Huawei arrest, US-China relations and effect on electronics industry

[Wan Huang Luo]

As anticipated, China has arrested a Canadian and did so a few days ago it appears. 

"Former Canadian diplomat Michael Kovrig was the person detained, two sources had said earlier. Kovrig works for the International Crisis Group, an independent conflict resolution think-tank which said it was seeking his prompt and safe release."

https://www.reuters.com/article/us-usa-china-huawei/canadian-detained-in-china-as-huawei-cfo-returns-to-court-idUSKBN1OA0M4


Brian

The brinkmen will have their way. 

[blueskull]

The brinkmen will have their way. 

Collaborating with foreign force to weaken reign of Chinese government, especially allying with the West and human right organizations, is punishable up to death in China. It's written in the laws, so what's wrong with Chinese government's move to seize that person?

It is always been used as a political tools -- to allow certain foreign citizen's unlawful actions in China, but when the time comes, this privilege can be taken back by Chinese government at will.

Make no illusion. In China, everyone has to work for Chinese government, even seemingly anti-China propaganda spreaders, such as the Youtuber laowhy86 and his South African friend.

Their videos are very clear that they do bash on Chinese society, but not badmouthing the actual government a lot. Chinese government uses them to spread the idea that it is the corrupted society made the government, not the corrupted government made the society.

Even the hard core anti-Communist cult, Falungong, is kind of working for the current Chinese government. If you read their newspaper, you will see they never attack China's current president. It always attacks the system and more often, the former president, Jiang. Also, their papers are almost intentionally written like BS to discredit themselves.

The goal is very clear -- everyone gets what they want. Current Chinese government wants a weapon to attack the previous government, as it is an ongoing political mass murder. The people who join the cult never truly believed it and only wants US EB4 green card, and the organizer wants donation form big rich Chinese companies seeking political help.

[raptor1956]

OK, so China is going to execute a Canadian national because ... reasons -- give me a break.  If China did anything like that they'd lose billions in business overnight through a combination of voluntary departures and ones imposed by law in Canada, the USA, and likely many other western countries.

Early this year when Trump began the tariff fight China was VERY aggressive in response.  Trump imposed those tariffs and China responded with there own.  Trump then imposed more tariffs and China was VERY aggressive in response.  Trump imposed those new tariffs and China responded with there own.  Trump then imposed still more tariffs and at this point China, realizing that the balance of trade would hurt them more than the USA, realized the the USA was finally exercising the clout the US market provides and China all of a sudden was more circumspect.  This is the game they play and unless confronted they will continue to play and benefit from playing.  When the west realizes the clout there money has and begins to exercise it then China will be forced to play fair, but until then China will continue to play this game.

In truth, China has allies in the multi-national companies doing business in China and this was very evident in the wake of the Tiananmen Square slaughter as many western companies, hoping to do business in China, lobbied there governments to not penalize China for the brutal crackdown.  For many, money trumps morality.


Brian

[Mr. Scram]

OK, so China is going to execute a Canadian national because ... reasons -- give me a break.  If China did anything like that they'd lose billions in business overnight through a combination of voluntary departures and ones imposed by law in Canada, the USA, and likely many other western countries.

Early this year when Trump began the tariff fight China was VERY aggressive in response.  Trump imposed those tariffs and China responded with there own.  Trump then imposed more tariffs and China was VERY aggressive in response.  Trump imposed those new tariffs and China responded with there own.  Trump then imposed still more tariffs and at this point China, realizing that the balance of trade would hurt them more than the USA, realized the the USA was finally exercising the clout the US market provides and China all of a sudden was more circumspect.  This is the game they play and unless confronted they will continue to play and benefit from playing.  When the west realizes the clout there money has and begins to exercise it then China will be forced to play fair, but until then China will continue to play this game.

In truth, China has allies in the multi-national companies doing business in China and this was very evident in the wake of the Tiananmen Square slaughter as many western companies, hoping to do business in China, lobbied there governments to not penalize China for the brutal crackdown.  For many, money trumps morality.


