Fake predictions, US-China trade war outcomes amid US elections
George Siy
President Trump enters the US elections about 10 points behind Biden, with the US economy resurging 31 percent in the last quarter, but still below its level in January 2020. What is the status of the trade war he created — for the United States and the world?
The US trade war hurt China but did not increase US manufacturing. The US goods trade deficit with China dropped from $420 billion to $345 billion in 2019. But this also hurt the US, where its overall deficit at $578 billion in 2019 was almost the same as in 2018, as the US imported more from Mexico, Vietnam, the European Union and others. Trump’s pressures on US companies and tax moves created few moves to the United States.
Surveys showed that while a large number were considering alternative manufacturing locations, only 4 percent were contemplating a return to the US.
Massive investments diversified to Asean countries, the major winner being Vietnam, including Samsung’s $17-billion investment. But these companies are diversifying rather than leaving China in a “China plus One” strategy.
India is a key destination, including expansions by Foxconn’s $1-billion plant and several other major manufacturers. These businesses have found problems in India, including infrastructure, local content requirements and taxation issues that have made Nokia and others leave. But India has a huge market that grows at 15 percent a year for smartphones versus some 3 percent for the world. Apple’s prices and lack of features like dual SIM that other brands are supplying, however, have not helped the tech company much. Restrictions to opening Apple stores and sources of supply that are not yet developed in India and taxed high when imported are issues.
A practical Indian government under Prime Minister Narendra Modi, however, has been addressing these practicalities now, adjusting the tax requirements, budgeting for support infrastructure, arranging for a substantial $6.6-billion in financial incentives, and resolving each issue in regulation and the blockages to Indian markets. Attractions are Indian wages, at a fourth of China’s $700 a month, with a highly technical education.
This practical outlook of Modi also demonstrated itself when incidents of recent border disputes with China, including shootouts, were each settled by discussion and each side compromising, refusing the provocations of Western media and local constituents from focusing on and expanding the issues. India and China, despite various existing disputes, also help each other focus on business, which the Philippines should learn from.
Truth leads to organization and progress. Sarvesh Mathi, Indian technology writer, points out the above information on both positive and negative points of India and China. He bases his article on statistics and ground facts rather than outright imagination used by many Philippine writers. The approach of this writer is the type that will bring his country and the world forward to innovate, solve things together and share benefits, and compromise on differences.
Philippine Daily Inquirer’s Lito Zulueta wrote an article series quoting liberally from Steven Mosher, a supposed expert on China who has been questioned many times by true subject matter experts. Mosher claims that China was massively lying about having Covid-19 under control when it wasn’t. While China, like every country may have some level of government PR and statistical deviations, except spurious ones, no serious external estimates of the deviations resulting from interpretation go above a maximum of some 4,000 casualties. This is miniscule compared to the US’ over 230,000 deaths and 9 million infections, with Trump gagging hospital workers and the military, firing his top navy officer for pleading for Covid help, attacking the media and his own medical experts as well as the World Health Organization and other information gaps.
Today, the Chinese are having huge pool parties in Wuhan, and domestic tourism trips at over a half billion visitors in just a few months, with the economy growing to near pre-Covid levels. These were covered by US and EU media, which would be all impossible to be happening if Mosher’s “expert” speculations are correct. Debunked again! But he will undoubtedly be quoted again by some writers who may not have time to research or are motivated in some way. Would they be open to actual visits when quarantines are eased, to check the actual situation?
While the trade war hurt some sectors of China, exports are only less than 20 percent of China’s economy, and the economy is growing far beyond the export sector. Ant Financial, largest IPO ever, is listing to raise $34.5 billion (Saudi Aramco was at $29.4 billion) and has attracted $3 trillion in orders from its dual listing in Hong Kong and Shanghai, showing confidence in the Chinese capital markets, even without tapping US exchanges — an indicator that China has been able to reduce its vulnerability to US finances. While institutions take the majority of the allocations, individuals drive the majority of daily turnover — with over 5 million retail accounts in Shanghai placing $3.8 trillion of orders.
Hong Kong retail attracted more than HK$1.3 trillion. These are not the actions of an oppressed people but of a society that believes it can benefit from the fruits of its decisions in life.
We should learn from and be friends with the US as well. It still provides the inspirational atmosphere that nurtured the Elon Musks and Steve Jobs. Four of the five trillion-dollar companies are innovation-based and from the US: Apple, Microsoft, Amazon and Alphabet (the other is Saudi Aramco). The largest and most advanced military, space and biological studies and others are still there. Millions of Filipinos live there and dream of living there.
But China is fast rising and, like all countries, deserves respect, rather than indiscriminate demonizing. India is also a large market, needing to organize and open up as well.
Vietnam is opening up its investments and retail even to majority or sole foreign control (a key factor in Vietnam GDP per capita overtaking that of the Philippines in 2020). The EU is restructuring and will not mind looking for partners. Even the US’ most sophisticated players in manufacturing, finance and marketing are interested in all these sources and markets. JPMorgan and Goldman Sachs have just applied for majority control of their China operations, those of various EU banks have already been approved. BYD electric car company, invested in by Warren Buffett, had earnings surge to over $200 million in just the last quarter. Tesla is about to double its car production and sales in the Shanghai factory.
That is, these people are not interested in war if it can be avoided.
Our politicians and writers may visit and see that the great majority of the population in China are energetic, directed and empowered to plan their lives and improve their communities. The ones here are interested in work and business, not planning on taking over the Philippines or Filipino jobs. They create many jobs, far more than their critics.
The new normal will require us to examine more models of success we Filipinos can adopt and formulate our own from, and to make friends and focus on working toward our improved future instead of imagining things and pushing for war, instead of complaining of things that can mostly be solved or managed.
George Siy is a Wharton-educated industrialist, international trade practitioner and negotiator and director of the Integrated Development Studies Institute (IDSI). He has advised the Philippines and various organizations in trade negotiations with the Association of Southeast Asian Nations, Japan and the United States.
New Worlds by IDSI aims to present frameworks based on a balance of economic theory, historical realities, ground success in real business and communities and attempt for common good, culture and spirituality. We welcome logical feedback and possibly working together with compatible frameworks. idsicenter@gmail.com
**Also published in: https://www.manilatimes.net/2020/11/01/opinion/columnists/fake-predictions-us-china-trade-war-outcomes-amid-us-elections/789713/