2 Takes on Why China 'Wins' a Trade War with America

♠ Posted by Emmanuel in , at 12/29/2016 05:21:00 PM
The premise of Donald Trump's China-bashing rhetoric is that the United States still holds all the good [trump?] cards in the global economy. As such, it can pretty much do as it pleases to serve its own interests. Because of lackluster leadership by others, however, the United States has allowed others to take advantage of it time and again. So, Trump proposes to slap tariffs of up to 40-some percent on Chinese made products to level the playing field. [1] But what if the premise is wrong? Winter Nie of the famed IMD business school not only argues that China holds the better cards--it has more export markets aside from...
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Actually, Trump's Been Great for Mexico's Exports (So Far)

♠ Posted by Emmanuel in , at 12/26/2016 02:11:00 PM
Koreans and others are still doing alright in Mexico. Arguably even better in recent months. Let us first get an update on the state of Mexican exports to the United States--by far its largest export market. Buoyed by automakers setting up shop south of the border to manufacture automobiles and automobile components at significantly lower costs destined for the United States, it's become a key manufacturing hub for this industry. Consequently, Mexico is now the second-largest exporter to the US (China is tops) after overtaking Canada. To an economist, it simply makes common sense. To the isolationist-protectionist, bunker-mentality...
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Xenophobe Trump Needs Migrants to Hit 3% GDP Growth

♠ Posted by Emmanuel in , at 12/22/2016 02:11:00 PM
To generate growth, the US needs more rather than less people from abroad. The math is simple. Amidst the barely concealed xenophobia of Trump's presidential campaign, something is becoming more evident the nearer he approaches the Oval Office: His economic promises go against what's been found possible in terms of generating growth relative to employment. To begin, witness another of his "clash of civilizations," "us against them" type remarks after the recent Berlin attacks: President-elect Donald Trump characterized the gruesome truck attack on a Christmas market in Berlin as part of a systematic campaign by Muslim...
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Semi-Detached: The Architectural Roots of Brexit

♠ Posted by Emmanuel in at 12/09/2016 03:05:00 PM
Look closely enough and you might find the roots of Brexit. I almost forgot to post this interesting architectural analogy made in the Financial Times in the wake of the dreaded Brexit. With all sorts of thoughtful commentary of the "I knew this was going to happen all along" variety made referencing British history, this was the best of the lot. For instance, in 1534, Henry VIII famously renounced the Catholic Church and created the Church of England for the main purpose of facilitating his divorce from Catherine of Aragon. So, the 2016 Brexit was simply another move towards isolation from the continental cousins. This...
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No @#$%: China Stats are Admittedly Fictional

♠ Posted by Emmanuel in at 12/08/2016 03:47:00 PM
The incredible macroeconomic figures the PRC has released in recent decades year in and year out without fail beggar belief. Not only are they exceeding those of most other countries for extended periods of time, but they also show amazing regularity. Most of the time, they come out in line with forecasts made by PRC authorities. Now, however, we are seeing some changes behind the curtain. As the Communist leadership aims to produce more meaningful (read: more accurate) readings of its economic performance, the onus is on statistical authorities to fess up about overstated figures: China’s top statistician has acknowledged...
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Corporate Racket: Pretend to Leave Trump's USA

♠ Posted by Emmanuel in , at 12/04/2016 03:39:00 PM
Wave this in front of the dimwit Trump and collect lots of government money. US President-elect Donald Trump's avowed interest in keeping American jobs Stateside--no matter how misguided they may be--are nonetheless a lucrative opportunity for companies if they play their cards right. In the run-up to the dreadful day he actually takes office, there have already been a number of instances that may set the template for what follows. First, he has (wrongly) claimed credit for keeping jobs Stateside that weren't going anywhere, anyway: President-elect Donald Trump took to Twitter on Thursday night to say Ford Motor Co....
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From 1985 Plaza Accord to 2017 'Trump Tower Accord'?

♠ Posted by Emmanuel in , at 11/30/2016 05:29:00 PM
Like Macaulay Culkin, foreign exchange markets circa 2017 may need some direction from Trump. Too strong a US dollar is not usually good for the rest of the world economy, but that's what we have at the moment with widespread expectations that the United States will hike interest rates faster with a "President Trump." As growth is expected to ramp up through pump priming, the dollar has strengthened accordingly. A casualty since the November 8 election result has been emerging markets--currencies, bonds, stocks...you name it. Not only do they have to deal with an increasingly more attractive US market, but there's also...
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Life at Samsung's Vietnam Factory After Galaxy Note 7

