Technological imperialism

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The Banality of ‘Don’t Be Evil’ by Julian Assange By JULIAN ASSANGE

NYTimes.com

“THE New Digital Age” is a startlingly clear and provocative blueprint for technocratic imperialism, from two of its leading witch doctors, Eric Schmidt and Jared Cohen, who construct a new idiom for United States global power in the 21st century. This idiom reflects the ever closer union between the State Department and Silicon Valley, as personified by Mr. Schmidt, the executive chairman of Google, and Mr. Cohen, a former adviser to Condoleezza Rice and Hillary Clinton who is now director of Google Ideas.

The authors met in occupied Baghdad in 2009, when the book was conceived. Strolling among the ruins, the two became excited that consumer technology was transforming a society flattened by United States military occupation. They decided the tech industry could be a powerful agent of American foreign policy.

The book proselytizes the role of technology in reshaping the world’s people and nations into likenesses of the world’s dominant superpower, whether they want to be reshaped or not. The prose is terse, the argument confident and the wisdom — banal. But this isn’t a book designed to be read. It is a major declaration designed to foster alliances.

“The New Digital Age” is, beyond anything else, an attempt by Google to position itself as America’s geopolitical visionary — the one company that can answer the question “Where should America go?” It is not surprising that a respectable cast of the world’s most famous warmongers has been trotted out to give its stamp of approval to this enticement to Western soft power. The acknowledgments give pride of place to Henry Kissinger, who along with Tony Blair and the former C.I.A. director Michael Hayden provided advance praise for the book.

In the book the authors happily take up the white geek’s burden. A liberal sprinkling of convenient, hypothetical dark-skinned worthies appear: Congolese fisherwomen, graphic designers in Botswana, anticorruption activists in San Salvador and illiterate Masai cattle herders in the Serengeti are all obediently summoned to demonstrate the progressive properties of Google phones jacked into the informational supply chain of the Western empire.

The authors offer an expertly banalized version of tomorrow’s world: the gadgetry of decades hence is predicted to be much like what we have right now — only cooler. “Progress” is driven by the inexorable spread of American consumer technology over the surface of the earth. Already, every day, another million or so Google-run mobile devices are activated. Google will interpose itself, and hence the United States government, between the communications of every human being not in China (naughty China). Commodities just become more marvelous; young, urban professionals sleep, work and shop with greater ease and comfort; democracy is insidiously subverted by technologies of surveillance, and control is enthusiastically rebranded as “participation”; and our present world order of systematized domination, intimidation and oppression continues, unmentioned, unafflicted or only faintly perturbed.

The authors are sour about the Egyptian triumph of 2011. They dismiss the Egyptian youth witheringly, claiming that “the mix of activism and arrogance in young people is universal.” Digitally inspired mobs mean revolutions will be “easier to start” but “harder to finish.” Because of the absence of strong leaders, the result, or so Mr. Kissinger tells the authors, will be coalition governments that descend into autocracies. They say there will be “no more springs” (but China is on the ropes).

The authors fantasize about the future of “well resourced” revolutionary groups. A new “crop of consultants” will “use data to build and fine-tune a political figure.”

“His” speeches (the future isn’t all that different) and writing will be fed “through complex feature-extraction and trend-analysis software suites” while “mapping his brain function,” and other “sophisticated diagnostics” will be used to “assess the weak parts of his political repertoire.”

The book mirrors State Department institutional taboos and obsessions. It avoids meaningful criticism of Israel and Saudi Arabia. It pretends, quite extraordinarily, that the Latin American sovereignty movement, which has liberated so many from United States-backed plutocracies and dictatorships over the last 30 years, never happened. Referring instead to the region’s “aging leaders,” the book can’t see Latin America for Cuba. And, of course, the book frets theatrically over Washington’s favorite boogeymen: North Korea and Iran.

Google, which started out as an expression of independent Californian graduate student culture — a decent, humane and playful culture — has, as it encountered the big, bad world, thrown its lot in with traditional Washington power elements, from the State Department to the National Security Agency.

Despite accounting for an infinitesimal fraction of violent deaths globally, terrorism is a favorite brand in United States policy circles. This is a fetish that must also be catered to, and so “The Future of Terrorism” gets a whole chapter. The future of terrorism, we learn, is cyberterrorism. A session of indulgent scaremongering follows, including a breathless disaster-movie scenario, wherein cyberterrorists take control of American air-traffic control systems and send planes crashing into buildings, shutting down power grids and launching nuclear weapons. The authors then tar activists who engage in digital sit-ins with the same brush.

I have a very different perspective. The advance of information technology epitomized by Google heralds the death of privacy for most people and shifts the world toward authoritarianism. This is the principal thesis in my book, “Cypherpunks.” But while Mr. Schmidt and Mr. Cohen tell us that the death of privacy will aid governments in “repressive autocracies” in “targeting their citizens,” they also say governments in “open” democracies will see it as “a gift” enabling them to “better respond to citizen and customer concerns.” In reality, the erosion of individual privacy in the West and the attendant centralization of power make abuses inevitable, moving the “good” societies closer to the “bad” ones.

The section on “repressive autocracies” describes, disapprovingly, various repressive surveillance measures: legislation to insert back doors into software to enable spying on citizens, monitoring of social networks and the collection of intelligence on entire populations. All of these are already in widespread use in the United States. In fact, some of those measures — like the push to require every social-network profile to be linked to a real name — were spearheaded by Google itself.

THE writing is on the wall, but the authors cannot see it. They borrow from William Dobson the idea that the media, in an autocracy, “allows for an opposition press as long as regime opponents understand where the unspoken limits are.” But these trends are beginning to emerge in the United States. No one doubts the chilling effects of the investigations into The Associated Press and Fox’s James Rosen. But there has been little analysis of Google’s role in complying with the Rosen subpoena. I have personal experience of these trends.

The Department of Justice admitted in March that it was in its third year of a continuing criminal investigation of WikiLeaks. Court testimony states that its targets include “the founders, owners, or managers of WikiLeaks.” One alleged source, Bradley Manning, faces a 12-week trial beginning tomorrow, with 24 prosecution witnesses expected to testify in secret.

This book is a balefully seminal work in which neither author has the language to see, much less to express, the titanic centralizing evil they are constructing. “What Lockheed Martin was to the 20th century,” they tell us, “technology and cybersecurity companies will be to the 21st.” Without even understanding how, they have updated and seamlessly implemented George Orwell’s prophecy. If you want a vision of the future, imagine Washington-backed Google Glasses strapped onto vacant human faces — forever.

Zealots of the cult of consumer technology will find little to inspire them here, not that they ever seem to need it. But this is essential reading for anyone caught up in the struggle for the future, in view of one simple imperative: Know your enemy.

Julian Assange is the editor in chief of WikiLeaks and author of “Cypherpunks: Freedom and the Future of the Internet.”

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[Jun 06, 2021] The intellectual property monopoly is a form of imperialism

Jun 06, 2021 | www.moonofalabama.org

karlof1 , May 17 2021 18:45 utc | 31

Michael Hudson appeared again on Moderate Rebels in an examination of Biden's policy direction, some of which are clearly a continuity from Trump and others Neoliberal Obaman. This observation and the following discussion reveals the modus behind what was initially Trumpian:

"So if you look at the sanctions against Russia and China as a way to split Europe and make Europe increasingly dependent on the United States, not only for gas, and energy, but also for vaccines."

Hudson calls it "the intellectual property monopoly" which was a major point in the rationale he produced for his Trade War with China. But as we've seen, the global reaction isn't as it was during the previous era from 1970-2000:

"So what we're seeing is an intensification of economic warfare against almost all the other countries in the world, hoping that somehow this will divide and conquer them, instead of driving them all together ." [My Emphasis]

And what we're seeing is the latter occurring as the Outlaw US Empire's Soft Power rapidly erodes. As with their initial program, the discussion is long and involved.

And since I've been absent, I should suggest reading Escobar's latest bit of historical review , which I found quite profound and an interesting gap filler in the historical narrative of Western Colonialism.

[Mar 21, 2021] The big question: Will the US try to play tcechnological dominance card against China?

Mar 21, 2021 | www.moonofalabama.org

karlof1 , Mar 20 2021 0:44 utc | 77

The Alaska talks have ended and the Global Times Editor writes :

"China and the US are two major world powers. No matter how many disputes they have, the two countries should not impulsively break their relations. Coexistence and cooperation are the only options for China and the US. Whether we like it or not, the two countries should learn to patiently explore mutual compromises and pursue strategic win-win cooperation ." [My Emphasis]

The big question: Does the Outlaw US Empire possess enough wisdom to act in that manner.

[Jan 15, 2021] How much damage Trump's Trade War did to the US economy and how it would benefit from Biden's ending it

Jan 15, 2021 | www.moonofalabama.org

karlof1 , Jan 15 2021 18:20 utc | 113

Trump is engaging in the declassification of documents, one of which is the 2018 US Strategic Framework for the Indo-Pacific that's provided at the top of Pepe Escobar's essay, "Trump's not-so-secret plan for containing China," that was published yesterday:

"These are the Top 5 items – with no euphemistic softening:

•Maintain as sacrosanct US 'primacy,' code for uncontested military power
•Promote the Quad (US, Japan, India, Australia)
•Fully support the (failed) Hong Kong color revolution
•Demonize everything connected to Belt & Road
•Invest in 'the rise of India'

"On the military front, things get way trickier: The imperative is to prevent Beijing, by all means necessary, from 'dominating the first island chain' – that is, the island ring from the Japanese archipelago to Taiwan all the way to the northern Philippines and Borneo. Moreover, 'primacy' should also be maintained in the 'area beyond.'

"So once again this is all about naval containment."

That's followed by an excellent graphic showing the first and second Island Chains. Of course, China isn't really worried:

"The 100th anniversary of the Chinese Communist Party falls next July 23. The day before the declassification of Indo-Pacific, President Xi Jinping outlined his – and the CCP's – vision for the almost three decades culminating in 2049, the hundredth anniversary of the People's Republic of China.

"Here are Xi's Top Three – in a nutshell:

•Keep calm and carry on, despite the ravaging effects of Covid-19, unrelenting Western – especially American – hostility, and the trials and tribulations of the crumbling US Empire
•Focus on domestic development, in all areas
•Focus on China's priorities; then, whatever happens, the world outside will not be able to interfere.
•Solidify its own 'primacy' in the South China Sea while diversifying trade and development strategic options all along Belt and Road"

I tried to locate where Xi made this statement Pepe cites, but was unsuccessful, and Pepe provided no link. The essay closes with an economic forecast for China that Biden won't be able to do much about. Indeed, this article details how much damage Trump's Trade War did to the US economy and how it would benefit from Biden's ending it:

"The multi-year trade war with China under the Trump administration resulted in a peak loss of 245,000 US jobs, Reuters reported Friday, citing a study commissioned by the US-China Business Council, a business group representing major US firms with operations in China.

"In an escalated scenario, meaning a significant China-US decoupling, the US GDP could shrink by $1.6 trillion over the next five years, resulting in up to 732,000 job losses in the US by 2022 and 320,000 fewer jobs by 2025, according to the study. A gradual scaling back of tariffs, however, is likely to boost growth, resulting in an additional 145,000 jobs by 2025."

As I wrote when Trump announced his Trade War, the Outlaw US Empire would be much better off if it joined with China rather than trying to fight it, and now the results are in. Too bad this report will likely be suppressed. The article looks at Biden's position and concludes with an infographic detailing trade flows between China and the Outlaw US Empire.

[Jan 14, 2021] Great Power Politics in the Fourth Industrial Revolution: The Geoeconomics of Technological Sovereignty.

Jan 14, 2021 | www.moonofalabama.org

karlof1 , Jan 14 2021 17:15 utc | 23

Hat tip to Pepe Escobar for this news. Glen Diesen has published a critical new book, Great Power Politics in the Fourth Industrial Revolution: The Geoeconomics of Technological Sovereignty . The initial reviews are quite tempting. A snippet from one of several:

"Diesen takes on and brings together two large phenomena, namely the revolution in technology and the change in global power relations."

My continual question: Will the Western world's morality evolve quickly enough to keep pace with technological progress? I have no worries about Eurasian morality. Rather, it's the West's loss of its 500 years of domination and what it will do to recoup that immoral position that's most troublesome.

[Jan 13, 2021] What to do with big tech octopus

Jan 13, 2021 | www.unz.com

John Regan , says: January 12, 2021 at 2:22 pm GMT • 13.9 hours ago

@anarchyst hen made public utilities available for all (obviously without compensation to the owners). No more of the sad "private company" excuse, and no more billions into the pockets of criminals who hate us.

Also, make Dorsey, Zuckerberg, Pichai et al. serve serious jail time for election tampering if nothing else. Both to send out a clear warning to others, and for the simple decency to see justice served.

Of course this will not happen short of a French Revolution-style regime shift. But since (sadly) the same is equally true even for your extremely generous and modest proposal, I see no harm in dreaming a little bigger.

[Jan 11, 2021] Google techno imperialism: For Google CEO Schmidt, pushing US social platform into forign countries is at one of the US foreign policy objectives and is driven by connecting non-Western countries to American companies and markets.

Jan 11, 2021 | caucus99percent.com

Originally published at Café Babylon on Oct. 6, 2014 .

When Google Met WikiLeaks

It seems even more relevant today than it did then. It's longish, so hang in there if you're able. In these post-'Capitol' social media de-platforming days, remember that (Chrome) Google algorithms suppress websites from the conservative and religious right to the 'subversive left (wsws and popular resistance, for instance). And Google bought Youtube in Oct. of 2006 for a paltry $1.65 billion.

If you haven't read it and seen the captioned photos, you'll love ' Google Is Not What It Seems' by Julian Assange, an extract from his new book When Google Met Wikileaks, wikileaks.org

Also see Scott Ritter's 'By banning Trump and his supporters, Google and Twitter are turning the US into a facsimile of the regimes we once condemned', RT.com, Jan. 9, 2021 Two excerpts:

"Digital democracy became privatized when its primary architect, Jared Cohen, left the State Department in September 2010 to take a new position with internet giant Google as the head of 'Google Ideas' now known as 'Jigsaw'. Jigsaw is a global initiative 'think tank' intended to "spearhead initiatives to apply technology solutions to problems faced by the developing world." This was the same job Cohen was doing while at the State Department.

Cohen promoted the notion of a "digital democracy contagion" based upon his belief that the "young people in the Middle East are just a mouse click away, they're just a Facebook connection away, they're just an instant message away, they're just a text message away" from sufficiently organizing to effect regime change. Cohen and Google were heavily involved the January 2011 demonstrations in Egypt, using social networking sites to call for demonstrations and political reform; the "Egyptian contagion" version of 'digital democracy' phenomena was fueled by social networking internet sites run by Egyptian youth groups which took a very public stance opposing the Mubarak regime and calling for political reform."
*************************************

On Sept. 18 , Julian Assange's new book of that name was published. The material was largely fashioned by conversations he'd had with Google's Eric Schmidt in 2011 at Ellingham Hall in Norfolk, England where Assange was living under house arrest. The ostensible purpose of the requested meeting was to discuss idea for a book that Schmidt and Jared Cohen (advisor to both Susan Rice and Hillary Clinton) were going to write, and in fact did: ' The New Digital Age ' (2013). They were accompanied by the book's editor Scott Malcomson, former senior advisor for the UN and member of the Council on Foreign Relations, who eventually worked at the US State Department, plus Lisa Shields, vice president of the Council on Foreign Relations, closely tied to the State Department, who was Schmidt's partner at the time. Hmmm. The plot, as they say, thickens. From the book's blurb :

'For several hours the besieged leader of the world's most famous insurgent publishing organization and the billionaire head of the world's largest information empire locked horns. The two men debated the political problems faced by society, and the technological solutions engendered by the global network -- from the Arab Spring to Bitcoin. They outlined radically opposing perspectives: for Assange, the liberating power of the Internet is based on its freedom and statelessness. For Schmidt, emancipation is at one with US foreign policy objectives and is driven by connecting non-Western countries to American companies and markets. These differences embodied a tug-of-war over the Internet's future that has only gathered force subsequently.'

Some background that will hopefully entice you to listen to the 42-minute Telesur video (sorry, no transcript) I'll embed below; this is the short version: ' Assange claims Google is in bed with US government'

WikiLeaks @wikileaks · Mar 2, 2016 Eating or being eaten? Schmidt now on Pentagon board. Hillary's people in Google and Google running her campaign http:// qz.com/520652/groundw ork-eric-schmidt-startup-working-for-hillary-clinton-campaign/ Well this diary has certainly had me glued online all afternoon.

I have not felt this kind of interest in the interconnected webs of deceit in our government since I read The Devil's Chessboard.

Thanks so much Wendy! up 10 users have voted. --

"Without the right to offend, freedom of speech does not exist." Taslima Nasrin

https://www.youtube.com/embed/EcY4nnFF2cQ?version=3&rel=1&showsearch=0&showinfo=1&iv_load_policy=1&fs=1&hl=en&autohide=2&wmode=transparent

Note that in other interviews Assange names 'other private and public security agencies' as well, and names the figures showing how deep Google is into smartphones and almost every nation on the planet. 'Do not be evil'.

If your appetite hasn't been sufficiently whetted to watch the 38-minute Telesur interview, you might at a minimum read 'When Google Met WikiLeaks: Battle for a New Digital Age' by Nozomi Hayase . An excerpt or three, after reminding us that in his earlier 2012 book Cypherpunks, Assange had said that " the internet, our greatest tool for emancipation, has been transformed into the most dangerous facilitator of totalitarianism we have ever seen ":

'Assange unveils how, contrary to Google's efforts to create a positive public image by giving away free storage, making it appear not like a corporation driven solely by profit motives, this seemingly philanthropic company is a willing participant in its own government co-optation. Indeed, he argues, Google Ideas was birthed as a brainchild of a Washington think-tank.

Assange described how "Google's bosses genuinely believe in the civilizing power of enlightened multinational corporations, and they see this mission as continuous with the shaping of the world according to the better judgment of the 'benevolent superpower.'" (p. 35). This process is so gradual and discrete that it is hardly conscious on the part of the actors. This digital mega-corporation, through getting too close to the US State Department and NSA, began to incorporate their ambitions and come to see no evil. This internalization of imperial values created what Assange called " the impenetrable banality of 'don't be evil' " (p. 35). It appears that bosses at Google genuinely think they are doing good, while they are quickly becoming part of a power structure that Assange described as a " capricious global system of secret loyalties , owed favors, and false consensus, of saying one thing in public and the opposite in private" (p. 7). Allegiance creates obedience and an unspoken alliance creates a web of self-deception through which one comes to believe one's own lies and becomes entangled in them. [snip]

' Assange pointed to how "the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the US Army, Air Force, Navy and Marine Corps" (p. 43).

Google does not see evil in itself. By embedding with U.S. central authority, this global tech company not only fails to see the invisible fist of "American strategic and economic hegemony" that dictates the market, but moreover aspires "to adorn the hidden fist like a velvet glove" (p. 43). By advancing the force of monopoly, they subordinate civic values to economic and U.S. hegemonic interests and escape any real accountability. They no longer recognize the unmediated market that responds to people's demands, a true market that functions as a space of democratic accountability. This normalization of control leads to a subversion of law, creating a rogue state where a ripple effect of corruption is created, as individuals, companies and the state each betray their own stated principles.'

'In a sense, one might conclude that Assange's new book is in itself another leak . In publishing what one might call the "GoogleFiles", Assange conducts his usual job of publishing in the public interest with due diligence by providing the verbatim transcript and audio of the secret meeting. This time, the source of the material was Google themselves who sought out Assange for their publication.'

How wonderful it is that he's rocking Google's Very Large Boat. Hayase also writes that Cohen and Schmidt engage in their own 'statist' version of the 'good whistleblower/bad whistleblower meme we're familiar with. Pfffft.

https://www.youtube.com/embed/8xS_Kl_smfk?version=3&rel=1&showsearch=0&showinfo=1&iv_load_policy=1&fs=1&hl=en&autohide=2&wmode=transparent

Google used its front page to back the US government's campaign to bomb Syria: snapshot

More if you'd like it:

From HuffPo's : Julian Assange Fires Back At Eric Schmidt and Google's 'Digital Colonialism', one exchange that's significant:

' HP : What about the substance of Schmidt's defense, that Google is pretty much at war with the U.S. government and that they don't cooperate? He claims that they're working to encrypt everything so that neither the NSA nor anyone else can get in. What would you say to that?

JA : It's a duplicitous statement. It's a lawyerly statement. Eric Schmidt did not say that Google encrypts everything so that the US government can't get at them. He said quite deliberately that Google has started to encrypt exchanges of information -- and that's hardly true, but it has increased amount of encrypted exchanges. But Google has not been encrypting their storage information. Google's whole business model is predicated on Google being able to access the vast reservoir of private information collected from billions of people each day. And if Google can access it, then of course the U.S. government has the legal right to access it, and that's what's been going on.

As a result of the Snowden revelation, Google was caught out. It tried to pretend that those revelations were not valid, and when that failed, it started to engage in a public relations campaign to try and say that it wasn't happy with what the National Security Agency was doing, and was fighting against it. Now, I'm sure that many people in Google are not happy with what has been occurring. But that doesn't stop it happening, because Google's business model is to collect as much information as possible and people store it, index and turn it into predictive profiles. Similarly, at Eric Schmidt's level, Google is very closely related to the U.S. government and there's a revolving door between the State Department and Google . '

For the Pffft factor plus some history of WikiLeaks' betrayal by both Daniel Domscheit-Berg ( his Wiki ), and the Guardian, the Daily Dot's : ' When WikiLeaks cold-called Hillary Clinton',

including:

'Within hours, Harrison's call was answered via State Department backchannels. Lisa Shields, then- Google Executive Eric Schmidt's girlfriend and vice president at the Council on Foreign Relations, reached out through one of WikiLeak's own, Joseph Farrell, to confirm it was indeed WikiLeaks calling to speak with Clinton. [snip]

'But in an act of gross negligence the Guardian newspaper -- our former partner -- had published the confidential decryption password to all 251,000 cables in a chapter heading in its book, rushed out hastily in February 2011.(1) By mid-August we discovered that a former German employee -- whom I had suspended in 2010 -- was cultivating business relationships with a variety of organizations and individuals by shopping around the location of the encrypted file, paired with the password's whereabouts in the book. At the rate the information was spreading, we estimated that within two weeks most intelligence agencies, contractors, and middlemen would have all the cables, but the public would not.'

https://www.youtube.com/embed/rlIDSBXHIsQ?version=3&rel=1&showsearch=0&showinfo=1&iv_load_policy=1&fs=1&hl=en&autohide=2&wmode=transparent

Background on the Rassmussen story to make sure he was elected head of NATO by shutting down Roj TV: Interview: Roj TV, ECHR and Wikileaks by Naila Bozo

Bonus WikiTweet:

@WikiLeaks
Students Sue Google for Monitoring Their Emails http://mashable.com/2014/03/19/students-sue-google-gmail/

Note: Easy Copying from the Café to the Café didn't go well. Everything doubled up, and not in the same order, and none of the quotation font colors hopped aboard. But it is what it is, and trying to repair it further seems Quixotic.

[Jan 11, 2021] "We are all Taiwanese now" stunt is Pompeo's act of petty spite for getting outfoxed in the Hong Kong colour revolution play.

Jan 11, 2021 | www.moonofalabama.org

LittleWhiteCabbage , Jan 11 2021 15:19 utc | 128

@84:
As sometimes said: don't sweat the small stuff.
This "We are all Taiwanese now" stunt is Pompeo's act of petty spite for getting outfoxed in the Hong Kong colour revolution play.
Empire's useful idiots were let loose to trash the hapless city, fired up by the Western propaganda machinery.
Now Beijing is putting the stock on those pompous minions with the National Security Law, and their foreign masters can't do nuffin' except squeal human rights and apply some nuisance sanctions.
The West fails because it looks at China through ideological lenses and sees Communists, who can fall back on 5000 years of statecraft to push back at interlopers.
Beijing's moves can be likened to two classic strategies.
1. Zhuge Liang fools the enemy to fire all their arrows at straw men, which become ammunition against them.
2. The Empty City strategy. Invaders take over an ostensibly abandoned city, only to be trapped inside.
Global Times is cantankerous and sometimes risible, but even a broken clock is right, twice a day.
So when it says that crossing Beijing's red line on the Taiwan issue is not in the island's best interests, the incoming BiMala administration should take note.

[Jan 03, 2021] Will Biden's Administration Simply Represent a Third Obama Term

Notable quotes:
"... The Biden administration, staffed with Obama veterans , may be in effect a third Obama term. Biden may seek a détente with China on some issues. But Democratic foreign policy elites as well as Republicans view China more harshly than they did four years ago. The most likely scenario, then, is an attempt to restore Obama's trilateral strategy of building the biggest possible coalition of allies against China. ..."
"... Democratic foreign policy elites are much more Europhile and Russophobic than their Republican counterparts. ..."
Jan 03, 2021 | nationalinterest.org

Under Barack Obama, the containment of China -- the "pivot to Asia" -- took the form of what might be called trilateralism, after the old Trilateral Commission of the 1970s. According to this strategy, while balancing China militarily, the United States would create trans-Pacific and trans-Atlantic trade blocs with rules favorable to the United States that China would be forced to beg to join in the future. The Trans-Pacific Partnership (TPP) was intended as an anti-Chinese, American-dominated Pacific trade bloc, while the Transatlantic Trade and Investment Partnership (TTIP) sought to create a NATO for trade from which China would be excluded.

Obama's grand strategy collapsed even before the election of 2016. TTIP died, chiefly because of hostility from European economic interests. In the United States, the fact that the TPP treaty was little more than a wish-list of giveaways to U.S. finance and pharma interests and other special-interest lobbies made it so unpopular that both Hillary Clinton and Trump renounced it during the 2016 presidential election season.

Trump, like Obama, sought to contain China , but by unilateral rather than trilateral measures. The Trump administration emphasized reshoring strategic supply chains like that of steel in the United States, unwilling to offshore critical supplies even to allies in Asia and Europe and North America. This break with prior tradition would have been difficult to pull off even under a popular president who was a good bureaucratic operator, unlike the erratic and inconsistent Trump.

The Biden administration, staffed with Obama veterans , may be in effect a third Obama term. Biden may seek a détente with China on some issues. But Democratic foreign policy elites as well as Republicans view China more harshly than they did four years ago. The most likely scenario, then, is an attempt to restore Obama's trilateral strategy of building the biggest possible coalition of allies against China.

An emphasis by the Biden administration on alliances may succeed in the case of the U.S.-Japan-Australia-India "Quad" (Quadrilateral alliance). The UK may support America's East Asian policy as well. But Germany and France, the dominant powers in Europe, view China as a vast market, not a threat, so Biden will fail if he seeks to repeat Obama's grand strategy of trilateral containment of China.

Democratic foreign policy elites are much more Europhile and Russophobic than their Republican counterparts. In part this is a projection of domestic politics. In the demonology of the Democratic Party, Putin stands for nationalism, social conservatism, and everything that elite Democrats despise about the "deplorables" in the United States who live outside of major metro areas and vote for Republicans. The irrational hostility of America's Democratic establishment extends beyond Russia to socially-conservative democratic governments in Poland and Hungary, two countries that Biden has denounced as "totalitarian."

In the Middle East, unlike Eastern Europe, a Biden administration is likely to sacrifice left-liberal ideology to the project of maximizing American power and consolidating the U.S. military presence, with the help of autocracies like Egypt and Saudi Arabia. Any hint of retrenchment will be denounced by the bipartisan foreign policy establishment that lined up behind Biden, so do not expect an end to any of the forever wars under Biden. Quite the contrary.

Michael Lind is Professor of Practice at the Lyndon B. Johnson School of the University of Texas at Austin and the author of The American Way of Strategy. His most recent book is The New Class War: Saving Democracy from the Managerial Elite.

[Dec 18, 2020] An interesting 15-minute video from Canadian youtuber numuves showing the pattern of how the US ensures technological dominance:

Notable quotes:
"... How the US dominates Tech | Untold Story https://www.youtube.com/watch?v=EgzB4_Zw3RE ..."
"... Biden's Scary Foreign Policy Picks: A Blast From War Crimes Past https://www.youtube.com/watch?v=c6wfnB1UMAc ..."
"... numuves is a legend Don't miss this short video all. ..."
Dec 18, 2020 | www.moonofalabama.org

Canadian Cents , Dec 17 2020 21:00 utc | 38

An interesting 15-minute video from Canadian YouTuber numuves showing the pattern of how the US ensures technological dominance:

How the US dominates Tech | Untold Story https://www.youtube.com/watch?v=EgzB4_Zw3RE

An Abby Martin 10-minute video on Biden's roster, another redux, as has also been pointed out by b and commenters:

Biden's Scary Foreign Policy Picks: A Blast From War Crimes Past https://www.youtube.com/watch?v=c6wfnB1UMAc

uncle tungsten , Dec 17 2020 23:55 utc | 48

Canadian Cents #38

How the US dominates Tech | Untold Story
https://www.youtube.com/watch?v=EgzB4_Zw3RE

Thank you for an excellent post. numuves is a legend Don't miss this short video all.

[Dec 02, 2020] China- A Cold Shower by Fred Reed

That's wishful thinking. While Chinese are making progress, the USA still is the only technological superpower and can cut oxygen to China companies in one minute.
Dec 02, 2020 | www.unz.com

Increasingly America does not compete with China, but strongarms it because it cannot compete. For example, in Five G China is ahead in technology, manufacturing capacity, and turnkey systems. Unable to produce an equivalent product, Washington banned Huawei Five G in the US and has twisted arms to keep countries that it controls from using Huawei. Seeing that Huawei had very attractive smartphones that would have competed with Apple, it banned these also. What America can't do, it seeks to keep anybody else from doing.

WSJ: "US vs. China in Five G: The Battle Isn't Even Close

HONG KONG -- By most measures, China is no longer just leading the U.S. when it comes to 5G. It is running away with the game. China has more 5G subscribers than the U.S., not just in total but per capita. It has more 5G smartphones for sale, and at lower prices, and it has more-widespread 5G coverage. Connections in China are, on average, faster than in the U.S., too By year's end, China will have an estimated 690,000 5G base stations -- boxes that blast 5G signals to consumers -- up and running across the country ."

Techies can argue C band versus millimeter waves but I will bet that the Chinese, nothing if not commercially agile, will have Five G up and running in factories and the IoT and everywhere else while American pols rattle on about how China is an Existential Threat and the Pentagon needs more money for Space Command and diversity is more important than schooling anyway.

The shifting balance may already be visible. For example, America used to make superb aircraft such as the SR-71 and the F-16. Now it has the F-35, an engineering horror. The Boeing 737 MAX, its flagship product, has been grounded internationally because of poor engineering, second-rate software, and corporate lying about both.

America invented the microcircuit, and once dominated its manufacture. Today, American companies cannot make the seven nanometer chips now used in high-end telephones, and certainly not the five nanometer chips now coming online. Neither can China. Both countries buy them from Taiwan Semiconductor Manufacturing Company, TSMC, Interestingly, the Taiwanese are genetically and culturally Chinese. Washington has strongarmed TSMC into ceasing to sell to Huawei -- the US still can't make high end chips. Recently it strongarmed TSMC into agreeing to build a semiconductor fab in Arizona. Because America can't.

Then there is TikTok, a hugely popular Chinese video app that threatened to break America's lock on social media. Unable to compete, Washington decided simply to confiscate it on grounds that it might be used to spy on Americans. (Chinese intelligence is deeply interested in your daughter's video of her cat.)

Parenthetically, technology seems to be shifting toward East Asia, with America being less ahead in things in which it is ahead and behind in others. Did I mention demographics?

Achmed E. Newman , says: Website November 30, 2020 at 5:37 am GMT • 1.3 days ago

You can't argue with the real engineering going on over there, especially the Civil Engineering. When you don't have a thousand tax-payer-supported bureaucrats from a hundred different agencies and even "Non-Governmental Organizations" blocking every thought you have, it's hard to get things done. There's no doubt that the huge military spending on "democracy for the world" and the squandering of the huge amount of goodwill and power accumulated at the end of the Cold War is part of America's problem (thanks NotSoFast). Mr. Reed never mentioned the increase in regulation and taxation by the Feral Beast that has turned America into a Can't-Do country.

It's a great photo essay on the amazing engineering advances out of China, but, as usual, Fred gets major things wrong.

I don't know what the deal is with Mr. Reed's repetitive harping on Americans' concern for intellectual property rights. The Chinese will do fine without our help now, but it's the theft of the IP of American engineering that has gotten them this far so fast. Why would you not be concerned with your ideas being stolen? Not giving your stuff away for free is not the same as trying to "cripple development. That's water under the bridge now but stupidity by Mr. Reed nonetheless.

[Oct 24, 2020] Wall Street is taking over Shanghai:

Oct 24, 2020 | www.unz.com

anon [340] Disclaimer , says: October 23, 2020 at 4:02 pm GMT

The CCP has finally capitulated. ((( Wall Street ))) is taking over Shanghai:

https://asiatimes.com/2020/10/wall-street-comes-to-shanghai-as-shackles-loosened/

I guess it's mission accomplished. Trump can loosen his witch hunt of Huawei and end the tech/trade war now. Or maybe he won't. Maybe the eventual goal is still the toppling of a government that the Chosenites have no hand in electing through "democracy".

Meanwhile, I'm sure more corrupt CCP elites will take full advantage of the selling out of their country, sleep(invest) with the enemy, get rich/richer, emigrate to the US, push their kids into our elite high schools and colleges, and turn us more and more like the dog-eat-dog, corrupt hellhole from whence they came.

So much for a government that looks out for its people. The CCP is as self-serving as the US Congress critters or the EU. The only difference is they don't need the charade of elections to install themselves in power.

[Sep 29, 2020] Federal judge blocks Trump's effort to ban TikTok from US app stores

Sep 29, 2020 | www.unz.com

vot tak , says: September 28, 2020 at 10:36 am GMT

Federal judge blocks Trump's effort to ban TikTok from US app stores

https://www.rt.com/usa/501873-tiktok-ban-court-injunction-trump/

" A US District judge has made an 11th hour intervention to block a federal government order prohibiting downloads of TikTok from app stores by American users.

US District Judge Carl Nichols issued a preliminary injunction, which would allow the popular app to still be on offer in Apple and Google stores, shortly before the ban was supposed to come into force on Sunday midnight. Earlier in the day, Nichols allowed a 90-minute hearing, where a lawyer representing TikTok made the case for it remaining available to users in the US.

Last week, a judge in California blocked a similar order ousting the WeChat app from American stores hours before it was supposed to take effect."

What a bummer. Looks like your neocon handlers took a couple of hits, whitney. No doubt those judges were agents of The B.L.M.

[Sep 28, 2020] China Plans To Protect TikTok -At All Cost- Against -Mafia-Style Robbery- US Threat To National Security

Thr application functionality is duplicated in other applications. The key here is the access to Chinese segment of the US users.
Sep 28, 2020 | www.zerohedge.com

by Tyler Durden Sat, 09/26/2020 - 23:15 Twitter Facebook Reddit Email Print

It was a week ago that Beijing made clear it won't be signing off on the messy and mired in confusion proposed Oracle-TikTok deal, citing that it would harm its "national security interests," which is exactly the same reason given by Trump for trying to shut TikTok down in the first place.

China's state-run Global Times is out with a new editorial Saturday indicating that Beijing will stick to protecting TikTok "at all costs" . The theme of "compromised" national security is still being presented as the crux of the matter.

" China is prepared to prevent Chinese firm TikTok and its advanced technologies from falling into US hands at all cost ," Global Times introduces.

Getty Images

This even if that should mean the hugely popular app "risks being shut down in the US, because allowing the US to seize the firm and its technology will not only set a dangerous precedent for other Chinese firms, but also pose a direct threat to China's national security , Chinese experts said on Saturday, a day ahead of a court battle in the US over a ban of the app."

Again, interestingly this seems to be the mirror image argument the Trump administration has harped on for much of the past year, especially on Huawei. GT's argument continues:

More importantly, for Beijing, the case goes way beyond just a mafia-style robbery of a lucrative Chinese business and cutting-edge technologies , but a threat to its national security, because the US could find loopholes in those technologies to launch cyber and other attacks on China and other countries to preserve its hegemony, the experts added.

