Trade War; China; Chinese Economy; Alibaba, and etc.

[SensibleInvesting]

We're approaching the end of week 1, June 2019. The G20 is in about 3 weeks, and there seems to be no deescalation of the ongoing trade dispute between USA and China; in fact, it's further escalating e.g.: Mexico.

Having said this, I think it's important that we take a step back and really view what this all means to China in the greater scheme of things:

• China is poised to double their consumption (at least) by 2030;
• GDP will still grow at ~6% for another 3 years, slowing to 4 - 5% for the next 5 - 10;
• The number of online shoppers in China will almost triple the entire population of the USA
• China has created over 70 million service jobs in the last 5 years, but only lost 14 manufacturing jobs
• The Chinese middle, upper-middle, and upper class will triple in size in 10 years - totaling ~600 million
• Chinese disposable income will more than triple
• China will become a net importer like the USA, and will consume at an exponential rate - in 2018, net imports increased to >$2.1T - a 15.8% increase YoY
• The lower tier cities in China will grow faster than the upper tiers; their spending/consumption and net population already exceed the T1/T2 cities, and the income gap between upper tier vs. lower tier is narrowing

In light of this, we really have to ask ourselves whether the most recent market selloff is overdone. I think it is, and have been doing a deep dive into Alibaba; based on my research, I believe Alibaba will benefit more from China's impending tailwinds more than any other company in China - the ecosystem they're creating is scary, and I believe the market has got it wrong by taking such a reactive/short-term view.

 

[Smurf1976]

Having said this, I think it's important that we take a step back and really view what this all means to China in the greater scheme of things:

What you're describing looks like a case of China not so much competing against the USA but of essentially becoming the USA at least in economic terms.

Fast forward 20 years and Chinese people will be lamenting that not much is made in China anymore, whatever foreign country took all their factories and the government ought to do something to stop this.

That seems the logical conclusion if they're going down the service and consumption rather than production track and begs the question of to where is manufacturing going to shift next?

 

[SensibleInvesting]

where is manufacturing going to shift next?

My guess for the immediate term SEA, then onto Africa. There was a SUPER interesting video I saw on African becoming China's China. I would highly encourage you to watch this, as it was fascinating and insightful, but most importantly it was very logical!

 

[Knobby22]

China will wipe out the West’s electric car industry because its carmakers can make a much fatter profit per car overseas. Photo: Bloomberg


COMMENT
It’s time to defend yourself – or get crushed by China’s export tsunami
Ambrose Evans-Pritchard

The EU will be forced to follow Joe Biden’s tariffs against China whether it likes it or not; otherwise Europe will alone face the concentrated trade shock from Xi Jinping’s predatory mercantilism.

It will become the primary dumping ground for China’s exorbitant overproduction of industrial goods, with a flood of cars, batteries and cleantech components together posing an existential threat to the European social market model.

(From the Telegraph, republished Age, SMH).

 

[Dona Ferentes]

and a good take, from someone experiencing the change over 4 decades...

China’s curse is to raise hopes and dash them

In her book “Wild Ride”, an American journalist details her life in China as it opened to the world, then regressed back to an oppressive, inward-looking regime.

www.afr.com

 

[Knobby22]

Here is the full article, worth a read.

It’s defend yourself, or get crushed by China’s export tsunami

An open world economy cannot exist with a deformed Chinese economy that accounts for 13 per cent of global consumption but produces 31 per cent of all manufactured goods.

www.theage.com.au

 

[divs4ever]

Here is the full article, worth a read.

It’s defend yourself, or get crushed by China’s export tsunami

An open world economy cannot exist with a deformed Chinese economy that accounts for 13 per cent of global consumption but produces 31 per cent of all manufactured goods.

www.theage.com.au

i disagree the existential threat to Europe is itself , it's arrogance , greed and sense of entitlement , it wanted more and more without the needed productivity , in fact it has gone to great lengths ( and is still rushing ahead ) to de-industrialize itself

it is completely capable of manufacturing all it need , but chooses to not do the work

blaming China for doing it all and more efficiently is a crutch ( and i hope China exports to everywhere else and helps them rise to living standards only currently reserved for European royalty )

if Europe wants to descend into the cesspit of true Communism it is welcome to do so , but alone ( even China realized that was not a place to dwell in )

 

[Knobby22]

i disagree the existential threat to Europe is itself , it's arrogance , greed and sense of entitlement , it wanted more and more without the needed productivity , in fact it has gone to great lengths ( and is still rushing ahead ) to de-industrialize itself

it is completely capable of manufacturing all it need , but chooses to not do the work

blaming China for doing it all and more efficiently is a crutch ( and i hope China exports to everywhere else and helps them rise to living standards only currently reserved for European royalty )

if Europe wants to descend into the cesspit of true Communism it is welcome to do so , but alone ( even China realized that was not a place to dwell in )

India and the USA are putting up tariff walls to protect themselves so the argument is Europe should do also.

Australia on the other hand has little manufacturing to lose especially with regard the car industry so we can look forward to very cheap Chinese EV cars.

