Bye Bye Trade War? China Plans $1 Trillion Buying Spree to Reduce US Trade Deficit

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ksupoke

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We'll find out shortly
From the straits times

as a por - China ag purchases in 2016 were just about $25B and 2015 was about $24B per the USDA

A USTR fact sheet refers to this part of the deal as the Expanding Trade chapter. According to the US, China has agreed to increase its total purchases of US goods and services by at least US$200 billion over the next two years.

Also included is a commitment by China to increase its buying of US agricultural products to US$40 billion to US$50 billion in each of the next two years.

Mr Lighthizer told reporters "these are numbers that are realistic and that we arrived at together." The specific breakdown of targets for individual commodities will be classified and not disclosed to the public.

IP, FORCED TECH TRANSFER

The deal will centre around what a senior administration official called "state-of-the-art" IP commitments and a breakthrough on forced technology transfer. Those issues are also at the heart of an investigation that led US President Donald Trump to raise tariffs on China in the first place.

Among the specific commitments USTR announced on Friday: China has agreed to end its longstanding practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals, or receiving advantages from the government.

China also commits to provide transparency, fairness, and due process in administrative proceedings and to have technology transfer and licensing take place on market terms.

ENFORCEMENT

The agreement will include a dispute-resolution mechanism that will serve as the enforcement arm. That process is in line with how other US trade agreements are enforced.

Complaints of one party will be brought to a US-China working group and if officials can't resolve their dispute, a decision will be made at the ministerial level of what action to take. That action could include tariffs or other measures, Mr Lighthizer said, though he sounded optimistic that he thinks China will keep their promises.
 

SLVRBK

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From the straits times

as a por - China ag purchases in 2016 were just about $25B and 2015 was about $24B per the USDA

A USTR fact sheet refers to this part of the deal as the Expanding Trade chapter. According to the US, China has agreed to increase its total purchases of US goods and services by at least US$200 billion over the next two years.

Also included is a commitment by China to increase its buying of US agricultural products to US$40 billion to US$50 billion in each of the next two years.

Mr Lighthizer told reporters "these are numbers that are realistic and that we arrived at together." The specific breakdown of targets for individual commodities will be classified and not disclosed to the public.

IP, FORCED TECH TRANSFER

The deal will centre around what a senior administration official called "state-of-the-art" IP commitments and a breakthrough on forced technology transfer. Those issues are also at the heart of an investigation that led US President Donald Trump to raise tariffs on China in the first place.

Among the specific commitments USTR announced on Friday: China has agreed to end its longstanding practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, administrative approvals, or receiving advantages from the government.

China also commits to provide transparency, fairness, and due process in administrative proceedings and to have technology transfer and licensing take place on market terms.

ENFORCEMENT

The agreement will include a dispute-resolution mechanism that will serve as the enforcement arm. That process is in line with how other US trade agreements are enforced.

Complaints of one party will be brought to a US-China working group and if officials can't resolve their dispute, a decision will be made at the ministerial level of what action to take. That action could include tariffs or other measures, Mr Lighthizer said, though he sounded optimistic that he thinks China will keep their promises.
Sounds like a win for the US on P1 to me, IP and Tech Transfer were two of our biggest drivers in this whole thing.
 

ksupoke

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Remember tact ain’t a strong point of mine, I’m directing this at the author.
My response ‘No sh@t Dick Tracy’
If that comes as a surprise to Mr Finbarr, I’m not sure he should be commenting on global mfg.

Going all the way back to the 80’s and into the early 00’s when the movement of us mfg peaked in terms of moving to China for whatever reason, market access lower costs higher availability of labor etc... all of this has been at issue and really most mfg that’s been moved since the late 90’s was to both lower the landed cost at point of consumption and provide market access to China. The reality is that, in broad terms, China access for most goods and services, exempting ag, is important but not critical, the market just hasn’t materialized, there’s just not a sizable enough middle class in China to make a difference. The landed costs to opotw can be lowered elsewhere without the drama that surrounds the China region, again none of this is a surprise.
Sometime back I posted here about a study that I was part of at Solectron about 30 yrs ago.
We were looking at full cycle circular global mfg, our conclusion, which is proving prescient, was that most mfg would be dispersed based on mkt size not cost of labor within 50 - 60 yrs years, there will still be pockets of economic incentives that will prove to pull in certain activities but overall the ‘chasing’ of lower costs will show no bottom line benefits and thus will cease to a great extent.
 

