thing, in a more politically nice kind of way - funny enough even
though the US is in a 'trade war' with Canada, Europe, UK etc., behind the
scenes, they are all already working with Trump on the China file, it's just
not highly publicized for obvious reasons.

~~~
Eridrus
I agree that China has not been a good actor trade-wise, and pressure should
be applied, but I'm utterly unconvinced that Trump understands the situation
well enough to get them to actually do anything. He put tarrifs on Canadian
steel ffs, I'm not sure how he can succeed in China when he fucks up relations
with our allies like this.

~~~
topmonk
> He put tarrifs on Canadian steel ffs

Doesn't Canada put tariffs on the USA? Aren't they also “fucking up relations”
with us as well?

~~~
sonnyblarney
The USA started a trade war by putting tariffs on stuff that's not allowed via
NAFTA.

The US being 10x larger than Canada always has the upper hand in trade
negotiations.

------
ck425
Not directly related to the article but could this be updated to link to the
full article not the AMP version: [https://www.scmp.com/news/china/diplomacy-
defence/article/21...](https://www.scmp.com/news/china/diplomacy-
defence/article/2156810/many-chinese-companies-will-go-bankrupt-if-us-
delivers)

Would be great if we could auto convert submitted amp links.

~~~
consumer451
Counterpoint: I was just traveling and stuck on 2G data for a few days. The
only things on the web that were usable were HN, Tildes.net, and AMP pages. I
have spoken ill of AMP in the past, but no more. Google is actually doing
something about site bloat.

~~~
ck425
Maybe, but even if it stays AMP can the domain atleast be directly attributed.

~~~
consumer451
Fair point.

------
Bombthecat
It is really sad that no one comments here.

Discussing topics like this became a line field.

Even on hackernews now...

------
craftyguy
I recently heard an argument in favor of more tariffs, its basis was that
tariffs 'force' (through incentives, obviously) nations to produce goods
locally. This is generally better from an environmental standpoint since goods
which could be produced locally but are made thousands of miles away don't
have to be transported over vast distances.

~~~
c3534l
Actually, the opposite is true:
[https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877](https://www.aeaweb.org/articles?id=10.1257/aer.91.4.877)

Similar articles found via scholar.google.com show the similar results: a
relatively small net reduction in pollution output.

Local isn't better for the environment, even though that's the latest
California hippy mantra. Efficient is more likely better for the environment.

~~~
craftyguy
Unfortunately I cannot download that paper to read it.. Got another source?

~~~
akx
That article "10.1257/aer.91.4.877" is available on Libgen, for instance. You
can google for Libgen.