Voicing the communist government's rationale further, GT cites an expert at the China Electronics Standardization Institute Liu Chang, who says "What the US wants, we definitely cannot give."

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-0&frame=false&hideCard=false&hideThread=false&id=1308324951540158465&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fgeopolitical%2Fchina-protect-tiktok-all-cost-against-mafia-style-robbery-us-threat-national-security&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890 NEVER MISS THE NEWS THAT MATTERS MOST

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"From the perspective of both the company and the Chinese government, this cannot be allowed to happen ," he said. y_arrow 1 Pliskin , 18 hours ago

American Pirates looking for more stuff to steal..no surprises there!

Go and make your own stuff,piss-ant Yanks!

...And get the message into your thick skulls,the whole World hates you!

Srbutterfly , 13 hours ago

Except for Israel.

TheRapture , 19 hours ago

The USA has abandoned Ronald Reagan and free trade, and morphed into an incompetent rogue state that behaves like the Mafia. Tik Tok, Huawei, etc. The U.S. can't compete fairly, so it cheats, steals and launches "regime-change" wars.

R.I.P, America.

LEEPERMAX , 20 hours ago

The CCP is nothing but A CRIMINAL ORGANIZATION with that pompous clown Xi JinPig as their despicable ringleader.

Criminals, all of them.

HoyeruNew , 18 hours ago

its called projection.

Srbutterfly , 13 hours ago

The ccp is an extension of the imperial system, they are no better off than when the emperors were calling the shots.

kleptomistic , 19 hours ago

TikTok is "cutting edge technology"? Exactly what is this app capable of? It must really be something since it's worth billions and everyone is fighting over it.

kleptomistic , 19 hours ago

Installing TikTok is literally like handing your phone to the CCP.

You give them total control of your phone...to listen/watch...to track you...to upload your address book so they know everyone you know...you also allow them to upload stuff to your phone.

HoyeruNew , 18 hours ago

prove it. BTW< I hear USA is STILL looking for Saddam's weapons of mass distraction.

Suey Cidal , 18 hours ago

It is valuable as a distraction, keeping the sheep believing the lie that China and USA are independent countries and that they are not both owned by the same rich fuktards.

Yen Cross , 18 hours ago

Lets look realistically at the situation. China is not cheap for manufacturing, has zero interest honoring 'favored nation' trade status, and is definitely NOT a developing third world country.

The Chinese love to gamble, yet call themselves, "long game" players?

Tic Tok is a fad. Just an information gathering scheme.

Ex-Kalifornian , 12 hours ago

Our society would be better off if we had no social media, so just ban it and make everyone that more productive.....

halcyon , 15 hours ago

Good for them

**** Silicon Valley/NSA spy monopoly.

At least this way we'll have a spy duopoly, with one of them free of Israel's UNIT 8200 backdoor crap, and we can make them compete against each other.

Monopoly and no choice is the worst possible choice.

[Sep 22, 2020] We're no longer in the century of humiliation! Why China will not cave in to Trump's state extortion over TikTok -- RT Op-ed

Sep 22, 2020 | www.rt.com

We're no longer in the century of humiliation! Why China will not cave in to Trump's state extortion over TikTok 22 Sep, 2020 15:05 Get short URL We're no longer in the century of humiliation! Why China will not cave in to Trump's state extortion over TikTok FILE PHOTO. © Getty Images/Chesnot ; REUTERS/Kevin Lamarque 7 Follow RT on RT

Tom Fowdy is a British writer and analyst of politics and international relations with a primary focus on East Asia. The battle over TikTok is all because the US finds the idea of a Chinese social media app gaining global acclaim as intolerable and a threat to its own monopolies in Silicon Valley.

Did I miss the announcement that The Apprentice has got a new episode out? You know, the one where Donald Trump shouts " You're fired! " to TikTok's owners in Beijing? Oh, wait, that's not a reality TV show – it is reality. At least in his mind.

Were it not so serious, you would have to laugh at this week's flip-flopping antics of the former TV show host turned president of the USA.

On Sunday, he stated he was giving his " blessing " to a deal between US giants Oracle and Walmart and ByteDance, TikTok's Chinese owner. ' TikTok-Oracle Deal Wins Trump's Approval ,' read the headline on Bloomberg.

ALSO ON RT.COM Colonialism 2.0: US assault on TikTok is latest step in building monopoly on hearts & minds of internet-connected world

By Monday, he had made a U-turn, demanding that the Chinese firm cede control of its US operations completely, or he would ban the popular platform. ' Trump Says ByteDance Can't Keep Control of TikTok in Oracle Deal ,' said Bloomberg.

Initially, the deal reported by the media involved the two US companies taking a 20 percent stake in the creation of a new venture, TikTok Global, which would see its data managed by the American stakeholders. But now the White House has seemingly reverted to its old position of demanding that ByteDance, or as it puts it, " China ," cedes " complete control" of the application in the US, including the handover of its technology and algorithm. Under the headline 'Say 'No!' to US robbery of Tik Tok,' China's Global Times stated the country will "not accept an unequal treaty that targets Chinese companies. "

Trump's actions concerning this app, irrespective of the eventual outcome, should be understood not as legitimate " national security concerns, " but a clear attempt to subjugate and humiliate China for his own political and electoral gain, as well as to maintain American primacy over technology and global social media.

His approach has been infused with his classical ' Art of the Deal ' approach so beloved of fans of The Apprentice . It essentially involves pushing a given target to the brink in an attempt to extort an outcome on terms favorable to him. Beijing, however, sees painful historical parallels in Trump's conduct, and is prepared to rise to the challenge.

ALSO ON RT.COM Banning TikTok gives Trump cheap anti-China points but undermines his free speech chops in war with Twitter and Google

There is a period in China's history, roughly dating from 1830 to the 1950s, which is popularly referred to as the " century of humiliation. " It describes an era when the country was subjugated to political and economic exploitation by Western powers and forced to accept agreements on unequal terms, particularly by Britain, France, Germany and Japan, amongst others.

The era is commonly defined to have begun with the commencement of the opium wars, whereby the British Empire waged war against the Qing Dynasty in order to open up its markets by force to export opium, resulting in the Treaty of Nanking, which forced China to accept British demands and the subsequent annexation of Hong Kong.

The legacy of the century of humiliation has a deep influence on how China perceives its relations with the rest of the world today, particularly the West. To Beijing, the Trump administration has sought to forcefully confront and contain China on multiple fronts, especially in the field of technology and trade, in ways reminiscent of the bad old days.

The US evidently does not accept China on equal terms, and once having believed trade and engagement would " reform " the country towards America's image and preferences, the impetus has now shifted to Washington attempting to stifle the country's rise and force changes to its political-economic system.

This is where TikTok comes into the picture. The claim that the popular video application is a threat to US national security should not be taken seriously – it's a platform used by young people to post videos, mostly of them doing silly dances.

Washington has a way of whipping up fear and hysteria in order to manufacture consent for its aggressive foreign policies. There is no serious evidence TikTok has engaged in any wrongdoing. Instead the impetus is geopolitical: the US finds the idea of a Chinese social media application gaining global acclaim as intolerable and a threat to its own monopolies in Silicon Valley. The Trump administration's response to any Chinese initiative which challenges or outgrows US capabilities is simply to attempt to crush it by coercive force.

ALSO ON RT.COM The new media elite will stop at nothing to protect their profits. They're rapacious monopolists, and we are their food

In this case, however, an outright ban on an application as popular as TikTok (it has around 80 million users in the US) would be politically damaging for Trump. Which is why he has sought to utilize state force with the view to extorting the app into American ownership. The fact that the proposed venture is called TikTok Global is an obvious indicator that the new " US " version of the platform would quickly aim to compete with and make obsolete ByteDance's market in the rest of the world.

Little wonder then that, in line with the rest of the administration's policies, China perceives the attempt by Trump to extort TikTok as an attempt to start a new century of humiliation. Their judgement is correct. Once again, a Western power believes that China ought only to exist on terms which are tolerable to the West, and that the way to "handle" the country involves attempting to subjugate it into accepting unequal agreements.

But this is 2020, not 1920. China will no longer be treated in this way or approve any deal which extorts ByteDance's business. Beijing would rather see TikTok banned in America than have it stolen from them through Trumpian coercion.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.


[Sep 22, 2020] Beijing Says -No!- To Washington's Attempted -Robbery- Of TikTok -

Sep 22, 2020 | www.zerohedge.com


Beijing Says "No!" To Washington's Attempted "Robbery" Of TikTok
by Tyler Durden Tue, 09/22/2020 - 11:30 Twitter Facebook Reddit Email Print

In what is perhaps the most compelling sign yet that Beijing has put the kibosh on the Oracle-TikTok deal, the Global Times on Tuesday published a scathing editorial attacking President Trump for attempting a "robbery" of TikTok and violate China's "dignity."

The paper's editorial writers echoed claims made in an editorial published more than six weeks ago by the People's Daily - that Beijing would never tolerate Trump transferring majority ownership of TikTok to the US. Furthermore, as Kyle Bass explained earlier, anything that would require the company to fork over its content-recommendation algorithm is an instant deal breaker. Beijing has previously said it would rather shut down TikTok US than hand the business to the Americans.

Writers explained that by turning over source code from TikTok to Oracle, Americans would also gain insight into the operations of Douyin, TikTok's counterpart built for the Chinese market (which, remember, runs on an entirely separate, cordoned-off internet).

Throwing Trump's words back in his face, the writers insisted Beijing didn't appreciate the president's characterization that the new TikTok would have "nothing" to do with China.

Because even more than money, China must have the credit. Like Bass explained, the CCP is fighting a narrative war against the US.

And in case the point wasn't clear, the Global Times editor, Hu Xijin, drives it home with a tweet.

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-0&frame=false&hideCard=false&hideThread=false&id=1308324951540158465&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fgeopolitical%2Fbeijing-says-no-washingtons-attempted-robbery-tiktok&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px

Here are some more excerpts courtesy of Bloomberg :

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

Read the editorial below:

* * *

It was reported Sunday, Beijing time, that US President Donald Trump approved a deal in principle between TikTok's parent company ByteDance, and Oracle and Walmart. The main content of the deal was later disclosed. From the information provided by the US, the deal was unfair. It caters to the unreasonable demands of Washington. It's hard for us to believe that Beijing will approve such an agreement.

Although people can have various interpretations, some articles in the agreement show what the problems are.

For instance, American citizens will take up four of the five board seats for TikTok Global and only one can be Chinese. The board of TikTok Global would include a national security director, who will have to be approved by the US.

Oracle will have the authority to check the source code of TikTok USA and updates. As the TikTok and Douyin should have the same source code , this means the US can get to know the operations of Douyin, t he Chinese version of TikTok.

TikTok Global will control the business of TikTok around the world except China. It will block IP from the Chinese mainland to access it. This means the Americans can take control of the global business of TikTok and reject Chinese to access it.

It is clear that these articles extensively show Washington's bullying style and hooligan logic. They hurt China's national security, interests and dignity. ByteDance is an ordinary company in China. The US suppresses it with all its national strength and forces it to sign a deal under coercion. China, also a major country, will not yield to US intimidation and will not accept an unequal treaty that targets Chinese companies.

When Trump said he had approved the new TikTok deal, he noted the new company would have "nothing to do" with China and would be fully controlled by the US. On Monday, he said Oracle and Walmart would have total control of the service; otherwise, "we're not going to approve the deal."

It seems this is not his campaign language, but the Trump administration's real attitude toward restructuring TikTok. Washington is way too confident and has underestimated China's determination to defend its basic rights and dignity.

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The US is a big market. If the reorganization of TikTok under US manipulation becomes a model, it means once any successful Chinese company expands its business to the US and becomes competitive, it will be targeted by the US and turned into a US-controlled company via trickery and coercion, which eventually serves only US interests.

If China surrenders, which country in the world can resist? The US encirclement of TikTok and the global huntdown of Huawei are stifling the hopes of high-tech companies around the world for having world-class technologies and independent development. Once Washington succeeds, the US will enjoy global technological hegemony forever.

China will not accept this kind of bullying arrangement of the US. The US is taking discriminatory action to squeeze TikTok. In an era when countries have concerns about network data security, US internet giants set up branches around the world. But does any one of them hand over its control to companies of the host country? Which company's board members must be approved by the government of the host country?

Washington's huntdown on TikTok is creating problems for US internet companies worldwide. With cyber security increasingly becoming a common issue, there must be countries that will imitate the US to take action against American companies. The precedent set by the US will eventually hurt its own companies.

Issues concerning global internet data security should be addressed in a fair, reasonable and effective manner. China has put forward an eight-point proposal for this. The US seeks its own interests in a hegemonic way, and attempts to maintain its technological hegemony under the guise of cyber security. This cannot be accepted by international society, including China. It's hoped the US returns to globalization from "America First," and retake the universal commercial values that will not only benefit itself but also others.

[Sep 19, 2020] The US ban on TikTok and WeChat is set to take effect on Sunday, part of the increasing hostility between Washington and Beijing

Sep 19, 2020 | abcnews.go.com

Starting Sunday, downloads of the massively popular video app TikTok and the messaging app WeChat will be banned in the United States, the U.S. Department of Commerce announced Friday morning.

The department said in a statement that the move was necessary to "safeguard the national security of the United States."

President Donald Trump issued twin executive orders in August, saying the apps would shut down by Sept. 20 if they were not sold to U.S. owners. The admin claimed the Chinese Communist Party was using data collected through these apps to "threaten the national security, foreign policy and the economy of the U.S."

Commerce Secretary Wilbur Ross said in an interview on Fox Business News Friday morning that these new rules announced this morning were in connection with the executive orders issued in August and are "separate" from the ongoing negotiations between TikTok and tentative U.S. buyers including Oracle and Walmart.

Ross said that "for all practical purposes" WeChat will be shut down in the U.S. as of midnight Monday with the new Commerce Department ruling.

MORE: For Chinese Americans, WeChat ban threatens to upend business and community "TikTok is more complicated," Ross added, saying that essentially a deadline for a deal with a U.S. buyer has been extended until Nov. 12. In the meantime, updates will be barred in the app.

"Basic TikTok will stay intact until November 12," he said. "If there is not a deal by November 12 under the provisions of the old order then TikTok also will be, for all practical purposes, shut down."

Secretary of State Mike Pompeo separately weighed in on the news while traveling in Guyana on Friday.

[Aug 22, 2020] Things with WeChat ban becomes more complicated as US firms are afraid of being cut off their Chinese's customers

Aug 22, 2020 | www.zerohedge.com

Trump Team Assures Big Tech Lobbyists That WeChat Ban Won't Impact China Business

A little over a week ago, we shared how President Trump's decision to expand the scope of his crackdown on Chinese tech firms to include WeChat, Tencent's ubiquitous platform for everything from payments, to messaging to e-commerce sent a wave of panic through American multinationals like Apple who depend on the Chinese market for growth, and feared being essentially shut out due to an oversight by the administration.

The backlash has been just as intense as could be expected. In a quintuple-byline story published Friday afternoon, Bloomberg reported that an army of corporate lobbyists are working with Team Trump to try and find a way to restrict WeChat's use in the US without hamstringing every American company that depends on the app to connect with Chinese consumers.

According to sources from within the West Wing, the administration is still "working through the technicals" of how they're going to restrict WeChat in the US while allowing American companies to liaise with it in foreign markets.

The Trump administration is signaling that U.S. companies can continue to use the WeChat messaging app in China, according to several people familiar with the matter, two weeks after President Donald Trump ordered a U.S. ban on the Chinese-owned service.

The administration is still working through the technical implications of how to enforce such a partial ban on the app , which is owned by Tencent Holdings Ltd., one of China's biggest companies. A key question is whether the White House would allow Apple Inc. and Alphabet Inc.'s Google to carry the app in its global app stores outside of the U.S., according to the people, who spoke on condition of anonymity.

Over the past week, lobbyists went into "overdrive" and started harassing White House and Commerce Department staffers about Trump's order, and the "logistics and intention of the WeChat executive order." Now they're pushing to "narrow" the scope of the looming ban.

"We are talking to everyone who will listen to us," said Craig Allen, president of the US-China Business Council, whose group represents companies including Walmart Inc. and General Motors Co. "WeChat is a little like electricity. You use it everywhere" in China, Allen said.

We imagine the administration will come around on the "downsides to an expansive interpretation of the order." Because the last thing Trump needs is a selloff in big tech large enough reconcile S&P 500's valuation with the S&P 500 ex-FAANG.

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YesWeKahn , 3 hours ago

Wechat is just junk, people used to do a lot more business in china without it, I think these tech firms are bought by the ccp

aberfoyle_crumplehausen , 1 hour ago

America is turning Fascist under Trump right in front of our eyes. Fascism: merging of State and Corporates. Full stop. You can't argue this, don't even try.

LetThemEatRand , 3 hours ago

Big tech depends on a communist country for growth. Let that sink in.

hoytmonger , 2 hours ago

A communist country is better at business than the US.

Let that sink in.

holyvanguard , 3 hours ago

Xi and Trump should stage a photograph to reinact a classic Winne the Pooh scene.

NIRP_BTFD , 3 hours ago

Riddle me this. How the hell does the USA want to ban apps? I can install every possible apk on my device. If google takes apps out of their store i just install them with an alternative app store or just download them somewhere else.

inhibi , 3 hours ago

That's you and me and the few tech minded folks out there.

99% of the users get what the store bought phone gives them. This is just trying to rattle China's market.

Lets be honest: the real issue, as you have touched upon, is the complete monopoly of OS and app stores by Google and Apple.

philipat , 2 hours ago

You expect Gubmin to understand that?

Or that these things work both ways and China will surely tit-for-tat with restrictions on US Companies, probably starting with Apple?

Still, there's an election coming.............

HedgeJunkie , 3 hours ago

**** 'em all, ban it totally, let their vastly inflated values inflate more.

cr1stal , 3 hours ago

you have no idea how globalism works. they dont go oh i have 1000 billion so ill let a few beady eyed devil worshippers who just dropped out of harvard cooking school accrue a few hundred million. a disruptive autistic clown is about as welcome as he would be in the opium fields of the golden triangle

BeePee , 3 hours ago

This is what I will miss about the exiting of the Trump administration. Standing up to CCP China.

After Biden's inauguration, all this will roll back, money goes into Hunter Biden's account. China will roll over us. Yes, there will be some agreements, none of which will be honored by CCP China.

Kamala will be jocking one of the young male interns at the VP mansion. Apparently she is very adept at penis stimulation.

I guess we'll get what we want, or at least deserve. Trans bathrooms everywhere. There are no longer male or female identities. To heck with science, sexuality and gender is just a perspective. Crime really doesn't go up if you don't consider it a crime.

DeathMerchant , 14 minutes ago

Who gives a rats about Chinese consumers ?? Lobbyists should not even be permitted to be in or communicate with anyone in DC.

[Aug 12, 2020] Experts familiar with law enforcement requests say that what TikTok collects and hands over is not significantly more than what companies like Amazon, Facebook, or Google regularly provide, but that's because U.S. tech companies collect and hand over a lot of information.

Aug 12, 2020 | www.moonofalabama.org

Richard Steven Hack , Aug 11 2020 2:21 utc | 58

Leaked Documents Reveal What TikTok Shares with Authorities -- in the U.S.
A glimpse at what the social media platform does in the U.S. underscores that data privacy issues extend beyond China.


Experts familiar with law enforcement requests say that what TikTok collects and hands over is not significantly more than what companies like Amazon, Facebook, or Google regularly provide, but that's because U.S. tech companies collect and hand over a lot of information.

The documents also reveal that two representatives with bytedance.com email addresses registered on the website of the Northern California Regional Intelligence Center, a fusion center that covers the Silicon Valley area.

And they show that the Federal Bureau of Investigation and Department of Homeland Security actively monitored TikTok for signs of unrest during the George Floyd protests.

The number of requests for subscriber information that TikTok says it receives from law enforcement is significantly lower than what U.S. tech giants reportedly field, likely because police are more accustomed to using data from U.S. companies and apps in investigations. TikTok enumerates its requests from law enforcement in a biannual transparency report, the most recent of which says that for the last half of 2019, the company received 100 requests covering 107 accounts. It handed over information in 82 percent of cases. Facebook, by contrast, says it received a whopping 51,121 requests over the same period, and handed over at least some data in 88 percent of cases.

That last sentence... That's *why* Facebook exists. As does Google and Twitter and the rest of the social media giants.

[Aug 08, 2020] All About the Chips- Taiwan is Next Battleground for Trade Fight -

Aug 08, 2020 | www.theamericanconservative.com

Home / Articles / Economy / All About The Chips: Taiwan Is Next Battleground For Trade Fight ECONOMY , WORLD All About The Chips: Taiwan Is Next Battleground For Trade Fight

Vital tech production could put the island back at the center of intensifying Sino-American relations. Global dependence on Taiwan-made memory chips is risky business. (By Shutterstock/stockwars)

AUGUST 8, 2020

|

12:01 AM

MARSHALL AUERBACK

The media likes to dabble in war-game fantasies between the 21st-century great powers China and the U.S., but it's a distraction from the hybrid economic warfare that is underway -- from Trump's tariff hikes to the shores of the advanced economy.

Here in a nutshell is the problem facing the United States. The country that used to be a world leader in all forms of high tech, especially semiconductor chips, now spends its time redesigning chocolate chips. By contrast, Taiwan, officially a "rogue province of China," but in reality operating as an independent nation of 23 million people, ranked 20th as a world economy (right behind Switzerland), is now a leading global player in the production of semiconductor chips. As such it has emerged as the key supply link to a multiplicity of American and Chinese high-tech companies at a time when the Trump administration is working hard to cut China's access to Taiwan's semiconductors.

https://lockerdome.com/lad/13045197114175078?pubid=ld-dfp-ad-13045197114175078-0&pubo=https%3A%2F%2Fwww.theamericanconservative.com&rid=www.theamericanconservative.com&width=838

For all of China's significant technological advancements, the country still lags in the production of semiconductor chips.

Memory chips are principally made by Samsung, SK Hynix (South Korea), and Micron (USA). Intel also makes some memory chips for its own use. Memory chips are a big issue for China. Beijing has deployed considerable fiscal resources into producing them and last year set a goal of producing 5 percent of the world's total production by the end of 2020.

That's ambitious. It's one thing to produce memory chips, another to get a usable "yield," i.e., the percentage of output that actually works. It is a singularly challenging industry in which to attain industrial self-sufficiency.

Taiwan Semiconductor Manufacturing Company (TSMC) is a " fabless chip maker " that produces customized semiconductor chips for use in various types of electronics, such as digital cameras, smartphones, and the new technologically sophisticated "smart" cars. They also produce chips for the military, and for 5G base stations. China's leading telecom equipment manufacturer, Huawei, was a large customer, but the Trump administration has now mandated that all semiconductor chip manufacturers using U.S. equipment, IP, or design software will require a license before shipping to Huawei, which has forced TSMC to stop taking fresh orders from Huawei, as it uses U.S. equipment in its own manufacturing processes, such as LAM research and Applied Materials.

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The wisdom of so many companies relying on manufacturing facilities located in Taiwan is debatable. Intel and Micron locate fabs around the world, in part to diversify risk (earthquake, weather, politics) and to access skilled labor pools. Intel has long had production facilities in Ireland, Israel, and China itself; it has also purchased Israeli companies for their research and development. But it also has retained significant production facilities still in the United States. Similarly, Micron has fabs in Boise Idaho, Utah, and Manassas, Virginia (right near the CIA and Pentagon.)

TSMC is important because it is pretty much the only place to get processor chips fabricated, unless you're Intel. In that regard, Intel's recent 2nd quarter earnings announcement that its planned launch of the company's next generation of chips will be delayed by six months is most concerning. News of the production delay (which now pushes the production of the company's latest central processing unit (CPU) -- aka the "brains" of the laptop -- out to early 2023) generated considerable market anxiety, as evidenced by the 17 percent fall in the share price in the wake of the disclosure. From a long-term perspective, however, the more alarming aspect is Intel's decision to consider outsourcing its manufacturing capacity, a sharp break from the company's historic practice.

Intel has been one of the few leading American high-tech companies that has hitherto largely resisted the panacea of offshoring its production. Much of this is a product of the corporate culture established by former CEO Andy Grove, who had warned that Silicon Valley risked "squandering its competitive edge in innovation by failing to propel strong job growth in the United States," according to a New York Times op-ed by Teresa Tritch written shortly after his death. Tritch explains that:

in [Grove's] view, those lower Asian costs masked the high price of offshoring as measured by lost jobs and lost expertise

Mr. Grove contrasted the start-up phase of a business, when uses for new technologies are identified, with the scale-up phase, when technology goes from prototype to mass production. Both are important. But only scale-up is an engine for job growth -- and scale-up, in general, no longer occurs in the United States. "Without scaling," he wrote, "we don't just lose jobs -- we lose our hold on new technologies" and "ultimately damage our capacity to innovate."

Intel's decision comes at a time when American policymakers are finally beginning to appreciate the adverse economic and strategic consequences of such moves. Were Intel to follow through on its outsourcing threat, it too would further exacerbate America's strategic reliance on Taiwan for customized semiconductor manufacturing, as well as undermining the impact of recent legislative attempts to rebuild the country's semiconductor manufacturing capacity.

By contrast, economic competition that degenerates into out-and-out war would be a disaster for all sides. As David Arase, resident professor of International Politics at the Hopkins-Nanjing Center of the Johns Hopkins University School of Advanced International Studies, recently contended in the Asia Times, "Even an unsuccessful invasion of Taiwan would cause a supply chain disruption." By the same token, actively upgrading diplomatic relations with Taiwan to something akin to the old mutual defense treaty that existed prior to Washington's recognition of Beijing in 1979 as the one sovereign government representing China, would almost certainly provoke a more aggressive response from Beijing.

U.S. goals should be far more modest: not to underwrite the freedom aspirations of another country (even a vibrant multi-party democracy such as Taiwan) but, rather, to fix a key vulnerability in the global supply chain that currently renders the U.S. so reliant on Taiwan. Even TSMC has implicitly acknowledged its own geographical shortcomings, as it has recently announced plans to build a new $12 billion chip manufacturing facility in Arizona. Consider this a form of political risk insurance.

A full-scale defense of Taiwan would cost thousands of lives, and potentially entrench the U.S. military in a long-term quagmire; it would also represent a logistical nightmare in terms of supplying such a force over so many thousands of miles (versus an opposing Chinese army a mere 100 miles away .) To say nothing of the risks posed to numerous substantial American multinationals already operating in China.

A key conceptual problem that our policymakers and business leaders have today is an addiction to 19th-century concepts that are anomalous in the context of a 21st-century economy. David Ricardo's " comparative advantage " -- that "refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners" -- has less relevance at a time when such advantage can be largely created as a byproduct of state policy. Countries such as Taiwan, South Korea, and now China itself, can dominate targeted industries by subsidizing them aggressively. Because of increasing returns to scale, there is a winner-take-all pattern in which, at any given time, one nation tends to dominate a huge global market share of the underlying product -- since the 1970s, Japan, South Korea and China in that order. It also creates huge employment opportunities in high-quality jobs for the countries as they scale up production. This was also a key insight of Andy Grove .

None of these countries had a natural "comparative advantage" in semiconductor production; they just followed the classic pattern of subsidizing their growth via substantial government support, relentlessly driving down cost inputs to push other marginal manufacturers out of the industry.

The incessant focus on market share usually comes at a cost of short-term profitability (a no-no for Wall Street, which focuses on quarterly earnings as intently as an audience waiting for the white smoke to emerge from a papal election). However, businesses usually recoup these costs later once they've established dominant market share.

Semiconductors are a high value-added manufacturing platform industry that has a significant multiplier effect on the domestic economy. It represents an area that should be prioritized by the U.S., not de-emphasized (as Intel's proposed move threatens to do). The road back to manufacturing relevance is a long one, but the perpetuation of the current policy risks exacerbating longstanding pathologies in the U.S. economy, while simultaneously creating new national security vulnerabilities.

Taiwan is a vibrant multiparty democracy that constitutes a model of economic development. But those virtues could be threatened if we try, shortsightedly, to turn it into a U.S. protectorate to address problems that should be resolved much closer to home.

Marshall Auerback is a market analyst and contributor to the Independent Media Institute .


Fazal Majid 18 hours ago

TSMC's Arizona fab is tiny compared to its 12 Taiwan ones, and more of a sop to the Trump administration than a serious effort to diversify. The jugular vein of the semiconductor industry is within easy reach of China's missile arsenal, and indeed the Chinese military can be said to have been designed specifically for the task of retaking Taiwan.

Steve Smith Fazal Majid 6 hours ago

China might not even need to invade. If they blockade Taiwan--air and sea--and threaten to destroy ships and aircraft trying to enter or leave Taiwan, they can stop chip export.

It's similar to Iran saying, "Either everybody can export oil from the Gulf or no one can." China would say, "Either everyone can import chips from Taiwan or no one can. And China is in a much better position to enforce its will than Iran.

Tradcon 11 hours ago

The reaction to Auberback's refutation of comparative advantage would be extreme depending on who was reacting. The field of economics is like a cult, with a lot of groupthink and academic homogeneity. In this way failed consensuses are continued and alternatives, even if they have a good historical track record, are railed against as heterodox and fringe.

Its amazing how in just two or three decades we forgot about basically all of US economic history and policy history up to that point.

L RNY 10 hours ago

I completely agree that a supply chains including those for memory chips in Taiwan must be diversified but it is of paramount importance that Taiwan not be left weakened and vulnerable to mainland China by these shifting supply chains because any weakness in Taiwan will be an invitation for Beijing to exploit...and if Beijing exploits that invitation then they could take that invitation all the way to an invasion which will be a detriment of all other nations in the Pacific. Right now China is focused on Hong Kong, Taiwan and India....with Hong Kong and Taiwan gone the China will push its aggressive hegemony to Indonesia, Malaysia, Philippines, etc.

I also complete agree that we (the US, Japan and any other asian nation that will join) need a treaty protecting Taiwan's independence from mainland China but the very first thing the US should do prior to such a new treaty is to get other nations to start using the name Taiwan again on their maps, plane flights, UN, etc because as you know Beijing has been doing everything possible to not just get nations and businesses to stop recognizing Taiwan and to even stop using its name in an attempt to erase both the existence of Taiwan and any distinction that Taiwan is separate from mainland China. The recognition of Taiwan and the use of its name must be reinforced everywhere in the world as part of the first step in negotiating a security treaty for Taiwan.

donthomson1 L RNY 3 hours ago

The USA has a one China policy and recognises the Chinese Government as the Government of China. It's true that it once recognised the Government of Taiwan as the Government of China. It's a completely new policy you're proposing of splitting China into 2 (or more?) states. That needs war, as it would if China was proposing to break up the USA, and the USA would lose a non-nuclear war.

The USA could win a nuclear war but would lose a lot of its population. I don't know how seriously we should take the US estimate of 90% within a year by starvation and disease with just an EMP attack. Mexico, Canada and Cuba might accept many US refugees even though they would also suffer damage. Not all of the area of those countries would suffer EMP damage. Other countries might also provide some charity.

Mexico, Canada and Cuba could be rewarded for their charity by dividing the USA between them. That would be a powerful incentive and remove a country fond of wars of aggression. A USA that poses no threat to anybody could continue to exist and be called Hawaii. [email protected]

Fazal Majid 18 hours ago

TSMC's Arizona fab is tiny compared to its 12 Taiwan ones, and more of a sop to the Trump administration than a serious effort to diversify. The jugular vein of the semiconductor industry is within easy reach of China's missile arsenal, and indeed the Chinese military can be said to have been designed specifically for the task of retaking Taiwan.

Steve Smith Fazal Majid 6 hours ago

China might not even need to invade. If they blockade Taiwan--air and sea--and threaten to destroy ships and aircraft trying to enter or leave Taiwan, they can stop chip export.

It's similar to Iran saying, "Either everybody can export oil from the Gulf or no one can." China would say, "Either everyone can import chips from Taiwan or no one can. And China is in a much better position to enforce its will than Iran.

Tradcon 11 hours ago

The reaction to Auberback's refutation of comparative advantage would be extreme depending on who was reacting. The field of economics is like a cult, with a lot of groupthink and academic homogeneity. In this way failed consensuses are continued and alternatives, even if they have a good historical track record, are railed against as heterodox and fringe.

Its amazing how in just two or three decades we forgot about basically all of US economic history and policy history up to that point.

L RNY 10 hours ago

I completely agree that a supply chains including those for memory chips in Taiwan must be diversified but it is of paramount importance that Taiwan not be left weakened and vulnerable to mainland China by these shifting supply chains because any weakness in Taiwan will be an invitation for Beijing to exploit...and if Beijing exploits that invitation then they could take that invitation all the way to an invasion which will be a detriment of all other nations in the Pacific. Right now China is focused on Hong Kong, Taiwan and India....with Hong Kong and Taiwan gone the China will push its aggressive hegemony to Indonesia, Malaysia, Philippines, etc.

I also complete agree that we (the US, Japan and any other asian nation that will join) need a treaty protecting Taiwan's independence from mainland China but the very first thing the US should do prior to such a new treaty is to get other nations to start using the name Taiwan again on their maps, plane flights, UN, etc because as you know Beijing has been doing everything possible to not just get nations and businesses to stop recognizing Taiwan and to even stop using its name in an attempt to erase both the existence of Taiwan and any distinction that Taiwan is separate from mainland China. The recognition of Taiwan and the use of its name must be reinforced everywhere in the world as part of the first step in negotiating a security treaty for Taiwan.

donthomson1 L RNY 3 hours ago

The USA has a one China policy and recognises the Chinese Government as the Government of China. It's true that it once recognised the Government of Taiwan as the Government of China. It's a completely new policy you're proposing of splitting China into 2 (or more?) states. That needs war, as it would if China was proposing to break up the USA, and the USA would lose a non-nuclear war.

The USA could win a nuclear war but would lose a lot of its population. I don't know how seriously we should take the US estimate of 90% within a year by starvation and disease with just an EMP attack. Mexico, Canada and Cuba might accept many US refugees even though they would also suffer damage. Not all of the area of those countries would suffer EMP damage. Other countries might also provide some charity.

Mexico, Canada and Cuba could be rewarded for their charity by dividing the USA between them. That would be a powerful incentive and remove a country fond of wars of aggression. A USA that poses no threat to anybody could continue to exist and be called Hawaii. [email protected]

[Aug 05, 2020] US' Goal Was Not to Force Sale of TikTok US, but Ban App, China's ByteDance Says in Internal Letter

Aug 05, 2020 | www.unz.com

vot tak , says: August 4, 2020 at 9:40 am GMT

US' Goal Was Not to Force Sale of TikTok US, but Ban App, China's ByteDance Says in Internal Letter

https://sputniknews.com/science/202008041080053001-us-goal-was-not-to-force-sale-of-tiktok-us-but-ban-app -- chinas-bytedance/

The israeli's american colony has literally been reduced to the level of the Jewish mafia organised crime gangsterism.

"Either give us control of your business or we run you out of town".

[Aug 04, 2020] Trump Presses Microsoft, TikTok Into A Deal That Neither Wants - Who Profits From It-

Aug 04, 2020 | www.moonofalabama.org

Kali , Aug 3 2020 17:57 utc | 1

The Trump administration is working to dispossess the Chinese company ByteDance by blackmailing it to sell its valuable TikTok business to a U.S. company for a bargain price. This to the benefit of yet unknown people.

False allegation over the security of TikTok user data were used to threaten the prohibition of the video app in its U.S. market. In the U.S. alone the app is used by more than 80 million people. It plays an important part in the youth culture and music business. Faced with a potential close down of its prime business in one of its most profitable markets ByteDance had no choice but to agree to negotiate about a sale.

ByteDance declined an offer by two of its U.S. based minority investors to buy the business for $50 billion as that price was far below its presumed value. The White House stepped in to find a new buyer with enough change to pay for a deal. As the largest social media companies - Facebook, Apple, Google and Twitter - are already under congressional investigations for their monopoly positions in U.S. markets none of them could be the potential buyer. Facebook has in fact just launched a rip-off of the TikTok product under the name Reels. It is trying to poach TikTok 'creators' for its own service. Facebook owner Mark Zuckerberg has warned of Chinese competition. He would be the biggest winner should TikTok be thrown out of the U.S. market.