♠ Posted by Emmanuel in , at 11/23/2016 06:00:00 PM
No thanks to Galaxy Note 7, it won't be a very merry Christmas in these parts. The recall of Samsung's Galaxy Note 7 worldwide for its battery catching fire has damaged any number of things including Samsung's sales and profits, Samsung's reputation (though some would say less than you think) and...Samsung's hiring of local workers at its Vietnam assembly plant[s]. Nearly a third of Samsung's assembly operations are now being handled in the lower-cost Southeast Asian destination. Obviously, hopes were high that business would pick up at year end when retail demand is highest for the Christmas season. However, what we instead...
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Korea, Japan Try to Save Their Shipping Industries

♠ Posted by Emmanuel in at 11/21/2016 04:53:00 PM
It's better to merge than to fade away: the tale of global shipping. It is no big secret that the global shipping industry is currently encountering difficult conditions. The bankruptcy of Korean shipping giant Hanjin points out how overcapacity--too many ships have been built in expectation of rising shipping demand worldwide in recent years that didn't materialize--has dented the fortunes of this industry. Supply exceeds demand, and correcting the oversupply has not been a pleasant process for those involved. Given its crucial place in ensuring that goods manufactured in East Asia get to consumer markets elsewhere,...
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Economic Folly: Thai Rice Subsidies Never Die

♠ Posted by Emmanuel in , at 11/19/2016 05:13:00 PM
The importance of rice production to the Thai economy cannot be overstated. In the past, I have discussed [1, 2] the current ruling junta's efforts to punish the overthrown Yingluck Shinawatra for her abuses in overpaying for rice to buy the favor of those in rural communities. Appallingly, however, the same junta is now planning to implement another rice subsidy program. This while it is busy pursuing the prosecution of Yingluck Sinawatra. The junta's calculations are aimed at regime survival. With rice prices at multi-year lows and the recent death of longtime figurehead King Bhumipol, it needs to prop up its domestic...
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Will Apple Supplier Foxconn Make iPhones Stateside?

♠ Posted by Emmanuel in at 11/18/2016 11:56:00 AM
If Apple supplier Foxconn starts assembling iPhones Stateside, Tim Cook may not need to visit China anymore. Despite the US stock markets rising since the election of Donald Trump due to expectations that he will inject massive amounts of stimulus into the economy, a notable laggard has been Apple. Like other technology companies with supply chains that are extensive in Asia, Trump's protectionist rhetoric has been of concern to investors. That is, will punitive tariffs be applied to practically all the things Apple sells since most of it is made in the Far East? (Is that now the Fear East?) The Nikkei Asian Review has...
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Trump Makes America #1 Environmental Rogue Regime Again

♠ Posted by Emmanuel in , at 11/13/2016 05:32:00 PM
Welcome to the coalface, circa 2016 in TrumpWorld. As a lover of conspiracy theories, Donald Trump famously said that climate change is a hoax perpetuated by the Chinese (nevermind that they're now the world's largest carbon emitters, but hey, what's logic gotta do with it?) What are the consequences of this belief? Initially, Trump may withdraw the United States' participation in the Paris Agreement. Oddly enough, the Chinese--once the most obstructive of countries on dealing with the issue--are now cautioning Trump on junking the agreement at the ongoing UNFCCC Conference of the Parties in Morocco: In a sign of how far...
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To *Really* Escape Trump, Yanks Should Move to Bhutan

♠ Posted by Emmanuel in at 11/11/2016 11:01:00 AM
Americans fleeing TrumpLand are well-advised to consider splendidly isolated and beautiful Bhutan (pop. ~760k). While the election of Donald Trump as US president was as shocking to me as it was to the rest of the world, something else struck me as equally baffling: Americans unhappy about this turn of events--his opponent won more votes overall, remember--began crashing websites for immigration to Canada and New Zealand. I presume that they were looking for Anglophone nations to move to with generally liberal social orientations. However, consider that these countries are part of the "Five Eyes" intelligence consortium,...
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Beautician 1, Brexit 0: EU's Turn to Stop It

♠ Posted by Emmanuel in , at 11/03/2016 03:45:00 PM
The pound flies after the court decision was released requiring parliamentary approval of Brexit. A few months ago I featured a story on the legal challenge mounted by British hairdresser Deir Dos Santos concerning the need for UK parliamentary approval to commence on the process of exiting the European Union. In EU jargon, this is known as the Article 50 process. Today, the ruling was issued in favor of Deir Dos Santos and against Prime Minister Theresa May who intended to serve Article 50 to the EU by March of 2017. My belief is that this is not a mere "technicality" on the road to Brexit. Instead, requiring parliamentary...
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Whew! EU-Canada FTA [CETA] is a Go