Brian

You repeatedly say that China's response was "VERY aggressive" but the total tariffs imposed by the Chinese are only half of the US imposed ones, each Chinese step only matched the one from the US at worst and each and every step was a response to a move first made by the US. How can that be construed as very aggressive, other than viewing the moves made by the US as considerably more aggressive?

[beanflying]

Collaborating with foreign force to weaken reign of Chinese government, especially allying with the West and human right organizations, is punishable up to death in China. It's written in the laws, so what's wrong with Chinese government's move to seize that person?

It is always been used as a political tools -- to allow certain foreign citizen's unlawful actions in China, but when the time comes, this privilege can be taken back by Chinese government at will.

Make no illusion. In China, everyone has to work for Chinese government, even seemingly anti-China propaganda spreaders, such as the Youtuber laowhy86 and his South African friend.

Their videos are very clear that they do bash on Chinese society, but not badmouthing the actual government a lot. Chinese government uses them to spread the idea that it is the corrupted society made the government, not the corrupted government made the society.

Even the hard core anti-Communist cult, Falungong, is kind of working for the current Chinese government. If you read their newspaper, you will see they never attack China's current president. It always attacks the system and more often, the former president, Jiang. Also, their papers are almost intentionally written like BS to discredit themselves.

The goal is very clear -- everyone gets what they want. Current Chinese government wants a weapon to attack the previous government, as it is an ongoing political mass murder. The people who join the cult never truly believed it and only wants US EB4 green card, and the organizer wants donation form big rich Chinese companies seeking political help.

Winston and Matt as residents (not citizens) of China obviously tread a very fine line when it comes to the Chinese Government and being critical of it for obvious reasons they like living and remaining out of jail! I would suggest to you they talk as openly as they can about the 'reality' of living in China and people and what China is like behind the western biased news media. There is positives and negatives like ALL COUNTRIES have!

No Country or People of that country (mine included) should not get so butt hurt every time someone passes critical observations about them. China and the People have a long way to go to understand that concept.

Your modern country was founded only 70 years ago when Mao and his Friends revolted against a legitimate regime (be is as corrupt and despotic as it was) but clearly they took issue with the status quo. Did they magically rise up no it started decades before that. But they were 'critical' of a government to the point of armed revolt.

So deal with it no one is perfect and governments even less so.

[edy]

Latest news... she's been granted bail!

https://www.cbc.ca/news/canada/british-columbia/huawei-meng-wanzhou-bail-hearing-vancouver-1.4940849

Added on.... quote from news article:

Huawei's chief financial officer will be released on $10 million bail — with five guarantors — as she awaits possible extradition to the United States on fraud charges, a B.C. Supreme Court justice has ruled.

Meng Wanzhou, 46, was granted bail after three days of hearings concluded on Tuesday afternoon.

In delivering his reasons for granting the bail, Justice William Ehrcke said $7 million of that bail payment must be made in cash.

Meng must also report to a bail supervisor, maintain good behaviour, live at a house owned by her husband, Liu Xiaozong, and stay in that house between the hours of 11 p.m. and 6 a.m.

She will not be allowed to leave the province of B.C.

She must also surrender her passports, wear an electronic monitoring bracelet on her ankle and live under surveillance 24/7. Meng has been ordered to pay the surveillance costs herself.

That really sucks. It sounds like she has some time though to figure things out in the comfort of her own home though...

The extradition process could take months. Meng is scheduled to appear in court again on Feb. 6 to set a date for those proceedings.

Once she is in the US it will not be so cozy, so they will try to procrastinate and delay as much as possible the stay in Canada until maybe something happens, maybe a miracle, or there is some other high-profile capture which could perhaps initiate an "exchange" of sorts of prisoners. Not good! I don't think China will take it sitting down, but then again Canada is going to have to hand her over to the USA, I don't see them getting out of that at all.

One more thing... CNN's new article:

CHINESE COMPANIES THREATENING TO BAN EMPLOYEES USING APPLE PHONES!      

https://www.cnn.com/2018/12/11/business/huawei-apple-china-tech-us/index.html

It's getting out of hand...

[blueskull]

OK, so China is going to execute a Canadian national because ... reasons -- give me a break.  If China did anything like that they'd lose billions in business overnight through a combination of voluntary departures and ones imposed by law in Canada, the USA, and likely many other western countries.