The White House finally came up with Microsoft as a potential buyer. But Microsoft has historically been unsuccessful in the social media business. It also does other business with China and is reluctant to get involved in a move that could damage that business.

Despite Microsoft's lack of interest President Trump personally pressed for a shotgun marriage. The Democrats are supporting him in this. But neither ByteDance nor Microsoft really want to make the deal.

ByteDance would prefer to move the TikTok business into an independent company :

TikTok could become totally independent from its Chinese owner ByteDance to continue operating overseas, according to a source who has been briefed on the discussions.

But the source said that despite reports that the video-sharing platform would be taken over by Microsoft, ByteDance founder Zhang Yiming and investors were reluctant to sell to the US company.
...
[I]f it is able to continue operating in the US, the board of ByteDance will agree to a complete spin-off for the overseas version of the app, which operates under the name Douyin in China.

The new entity would keep the TikTok name, but will have different management and will no longer answer to ByteDance.

"Except for Zhang Yiming, almost all those in the room favour such a spin-off," the source said. "The mood is kind of: 'the founder will be out and the house will be ours'.

"But even for Zhang himself, there's really no other option because the app will be killed if you don't let it go."

The spin-off would cover all markets except China where a ByteDance owned app similar to TikTok is run under the name Douyin. A sale to Microsoft would only include the markets in the U.S., Canada, New Zealand and Australia. (Note that Britain is the only member of the 5-eyes club missing here.)

That Microsoft is not really wanting the deal can be gleaned for the convoluted statement it issued yesterday. This is clearly unprecedented language in a public company's communication:

Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States.

Microsoft fully appreciates the importance of addressing the President's concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury .

Microsoft will move quickly to pursue discussions with TikTok's parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President.

The discussions with ByteDance will build upon a notification made by Microsoft and ByteDance to the Committee on Foreign Investment in the United States (CFIUS).
...
Microsoft may invite other American investors to participate on a minority basis in this purchase.
...
Microsoft appreciates the U.S. Government's and President Trump's personal involvement as it continues to develop strong security protections for the country.

This ass kissing of Trump is not what Microsoft is used to do. Satva Nadella was clearly pressed into publishing this. Such a statement would usually include language about increasing shareholder value or better user experience. This statement has none of that standard sweet talk.

The stock market seems to believe that a takeover of TikTok would be profitable for Microsoft :


bigger

I have my doubts that Microsoft can successfully run a social network business. This one would be restricted to just four countries and it would likely lose access to the continuing development of the app. Where is the potential growth for such a restricted application?

And how will China react if Microsoft takes part in the U.S. raid of ByteDance's business? While China is only contributing some 2% to Microsoft's overall revenue the company's biggest R&D center outside of the U.S. is in China . It contributes to its global success:

"[There has been an] explosion of innovation in China," [Microsoft President Brad] Smith said. "One of the things that we at Microsoft have long appreciated is the enormous ingenuity of the engineering population of China."

Microsoft's X-Box game station as well as other hardware it sells is at least partially developed and produced in China . Some of Microsoft's Chinese engineers might have there own ideas on how China should retaliate to the attack on a successful Chinese company. The Trump administration sees that danger and it is pressing Microsoft to get rid of all its relations with China:

White House trade adviser Peter Navarro suggested on Monday that Microsoft could divest its holdings in China if it were to buy TikTok.

"So the question is, is Microsoft going to be compromised?" Navarro said in an interview with CNN. "Maybe Microsoft could divest its Chinese holdings?"

Leaving China would surely damage Microsoft's long term business. For a global company that country is a too big potential market to be left at the wayside.

But the real question about the mafia raid on ByteDance is who is destined to profit from it.

Today Trump said (vid) that if Microsoft closes the deal a substantial amount should be paid to the Treasury because his administration 'enabled the deal'. He likely didn't consult a lawyer before making that wrongheaded statement.

But who are the "other American investors" who are invited "to participate on a minority basis in this purchase". Reuters had already reported that 'minority investor' clause. Is the wider Trump family involved in this?

Why is that term so important for Trump that Microsoft has felt a need to repeat it in what is essentially a public terms letter addressed to Trump?

Posted by b on August 3, 2020 at 17:47 UTC | Permalink

I know B says this is about stealing, but maybe this is about sending China a message about how it does business in general. As you should know by now, China disallows many American apps in China. Is this a message to China about how America and maybe American allies will do business with them from now on? First Huawei and now Tik Tok and next who knows what? It looks to me like the message to China is: Follow the Golden Rule, which is not "whoever has the most gold rules" but is instead "Do unto others as you would have them do unto you."


OJs_White_Bronco , Aug 3 2020 18:09 utc | 2

Hey Kali, China DOES NOT need the US but what you are seeing is a violation of business norms. You say China doesn't allow many apps from entering its market is not the same as the US trying to blackmail a successful Chinese app that have already entered the US market. Since you mentioned Huawei; they own almost the entire 5G technology so either you pay directly or indirectly irregardless if the US bans them or not

One Too Many , Aug 3 2020 18:50 utc | 10

Facebook at one time was operating in China. In 2008-2009 terrorists were using Facebook to coordinate attacks in Xinjiang province. When the Chinese government demanded the information Facebook declined to provide citing privacy issues. After that Facebook was banned.

One Too Many , Aug 3 2020 18:58 utc | 12

Posted by: Kali | Aug 3 2020 18:52 utc | 11

"For example Facebook, Youtube, Twitter, Google--maybe they want complete control over what their populations hear or says online?"

If that's the case why is it not illegal in China to have a VPN? How many strawmen are in that diatribe you just posted? I can only knock down one at a time.

Jackrabbit , Aug 3 2020 19:01 utc | 15

Is the dispute over Tik-Tok really about protecting American citizens?

Non-US companies collect a lot of info about US citizens and citizens of other Western countries via internet apps and other means. And much info is available for sale as well.

Seems more likely that the forced sale is really about protecting the Western establishment and US power-elite. A massive social network is a threat to their control because it could be used to spread anti-US govt messages. Mostly to younger people who are already very cynical (as we can see from the protesting) and thus more willing to accept it as true or reflecting a truth.

Trump impersonator Sarah Cooper got started on TikTok .

Although Sarah's comedy is not a threat to the US power-elite, one can easily imagine messaging that would be:


<> <> <> <> <>

PS Where's the libertarian mob complaining about government control? Those astro-turfed bullsh*ters are not really interested in issues that they are not paid to be interested in.

!!

karlof1 , Aug 3 2020 19:15 utc | 18

Gee, seems the Chinese have a very different view of it all :

"As TikTok's global market influence was skyrocketing, the company was suppressed by the US government. Again, this shows how difficult it is for companies from China to go global. ByteDance said in a statement that it is "committed to becoming a global company." But Washington will not easily let the company off just because of its good wishes.

"The US' decoupling from China starts from killing China's most competitive companies. In the process, Washington ignores rules and is unreasonable. Although suppressing Huawei and TikTok also incurs losses to the US, the suppression can still be implemented in the US. This is because such suppression echoes the sense of crisis instigated by some US elites when facing China's rise.

"Huawei and ByteDance can only provide limited protection to themselves via legal means. But we should not overestimate the US' sense of justice. The country has shown us too many examples of politics overwhelming everything else....

"Huawei has advanced equipment, and ByteDance sells services to the world through unique concepts and technologies. The two companies are pioneers worldwide. They have brought a sense of crisis to US elites, which shows that China's top companies have the ability to move to the forefront of the world in technology. It reflects the power of China as an emerging market. As long as such power continues to expand, these top Chinese companies can eventually break through US suppression.

"By banning Huawei, the US would lag behind in 5G technology. By banning TikTok, the US would harm its own internet diversity and its belief in freedom and democracy. When similar things happen time and again, the US will take steps closer to its decline. The US is a pioneer in global internet and has created Google, Facebook, Twitter and YouTube. But in recent years, the US' internet structure has been rigid.

"Rising stars such as ByteDance continue to emerge in Chinese internet sector, showing huge vitality. China knows its deficiencies, strives to become stronger, and adheres to opening-up to the world. The US, however, is gradually being shrouded in arrogance, seclusion and a negative attitude. Chinese people should not be discouraged by temporary setbacks, or our weaker position in the China-US confrontation. What's important is that China's trend of faster-pace progress has not changed....

"The COVID-19 pandemic is an important issue, clearly showing us that the US has fallen into a type of systematic chaos. This will severely limit its ability to indefinitely upgrade and exert pressure on China. Many of the US practices, including banning TikTok, show the country's weakening competitiveness. Can't Facebook just come up with a more powerful app and beat TikTok in the market? The problem is Facebook cannot do it. It can only resort to the brute force of US politics."

As you read, China takes this very differently. It sees the inability of Outlaw US Empire firms to compete and thus seek protection as suggested here :

"Western countries' social media platforms have long dominated, and only a handful of Chinese firms that have entered the arena in recent years have won popularity. TikTok has seen record-high downloads across the world. Per data from an industry analysis platform Sensor Tower in April, TikTok had been downloaded more than 2 billion times globally .

"The US' plan to ban TikTok follows the same logic as its crackdown on Chinese tech firm Huawei. The US has been limiting the 5G frontrunner for years, essentially the result of evolving relations between China and the US-led Western world.

" TikTok and Huawei are not isolated cases. Chinese high-tech firms that expand overseas will encounter different levels of barriers as China develops into a new tech power, giving rise to concerns from countries that feel threatened by Chinese technology .

"The US will not allow a social media platform that enjoys high popularity among younger generations to be operated by a foreign company, especially when the countdown to its presidential election ticks on. Banning TikTok now is, to some extent, also a move by Trump to control public voices after groups of young American TikTok users reportedly upstaged his first large-scale public rally amid the COVID-19 pandemic by registering for tickets and failing to attend.

"With the election drawing near, a plunging second-quarter GDP at negative 32.9 percent, and the world's largest number of coronavirus infections, it is likely the Trump administration will continue rolling out new and even harsher measures to antagonize China and attempt to block it economically." [My Emphasis]

How much revenge and the election play into the drama are unknown, but we know Trump is soft-skinned and very vindictive; Tulsa was a huge embarrassment. Can't compete; erect a tariff wall to protect your weak companies--the Outlaw US Empire demands China "open up" while it closes up instead. As the headline of the first item screamed, "Banning TikTok reflects Washington's cowardice."

Clueless Joe , Aug 3 2020 19:37 utc | 22

Gotta love the stupid Western capitalists.
First, it was "Let's all invest in China, do a lot of business and move all our factories there because we'll make a shit-ton of $$".
Then, it's "Oh, they're too big and powerful, we need to stop trading and making any kind of business with them".
As some clever guy said about these short-sighted idiots more than a century ago, they're selling the rope with which to hang them.

[Aug 02, 2020] TikTok ban demonstrates barbaric act of rogue US: Global Times editorial

The mafia methods used are often packaged as monopoly powers such copyrights, patents, transformation of public goods into for profit private enterprizes (privatization), takeovers and bankruptcy, private ownership of the highest levels of nearly all governments, and just 6 own 92% of all media.
Takeover of Tik Toc by Microsoft is just one demonstrating of a wider trend -- the tend toward gangster capitalism. BTW Chinese proposes complete divestment. That spells big trouble for US heavyweights such as Amazon, Google and Facebook.
"We lie to deceive ourselves, we lie to comfort others, we lie out of pity, we lie out of shame, to encourage, to hide our misery, we lie out of honesty. We lie for freedom."
Trump blames China every chance he can and the Democrats either agree or offer mealy-mouthed protest.
Notable quotes:
"... It comes to light that at least 125 US companies owned or invested in by Chinese entities, including Chinese SOE, received hundreds of millions in PPP loans backed by the US SBS. ..."
"... This level of capitalust interconnection between elite investors and governments belies all the heated talk of cold war by politicians on both sides as well as useful idiots the world over. ..."
"... "If this is also national security, then US national security is synonymous with hegemony." ..."
Aug 02, 2020 | www.moonofalabama.org
vk , Aug 2 2020 15:04 utc | 8

TikTok ban demonstrates barbaric act of rogue US: Global Times editorial

China has never banned US high-tech companies from doing business in the country. What the Chinese government demands is that what they do in China should comply with Chinese law. That's all . It was some US companies that refused to comply with Chinese laws. Google used to have a position in the Chinese market. It itself pulled out of China a decade ago, while other companies were accused in the US of kowtowing to China when they tried to design their specific versions for the Chinese market. This leaves no US internet giant currently operating in China.

TikTok operates in the US in full compliance with US laws and is completely cut off from Douyin, its Chinese equivalent. Users in the Chinese mainland cannot register for TikTok even if they bypass the so-called great firewall . TikTok does not violate any US law but fully cooperates with the US administration.

The US claim that TikTok threatens its own national security is a purely hypothetical and unwarranted charge - just like the groundless accusation that Huawei gathers intelligence for the Chinese government. This is fundamentally different from China's refusal to allow the original versions of Facebook and Twitter to enter China and require them to operate in accordance with Chinese laws.

In just three paragraphs, the Global Times killed two myths: that a "great firewall" exists and that China censorship things from the West (i.e. that the Chinese people is "living in the darkness").

I had a teacher who traveled to China recently. He went to a local bar (100% Mainland Chinese) as soon as he landed. He was having difficulty accessing Google (I think it was either Gmail or Google Drive). He tried, tried, tried but couldn't do it. When the locals there realized he was trying to access Google products, they promptly and calmly told him he should use VPN because Google didn't operate in China. No drama, no fear of a local police officer suddenly coming to the place to arrest them.

They know what Apple, Google and Facebook are. It's just that China has better local options for the same product.

--//--

New cold war will not stop US decline

Bingo.


donkeytale , Aug 2 2020 20:25 utc | 45

Not that globalization is a one way street by any means.

It comes to light that at least 125 US companies owned or invested in by Chinese entities, including Chinese SOE, received hundreds of millions in PPP loans backed by the US SBS.

This level of capitalust interconnection between elite investors and governments belies all the heated talk of cold war by politicians on both sides as well as useful idiots the world over.

Why even favorite Chinese PR flack Pepe Escobar recently characterized the Stupidity Trap aka Thucydides Trap as childish nonsense.

ptb , Aug 2 2020 20:28 utc | 46

@karlof1 32

"If this is also national security, then US national security is synonymous with hegemony."

That is precisely the problem. Unfortunately, the current US economy has become dependent on advantages arising from unrivaled geopolitical power. Take it away too suddenly, and there would be a painful economic transition to become a normal nation again.

... ... ..

[Aug 02, 2020] Pompeo- Trump taking action on Chinese software firms 'in coming days'

While concern might be legitimate, Trump administration actions looks more and more like extortion. They really open the door for king US financial companies and accounting firms from China and Russia. The latter also represent "national security" threat.
Aug 02, 2020 | www.msn.com
Live: Watch NASA astronauts splash down near Florida in a SpaceX Crew Ground beef recall 2020: JBS Food Canada recalls more than 38,000 pounds of meat The Hill logo Pompeo: Trump taking action on Chinese software firms 'in coming days'

Secretary of State Mike Pompeo said Sunday that President Trump would soon take action against Chinese software companies that the administration believes present a national security risk for Americans.

Mike Pompeo wearing a suit and tie: Pompeo: Trump taking action on Chinese software firms 'in coming days' © Greg Nash Pompeo: Trump taking action on Chinese software firms 'in coming days'

"President Trump has said, 'enough,' and we're going to fix it," Pompeo said on Fox News's "Sunday Morning Futures." "And so he will take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party."

me marginwidth=

The comments come on the heels of Trump's announcement on Friday that he was prepared to sign an executive order to ban TikTok, a Chinese-owned short-form video app, from operating in the U.S.

Pompeo on Sunday asserted that Chinese-owned software companies doing business in America were "feeding data directly" to the government in Beijing and that the practices amounted to "true national security issues." He specifically named TikTok and WeChat, a Chinese-owned messaging and social media app.

"They are true privacy issues for the American people. And for a long time, a long time, the United States just said, well, goodness, if we're having fun with it, or if a company can make money off of it, we're going to permit that to happen," Pompeo added, noting that officials have been deliberating on a decision for months now.

TikTok, which has become especially popular among teens in recent years, has gained relentless scrutiny from the Trump administration and members of Congress overs its relationship with ByteDance, a Chinese firm. Lawmakers have voiced concerns that Americans' information is not secure in the hands of TikTok, considering Chinese laws that require disclosures of sensitive data upon request by the government.

TikTok has strongly pushed back against allegations about its handling of user data in recent days, with the company's CEO releasing a statement rebuking "rumors and misinformation." The company also sent a letter to leaders on the House Judiciary Committee last Wednesday rebutting allegations about its data practices.

"TikTok is not available in China," the letter said. "We store Americans' user data in the US, with back-up in Singapore, with strict access controls for employees. We have never provided any US user data to the Chinese government, nor would we do so if asked. Any allegations to the contrary are unfounded."

TikTok has not directly commented on Trump's stated plans to bar the app's use in the U.S. Though TikTok's U.S. general manager, Vanessa Pappas, said in a video on Saturday that the company is "here for the long run." The company has also highlighted the 1,000 people in the U.S. it has hired, noting that it plans on adding another 10,000 employees in the country in the future.

After Trump's comments on Friday, reports surfaced that Microsoft was in talks to purchase the short-form video app, which boasts roughly 100 million American users.

Asked about that possibility and whether it would end any opportunity for Chinese surveillance, Pompeo said on Fox News that the administration "will make sure that everything we have done drives us as close to zero risk for the American people."

Multiple GOP Senators have voiced support of the prospect of a U.S. company purchasing TikTok to avoid an outright ban. Sen. Marco Rubio (R-Fla.) said in a tweet Sunday that a "trusted" U.S. company buying the app would be a "positive and acceptable outcome."

[Jul 30, 2020] Donald Trump is 'willing to accept more risk' to counter Beijing aggression, says US official - South China Morning Post

Notable quotes:
"... Join the Singapore Property Festival - a virtual exhibition organised by the South China Morning Post on August 1 to explore a wide range of affordable luxury residential and commercial real estate assets in Singapore, perfect as relocation and investment options. Get property project highlights and market insights from Info Session webinars and LIVE 1-on-1 chats with property taxation, immigration and investment experts. Register for your FREE PASS now. ..."
Jul 30, 2020 | www.scmp.com

Curtis also stuck close to the main theme of US Secretary of State Mike Pompeo's high-profile China policy speech last week by arguing that the India border clash and sovereign debt financing used for Belt and Road Initiative projects "fits with a larger pattern of PRC aggression in other parts of the world". Pompeo called for "a new grouping of like-minded nations" to counter China.

Accusing Beijing of "selling cheap armaments and building a base for the 1970s-era submarines that it sold to the Bangladesh Navy in 2016", Curtis also committed to stronger relations with Dhaka.

"We're committed to Bangladesh's long-term success because US interests in the Indo-Pacific depends on a Bangladesh that is peaceful, secure, prosperous healthy and democratic," Curtis said. "We continue to encourage the Bangladeshi government to renew its commitment to democratic values as it prepares to celebrate its 50th anniversary of independence, next year." Big Tech tangles with US lawmakers in antitrust showdown 30 Jul 2020

While the India-China border clash, pressing of maritime claims in the South China Sea, and increasing military and economic pressure on Taiwan may have helped to push countries in the region to cooperate more, Washington will not necessarily benefit, said Ali Wyne, a non-resident senior fellow at the Atlantic Council and a non-resident fellow at the Modern War Institute.

"China's actions in recent months have compelled many of its neighbours to try and bolster their military capabilities on an accelerated timeline and to intensify their security cooperation with one another," Wyne said.

"For at least two reasons, though, it is unclear that those neighbours would be full participants in a US-led effort to counterbalance China.

"First, geographical proximity and economic dependence constrain the extent to which they can push back against Beijing's assertiveness without undercutting their own national interests," he said. "Second, many of them are reluctant to make common cause with the United States in view of the transactional diplomacy that it has pursued in recent years." China's foreign minister calls on other nations to resist US and stop a new cold war 29 Jul 2020

China's embassy in Washington did not respond to a request for comment.

However, Chinese Foreign Minister Wang Yi on Tuesday called Washington's increasingly hard line against the Chinese government "naked power politics". In a phone call with his French counterpart Jean-Yves Le Drian on Tuesday, Wang said the Trump administration's strategy was to "constantly provoke China's core interests, attack the social system chosen by the Chinese people and slander the ruling party that is closely connected with the Chinese people," according to state news agency Xinhua.

"These actions have lost the most basic etiquette for state-to-state exchanges and have broken through the most basic bottom line of international norms," he said, warning that "the world will fall into a crisis of division, and the future and destiny of mankind will also be in danger".

https://www.youtube.com/embed/c3uzkXgW4yY?rel=0&mute=1&playsinline=1&frameborder=0&autoplay=0&embed_config=%7B%22relatedChannels%22%3A%5B%22UC4SUWizzKc1tptprBkWjX2Q%22%5D%2C%22adsConfig%22%3A%7B%22adTagParameters%22%3A%7B%22iu%22%3A%22%2F8134%2Fscmp%2Fweb%2Fchina_policiespolitics%2Farticle%2Finstream1%22%2C%22cust_params%22%3A%7B%22paid%22%3A1%2C%22scnid%22%3A%223095250%22%2C%22sctid%22%3A%22326745%22%2C%22scsid%22%3A%5B%2291%22%2C%224%22%2C%22318198%22%5D%2C%22articletype%22%3A%22DEFAULT%22%7D%7D%2C%22nonPersonalizedAd%22%3Atrue%7D%7D&enablejsapi=1&origin=https%3A%2F%2Fwww.scmp.com&widgetid=2 US House of Representatives sends Uygur Human Rights Policy Act to Trump's desk for approval

US House of Representatives sends Uygur Human Rights Policy Act to Trump's desk for approval

Curtis was less sanguine about how much Kazakhstan, Kyrgyzstan and other Central Asian republics were resisting China's influence, citing an emphasis by governments in the region on the economic consequences of strained ties with Beijing by protesting the treatment of Muslim minorities in China's far northwest.

China's internment of Muslim Uygurs in the Xinjiang region has drawn international condemnation. The UN has estimated that more than a million Muslims have been detained in camps there for political re-education, but Beijing claims they are vocational training centres aimed at countering religious extremism.

"With regard to the Central Asian countries, I think they're concerned about China's economic influence in their countries, and therefore they very much hedge their comments about the repression of Muslims in Xinjiang province," Curtis said, but added that she expected public condemnation of China in Pakistan and Bangladesh to mount over the issue.

"There has been reticence, which has been disheartening, but I think as these countries see China trying to trying to increase disinformation campaigns you'll start to see pushback from the South Central Asian countries and more speaking out about the treatment of Muslims in Xinjiang," she said. Join the Singapore Property Festival - a virtual exhibition organised by the South China Morning Post on August 1 to explore a wide range of affordable luxury residential and commercial real estate assets in Singapore, perfect as relocation and investment options. Get property project highlights and market insights from Info Session webinars and LIVE 1-on-1 chats with property taxation, immigration and investment experts. Register for your FREE PASS now.

[Jul 29, 2020] A Significant Decline Is Coming For The U.S-

Notable quotes:
"... The problem for the US is that China is the world's biggest semiconductor market and biggest chip importer on the world ..."
"... these bans are lose lose situation for both the US and China ..."
"... I do not think that Pompeo is smelling blood and moving for the jugular, its not such a situation as China is not that vulnerable, it is more likely to be US elite anger due to the US weakening and China gains during the Covid-19 crisis. ..."
"... Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them. ..."
"... I guess most of the world is too cowardly and prefers to go with the flow. They will abandon the US only after the US lost anyway. Well, it is not an easy situation. Still, the US reactions are very strong and hateful precisely because things are still not good for it and its decline is continuing, regardless of some tactical victories, where in some cases it is a lose lose situation anyway. ..."
Jul 29, 2020 | www.moonofalabama.org

A Significant Decline Is Coming For The U.S. james , Jul 27 2020 18:10 utc | 1

by Passer by

In response to several comments in the last open thread (slightly edited).

Actually there is even some real, and not only relative, decline for the US, for example US life expectancy is dropping. This is a pretty bad sign for a developed country. Same for the UK by the way.

On the issue of China gaining during the Covid crisis, they gained in raw power, for example gained in GDP relatively to the US. And they gained in debt levels too, relatively, as US debt levels exploded due to the crisis. Now you have V-shaped recovery in China and poor, W-shaped double dip recovery in the US. With far more debt added.

Of course there is the issue of public relations and soft power. On the one hand the US blamed China for the pandemic, but on the other hand it embarrassed itself due to its poor performance in containing the pandemic, compared to other countries. And the US lost points around the world due to rejecting WHO right in the middle of the pandemic. Europe and developing countries did not like that at all. Don't forget that Covid also weakened the US military, they have problems with it, including on ships and overseas bases, and even broke the biggest US exercise planned in Europe for the last 30 years. And the pandemic in the US is still raging, its not fixed at all and death rates are increasing again.

Here for example, the futurologists from Pardee Canter that that China gained during the crisis, in raw capabilities. Future research and relative power between countries is their specialty :

Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer use IFs (International Futures) to explore the long-term impact of COVID-19 in China in this Duck Of Minerva blog post" "Where broad measures of material capabilities are concerned, the picture is clear: COVID-19 is closing the gap in relative capabilities for the U.S. and China and accelerating the U.S.-China transition. Through multiple long-term forecast scenarios using the International Futures tool, Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer explain on the Duck of Minerva blog that China is likely to gain approximately one percent of global power relative to the U.S. by 2030 due to the economic and mortality impacts of COVID-19. This share of global power is similar to the relative capabilities of Turkey today.

On the issue of the USD, Stephen Roach also says that there will be a significant decline in the medium term. And the argument is pretty logical - if the US share in the global economy is declining (and it will be declining at least up to year 2060), and if the level of US debts is reaching all time high levels, then the USD will decline. I agree with that argument. It is fully logical.

On the chip/semiconductor issue. David Goldman is skeptical that the US will be able to stop China on this :

The chip ban gives the world an enormous incentive to circumvent the US
Basically Huawei still has advanced suppliers, from South Korea and Japan. And some of them are refusing to yield. The problem for the US is that China is the world's biggest semiconductor market and biggest chip importer on the world , which gives enormous initiative for private businesses to circumvent US made equipment in order to export to China. Then also China is stashing large quantities of chips. By 2025, it should be able to replace foreign production with homegrown. So these bans are lose lose situation for both the US and China - yes, this will cause come costs to China up to 2025. But it will also lead to US companies, such as Qualcomm, to lose the Chinese chip market, which is the largest in the world, and there is nothing to replace it.

These are hundreds of billions of losses for the US due to gradually losing the most lucrative market. Thus, in relative terms, China does not lose from these games, as the US will pay a large price just as China. It is lose-lose situation, but in relative terms the same. US loses just as China loses. And do not forget that China warned that a full US attack on Huawei will lead to Boeing being kicked from the country, which is becoming the biggest aviation market in the world, and will lead to hundreds of billions of losses for that company too, and will probably burry it under Airbus. China needs lots of planes up to 2028, when they will replace them with their own, worth hundreds of billions of dollars. Elevating Airbus over Boeing, which already has big troubles, will be a significant hit for the US aerospace industry.

So China has cards to play too. On the issue of the US getting some countries to ban Huawei, it is again lose - lose situation - that is both the US and some of its allies will lose due to using more expensive 5G equipment and will lose more time to build their networks. So China loses, and US and some allies lose, but in relative terms things remain the same between them power-wise, as they both lose. Do not forget that Germany said that it will continue to use Huawei equipment, and this is the biggest economy in Europe:

Germany's three major telecommunications operators Deutsche Telekom, Vodafone and Telefonica have been actively promoting 5G in recent years. They implement the "supplier diversification" strategy and use Huawei equipment in their networks among other vendors. Peter Altmaier, German minister of economy, told the Frankfurter Allgemeine Zeitung on July 11 that Germany would not exclude Huawei from the country's 5G network rollout. "There can only be an exclusion if national security is demonstrably at risk. However, we will strengthen our security measures, regardless of which country the products come from," said Altmaier. "There is no change in Germany's position," a spokesperson of the country's Interior Ministry told local broadcaster ARD on July 16.

So we can say that probably half of Europe will be using Huawei. Still, as you said, a large part of the world will exclude it. Maybe half of world's GDP. Unfortunately things are not perfect. One bright spot in that is that Huawei is betting on emerging markets, and emerging markets have higher growth rates than western markets - that is, they will matter more in the future.

I would agree that the US is harming China, but the damage is not large IMO, as these are mostly lose lose situations where relative power stays the same. And with time, there will be significant damages for the US too, such as losing the biggest chip and aviation markets and the empowerment of Boeing competitors such as Airbus.

So its not too bad in China. Thus, after mentioning all of this, I do not think that Pompeo is smelling blood and moving for the jugular, its not such a situation as China is not that vulnerable, it is more likely to be US elite anger due to the US weakening and China gains during the Covid-19 crisis.

On Hong Kong China had no options. It was a lose-lose situation. If they allowed everything to stay as it is there would be constant color revolution there and they will be constantly in the media. Maybe it is better to stop this once and for all. They hoped that the Covid crisis will give them cover to do this. It did not work very well.

Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them.

I guess most of the world is too cowardly and prefers to go with the flow. They will abandon the US only after the US lost anyway. Well, it is not an easy situation. Still, the US reactions are very strong and hateful precisely because things are still not good for it and its decline is continuing, regardless of some tactical victories, where in some cases it is a lose lose situation anyway.

The data shows a significant decline incoming for the US.

The Highway Trust Fund (HTF) will be depleted by 2021, the Medicare Hospital Insurance (HI) trust fund by the beginning of 2024, the Social Security Disability Insurance (SSDI) trust fund in the 2020s, the Pension Benefit Guarantee Corporation (PBGC) Multi-Employer fund at some point in the mid-2020s, and the Social Security Old-Age and Survivors Insurance (OASI) trust fund by 2031. We estimate the theoretically combined Social Security OASDI Trust fund will run out of reserves by 2031.

That is not to mention the big divide in US society, and the ongoing Covid crisis, which is still not fixed in the US. But is largely fixed in China. Do you see the decline now? They have a big, big reason to be worried. A significant decline is coming for the US.

Posted by b on July 27, 2020 at 17:53 UTC | Permalink

thanks for highlighting 'passer by's post b... i agree with them for the most part... it reminds me of a game of chess where pieces are being removed from the board.. it is a lose- lose, but ultimately, it is a bigger loss for the usa down the road... for whatever reason the usa can't see that the financial sanctions, bullying and etc, only go so far and others work around this as we see with russia, iran, venezuala and china in particular...

the one comment i would view differently then passer by is this one - "Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them." i think the usa is losing it's position in terms of soft power and world opinion but you won't be reading about it in the western msm.. that is going to come out later after the emergence of a new reality is very clear for all to see... the trump strategy is really more of the same and it is like a medicine that loses it's power over time and becomes ineffective - sort of like antibiotics...


O , Jul 27 2020 18:34 utc | 7

In other words the western oligarchs will lose out to the eastern oligarchs in the Great Trade War under the cover of a fake pandemic.

Or perhaps the global oligarchs in general just want the world to follow more in the Chinese model where the population is more agreeable to total surveillance, social credit scores and even more out right fascistic government/corp model under the cover of a fake pandemic.

Kadath , Jul 27 2020 18:46 utc | 8

Re: James #1,

With respect to "bullying works", in international diplomacy it usually does since weaker powers have more to lose in a direct diplomatic crisis with a larger power. This is not to say that they won't push back, but they will be far more strategic in where they do. In essence, weaker powers have fewer "red lines" but they will still enforce those, while greater powers have more "red lines", because they have more power to squander on fundamentally insignificant issues. However, weaker states will still remember being abused and oppressed, so when the worms turns while they won't be the first to jump ship, they will be more than eager to pile on and extract some juicy retribution once it is clear they will not be singled out. I suspect the Germany will be the bellwether, when (if) Germany breaks from the US on a key aspect on the transatlantic relationship that will be the signal for others to start jumping ship. If Nordstream 2 go through, then there will be a break within 5 years; if Nordstream is killed, then the break might be delayed for 5 years or more but there will still be a break when the US pushes Germany to support the next major US regime change war in the Middle East.

O , Jul 27 2020 19:10 utc | 16

The engineered collapse is being called the "Great Reset" by many outlets already. The covid nonsense is just a cover for it. Instead of Saudi Arabian terrorist it is a basically a harmless coronavirus. Just in the days immediately following 911 the "terrorist'' threat was so overhyped that security theater was employed everywhere. Now sanitation theater is the new act in town.

blum , Jul 27 2020 19:11 utc | 17

Where does anyone get these numbers about military spend as a % of gdp? Have you listened to Katherine Austin Fitts on Corbett Report?
Posted by: oglalla | Jul 27 2020 18:27 utc | 4

If you could dig through the linked Committee for a Responsible Federal Budge links for me. I'd appreicate it a lot. ;)
http://www.crfb.org/blogs/major-trust-funds-headed-insolvency-within-11-years

Long time not heard anything from Katherine. You feel I should check both her and Corbert on Gates, I suppose?

karlof1 , Jul 27 2020 19:24 utc | 19

Article discussing political fallout from info provided @11.

Andrei @14--

Good to see your comment. Lots of anecdotal evidence nationwide about store closures and many vacancies in business centers, particularly within economic engines of NYC and elsewhere along the East Coast. IMO, lots of self-censorship by business media while the reality reported by Shadowstats goes ignored. As for losing the status of #1 economy, that was always going to occur once China or India became a moderately developed economy. It just happened that China is far more efficient politically which allowed it to become #1. And until India improves politically, it will continue to lag behind numerous smaller nations. Too bad there isn't a place where one can bet on the great likelihood that the Outlaw US Empire will outperform all nations in the production of Bullshit and Lies.

Jackrabbit , Jul 27 2020 20:48 utc | 29

I also disagree with the comparison between USA and China gdp and other statistics.

China is not simply competing against USA but against the Empire: 5 eyes, NATO, Euro poodles, Israel and the Gulf States and others like Mexico, Columbia, Brazil, India.

Anyone that is minimizing the conflict and the advantages of one side vs another is doing a disservice.

Cold War I lasted 40 years.

!!

Mark2 , Jul 27 2020 21:13 utc | 39

CitizenX @ 26
Agree with your tone and content.
Particularly the third from last paragraph. I think people are missing by choice the growing ground-swell of public opinion US wide as this blog shows, a multi-faceted detereation of US political morals and legality.
Combined with a world wide growing awareness of how deranged American leaders now are.
Haterd consumes itself as dose greed.
My ear to the ground tells me, the protests at present are growing some in full sight some not.
This is not buseness as usual. Then return to normal. The mood now is -- -- - let's settle this thing once and for all, let's get the job done.
So my personal opinion ? we will see a US regime chainge faster than a lot here predict. Much faster.

jadan , Jul 27 2020 21:50 utc | 54

Passer by is correct, no doubt, thanks to incompetent leadership in the US, but this economic horse race doesn't matter.

What matters above all is that nations should hold it together, "it" being sustainable, survivable support systems capable of providing for mass populations.We have failed that test here in our encounter with this pandemic. We have failed to develop a sustainable financial system. We have failed to meet any sort of environmental goals. We don't even have environmental goals! Our electoral system doesn't work, either, proof being the election of this idiot atavistic rich boy. If anyone thinks the election of Trump reflects the will of the majority of Americans, they are part of the problem.

China is in deep trouble. The CCP's greatest challenge is simply to hold "it" together. The Party has to perform economic miracles or the country will collapse. Those groups not satisfied with life in the PRC have no outlet for their voices to be heard. They cannot protest. They are under the strict control of an increasingly sophisticated but tiny elitist clique that is only 6.5% of the total population. This clique will not relinquish power and permit more democratic expression. On the contrary, more and more suppression of dissidence of any sort will happen. The social scoring system is an especially insidious program of social control. China's collectivism has turned the country into an ant hill. It is extremely productive, but people are not ants.

Passer by is looking at the world through a keyhole.

