China tariffs

4/6/2018 7:42:04 AM

Here is the real reason we are imposing tariffs.

The Made in China 2025 initiative, announced in 2015 by China’s State Council, seeks to make that country nearly self-sufficient in 10 crucial industries, including aircraft, robots, electric cars, and computer chips. Beijing has set out specific goals for market shares by industry.

The plan aims for near self-sufficiency in components by 2020 and materials five years later. Moreover, Beijing, stepping into trade-violation territory, wants Chinese industries to possess 80 percent of their home market in the listed sectors.

CM2025, as the initiative is known in China, calls for jumbo-sized, low-interest loans from state investment funds and development banks, aid for the purchase of foreign competitors, and research subsidies.

If allowed to develop these industries, using technology stolen from other countries, and subsidized by the Chinese government, China would dominate these industries and drive others out of the business, much as has happened with steel.

Imagine companies like Boeing, Lockheed Martin, and Intel facing competition that charges half its price. Additionally, once their stock prices collapsed, China would look to buy them out and use their research and technology.

This is a huge national security issue.

8 comments

Latest

galiziabob.sabbatical

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7 years ago

Not only that, but they use slave labor.

Cashman1234

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7 years ago

This is a major challenge, and one that is made more difficult due to the heavy level of our debt held by China.

It is also complicated by competition from a communist country. We have free markets that allow for most goods to carry market prices. A communist country won’t face that type of internal market. It can be quite dangerous as pricing and demand are influences in the wages paid to workers.

It could be very dangerous - as it’s a global economy - but there may need to be a protectionist stance adopted in certain areas.

twentyfive

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7 years ago

For extra credit @mark94 can you define oligarch? LOL

gammanu95

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7 years ago

Hopefully Trump is playing the long game, and trying to wean America off its addiction to cheap Chinese goods. In addition to holding the vast majority of American debt, China also is the world's only supplier of rare earth metals. China also requires all trade secrets be shared to cheaply produce a foreign company's equipment using Chinese resources (Apple iPhones, processors like Intel and Qualcomm). In short, our dependence on China for the raw materials used for our advanced technological lifestyle is a serious national security threat. A little pain now could prevent an existential threat from China in the future.

RandomMember

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7 years ago

The only thing that everyone agrees on is that China has no respect for intellectual property rights. Getting into a trade war is such a complicated issue -- and I have absolutely no confidence in Trump's ability to pull off a coherent policy. I don't even have confidence that Trump will find the right advisers. Meanwhile the market fluctuates wildly as Trump makes a threat, then pulls pack, then makes another threat. Nobody (including Trump) knows what Trump will do next.

RandomMember

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7 years ago

Even @Mark93's hero, television fake-economist clown and chief adviser Larry Kudlow, is against protectionism.

RandomMember

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7 years ago

Both @GammaNut's @Mark93's posts are laced with nutty right-wing paranoia about China becoming an existential threat. But both are probably parroting what they heard on Fox News.

twentyfive

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7 years ago

For extra credit let gramma nut or mark explain how the Chinese are going to call all of the loans. One thing that Trump understands better than anyone here, is how debt works.He knows very well that the bankers can't afford to allow the loans to become nonperforming, a default as large as the U.S. on the Chinese bondholders, would wipe out China.
Simple explanation: if you owe a few hundred thousand dollars and can't pay, you are in trouble, on the other hand if you owe a few hundred trillion and can't pay the debt holder is the one in trouble.

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