Bullshit. If you come to China, you obey Chinese law. Don't like it? Then don't come. If a government can't enforce its own law, then what power does it has?
If Donald Trump breaks a Chinese law in China outside US embassy or consulate, Chinese government can also seize him. He will of course receive a courtesy, but I can't say the same for other US citizens.

[Bud]

And speaking of hacking

The plan for Meng's potential release calls for round-the-clock physical surveillance combined with an electronic ankle monitor using GPS to mark her location. The heads of two security firms testified to the reliability of their products.

But Gibb-Carsley noted that neither man could guarantee Meng wouldn't escape. He asked them about the possibility of their electronic systems being compromised.

[Rick Law]

OK, so China is going to execute a Canadian national because ... reasons -- give me a break.  If China did anything like that they'd lose billions in business overnight through a combination of voluntary departures and ones imposed by law in Canada, the USA, and likely many other western countries.

Bullshit. If you come to China, you obey Chinese law. Don't like it? Then don't come. If a government can't enforce its own law, then what power does it has?
If Donald Trump breaks a Chinese law in China outside US embassy or consulate, Chinese government can also seize him. He will of course receive a courtesy, but I can't say the same for other US citizens.

Ahem, just to be annoying...  Let me point out, in your scenario, China would need Trumps approval to arrest Trump.

Trump as US President visits China is a visiting diplomat with full diplomatic immunity inside or outside of a USA embassy.  Diplomatic immunity is a legal concept under international law accepted by both USA and China and not mere courtesy because Xi and Trump are good pals.

So, China need to US States Department for an okay to arrest this diplomat who is Trump.  Arresting such a high level person means US State Department has to go all the way up to the President for decision.  So, from this layman's understanding, China needs Trump's approval to arrest Trump.

Now for any other US Citizen that is not a high level government employee - you are absolutely right.

[blueskull]

Ahem, just to be annoying...  Let me point out, in your scenario, China would need Trumps approval to arrest Trump.

I stand corrected.

[Rick Law]

Ahem, just to be annoying...  Let me point out, in your scenario, China would need Trumps approval to arrest Trump.

I stand corrected.

Just friendly overhead fire to lighten your day.

[Just so everyone else doesn't think I was starting a fight with that earlier reply...  BullSkull and I had friendly personal message exchanges before, so I know he would consider my post there fun poking from a friend...]

[raptor1956]

OK, so China is going to execute a Canadian national because ... reasons -- give me a break.  If China did anything like that they'd lose billions in business overnight through a combination of voluntary departures and ones imposed by law in Canada, the USA, and likely many other western countries.

Early this year when Trump began the tariff fight China was VERY aggressive in response.  Trump imposed those tariffs and China responded with there own.  Trump then imposed more tariffs and China was VERY aggressive in response.  Trump imposed those new tariffs and China responded with there own.  Trump then imposed still more tariffs and at this point China, realizing that the balance of trade would hurt them more than the USA, realized the the USA was finally exercising the clout the US market provides and China all of a sudden was more circumspect.  This is the game they play and unless confronted they will continue to play and benefit from playing.  When the west realizes the clout there money has and begins to exercise it then China will be forced to play fair, but until then China will continue to play this game.

In truth, China has allies in the multi-national companies doing business in China and this was very evident in the wake of the Tiananmen Square slaughter as many western companies, hoping to do business in China, lobbied there governments to not penalize China for the brutal crackdown.  For many, money trumps morality.


Brian

You repeatedly say that China's response was "VERY aggressive" but the total tariffs imposed by the Chinese are only half of the US imposed ones, each Chinese step only matched the one from the US at worst and each and every step was a response to a move first made by the US. How can that be construed as very aggressive, other than viewing the moves made by the US as considerably more aggressive?