O , Jul 27 2020 22:23 utc | 68

Nightmare' conditions at Chinese factories where Hasbro and Disney toys are made


Investigators found there were serious violations at the factories which were endangering workers.

In peak production season, employees were working up to 175 overtime hours per month. Chinese labour law restricts monthly overtime to 36 hours per month, but the report alleged factories would often ask local governments to implement a "comprehensive working hour scheme" to override existing legislation.

https://www.cnbc.com/2018/12/07/nightmare-at-chinese-factories-making-hasbro-and-disney-toys.html

O , Jul 27 2020 22:28 utc | 69

One wonders if China will run into the same problems of the US in the not too distant future?

"The End of Sweatshops? Robotisation and the Making of New Skilled Workers in China"


Over the past four decades China has undergone a process of massive industrialisation that has allowed the country to achieve remarkable economic growth. Because of its large manufacturing capacity based on a seemingly unlimited supply of cheap migrant labour in light industries, China has come to be known as the 'workshop of the world'. However, since the early 2000s the country's labour market has experienced a remarkable transition from labour surplus to a shortage of labour, which has led to sustained increases in the wages of ordinary workers. In such a context, since 2015 robotisation has become a driving policy for industrial upgrading for manufacturing in China, with the slogan 'replacing human workers with industrial robots' (机器换人) frequently appearing in media reports and official policy documents.

https://madeinchinajournal.com/2020/05/07/the-end-of-sweatshops-robotisation-and-the-making-of-new-skilled-workers-in-china/


Jackrabbit , Jul 27 2020 22:39 utc | 72

karlof1 @Jul27 21:50 #55

Thank you for clarifying that.

The early date of "full spectrum dominance" (1996 not 2010) suggests to me that the doctrine was related the "end of history" thinking of that time. USA Deep State believed its own propaganda.

It also strengthens my case for the proximate cause for the current conflict originating in 2014 when the US Deep State suddenly realized the threat that Russia and China Alliance posed to their plans for global domination.

Not only had they believed their own propaganda but they had overreached with their attempt to force Russia to capitulate and had been distracted by Israel interests that wanted to use USA for the greater Israel project.

!!

karlof1 , Jul 27 2020 22:59 utc | 74
When I wrote my economic analysis paper on China in 1999, it was quite clear that the 21st Century was going to become the Asian Century as the Outlaw US Empire would be eclipsed by Asia's economic dynamism. 20+ years later, my prediction holds true, and it's even stronger now than then with Russia's resurgence. Both outcomes clearly go against the 500+ years of Western Global Hegemony and goads numerous people. For students of history like myself, what's occurring isn't a surprise thanks to the West's adoption of--or should I write forced indoctrination into--the Neoliberal political-economic philosophy, which is akin to that of Feudalism since it benefits the same class as that of the Feudal Era. China too was once Feudal and suffered a massive Civil War that destroyed much of its structure, a conflict known to the West as The Taiping Rebellion that lasted almost 14 years, from 1850-1864. One might say that was the first half of China's overall effort to overthrow Feudalism and Western Imperialism, as the second half began in 1927 and finally concluded in 1949. That amounts to a large % of years for a newbie nation like the USA; but for a nation like China inhabited by humans for over 1.3 million years and with 4,500 years of recorded history, it's really just another Dynastic Rollover--something inconceivable to non-Asians.

In reality, China's a conservative nation, culture and society with a several thousand year ethos of Collectivism, although that allowed a significant divergence in social stratification due to the ruling Feudal ways. Those who have read The Good Earth have an excellent grasp on the nature of Chinese Feudalism, which was embodied by the Kuomintang or KMT--as with Feudal lords, KMT leaders were deemed "Gangsters" by US Generals and diplomats during and after WW2. General Marshall wrote in 1947 it was clear to him that the KMT would lose to the CPC, that there was no good reason to throw good money after bad, and it would be best for the USA and the West to accept the fact of a Communist China (all noted by Kolko in his Politics of War ). Contemporary China when compared to China as depicted in 1931 by Pearl Buck is one of the most amazing human achievements of all time, and the conservative Chinese government intends to keep it that way through a series of well thought-out plans. That's the reality. It can be accepted and worked with as numerous nations realize, or it be somehow seen as unacceptable and fought against in what will prove to be a losing effort since all China need do is parry the blows and reflect them back upon its opponent using skills it developed over several thousand years. It would be much easier to join China than fight.

Hoarsewhisperer , Jul 27 2020 23:00 utc | 75
It's misleading to assess the National Military Capability of various countries in $US terms. The West's M-IC is privately owned and puts shareholder profit before all else. And the owners of the Western M-IC also own the politicians who facilitate and approve the rip-offs.

China and Russia's M-IC are owned and controlled by The People via the government and can therefore get $2+ of value for every $1 invested. For example, one can buy some very nifty twin-engine bizjets for less than half the price USG pays for a flying Batmobile (F-35) - a glorified hot-rod with guns.

VietnamVet , Jul 27 2020 23:40 utc | 83

There is definitely a decline in the USA. Deaths of despair and from the coronavirus are too great to ignore anymore. 150,000 dead and counting are not nothing. The Western Empire has fallen. The U.S. federal government failed. The Imperialists are quarantined at home.

The question is if the 19th century North American Empire from Hawaii to Puerto Rico survives. The Elite have bet it all on a vaccine or patentable treatment to give the Pharmaceutical Industry billions of dollars. However, quick cheap paper monoclonal antigen tests would make testing at home before going to work or school practical.

https://www.youtube.com/watch?v=h7Sv_pS8MgQ

This would end viral transmission and the pandemic. No drug jackpot for the 10%. Instead public health is ignored as Americans die. The silence is deafening. The protests in the Pacific Northwest are not about slavery. They are about the 90% of Americans being treated as disposable trash.

Jackrabbit , Jul 28 2020 0:26 utc | 87

VietnamVet | Jul 27 2020 23:40 utc | 83

150,000 dead and counting are not nothing. The Western Empire has fallen.

No offense VV but I can't help thinking that you (and maybe some others) are talking past the issue.

To be clear, the issue is this: Will the West's decline play a role in the US/Empire's ability and willingness to confront Russia-China? Or is the oft-heard refrain that US/Empire can not 'win' against China (implying that they shouldn't/won't bother trying!) because of its decline (usually attributed to 'late-state capitalism') just wishful thinking?

Virtually everyone here has agreed that the West - especially USA - hasn't fought the virus correctly and with vigor. And virtually everyone agrees that there has been a relative decline in USA/West and in some areas an absolute decline.

IMO what is ignored is that:

  1. from the perspective of the US 'Deep State' or Western power-elite the failure to fight the virus is a net positive if the repercussions are blamed on China (in addition to other 'positives' from their perspective: saving on cost of care to elderly, boosting Big Pharma profits, etc.) -

    In fact, deliberate mistakes and mounting only a token effort (as we've seen) is exactly what we should expect from a craven power-elite that want to further their interests;

  2. the overall decline, while troublesome - especially to the ordinary blokes who get the short end of that decline - is not yet significant enough to prevent USA/Empire from countering the Russia-China 'upstarts' aggressively.

I likened the hopefulness of the anti-Empire crowd about Western decline to their hopefulness they previously expressed regarding Turkey. "Erdogan is turning east!" proved to be wrong.

!!

Richard Steven Hack , Jul 28 2020 0:37 utc | 89

Posted by: Andrei Martyanov | Jul 27 2020 19:01 utc | 14 Within last 10 years China built surface fleet which in terms of hulls (and "freshness") rivals that of the US. US economy would have it bottom falling off if it tried to accomplish a similar task.

Nice to see you here again. Yes, I mentioned the relative navy building in the previous open thread. China's navy will exceed US capability by 2050 and be on parity by 2030-2040 according to reports I've read. That's just ten years to twenty years from now.

Result: US gets kicked out of the South China Sea and has to share the Pacific, Indian Ocean (as will India with gnashing of teeth) and even the Med with China. China will undoubtedly project naval power all the way to the Med in support of BRI in the Middle East.

Richard Steven Hack , Jul 28 2020 1:12 utc | 92

Posted by: Jackrabbit | Jul 27 2020 20:43 utc | 27 There is decline, and while it has been mostly relative it is also accelerating - but that hasn't significantly constrained USA/Empire's response to the upstarts.

I agree. US military power isn't going away in ten years or twenty. China may achieve parity at some point (and can do serious damage now). But that doesn't obviate the fact that, short of nuclear war, the US is still in a position to throw its weight around and will continue to do so until forced back by a (hopefully conventional) military defeat of serious proportions, i.e., not just "give up and go home". And economic woes won't change that as long as the taxpayer can be fleeced - and they will be, for at least a few more decades.

jadan , Jul 28 2020 1:30 utc | 95

@ 62 A.L. "Would it be a surprise to you than there are many many protests in China at the grass root level everyday?"

There are indeed protests all the time, which is the fire under the local Party leaders that keeps them dancing. Usually the protests are against local corruption or mismanagement and are not serious. People can get what they want this way. Each year at the general Party gathering, however, special note is taken of "mass incidents", that is, protests on a larger scale, and overtly political events such as those in the Uighur province of Xinjiang and in Hong Kong. Any protest that challenges the control of the Party is not permitted. The current protests in the US could not happen in China because they challenge political orthodoxy. The Chinese don't just roll over on command for the CCP to scratch their bellies and the Party knows just how volatile the political situation could be if mishandled. China is developing into the ultimate surveillance state. There are lots of Chinese like that little guy that stood down the tank at Tienanmen in 1989. Eventually that guy is going to say: "There is some shit I will not eat!" The Party knows this.

Seer , Jul 28 2020 1:40 utc | 96

Several years ago (close to 10) I noted that the US would be bringing back US companies from China, that it would actually subsidize their relocation. It's only logical. I saw China as becoming hostile to US corporations: in light of how things are going today it's the US govt becoming hostile toward US companies in China. Make huge profits and then get free money to return back to the US: and be welcomed as victorious troops arriving back from some glorious war.

It's Musical Chairs. As the music plays more and more chairs are being removed. Capitalism has been the most efficient economic system in which to trigger an economic collapse. WTF did people think would happen with basing economic systems on the impossible, basing on perpetual growth on a finite planet. All of this was readily foreseeable using SIMPLE MATH.

Economies of scale in reverse...

Cyril , Jul 28 2020 1:43 utc | 98

@jadan | Jul 27 2020 21:50 utc | 54

China is in deep trouble. The CCP's greatest challenge is simply to hold "it" together. The Party has to perform economic miracles or the country will collapse.

How do you square your dire prediction of China's collapse with the Edelman trust barometer of 2019 (warning: PDF file), where China scores 88 on the trust index and the US scores 60?

Daniel , Jul 28 2020 1:51 utc | 101

The COVID-19 pandemic revealed that all the "leading" western countries are unable to handle even a relatively moderate public health crisis. The neoliberal economic model considers any aspect of society that isn't generating a profit as ideologically unsound and targets these areas for "reform" (i.e. privatization).

Sometimes this is done outright, as when a public utility or service is sold to a private, for-profit operator (e.g. British Rail in the UK). But when the government thinks the public will resist and push back it is done by stealth, usually by starving the targeted service/organization of funds and then farming out parts of it to for-profit companies in the name of "efficiency", "innovation", "resilience" or some other neoliberal doublespeak concept (they all mean only one thing of course: PROFIT). This is currently happening to the US Postal Service.

Every public healthcare system in the so-called "advanced" nations encompassed by the EU/NATO and Five Spies has been underfunded and subjected to stealth privatization for decades. Furthermore, people in neoliberal societies exist to serve as fodder and raw material for "the economy" (i.e. the plutocrat or oligarch class) and there is no mechanism to deal with emergencies that can't be milked for a profit. Hence, the half arsed, incompetent, making-it up-as-they-go-along response to COVID-19 that simply writes off older and sick people as expendable.

Neoliberalism began as a US/UK project, that's why poverty, crime, inadequate health care and social services etc. and governmental and societal dysfunction generally is more advanced there than in, say, Canada and Germany.

So, yes, the US is in decline, maybe even collapsing, but that doesn't mean the imperial lackey countries are immune to the forces tearing apart the United States. They are just proceeding down that road at a slower pace. If the US falls, the west falls...globalization takes no prisoners.

I live in Canada where sometimes people get a bit smug about how great everything is here compared to the US. In British Columbia, for example, opiate overdose deaths are at a record high and have killed many many more people than COVID-19 since the pandemic began. Housing in cities like Vancouver is increasingly unaffordable, there aren't enough jobs that pay a living wage, permanent homeless camps exist in city parks, there are entire blocks where people who live in their vehicles park etc.etc.

The reality is that it's the west that is in decline, not only the United States.

O , Jul 28 2020 1:51 utc | 102

China is developing into the ultimate surveillance state.
Posted by: jadan | Jul 28 2020 1:30 utc | 95

But don't you see, dear jadan, it is for the good of the people, if only the rest of the world could see the benevolence of Big Brother we would all be much happier at least that is what the thought police has told me to think. One government, one heart, one mind. Long Live the PRC revolution./s

Schmoe , Jul 28 2020 2:04 utc | 105

Amidst all of the nonsense in the discussion section of the following link, I believe there are some germane comments from individuals that work in the semiconductor space that touch on some of the challenges China's chip industry faces. link

This article notes the substantial challenges TSMC and Samsung would face it they tried to build a cutting edge chip facility without US cooperation: can-tsmc-and-samsung-build-a-production-line-for-huawei-without-us-equipment

I hope their hiring of 3,000 experienced chip engineers accelerates their learning curve. Developing a chip industry on a moment's notice, let alone competing with Samsung and TSMC, is no small chore.

One item not mentioned in the above article is whether China could build many consumer components based on domestic 14nm (or larger) technology. Given China used to spend more importing chips than oil, I assume that even less advanced chips used for TVs, etc. as opposed to cellphones, would be very helpful for China's consumer electronics manufacturing.

They are also making some strides in the flash memory and CPU space, but production quantities are still very low.

Peter AU1 , Jul 28 2020 2:54 utc | 108

Lose lose China loses less?

Health, education, infrastructure, research and development. The backbone of prosperity. These will all continue no matter trade war or cold war but barring hot war. There must be a doubling time for this - something like an R0. Cold war and sanctions will only serve to increase R&D

US mistakes, hubris ect move in the opposite direction, mistakes multiplying mistakes.

ptb , Jul 28 2020 2:55 utc | 109

@Schmoe 105
thanks, interesting. Here is a complementary tho less detailed article on some of the same topics I ran across recently: China Speeds Up Advanced Chip Development [semiconductorengineering.com]

One important point, clearly visible in the tables in the seekingalpha article linked by Schmoe, is that the ultra-small 14nm/7nm stuff is for specialized (but strategically important) applications. Most consumer electronics, industry, and everything else is 40-60nm and up, although of course smaller has benefits to older applications in improve power (i.e. mobile applications and servers) and cost (higher density/wafer)


Peter AU1 , Jul 28 2020 3:20 utc | 113

ptb

US as an one excuse for its current hostilities against China is 'intellectual property' theft. Makes me think of ninja Chinese sneaking around removing peoples brains.
But back to semiconductors. One of China's biggest imports is chips, mostly made by machines using US tech. Many industries are highly specialized and it often makes sense from small community level to national and global level to by a product from those that specialist in that product.
China has been content to buy chips, but that will now change due to necessity. Yankistan can now expect to get its brains hacked, but I am also reminded of the Scientists in the Manhattan Project being the ones to pass on much information to the Soviet Union.
Yankistan will be leaking like a sieve. I guess that's why both oz and the poms are beefing up their secret police laws. Wont be long before we are getting shot trying to run through checkpoint charlie to the free east.

gepay , Jul 28 2020 3:46 utc | 114

It is clear that the US is in decline. It is clear the US military is bloated and overpriced but it can still turn most countries into rubble (even without using nuclear weapons) and has done a few recently. Mostly the US uses its reserve currency status and control of financial networks to punish countries that do not go along with its program. Can you say sanctions. but as Hemingway said about bankruptcy - it happens slowly and then all at once - is probably how it will continue to go. It is even losing its technological advantage. Boeing used to be the leader and made reliable planes. Now they sometimes fall out of the air. Things like high speed railways used to be the kind of thing the US did well. Now California can't get one built. China has built thousands of miles of them. Russia built a 19 kilometer bridge to Crimea in 2 years after 2 years of planning. It appears to be competently built on time and on budget. Do you really think this could happen in the USA now? In the 70s the US was the leader in environmental actions. I wonder if the present day Congress could even pass bills comparable to the Clean Air ACT or the Clean water bill. US national politics are a mean joke. Our choice this year for President - two 70+ old white men with mental issues. Our health system is overpriced. Medical bills are one of the main reasons for personal bankruptcies. As others mentioned the US life expectancy is falling. As Dmitri Orlov who watched the Soviet Empire fail said - Empire hollowed out the Soviet Union till it failed, I see it doing the same thing in the US.

John A Lee , Jul 28 2020 4:04 utc | 115

The current 'adjustment' in the USD & living standards is just what the doctor ordered to allow elites to roll out "tech wave 2" - there is precious little gain to be had from further staffing & wages cuts to the average shit-kicker, so now the bourgeoisie, medicos, architects, academics, writers plus all the rest of the tertiary educated types who blew hundreds of thousands on an education guaranteed to keep them employed, are about to be tossed on the scrap heap.

We already know from previous stunts such as 911 & the 2008 'global financial meltdown' that those most disadvantaged by this entirely predictable destruction of lives will be easily diverted into time-wasting and pointless arguments about the real cause of the mess.

This will allow the elites to use that diversion to funnel all federal funds into subsidising the capital costs of the retooling, as both parties have begun to with the despicable CARES Act, supported by the mad christian right in the senate, as well as the so-called socialists in the Congress squad.

All the Cares Act does is inject capital into big corporations, boosting their stock price & leaving citizens to lose most of their unemployment benefit. Citizens get evicted from their homes. This time it will be tenants as well as home owners.

Both of those factions of elite enablers are going to create a great deal of noise and crass finger pointing. The squad will jump up and down about this being a deliberate attack on citizens by the elite while senate fundies will claim that this 'retooling' is the result of unreasonable pay & working conditions demands by the communist unions.

What should be a universal expression of disgust will be reduced to just another culture war.

Neither will ever admit that it is far too late to be worrying about cause, it is time to concern themselves with effect, because to do so would create focus back on where the money was going at time when it is important to be saying "everyone is hurting, including the elites". Fools.

Eventually when the deed has been done assorted scummy senators & creepy congress people will announce "It is time to move on" That will be a signal that treasury tanks are dry, the elites have gotten everything which wasn't nailed down so now the citizens can roll clawing & scratching in the mud.

I have no doubt that will be the direction of discussion here as well, it is much easier to sit at a keyboard digging out obscure 'facts' that 'prove' one point of view or another, than it is to leave the keyboard behind and put work into resisting the elites and in doing so forcing a change that is more citizen friendly.

Peter AU1 , Jul 28 2020 4:31 utc | 116

gepay

With the return of Russia to the geo-political arena, US can no longer destroy counties at will through conventional weapons nor color revolutions and AQ freedom fighters.
Trump decided to go nuclear, so Russia placed its nuclear umbrella over it allies.
US can no longer destroy countries at will. It can attack a country and risk ensuring its own destruction.
So back to hybrid war and proxie war ... but now the field is narrowed down to five-eyes and in the case of China - India.
So to keep Russia out, yankistan has to rely on conventional war and hybrid war, though we are looking at a country where the lunatics are in charge of the asylum so anything could happen.

Antonym , Jul 28 2020 5:29 utc | 119

5G, who wants this?

The MNCs producing it, the MSS, NSA and GCHQ, the IoT idiots and all authoritarians on the globe. Consumers are happy with 3G: many don't even have 4G reception - give that to them.

With IoT more unemployment, more electricity and Internet dependency, more chance of hacks or natural disruptions (solar flares), more 1984.

More is not always better at all.

aquadraht , Jul 28 2020 5:36 utc | 121

Just read an "opinion piece" demonstrated how remote from reality are not only people like Pompeo from a"liberal" commentator:

https://www.msn.com/en-us/news/world/pompeos-surreal-speech-on-china/ar-BB17bk0t

The Chinese Communist Party wants a tributary international system where smaller countries are deferential to larger powers, instead of a rules-based international order where small countries enjoy equal rights.

HAHAHA!

Antonym , Jul 28 2020 5:40 utc | 123

The US/UK declining won't bother most billionaires with those passports: they just buy any other. Stuck are the millions of others.

Equally "China" ascending brings joy for all billionaires around the globe holding stock depending on Chinese near monopolies, including Anglo-es.

Some middle class Chinese are beginning to see that dying "rich" is is very limited goal, as zero can be taken to the Here After and the price for this Now is too high. Money is not everything. Welcome to this select club, Chinese brothers and sisters. Sure, a bit is good to live but amassing is a waste of precious time and attention.

William Gruff , Jul 28 2020 16:19 utc | 160

The US lacks the capacity to erect an "economic wall" that can stop China's development. Trump's "trade war" was an attempt to do just that, and America got steamrolled.

To be sure, the US can attempt even more irrational and desperate acts such as trying to seize assets owned by Chinese people and organizations in the US, but that would be America shooting itself in the head rather than just the foot.

The US simply does not posses the ability to "take the wind out of China's sails" . That is not something that is within America's power to accomplish without going kinetic by, for instance, trying to enforce a naval blockade of China's maritime transport routes. At this point there are no economic measures America can take that will not do vastly more damage to America than to China. Both trade war and bio attack were the best options America had, and America has suffered grievously from those efforts with relatively minimal impact on China. China's economy remains fundamentally strong while America's economy is devastated.

As for disrupting China's international development efforts, America has been trying its hardest for years now with the only impact being minor delays in China's plans. The only way to truly disrupt China's international development efforts would be to offer a better deal, but America no longer has anything to offer that is better. The only option left to America to delay the BRI for longer would be a kinetic one, and the door is closing on that.

juliania , Jul 28 2020 16:23 utc | 161

jack rabbit @ 81,

Your item 1. reads:

from the perspective of the US 'Deep State' or Western power-elite the failure to fight the virus is a net positive if the repercussions are blamed on China (in addition to other 'positives' from their perspective: saving on cost of care to elderly, boosting Big Pharma profits, etc.) -

It will not be possible to blame China, simply because no one believes the US press any longer, and there is no convincing the woman or man on the street that US handling of the virus has been in any way competent. We may not understand its virulence, and we perhaps don't understand yet how to cope with it, but the example of China has been clear from the earliest moments, and that speaks louder than any false rhetoric can claim.

We know what we have been experiencing in comparison with others who acted with celerity, and that basically was what was needed. The US chose to go it alone, at its peril. It stuck by a set of rules it had made for itself in these last years - rules which have not benefited the people at large. It all comes down to that.

foolisholdman , Jul 28 2020 16:38 utc | 165

O | Jul 27 2020 21:33 utc | 49

https://en.wikipedia.org/wiki/2010_Chinese_labour_unrest

Care to comment on that.

I would not quote a Zionist dominated source like Wikipedia on anything politically sensitive and the article you refer to is in any case 10 years out of date. However if you read it it refers to two foreign-owned firms, and it mentions that there are (In 2010)plans to double wages in the next ten years which has happened. The article also states"

Strikes are not new in China. Chinese authorities have long tolerated limited, local protests by workers unhappy over wages or other issues.[40] The Pearl River Delta alone has up to 10,000 labor disputes each year. In the spring of 2008, a local union official described strikes as "as natural as arguments between a husband and wife".[41] The Chinese government sought balance on the issue; while it has recently repeated calls for increased domestic consumption through wage increases and regulations, it is also aware that labour unrest could cause political instability.[42][43]

In response to the string of employee suicides at Foxconn, Guangdong CPC chief Wang Yang called on companies to improve their treatment of workers. Wang said that "economic growth should be people-oriented".[44] As the strikes intensified, Wang went further by calling for more effective negotiations mechanisms, particularly the reform of existing trade unions. At the same time, authorities began shutting down some websites reporting on the labour incidents, and have restricted reporting, particularly on strikes occurring at domestic-owned factories.[46][47] Guangdong province also announced plans to "professionalize union staff" by taking union representatives off of company payroll to ensure their independence from management influence.

Which indicates to me that the suicides alerted the government to the fact that these firms were making the lives of their workers miserable and took steps to improve the control of them. They obviously realized that the Union officials had been bought by the management. I wonder how the British government or the USG would have reacted? What I am certain about is that the MSM would have been much less enthusiastic about reporting it.
uncle tungsten , Jul 29 2020 2:13 utc | 197

karlof1 #86

IMO, taking a good look at Brazil's situation provides close to a mirror image for those within the Outlaw US Empire having trouble seeing clearly. Too often we forget to look South at the great sewer and its misery US Imperialism's created. It may be getting defeated in Eurasia, but it's winning in Latin America.

That sewer of misery was running full flush during Susan Rice's rise through the ranks.

National Security Adviser to Obummer 2013 - 2017,
US Ambassador to the UN 2009 - 2013
Do read the rest:

And well beyond South America.

Now she is close to seizing the prize of VP to Biden. She is a iron war horse of formidable capacity and mendacity given her past roles. She has few redeeming features. She will conform exactly to the dictats of the permanent state and she will easily step right over Joe Biden as he either falls or is taken down at the most opportune time.

What drole sense of humour thought of this - the hapless Trump squeezed between two black American presidents. Seems like something the Clintons dreamed up.

Antonym , Jul 29 2020 5:07 utc | 198

David Dayen's New Book Exposes the Dirty Hands of Wall Street Driving Monopoly Power in U.S. https://wallstreetonparade.com/2020/07/david-dayens-new-book-exposes-the-dirty-hands-of-wall-street-driving-monopoly-power-in-u-s/

New York Times Rewrites the Timeline of the Fed's Wall Street Bailouts, Giving Banks a Free Pass
https://wallstreetonparade.com/2020/07/new-york-times-rewrites-the-timeline-of-the-feds-wall-street-bailouts-giving-banks-a-free-pass/

kiwiklown , Jul 29 2020 5:39 utc | 200

Posted by: karlof1 | Jul 28 2020 22:30 utc | 191

"It was asked upthread if the US citizenry would trade its no-longer existing Superpower status for decent living standards.... There're only two forces keeping the American people from attaining freedom from the above fundamental fear and having lifelong security: The Duopoly and its Donor Class, the Rentier Class of Feudalistic Parasites that are the enemy of virtually all humanity."

The US citizenry will choose decent living standards in a heartbeat, but the present arrangement for eating off the labour of deplorables is just too profitable for the Duopoly & Donor Class to be permitted to change for a couple decades more.

Perhaps they will move on when there is no more meat on the American corpse, or when they have built up a sufficiently large group of useful idiots in China to begin eating off the backs of deplorables with Chinese characteristics.

Anything is possible, with the right amount of moolah, even overcoming Confucian morals. Joshua Wong comes to mind, who not only does idiotic, but actually looks idiotic.

class="posted">

[Jul 26, 2020] China reaction to Mike Pompeo's 'new Iron Curtain speech'

Notable quotes:
"... Attempting to neutralise a global competitor is the main goal of Americans. Neutralising China's rapid, dynamic development is the essence of the American strategy ..."
Jul 26, 2020 | www.moonofalabama.org

karlof1 , Jul 26 2020 17:41 utc | 17

Recap from today's Global Times where the argument is to continue to stay the course and counterpunch in the typical martial arts fashion, as this op/ed from today's Global Times says :

"Chinese analysts said Sunday the key for China to handle the US offensive is to focus on its own development and insist on continued reform and opening-up to meet the increasing needs of Chinese people for better lives. In the upcoming three months, before the November US presidential election, the China-US relationship is in extreme danger as the Trump administration is likely to launch more aggressions to force China to retaliate, they said."

Stay the course; Trump's shit is just an election ploy. However,

"The US' posturing is serving to distract from domestic pressure over President Trump's failure in handling the pandemic when Trump is seeking reelection this year, Chinese observers said. However, the Trump administration's China stance still reflects bipartisan consensus among US elites, so China should not expect significant change in US policy toward China even if there is a power transition in November, which means China should prepare itself for a long fight."

Don't stray from the Long Game. An international conference was held that I'll try to get a link for. Here's GT's summation:

"According to the Xinhua News Agency on Saturday, international scholars said at a virtual meeting on the international campaign against a new cold war on China on Saturday that 'aggressive statements and actions by the US government toward China poses a threat to world peace and a potential new cold war on China goes against the interests of humanity.'

"The meeting gathered experts from a number of countries including the US, China, Britain, India, Russia and Canada.

"Experts attending the meeting issued a statement calling upon the US to step back from this threat of a cold war and also from other dangerous threats to world peace it is engaged in.

"The reason why international scholars are criticizing the US rather than China is that they can see how restrained China remains and the sincerity of China to settle the tension by dialogue, even though the US is getting unreasonably aggressive, said Chinese experts.

"Washington has made a huge mistake as it has chosen the wrong target - China - to be 'the common enemy or common fear' to reshape its declining leadership among the West. Right now, the common enemy of humanity is COVID-19, and this is why its new cold war declaration received almost no positive responses from other major powers and even raised concern, said Lü Xiang, a research fellow at the Chinese Academy of Social Sciences in Beijing, on Sunday."

Today's Global Times lead editorial asked most of the questions everyone else's asking:

"People are asking: How far will the current China-US confrontation keep going? Will a new cold war take shape? Will there be military conflicts and will the possible clashes evolve into large-scale military confrontation between the two?

"Perhaps everyone believes that China does not want a new cold war, let alone a hot war. But the above-mentioned questions have become disturbing suspense because no one knows how wild the ambitions the US ruling team has now, and whether American and international societies are capable of restraining their ambitions."

IMO, the editor's conclusions are quite correct:

"The world must start to act and do whatever it can to stop Washington's hysteria in its relations with China.

"Right now, it is no longer a matter of whether China-US ties are in freefall, but whether the line of defense on world peace is being broken through by Washington. The world must not be hijacked by a group of political madmen. The tragedies in 1910s and 1930s must not be repeated again ."

Trump is elevated to the same plane as Hitler and Mussolini, and the Outlaw US Empire is now the equivalent of Nazi Germany and the Fascist drive to rule the world--a well illustrated trend that's been ongoing since 1991 that only those blinded by propaganda aren't capable of seeing. I think it absolutely correct for China to focus its rhetoric on the Outlaw US Empire's utter failure to control COVID, which prompts some probing questions made from the first article:

"Shen Yi, a professor at the School of International Relations and Public Affairs of Fudan University, told the Global Times on Sunday that there is wide consensus among the international community that the COVID-19 pandemic is the most urgent challenge that the world should deal with. Whether on domestic epidemic control or international cooperation, the US has done almost nothing right compared to China's efforts to assist others and its successful control measures for domestic outbreaks .

"In response to US Secretary of State Mike Pompeo's 'new Iron Curtain speech' at the Richard Nixon Presidential Library on Thursday declaring a new cold war against China, Shen said, ' We can also ask 'is Pompeo an ally of coronavirus?' Because he wants to confuse the world to target the wrong enemy amid the tough fight against the pandemic, so that the virus can kill more people, especially US people, since his country is in the worst situation .'

Shen said, 'In 2018, US Vice President Mike Pence already made a speech which the media saw as a new 'Iron Curtain speech,' and in 2020, Pompeo made a similar speech again, which means their cold war idea is not popular and brings no positive responses from its allies, so they need to try time and again. Of course, they will fail again.'" [My Emphasis]

Wow! The suggestion that Trump, Pompeo, Pence, and company want to "kill more people, especially US people" seems to be proven via their behavior which some of us barflies recognize and have discussed. Now that notion is out in the public, internationally. You don't need Concentration Camps and ovens when the work can be done via the dysfunctional structure of your economy and doing nothing about the situation.

Shen provides the clincher, what Gruff, myself, and others have said here:

"'So if we want to win this competition that was forced by the US, we must focus on our own development and not get distracted. The US is not afraid of a cold war with us, it is afraid of our development .'" [My Emphasis]

My synopsis of both articles omitted some additional info, so do please click the links to read them fully.

karlof1 , Jul 26 2020 18:02 utc | 19

Sputnik offers this analysis of the China/Outlaw US Empire issue , where I found this bit quite apt from "Alexey Biryukov, senior adviser at the Centre for International Information Security, Science and Technology Policy (CIIS) MGIMO-University":

"'The US is fighting with a country that is developing very rapidly, gaining power, increasing its competitiveness in areas where previously there was undeniably US leadership. Attempting to neutralise a global competitor is the main goal of Americans. Neutralising China's rapid, dynamic development is the essence of the American strategy . Meanwhile, China is interested in developing friendly relations with all countries. Recently, it presented the idea of building a community of common destiny for humanity. That's what Sino-American relations should be built around . It would seem that the pandemic should have brought people together around the idea of building a prosperous world for all, not just someone. But the Americans didn't understand that: they started looking for the guilty ones. This is the favourite strategy of Anglo-Saxons, Americans including, to look for the guilty . As a result, they found their main competitor – China'". [My Emphasis]

That is the "guilty ones" that aren't within the Outlaw US Empire. Many more opinions are provided in the article, but they all revolve around the one theme of Trump's actions being motivated by the election and his morbidly poor attempts to corral COVID.

[Jul 26, 2020] French limits on Huawei 5G equipment amount to de facto ban by 2028

Jul 26, 2020 | thenewkremlinstooge.wordpress.com

ET AL July 23, 2020 at 4:41 am

Euractiv+Neuters: French limits on Huawei 5G equipment amount to de facto ban by 2028
https://www.euractiv.com/section/5g/news/french-limits-on-huawei-5g-equipment-amount-to-de-facto-ban-by-2028/

French authorities have told telecoms operators planning to buy Huawei 5G equipment that they won't be able to renew licences for the gear once they expire, effectively phasing the Chinese firm out of mobile networks, three sources close to the matter said.
####

Quelle surprise that they fall in to line too. No doubt €µ will say something different to Beijing that France values 'friendly ties' with China, but the die is cast. It must be tempting for Beijing to kill two birds with one stone by pulling the plug on UK NPPs as France's EDF is also the project lead. The anti-China crowd want it out of any European NPPs likewise. We'll see

MARK CHAPMAN July 23, 2020 at 7:44 am

What a triumph for the global bully. Well, as I have said before – marry in haste, repent at leisure. European countries which commit to an inferior network just for the privilege of having Uncle Sam spy on their every move instead of the Chinese will have many years to ponder their gutlessness. The USA knows now that is in a fight to the finish, and will want to consolidate as much of the globe as possible under its solid control. But those who are in thrall will regularly be reminded who is the boss, with forced concessions to American objectives, so let's have no more of this 'sovereignty' pap. If you're in, you're ALL in.

It will mess up Huawei's plans and give the iPhone a new lease on life, but it will also sharpen the division between East and West in terms of networks and smartphones. iPhones will be bigger in the west as Huawei fades from competition, but iPhones should all but vanish from the shelves in Asia, which was the growth market, especially China. Loyal American ally Japan might become a bit of an outlier in its own region. Washington will have a much harder time spying on China as the demand for American electronics dries up. What goes around comes around, and the search will be on for neutral companies from whom you can buy a cheap smartphone to use while you're going from one side to the other, which can draw on the networks of both. America has been successful to a significant degree in excluding a competitor who makes a superior product – which, by the bye, goes completely against the blabber America spouts about a level playing field and trade based on merit – but I am confident it will not go unanswered by China and American products in China will suffer as a consequence.

[Jul 26, 2020] Watch- China Answers Houston Closure With Raid On US Consulate In Chengdu

Closing consulates is far from the best foreign policy and fat Pompeo known it. It just starts the unnecessary and counter productive spiral of retaliation and Chinese have more leverage over the USA as more the USA diplomatic personnel woks in China than the china diplomatic personnel in the USA. They were always burned in Russia and now they stepped on the same rake again.
Jul 26, 2020 | www.zerohedge.com

Musum , 8 hours ago

One good turn deserves another.

Maybe fat Pompeo knows he's on his way out and desperate to make a lasting mark on the geopolitical stage on behalf of the West Point mafia and his brothers-in-arm at the Jweish mafia.

QABubba , 8 hours ago

Quit stealing Russian consulates, Chinese consulates, etc.

It serves no purpose.

Haboob , 7 hours ago

Closing diplomacy with nations as USA shrinks on the world stage shows America's juvenile behavior.