ksupoke

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SLVRBK

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ksupoke

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Just reading the fact sheet...I like it.
That they got China to agree on the outbound investment is shocking.
Here’s an article on a piece of the legislation that hasn’t been as publicized but may have the largest implication of all. I posted that China owns their own debt and that’s true it means their economy is always on the brink and it restricts access to and for our FI’s. It also restricts equity based transaction for US companies. If this goes through as explained it could stabilize the China economy and create the long awaited growth in middle class. It’s under financial services

https://www.bloomberg.com/news/arti...-points-in-the-phase-one-u-s-china-trade-deal
 

SLVRBK

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Here’s an article on a piece of the legislation that hasn’t been as publicized but may have the largest implication of all. I posted that China owns their own debt and that’s true it means their economy is always on the brink and it restricts access to and for our FI’s. It also restricts equity based transaction for US companies. If this goes through as explained it could stabilize the China economy and create the long awaited growth in middle class. It’s under financial services

https://www.bloomberg.com/news/arti...-points-in-the-phase-one-u-s-china-trade-deal
Requiring outside rating agencies to rate credit worthiness of Chinese domestic and international bonds, mind blowing
 
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This agreement has the potential to flip the table in ag. Couple that with the Japanese and USMCA it could be a vastly different trade world. The networks are to busy trying to get their impeachment pens from Pelosi framed for display to cover this.

Bravo, Mr President, Bravo
 

SLVRBK

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Has their house of cards been exposed?
As @ksupoke stated it's something that is known but ignored, their official debt is around 42% of GDP but it's the off books debt that is their issue. I think the principle concern are Gov't owned banks loaning to gov't owned businesses with the loans backed by gov't pensions. @ksupoke can correct me if I'm wrong on that. Plus they have a massive issue with Shadow Banking and no one knows what's at risk there.
 

ksupoke

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As @ksupoke stated it's something that is known but ignored, their official debt is around 42% of GDP but it's the off books debt that is their issue. I think the principle concern are Gov't owned banks loaning to gov't owned businesses with the loans backed by gov't pensions. @ksupoke can correct me if I'm wrong on that. Plus they have a massive issue with Shadow Banking and no one knows what's at risk there.
It would take a lot more time to go into details and ftmp, it would fall on deaf ears so in a nutshell. You’re spot on, even with all the regulatory changes China has made the lingering one that this addresses is that the auditing will be done independent of the state. This will have significant effect, it’s going to cause a lot of pain, think of our S&L problem as the example. When they’ve gotten rid of the bad apples and US companies are allowed far less restricted access to company acquisition and lending and borrowing, this will provide a huge dividend to China. In some ways it’s like the first hammer taken to the Berlin Wall, by extension, Nixon was the first stone that was thrown at a guard on the Berlin Wall, it will take time but if the gvt allows this to take its natural course, this will change China rule in a way very similar to the old USSR. It’s a monumental day for that region of the world and the US, now we have to pray that partisanship doesn’t screw it up.
 
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ksupoke

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Just a little more on this
China has historically had a financial structure that consisted of the state aka the people’s bank of China and oversaw the 3 regulatory commissions, banking insurance and securities.
What @SLVRBK pointed out (shadow banking or services that blurred the lines between all 3) has become a major problem and because of that the state didn’t want anything but outside investment with very little details, if you had audited most of the companies across these 3 areas they would have failed even the most lenient of financial tests.
Again going back to a prior post of @SLVRBK on the bond market, that the China gvt has, faiap, is going to take an approach similar to what we have here is a fundamental and necessary change for China to fully participate in global economic discussions in a substantive way. Finally this also begins to clear the way for China to monetize ‘sell’ their debt.
It’s importance cannot be overstated.