Benny Beaver Outed in NY Times
"“Everyone was saying: ‘Oh, it’s a negotiating tactic. It won’t last long,’” Mr. LaFrazia recalled.
But nearly a year later, the trade war shows no sign of cooling off. So ControlTek, the electronics manufacturer that Mr. LaFrazia runs near Portland, is taking steps to protect itself, a strategic shift that has been repeated in boardrooms and executive suites around the world in recent weeks.
ControlTek is rewriting contract language to make it easier to pass the cost of tariffs on to its customers. It is shifting supply chains out of China where possible, and redesigning products to avoid Chinese components where it isn’t. And as a tiny player in an enormous global industry, it is discovering that there is only so much it can do.
“We’re very much at the end of the whip getting thrown around,” Mr. LaFrazia said."
Good Read on the Trade War and its effects
Also, like I said, expect to see acceleration of supply chains leaving China.
[Over time, ControlTek has learned to navigate the system. Suppliers are sourcing components from Vietnam, Malaysia and other countries where possible, and ControlTek has begun factoring the tariffs into its product designs.
“We’ll design China out,” Mr. LaFrazia said.]
Comments
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Good for Benny
Fuck China -
We're at a fascinating crossroads. If American supply chains continue to "design China out", we'll begin to move towards two global economies that will be nearly identical but barred from one another. Think Amazon vs Alibaba but for the entire system. China's already a player in consumer products just by virtue of their enormous domestic market. Now there's going to be a big shift of state investment there if we continue to damage their manufacturing base.
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China still doesn't have the consumer base that the US does. A huge proportion of the economy is driven by government spending which for the last 5-10 years has been debt driven. Lots of building bridges to nowhere like we saw in Japan(Or building "islands" in the South China Sea). There's very little domestic demand for what they produce as part of a supply chain. Eventually, a consumer base may catch up and develop but with a declining and aging population its probably going to take decades at least. Until then, with a reduced demand for exports they will have to figure out a way to boost consumption to keep their economy out of recession(they probably won't). Exacerbating this is a reduced demand for exports from Europe because of depressed growth there as well. Sorry, BRIC's aren't going to make up the demand difference by a wide mile.GreenRiverGatorz said:We're at a fascinating crossroads. If American supply chains continue to "design China out", we'll begin to move towards two global economies that will be nearly identical but barred from one another. Think Amazon vs Alibaba but for the entire system. China's already a player in consumer products just by virtue of their enormous domestic market. Now there's going to be a big shift of state investment there if we continue to damage their manufacturing base.
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Well that's about to change. They're expected to finally surpass us this year with $5.6 trillion in retail sales. Given that their YoY growth on consumer spending is still double ours, talk of a recession sounds premature. Shit, we've been hearing about various Chinese bubbles ready to pop any minute now since our last recession. I'm not holding my breath.UW_Doog_Bot said:
China still doesn't have the consumer base that the US does. A huge proportion of the economy is driven by government spending which for the last 5-10 years has been debt driven. Lots of building bridges to nowhere like we saw in Japan(Or building "islands" in the South China Sea). There's very little domestic demand for what they produce as part of a supply chain. Eventually, a consumer base may catch up and develop but with a declining and aging population its probably going to take decades at least. Until then, with a reduced demand for exports they will have to figure out a way to boost consumption to keep their economy out of recession(they probably won't). Exacerbating this is a reduced demand for exports from Europe because of depressed growth there as well. Sorry, BRIC's aren't going to make up the demand difference by a wide mile.GreenRiverGatorz said:We're at a fascinating crossroads. If American supply chains continue to "design China out", we'll begin to move towards two global economies that will be nearly identical but barred from one another. Think Amazon vs Alibaba but for the entire system. China's already a player in consumer products just by virtue of their enormous domestic market. Now there's going to be a big shift of state investment there if we continue to damage their manufacturing base.
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I'd actually love a real link. I don't trust official Beijing numbers since, even CCP officials admit they are totally unreliable.GreenRiverGatorz said:
Well that's about to change. They're expected to finally surpass us this year with $5.6 trillion in retail sales. Given that their YoY growth on consumer spending is still double ours, talk of a recession sounds premature. Shit, we've been hearing about various Chinese bubbles ready to pop any minute now since our last recession. I'm not holding my breath.UW_Doog_Bot said:
China still doesn't have the consumer base that the US does. A huge proportion of the economy is driven by government spending which for the last 5-10 years has been debt driven. Lots of building bridges to nowhere like we saw in Japan(Or building "islands" in the South China Sea). There's very little domestic demand for what they produce as part of a supply chain. Eventually, a consumer base may catch up and develop but with a declining and aging population its probably going to take decades at least. Until then, with a reduced demand for exports they will have to figure out a way to boost consumption to keep their economy out of recession(they probably won't). Exacerbating this is a reduced demand for exports from Europe because of depressed growth there as well. Sorry, BRIC's aren't going to make up the demand difference by a wide mile.GreenRiverGatorz said:We're at a fascinating crossroads. If American supply chains continue to "design China out", we'll begin to move towards two global economies that will be nearly identical but barred from one another. Think Amazon vs Alibaba but for the entire system. China's already a player in consumer products just by virtue of their enormous domestic market. Now there's going to be a big shift of state investment there if we continue to damage their manufacturing base.