Salisarsims , 7 hours ago

We are a young twenty something nation what do you expect but drama.

Haboob , 7 hours ago

It is funny how the young and arrogant always think they are right and have manifest destiny over the old and wise. The young never listen to the old and as the story goes they are defeated everytime. China is older than America, older than the west, they understand this world we are living in far more than we do.

me or you , 9 hours ago

He is right!

The world has witnessed the US is not more than a banana Republic with a banana healthcare system

To Hell In A Handbasket , 9 hours ago

I love seeing how gullible the USSA dunces are susceptible to hating an imaginary enemy. Go on dunces wave the star spangled banner, and place the hand over the heart, you non-critical thinking imbeciles. I told you fools years ago we are going to invoke the Yellow Peril 2.0, and now we are living it. China bad, is just as stupid as Russia bad, while the state stenographers at the MSM netowrks do all in their power to hide our rotten behaviour.

Who falls for this ****? The poorly educated, and the inherently stupid.

To Hell In A Handbasket , 8 hours ago

No, it's called nationalism or self preservation.

What are the citizens of the US suppose to do,

You are wrong on so many levels, but ultimately the Chinese have beaten us at our own rigged game. When I was riling against unfettered free-markets, and the movement of capital, that allowed the west for centuries to move into undeveloped foreign markets and gain a stranglehold, I was called a communist, and a protectionist.

While the USSA money printing b@stards was roaming around the planet like imperialists, and their companies was not only raping the planet, but gouging foreign markets, the average USSA dunce was brainwashed into believing USSA companies were the best.

Now these same market and economic rules we the west have set for the last several hundred years no longer work for us, we want to change the rules. Again, my point is "where was you on this position 5-10-20-30 years ago?" I've always seen this outcome, because logic said so. To reject our own status quo, and return to mercantilism, makes us look like the biggest hypocrites ever.

[Jul 24, 2020] Huawei and the closure of Houston consulate

Jul 24, 2020 | www.moonofalabama.org

O , Jul 24 2020 19:30 utc | 17

The Issue:

"Much of the focus of the Trump administration's trade dispute with China has centered on the size of the U.S. bilateral trade deficit. Most economists agree that this focus is misdirected, and that the existence or size of bilateral trade deficits should not generally be a matter of concern or a target of public policy. Instead, there is bipartisan agreement regarding a different problem at the core of trade issues with China: China's persistent misappropriation of foreign technology. Forced technology transfer occurs when foreign multinational companies have to provide strategically significant technology to an indigenous entity they do not control in order to gain access to the massive Chinese market."
https://econofact.org/what-is-the-problem-of-forced-technology-transfer-in-china


The western oligarchs want the Chinese oligarchs to be more fair, in particular Huawei to transfer their tech the other way in order to play in western markets.


"The global business community would generally prefer that business with Huawei could just go on as usual. Huawei and its affiliates are the acclaimed leaders in 5G technology, and the rest of the commercial world wants to have access to that technology, and also to be able to interoperate with it. In other words, to the extent that western companies agree with the US administration the risks, they have decided that the rewards outweigh those risks and are willing to accept them -- as most recently evidenced by the news yesterday relating to how many US components are finding their way into Chinese handsets."
https://www.zdnet.com/article/huawei-changes-its-patent-story/


Furthermore, Houston is one the main cities where total 5g tech is being implemented first along with L.A and Chicago.


Houston's a player in the race for 5G dominance
https://www.houstonchronicle.com/techburger/article/Houston-s-a-player-in-the-race-for-5G-dominance-14484221.php


O , Jul 24 2020 19:38 utc | 18

Forced Tech Transfers Are on the Rise in China, European Firms Say
The practice has become more widespread despite official assurances from Beijing it would be stopped

https://www.wsj.com/articles/forced-tech-transfers-are-on-the-rise-in-china-european-firms-say-11558344240

Is the US right to cry foul about forced technology transfer to do business in China – and what is Beijing's position?
Foreign companies' concerns about having to share their tech secrets are among the matters being discussed in ongoing US-China trade talks
Beijing's draft foreign investment law could legislate against the practice, but businesses are sceptical about enforcement

https://www.scmp.com/news/china/diplomacy/article/2181528/us-right-cry-foul-about-forced-technology-transfer-do-business

This is about trade and tech not lame inconsequential quarantine rules.

[Jul 19, 2020] The Tech Cold War Between The US And China Will Cost $3.5 Trillion In Just The Next Five Years -

Jul 19, 2020 | www.zerohedge.com

How much would a Tech Cold War Cost?

That's the question DB's new tech strategist Apjit Walia asks in a new research report, in which he looks at the interplay between the Post Covid Tech Rally and the Tech Cold War, which have emerged as two of the most salient aspects of the current market dynamic. And with tensions between US and China continuing to rise and spread to other parts of the world, the strategist conducts a top-down analysis of the impact on the Global Information & Communications Technology sector from a full-blown cold war.

The report finds that the ensuing demand disruption, supply chain upheaval and resultant "Tech Wall" that would delineate the world into rivaling tech standards could cost the sector more than $3.5 Trillion over the next five years .

But before getting into the details, we update on the current state of the DB Tech Cold War Index. As Walia writes, a nuanced observation of the tariff and geopolitical issues between the US and China over the past few year suggest they are primarily a smaller strategy that is part of a larger Global Tech Cold War. To reduce the noise from the subjective geopolitical commentaries, DB created a systematic measure using machine learning to quantify the intensity of the cold war at any given point of time. It quantitatively analyzes and tracks the sentiment of the Tech Cold War globally. Not surprisingly, the DB Tech Cold War Index has been trending higher since 2016 with peaks coinciding with tit-for-tat measures by US and China on technology IP protection and counter measures. It made an all-time high in April 2020 with the Covid crisis fueling tensions and has spiraled higher since then. The political headlines are matching the sentiment among the populace. Recurrent surveys from April to June show that post Covid tempers remain at elevated levels with 41%+ of Americans and 35%+ of Chinese stating they will not buy each other's products. An election year in the US further complicates this geopolitical dynamic.

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Cold War Impact on Global ICT Sector

US and China have been engaging in an increasing capacity since the 1970s and the level of integration between the two global tech regimes is unprecedented. The integration is a complex demand and labyrinthine supply chain network that has taken 40 years to develop. DB uses a top down approach to ascertain the level of revenues and supply chain links across the global ICT industries to China. To analyze and quantify this complex co-dependent Tech relationship between the two countries is a challenging task, the bank surveyed Tech managements, CTOs, Industry associations and supply chain experts globally. The estimate on the total impact is by no means a solid target but a reference point that should provide context if the cold war escalates significantly and decoupling picks up momentum. The bank's strategist quantifies the downside impact on the sector from a material escalation of the tech cold war, categorized under the following three broad categories:

DB looks at a range of downside scenarios including one of a full-fledged tech cold war and estimate the total impact on the ICT sector from the three factors over a 5-year period to be around $3.5 trillion. And while the bank thinks that 5-8 years is an appropriate time period some supply chain experts believe the time to relocate the cluster of supply chain networks could take as long as 10 years.

Domestic Chinese demand

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Globally, China has about 13% of revenues of the ICT sector amounting to around $730 Billion per annum. However, a significant part of this is demand from the Chinese tech sector that is re-exported after some value-add, assembly and packaging ("re-export demand") - this constitutes supply chain risk . To analyze domestic end demand from China that could be at risk if tensions escalate leading to IP restrictions, product bans and export-restrictions, DB looks at the underlying ICT industry groups and their varied re-export mixes from China. The range varies widely with Telecom services sectors that have minimal revenue exposure all the way to software services that have pure domestic Chinese consumption (low or no re-export). For majority of the ICT sector, the range falls between 25%-75% in re-export mix (semiconductors, electronic components, computer hardware, computer peripherals, electronic equipment sectors). The weighted average of the re-export demand mix for the whole ICT sector comes to 45%. Stripping that out of the total ICT revenues, one gets 55% in current organic Chinese end-demand or $400 Billion in revenues. In the worst case scenario of a full-fledged tech cold war, the ICT sector would stand to lose these revenues.

Supply Chain Risk

A transition out of Mainland China could take 5-8 years to achieve successfully. Lack of infrastructure, clustered networks and skilled labor in other countries versus China are major obstacles. Vietnam, India, Malaysia, Indonesia and Philippines are the primary targets for this transition but most of them would need significant infrastructure upgrades to catch up with the Chinese supply chain cluster strength.

In most categories, exports outstrip imports, except for electronic components, where imports are 3x of exports. Electronic components, such as semiconductors are imported and used as inputs in consumer goods and communication equipment and exported out of China. While Electronic component manufacturers have the risk of end demand from China declining – e.g. semis used in communication equipment, majority of the supply chain costs would fall on the final goods manufacturers who use China as a manufacturing base. When they shift the supply chain outside, component manufacturers would simply shift the destination of where they ship components.

The supply chain risk of the ICT sector is estimated to be the built-up book value that is exposed to China that would require relocation in the event of disengagement. Although book value provides a decent lower bound measure for the capital
deployed in hard assets, it does not fully account for the economic value of the supply chain network, which may be quite costly to rebuild. To arrive at an estimate of the book value that is exposed to supply chain facilities in China, DB analyzed the revenues and Export/Import ratio of various categories of Tech goods. The book value of the ICT sector tied to China comes to approximately $500 billion.

The average cost of rebuilding the supply chain will be approximately 1.5 to 2x of the book value based on feedback from Tech managements and supply chain experts. Using a sustainable capex rate, it would take 5-8 years to relocate the supply chains. The cost of a transition over a five year period would come to around $1 Trillion.

Tech Wall Risk

On top of the demand disruption and supply chain upheaval, it would be unavoidable for Tech companies to operate efficiently in a large part of the "Non Aligned" world without complying with the two rivaling global standards that would come up as the cold war heats up. The Tech Wall would entail rival internet platforms, satellite communication networks, telecom infrastructure regimes, CPU architectures, operating systems, IOT networks and payment systems with very little inter-operability or interaction. It would mean having to deploy two different communication and networking standards across several geographies to ensure inter-operability. In this new world order, these non-aligned countries would require companies to have dual standard compliance to operate there.

A divergence in standards could increase costs in multiple ways. Increased R&D, design, product development and related costs for manufacturers. Increased costs of compliance to different IP, networking, data privacy/localization regimes for corporates. Loss of interoperability of devices across geographies for consumer. For example, a high-end smartphone networking gear makes up ~10%-15% of the bill of materials. If phones had to support dual standards that cost could increase by ~30-70% and can add close to $100 for the end consumer. For lower end handsets costs would be high enough that manufacturers would probably choose to cater to a single standard based on geography. Corporations' compliance to different data localization, privacy rules as well as supporting multiple networking standards would increase costs by 2-3%.

The Tech Wall's impact on ICT sector could range between 2-3% in incremental costs (capex, labor) or $100-$150 Billion per year. After some time, these costs would get absorbed as economies of scale kick in, but that would take about 5 years to average out.

Second and third order effects:

There are also going to be cross effects and second order effects.

In summary, while DB estimates the potential impact of a full blown tech cold war at $3.5 Trillion over a five year period, the actual outcome will obviously be path dependent on how both countries approach the economic and geopolitical trade-offs.

ICT Sector Correlations to Tech Cold War

The following chart shows ICT industry group's revenues to China, this includes sales of goods that are re-exported out of China after assembly for end consumption elsewhere.

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DB measured sensitivities of these industry groups to escalations between US and China. Using the DB Tech Cold War Index, the bank identified 15 major periods of sustained escalation in news intensity. These are periods where the geopolitical tech dispute news flow picks up from low initial levels and continues to grow in intensity until it reaches a peak, often coinciding with major news events or steps on either side. DB then computed the correlations of these global ICT industry stock returns with the DB Tech Cold War index over these episodes.

As the chart shows, the market is quite efficient. Industries in the right bottom quadrant are the ones with the higher revenue exposure to China and have the most sensitivity or negative stock price correlation to rising tensions. The hardware industries which predominantly have both revenue and supply chain dependence on China respond sharply to escalations. Industries with lower revenue exposure to China display defensive characteristics during rising tensions, and fall in the top left quadrant. Software and service display defensive characteristics as they have very limited revenue exposure to China. Telecom service providers have limited revenue exposure and their returns appear to be uncorrelated to escalation events.

The one surprising exception to this trend is the Semiconductor sector, standing out in the top right hand quadrant. Contrary to consensus opinion, the analysis shows that semiconductor stocks are reacting positively to rising cold war tensions despite the sector being the biggest point of contention in the conflict and high sales exposure to the Chinese market.

This could be driven by several factors. One of the explanations is inventory build that occurs when tensions rise and companies over order as they are concerned about supply chains clogging up . These orders could be viewed by the market as incremental demand.

Another factor could be the market considering the sector as defensive given its long term secular potential and the structural growth becoming less sensitive to business cycles. With digitization ramping up globally in the post Covid tech ramp, this structural dynamic of the sector starts to become self-reinforcing.

Anticipated policy support from governments given the centrality of the sector to nation states in geopolitical tech relevance is also touted as a driving factor in multiples. Clearly, Semis are key to retaining tech supremacy and form the backbone of any AI or Software enhancements to institutions and countries.

However, there remains one tail case scenario and that is in the event of disengagement and escalation of the cold war, Semiconductors will see significant market share and supply chain disruption that will be too big to be offset by government policy support and central bank liquidity. This scenario does not seem to have been factored in the current market.

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[Jul 16, 2020] China own silicon

Jul 16, 2020 | www.moonofalabama.org

A. L. , Jul 15 2020 20:23 utc | 26

@19

That is correct. Backdoors were baked into every piece of equipment and random number generator the US and friends are able to influence. Hardware and software.

Read up on how cisco networking equipments were/are intercepted enroute for 'extra' attention by US Intel depending on where they're going to. With full assistance from cisco. Other manufacturer also play the same game.

This was the genesis of Huawei, to cut reliance on US network gear and it is also why China is doing its own silicon. Huawei with the Kirin which is an ARM based processor and also x86 via the AMD JV and VIA/Cyrix.

Fabs aside the Kirin can cut it with the best and the x86 are about 2-6 years behind but rapidly improving depending on who you ask.

Their achilles heel is the Fabs where China is about 2-3 generations behind. Today Huawei is relying on Taiwanese Fabs to produce its cutting edge chips to Huawei's design.

However, these are just a function of investment in research and time, China is well past the tipping point for self reliance and they'll get to parity and beyond soon enough. So the west's game is already lost.

Reading between the lines, when China is cut out of the west's networks who then could the 5 peeping Tom's look at? Yup, the serfs, and that's the game plan all along.

[Jul 13, 2020] Washington has essentially forgotten how to negotiate on mutually-respectful terms, and favours maneuvering its 'partners' into relationships in which the USA has an overwhelmingly dominant position, and then announcing it is 'leveling the playing field'. Which means putting its thumb on the scale.

Jul 13, 2020 | thenewkremlinstooge.wordpress.com

MARK CHAPMAN July 7, 2020 at 8:12 am

Again, probably not an urgent problem unless some existing Chinese aircraft in service are on their last legs and urgently must be replaced. In which case they could go with Airbus if the situation could not wait. China has options. Boeing does not.

The west loves to portray the Chinese as totally without ethics, and if you have a product they can't make for themselves, they will buy it from you only until they have figured out how to make it themselves, and then fuck you, Jack. I don't see any reason to believe the Chinese value alliances less than the west does, or are any more incapable of grasping the value of a give-and-take trade policy. The west – especially the United States – favours establishing a monopoly on markets and then using your inability to get the product anywhere else as leverage to force concessions you don't want to make; is that ethical? China must surely see the advantages of a mutually-respectful relationship with Russia, considering that country not only safeguards a significant length of its border from western probing, but supplies most of its energy. There remain many unexplored avenues for technical, engineering and technological cooperation. At the same time, Russia is not in a subordinate position where it has to endure being taken advantage of.

Trade is hard work, and any partner will maneuver for advantage, because everyone in commerce likes market share and money. But Washington has essentially forgotten how to negotiate on mutually-respectful terms, and favours maneuvering its 'partners' into relationships in which the USA has an overwhelmingly dominant position, and then announcing it is 'leveling the playing field'. Which means putting its thumb on the scale.


[Jul 13, 2020] Looks like the Iran economic cooperation train left for China and Washington now threaten it from the platform

The New York Times claims that the agreement would entail an economic and military partnership
Notable quotes:
"... one day the cost of obeying will be greater than the cost of saying "Go fuck yourself". ..."
Jul 13, 2020 | thenewkremlinstooge.wordpress.com

ET AL July 13, 2020 at 8:45 am

Antiwar.com : US Warns Iran and China Against Major Investment and Security Deal
https://news.antiwar.com/2020/07/12/us-warns-iran-and-china-against-major-investment-and-security-deal/

State Dept vows to impose costs on both nations

####

Must. Pass. Foreign. Relations. Policy. Past. USDoS. First. Well that is unforgiveable for the Masters of the Universe(TM). No-one knows exactly what's in it except that it is substantial. Still, the USDoS is having a public aneurism tells us that they care a lot.

MARK CHAPMAN July 13, 2020 at 10:49 am

Every time you "impose costs" on another country, you make more enemies and inspire more end-around plays which take you as an economic player out of that loop. And by and by what you do is of no great consequence, and your ability – your LEGAL ability, I should interject – to 'impose costs' is gone.

Sooner or later America's allies are going to refuse to recognize its extraterritorial sanctions, which it has no legal right to impose; it gets away with it by threatening costs in trade with the USA, which is a huge economy and is something under its control.

But that practice causes other countries to gradually insulate themselves against exposure, and one day the cost of obeying will be greater than the cost of saying "Go fuck yourself".

... ... ...

[Jul 08, 2020] US is destroying itself and world through erratic moves- Global Times editorial - Global Times

Notable quotes:
"... The US is too indulged in using geopolitical means to cope with challenges and pursuing its own interests. Following the disintegration of the former Soviet Union, Russia hoped to integrate into the Western world, but the US pulled geopolitical levers and imposed the most intense strategic pressure on Russia. As NATO expanded eastward, it not only incorporated all countries of the Warsaw Pact and the Baltic states, but also extended its hand to the Commonwealth of Independent States, such as Georgia and Ukraine, eventually prompting Russia to have no other options but to take countermeasures. ..."
"... The world has to pay for Washington's ambition to strengthen its hegemony. What the US advocates is not simply decoupling from China, but urging the Western world and more countries to side with the US amid its clashes with China, and to contain China. China is the largest trading partner of more than 100 countries, and has a market almost as big as that of the US. The US not only stabbed China, but the current global cooperative system as well. ..."
"... Unfortunately, those geopolitical maniacs in the US are ending the "good old days" since the end of the Cold War. We are likely to enter a new era with more hatred and the menace of war. Major countries would become more nervous, and the prosperity of small countries would become fragile. The US political elite behind such changes are bound to be shamed by history. ..."
Jul 08, 2020 | www.globaltimes.cn

Washington has almost destroyed the cooperation-centered major-power relations and is pushing the world back to confrontation between major powers.

The global geopolitical struggle has apparently become an irreversible trend. This will have a profound influence on the nature of international relations, fundamentally disturb globalization, and lead to undesirable consequences.

The US is too indulged in using geopolitical means to cope with challenges and pursuing its own interests. Following the disintegration of the former Soviet Union, Russia hoped to integrate into the Western world, but the US pulled geopolitical levers and imposed the most intense strategic pressure on Russia. As NATO expanded eastward, it not only incorporated all countries of the Warsaw Pact and the Baltic states, but also extended its hand to the Commonwealth of Independent States, such as Georgia and Ukraine, eventually prompting Russia to have no other options but to take countermeasures.

Now, the US is using its extreme geopolitical tools on China. It is making the ideological conflict with China more extreme, because it is the cheapest means to mobilize its allies against China. It supports all countries that have territorial disputes with China, incites them to adopt a hard-line approach toward China, and smears China's foreign cooperation to overthrow the world order. It aims to worsen China's external environment, and make people in other countries less willing to cooperate with China.

The world has to pay for Washington's ambition to strengthen its hegemony. What the US advocates is not simply decoupling from China, but urging the Western world and more countries to side with the US amid its clashes with China, and to contain China. China is the largest trading partner of more than 100 countries, and has a market almost as big as that of the US. The US not only stabbed China, but the current global cooperative system as well.

The world will suffer long-lasting costs. The ongoing COVID-19 pandemic is just the first wave. In the face of the raging pandemic, the US has blocked international cooperation. It has only two perspectives on the anti-virus fight - one from the upcoming presidential elections, and the other from international geopolitics. Its lack of a scientific perspective has become the biggest obstacle to international cooperation.

It is not hard to imagine that if China and the US, together with all major powers, join hands and coordinate strategies, the COVID-19 pandemic could have been much less severe than it is now, and the global economy could resume in a more orderly manner.

The US policy that favors major-power confrontation will surely drag down global economic growth, which will force countries to consume their own resources. Coupled with the destructive impact of the pandemic, global economic prosperity after the Cold War is, perhaps, coming to an end. The world will lose huge employment. The global economy will become politicized, and the concept of national security would play a leading role in irrelevant sectors such as the economy.

An arms race and intimidation will return to international relations. Age-old contradictions will be reinforced in the loss of a world order. Favorable opinions toward each other's society will be reduced. The passion for studying and traveling abroad will cool down. The lives of many people will change.

Unfortunately, those geopolitical maniacs in the US are ending the "good old days" since the end of the Cold War. We are likely to enter a new era with more hatred and the menace of war. Major countries would become more nervous, and the prosperity of small countries would become fragile. The US political elite behind such changes are bound to be shamed by history.

[May 29, 2020] The Great Disentanglement

May 29, 2020 | www.counterpunch.org

... ... ...

China's economic shutdown at the onset of the coronavirus pandemic disrupted many global supply chains, prompting a number of countries and corporations to accelerate their strategy of reducing their dependency on China for components.

...the trade war between Washington and Beijing had contributed to the U.S. fashion industry and tech firms like Apple rethinking their own supply chains. Japan, heavily dependent on Chinese trade, is using $2 billion in economic stimulus funds to subsidize the move of Japanese firms out of China.

The Trump administration is thus swimming with the current in its effort to isolate China. It has imposed sanctions because of China's violations of Uyghur human rights. It has levied penalties against China for its cooperation with Iranian firms. And it has threatened to add another set of tariffs on top of the existing ones for China's handling of the coronavirus.

Its latest initiative has been to tighten the screws on the Chinese technology firm, Huawei. Last week, the administration announced sanctions against any firms using U.S.-made equipment that supply the Chinese tech giant. The chief victim of these new restrictions will be the Taiwanese firm TSMC, which supplies 90 percent of Huawei's smartphone chips.

In other words, the Trump administration is committed not only to severing U.S. economic connections with China. It wants to put as much pressure on other countries as well to disentangle themselves from Chinese manufacturing. Taiwan, of course, has no particular love for Mainland China. It battles Beijing on a daily basis to get international recognition -- from other countries and from global organizations like the World Health Organization.

But the Taiwanese economy is also heavily dependent on its cross-strait neighbor. As Eleanor Albert points out :

China is Taiwan's largest trading partner, accounting for nearly 30 percent of the island's total trade, and trade between the two reached $150.5 billion in 2018 (up from $35 billion in 1999). China and Taiwan have also agreed to allow banks, insurers, and other financial service providers to work in both markets.

And it probably won't be Huawei but Taiwan that suffers from the U.S. move. As Michael Reilly notes , "Huawei's size in the global market means its Taiwanese suppliers cannot easily find an alternative customer of comparable standing to replace it." China, meanwhile, will either find another source of chips outside the U.S. sphere, or it will do what the United States has been threatening to do: bring production of critical components back closer to home.

Another key player in the containment of China is India. Trump's friendship with Indian Prime Minister Narendra Modi, a right-wing Hindu nationalist, is more than simply an ideological affection. Trump sealed a $3 billion in military sales deal with India in February, with a trade deal still on the horizon.

Modi, in turn, is hoping to be the biggest beneficiary of the falling out between Washington and Beijing. "The government in April reached out to more than 1,000 companies in the U.S. and through overseas missions to offer incentives for manufacturers seeking to move out of China," reports Bloomberg . "India is prioritizing medical equipment suppliers, food processing units, textiles, leather, and auto part makers among more than 550 products covered in the discussions."

Vietnam is another regional competitor that the United States is supporting in its containment strategy. With only a couple hundred reported coronavirus cases and zero deaths, Vietnam is poised to emerge from the current crisis virtually unscathed. With low labor costs and an authoritarian government that can enforce deals, it is already a favored alternative for corporations looking for alternatives to China. But wildcat strikes have been happening in greater numbers in the country, and the Vietnamese government recently approved the country's first independent trade union.

Yet with a more technologically sophisticated infrastructure, China will continue to look more attractive to investors than India or Vietnam.

... ... ...

Trump administration is, frankly, at a huge disadvantage when it tries to pressure companies to relocate their operations. Writes Manisha Mirchandani:

The global technology and consumer electronics sectors are especially reliant on China's infrastructure and specialized labor pool, neither of which will be easy to replicate. The Chinese government is already mobilizing resources to convince producers of China's unique merits as a manufacturing location. Zhengzhou, within Henan Province, has appointed officials to support Apple's partner Foxconn in mitigating the disruptions caused by the coronavirus, while the Ministry of Finance is increasing credit support to the manufacturing sector. Further, the Chinese government is likely to channel stimulus efforts to develop the country's high-tech manufacturing infrastructure, moving away from its low-value manufacturing base and accelerating its vision for a technology-driven services economy.

The Trump administration is playing the short game, trying to use tariffs and anti-Chinese sentiment to hobble a rising power. China, on the other hand, is playing the long game, translating its trade surpluses into structural advantages in a fast-evolving global economy.

Will the Conflict Turn Hot?

Despite the economic ravages of the pandemic, the Pentagon continues to demand the lion's share of the U.S. budget. It wants another $705 billion for 2021, after increasing its budget by 20 percent between 2016 and 2020.

This appalling waste of government resources has already caused long-term damage to the economic competitiveness of the United States. But it's all the money the Pentagon is spending on "deterring China" that might prove more devastating in the short term.

John Feffer is the director of Foreign Policy In Focus , where this article originally appeared.

[May 29, 2020] The USA effectively controls world semiconductor industry and this fact will hurt Huaway at least in a short run

May 29, 2020 | www.theamericanconservative.com

The administration also took off the gloves with China over U.S. listings by mainland companies that fail to follow U.S. securities laws. This came after the Commerce Department finally moved to limit access by Huawei Technologies to high-end silicon chips made with U.S. lithography machines. The trade war with China is heating up, but a conflict was inevitable and particularly when it comes to technology.

At the bleeding edge of 7 and 5 nanometer feature size, American tech still rules the world of semiconductors. In 2018, Qualcomm confirmed its next-generation Snapdragon SoC would be built at 7 nm. Huawei has already officially announced its first 7nm chip -- the Kirin 980. But now Huawei is effectively shut out of the best in class of custom-made chips, giving Samsung and Apple a built-in advantage in handsets and network equipment.

It was no secret that Washington allowed Huawei to use loopholes in last year's blacklist rules to continue to buy U.S. sourced chips. Now the door is closed, however, as the major Taiwan foundries led by TSMC will be forced to stop custom production for Huawei, which is basically out of business in about 90 days when its inventory of chips runs out. But even as Huawei spirals down, the White House is declaring financial war on dozens of other listed Chinese firms.

President Donald Trump said in an interview with Fox Business News that forcing Chinese companies to follow U.S. accounting norms would likely push them to list in non-U.S. exchanges. Chinese companies that list their shares in the U.S. have long refused to allow American regulators to inspect their accounting audits, citing direction from their government -- a practice that market authorities here have been unwilling or unable to stop.

The attack by the Trump Administration on shoddy financial disclosure at Chinese firms is long overdue, but comes at a time when the political evolution in China is turning decidedly authoritarian in nature and against any pretense of market-oriented development. The rising power of state companies in China parallels the accumulation of power in the hands of Xi Jinping, who is increasingly seen as a threat to western-oriented business leaders. The trade tensions with Washington provide a perfect foil to crack down on popular unrest in Hong Kong and discipline wayward oligarchs.

The latest moves by Beijing to take full control in Hong Kong are part of the more general retrenchment visible in China. "[P]rivate entrepreneurs are increasingly nervous about their future," writes Henny Sender in the Financial Times . "In many cases, these entrepreneurs have U.S. passports or green cards and both children and property in America. To be paid in U.S. dollars outside China for their companies must look more tempting by the day." A torrent of western oriented Chinese business leaders is exiting before the door is shut completely.

The fact is that China's position in U.S. trade has retreated as nations like Mexico and Vietnam have gained. Mexico is now America's largest trading partner and Vietnam has risen to 11th, reports Qian Wang of Bloomberg News . Meanwhile, China has dropped from 21 percent of U.S. trade in 2018 to just 18 percent last year. A big part of the shift is due to the U.S.-Mexico-Canada trade pact, which is expected to accelerate a return of production to North America. Sourcing for everything from autos to semiconductors is expected to rotate away from China in coming years.

China abandoned its decades-old practice of setting a target for annual economic growth , claiming that it was prioritizing goals such as stabilizing employment, alleviating poverty and preventing risks in 2020. Many observers accept the official communist party line that the impact of the Covid-19 pandemic made it almost impossible to fix an expansion rate this year, but in fact the lasting effects of the 2008 financial crisis and the aggressive policies of President Trump have rocked China back on its heels.

As China becomes increasingly focused inward and with an eye on public security, the economic situation is likely to deteriorate further. While many observers viewed China's "Belt & Road" initiative as a sign of confidence and strength, in fact it was Beijing's attempt to deal with an economic realignment that followed the 2008 crisis. The arrival of President Trump on the scene further weakened China's already unstable mercantilist economic model, where non-existent internal demand was supposed to make up for falling global trade flows. Or at least this was the plan until COVID-19.

"Before the Covid-19 outbreak, many economists were expecting China to set a GDP growth target of 6% to 6.5% to reflect the gradual slowdown in the pace of expansion over the past few years," reports Caixin Global . "Growth slid to 6.1% in 2019 from 6.7% in 2018. But the devastation caused by the coronavirus epidemic -- which saw the economy contract 6.8% year-on-year in the first quarter -- has thrown those forecasts out of the window."

Out of the window indeed. Instead of presiding over a glorious expansion of the Chinese sphere of influence in Asia, Xi Jinping is instead left to fight a defensive action economically and financially. The prospective end of the special status of Hong Kong is unlikely to have any economic benefits and may actually cause China's problems with massive internal debt and economic malaise to intensify. Beijing's proposed security law would reduce Hong Kong's separate legal status and likely bring an end to the separate currency and business environment.


M Orban 20 hours ago

I honestly don't know if this article is or is not correct... But I wonder...
AmConMag publishes a major anti-China article on most days now. What is happening? What is the mechanics of this... "phenomenon"?
chris chuba M Orban 12 hours ago
For any of their flaws AmConMag was a sweet spot.

A place where where Americans opposed to U.S. hegemony because it's harm on everyone without being overwhelmed by the Neocon acolytes where can we go, anyone ever try to get a word in on foxnews ?

If you try to reach out to twitter on Tom Cotton or Mike Waltz dismisses you as a 'Chinese govt / Iranian / Russian bot'

You know what, God will judge us and we will all be equal in he eyes of Him
Why should I be afraid. Why should I be silent. And thank you TAC for the opportunity to post.

M Orban chris chuba 6 hours ago
I too came here for interesting commentary, - and even better comments... five years ago or so?
I found the original articles mostly okay, often too verbose, meandering for my taste but the different point of view made them worthwhile. The readers' comments, now that is priceless. That brings the real value. That's where we learn. That's where I learn, anyway. :)
It never occurred to me to message to any politician, I think my voice would be lost in the cacophony.
The target of my curiosity is that when all these articles start to point in one direction (like belligerence toward China) how does it happen? Is there a chain of command? It seems coordinated.
MPC M Orban 2 hours ago • edited
It's possible to be anti-neocon, for their being too ideological, and not pacifist. That is basically my position.

I agree with most here on Russia and Iran. They are not threats, and in specific cases should be partners instead. Agree on American imperialism being foolish and often evil. I believe in a multipolar world as a practical matter. I don't take a soft view of China however. I believe they do intend to replace nefarious American hegemony with their own relevant, but equally nefarious, flavor of hegemony. There are few countries in the world with such a pathological distrust of their own people. I truly believe that country is a threat that needs to be checked at least for a couple of decades by the rest of the world.

As to the editorial direction, I think it is merely capitalism. China's perception in the world is extremely bad lately. I would fully expect the always somewhat Russophile environment here to seize the moment to say 'see! Russia is not a true threat! It's China!' RT itself soon after Trump's election I recall posted an article complaining about total disregard for Chinese election meddling.

Barry_II M Orban 7 hours ago
You can see when the people holding the leash give a tug on the collar. And it's clear that the GOP is feeling the need for a warlike political environment.

The most blatant presstitution example, of course, was the National Review, going from 'Never Trump' to full time servicing.

M Orban Barry_II 6 hours ago
In case of AmConMag, who is holding the leash?

[May 28, 2020] By arresting Meng, Trump administration just driving a hedge between inside the "Capitalist International"

May 28, 2020 | www.moonofalabama.org

vk , May 27 2020 20:28 utc | 17

@ Posted by: james | May 27 2020 18:51 utc | 8

Of all the options in the Western arsenal against China, arresting Huawei's heir apparent on blatantly forged charges is easily one of the worst.

Chinese or not Chinese, fact is Meng is a member of the bourgeoisie. She is one of them. It doesn't matter if Huawei only became big and prosperous thanks to the CCP: bourgeoisie is bourgeoisie, and having a strong one within communist China's belly is essential for the long term success of capitalism in its war against communism.

By arresting Meng, the capitalists (i.e. Americans) are just driving a hedge between inside the "Capitalist International". The Chinese capitalist class - who was certainly very interested in ganging up with their western counterparts to, in the long term, topple the CCP - is now completely at the mercy of the CCP, as the CCP is now the only guarantor of their own class status.

The correct strategy would be for the Western bourgeoisie to woo the Chinese bourgeoisie with as many tax breaks, green cards and other kinds of flattery, so that, withing the course of some generations, the Chinese bourgeoisie become fully liberal (westernized). It would then make the infamous "middle class insurgence" theory feasible.

But (and there's always a "but" in the real world), it seems that capitalism itself is in crisis. It seems that, all of a sudden, the pot became too small to make every alpha male happy. The international bourgeoisie is now devouring its children (the petite-bourgeoisie, the "small business owners") and is beginning to devour itself.


A.L. , May 27 2020 20:48 utc | 20

@Kadath 15

Meng is a high profile scalp but won't change anything. it'll just up the ante in this game of chicken.

in regards to HK's special trading rights, it's horseshit really. HK hasn't made anything anyone needed for decades. the biggest use of this special relationship (cough cough) is to move mainland product through Hong Kong to skirt quota and tariff restrictions. as an inhabitant I won't be sorry to see it go. it hasn't and doesn't benefit the people here anyway.

as to it's status as a financial hub, do you really think the bankers will leave if there are money to be made? c'mon who are we kidding here. actually, if it means driving away a few expat bankers who does nothing except creating glass ceilings and hanging out in various golf and aristocratic clubs in hk, I'm all for it too.

as to visa free travel, again it's a non issue as well. I remember before the 1997 handover having to get visas to go pretty much anywhere with my HK British passport it was an utterly useless 3nd class citizen passport. so nothing changes. ironically all of the visa free agreement came after the handover with no thanks to the Brits.

if USA start freezing assets of individuals and businesses it'll be a sloppily slope for Trumpville. For one freezing individuals assets won't hurt China on the whole one iota, second, China can play that game too. US businesses and assets can all be nationalised.

I'm still waiting for China to cancel all Boeing and GE orders because they're defense suppliers of USA, just as USA is claiming huawei to be as the reason for sanctions.

so yeah it'll get worse.

A.L. , May 27 2020 21:06 utc | 23
@vk 17

"The Chinese capitalist class - who was certainly very interested in ganging up with their western counterparts to, in the long term, topple the CCP - is now completely at the mercy of the CCP, as the CCP is now the only guarantor of their own class status."