 

[divs4ever]

but don't expect China to do 'free-trade with you ' , they are just as entitled to restrict trade to suit themselves ( and any friends they have )

remember the WEST wanted/demanded/begged for the Bamboo Curtain to be lifted , China and the Soviet Union managed by themselves for 20 years after WW2

and look at 'free-trade Europe back to back-stabbing other members

BTW our G7 'friends ' will demand we buy their expensive garbage ( at a premium price ) just like we bought Volvos and Jaguars for decades

 

[Knobby22]

The third plenum is a disaster for the world and China.

Being has not switched from its long promised switch from an investment led economy to a mature consumption economy.

This requires spending on a social welfare blanket so that the Chinese people do not feel compelled to save a third of their income. But this cuts against Xi Thought.

"We cannot engage in welfarism ".

Meanwhile the middle class is being forced to take 25% pay cuts, being squeezed in the falling property market and other financial strains.

Debt in companies and state institutions is high on a par with Greece.

But the plan is to put even more money into production capacity. Deliberately wiping out whole sectors from other countries in Asia and attacking the west trade imbalance. It is almost a declaration of economic war.

Much more in this article below. Worth a read.

China’s trade policy is almost a declaration of economic war

Forget free trade: Beijing aims to demolish its rivals and achieve monopolistic hegemony across entire industries, seeing trade as ideological warfare against democracies.

www.smh.com.au

 

[farmerge]

The third plenum is a disaster for the world and China.

Being has not switched from its long promised switch from an investment led economy to a mature consumption economy.

This requires spending on a social welfare blanket so that the Chinese people do not feel compelled to save a third of their income. But this cuts against Xi Thought.

"We cannot engage in welfarism ".

Meanwhile the middle class is being forced to take 25% pay cuts, being squeezed in the falling property market and other financial strains.

Debt in companies and state institutions is high on a par with Greece.

But the plan is to put even more money into production capacity. Deliberately wiping out whole sectors from other countries in Asia and attacking the west trade imbalance. It is almost a declaration of economic war.

Much more in this article below. Worth a read.

China’s trade policy is almost a declaration of economic war

Forget free trade: Beijing aims to demolish its rivals and achieve monopolistic hegemony across entire industries, seeing trade as ideological warfare against democracies.

www.smh.com.au

When all the eggs are in the one basket Heaven forbid if that basket handle breaks.
We all gave the Chinese the "heads up" and now will be paying by jumping to the piper's tune !!!

 

[qldfrog]

. It is almost a declaration of economic war.

There is an actual economic war.
Xi learnt from Ukraine and history, so destroying the west using our own greed, stupidity and division , and giving up real goods and wealth: lands, minerals, PMs, even art and historical treasures etc against monkey currency

 

[divs4ever]

There is an actual economic war.
Xi learnt from Ukraine and history, so destroying the west using our own greed, stupidity and division , and giving up real goods and wealth: lands, minerals, PMs, even art and historical treasures etc against monkey currency

i would think China was positioning well before that , maybe as early as the collapse of the Soviet Union , half expecting a similar strategy to be used on them sooner rather than later , unlike Russia, China is not basically self-reliant for several modern commodities and could foresee that vulnerability ( being exploited by an aggressor )

after all they had a ringside seat of the US sanctions on Japan before and during WW2

 

[Knobby22]

There is an actual economic war.
Xi learnt from Ukraine and history, so destroying the west using our own greed, stupidity and division , and giving up real goods and wealth: lands, minerals, PMs, even art and historical treasures etc against monkey currency

It is an economic warfare, but undeclared, but practically declared. It does not serve China's interests to declare it as that would lead to more western actions that are taking place already.+ we need what they have.

Long term something has to give. I am starting to suspect Xi is a fool. New leadership is required but that can no longer happened as he is another autocrat.

 

[qldfrog]

It is an economic warfare, but undeclared, but practically declared. It does not serve China's interests to declare it as that would lead to more western actions that are taking place already.+ we need what they have.

Long term something has to give. I am starting to suspect Xi is a fool. New leadership is required but that can no longer happened as he is another autocrat.

What would he be a fool?
Is Putin a fool?
I do not believe either are fools.. dangerous for the US and by extension the west/us, but no fools ; clairvoyants maybe

 

[divs4ever]

It is an economic warfare, but undeclared, but practically declared. It does not serve China's interests to declare it as that would lead to more western actions that are taking place already.+ we need what they have.

Long term something has to give. I am starting to suspect Xi is a fool. New leadership is required but that can no longer happened as he is another autocrat.

a fool , or very patient ?

several nations are self-destructing trying to cripple Russia

remember China only wants trading supremacy , it is cultivating new markets , new trading partners , and the major rivals are busy with fiscal recklessness

20 years down the track the big player will be India principally because of a growing population when many others are shrinking as well as aging

 

[Knobby22]

What would he be a fool?
Is Putin a fool?
I do not believe either are fools.. dangerous for the US and by extension the west/us, but no fools ; clairvoyants maybe

I believe Putin is definitely a fool. He was going well and was getting success but his need to be a modern Peter the Great has greatly damaged his country and now he is almost a client state of China.

 

[sptrawler]

Wow the Chinese have lifted the ban on crayfish, but screwed nickel and lithium, what a win.
Yeh, yeh , yeh.

Lobster exports: Prime minister strikes deal with Chinese premier to resume lucrative rock lobster exports

amp-9news-com-au.cdn.ampproject.org