Now I’ve heard it all, China “to lead” on free trade!

Mr Rowan Callick is making some sense today:

Mei Xinyu, senior researcher at China’s Commerce Ministry, said Mr Trump’s planned withdrawal from the TPP meant China’s proposals for free-trade arrangements would gain more traction and provide better possibilities.

“China is hoping Australia will be actively involved” in new regional trade arrangements, especially in providing technical and financial investment, Dr Mei said.

Professor Zhou said promoting “freer” trade comprised China’s core international trade policy.

“If the US does withdraw from the TPP, it means that America’s own policies will become more introverted and isolated, so this will naturally give more say to China in developing the mechanisms of international trade,” he said.

“Becoming a leader in inter­national trade may not be an entirely positive move for China, since the country also has to pay a higher cost to become the leader.”

Professor Yan said Mr Trump seemed intent on destroying regional co-operation, which meant the RECP as well as the TPP was doomed.

To wit:

Chinese officials have warned of retaliation against the US if Washington levies tariffs on the world’s second-largest economy as President-elect Donald Trump has threatened, US Commerce Secretary Penny Pritzker has revealed.

“The Chinese have said they’ll have to retaliate,” Ms Pritzker said in an interview on the sidelines of high-level US-China trade talks in Washington.

That could harm US workers and industries and hurt the US economy, she said.

Mr Trump has said one of his top priorities when he takes office will be to label China a currency manipulator. He has repeatedly threatened to slap Chinese imports with hefty tariffs. Ms Pritzker also criticised Mr Trump’s promise to withdraw the US from the trans-Pacific Partnership trade deal the Obama administration struck with nearly a dozen other nations.

The major cost from leading on trade does not necessarily spring from trade agreements themselves. It is more that it usually also comes with some status as a reserve currency. In that event, everybody begins to chase your currency with pegs and it rises as they export their goods to you then recycle the profits into your capital markets. Martin Wolf has more:

…there are limits to how far China might replace the US, let alone the west, in world trade. If we look at shares of global gross domestic product at market prices, a crude measure of actual purchasing power, China’s share jumped from 4 per cent in 2000 to 15 per cent in 2016. The share of Asia (including Japan) is 31 per cent. Meanwhile, the US and the EU together account for 47 per cent of global GDP. Similarly, despite growing rapidly, China’s share in global imports was only 12 per cent in 2015, while that of Asia was 36 per cent. The US and EU (excluding intra-EU trade) still accounted for 31 per cent of world imports.

Moreover, this understates the role of high-income economies in world trade, in two significant respects. First, much of the world’s final demand still comes from these economies: at market prices, Chinese consumption was roughly a third of that of the US and EU combined in 2015.

Second and far more important, the knowledge driving much of contemporary trade comes from companies of high-income economies. Chinese companies have still no comparable depth of know-how to offer.

That is quite clearly a burden that China is still unable to shoulder given how dodgy its debt markets remain, how wildcat its wider markets remain, how prone to intervention, how replete with trade interests and how immature are its institutions.

In short, for China to lead on trade liberalisation, it would have let everyone else do a China to China. Yet capital is desperately trying to get out of the Middle Kingdom not get in, even as its trade surplus is as fulsome as ever while operating the most oversupplied and protected global dumping industries on earth:

wergw

The idea of China leading on free trade really is a bit of a laugh!

Comments

    • Because the US has been awesome.

      Meanwhile – the UK invaded almost every single country on earth and enslaved half the planet in “free trade”.

      Are we talking free trade or just neo-colonialism and an extreme disdain for anything not white / christian / speaking proper English.

      .

      • For first worlders? Yes, America has been awesome. I’d feel way safer saying nasty things in America about America or its government than I would in China. I’d also feel a lot more confident in my ability to obtain legal representation in matters civil or criminal. America has behaved poorly on a number of issues, but China is not even close to as ‘free’ as America is.

      • “Meanwhile – the UK invaded almost every single country on earth and enslaved half the planet in “free trade”.