I think you nailed it on the head there. it's not just capitalists, a lot of party officials shipped their families to the 5 eye countries thinking it's their plan B (often with obscene, questionable wealth and under fake identities as dual citizenship is not allowed in China). now it's becoming clear to them they're now in the pocket of uncle Sam, their loved ones to be sacrificed and used against them in any moment.

Kadath , May 27 2020 21:15 utc | 25
Re: 20 A.L.

I agree, stripping HK of its' special trading agreement isn't going to hurt China in any meaningful way and I don't think the financial elite of HK are going to flee from China over this. However, the way in which the US is doing this is an insult to the Chinese (not just the government, but the Chinese people themselves). The US claiming to have the right to adjudicate over the domestic policies of other countries is not just an insult but also an implied threat. In international politics claiming that you have a right of approval over another nation's internal policies is in effect a claim of superior authority over that country than that country's own government and it logically brings up all sorts of questions about what happens if they refuse to accept your claim, do you impose sanctions or go to war over it?

The bigger threats are coming over Taiwan and Tibet, the US suggesting that it might pass legislation recognizing them as independent countries means that the US feels it has the right to unilaterally impose new boarders on countries - that only happens if you win a war, so the US feels it is at war with China and that it has already won or is so certain to win that it can announce what it wants the new boarders to look like. That is crazy. What's next, will the US do what they did with Venezuela and declare some random oligarch the new Chinese President then sign agreements with him and insist that they are real legal documents (that might very well be the plan for the leader of the HK protests Joshua Wong).

The US was stupid or crazy or both to try this path with Venezuela to try this with China means war.

james , May 27 2020 21:19 utc | 26
@ 25 kadath... isn't this what the usa is doing with the huawei case in canada? they are essentially saying - our rules 'trump' all of yours... this is how exceptional nations work ya know... either that or the bullying tactics are wearing thin with me...
Anonymous , May 27 2020 21:29 utc | 28
Since the subject of Meng Wanzhou's court case came up, I thought I'd post more detail.

"Meng's lawyers argued that the fact Canada does not have economic sanctions against Iran meant her alleged actions would not have been considered a crime in Canada because no bank would have suffered a loss in an identical set of circumstances.

But the judge said Meng's lawyers were trying to make the scope of her analysis too narrow.

"Canada's law of fraud looks beyond international boundaries to encompass all the relevant details that make up the factual matrix, including foreign laws that may give meaning to some of the facts," Holmes said.
____

OK, so that's settled but there is a lot more to come:

"The judge still has to hold hearings to determine whether there is sufficient evidence to warrant extradition, and Meng has also claimed that her rights were violated at the time of her arrest.

Holmes pointed out that Canada's minister of justice will also have a chance to weigh in on whether a decision to commit Meng for extradition would be contrary to Canadian values.

The ministry confirmed in a statement that extradition proceedings will go ahead "as expeditiously as possible."

Links:

https://www.cbc.ca/news/canada/british-columbia/meng-wanzhou-extradition-decision-1.5585737

https://www.thestar.com/news/canada/2020/05/27/huaweis-meng-wanzhou-faces-court-decision-that-could-set-her-free.html

https://www.bccourts.ca/jdb-txt/sc/20/07/2020BCSC0785.htm

Kadath , May 27 2020 21:36 utc | 29
Re:26 James,

The extraterritoriality the US is claiming over everything related to international finance and sanctions (not just Iran, but also Cuba, Russia, roughly 1/3 of the world is under some form of US sanctions) is a constant crime which kills thousands of people per year. But what the US has been doing over the past few years, changing boarders unilaterally without evening going to war is a step towards pure insanity. The US "declares" that the "Golan heights" belong to Israel, the US hates the current President of Venezuela so they declare some random guy the new President and bully other countries into pretending his is as well. Ultimately, this is a sign of growing weakness, when the US wanted to change the government of Iraq they invaded (and failed), when they wanted to breakup Syria they bankrolled a bunch of mercenaries (and failed again). Now the US isn't even confident enough to invade Venezuela and impose a new government, so instead they play make-believe with Guaido. Despite this, Venezula isn't strong enough to punish the US for its' delusions but if the US insists on playing make-believe with China they will learn some very painful lessons because China is strong enough to push back.

bevin , May 28 2020 0:46 utc | 41
The Meng case has always been part of the Trump campaign to put pressure on China. The Judge's ruling today is quite ludicrous but wholly consistent with Canada's historic tradition of carrying out instructions from the Imperial capital, whether that be in London or Washington.
It is sad to see a national ruling class prostituting itself and sadder still when it does so out of fear rather than for profit.
It is all about China, which is in an invulnerable position thanks to Washington having spent the last twenty years forcing Russia and Iran into Beijing's arms. Having given up diplomacy in order to concentrate on gangster bullying tactics the US has ended up, the way all declining empires do, with no friends except those countries so weak that they still crave the Emperor's favour.

https://peoplesdispatch.org/2020/05/26/why-irans-fuel-tankers-for-venezuela-are-sending-shudders-through-washington/

dh , May 28 2020 1:24 utc | 43
@41 "....it does so out of fear rather than for profit."

Basic economic survival surely. Canada is in no position to upset the current administration in Washington....much as many Canadians would like to.

[May 27, 2020] An important ruling in the Canada-US extradition case of Huawei CFO Meng Wanzhou will be announced shortly

May 27, 2020 | www.moonofalabama.org

jayc , May 27 2020 17:38 utc | 2

An important ruling in the Canada-US extradition case of Huawei CFO Meng Wanzhou will be announced shortly. A Canadian court will rule if the case has suitable "double-criminality" - i.e. an act illegal in both countries - and Men will either be free or one step closer to being delivered to the Americans. While it is claimed the arrest was political in nature due to an off-the-cuff comment by Trump, the politicized nature of the charge and extradition request goes back ten years as revealed in the New York Times in December 2018 (How A National Security Investigation of Huawei Set Off an International Incident Dec 14, 2018):


"The details of the criminal charges against Ms. Meng, filed under seal, remain murky. But court filings in Canada and interviews with people familiar with the Huawei investigation show that the events leading to her arrest were set in motion years ago.

How a National Security Investigation of Huawei Set Off an International Incident - The New York Times 2018-12-15, 4*50 PM
They grew out of an Obama administration national security investigation into Chinese companies -- including Huawei -- that act as extensions of the country's government, according to the people familiar with the investigation. The focus only recently shifted to whether Huawei, and specifically Ms. Meng, deceived HSBC and other banks to get them to keep facilitating business in Iran. Former federal prosecutors said pursuing Ms. Meng, 46, for alleged bank fraud proved to be a better line of attack than trying to build a case on national security grounds...

Counterintelligence agents and federal prosecutors began exploring possible cases against Huawei's leadership in 2010, according to a former federal law enforcement official. The effort was led by United States attorney's offices in places where Huawei has facilities, including Massachusetts, Alabama, California, New York and Texas."

In other words, the Americans had decided to use its courts against Huawei many years before any charges directed at Meng came to pass. They were literally in search of a crime.

Some of the uglier features of the Canadian political establishment and media have been pounding the drums for expanded hostilities directed at China, in concert with other Five Eyes partners.


james , May 27 2020 18:51 utc | 8

cbc article on it here - Huawei CFO Meng Wanzhou loses major court battle as B.C. judge rules extradition bid should proceed
Kadath , May 27 2020 20:15 utc | 15
Well now that it's 95% sure that Meng will be extradited to the US by the Canadian poodle courts, we should now consider how China will respond as the full court press against China has really heated up in the past month. If Meng is extradited to the US, she'll almost certainly be kept in a high security prison, as I can't imagine the US allowing her to remain free on bail during the trial and then given a 10-15yr prison sentence which will be used as a bargaining chip in the US-China trade war. US intelligence agencies will constantly interrogate/torture/bribe her in efforts to get her to flip against the Chinese government or provide them some intelligence. Given her high status I think China may want to consider the following options

1. Arrest some more Canadian "diplomats" (i.e. spies) and perhaps even up the ante by arresting a US spy.
2. Pull an Assange and have Meng flee to the Chinese Consulate in Vancouver, I've seen the Consulate and it is much roomier than the Ecuadorian embassy that Julian was stuck in. This would ensure her protection and bypass the corrupt Courts, making it purely a question of diplomacy between states (not that Canada has good diplomacy skills, but if China was also holding a bunch of Canadian spies it would make sense to make this problem go away).

6 months ago, I think the Chinese would have allowed her to be extradited to the US and then fought it out in backdown diplomacy with the US. But will all of the crazy things the US has done in the past 2 months I think China has had enough and will start pushing back. Heck, in the past 48 hours a congressman put forth a motion to declare Tibet an independent country illegally occupied by China and the Whitehouse is threatening to strip Hong Kong of special trading rights.

vk , May 27 2020 20:28 utc | 17
@ Posted by: james | May 27 2020 18:51 utc | 8

Of all the options in the Western arsenal against China, arresting Huawei's heir apparent on blatantly forged charges is easily one of the worst.

Chinese or not Chinese, fact is Meng is a member of the bourgeoisie. She is one of them. It doesn't matter if Huawei only became big and prosperous thanks to the CCP: bourgeoisie is bourgeoisie, and having a strong one within communist China's belly is essential for the long term success of capitalism in its war against communism.

By arresting Meng, the capitalists (i.e. Americans) are just driving a hedge between inside the "Capitalist International". The Chinese capitalist class - who was certainly very interested in ganging up with their western counterparts to, in the long term, topple the CCP - is now completely at the mercy of the CCP, as the CCP is now the only guarantor of their own class status.

The correct strategy would be for the Western bourgeoisie to woo the Chinese bourgeoisie with as many tax breaks, green cards and other kinds of flattery, so that, withing the course of some generations, the Chinese bourgeoisie become fully liberal (westernized). It would then make the infamous "middle class insurgence" theory feasible.

But (and there's always a "but" in the real world), it seems that capitalism itself is in crisis. It seems that, all of a sudden, the pot became too small to make every alpha male happy. The international bourgeoisie is now devouring its children (the petite-bourgeoisie, the "small business owners") and is beginning to devour itself.

[May 26, 2020] Huawei Warns of 'Terrible Price' If U.S.-China Tensions Escalate - Bloomberg

Notable quotes:
"... Bloomberg News ..."
"... Guo was far less vocal than colleague Richard Yu, who runs the consumer division responsible for smartphones. The outspoken executive said the restrictions that ostensibly aim to allay U.S. cybersecurity concerns are really designed to safeguard American dominance of global tech. ..."
"... "The so-called cybersecurity reasons are merely an excuse," Yu, head of the Chinese tech giant's consumer electronics unit, wrote in a post to his account on messaging app WeChat earlier on Monday. "The key is the threat to the technology hegemony of the U.S." posed by Huawei, he added. ..."
May 26, 2020 | www.bloomberg.com

‎May‎ ‎17‎, ‎2020‎ ‎10‎:‎25‎ ‎PM Updated on ‎May‎ ‎18‎, ‎2020‎ ‎6‎:‎00‎ ‎AM 2:44

... ... ...

China's largest technology company said it will be "significantly affected" by a Commerce Department decree barring any chipmaker using American equipment from supplying Huawei without U.S. government approval. That means companies like Taiwan Semiconductor Manufacturing Co. and its rivals will have to cut off the Chinese company unless they get waivers -- effectively severing Huawei's access to cutting-edge silicon it needs for smartphones and networking gear.

... ... ...

"Our business will significantly be impacted," Guo said at a company briefing with analysts in Shenzhen. "Given the changes in the industry over the past year, it dawned on us more clearly that fragmented standards and supply chains benefit no one. If further fragmentation were to take place, the whole industry would pay a terrible price," he added.

Huawei is still assessing the potential fallout of the latest restrictions and couldn't predict the impact on revenue for now, Guo said. On Monday, a swathe of Huawei's suppliers from TSMC to AAC Technologies Holdings Inc. plunged in Asian trading.

QuickTake: How Huawei Landed at the Center of Global Tech Tussle

Guo was far less vocal than colleague Richard Yu, who runs the consumer division responsible for smartphones. The outspoken executive said the restrictions that ostensibly aim to allay U.S. cybersecurity concerns are really designed to safeguard American dominance of global tech.

"The so-called cybersecurity reasons are merely an excuse," Yu, head of the Chinese tech giant's consumer electronics unit, wrote in a post to his account on messaging app WeChat earlier on Monday. "The key is the threat to the technology hegemony of the U.S." posed by Huawei, he added.

Yu also posted a link to a Chinese article circulating on social media with part of its headline asking: "Why Does America Want to Kill Huawei?"

The U.S. is leveraging its own technological strengths to crush companies outside its own borders, spokesman Joe Kelly told analysts, reading from a prepared statement. "This will only serve to undermine the trust international companies place in U.S. technology and supply chains," Kelly said. "Ultimately, this will harm U.S. interests."

Read more: Global Chipmaking Kingpin Gets Dragged into U.S.-China Trade War

-- With assistance by Colum Murphy, Yuan Gao, and Debby Wu

( Updates with more details from the Huawei briefing with analysts )

[May 24, 2020] Trump's 'Uncreative Destruction' of the U.S.-China Relationship - FPIF by John Feffer

May 20, 2020 | fpif.org

Trump's economic war on China comes in the shadow of an even deadlier military escalation. And it may not stop after November, no matter who wins the election.

Economists like to think of the wreckage caused by stock market downturns, widespread bankruptcies, and corporate downsizing as "creative destruction." As it destroys the old and the dysfunctional, the capitalist system continually spurs innovation, much as a forest fire prepares the ground for new growth.

Or so the representatives of the dismal science argue.

Donald Trump, who is neither economist nor scientist, has his own version of creative destruction. He is determined to destroy the Affordable Care Act and replace it with his own health insurance alternative. He has torn up the Iran nuclear deal in favor of negotiating something brand new with Tehran. He has withdrawn from the Paris climate accord and argues that the United States is reducing carbon emissions in its own superior manner.

The problem, of course, is that Trump is very good at destruction but, despite his previous job as a real estate mogul, exceedingly bad at construction. Indeed, there's abundant evidence that he never intended to replace what he is destroying with anything at all. Trump has never offered any viable alternative to Obamacare or any new negotiating framework with Iran. And prior to the recent economic downturn, U.S. carbon emissions were increasing after several years of decline.

Perhaps the most dangerous example of Trump's uncreative destruction is his approach to China.

Previously, Trump said that he simply wanted to level the playing field by placing trade with China on a fairer and more reciprocal basis, strengthening the regime of intellectual property rights, and stopping Beijing from manipulating its currency.

He was willing to go to great lengths to accomplish this goal. The tariffs that Trump imposed on Chinese products precipitated a trade war that jeopardized the livelihoods of millions of American farmers and workers. The initial trade deal that the United States and China signed in January, even though many of the U.S. tariffs remain in place, was supposed to be the grand alternative to the old and dysfunctional trade relationship.

But here again, Trump is not telling the truth. He and his team have a very different set of objectives. As with so many other elements of his domestic and foreign policy, Trump wants to tear apart the current system -- in this case, the network of economic ties between the United States and China -- and replace it with absolutely nothing at all.

Oh sure, Trump believes that U.S. manufacturers can step up to take the place of Chinese suppliers. More recently, as the administration "turbocharges" its efforts to isolate China in response to its purported pandemic mistakes , it has talked of creating an Economic Prosperity Network of trusted allies like South Korea, Australia, India, and Vietnam. But this is all whistling in the dark, because the administration doesn't really understand the consequences -- for the world economy, for the U.S. economy -- of tearing apart the global supply chain in this way.

Just how poorly Trump understands all this is reflected in his statement last week that "we could cut off the whole relationship" with China and "save $500 billion." This from the president who erroneously believes that China is paying the United States "billions and billions of dollars of tariffs a month." What else do you expect from a man who received a BS in economics from Wharton?

Unlike many of the administration's other policies, however, its hardline approach to China has some bipartisan support. Engagement with China has virtually disappeared as a policy option in the Democratic Party. Joe Biden, the Democrats' presumptive presidential candidate, has attempted to present himself as the tougher alternative when it comes to China, a misguided effort to fend off charges of his bedding down with Beijing.

Finger to the wind, Biden is crafting policies in response not just to Trump but to public opinion. In 2017, 44 percent of Americans had a favorable view of China, compared to 47 percent who held an unfavorable opinion of the country, according to Pew. In this year's survey , only 26 percent looked at China positively versus 66 percent who viewed it negatively. The latter category includes 62 percent of Democrats.

Writing for the Atlantic Council, Michael Greenwald sums up the new conventional wisdom of the centrists:

The United States can no longer remain content with the notion of a Chinese economic threat arising in the distant future. The advent of COVID-19 has made it more apparent than any other time including the US-China trade war that now is the moment for the United States, European Union, and other like-minded countries to diversify supply chains away from China.

That's what makes Trump's uncreative destruction vis a vis China so dangerous. It may not stop after November, no matter who wins the election.

The Great Disentanglement

China's economic shutdown at the onset of the coronavirus pandemic disrupted many global supply chains, prompting a number of countries and corporations to accelerate their strategy of reducing their dependency on China for components.

Rising labor costs in China, concerns over human rights abuses there, but especially the trade war between Washington and Beijing had contributed to the U.S. fashion industry and tech firms like Apple rethinking their own supply chains. Japan, heavily dependent on Chinese trade, is using $2 billion in economic stimulus funds to subsidize the move of Japanese firms out of China.

The Trump administration is thus swimming with the current in its effort to isolate China. It has imposed sanctions because of China's violations of Uyghur human rights. It has levied penalties against China for its cooperation with Iranian firms. And it has threatened to add another set of tariffs on top of the existing ones for China's handling of the coronavirus.

Its latest initiative has been to tighten the screws on the Chinese technology firm, Huawei. Last week, the administration announced sanctions against any firms using U.S.-made equipment that supply the Chinese tech giant. The chief victim of these new restrictions will be the Taiwanese firm TSMC, which supplies 90 percent of Huawei's smartphone chips.

In other words, the Trump administration is committed not only to severing U.S. economic connections with China. It wants to put as much pressure on other countries as well to disentangle themselves from Chinese manufacturing. Taiwan, of course, has no particular love for Mainland China. It battles Beijing on a daily basis to get international recognition -- from other countries and from global organizations like the World Health Organization.

But the Taiwanese economy is also heavily dependent on its cross-strait neighbor. As Eleanor Albert points out :

China is Taiwa n's largest trading partner, accounting for nearly 30 percent of the island's total trade, and trade between the two reached $150.5 billion in 2018 (up from $35 billion in 1999). China and Taiwan have also agreed to allow banks, insurers, and other financial service providers to work in both market s.

And it probably won't be Huawei but Taiwan that suffers from the U.S. move. As Michael Reilly notes , "Huawei's size in the global market means its Taiwanese suppliers cannot easily find an alternative customer of comparable standing to replace it." China, meanwhile, will either find another source of chips outside the U.S. sphere, or it will do what the United States has been threatening to do: bring production of critical components back closer to home.

Another key player in the containment of China is India. Trump's friendship with Indian Prime Minister Narendra Modi, a right-wing Hindu nationalist, is more than simply an ideological affection. Trump sealed a $3 billion in military sales deal with India in February, with a trade deal still on the horizon.

Modi, in turn, is hoping to be the biggest beneficiary of the falling out between Washington and Beijing. "The government in April reached out to more than 1,000 companies in the U.S. and through overseas missions to offer incentives for manufacturers seeking to move out of China," reports Bloomberg . "India is prioritizing medical equipment suppliers, food processing units, textiles, leather, and auto part makers among more than 550 products covered in the discussions."

Vietnam is another regional competitor that the United States is supporting in its containment strategy. With only a couple hundred reported coronavirus cases and zero deaths, Vietnam is poised to emerge from the current crisis virtually unscathed. With low labor costs and an authoritarian government that can enforce deals, it is already a favored alternative for corporations looking for alternatives to China. But wildcat strikes have been happening in greater numbers in the country, and the Vietnamese government recently approved the country's first independent trade union.

Yet with a more technologically sophisticated infrastructure, China will continue to look more attractive to investors than India or Vietnam.

Don't Count Out China

If your image of the Chinese economy is stuck in the 1980s -- cheap toys and mass-produced baubles -- then you probably think that severing economic ties with the country is no big deal. America can produce its own plastic junk, right?

But China is no longer hurrying to catch up to the West. In some ways, the West is already in China's rearview mirror.

Huawei is well-known for the part it's playing in the rollout of 5G networks worldwide. China is not only ahead of the curve in upgrading to 5G domestically, it is busy manufacturing all the new tech that will run on these high-speed networks, like virtual reality and augmented reality and AI-driven devices.

Perhaps more to the point, China is not simply part of the global supply chain. It is using these new technologies to revolutionize the global supply chain.

For instance, it's using 3-D modeling to shorten product development. It has long integrated drones into its distribution networks. "Chinese supply chain companies are incorporating groundbreaking technologies like cloud-based systems, data analytics, and artificial intelligence (AI) and using them to redesign supply chain operations," writes Adina-Laura Achim.

And don't discount the role of a well-financed, centralized, authoritarian government. The Trump administration is, frankly, at a huge disadvantage when it tries to pressure companies to relocate their operations. Writes Manisha Mirchandani:

The global technology and consumer electronics sectors are especially reliant on China's infrastructure and specialized labor pool, neither of which will be easy to replicate. The Chinese government is already mobilizing resources to convince producers of China's unique merits as a manufacturing location. Zhengzhou, within Henan Province, has appointed officials to support Apple's partner Foxconn in mitigating the disruptions caused by the coronavirus, while the Ministry of Finance is increasing credit support to the manufacturing sector. Further, the Chinese government is likely to channel stimulus efforts to develop the country's high-tech manufacturing infrastructure, moving away from its low-value manufacturing base and accelerating its vision for a technology-driven services economy.

The Trump administration is playing the short game, trying to use tariffs and anti-Chinese sentiment to hobble a rising power. China, on the other hand, is playing the long game, translating its trade surpluses into structural advantages in a fast-evolving global economy.

Will the Conflict Turn Hot?

Despite the economic ravages of the pandemic, the Pentagon continues to demand the lion's share of the U.S. budget. It wants another $705 billion for 2021, after increasing its budget by 20 percent between 2016 and 2020.

This appalling waste of government resources has already caused long-term damage to the economic competitiveness of the United States. But it's all the money the Pentagon is spending on "deterring China" that might prove more devastating in the short term.

The U.S. Navy announced this month that it was sending its entire forward-deployed sub fleet on "contingency response operations" as a warning to China. Last month, the U.S. Navy Expeditionary Strike Group sailed into the South China Sea to support Malaysia's oil exploration in an area that China claims. Aside from the reality that oil exploration makes no economic sense at a time of record low oil prices, the United States should be helping the countries bordering the South China Sea come to a fair resolution of their disputes, not throwing more armaments at the problem.

There's also heightened risk of confrontation in the Taiwan Strait, the East China Sea, and even in outer space . A huge portion of the Pentagon's budget goes toward preparing for war with China -- and, frankly, provoking war as well.

What does this all have to do with the Great Disentanglement?

The close economic ties between the United States and China have always represented a significant constraint on military confrontation. Surely the two countries would not risk grievous economic harm by coming to blows. Economic cooperation also provides multiple channels for resolving conflicts and communicating discontent. The United States and Soviet Union never had that kind of buffer.

If the Great Disentanglement goes forward, however, then the two countries have less to lose economically in a military confrontation. Trading partners, of course, sometimes go to war with one another. But as the data demonstrates , more trade generally translates into less war.

There are lots and lots of problems in the U.S.-China economic relationship. But they pale in comparison to World War III. Share this:

John Feffer is the director of Foreign Policy In Focus.

Issues: Labor, Trade, & Finance , War & Peace

Regions: Asia & Pacific , China , India , North America , United States , Vietnam

Tags: 5G , Donald Trump , global supply chain , globalization , great disentanglement , huawei , Joe Biden , tariffs , trade war , U.S. military spending

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[May 23, 2020] China is still in great danger: it is still greatly dependent on the West to development and still is a developing country.

May 23, 2020 | www.moonofalabama.org

vk , May 22 2020 21:02 utc | 27

China is still in great danger. Of the existing 30 or so high-tech productive chains, China only enjoys superiority at 2 or 3 (see 6:48). It is still greatly dependent on the West to development and still is a developing country.

So, yes, the West still has a realistic chance of destroying China and inaugurating a new cycle of capitalist prosperity.

What happens with the "decoupling"/"Pivot to Asia" is that, in the West, there's a scatological theory [go to 10th paragraph] - of Keynesian origin - that socialism can only play "catch up" with capitalism, but never surpass it when a "toyotist phase" of technological innovation comes (this is obviously based on the USSR's case). This theory states that, if there's innovation in socialism, it is residual and by accident, and that only in capitalism is significant technological advancement possible. From this, they posit that, if China is blocked out of Western IP, it will soon "go back to its place" - which is probably to Brazil or India level.

If China will be able to get out of the "Toyotist Trap" that destroyed the USSR, only time will tell. Regardless, decoupling is clearly not working, and China is not showing any signs so far of slowing down. Hence Trump is now embracing a more direct approach.

As for the USA, I've put my big picture opinion about it some days ago, so I won't repeat myself. Here, it suffices to say that, yes, I believe the USA can continue to survive as an empire - even if, worst case scenario, in a "byzantine" form. To its favor, it has: 1) the third largest world population 2) huge territory, with excellent proportion of high-quality arable land (35%), that basically guarantees food security indefinitely (for comparison, the USSR only had 10% of arable land, and of worse quality) 3) two coasts, to the two main Oceans (Pacific and Atlantic), plus a direct exit to the Arctic (Alaska and, de facto, Greenland and Canada) 4) excellent, very defensive territory, protected by both oceans (sea-to-sea), bordered only by two very feeble neighbors (Mexico and Canada) that can be easily absorbed if the situation asks to 4) still the financial superpower 5) still a robust "real" economy - specially if compared to the micro-nations of Western Europe and East-Asia 6) a big fucking Navy, which gives it thalassocratic power.

I don't see the USA losing its territorial integrity anytime soon. There are separatist movements in places like Texas and, more recently, the Western Coast. Most of them exist only for fiscal reasons and are not taken seriously by anyone else. The Star-and-Stripes is still a very strong ideal to the average American, and nobody takes the idea of territory loss for real. If that happens, though, it would change my equation on the survival of the American Empire completely.

As for Hong Kong. I watched a video by the chief of the PLA last year (unfortunately, I watched it on Twitter and don't have the link with me anymore). He was very clear: Hong Kong does not present an existential threat to China. The greatest existential threat to China are, by far, Xinjiang and Tibet, followed by Taiwan and the South China Sea. Hong Kong is a distant fourth place.

Those liberal clowns were never close.


Jen , May 22 2020 21:55 utc | 32

VK @ 28:

One problem with your scenario is that the US navy may be over-extended in parts of the world where all the enemy has to do is to cut off supply lines to battleship groups and then those ships would be completely helpless. US warships in the Persian Gulf with the Strait of Hormuz sealed off by Iran come to mind.

Incidents involving US naval ship collisions with slow-moving oil tankers in SE Asian waters and some other parts of of the the world, resulting in the loss of sailors, hardly instill the notion that the US is a mighty thalassocratic force.

It's my understanding also that Russia, China and maybe some other countries have invested hugely in long-range missiles capable of hitting US coastal cities and areas where the bulk of the US population lives.

And if long-range missiles don't put paid to the notion that projecting power through sending naval warships all over the planet works, maybe the fact that many of these ships are sitting ducks for COVID-19 infection clusters might, where the US public is concerned.

vk , May 22 2020 22:16 utc | 33
@ Posted by: Jen | May 22 2020 21:55 utc | 33

I agree the new anti-ship missile technology may have changed the rules of naval warfare.

However, it's important to highlight that, contrary to the US Army, the USN has a stellar record. It fought wonderfully against the Japanese Empire in 1941-1945, and successfully converted both the Pacific and the Atlantic into "American lakes" for the next 75 years. All the Americans have nowadays it owes its Navy.

But you may be right. Maybe the USN is also susceptible to degeneration.

Richard Steven Hack , May 22 2020 23:51 utc | 38
Posted by: vk | May 22 2020 21:02 utc | 28

Of the existing 30 or so high-tech productive chains, China only enjoys superiority at 2 or 3 (see 6:48). It is still greatly dependent on the West to development and still is a developing country.

Based on what I've read, China is on a fast track to develop technology on their own. In addition, technology development is world-wide these days. What China can not develop itself - quickly enough, time is the only real problem - it can buy with its economic power.

"if China is blocked out of Western IP, it will soon "go back to its place" - which is probably to Brazil or India level."

Ah, but that's where hackers come in. China can *not* be blocked out of Western IP. First, as I said, China can *buy* it. Unless there is a general prohibition across the entire Western world, and by extension sanctions against any other nation from selling to China - which is an unenforceable policy, as Iran has shown - China can buy what it doesn't have and then reverse-engineer it. Russia will sell it if no one else will.

Second, China can continue to simply acquire technology through industrial espionage. Every country and every industry engages in this sort of thing. Ever watch the movie "Duplicity"? That shit actually happens. I read about industrial espionage years ago and it's only gotten fancier since the old days of paper files. I would be happy to breach any US or EU industrial sector and sell what I find to the Chinese, the Malaysians or anyone else interested. It's called "leveling the playing field" and that is advantageous for everyone. If the US industrial sector employees can't keep up, that's their problem. No one is guaranteed a job for life - and shouldn't be.

"1) the third largest world population"

Which is mostly engaged in unproductive activities like finance, law, etc. I've read that if you visit the main US universities teaching science and technology, who are the students? Chinese. Indians. Not Americans. Americans only want to "make money" in law and finance, not "make things."

"2) huge territory, with excellent proportion of high-quality arable land (35%), that basically guarantees food security indefinitely"

In military terms, given current military technology, territory doesn't matter. China has enough nuclear missiles to destroy the 50 Major Metropolitan Areas in this country. Losing 100-200 millions citizens kinda puts a damper on US productivity. Losing the same number in China merely means more for the rest.

"3) two coasts, to the two main Oceans (Pacific and Atlantic)"

Which submarines can make irrelevant. Good for economic matters - *if* your economy can continue competing. China has one coast - but its Belt and Road Initiative gives it economic clout on the back-end and the front-end. I don't see the US successfully countering that Initiative.

"4) excellent, very defensive territory, protected by both oceans (sea-to-sea)"

Which only means the US can't be "invaded". That's WWI and WWII thinking the US is mired in. Today, you destroy an opponent's military and, if necessary, his civilian population, or at least its ability to "project" force against you. You don't "invade" unless it's some weak Third World country. And if the US can't "project" its power via its navy or air force, having a lot of territory doesn't mean much. This is where Russia is right now. Very defensible but limited in force projection (but getting better fast.) The problem for the US is China and Russia are developing military technology that can prevent US force projection around *their* borders.

"bordered only by two very feeble neighbors (Mexico and Canada) that can be easily absorbed if the situation asks"

LOL I can just see the US "absorbing" Mexico. Canada, maybe - they're allies anyway. Mexico, not so much. You want a "quagmire", send the US troops to take on the Mexican drug gangs. They aren't Pancho Villa.

"4) still the financial superpower"

Uhm, what part of "Depression" did you miss? And even if that doesn't happen now, continued financial success is unlikely. Like pandemics, shit happens in economics and monetary policy.

"a big fucking Navy, which gives it thalassocratic power."

That can be sunk in a heartbeat and is virtually a colossal money pit with limited strategic value given current military technology which both China and Russia are as advanced as the US is, if not more so. Plus China is developing its own navy quickly. I read somewhere a description of one Chinese naval shipyard. There were several advanced destroyers being developed. Then the article noted that China has several more large shipyards. That Chinese long coast comes in handy for that sort of thing.

China Now Has More Warships Than the U.S.
But sometimes quantity doesn't trump quality. [My note: But sometimes it does.]
https://tinyurl.com/y7numhef

That's just the first article I found, from a crappy source. There are better analyses, of course.

"I don't see the USA losing its territorial integrity anytime soon. There are separatist movements in places like Texas and, more recently, the Western Coast. Most of them exist only for fiscal reasons and are not taken seriously by anyone else."

I'd agree with that. I hear this "California secession" crap periodically and never believe it. However, for state politicians, the notion of being "President" of your own country versus a "Governor" probably is tempting to these morons. State populations are frequently idiots as well, as the current lockdown response is demonstrating. All in all, though, if there are perceived external military threats, that is likely to make the states prefer to remain under US central control.

[May 23, 2020] HK is protected against US tarrifs imposed on China goods. China exports a good chunk of goods through HK. If Trump were really serious he would remove HK's protected status.

May 23, 2020 | www.moonofalabama.org

Kay Fabe , May 23 2020 0:09 utc | 42

"Britain had to agree to the pact because it had lost the capability to defend the colony.".."

That was the excuse. I believe HK was offered to China in return for Deng to open up and turn China capitalist. Deng was not the one who
demanded HK return. Britain initiated the discussions. Deng gladly accepted although he insisted on maintaining their authoritarian form of undemocratic government and left HK's fate ambiguous so Britain could get support from their people and the HK elite. The party elites were happy to be able to join the Western Elites in accumulating an unequal share of the wealth. The Soviet elites led by the US Globalist puppet Gorbachev chose the same path although they chose Fake Democracy and rule of the oligarchs as in the US rather than party control of China

HK is protected against US tarrifs imposed on China goods. China exports a good chunk of goods through HK. If Trump were really serious he would remove HK's protected status.

vk , May 23 2020 0:30 utc | 47

@ Posted by: Kay Fabe | May 23 2020 0:09 utc | 42

The timing doesn't add up. China opened up in 1972 (the famous Nixon-Mao handshake), while the UK's agreement to give HK back was from 1984 - well into the Thatcher Era.

The most likely reason for the UK to decide to obey the lease deal was of military nature: the valuable land necessary to defend HK was the flatland adjacent to the city proper, where potable water comes from. It already part of the Mainland, thus rendering the defense of HK virtually impossible without an outright invasion of the Mainland itself.

Margaret Thatcher probably didn't want to obey the treaty (99-year lease), as a good neoliberal she was, but her military advisors probably warned her of the practical difficulties, and, since it was a 99-year lease anyway, she must've agreed to simply allow the treaty to be followed.

It is important to highlight that, in 1984, there were a lot of reasons the capitalist world should be optimist about China becoming capitalist. After all, it really got off the Soviet sphere after 1972, and Deng's reforms were - from the point of view of a vulgar (bourgeois) economist - indeed a clear path to a capitalist restoration. It didn't cross Thatcher's mind that China could stand its ground and remain socialist - at least not in 1984. If you read the sources of the time, you will easily see the Western elites treated China's return to capitalism as a given.

[May 23, 2020] China is still in great danger. Of the existing 30 or so high-tech productive chains, China only enjoys superiority at 2 or 3

Highly recommended!
May 23, 2020 | www.moonofalabama.org

vk , May 22 2020 21:02 utc | 28

China is still in great danger. Of the existing 30 or so high-tech productive chains, China only enjoys superiority at 2 or 3 (see 6:48).

It is still greatly dependent on the West to development and still is a developing country.

So, yes, the West still has a realistic chance of destroying China and inaugurating a new cycle of capitalist prosperity.

What happens with the "decoupling"/"Pivot to Asia" is that, in the West, there's a scatological theory [go to 10th paragraph] - of Keynesian origin - that socialism can only play "catch up" with capitalism, but never surpass it when a "toyotist phase" of technological innovation comes (this is obviously based on the USSR's case). This theory states that, if there's innovation in socialism, it is residual and by accident, and that only in capitalism is significant technological advancement possible. From this, they posit that, if China is blocked out of Western IP, it will soon "go back to its place" - which is probably to Brazil or India level.

If China will be able to get out of the "Toyotist Trap" that destroyed the USSR, only time will tell. Regardless, decoupling is clearly not working, and China is not showing any signs so far of slowing down. Hence Trump is now embracing a more direct approach.

