Trading wars impact

Hong Kong people is anti-China, fake Japanese and fake British. Why would I trust your view on China? Also, the fact that you came to USA is self-selection i.e. hold that above view :rofl: Any proof that you are not biased?

Less but 18.4% is still a big number.

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IMO, it is not fake promise, but original intention of Jack Ma is defeated when tariff is added. It made sense for Jack ma before tariff, but it does not make economic sense after tariff.

How? Here is the scenario (my guess).

What others are doing presently? Example Apple iphone (same applicable to every company): They design product in USA, and manufacture in China ship through ireland. China price is $250 reaches Ireland manufacturing (Priced $750) and then reshipped to USA, sold $1000.

The price $250 includes 55% corp tax in China

The profit $750-$250 = $500 is taxed at ireland with 17.5% corp tax

The profit $1000 - $750 = $250 is taxed with 39.5% (pre-2017 reform)

Pre-tariff.

He will have a manufacturing/supply chain main office in USA and distribution centers across USA, sales office across USA. This will be eventually 1M jobs.

Jack ma , current profits are taxed at China at 55% corp tax. When USA tariff was changed from 39.5% to 21%, he finds it attractive to have office in USA (as US becomes tax haven country like ireland). Jack ma will have maximum profit at USA at 21% and will declare min in China at 55%. His main manufacturing will still be in China for cost effective. He liked to move some office (as if manufacturing base - for corp tax compliance ).

By doing this, Jack ma will save billions in USA tax haven country. In this, he will even supersede easily Amazon as his cost be less than Amazon.

Post-tariff

USA will apply 25% tariff means effective tax rate is 25%+21 = 46%. Even though it is less than 55% rate at china, considering all overhead, it does not make sense for him to move it to USA.

Overall, it does not make sense for him now.

If Trump is not applying such tariff, reducing corp tax will be counter productive in USA and BABA will over-through Amazon as Amazon becomes a retail industry and BABA will become like AMAZON.

Think as if you are in Jack Ma position.

Everything is driven by economical sense, esp from company point of view, be it Jack Ma or Mark Z or Jeff B !!!

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Hard to believe that people talk about China moving away from being a export oriented nation and OBOR at the same time. OBOR is meant to consume the surplus capacity of Chinese factories.

OBOR is neo-colonism and will fail. But China is no west and “take loan and get owned” wont work in today’s world.

No point debating, let time be the judge.

Replace fake with pre-empt tariff :slight_smile:

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Lets not talk neo-colonism but isnt OBOR an export side initiative from China. How does these two arguments that China is not focusing on exports, and doubling down on OBOR, fits together?

No more OBOR, is called Belt and Route. Facilitate two way trade, why become export oriented?

Alright BR not OBOR.

For the port in Srilanka, for which Chinese gave billions of dollars in loan, and now own the port for 99 years, what did China imported from Sri Lanka?

Heard of CPEC? its part of BR. Look it up and see what Pakistan is exporting back to China.

In BR initiatives across these poor countries when China makes billions of dollars in investment I am sure China gets paid back through imports from these countries. Correct? Its trade, isnt it?

Are you saying the BR is similar to Marshal Plan? Does it matter since receiving nations eventually developed its infrastructure and economy? No overnight success, things take time. Transition might look silly. Don’t be influenced by American journalism, is well known is no longer reporting facts, too much sensational reporting.

I think you are side tracking it again just like you kept correcting me on what its called but never answered the question that i asked.

Here it is again (2 questions now to simplify it further)
Since BR is all about trade (import and export) what is China importing from the countries where billions of investment is being made by China. And when China is investing who is doing the construction, supplying equipment and machinery, doing the EPC work? Is it Chinese firms or the local firms?

My point is BR is all about “Exports” to other countries. From overcapacity ridden chinese state owned firms. China cant move away from being an export oriented nation. They are just trying to diversify in customers. So the argument that China is moving away from being a export oriented nation and doubling down on BR is fundamentally inconsistent.

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Let me tell you how China invest in BR:

-Chinese state owned banks gives loan to the poor nation to build an infrastructure
-The loan money goes to an escrow account maintained in HK
-Chinese companies are hired to do the 95% work by cost for the project. All equipment, machinery, people are supplied by Chinese firms. For Power plants even future coal supplies will come from China (ka ching!!!)
-The Chinese companies are paid directly through the escrow account. The money actually never reaches the poor nation.
-The poor nation now has to pay back to China over many years for using the Infrastructure. In most cases they cant pay back. China then comes and owns the infrastructure.

All this using the surplus money generated from exporting to US. US is effectively funding China to rob these poor nations of their land and infrastructure.

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You’re talking about short-term/ transition. Things take time. You need to build the infrastructure first. Current infrastructure is hard to trade in volume, may not be able to trade too. Goal of Belt and Route is long term.

So you yourself are admitting that short term benefit is for China only? Its an export correct? All Chinese investment in BR is actually a export from China. So China is not able to consume the domestic surplus internally.

I can understand if its hard to accept. But everyone knows it. Chinese think that they can do propaganda of helping the poor countries with trade, and the world will believe it.

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Some people assume that people in the US(Free societies) read only read People’s daily :slight_smile:

We recently stopped supporting Pakistan with free money and loans. We have been doing it for ages. The reason state department gave was that the money will actually fund China who has given Pakistan $62 Billions in loans under BR for building infrastructure. Pakistan can’t pay the 18% interest on these loans. if IMF, US or West bails out Pakistan they are effectively bailing out Chinese investment. It will be same for other countries. Or China takes over the infrastructure. Which has happened in case of Sri Lanka already. China will soon take over the Port city in Pakistan.

If its not neo-colonialism what else is? Dont want to accept it, fine. But dont blame western reporting and Journalism.

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keyword is admit

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@hanera just look north at our former neighbors. Malaysia canceled their OBOR contracts because the 2 pipelines were overcharged and not built despite a 90% disbursement of funds. And they are furious over the cost of the highway to the east. And yesterday the report comes out about the $2.6B Ringgit in Najib’s account

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It’s a brilliant move when your country has massive excess capacity of concrete, steel, etc. You loan others money to buy it from you. Credit bubbles never end well.

Malaysia also canceled contract with Singapore :slight_smile: Wrong example. Malaysian government has always been corrupted. It doesn’t matter who is in charge.

Essentially copy from USA :slight_smile: USA did even worse thing. Sell obsolete technology for a ridiculously high price.

No. You’re putting words in my mouth. You need to build the infrastructure first. Period. Goal of BR is long term. If you insist on focusing on short-term, I can’t help it.