The aggression of which I spoke was about the verbal threats China made repeatedly but after about the third round of tariff and counter-tariff China was much less aggressive verbally and in fact you could detect a degree of resignation as they realized they were on the losing end of the fight.  The US, as a country, is the largest market by far, and with that comes clout, clout the US had not used while China continued to steel IP and undercut US goods.  As I mentioned in a prior, I oppose tariffs between relative equals but support tariffs when the two countries are not equal.  So, the US and western nations with higher wages and better workplace safety and environmental controls should impose a tariff equal to about 2/3 of the cost advantage the other nation has.  In this way production will not automatically move to places where pollution controls etc are less and therefore pollution actually increases.  This would also reduce the wage stagnation problem and lessen the wage disparity that has grown to monumental levels in the last four decades.  And here's the last point ... when the wage levels and workplace safety and environmental controls are improved in the other country the tariff goes down automatically.  This will result in an incentive to raise wage levels and improve workplace safety and environmental controls.

But, the rules are written by people that don't care about the working class and in fact the era we live in, the era that's about 40 years old, is largely governed by the idea that cost is everything and chief among the cost centers is labor cost.  The flat-lining of wages for the lower 90% has coincided exactly with the unheard of levels of income disparity and these two facts are not unrelated.  Trump's ham fisted approach is not what I'd propose and applying tariffs to relative equals is unnecessary and unwise unless there is some cheating that warrants a penalty. 


Brian

[Mr. Scram]

The aggression of which I spoke was about the verbal threats China made repeatedly but after about the third round of tariff and counter-tariff China was much less aggressive verbally and in fact you could detect a degree of resignation as they realized they were on the losing end of the fight.  The US, as a country, is the largest market by far, and with that comes clout, clout the US had not used while China continued to steel IP and undercut US goods.  As I mentioned in a prior, I oppose tariffs between relative equals but support tariffs when the two countries are not equal.  So, the US and western nations with higher wages and better workplace safety and environmental controls should impose a tariff equal to about 2/3 of the cost advantage the other nation has.  In this way production will not automatically move to places where pollution controls etc are less and therefore pollution actually increases.  This would also reduce the wage stagnation problem and lessen the wage disparity that has grown to monumental levels in the last four decades.  And here's the last point ... when the wage levels and workplace safety and environmental controls are improved in the other country the tariff goes down automatically.  This will result in an incentive to raise wage levels and improve workplace safety and environmental controls.

But, the rules are written by people that don't care about the working class and in fact the era we live in, the era that's about 40 years old, is largely governed by the idea that cost is everything and chief among the cost centers is labor cost.  The flat-lining of wages for the lower 90% has coincided exactly with the unheard of levels of income disparity and these two facts are not unrelated.  Trump's ham fisted approach is not what I'd propose and applying tariffs to relative equals is unnecessary and unwise unless there is some cheating that warrants a penalty. 


Brian

Looking at it on a per country basis doesn't make much sense. The US market is third behind the EU and Asian market for China. The reality is that the US needs China more than China needs the US. If all trade between the US and China were to cease tomorrow, the US would certainly have it harder than China. The Chinese won't go that far though, as they own far too much US assets. They'd be shaking money out of their own pockets.

Protectionism never works, regardless of the motivation. It can only lead to isolating your own country while the rest of the world happily overtakes you, if they hadn't already.

[blueskull]

1. <snip> while China continued to steel IP and undercut US goods.

2. So, the US and western nations with higher wages and better workplace safety and environmental controls should impose a tariff equal to about 2/3 of the cost advantage the other nation has. <snip> This will result in an incentive to raise wage levels and improve workplace safety and environmental controls.

3. But, the rules are written by people that don't care about the working class <snip>

1. I agree. My guess the end of the trade war is China will give up stealing western IPs tp certain degree, under a condition that the West promises never to sanction China by limiting high tech export to China. From Chinese government's perspective, the West uses high tech sanction to protest dictatorship and Taiwan problem. If China is given a green unconditionally on high tech, China will have no excuse to fund cloning of Western technology.

2. BS. If you can't compete, you deserve to die. China will deal with pollution and many other social problems, but human competing and phasing out human will never change. That's the thrust of natural selection.

3. Politicians know what is good for the human as a race, not the humanity BS. If evolution requires, everyone not up to the standard should and can die.

