
China backtracked on almost all aspects of U.S. trade deal – sources - ycombonator
https://www.reuters.com/article/us-usa-trade-china-backtracking-exclusiv/exclusive-china-backtracked-on-nearly-all-aspects-of-u-s-trade-deal-sources-idUSKCN1SE0WJ
======
rrggrr
I suspect Xi wants this dispute to continue for internal Chinese reasons. The
tariffs impact different sectors and regions in China differently. It may be
continued tariffs are reducing overcapacity in a manner that allows Xi to save
face internally. It could be the tarrifs are breaking the back of powerful
exporting provinces (eg. Jiagnsu) and helping Xi consolidate power. It may
also be the case that things need to get much worse in China economically
before Xi has a strong enough argument to persuade the Chinese military (a
powerful economic force itself) to embrace a deal. Finally, the success of the
Belt&Road strategy requires a shift from US/Western export to vast investment
elsewhere; and it may be the case these tariffs provide the Chinese private
sector a strong incentive to open new markets and long-haul decrease reliance
on the US. Its complicated. I suspect a deal will be reached in 2-4 months.

~~~
spectramax
I don’t know how by cutting down exports Xi plans to consolidate power? Could
you please expand on the mechanism by which this could happen? Tariffs are
breaking backs of exporting provinces, may be they could be ill informed and
Chinese propaganda can spin this to blame US.

~~~
rrggrr
Suffering constituencies (provinces, cities, banks, businesses) may have to
make substantial concessions to Xi's leadership team/faction to obtain relief.
Those concessions may be up front, or favors owed to be collected in the
future. Politics 101.

------
CWuestefeld
Related to this and the censorship story already on the front page:

China is censoring internal news about these trade controversies. From family
over there I know that the general public isn't seeing this on TV or anything.
And even messages on WeChat are being taken down (my wife has had several
private postings removed)

~~~
spectramax
I don’t know why and I am not a Chinese citizen but this kind of thing bothers
me deeply. I hope Streisand effect takes over China in a self-propelling
feedback loop until this whole show comes crashing down. People of China
deserve better (once they’re a solid middle class and taken out of poverty).

~~~
jak92
> People of China deserve better (once they’re a solid middle class and taken
> out of poverty).

You are implying that the current policies will bring them out of poverty
which in a sense contradicts your first statement.

~~~
samspenc
Countries have emerged out of poverty even with strong democracies. I'm not
sure why the world thinks that a strongman regime like the CCP is needed for
economic growth.

In that sense, China is (IMHO) actually an outlier, an exception where a
Communist regime used fully capitalistic economic policies and foreign
investment to bring people out of poverty. This could have happened even if
there was a different form of government there.

------
Shivetya
So basically China's stance is, we cannot change our laws so our bad trading
practices must remain in place?

While we only get news of trade imbalances between US and China to include all
their tariffs and restrictions can someone for the EU or elsewhere chime in
with how their nations fare?

~~~
maxxxxx
“So basically China's stance is, we cannot change our laws so our bad trading
practices must remain in place? ”

Reminds me of a lot of corporations. “This doesn’t make sense but it’s
policy”. Never mind that they wrote the policy themselves.

~~~
jvanderbot
"this is not profitable so it should not be law".

Yeah I've heard that plenty over here in the US.

------
duxup
I think this is a very strange development. I'm a bit surprised they would
backtrack at all.

Rather in the past they've agreed to various regulations and laws and ... just
not enacted or simply enacted and not followed them. That last part being the
real question in all these details, does it matter if a deal gets made anyway?

If anything the traditional route would have allowed the POTUS to declare
victory and everyone just move on, but this is far more confrontational and
unusual based on my understanding.

~~~
mfatica
They're hoping for a democratic administration in 2020 to negotiate with.

~~~
toasterlovin
Another year and a half is a long time to make your people suffer. And a lot
of the supply chains that moved out of China might not come back. Waiting is a
hell of a gamble.

~~~
mfatica
I'm not sure a year and a half of unfavorable trade means much to a dictator
who declares themself dictator for life, imprisons millions of citizens in re-
education camps and engages in mass censorship.

~~~
toasterlovin
Good thing the Chinese people have no history of violently overthrowing their
rulers.

------
nabla9
Maybe China was just playing time and trying to time the trade conflict.

US elections are next year. If the trade war escalates this summer, the effect
on voters and the US economy will be hardest 6 to 12 months from now. After
that the US economy will start to adjust for the new normal.