As for the USA, I've put my big picture opinion about it some days ago, so I won't repeat myself. Here, it suffices to say that, yes, I believe the USA can continue to survive as an empire - even if, worst case scenario, in a "byzantine" form. To its favor, it has: 1) the third largest world population 2) huge territory, with excellent proportion of high-quality arable land (35%), that basically guarantees food security indefinitely (for comparison, the USSR only had 10% of arable land, and of worse quality) 3) two coasts, to the two main Oceans (Pacific and Atlantic), plus a direct exit to the Arctic (Alaska and, de facto, Greenland and Canada) 4) excellent, very defensive territory, protected by both oceans (sea-to-sea), bordered only by two very feeble neighbors (Mexico and Canada) that can be easily absorbed if the situation asks to 4) still the financial superpower 5) still a robust "real" economy - specially if compared to the micro-nations of Western Europe and East-Asia 6) a big fucking Navy, which gives it thalassocratic power.

I don't see the USA losing its territorial integrity anytime soon. There are separatist movements in places like Texas and, more recently, the Western Coast. Most of them exist only for fiscal reasons and are not taken seriously by anyone else. The Star-and-Stripes is still a very strong ideal to the average American, and nobody takes the idea of territory loss for real. If that happens, though, it would change my equation on the survival of the American Empire completely.

As for Hong Kong. I watched a video by the chief of the PLA last year (unfortunately, I watched it on Twitter and don't have the link with me anymore). He was very clear: Hong Kong does not present an existential threat to China. The greatest existential threat to China are, by far, Xinjiang and Tibet, followed by Taiwan and the South China Sea. Hong Kong is a distant fourth place.

Those liberal clowns were never close.

[May 22, 2020] They Saw This Day Coming - Huawei Forges Alliances With Rival Chipmakers As Washington's Crackdown Intensifies

May 22, 2020 | www.zerohedge.com

"They Saw This Day Coming" - Huawei Forges Alliances With Rival Chipmakers As Washington's Crackdown Intensifies by Tyler Durden Fri, 05/22/2020 - 18:05 The US Commerce Department's latest move to block companies from selling products to Huawei that were created with American technology, equipment or software has undoubtedly hurt the Chinese telecoms giant. But it won't be nearly enough to take it down.

Since Washington launched its campaign against Huawei two years ago (when the trade tensions between the US and China started to heat up, as President Trump started slapping more tariffs on foreign goods) the company has been strengthening ties with contract chipmakers in Taiwan and elsewhere, while ramping up its own microchip-technology arm, known as HiSilicon Technologies.

On Friday, Nikkei reported that Huawei had initiated conversations with other mobile chipmakers to try and figure out where it might source certain essential components for its handsets (remember, Huawei is the second-largest cellphone maker by sales volume) and other products.

Of course, the crackdown cuts both ways, as several American companies relied heavily on Huawei's business (they can still apply for licenses to continue selling to Huawei...so long as Commerce approves).

As we reported earlier this week , it's not just American chipmakers that are distancing themselves from Huawei: some Taiwan-based chipmakers are also dropping the telecoms giant for fear of being targeted by Treasury sanctions, including TSMC, the world's largest contract chipmaker.

Now, Huawei is reportedly in talks with MediaTek, the world's second-largest contract chip producer.

Huawei Technologies is seeking help from rival mobile-chip makers to withstand a U.S. clampdown aimed at crippling the Chinese company, sources familiar with the matter told the Nikkei Asian Review.

Huawei is in talks with MediaTek, the world's second-largest mobile chip developer after Qualcomm of the U.S., and UNISOC, China's second-largest mobile chip designer after Huawei's HiSilicon Technologies unit, to buy more chips as alternatives to keep its consumer electronics business afloat, the sources said.

To work with a contract chipmaker, Huawei would still need to design its own chips. Over the past two years, Huawei has expanded its team of engineers working on chip design to more than 10,000, Nikkei said.

To be sure, MediaTek already makes low- and medium-end chips for Huawei, evidence that the company, which was founded by a veteran of China's PLA, and purportedly maintains strong links to the Chinese military, has been bracing for the other shoe to drop. MediaTek, meanwhile, is still trying to figure out if it can meet Huawei's latest bid.

"Huawei has foreseen this day coming. It started to allocate more mid- to low-end mobile chip projects to MediaTek last year amid its de-Americanization efforts," one of the sources said. "Huawei has also become one of the key clients for the Taiwanese mobile chip developer's mid-end 5G mobile chip for this year."

MediaTek is evaluating whether it has sufficient human resources to fully support Huawei's aggressive bid, as the Chinese company is asking for volume 300% above its usual procurement in the past few years, another source familiar with the talks said.

The situation has also created an opportunity for small Chinese chipmakers (working, we imagine, mostly with technology stolen from American and Taiwanese companies) to expand.

Huawei also seeks to deepen its collaboration with UNISOC, a Beijing-backed mobile chip developer that relies mostly on smaller device makers as customers and mainly supports entry-level products and devices for emerging markets. Previously, Huawei used only very few UNISOC chips for its low-end smartphone and tablet offerings, sources said.

"The new procurement deals would be a great boost to help UNISOC further upgrade its chip design capability," said a chip industry executive. "In the past, UNISOC was struggling quite a bit, because it could not really secure big contracts with global leading smartphone makers as these top smartphone makers could find better offerings elsewhere. This time could be an opportunity that it could really seek to match the international standard."

UNISOC last year accelerated its 5G chip development to catch up with Qualcomm and MediaTek, Nikkei has reported. More recently, the company received 4.5 billion yuan ($630 million) from China's national integrated circuit fund, the so-called Big Fund.

UNISOC is preparing to list on the Shanghai STAR tech board, the Chinese version of Nasdaq, later this year. Qualcomm has needed a license from the U.S. Department of Commerce to supply Huawei since mid-May of 2019.

Huawei has already expanded production of in-house mobile processors for its smartphone business to 75%, up from 69% in 2018 and 45% in 2016, according to to data from GF Securities cited by Nikkei. Huawei shipped 240 million smartphones in 2019. And with China now throwing caution to the wind and cracking down on Hong Kong, we wouldn't be surprised to see more Huawei drama in the headlines next week, with serious market repercussions for the US semiconductor industry.

[May 21, 2020] Pompeo Lays Out the Case For Cold War II With China by Matthew Petti

That will be an interesting chess party. The USA moved way to many plants to Chine to get out of this conflict without major losses
Notable quotes:
"... Secretary of State Mike Pompeo slammed China as “hostile to free nations,” portraying Beijing as fundamentally opposed to the United States, on Wednesday. ..."
"... But the Secretary of State pointed to deeper issues in the relationship, claiming that “the nature of the regime is not new.” “For several decades, we thought the regime would become more like us through trade, scientific exchanges, diplomatic outreach, letting them in the [World Trade Organization] as a developing nation,” he said. “That didn’t happen.” ..."
May 20, 2020 | nationalinterest.org

'The regime is ideologically and politically hostile to free nations.'

Secretary of State Mike Pompeo slammed China as “hostile to free nations,” portraying Beijing as fundamentally opposed to the United States, on Wednesday.

Tensions between the United States and China have reached a fever pitch during the coronavirus pandemic. Pompeo’s speech at a Wednesday morning press conference laid out a vision of a global clash between two fundamentally different societies.

“China’s been ruled by a brutal, authoritarian regime, a communist regime since 1949,” he said. “We greatly underestimated the degree to which Beijing is ideologically and politically hostile to free nations. The whole world is waking up to that fact.”

He added that a focus on the coronavirus pandemic “risks missing the bigger picture of the challenge that’s presented by the Chinese Communist Party.”

The pandemic has accelerated U.S.-China tensions.

Last week, a Chinese Communist Party news threatened sanctions against U.S. lawmakers for attempting to sue the Chinese government for the pandemic, and U.S. law enforcement accused Chinese hackers of cyberattacks against U.S. researchers.

But the Secretary of State pointed to deeper issues in the relationship, claiming that “the nature of the regime is not new.” “For several decades, we thought the regime would become more like us through trade, scientific exchanges, diplomatic outreach, letting them in the [World Trade Organization] as a developing nation,” he said. “That didn’t happen.”

Pompeo accused the World Health Organization’s director-general Dr. Tedros Adhanom Ghebreyesus of “unusually close ties to Beijing” that “started long before this current pandemic.”

The Trump administration has accused China of covering up information about the novel coronavirus—even implying that the virus emerged from a lab accident in Wuhan, China—and pointed the finger at the World Health Organization for aiding China’s coverup.

The Secretary of State slammed the public health group for excluding Taiwan in his Wednesday speech, touching on a sensitive topic for Beijing.

Taiwan, an island that was once ruled by China, has ruled itself since the end of the Chinese Civil War in 1950. Beijing considers the island a breakaway Chinese province that must be reunited with the mainland, while Taiwan’s ruling Pan-Green Alliance leans towards independence.

“The democratic process in Taiwan has matured into a model for the world,” Pompeo said, congratulating President Tsai Ing-wen on her re-election. “Despite great pressure from the outside, Taiwan has demonstrated the wisdom of giving people a voice and a choice.”

But he shied away from changing U..S. policy towards Taiwan..

Pompeo said that work that “comports with the history of the agreements between the United States and China is the right solution to maximize the stability there in the straits.”

The United States acknowledged the Chinese position that “there is but one China and Taiwan is part of China” as part of a 1979 joint communique with Beijing, and does not officially recognize Taiwan as a state, but maintains close informal ties with the Taiwanese government and opposes attempts to change the island’s government by force.

“The President talked about how we’re going to respond [to China], how he’s beginning to think about responding to the calamity that has befallen the world as a result of the actions of the Chinese Communist Party,” Pompeo said. “I don’t want to get ahead of him in terms of talking about how the administration will respond to that, but you can already begin to see the outlines of it.”

Matthew Petti is a national security reporter at the National Interest. Follow him on Twitter: @matthew_petti. This article initially stated that the United States “recognized that ‘there is but one China and Taiwan is a part of China’ in a 1979 joint communique.” The communique actually states that the United States “acknowledges” this as the Chinese position. The article has been updated to more correctly reflect the communique. Image: Reuters.

[May 20, 2020] Washington wants to prevent Russia and China supplanting US interests but The China-US relationship is the most important bilateral relationship in the world and involves huge interests of the two countries, as well as the rest of the world. Therefore, it is not something Trump can cut off emotionally

Notable quotes:
"... The Chinese will not start a shooting war and the US has no guts for one. Its industry has been hollowed out not just by outsourcing but by corruption as well. The campaign of demonization against China is very obvious, how far it is working I have no way of telling. Among the 5-eyes probably quite well, in the rest of the World rather less well, I would imagine. Notably, the British economy has been hollowed out in exactly the same manner as the US's. Canada's, Australia's, NewZealand's? Could they, would they support a war? ..."
"... Right now, China is leading the vaccine race and has developed an antibody treatment for Covid-19 that should be ready this year. ..."
"... Interesting article by Escobar. If one cares to notice, this anti-China cold war is a neocon based aggression. The primary movers of it are mostly neocons or the sorts who follow the neocon lead. ..."
"... "Again! Trump is talking nonsense." Trump seems to be losing his mind right now. Even he has such crazy ideas of cutting ties with China, US politicians, businessmen and Americans would not allow him to do so, Xin Qiang, deputy director of the Center for US Studies at Fudan University, told the Global Times. ..."
"... Jin Canrong, the associate dean of Renmin University of China's School of International Studies in Beijing, told the Global Times on Thursday that Trump made very irresponsible and emotional remarks in the interview. ..."
"... "For Trump, fantasy is power; bluffing is power, so he might use the future of his country to gamble with China. Although China always believes cooperation is the only right choice for the two countries to solve the problems together, if the US unilaterally and irrationally chooses all-out confrontation, China also needs to be prepared." ..."
May 20, 2020 | www.unz.com

peter mcloughlin , says: Show Comment May 19, 2020 at 6:02 pm GMT

Washington wants to prevent Russia and China supplanting US interests. Moscow and Beijing pursue what they see as their own legitimate interests. What we face is not a "hybrid" war or "New Cold War" but a world war.
https://www.ghostsofhistory.wordpress.com/
foolisholdman , says: Show Comment May 19, 2020 at 8:09 pm GMT
@peter mcloughlin

What we face is not a "hybrid" war or "New Cold War" but a world war.

Honestly, I don't see it. My reasoning is simple, maybe too simple. The Chinese will not start a shooting war and the US has no guts for one. Its industry has been hollowed out not just by outsourcing but by corruption as well. The campaign of demonization against China is very obvious, how far it is working I have no way of telling. Among the 5-eyes probably quite well, in the rest of the World rather less well, I would imagine. Notably, the British economy has been hollowed out in exactly the same manner as the US's. Canada's, Australia's, NewZealand's? Could they, would they support a war?

The other reason I think a shooting war is less likely than might appear, is that the the MIC is doing so well with the current cold war; that it would seem stupid to allow the massive disruption and uncertainty that a shooting war would cause to interrupt the torrent of cash being shoveled its way at the moment.

d dan , says: Show Comment May 19, 2020 at 8:34 pm GMT
"Hard landing" vs "Well and alive". Who wins?

source: comment #313 by Godfree Roberts
https://www.unz.com/article/objections-to-an-independent-investigation-of-china/

[Hide MORE]
1990. China's economy has come to a halt. The Economist
1996. China's economy will face a hard landing. The Economist
1998. China's economy's dangerous period of sluggish growth. The Economist
1999. Likelihood of a hard landing for the Chinese economy. Bank of Canada
2000. China currency move nails hard landing risk coffin. Chicago Tribune
2001. A hard landing in China. Wilbanks, Smith & Thomas
2002. China Seeks a Soft Economic Landing. Westchester University
2003. Banking crisis imperils China. New York Times
2004. The great fall of China? The Economist
2005. The Risk of a Hard Landing in China. Nouriel Roubini
2006. Can China Achieve a Soft Landing? International Economy
2007. Can China avoid a hard landing? TIME
2008. Hard Landing In China? Forbes
2009. China's hard landing. China must find a way to recover. Fortune
2010: Hard landing coming in China. Nouriel Roubini
2011: Chinese Hard Landing Closer Than You Think. Business Insider
2012: Economic News from China: Hard Landing. American Interest
2013: A Hard Landing In China. Zero Hedge
2014. A hard landing in China. CNBC
2015. Congratulations, You Got Yourself A Chinese Hard Landing. Forbes
2016. Hard landing looms for China. The Economist
2017. Is China's Economy Going To Crash? National Interest
2018. China's Coming Financial Meltdown. The Daily Reckoning.
2019 China's Economic Slowdown: How worried should we be? BBC
2020. Coronavirus Could End China's Decades-Long Economic Growth Streak. NY Times

=========

source: b
https://www.moonofalabama.org/2020/05/this-illusion-is-alive-and-well.html#more

Godfree Roberts , says: Website Show Comment May 19, 2020 at 11:26 pm GMT
Chinese strategists like Liu He publicly acknowledge that epidemics can catalyze geopolitical changes.

Right now, China is leading the vaccine race and has developed an antibody treatment for Covid-19 that should be ready this year.

If development is successful and if it donates the cure to the world as Xi promised and if WHO's investigation shows China is not the source of the virus, and if China's economy is firing on all cylinders in November, it's game over: 3-0 China.

I put the odds of that conjunction at 2:1.

FB , says: Website Show Comment May 20, 2020 at 4:28 am GMT
@d dan LOLOLOL

You gotta love these headline fails I mean how is it even possible to be so spectacularly WRONG about everything time after time after time ?

Folks if you want to know why the US is screwed, it's because the same kind of geniuses that write these headlines are in charge of EVERYTHING

One day these people will be studied by psychologists dealing with MASSIVE DELUSION

anon [161] Disclaimer , says: Show Comment May 20, 2020 at 4:39 am GMT
@Godfree Roberts Do you have any odds on Trump v. Biden?
vot tak , says: Show Comment May 20, 2020 at 4:54 am GMT
Interesting article by Escobar. If one cares to notice, this anti-China cold war is a neocon based aggression. The primary movers of it are mostly neocons or the sorts who follow the neocon lead. China is one country the zionazi-gays have not been able to dominate. Coupled with China's economic rise and appeal to developing countries, these zionazi oligarchs are going apeshit trying to bring China down. In addition to other articles referenced in the article, see also this Global Time report:

Chinese ridicule Trump's China 'cut-off' threat

https://www.globaltimes.cn/content/1188437.shtml

"Americans will suffer

[MORE]
"Again! Trump is talking nonsense." Trump seems to be losing his mind right now. Even he has such crazy ideas of cutting ties with China, US politicians, businessmen and Americans would not allow him to do so, Xin Qiang, deputy director of the Center for US Studies at Fudan University, told the Global Times.

He noted that Trump is bluffing and acting tough toward China to win more support. Fox News, which has been regarded as Trump's defender and is notorious for a lack of professionalism, is also making eye-catching news to draw attention.

Jin Canrong, the associate dean of Renmin University of China's School of International Studies in Beijing, told the Global Times on Thursday that Trump made very irresponsible and emotional remarks in the interview.

"The China-US relationship is the most important bilateral relationship in the world and involves huge interests of the two countries, as well as the rest of the world. Therefore, it is not something he can cut off emotionally," Jin said.

"If the US unilaterally cuts off ties, the American people will pay a heavier price than us, because China's domestic market is huge and 75-80 percent of Chinese manufacturers are supplying China's market, and the 2 to 5 percent that supply the US can also be absorbed by the domestic market," he noted.

China has nothing to be afraid of as "in the past, we didn't solve the Taiwan question because we wanted to maintain the China-US relationship, and if the US unilaterally cuts it off, we can just reunify Taiwan immediately since the Chinese mainland has an overwhelming advantage to solve this long-standing problem."

"Trump is like a giant baby on the brink of a meltdown as he faces tremendous pressure due to massive failures that caused such a high death toll," Shen Yi, an expert from Fudan University, told the Global Times. "It's like someone who wants to show his guts when he passes by a cemetery in midnight. He needs to shout to give himself the courage," he said.

Shen also noted that the American companies and industries would suffer the most severe consequences, because the supply chain has been integrated with China.

"The Chinese public would only take such bluffing as a joke," Shen said, adding that there has been no US president in the history who has made such a ridiculous statement against China, not even during the Cold War.

Yuan Zheng, a research fellow at the Chinese Academy of Social Sciences (CASS), said he could not even remember any US leader who took a similar action. "His flip-flop rhetoric is unprecedented, but we need to take a look at whether Trump will take real action," he said, noting that there is no need to pay attention to claims that are unrealistic and meaningless.

"For Trump, fantasy is power; bluffing is power, so he might use the future of his country to gamble with China. Although China always believes cooperation is the only right choice for the two countries to solve the problems together, if the US unilaterally and irrationally chooses all-out confrontation, China also needs to be prepared."

Change that Matters , says: Show Comment May 20, 2020 at 5:11 am GMT
@Godfree Roberts China's economy won't be firing on all cylinders by November, but the important parts of it will be. The manufacturers I talk to have weathered the worst of it, and their order books for Q4 are more or less back to what they were in January (or at least healthy enough to prevent soft skill losses). Many are upbeat about the future. (Not all of them will survive, and the ones that die probably should have done so years ago.)

Compare this to the rest of Asia (Bangladesh, Pakistan, India, Cambodia, Myanmar, and others): they are a mess. Bangladesh put all its eggs in the huge volume low quality basket and will now pay a fatal price. Pakistan was dead before corona, and is now in a manufacturing death spiral. India has the capacity to succeed, but is hamstrung by a caste-based barbarism that has jettisoned all pretense of decency by throwing migrant workers in the informal economy to their deaths. This will not be forgotten and I predict years of trouble. The others only have a manufacturing sector because the Chinese moved their factories there. Vietnam has some chance, and should be a big winner as China moves out of low- to middle-end manufacturing.

Countries in South America have lost their opportunity. China passed them by years ago. It's a tragedy, but they really have themselves to blame for it. And Africa, the last frontier, is already dominated by China (15 years ago I'd bump into Chinese businessmen who'd ship a 40-foot container of – 'insert any product you can think of' – to some back of beyond place in Africa and refuse to come home until everything was sold). They've moved up the ladder since then. Ethiopia, the fastest-growing economy on the continent, is essentially an industrial zone for Chinese manufacturing.

Australia has become a mine/farm for China. New Zealand and Canada likewise, and a nice place to send your teenagers to get educated and perhaps for retirement.

The EU, led by Germany, will be back on track soon. The winners here should be the former USSR countries, with low labor costs and strong soft skills. With EU companies wanting to bring the supply chain closer to home, this is their moment. If they screw it up, they will spend another 30 years wondering what went wrong. I hope they won't, but if you spend any time working with these people you know they often fail at the final hurdle (as though on purpose – the psychology of self-destruction is their Achilles heel).

It's China's game to lose. And quite frankly, at this point, I don't see how. This has been in the making since the late 70s. Perhaps earlier. I admire them for their intelligence, their work ethic, their organizational capacity, their can-do spirit, and – yes – their creativity (if you think China is Japan in the 60s, you need to spend some serious time with younger Chinese in China).

The Chinese problem is, of course, its culture of responsibility avoidance. But even with this issue, they are on track for a knockout victory. Most people in the West have no idea what going on, which is exactly how You Know Who likes it.

I have no intention of letting my tribe be overrun by Chinese. But I have enough experience to know they're smarter than my tribe, and it would be a wise thing to start thinking more strategically and tactically about how to carve out a space in a new world most people are unable to imagine (which is less than 10 years away).

Weston Waroda , says: Show Comment May 20, 2020 at 5:19 am GMT
@Godfree Roberts

The center of gravity of global economic power keeps moving, inexorably, toward Asia.

it's game over

While the U.S. spent recent decades policing the world in pointless wars, China was about the business of building an infrastructure in which all roads lead to Beijing, railroad cars and boatloads of wealth. Just keep it coming, folks. Those roads and railroads and shipping are linking nothing less than Eurasia, Sir Halford's World Island. It took this coronavirus to show the imperial subjects that the Empire is naked and that China had already surpassed it economically several years ago. It seems like it really is game over. I'm sad in a way, but I would rather have a normal country than a hegemon; that is, if normalcy is still a possibility.

Bronze Age Persecutor , says: Show Comment May 20, 2020 at 5:35 am GMT
What about the biggest hybrid war going on since centuries ago: jews (including crypto-jews, hybrids and minions) versus everybody else?
The chinese had the full cooperation of diaspora jews (and their sayanim network) and israelis. Specially the Chabad Lubavich.
Miro23 , says: Show Comment May 20, 2020 at 6:09 am GMT
From the referenced Global Times article, the US attack on Huawei (with its 5G leadership + NSA proof encryption ) is at the heart of the story:

Based on Global Times sources, if the US further pinches Chinese telecommunication giant Huawei by blocking companies such as TSMC from providing chips to the company, China will carry out countermeasures, such as including certain US companies into its list of "unreliable entities," imposing restrictions on or investigating US companies such as Qualcomm, Cisco and Apple, and suspending purchases of Boeing aircraft.

The US would lose this fight. Apple for example manufactures in China with only a small percentage of the sales price staying in China. If Apple manufacturing is shut down then Apple is the big loser. They're already trying to move manufacturing to India but that's not going to work.

We must be clear that coping with US suppression will be the key focus of China's national strategy. We should enhance cooperation with most countries. The US is expected to contain China's international frontlines, and we must knock out this US plot and make China-US rivalry a process of US self-isolation.

China has plenty of alternative markets. US corporations mostly only sell to the US using (now very sophisticated) Chinese manufacturing. Take this away, and Apple for example, have no alternative supplier for the volumes, quality, sub-contractor network and export infrastructure required.

General Qiao dismisses the possibility that Vietnam, the Philippines, Bangladesh, India and other Asian nations may replace China's cheap workforce: "Think about which of these countries has more skilled workers than China. What quantity of medium and high level human resources was produced in China in these past 30 years? Which country is educating over 100 million students at secondary and university levels? The energy of all these people is still far from being liberated for China's economic development."

True.

This will imply a concerted offensive, trying to enforce embargoes and trying to block regional markets to Chinese companies. Lawfare will be the norm. Even freezing Chinese assets in the US is not a far-fetched proposition anymore.

If the US steals the $ trillions China has invested in US treasuries, then the US dollar also forfeits its claim to be the world reserve currency (safe place to hold international trade balances).

Still, scores of nations are being asked, bluntly, by the hegemon to position themselves once again in a "you're with us or against us" global war on terror imperative.

9/11 was fakery pumped up by the MSM to target Iraq/Iran and Covid-19 is more of the same – this time targeting China. European states are getting tired of this game. For example they were all dragged into supporting the Venezuela CIA coup that fizzled, and are now trying to disentangle from it.

General Qiao counsels, "Don't think that only territorial sovereignty is linked to the fundamental interests of a nation. Other kinds of sovereignty – economic, financial, defense, food, resources, biological and cultural sovereignty – are all linked to the interests and survival of nations and are components of national sovereignty."

If the US public look carefully at General Qiao's list they will realize that they have already lost more than 50% of these sovereignties.

Anon [392] Disclaimer , says: Show Comment May 20, 2020 at 6:10 am GMT
" General Qiao dismisses the possibility .. India and other Asian nations may replace China's c: "Think about which of these countries has more skilled "

Everyday US. news are amplifying the bipartisan chorus against China . India is begging for favors from USA while serenading USA with reinforcing American position.

India is stealing land from Nepal and Indian media thinks that ultranationalist of Nepal are to blame for questioning Indian stance .

China is under a real threat of concerted attacks by the US 's opportunistic vassals. There will be a seismic change affecting the alliances and the future .
Can China persuade Nepal Bangladesh Pakistan Sri Lanka Afghanistan Iran and Myanmar to work together and persuade them move out of India's hegemony ?.

Natt , says: Show Comment May 20, 2020 at 6:42 am GMT
Nice fluff piece. China is fucked. Demographically, economically and militarily.
Carlos22 , says: Show Comment May 20, 2020 at 7:06 am GMT
They are probably looking past Trump as they think he may not get back in.

Nov is just a few months away.

The question is what will the democrats do?

Not that I particularly want that of course.

carlusjr , says: Show Comment May 20, 2020 at 7:48 am GMT
It's always astounding to read a geopolitical analysis by a journalist who completely ignores the climate pollution crisis with it's impending effects overhanging every strategy any state may envision to dominate the planet. It's as if the writer lives in an imaginary world devoid of nature, along with his supposed expert sources and well placed powerful state movers and shakers. This is delusional. China's cheap forced labor, making more crap for the planet's shrinking population of affluent consumers, competing with other countries with equally desperate workers. Countries competing to build the most dangerous bio-weapons in their unsafe, leaky level 4 labs. All the while the atmosphere is being polluted to the point of melting all the ice on the planet, the air is being degraded to the point of being disgusting to see and carcinogenic to breath, the fresh water supply is being depleted and polluted, the oceans degraded into radioactive chemical cesspools (soon to be a brown sludge inhabited by only bacteria, viruses and fungus), the land ceded with thousands of chemicals that have no purpose other than to kill. The existential threshold is within a few years. The geopolitical strategy of the US and China can be summarized as a strategy to kill all sentient life on the planet in order to have a some sort of imaginary strategic dominance. It is mass psychosis.
Biff , says: Show Comment May 20, 2020 at 7:58 am GMT
@anon

Do you have any odds on Trump v. Biden?

I've got 2 to 1 odds the voting machines will be electing Biden. They got this far didn't they?

paranoid goy , says: Website Show Comment May 20, 2020 at 8:13 am GMT
@foolisholdman Old man, don't be foolish, they all hate us human scum, and will gladly go to war, are at war. Remember how, in Catch 22, the opposing sides eventually saved a crap load of money by geting Milo de Milo to bomb their own airfields using his supply planes? Its already happening, us plebs are just in the way. In the end, the Protocols calls for one government ruling what's left of mankind "with an iron staff." I cannot tell you (yet) what Zion's hold on Beijing is, but be assured, "bring on the war" is the swill of Zion being lapped up by little globalist piggies trying to get to the trough.
People think 'hybrid warfare" is some kind of technological term. Zion chooses its words very carefully, and your first defence is your dictionary. The USAGE of words change with time, the MEANING is constant. Now let's go find them hybrids, before Bill Gates can create enough microcephalics to man his man/machine interfaced battle 'droids armed with depleted uranium bullets and virally-delivered vaccines.
paranoid goy , says: Website Show Comment May 20, 2020 at 8:28 am GMT
@carlusjr Pollution sure is an important issue, one of the most important of our time, yes. The subject matter at hand though, is mostly military, with economics as a condiment to explain the sour taste. China might be the one manufacturing plastic turds, but it is the so-called western media that is teaching your children the dire need to own the latest version of plastic poop. China would not bother with plastic poop, but you voted for people who decided China makes the best poo at the lowest cost and highest profit. Don't blame China for taking advantage of YOUR leadership's desire to disown YOU and hand your habitat over to those who "know how to make a profit" from your suffering, while dangling a piece of plastic poop in front of you, calling it ambition, and deplatforming you if you refuse their offer of improved turdiness.
But yah, now we know you hate pollution. Soon we will close down all the factories, and ban all cars, and only those on "official business" will be alowed on aeroplanes, and then you can breathe freely, as you stand in line, so the Special Agents can see if you have the Bill Gates vaccine licence to visit the plastic poop and soylent green depository that we used to call a supermarket.
Buzz Mohawk , says: Show Comment May 20, 2020 at 9:04 am GMT

A toxic racism-meets-anti-communism matrix is responsible for the predominant anti-Chinese sentiment across the US, encompassing at least 66% of the whole population.

No it isn't.

A hint of what is responsible is this from the same article:

"They have state of the art technology, but not the methods and production capacity. So they have to rely on Chinese production."

Our jobs, our industry, our hard-earned intellectual property, and our money have all gone to China. Our own leaders of industry and government are to blame for our predicament, but our anger at China is the result.

Funny this from the Chinese General Qiao:

"as a producing country, we still cannot satisfy our manufacturing industry with our own resources and rely on our own markets to consume our products."

No kidding, General. Your country built itself up by selling to us! We made you into our own rival. Thanks are in order, but instead you plot to weaken us.

Tor597 , says: Show Comment May 20, 2020 at 9:10 am GMT
Just wanted to point out the excellent concept of cultural sovereignty as something that is akin to territorial sovereignty.

Both are needed, but cultural sovereignty is ever more important to inoculate your citizens against globe homo.

Half-Jap , says: Show Comment May 20, 2020 at 9:14 am GMT
@Godfree Roberts Sounds like a man who has no understanding of the science regarding the matter, but so doesn't most of the world. Vaccine? Anti-body treatment? Does anybody know what they are and how they work (or doesn't) or mean? From those tests to those invasive ventilators, it shows me how people can easily be herded towards slaughter, for their safety, ofc, because "science." And just over a mild cold no less.
So much for China's brilliance; they are as dumb or brainwashed by 'accepted science' as the next moronic authority figure.
But exploiting the situation, that's something else that should be appreciated.
anon [232] Disclaimer , says: Show Comment May 20, 2020 at 9:17 am GMT
@Godfree Roberts

China is leading

Godfree, we will bury you and your beloved CCP.

Wood Stove , says: Show Comment May 20, 2020 at 9:42 am GMT
@carlusjr Ok Karen
Adûnâi , says: Show Comment May 20, 2020 at 9:45 am GMT

This will be China's contribution to ensuring vaccine accessibility and affordability in developing countries." The Global South is paying attention.

Do the underdeveloped (hate the PC term "developing") countries even want a vaccine? They have too many people anyway, any moderate dying will be an advantage to their societies. And another point is that the anti-vaxxer movement there might be on the rise, just as it is in America – remember how the Philippines government was watching a conspiracy video about evil Bill Gates? I have talked to anti-vaxxer people in my Ukrainian university!

"Containment" will go into overdrive. A neat example is Admiral Philip Davidson – head of the Indo-Pacific Command – asking for $20 billion for a "robust military cordon" from California to Japan and down the Pacific Rim, complete with "highly survivable, precision-strike networks" along the Pacific Rim and "forward-based, rotational joint forces" to counteract the "renewed threat we face from great power competition."

My prediction is the US goes into a civil war > the liberals start losing > the liberals invite the Chinese into California > the Chinese exterminate all Americans and get a large Lebensraum in the East.

Anon [397] Disclaimer , says: Show Comment May 20, 2020 at 9:50 am GMT
a Korea War pictorial. Nice.
It's long long ago since China made the last movie about Korea War. Too long ago that they are in black and white.
Recently someone is preparing for a new movie: The Chosin Lake.
I really hope it will be well made. I love war movies, especially the ones on historical big wars.
Just Passing Through , says: Show Comment May 20, 2020 at 10:13 am GMT
@Natt I think you are mistaken and are describing America.
Just Passing Through , says: Show Comment May 20, 2020 at 10:28 am GMT
@Buzz Mohawk I think the Western globalists though that China would be subservient to them and not get any funny ideas, this virus is just a cover for antipathy that was building up for years, similar to how the poor Jews being persecuted in Germany was used by propagandists to whip up Germany sentiment, because of German economic prowess.

Western thinking is dominated by this balance of power mentality, the same mentality such caused it to enter into two fratricidal wars not too long ago.

One can only hope this is good news for us, but I fear the globalists will just use this time to move manufacturing to other Third World countries instead of bringing it back home.

I agree that it was a huge mistake transferring our IP to China, they would simply have not got to this point if we hadn't. This is also why the Chinese are not taking any chances in their BRI, and are using Chinese labour instead of doing the more sustainable thing and training up local workers, that would mean a destruction of their market! Sadly this will continue, on top of the terrible policy of mass Third World immigration, we let Chinese into out top companies and research facilities, some of whom no doubt pass this information back home.

https://time.com/5596066/emory-fires-chinese-researchers/

In terms of realpolitik, I think it is very smart that China is using its diaspora as a fifth column.

padre , says: Show Comment May 20, 2020 at 10:36 am GMT
@Natt Do you know, how many times in their short history of about roughly 5000 years were Chinese doomed ?
Really No Shit , says: Show Comment May 20, 2020 at 10:50 am GMT
So the Global South is going to be "grateful" to China for coming up with vaccination after innudating it with the Chinese virus in the first place Pepe, lay of the Mezcal because is clouding your opaque thinking!
John Hagan , says: Show Comment May 20, 2020 at 11:07 am GMT
Let me make this clear. America is self-destructing. A malignant narcissist in charge and a man who cannot construct a sentence is an alternative. A stock market devoid of reality and a 1 percent devoid of conscience. Any remote consideration of the other 99 percent is soley based on profit. Any civilization that cannot reverse itself is doomed. China maybe a shortterm factor yet not a factor in the longer considerations.
Avery , says: Show Comment May 20, 2020 at 11:10 am GMT
@foolisholdman {Honestly, I don't see it.}

Agree.

{ .. and the US has no guts for one. Its industry has been hollowed out not just by outsourcing but by corruption as well.}

Even in the 50s when US industry was not hollowed out ( ran supreme) and China had no nukes, US was unable to defeat China in a ground war in Korea. Of course there was talk in US of using nukes against China (Gen. MacArthur), but cooler heads prevailed, arguing that, that would trigger USSR to use nukes too, resulting in world wide nuclear conflagration.

Now China has nukes, and delivery systems, and US cannot possible defeat China conventionally, so US will huff-and-puff, try to damage China financially, or steal its holdings in US*, but nothing will come out of it.

Sad that US screwed itself over the years so badly that it is in this predicament now.

_____________________________
* There has been semi-serious talk in US of just taking $ hundreds of billions of Chinese holdings in US as payment for ' damages' China has supposedly caused US by Covid-19.

Big Daddy , says: Show Comment May 20, 2020 at 11:28 am GMT
All this big nation state fluff stinks today as it did when the first two Western ones, England and France had a 100 Years War and it has stunk throughout history.

We humans are born naked, helpless, and totally ignorant. We also have an evil streak in us; vide Adam and Eve. And as Shakespeare stated we must consign ourselves to a willing death each eve or we die. We are so haughty yet the first thing we must do upon wakening from our nightly death is evacuate waste.

We have never respected Nature. Now we spray aluminum and plastic microns in the upper atmosphere which we all breathe as they fall and have virtually destroyed the ozone layer and the biosphere. We live in 1984 right now!

True libertarianism which is no aggression against person or property and backed up by cheap, Natural Law arbitration courts works. It is that or sayonara humans.