        I reckon those same countries use things like:
        * Internal Combustion steam engine.
        * Incandescent light bulbs
        * Electromagnets
        * Bicycles
        * Hypodermic syringes
        * Steel Alloy
        * Light switch
        * Screw cutting lathe

        et. al… just as handful and as reasonable trade offs yeah?

        Now list those against the Chinese
        * Wheelbarrow

        The end.

        We can also talk to peoples like the Maiyue and the Guanxi how they feel about Chinese invasion… ooops, no we can’t, they don’t exist anymore. Perhaps we’ll leave it to the Tibetans before their culture is wiped out in 50 years.

      • “the UK invaded almost every single country on earth and enslaved half the planet”

        Chinese government has killed millions of ITS OWN people. and invaded/taken over bullied many other Asian countries in history. We just don’t learn about it in school because we focus mainly on Western history.At least the west admits to past injustices e.g. slavery etc. If it had been China, they would have just changed the history books or lied about their past as they do about pretty much everything including their GDP figures.

      • UK ruled 25% of the world. Thailand was never colonised and it is still a corrupt 3rd world nation.

        UK ruled Hong Kong for 100 years till 1997. Even today, Mainland Chinese go to HK to buy baby milk powder.

        Compare HK to any city in China.

        UK believed in rule of law and fair play. Perhaps that is why the courts in India are independent of the politicians?

    • It takes two to tango. How much did Australia give away to China on the latest free trade agreement? How much did we get back? Where is Andrew Robb right now? Is it China’s fault when our former Minister for Trade sells out Australia so cheaply?

    • Yes. Another interpretation is:

      We (China) will buy Australia and own its inhabitants when we undercut Australian businesses by using minimum labour costs, combined with environmentally damaging cheaper production and tighter social controls. At an optimum level we will assert that Australia is ours and we will take over our rightfully owned lands to rule by our laws.

      Trump was right about this one.

  1. Chinese companies have still no comparable depth of know-how to offer.

    Honestly – this has to be one of the single dumbest thing I have EVER read.

    Don’t completely destroy your credibility over your slavish devotion to old and outdated alliances based on being

    1) White

    2) Christian

    3) Speaking English.

    It really does just make you say stupid things, and look like an idiot to everyone.

    This “blog” still hasn’t seriously, at any stage, covered the One Belt One Road initiative – for a “blog” which stakes its entire credibility on reading China – this is a pretty serious fuck up.

    Now get back to me on China when you can understand their status as world leaders in areas from computing (yes, for the last decade) through to high tech materials, rockets, and now even space and aeronautics.

    Sad as hell watching this blog throw its reputation down the dunny chasing the WASP racist dreams.

    .

    • Come now, Terence, you are all over the place here. China is not on any objective measure a free trading nation. By the same token you seem to hate Western nations that are.

      Which is it, man?

    • More please. It’s funny. This style of propaganda is traditional and though Singapore and Malaysia keep it alive it’s great to be reminded of how unsophisticated it is; that it shrieks over and over, and lacks any degree of rational thought.

      • Yes, funny Jake but also a little scary. People really believe this sort of BS. My first trip to Singapore was so long ago the original Changi airport was still in use. I also had a lot of dealings with Chinese at uni (and a few Chinese girlfriends)……..’white, Christian racists’??……well, in my experience, to the extent that generalisations are valid, Chinese are probably the most racist people on the planet

    • Here we go folks – the everything that’s old is new again (as Jake identifies above) combined with the usual ‘how dare you critcise us, YOU”RE WHITE, WHITE PEOPLE ARE RACISTS’ nonsense that is of course the lingua franca of the PC/SJW cabals

      We must live in perpetual sorrow and apology for our white imperialist forebears. And locally we must cringe before the almighty multicultural ideologues. It would be sort of funny/pathetic if these absurdities weren’t so imbedded throughout our so-called ‘leadership’

      Allowing globalist multi-national corporations and financial engineering operatives to take over the economies of the West and facilitating the intrusion of neoliberal propaganda into every aspect of our lives has resulted in nothing other than the provision of endless, vastly excessive consumption to the detriment of us all…… and it now is being used to support the ‘China is the world’s workshop’ monster.