~~~
toasterlovin
How, exactly, do you envision the US economy being damaged by a trade war with
China? As far as I can tell, the effects thus far have been basically nil.
Whereas things are looking pretty bad in China at the moment...

~~~
existencebox
>the effects thus far have been basically nil

This is quite factually untrue. [0] [1] [2] [3]

To be clear, this is entirely as a rebuttal to your claim, not as any broader
statement about international policy or outcomes.

[0] [https://www.bloomberg.com/news/articles/2019-02-14/u-s-
soy-e...](https://www.bloomberg.com/news/articles/2019-02-14/u-s-soy-exports-
won-t-reach-pre-trade-war-levels-for-years)

[1] [https://www.nytimes.com/2018/11/19/us/politics/farming-
trump...](https://www.nytimes.com/2018/11/19/us/politics/farming-trump-trade-
war.html)

[2]
[https://www.forbes.com/sites/jamesellsmoor/2019/02/24/under-...](https://www.forbes.com/sites/jamesellsmoor/2019/02/24/under-
trumps-tariffs-the-us-lost-20000-solar-energy-jobs/#1fcc880d76ba)

[3][https://www.minnpost.com/economy/2018/08/trade-war-pulls-
por...](https://www.minnpost.com/economy/2018/08/trade-war-pulls-pork-prices-
down-minnesota-farmers/)

------
Leary
The most recent tweets by Trump regarding this:

"The reason for the China pullback & attempted renegotiation of the Trade Deal
is the sincere HOPE that they will be able to “negotiate” with Joe Biden or
one of the very weak Democrats, and thereby continue to ripoff the United
States (($500 Billion a year)) for years to come... Guess what, that’s not
going to happen! China has just informed us that they (Vice-Premier) are now
coming to the U.S. to make a deal. We’ll see, but I am very happy with over
$100 Billion a year in Tariffs filling U.S. coffers...great for U.S., not good
for China!"

~~~
logfromblammo
The import tariffs are paid by the people inside the importing nation.

A US import tax on Chinese goods is a tax on American consumers and
manufacturers.

The way to tax China itself would be an _export_ tax on money bound _to_
China, including the transfers of immobile or intangible assets to Chinese
nationals or corporations via domestic exchanges or brokerages--and including
the cash value of transferred intellectual property.

Imports are paid for by exports. If you're worried about a trade imbalance,
you could always say that the other nation can keep sending more goods if they
want, but we'll only pay for them with trade goods and services, not with
cash, or ownership of land and capital.

~~~
burfog
Taxes on transactions, such as tariffs, are almost never paid only by one
side. The side with less flexibility is going to pay most of it, adjusting
prices as needed to make this so.

China has less flexibility. Idled factories are a huge problem, and there is
no other buyer as large as the US. It is relatively easier for the US to buy
elsewhere, both abroad and domestic.

About 83% of the tariff burden is getting paid by China. (analysis by European
financial firm)

Even the part we do pay isn't all bad. It reduces the need for other taxes. It
supports American workers, reducing income inequality.

~~~
DuskStar
Seriously, 83%? That's insane!

Seems things are going far better in this little trade war than I was
expecting. If the 17% paid by US consumers displaces other taxes, that's a
huge net gain.

------
verroq
I don't understand the hate Trump gets for doing what needs to be done. All
these issues esp. theft of intellectual property, IP transfer, currency
manipulation are much more important in the long term than some tarrifs.

One shitpost tweet crashed SZSC by 7%, most of China couldn't even read it.
Trump is in a position of power at least with this negotiation.

China deserves the pain train for backpedalling.

~~~
scarface74
The trade war isn't helping anyone. It's costing US consumers, companies,
farmers and the stock market.

Just a quick search, I couldn't find any mainstream, usually Republican
leaning economists, magazines, or newspapers that said it was a good idea.

~~~
toasterlovin
It isn’t costing consumers much. I run a company that was affected by the
tariffs. If we had kept manufacturing in China, cost of goods sold (COGS)
would have gone up by 25%. But COGS are only 50% of the price customers pay
for our products. So the price increase to our customers would have only been
12.5%. But we didn’t keep our manufacturing in China, we moved it to Taiwan
and Vietnam. As a result, our COGS went up by roughly 8% (prices are higher at
our new factories), which works out to a 4% increase in prices to our
customers. And our products have an unusually high COGS relative to most
things consumers would buy at, say, Walmart. So the real impact of the tariffs
to the prices most consumers are paying is in the very low single digits,
percentage wise. Not really a big deal. Mostly the tariffs are/were very
inconvenient for US business that manufactured in China.

~~~
scarface74
_It isn’t costing consumers much. I run a company that was affected by the
tariffs._

So you’re generalizing your experience from a “company you run” to a country
with a $19.39 trillion GDP....