There have been a number of ways they've continued to drive demand but almost all of them have to do with China going from a net saver to a net debtor. How long it takes to catch up with them remains to be seen. Maybe they can manage to grow their way out but even rosy GDP growth numbers don't match debt growth numbers. -
https://www.cnbc.com/2019/01/24/china-to-surpass-the-us-in-retail-sales-for-the-first-time-forecast.htmlUW_Doog_Bot said:
I'd actually love a real link. I don't trust official Beijing numbers since, even CCP officials admit they are totally unreliable.GreenRiverGatorz said:
Well that's about to change. They're expected to finally surpass us this year with $5.6 trillion in retail sales. Given that their YoY growth on consumer spending is still double ours, talk of a recession sounds premature. Shit, we've been hearing about various Chinese bubbles ready to pop any minute now since our last recession. I'm not holding my breath.UW_Doog_Bot said:
China still doesn't have the consumer base that the US does. A huge proportion of the economy is driven by government spending which for the last 5-10 years has been debt driven. Lots of building bridges to nowhere like we saw in Japan(Or building "islands" in the South China Sea). There's very little domestic demand for what they produce as part of a supply chain. Eventually, a consumer base may catch up and develop but with a declining and aging population its probably going to take decades at least. Until then, with a reduced demand for exports they will have to figure out a way to boost consumption to keep their economy out of recession(they probably won't). Exacerbating this is a reduced demand for exports from Europe because of depressed growth there as well. Sorry, BRIC's aren't going to make up the demand difference by a wide mile.GreenRiverGatorz said:We're at a fascinating crossroads. If American supply chains continue to "design China out", we'll begin to move towards two global economies that will be nearly identical but barred from one another. Think Amazon vs Alibaba but for the entire system. China's already a player in consumer products just by virtue of their enormous domestic market. Now there's going to be a big shift of state investment there if we continue to damage their manufacturing base.
There have been a number of ways they've continued to drive demand but almost all of them have to do with China going from a net saver to a net debtor. How long it takes to catch up with them remains to be seen. Maybe they can manage to grow their way out but even rosy GDP growth numbers don't match debt growth numbers.
Unfortunately, to your point, validating any underlying economic data for any closed economy is a difficult task. The firm, emarketer, doesn't give too much detail about where the data originates.
https://www.emarketer.com/newsroom/index.php/2019-china-to-surpass-us-in-total-retail-sales/ -
FREE PUB!
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So what I took from this entire thread, which was excellent btw, is Trump is WINNING again!
Sorry HondoBros. Maybe one day the US will lose again and then you can be happy. -
[There is likely to be no end this year to the discussions about China’s economic growth rate and its relationship to GDP. By now, observers widely agree that China’s economy is not as strong as the GDP data suggests. And I suspect that only a handful of the least imaginative resolutely-mainstream economists (and, weirdly enough, this is more likely to be true of foreign than Chinese ones) still believe that China’s economy is as healthy and brisk as would be expected from a country whose GDP is growing at 6.5 percent and is expected to grow next year by more than 6 percent.
The problems facing the Chinese economy, and the worries expressed by Chinese leaders, are so deep that it no longer requires much imagination to figure out that reported GDP in China simply does not represent what we think it represents elsewhere. Yet some economists have not always understood the implications, and they often seem to refuse to adjust their methodologies to take into account the aforementioned problems with China’s reported GDP data. Yesterday, for example, I read a report written by an economist that discussed the implications of China’s PPP-adjusted GDP being the biggest in the world.]
[The point is that if there has been a divergence between China’s reported GDP figures and the country’s underlying economy, there are at least three completely different ways that this discrepancy can manifest itself. Observers too often confuse the three, however. For example, I have said many times that I believe that if China’s GDP were to be expressed in a way that is comparable with that of other countries, it would be growing at less than half the current reported growth rate.
A lot of people interpret this to mean that I think Beijing is falsifying the data, but I don’t mean that at all. In my mind, the biggest problem is that China’s reported GDP is an input into the economic system, not a measured output. To make China’s GDP figures comparable to those of other countries, the input numbers would have to be adjusted with some relevant output, such as the amount of bad debt that should be (but isn’t) written down in a given time period. If this amount were subtracted from China’s nominal GDP growth rate, the resulting adjusted growth rate probably would be a lot closer to what economists think of as GDP than the country’s actual reported GDP data is.]
https://carnegieendowment.org/chinafinancialmarkets/78138
I think the current party line is to pump up domestic consumption to try and make up for the loss of net exports. Since they've already been pumping private savings to float investment(the Chinese stock market as an example) and created lots of private debt I don't think it will work. People are feeling the pinch of credit drying up. As always though, LIPO. -
But it's a TAX!!!!!!UW_Doog_Bot said:
"“Everyone was saying: ‘Oh, it’s a negotiating tactic. It won’t last long,’” Mr. LaFrazia recalled.
But nearly a year later, the trade war shows no sign of cooling off. So ControlTek, the electronics manufacturer that Mr. LaFrazia runs near Portland, is taking steps to protect itself, a strategic shift that has been repeated in boardrooms and executive suites around the world in recent weeks.
ControlTek is rewriting contract language to make it easier to pass the cost of tariffs on to its customers. It is shifting supply chains out of China where possible, and redesigning products to avoid Chinese components where it isn’t. And as a tiny player in an enormous global industry, it is discovering that there is only so much it can do.
“We’re very much at the end of the whip getting thrown around,” Mr. LaFrazia said."
Good Read on the Trade War and its effects
Also, like I said, expect to see acceleration of supply chains leaving China.
[Over time, ControlTek has learned to navigate the system. Suppliers are sourcing components from Vietnam, Malaysia and other countries where possible, and ControlTek has begun factoring the tariffs into its product designs.
“We’ll design China out,” Mr. LaFrazia said.]