      Let’s hope Trump does slap on a few tariffs (after all it appears that China is in breach of any number of WTO currency manipulation and dumping rules) – then, maybe, just maybe we can start the long painful process of recalibrating the world economy into something that just might actually work for the bulk of average people and not just the 1%ers

    • Initiatives are just that. The West has had plenty of them. Complete the fucking trade route before harping on about it. How many empires have tried to make their mark in that region, how many broken their swords there?

    • Terence, ” down the dunny” ?
      A few more occerisms and you’ll have me believing that you grew up in Australia like your Field Medalist namesake.

    • I think that one of the things many people in the west find troubling about China is the jingoistic nationalism that we often hear. There is no doubt that chinese people are very industrious and great innovators, however to be fair in terms of technology, they have stood on the shoulders of giants. Computing is a good example – to get where we are now required centuries of intellectual effort in mathematics, physics, engineering chemistry and optics. The western system, despite all its flaws actually worked well and to be honest, some of the magic dust that made it happen goes right back to the greek philosophers.

      Over the last millenia China probably had most of the ingredients to achieve an Industrial Revolution on its own. It didn’t happen – possibly for cultural reasons. Maybe those cultural forces are the same ones that result in China having a controlling communist system of government. When people of chinese extraction start railing against racism and bigotry in the west, it usually is just a smoke screen. The big problem western people have with China is cultural. The authoritarian communist government just makes us feel uneasy, because we don’t understand it and we don’t like it. We wonder why chinese people put up with it.

      Its all very well to boast about how China is the new technological leader in so many fields, but there is considerable historical evidence to support the idea that true innovation and creativity only thrives in societies which value personal freedom. China is reportedly introducing a social media system where people gets points for saying pro government things and lose points for saying bad things – like Tiannamin Square. Do you think we will get another Alan Turing or Richard Feynman from that social cauldron of distrust?

  2. wasabinatorMEMBER

    I saw all-Chinese adverts plastered over my Melbourne train yesterday. Signs of the new regime.

    • Not that new. I can recall Japanese signs in Cairns in the 90s. The Ryde/Eastwood/Chatswood area has had all-Chinese adverts and pamphlets for ages. My local ANZ had lots of Mandarin signs until recently.

      • Absolutely – I went to the Christian Brothers Chatswood in the ’60’s (there was 1 ethnic Chinese boy in the school out of about 1200 students – we were told his family came here in the gold rush days and that it was because of his religion that he didn’t have to go to Mass like the rest of us…..have wondered about all that. Sure htere is an interesting story behind it all).

        I was in Sydney on business that took me back to Chatswood for the first time on the mid 90’s. I was flabbergasted to see that the school’s main signboard’s predominant script was Mandarin with English subtext in letters half the size……….and Chatswood railway station at school finish time? I was literally the only white face on the platform

      • Davidjwalsh, if youre surprised with the changes in Chatswood, perhaps cross over to the southside and check out Hurstville where mainland chinese born make up 57% of the population. Throw in their local born offspring and the ratio is higher and we are talking changes in demagraphics which have only occured in the last decade. Chatswood and Hurstville are not the only places with visible changes in Sydney.

      • Well, at least it’s not Arabic.

        http://www.smh.com.au/business/media-and-marketing/optus-removes-arabic-ads-from-shopping-centre-after-alleged-threat-to-staff-20151116-gl0njn.html

        In the 80s when I went to primary school in Narwee, I was the only black-haired kid in class, and there was a total of 3 Asian kids in the entire school. Things have definitely changed a lot since then. It’s not only the Chinese coming to Australia either : in the Westmead/Wentworthville area, nearly everyone is school are Indian!!

      • @davidjwalsh I’m an ex- North Sydney Boys High School from an era when we played competitively in the Waratah Shield Rugby competition and I currently work in Chatswood. It’s ground zero here!!!

  3. Every businessman with a rational mind one only need to go through his list of trade partners to find out who is his most important partner. Any arguments besides this are just a waste of time for his business. A smart man will develop good relations with his most important partner, while an idiot will do the reverse with a bit of a laugh. 🙂