♠ Posted by Emmanuel in , at 10/30/2016 12:45:00 PM
In this year of Brexit 'n' Trumpism, the globophobes have been defeated. Wonders never cease. Perhaps the Europeans are not dead in the FTA negotiation sweepstakes after all: After the Walloons in Belgium held up the Comprehensive and Economic Trade Agreement [CETA], this EU-Canada FTA is set to go ahead after all after the Walloons were assuaged. It is only a matter of hours before the Canadian PM Justin Trudeau arrives in Brussels to finalize the deal: After several rounds of talks late into the night Belgium formally gave its endorsement on Saturday morning. Smaller than the U.S. state of New Jersey, Wallonia region...
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Mrs Clinton's New E-Mail Investigation Hits Mexican Peso

♠ Posted by Emmanuel in , at 10/28/2016 09:35:00 PM
There's an interesting article on MarketWatch on how the FBI issuing a recent statement that it would look further into Hillary Clinton's e-mails--here we go again--has affected various markets. Earlier in the day, it looked like US stock markets would end a three-day losing streak, but the uncertainty reintroduced into the American presidential elections put paid to that as understandable fears of a Trump presidency returned. More interestingly from an international perspective, the Mexican peso hit the skids once more as "Build a Wall" Trump and his NAFTA-canceling xenophobia were given a lifeline: Just when you thought...
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Duterte and the "People's Republic of the Philippines"

♠ Posted by Emmanuel in , at 10/23/2016 03:55:00 PM
Duterte claims the Philippines is now in the PRC's ideological flow. Take it with a whole heaping of salt. Friends abroad have asked me how to make sense of the bombastic and oafish Philippine President Rodrigo Duterte. My answer is always the same: Watch what the Philippine government does and not what he says since the latter is a completely unreliable guide to national policy. A case in point is his most ridiculous statements yet during a state visit to China. Apparently overwhelmed by the welcome granted to him that tinpot dictators the world over have also been given, Duterte began rambling incoherently as is his habit: In...
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Venezuelan Oiler PDVSA: Debt Swap or Bankrupt

♠ Posted by Emmanuel in ,, at 10/19/2016 04:25:00 PM
"Delay when we need to pay you back...or we'll default on Oct. 28!" Investor relations, Venezuela-style. When oil prices were at $100 or higher, Venezuela was flying high, using oil revenues to fund "socialist" PR stunts such as selling subsidized heating oil for poor Americans. As the price of oil tanked, however, the Venezuelan government has been less able to mount such extravagant displays of "generosity." After years and years of low oil prices, we instead have a situation in which state-owned oil company PDVSA is now threatening its creditors with default by next week if they do not accept the swap of bonds due in...
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From Busan to LA, Bankrupt Hanjin Hits World

♠ Posted by Emmanuel in at 10/18/2016 04:18:00 PM
"Busan, we have a problem." The oversupply of shipping vessels in the wake of world trade slowing down in recent years has resulted in the bankruptcy of one of Korea's most venerable firms, Hanjin Shipping. For years it has brought Korean-made goods to the rest of the world, but that didn't stop it from declaring bankruptcy earlier this year as its financial position became untenable. Its ships have not been able to dock at the world's major ports--those large enough to accommodate these large ships--over legal complications. What's more, shipments meant for the Christmas season have been stranded at sea together with these...
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Yo Blair! Can ex-PM Tony Save Britain from Brexit?

♠ Posted by Emmanuel in at 10/11/2016 03:35:00 PM
Him again? Blair, Labour, and preventing a "hard Brexit." There was an interesting story which came out over the weekend concerning former British Labour Prime Minister Tony Blair returning to (presumably) Parliament due to his concern over the UK's imminent decline in its global standing from Brexit. In particular, Blair is wary of the danger of a so-called "hard Brexit" being favored by the current Conservative PM Teresa May--a nasty divorce from all EU institutions. Being out of office giving Blair little voice in the whole sordid business, there appears to be only one recourse... Former Prime Minister Tony Blair could...
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Worst Branding Deal Ever? "Trump Tower Manila"

♠ Posted by Emmanuel in at 10/08/2016 09:25:00 PM
Is getting your private parts groped part of the deal if you buy a unit at this Trump-branded Manila condo? In psychology, there is a term "colonial mentality" referring to those living in former colonies adopting an inferiority complex towards their former colonizers. This phenomenon is particularly acute in the Philippines, where American-sourced things are typically regarded as superior to their local equivalents. If it has a whiff of the US, then it must be better by virtue of the association. Yippee, America #1! Philippine developer Century Properties certainly exudes this thinking by pandering to American celebrities....
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