[beanflying]

1: Chinese 'people' will get better at thinking for themselves and will start creating innovation instead of copying it. You really don't won't to go into discussing Taiwan or we may then have to get into the Chinese invasion of Tibet or expansionist claims in the south China Sea etc. (way off topic and won't end well)!

2: Agreed in principal. As I posted yesterday agreed keep in front by innovation, creation and manufacturing productivity or die. China is already having to deal with rising wages and some of the other issues western economies face.

3: In your one party totalitarian state you are told to believe implicitly in the infallibility of politicians. This is absolutely false politicians are driven by self interest and are fallible like all of us no matter which country. The idea of 'The Chinese Communist Party' being in charge while some of it's members are worth billions is I am afraid to say 'quaint' being very polite. Even allowing for some western media exaggeration https://www.telegraph.co.uk/news/2017/03/04/chinas-200-richest-lawmakers-gathering-congress-worth-415-billion/

[raptor1956]

The aggression of which I spoke was about the verbal threats China made repeatedly but after about the third round of tariff and counter-tariff China was much less aggressive verbally and in fact you could detect a degree of resignation as they realized they were on the losing end of the fight.  The US, as a country, is the largest market by far, and with that comes clout, clout the US had not used while China continued to steel IP and undercut US goods.  As I mentioned in a prior, I oppose tariffs between relative equals but support tariffs when the two countries are not equal.  So, the US and western nations with higher wages and better workplace safety and environmental controls should impose a tariff equal to about 2/3 of the cost advantage the other nation has.  In this way production will not automatically move to places where pollution controls etc are less and therefore pollution actually increases.  This would also reduce the wage stagnation problem and lessen the wage disparity that has grown to monumental levels in the last four decades.  And here's the last point ... when the wage levels and workplace safety and environmental controls are improved in the other country the tariff goes down automatically.  This will result in an incentive to raise wage levels and improve workplace safety and environmental controls.

But, the rules are written by people that don't care about the working class and in fact the era we live in, the era that's about 40 years old, is largely governed by the idea that cost is everything and chief among the cost centers is labor cost.  The flat-lining of wages for the lower 90% has coincided exactly with the unheard of levels of income disparity and these two facts are not unrelated.  Trump's ham fisted approach is not what I'd propose and applying tariffs to relative equals is unnecessary and unwise unless there is some cheating that warrants a penalty. 


Brian

Looking at it on a per country basis doesn't make much sense. The US market is third behind the EU and Asian market for China. The reality is that the US needs China more than China needs the US. If all trade between the US and China were to cease tomorrow, the US would certainly have it harder than China. The Chinese won't go that far though, as they own far too much US assets. They'd be shaking money out of their own pockets.

Protectionism never works, regardless of the motivation. It can only lead to isolating your own country while the rest of the world happily overtakes you, if they hadn't already.

You are delusional if you think the US would be harder hit than China.  The value of goods and services each country has with the other results in a balance of trade that hugely favors China so it, for example, the trade was to zero out then China would be impacted about 2X as much in dollar value as the USA and given the relative monetary systems the effect would in fact be more like 4X as much or even greater.  Mind you I'm not suggesting we engage in a trade war but having a balance of trade in the ballpark of -$500B every year is not sustainable.


Brian

The EU and Asia are not a country but a continent or group of nations and the USA is most definitely the country with the largest market on the planet and with that market has clout. 

[raptor1956]

1. <snip> while China continued to steel IP and undercut US goods.

2. So, the US and western nations with higher wages and better workplace safety and environmental controls should impose a tariff equal to about 2/3 of the cost advantage the other nation has. <snip> This will result in an incentive to raise wage levels and improve workplace safety and environmental controls.

3. But, the rules are written by people that don't care about the working class <snip>

1. I agree. My guess the end of the trade war is China will give up stealing western IPs tp certain degree, under a condition that the West promises never to sanction China by limiting high tech export to China. From Chinese government's perspective, the West uses high tech sanction to protest dictatorship and Taiwan problem. If China is given a green unconditionally on high tech, China will have no excuse to fund cloning of Western technology.

2. BS. If you can't compete, you deserve to die. China will deal with pollution and many other social problems, but human competing and phasing out human will never change. That's the thrust of natural selection.