~~~
burfog
Months ago, I saw an analysis done by a European financial firm. The burden of
the tariffs is 83% paid by China. This is very well aligned with his example.

The burden we do pay isn't so bad. It can substitute for other taxes. We used
to do this in a big way, funding the country without an income tax. The local
employment is pretty good too. Those industrial jobs, for example
steelworkers, are reducing income inequality.

~~~
scarface74
So we are creating those jobs at a cost of $900K per job. Tariffs are hardly
ever a good way to create jobs.

[https://www.washingtonpost.com/business/2019/05/07/trumps-
st...](https://www.washingtonpost.com/business/2019/05/07/trumps-steel-
tariffs-cost-us-consumers-every-job-created-experts-say/)

~~~
burfog
If that supposed $900K comes from Jeff Bezos, owner of the Washington Post,
I'm OK with it. In that case, he alone is worth a hundred thousand jobs. I can
see why his newspaper might be complaining.

~~~
scarface74
No, the $900K it costs the economy per job. So you are doubting the number
because it's from the "liberal media"?

In that case what about Forbes?

[https://www.forbes.com/sites/ikebrannon/2018/07/02/steel-
tar...](https://www.forbes.com/sites/ikebrannon/2018/07/02/steel-tariffs-are-
not-creating-american-jobs-at-least-not-in-missouri/#5c4ff4c7457b)

~~~
burfog
There are far bigger reasons to doubt it, so the "liberal media" issue is
moot. Not that "liberal media" isn't a fine reason, but Jeff Bezos is
literally the owner of the Washington Post. He also runs Amazon, shipping lots
of Chinese goods. His bias is obvious.

This isn't even a political conflict along the liberal/non-liberal axis
though, so Forbes doesn't change a thing. I'm sure you've heard of the
uniparty, demipublicans, republicrats, and so on. The leaders of multinational
corporations have a globalist mindset. Aside from desiring regulatory capture
to suppress competition, they also have a libertarian mindset. Very few media
sources and very few politicians break from either mindset by much, except
some hot air from some politicians. Politicians don't last long if they anger
the large multinational corporations.

There is almost nobody with interests aligned with the American worker. Of the
few who are, many would admit to loving the tariffs only if somebody like
Bernie Sanders had imposed them. Generally, all of those with a big voice
(media and politicians) would gladly wipe out American jobs in exchange for
greater profit. This is short-term thinking, ignoring the slow collapse of the
nation and the changing balance of world power.

~~~
scarface74
So there should be some studies somewhere that say the best way to brings jobs
to America that in aggregate is beneficial is to impose tariffs and
protectionism is to spend money on industries retraining workers?

Are you also in favor of laws in some states that don't allow people to pump
their own gas to save jobs?

------
educationdata
China is playing the old game, negotiation and negotiation and negotiation,
never intend to make any change. They can even make promise to make changes
after long long long negotiations and never do anything. And then when someone
finally decide to do something about it, they will ask for a new round of
negotiation and negotiation and negotiation.

Xi will stay in power may be in next 20 years, and he knows US will have
general election in every 4 years. Trump gets the idea:
[https://twitter.com/realDonaldTrump/status/11261065400150712...](https://twitter.com/realDonaldTrump/status/1126106540015071232)

~~~
rrggrr
Incorrect. The tariffs are costing Chinese businesses and the government
greatly. There is some other benefit to this that isn't explained by
negotiation tactics. Although I cannot rule out a total misread of Trump by
China, due to poor analysis, intelligence or misinformation.

~~~
pentae
Yeah, I guess the same tactic didn't work for North Korea, right? Oh, wait..

~~~
toasterlovin
North Korea doesn't have an economy dependent on exports to the US consumer
market. Not a good comparison.

------
argd678
> Trump said on Wednesday that China is mistaken if it hopes to negotiate
> trade later with a Democratic presidential administration.

What is that supposed to mean? That there won’t be another administration in
the future is how it sounds.

~~~
mfatica
Oh quit the fear mongering. He clearly states in the tweet they're referencing
that the hope is the next administration will be a democrat, and they are
trying to hold out for that.

------
_Codemonkeyism
In the long perspective the Chinese market is the larger one with more people.
Currently it makes sense for the US to be protectionist, in the long run the
US market is smaller and Chinese companies will benefit from the larger
Chinese market.

This played out over 50y with the fragmented European market vs. the larger
homogeneous US market. Starting in the US was (is) much more beneficial than
starting in Europe (the language and culture issue here will never go away
even when policy is more and more unified).