3. Politicians know what is good for the human as a race, not the humanity BS. If evolution requires, everyone not up to the standard should and can die.

2.  There are about 7B people on the planet and the vast majority of them live in poverty.  There will never be an end to the outsourcing and when China gets too pricey the multi-nationals will take there business elsewhere -- remember Japan?

3.  Social Darwinism was never a good idea and supporting the extermination of the less worthy caries several problems not the least of which is who gets to decide who is worthy and who is not.  This ideology was central to the Nazi's and it had many followers, then and now.  You can make claims for and against, but ultimately, if one group gets to decide who can live and who must die then this is what happens.  The group decides such-and-such must be eliminated and when they are all gone is the world the utopia they envisioned?  No, it isn't and before long they realize that others in there midst need to be pruned and when they are gone the process repeats until there's no one left.  Purging the world of people you don't think belong has but one endgame.


Brian

[beanflying]

How long can the USA sustain federal debt levels above 100% of GDP and who owns a chunk of that debt? As I said yesterday China doesn't need guns against the USA. Trump led BS and Bluster is not a game you can win in the long term.

Protectionism and cutting taxes to 'save' your economy, industries and jobs hasn't worked. Unfortunately to turn around your system built on the ideals of low tax, minimal (perceived) government and the 'American Dream' is going to take some real pain and commitment and to elect that unelectable someone or party willing to do it isn't anywhere on the horizon.

Sorry for going way off topic too 

[IconicPCB]

Japan was different game back when,,,

Korean war needed a supply base and Japan took off.

[BravoV]

There will never be an end to the outsourcing and when China gets too pricey the multi-nationals will take there business elsewhere -- remember Japan?

Nope, this time is not the same, either Japan (in 50s up to 80s), Taiwan (90s) , Korea (90s) ... are not the same as China, as these countries basically US's puppies, when they asked to bark, they will bark & wiggles.

China perceived as a puppy ... err... dog ... wild wolf that bites ... lethally if happened.

[IconicPCB]

and there is no bias in that opinion

[Mr. Scram]

You are delusional if you think the US would be harder hit than China.  The value of goods and services each country has with the other results in a balance of trade that hugely favors China so it, for example, the trade was to zero out then China would be impacted about 2X as much in dollar value as the USA and given the relative monetary systems the effect would in fact be more like 4X as much or even greater.  Mind you I'm not suggesting we engage in a trade war but having a balance of trade in the ballpark of -$500B every year is not sustainable.


Brian

The EU and Asia are not a country but a continent or group of nations and the USA is most definitely the country with the largest market on the planet and with that market has clout.

I know Americans don't like to hear it, but the US economy would fall flat on its arse if China decided to call it quits. Look at what gets sold in US shops and stores. It's mostly Chinese made. There's no other country or combination of countries which can fill the gap quickly enough to prevent disaster. It's not just that though. The Chinese own a lot in the US. That's a lot of leverage. Again, the Chinese aren't stupid enough to do that exactly because they own a lot of US assets and about 5% of US debt. You don't choke the life out of your own investments, even if the other threatens to put his own head into the noose.

I'm not getting into a discussion over the balance of trade that gets touted so often, but so few people actually seem to understand. Much more than "big number bad" it generally doesn't appear to be, despite actual economists being very clear about that not being a bad thing.

[beanflying]

The Chinese own a lot in the US. That's a lot of leverage. Again, the Chinese aren't stupid enough to do that exactly because they own a lot of US assets and about 5% of US debt. You don't choke the life out of your own investments, even if the other threatens to put his own head into the noose.

Sorry you understated it a little it is actually over 20% of the USA's government debt.

[Mr. Scram]

Sorry you understated it a little it is actually over 20% of the USA's government debt.

Various sources seem to disagree a bit on that. The actual number is generally the same at around $1.15 trillion, but the percentage differs by quite a bit. I guess it depends on what you actually take into account. It's a lot either way.

[beanflying]

It was something I had heard. Quick check it seems the Chinese only own 20%+ of the foreign owned bit. For some strange reason the US Goverment is the biggest owner of government debt in some figures (got to love economists and accountants)