Realist , says: Show Comment May 20, 2020 at 11:42 am GMT
@Natt

Nice fluff piece. China is fucked. Demographically, economically and militarily.

Is that you Trump?

You're new around these here parts aren't you boy?

Parfois1 , says: Show Comment May 20, 2020 at 11:45 am GMT
@foolisholdman

My reasoning is simple, maybe too simple. The Chinese will not start a shooting war and the US has no guts for one.

You may be right about the Chinese (their government looks after 1,3 billion people) and that the US has no guts. But what is the "US"? If you mean the (mostly Jewish) ruling cabal and their goyim political clowns and puppets, you have no reason to be so sanguine about the "no guts". It's not their guts that will be on the line, for they will be quite happy so sacrifice millions of the plebes for the greater good of Israel and rebooting the "economy". War devastations (and pandemics) are the greatest source for immiserating and culling the masses and channeling wealth to the banksters.

Facing the demise of the Jewish-led hegemony through its PNAC's "full-spectrum dominance" – and what that could do to the SHITIS (shit-state of Israel) – it is reasonable (in their twisted minds) to step to the brink and beyond. Besides, the most recent great wars (the greatest carnages in the world's history) were not intended to end the way the warhawks wanted (neither Hitler not Chamberlain wished the destruction of country or empire) but the power dynamics unleashed by geopolitical gamesmanship suppresses reason.

JohnPlywood , says: Show Comment May 20, 2020 at 11:49 am GMT
@paranoid goy Non-CO2 pollution is a non-issue. It was far worse in the USA and China 50 years ago (air and water), and in Europe/East coast USA over 200 years ago. Wildlife populations are also rebounding. Every time I hear some retard complaining about pollution on the internet, I want to reach through the monitor and pepper spray them.
bigduke6 , says: Show Comment May 20, 2020 at 11:52 am GMT

A toxic racism

You're a "toxic racist" cries the yellow supremacist as he shills for Beijing

GeeBee , says: Show Comment May 20, 2020 at 12:05 pm GMT
@Natt In other news, the USA's Ministry of Plenty has announced that the weekly chocolate ration is to be increased from 70 gms to 40 gms
ld , says: Show Comment May 20, 2020 at 12:19 pm GMT
@d dan The American Dream is Live and well.

If they keep saying it like a mantra maybe it will come true.

Trust the media.

ld , says: Show Comment May 20, 2020 at 12:25 pm GMT
@anon They say that Biden is Israel's pick so it will likey be Biden.
His senility will make him easier to control than Trump.
Desert Fox , says: Show Comment May 20, 2020 at 12:37 pm GMT
The zionists are in control of China and the ZUS and Russia and Europe and India and everywhere in central and South America, and the fact is the zionist control was proven by every country that forced their people into the forced lockdown, using this scam of a coronavirus as an excuse.

These wars are a deversion, as the zionist install their global prison.

AWM , says: Show Comment May 20, 2020 at 1:16 pm GMT
"When will the Communist "clenched fist" attack America?"

Stanislav Lunev: "As soon as they can't steal from you anymore."

Guess what folks, the "Combloc Flu" was the first strike.

450.org , says: Show Comment May 20, 2020 at 1:31 pm GMT

General Qiao dismisses the possibility that Vietnam, the Philippines, Bangladesh, India and other Asian nations may replace China's cheap workforce: "Think about which of these countries has more skilled workers than China. What quantity of medium and high level human resources was produced in China in these past 30 years? Which country is educating over 100 million students at secondary and university levels? The energy of all these people is still far from being liberated for China's economic development."

Once again, I must caveat this with the proclamation I was not and I am not an advocate for Obama's TPP. The reason I'm not an advocate is for environmental purposes. I believe growth is killing the living planet and soon enough will extinct humans as well as many, most even, other species on the planet. The TPP did nothing to address growth and instead enabled it further by enhancing global trade versus diminishing it.

That being said, the TPP was a strategy to contain China's growing influence. It was intended to put global trade eggs in many baskets and not just in the basket labeled China. What does Trump do? He puts all the trade eggs in China's basket under the aegis/rubric of repatriating manufacturing to America. He put a knife in TPP and killed it but he never brought manufacturing back to America. Now America is truly good and fucked. Over a barrel. No options. Can you believe this moron and the cabal that's using him as a foil? Like I said before, if Trump didn't exist, the CCP would have to invent him because more than any other power player, be it Russia or Saudi Arabia or Israel, Trump has been extremely beneficial to China. Under Trump's watch, China is now the most powerful country in the world. Because of Trump, China is now the leader of the world. America, finally, has been knocked from its perch just as England was over 100 years prior. Once knocked from the perch, there is no regaining the status you once enjoyed. I suspect that within five years the dollar will no longer be the world's currency. When that happens, it's lights out for America FOR REAL. All this banter is whistling past the graveyard. What's done is done.

https://www.japantimes.co.jp/opinion/2015/06/21/commentary/japan-commentary/chinas-the-reason-why-u-s-needs-the-tpp/#.XsUuMS-z17M

House Democrats who've been interfering with President Barack Obama's ability to negotiate the Trans-Pacific Partnership are missing something very important: The trade deal isn't primarily significant because of the economy. It matters because it's part of the broader American geostrategic goal of containing China -- which pointedly hasn't been invited to join the TPP.

In the new cool war, China's rising economic influence is giving it greater geopolitical power in Asia. The TPP is, above all, an effort to push back on China's powerful trade relationships to reduce its political clout. By weakening Obama's ability to pursue it, congressional Democrats had been unintentionally weakening the U.S. side in the cool war.

In all this, China is using its close economic relationship with its neighbors as leverage to build its geopolitical position. Its ultimate goal is to displace the U.S. as the regional hegemon. President Xi Jinping's slogan of the "Chinese dream" requires nothing less.

The TPP aims to reduce some of China's geopolitical resurgence by damping down the extent of China's regional trade dominance. China itself has a proposed regional trade alliance, the Regional Comprehensive Economic Partnership, that would include 16 members and exclude the U.S. Australia, Japan and South Korea are all involved in negotiations to become members. The TPP is a direct, competitive counterpart to the RCEP.

Fyi, the following cartoon is per China Daily , a publication owned and run by the CCP. It's favorable to Trump. It's clear by virtue of Trump's cozy relationship with Putin and Xi that Trump is a communist in capitalist clothing. He is a communist trojan horse in the oval office. But he's even more than that. He has many hats. He's a tool, a self-promoting front man, for any tyrant or tyranny that expands his brand masquerading as a man of the people. As if. He's a man, albeit an insane moron, of the extractive elite and the extractive elite are transnational and transcultural. The extractive elite are a nation and culture unto themselves and the rest of us are their slaves on this global plantation.

Astuteobservor II , says: Show Comment May 20, 2020 at 1:34 pm GMT
@Weston Waroda Once reserved currency status of dollar is over n done with, there would be zero need for the huge military budget. That is the silver lining of this whole thing. The wars might finally stop. But living standards will take a hit from the devaluation of the dollar. But but, Jobs would return through that weakened dollar as off shoring jobs would no longer make sense. And just maybe, our political class might finally focus on domestic issues and improve the country after 4 decades of stagnation.
Astuteobservor II , says: Show Comment May 20, 2020 at 1:38 pm GMT
@Miro23 Apple follows every single law in China. Apple makes a lot of money in China, but also pays alot of taxes. I highly doubt it would be a target of retaliation. But other companies are fair game. Just something I noticed.
450.org , says: Show Comment May 20, 2020 at 1:47 pm GMT
@carlusjr Spot on. Humans are drowning in their own filth. There's an adage, "don't shit where you eat." Humans invented the saying but apparently don't abide by it and in fact zealously defy it. Here we are. It will be one pandemic after another from now until human is no more. Rapid pace, like automatic weapon fire. The center cannot hold and is not holding. Civilization is going down. Will the Samson Option be utilized? Man's last act? Destroy the planet entirely if he can't have it entirely? My bet is this is how it will go down. All you have to do is extrapolate the curve.
Sick of Orcs , says: Show Comment May 20, 2020 at 1:51 pm GMT
As long as America's Most Important Ally™ is safe
Cowboy , says: Show Comment May 20, 2020 at 1:54 pm GMT
Another bubblegum pop song from Lil Peepee and the chinks
Just Passing Through , says: Show Comment May 20, 2020 at 1:59 pm GMT
@bigduke6 It is quite obvious why they are doing, they are using Europeans' own liberal ideology against them. In today's Western world, nothing is worse than being a "racist" (except maybe, just maybe a paedophile necrophiliac, but even that is a close one) as such they will use these terms to beat down Europeans. Erdogan recently likened Greece to "Nazis", due to their brave defiance to Third World invaders.

https://www.theguardian.com/world/2020/mar/11/erdogan-compares-greek-border-crackdown-to-nazi-atrocities

As if they genuinely give a shit about Nazis, a particularly European obsession due to decades of brainwashing by the Jewish media elite. Even if one believes the textbooks in relation to Nazi atrocities, the fact is that such things are normal for history. No other people's beat themselves down over bad stuff they've done, hell, the Mongolians have erected a big statue of Genghis Khan, one of the greatest mass murderers in history!

Hegar , says: Show Comment May 20, 2020 at 2:07 pm GMT
Extremely misleading headline. Since the Asia Times story is actually about economic and political sovereignity – always a big issue for China ever since the Eight Powers carved up the nation in the past: Germany, Japan, Russia, Britain, France, Italy, Austria-Hungary, and the U.S.

It doesn't speak about warfare against the U.S. It speaks about meeting a threat from the U.S. It does speak of taking Taiwan, though by avoiding outright warfare. This is not something we should desire, but it is not war against the U.S., as the misleading headline is intended to make people believe.

As usual most of the rubes will only read the headline and look at the pictures, maybe skim through the text a bit, before typing out an angry post based on whether they like or dislike whatever nation is mentioned. Much like cruzbots and Bush lovers use Breitbart comments to screech against Iran and praise Israel. No facts needed.

[May 20, 2020] China Updates its 'Art of (Hybrid) War'

Notable quotes:
"... An example, referring to Covid-19, is the capacity to produce ventilators: "Out of over 1,400 pieces necessary for a ventilator, over 1,100 must be produced in China, including final assembly. That's the US problem today. They have state of the art technology, but not the methods and production capacity. So they have to rely on Chinese production." ..."
"... The gold standard expression has come in a no-holds barred Global Times editorial : "We must be clear that coping with US suppression will be the key focus of China's national strategy. We should enhance cooperation with most countries. The US is expected to contain China's international front lines, and we must knock out this US plot and make China-US rivalry a process of US self-isolation." ..."
"... An inevitable corollary is that the all-out offensive to cripple Huawei will be counterpunched in kind, targeting Apple, Qualcom, Cisco and Boeing, even including "investigations or suspensions of their right to do business in China." ..."
"... So, for all practical purposes, Beijing has now publicly unveiled its strategy to counteract U.S. President Donald Trump's "We could cut off the whole relationship" kind of assertions. ..."
"... The politicians controlling US foreign policy are leading us straight into the 19th century, with their updated gunboat diplomacy ..."
May 20, 2020 | consortiumnews.com

Dancing with Wolves

The bulk of his argument concentrates on the shortcomings of U.S. manufacturing: "How can the US today want to wage war against the biggest manufacturing power in the world while its own industry is hollowed out?"

An example, referring to Covid-19, is the capacity to produce ventilators: "Out of over 1,400 pieces necessary for a ventilator, over 1,100 must be produced in China, including final assembly. That's the US problem today. They have state of the art technology, but not the methods and production capacity. So they have to rely on Chinese production."

... ... ...

Gloves Are Off

Now compare General Qiao's analysis with the by-now-obvious geopolitical and geo-economic fact that Beijing will respond tit for tat to any hybrid war tactics deployed by the United States government. The gloves are definitely off.

The gold standard expression has come in a no-holds barred Global Times editorial : "We must be clear that coping with US suppression will be the key focus of China's national strategy. We should enhance cooperation with most countries. The US is expected to contain China's international front lines, and we must knock out this US plot and make China-US rivalry a process of US self-isolation."

An inevitable corollary is that the all-out offensive to cripple Huawei will be counterpunched in kind, targeting Apple, Qualcom, Cisco and Boeing, even including "investigations or suspensions of their right to do business in China."

So, for all practical purposes, Beijing has now publicly unveiled its strategy to counteract U.S. President Donald Trump's "We could cut off the whole relationship" kind of assertions.

A toxic racism-meets-anti-communism matrix is responsible for the predominant anti-Chinese sentiment across the U.S., encompassing at least 66 percent of the whole population. Trump instinctively seized it – and repackaged it as his re-election campaign theme, fully approved by Steve Bannon.

The strategic objective is to go after China across the full spectrum. The tactical objective is to forge an anti-China front across the West: another instance of encirclement, hybrid war-style, focused on economic war.

This will imply a concerted offensive, trying to enforce embargoes and trying to block regional markets to Chinese companies. Lawfare will be the norm. Even freezing Chinese assets in the U.S. is not a far-fetched proposition anymore.

Every possible Silk Road branch-out – on the energy front, ports, the Health Silk Road, digital interconnection – will be strategically targeted. Those who were dreaming that Covid-19 could be the ideal pretext for a new Yalta – uniting Trump, Xi and Putin – may rest in peace.

"Containment" will go into overdrive. A neat example is Admiral Philip Davidson – head of the Indo-Pacific Command – asking for $20 billion for a "robust military cordon" from California to Japan and down the Pacific Rim, complete with "highly survivable, precision-strike networks" along the Pacific Rim and "forward-based, rotational joint forces" to counteract the "renewed threat we face from great power competition."

Davidson argues that, "without a valid and convincing conventional deterrent, China and Russia will be emboldened to take action in the region to supplant U.S. interests."

... ... ...

From the point of view of large swathes of the Global South, the current, extremely dangerous incandescence, or New Cold War, is mostly interpreted as the progressive ending of the Western coalition's hegemony over the whole planet.

Still, scores of nations are being asked, bluntly, by the hegemon to position themselves once again in a "you're with us or against us" global war on terror imperative.

... ... ...

For the first time in 35 years, Beijing will be forced to relinquish its economic growth targets. This also means that the objective of doubling GDP and per capita income by 2020 compared with 2010 will also be postponed.

What we should expect is absolute emphasis on domestic spending – and social stability – over a struggle to become a global leader, even if that's not totally overlooked.

... ... ...

Internally, Beijing will boost support for state-owned enterprises that are strong in innovation and risk-taking. China always defies predictions by Western "experts." For instance, exports rose 3.5 percent in April, when the experts were forecasting a decline of 15.7 percent. The trade surplus was $45.3 billion, when experts were forecasting only $6.3 billion.

Beijing seems to identify clearly the extending gap between a West, especially the U.S., that's plunging into de facto New Great Depression territory with a China that's about to rekindle economic growth


Zhu , May 20, 2020 at 00:34

"A toxic mixture of racism and anti-communism" sounds about right. The Chinese government is not submissive and the "Chinks" are getting too prosperous. That's bound to infuriate both elite and grass-roots Americans.

Drew Hunkins , May 20, 2020 at 00:34

"For the first time in 35 years, Beijing will be forced to relinquish its economic growth targets. This also means that the objective of doubling GDP and per capita income by 2020 compared with 2010 will also be postponed. "

Good, good, just wonderful. This will really endear the United States to the Chinese people.

All that the Chinese govt did for its people over the last 30 years is totally eliminate poverty, that's all. Gotta love how our Western mass media won't shut their mouths about this small achievement.

Drew Hunkins , May 20, 2020 at 00:15

"Those who were dreaming that Covid-19 could be the ideal pretext for a new Yalta – uniting Trump, Xi and Putin – may rest in peace."

Rest in peace, no doubt. Washington is all about unilateralism, period. This is the crux of the issue, the rapacious capitalist-imperialists who infest Wall St, the military contractors and corporate mass media want nothing to do with a multi-polar world. This could lead to putting the far east on a dangerous path with U.S. warships provocatively traversing the area.

gcw , May 19, 2020 at 21:08

The politicians controlling US foreign policy are leading us straight into the 19th century, with their updated gunboat diplomacy . Never a thought to the impending disaster of climate change and unparalleled social and environmental chaos, they dream instead of yet another Cold War (Yellow-Peril 2.0), all the time sustaining a gargantuan military establishment which is draining the life-blood from American society. The Covid-19 virus is just a warning to us: we have about 5% of the world's population, yet lead the pack in deaths from the virus. If this monumental display of incompetence doesn't wake us up, what will?

[May 20, 2020] The best argument I have read from the anti China camp has been that if China succeeds, US dollar will be kaput, living standard in the USA will tanked

May 20, 2020 | www.unz.com

,

Ann Nonny Mouse , says: Show Comment May 6, 2020 at 9:33 pm GMT
@utu ... He produces evidence, evidence in response to highly-coordinated anti-China propaganda, the mountains of belligerent lies that are all that remain today of the failed state the USA. Those lies plus its military killing millions all over the world, incessantly destroying or attempting to destroy states simply for being independent.

Enormous thanks to Godfree Roberts.

Realist , says: Show Comment May 6, 2020 at 10:49 pm GMT
@Astuteobservor II

The best argument I have read from the anti China camp has been that if China succeeds, US dollar will be kaput, living standard in the USA will tanked to shit levels compare to right now.

Why would China succeeding reduce our living standard?

Realist , says: Show Comment May 6, 2020 at 11:07 pm GMT
@Ron Unz

Well, American propaganda is certainly vastly superior to the Chinese variety

American propaganda is certainly more effective but that is because of the stupidity of most Americans.

Yes the video is accurate and that means the Chinese know us well much better than we know them.

Astuteobservor II , says: Show Comment May 6, 2020 at 11:13 pm GMT
@Realist If China succeeds, that means dollar as reserve currency is kaput. Without the reserved currency status, dollar will devalue by 50% or more. Living standard auto lowers by 50% or more.

[May 18, 2020] A new way to make America great

May 18, 2020 | www.moonofalabama.org

JC , May 17 2020 20:31 utc | 28

Just a thought: what if people like Gordon Guthrie Chang, Jennifer Zeng, Peter Navarro or even Maria Bartiromo suggest to the two dude Trump and Pompeo sending FBI, CIA agents or even national guard to American's rural areas, small isolate farming communities in Pennsylvania, Oregon ripping off every Huawei and ZTE hardwares 2G, 3G, 4G and maybe 5G if any, cell towers and replaced it with Ericsson and Nokia. Would it make America great again ?

[May 17, 2020] TSMC a Taiwan chip's foundry not permitted to sell any chips to Huawei

May 17, 2020 | www.moonofalabama.org

JC , May 17 2020 18:03 utc | 16

Almost every freaking day Trump and Pompeo bashing China including Huawei.. Not a day of peace without china bashing.

Days earlier ZeroHedge, SCMP and other media reported freaking Trump and Pompeo... no companies inside or outside USA can sell American software or technology items or chips made with USA properties or machines to Huawei.

Meaning TSMC a Taiwan chip's foundry not permitted to sell any chips to Huawei, TSMC has been the world's dedicated semiconductor foundry. "curtailing its chip supply, an escalation of its campaign against the Chinese company that may also hurt Taiwan Semiconductor Manufacturing Co."

"China has the most fab projects in the world.... 30 facilities planned, including 10/7nm processes, but trade war and economic factors could slow progress...... SMIC 's move would put it on par with some of its foreign rivals. In addition, SMIC has obtained $10 billion in funding to develop 10nm and 7nm. Semiconductor Manufacturing International Corporation (SMIC) is a publicly held semiconductor foundry company, and the largest in China.

"Wuhan Hongxin Semiconductor Manufacturing (HSMC), a logic IC foundry founded in late 2017, is gearing up for 14nm and 7nm process manufacturing eyeing to be China's most advanced contract chipmaker.....Shang-yi Chiang, the former executive VP and co-chief operating officer overseeing R&D for Taiwan Semiconductor Manufacturing Company (TSMC), will join a Wuhan-headquartered foundry in China. "<

[May 17, 2020] India can serve as the USA ally in US-china trade war

May 17, 2020 | astutenews.com

BRICS Is Broken

Gone are the "good 'ole days" of BRICS bonhomie when the Alt-Media Community used to sing the praises of this nascent trade bloc and portray it as a game-changing development in International Relations. Although promising on paper, BRICS was always destined to be disappointing due to the irreparable differences between India and China that were either downplayed or outright ignored by this organization's loudest advocates. The author has been consistently warning for over the past four years that " India Is Now An American Ally " after it clinched the Logistics Exchange Memorandum Of Agreement (LEMOA) with the US to allow the latter to use its military infrastructure on a case-by-case "logistical" bases. Since then, India has fully submitted to the Pentagon's "Indo-Pacific" strategy of empowering the South Asian state as a "counterweight" China, with even Russian Foreign Minister Lavrov loudly warning his country's strategic partner of the pitfalls of this scenario as recently as early January of this year while speaking at a conference in their country.

Modi's Military Madness

Alas, whether due to long-lasting ignorance of the situation, unchecked professional incompetence, and/or shadowy motives that can only be speculated upon, the majority of the Alt-Media Community still refuses to recognize these facts, though the latest developments pertaining to Indian-Chinese relations might finally cause them to reconsider their inexplicable stance of always "covering up" for New Delhi. India has recently clashed with China along the Line of Actual Control (LAC) in Indian-Occupied Kashmir 's Ladakh region and close to the Donglang Plateau (described as "Doklam" by India and thus widely reported upon with this name in the Western Mainstream Media and among the members of the Alt-Media Community sympathetic to New Delhi) near Sikkim where they had their infamous three-month-long standoff in summer 2017 (which threatened to repeat itself in 2018). So tense has the situation become in Ladakh that China reportedly flew several helicopters near the scene while India flew a few fighter jets, significantly upping the ante.

India's Attempt To "Poach" Chinese-Based Companies

The backdrop against which these clashes are transpiring is India's aggressive attempt to "poach" foreign companies from the People's Republic, which the author analyzed last month in his piece about how " India's Selective Embrace Of Economic Nationalism Has Anti-Chinese Motivations ". Of relevance, India has also set aside land twice the size of Luxembourg for such companies to exploit in the event that they decide to re-offshore from the East Asian state to the South Asian one.

This perfectly dovetails with Trump's " trade war " plans to encourage foreign companies to leave his country's rival and either return home or set up shop in a friendly pro-American country instead. Of note, India is also vehemently opposed to China's Belt & Road Initiative ( BRI ) behind the US on the basis that its flagship project of the China-Pakistan Economic Corridor ( CPEC ) traverses through territory that New Delhi claims as its own per its maximalist approach to the Kashmir Conflict . Obviously, the US couldn't have found a better ally than India to thwart China's economic plans.

The US Might Rule The WHO Via Its Indian Proxy

On the soft power front, India is slated to assume leadership of the World Health Assembly (WHA, the governing body of the World Health Organization, WHO) from Japan later this month, and it's already being widely speculated in Indian media that the country might be seriously considering taking the US' side in respect to investigating the WHO for its alleged pro-Chinese bias . Not only that, but India might even be receptive towards Taiwan's request to participate in the organization's meetings, the scenario of which has already concerned China so much that its embassy in New Delhi felt compelled to remind the Indian leadership that doing so would violate the One China principle. From the American perspective, this is an unprecedented opportunity for Washington to exercise proxy leadership of the WHO through its "junior partner" of India, which could add a speciously convincing degree of credibility to its anti-Chinese claims in an attempt to win back the many hearts and minds that it's lost to its rival throughout the course of World War C .

The Indo-American Hybrid War On China

Taken together, India is indisputably intensifying its American-backed Hybrid War against China as a sign of fealty to its new ally, especially considering that it's only officially been the US' " comprehensive global strategic partner " since Trump's landmark visit to the country a few months back in February and thus feels like it has something to prove. Both countries share the grand strategic goal of "containing" China, to which end they're working hand-in-glove with one another to carry out this concerted campaign against the People's Republic.

Building off of the idiom, the American hand is unquestionably controlling the Indian glove after Trump cracked the whip on Modi by forcing him to export hydroxychloroquine to the US last month, which asserted his country's dominance as India's neo-imperial master. Whether across the military, economic, or soft power domains, the US-Indian alliance is doing its utmost to create serious difficulties for China. With India now suspecting China of building an island off of its coast, ties will likely continue to worsen to the US' benefit.


By Andrew Korybko

Source: One World

[May 15, 2020] China Ready To Target Apple, Qualcomm, Cisco and Boeing in Retaliation Against US' Huawei Ban - Slashdot

May 15, 2020 | apple.slashdot.org

An anonymous reader shares a report: China is ready to take a series of countermeasures against a US plan to block shipments of semiconductors to Chinese telecom firm Huawei , including putting US companies on an "unreliable entity list," launching investigations and imposing restrictions on US companies such as Apple and suspending the purchase of Boeing airplanes, a source close to the Chinese government told the Global Times. The Trump administration on Friday moved to block shipments of semiconductors to Huawei from global chipmakers. The US Commerce Department said it was amending an export rule and the Entity List to "strategically target Huawei's acquisition of semiconductors that are the direct product of certain US software and technology," according to a statement on its website. "China will take forceful countermeasures to protect its own legitimate rights," if the US moves forward with the plan to bar essential suppliers of chips, including Taiwan-based TSMC, from selling chips to the Chinese tech giant, the source told the Global Times in an exclusive interview.


Brain-Fu ( 1274756 ) , Friday May 15, 2020 @02:58PM ( #60064610 ) Homepage Journal

All chips have backdoors. ( Score: 5 , Insightful)

Every hardware vendor has clear and strong incentives to bake backdoors into their hardware. The only difference is to whom they are loyal.

sehlat ( 180760 ) , Friday May 15, 2020 @02:20PM ( #60064454 )
Universal Rule of Economic Warfare ( Score: 1 )

Both sides lose ... BIG.

bodog ( 231448 ) writes:
Re: ( Score: 1 )

BIGLY. tftfy.

UnknowingFool ( 672806 ) , Friday May 15, 2020 @02:45PM ( #60064558 )
Re:Universal Rule of Economic Warfare ( Score: 3 )

Well people on both sides lose. The leaders on both sides do not lose as much. Concisely Put.

Alain Williams ( 2972 ) writes: < [email protected] > on Friday May 15, 2020 @02:31PM ( #60064502 ) Homepage
Is anyone surprised ? ( Score: 5 , Interesting)

China will also put a lot of money into making things that it has, up to now, obtained from the USA. It might take a few years, but China's government set up (ie one party always in power) means that it does not have to do things to an electoral cycle.

[May 14, 2020] The USA fake democracy vs inverted totalitarism with Chinese characteristics

Notable quotes:
"... Sad but true. We are all given our illusions. In US its the illusion of democracy which is a fake democracy cloaking our totalitarian reality. In China they give the people the illusion of moving towards socialism, a fake socialism to be sure, never mind all the billionaire party members (and they don't have universal health care either, its insurance based) .The people have long accepted the reality of totalitarianism so they are one step ahead. ..."
May 14, 2020 | www.unz.com

Pft , says: Show Comment May 14, 2020 at 6:41 am GMT

Sad but true. We are all given our illusions. In US its the illusion of democracy which is a fake democracy cloaking our totalitarian reality. In China they give the people the illusion of moving towards socialism, a fake socialism to be sure, never mind all the billionaire party members (and they don't have universal health care either, its insurance based) .The people have long accepted the reality of totalitarianism so they are one step ahead.

Since China doesn't have another party to blame they must blame external enemies like the US and we happily play along with tarrifs paid for by us dumb sheep who cry out in satisfaction "take that". Lol

A fake Cold War works for us too. Trump says we are in a race for 5G and AI/Robotics with China. We must win or all is lost to China. Social credit scores, digital ID and digital currency along with Total Information Awareness and Full Spectrum Dominance over the herd.

Health effects of 5G will be blamed on CoVID. Fake Science is a great tool. Scientists never lie, they can be trusted, just like Priests . They are the Priests of the New Technocratic World Order. Global Warming and COVID- We must believe. They say Vaccines and 5G are good for you, just like DDT and Tobacco were said to be Good by Scientists of another time. We must believe. Have Faith and you will earn social credit bonus points.

Reality is Fake Wrestling. Kayfabe all the way baby. Who is the face and who is the heel? We are free to choose. So who says we don't have freedom?

[May 14, 2020] If we discard xenophobia, China is not natural ally of the USA

But it was natural target of offshoring manufacturing during neoliberal globalization frenzy. Now the USA needs to pay the price for the betryal of its elite.
Notable quotes:
"... China is not a natural ally of the US. It was helped for decades as a counterweight to the USSR and that policy continued after the Cold War ended because the Western elite reaped vast profits from the entry of a billion Chinese into the world labour markets. We have created a monster of arrogance and economic dynamism that refuses to take measures against novel coronaviruses springing out of their peculiar eating and aphrodisiac medicine habits. ..."
May 14, 2020 | www.unz.com

Sean , says: Show Comment May 14, 2020 at 6:22 am GMT

The USA is under no obligation whatsoever to be friendly to Russia, and especially not to China which rather owes America for everything and has repaid it in death. Capital and technology has flowed to China from America for decades. In return they sent profit to Wall St, Wuhan made Fentanyl the death of choice for whites desperate as a result of the policies that made China did so well out of, and now they send us a deadly epidemic.

RussiaGateRussiaGateRussiaGateChinaDidItChinaDidItChinaDidItIranIsEvilIranIsEvil

China is not a natural ally of the US. It was helped for decades as a counterweight to the USSR and that policy continued after the Cold War ended because the Western elite reaped vast profits from the entry of a billion Chinese into the world labour markets. We have created a monster of arrogance and economic dynamism that refuses to take measures against novel coronaviruses springing out of their peculiar eating and aphrodisiac medicine habits.

It was coffee made from beans taken from civet faeces that led to the SARS-CoV bat/ civet recombination virus and the 2002 Sars outbreak, during which China lied about what was happening as they subsequently admitted. The SARS-CoV 2 receptor-binding domain from pangolins ( world's most trafficked animal, is in demand by Chinese as a male enhancer) and it recombined with a bat virus was hundreds of times more effective a pathogen in humans than the one from bat–civet recombination of eighteen years ago.

But that is not what the Chinese said. Researchers in Wuhan on December 31st told the world about the Wuhan disease having been identifies as a coronavirus but said, 'It's not highly transmissible'. As late as the the 24th of January, Doctor Fauci w gave a briefing for senators in which he said there was very little danger to the US from the Wuhan disease. Later that day he repeated that opinion at a press conference.

So China said it was not infectious between people and there was nothing much to worry about. When Trump began to restrict travel into the US from China on the 31st January there was uproar about this supposed further evidence of his xenophobia,.

[May 14, 2020] How Beijing will respond to the anti-China fervor sweeping the US by Sam Bresnick & Lucas Tcheyan

May 13, 2020 | responsiblestatecraft.org

President Trump has used his executive power to take a hatchet to 40 years of America's China policy. His administration has called for a "whole-of-government" approach to counter Beijing's unfair economic practices, initiated a damaging trade war, banned Chinese telecommunication equipment from domestic networks, and implemented stringent regulations to vet Chinese investments in sensitive industries.

In a novel development, the administration has begun coaxing individual states to aid the federal government in its anti-China fervor. Speaking to the National Governors Association in early February, Secretary of State Mike Pompeo warned that "competition with China is not just a federal issue It's happening in your states with consequences for our foreign policy, for the citizens that reside in your states, and indeed, for each of you."

The administration's enlisting of states in the broader U.S.-China competition has significant economic implications for subnational actors. Increasingly hawkish incumbents, as well as congressional candidates, could provoke economic pushback from Beijing. Many of these officials have bought into the Republican Party's strategy of carrying out an " anti-China assault " on the campaign trail, scapegoating Beijing for the coronavirus outbreak in the United States instead of acknowledging the Trump administration's central role in the country's failure to prepare itself properly.

While Washington is correct to scrutinize Chinese investments in sensitive technologies and pursue reciprocal trade and economic relations, politically motivated, opportunistic anti-China rhetoric could threaten individual states' cooperation with China, one of the few remaining productive aspects of the bilateral relationship. Indeed, as Hu Xijin, editor of Chinese tabloid Global Times, tweeted , "Beijing is already preparing to take necessary punishment measures against some members of the US Congress, the state of Missouri, and relevant individuals and entities."

China-skeptic sentiment in the U.S. government and on the campaign trail is not a new phenomenon , but the coronavirus pandemic and resultant economic crisis have afforded many politicians the cover to push hawkish policies. Some of their proposals would benefit the United States, including reducing U.S. reliance on Chinese-made pharmaceutical products , a motion broadly backed by both Republicans and Democrats. But many of their arguments are politically motivated and risk further inflaming U.S.-China tensions and painting Beijing as an enemy, à la the Soviet Union during the Cold War, rather than a competitor.

Senator Tom Cotton made waves last month by arguing that U.S. universities should not accept Chinese STEM students given the chance they might return home and use their training to drive China's scientific advances. Senators Josh Hawley and Marco Rubio have also joined the fray, advocating that the United States reduce its reliance on China and punish the country for failing to contain the COVID-19 outbreak. The attorneys general of Missouri and Mississippi have filed lawsuits seeking damages from Beijing for the coronavirus.

Incumbents, however, are not the only ones wagering their political futures on China. Senate candidates in Tennessee , Arizona , and Alabama , among other states, have adopted overtly hawkish stances toward Beijing, blaming China for the pandemic, painting their opponents as soft on the country, and using the China threat to push anti-immigration policies .

Amid Washington's anti-China turn, preserving cooperation at the state level will be critical to maintaining any semblance of productive bilateral ties going forward. As Los Angeles Deputy Mayor of International Affairs Nina Hachigian said at a Brookings panel last year, "cities and states can take advantage of the trade, investment, students, climate change cooperation, culture, and tourism China offers without really having to balance the broader national security, geopolitical, and human rights questions."

It is no coincidence that three of the past four U.S. Ambassadors to Beijing previously served as governors of states with deep links to China: Terry Branstad (Iowa), Gary Locke (Washington), and John Huntsman (Utah).

The aforementioned politicians may be fighting to relocate supply chains outside of mainland China and decouple vast sections of the two countries' economies, but their rhetoric may also lead Beijing to move Chinese-owned businesses out of the United States or cut imports from the country. Despite bilateral tensions, there is clear evidence that Chinese investments in the United States can be beneficial. In the midst of the trade war, a Chinese takeover of a failing paper mill in Maine helped revitalize a local community. In Tennessee, Chinese investments in automotive parts , mattresses , and porcelain manufacturing have benefited the state's economy. There is a real risk that Chinese companies, seeing both politicians' and the American public's growing distaste for China, could simply up and leave.

A more likely outcome of the growing antagonism, however, is for Beijing to engage in economic coercion , which it uses to try to force nations, companies, and officials into doing its bidding and punish those who do not. The Chinese Communist Party (CCP) has developed a wide-ranging and flexible toolkit of coercive measures that it has used strategically throughout the world.

When South Korea agreed to host the United States' Terminal High Altitude Area Defense (THAAD) missile defense system, Beijing did not impose tariffs on Seoul despite its displeasure. China instead restricted flights to South Korea, drummed up nationalist sentiment among the Chinese public to boycott South Korean goods, and even shut down China-based outlets of Lotte Group, the Korean company on whose land THAAD was installed.

China took a similar approach with the Philippines following a 2012 dispute over claims in the South China Sea. In order to cause significant economic pain, Beijing tightened quality controls on agriculture exports from Manila while stemming the flow of Chinese tourists to the Philippines. And most recently, Beijing threatened and then followed through on a boycott of Australian beef after Canberra called for an independent investigation into the origins of the coronavirus.

Beijing coerces not only countries but also private companies for perceived transgressions. Marriott, Delta Airlines, and Zara all faced the prospect of losing business in China after listing Taiwan, Hong Kong, or Tibet as sovereign nations. Last fall, Beijing suspended broadcasts of NBA games after Houston Rockets general manager Daryl Morey tweeted his support for pro-democracy protestors in Hong Kong.

If public sentiment across the United States continues to turn against China, Beijing may begin adapting its methods of economic coercion to retaliate against states and politicians it perceives as hostile to its interests.

Indeed, China is clearly paying attention to U.S. domestic politics and state officials' views of China. A think tank in Beijing recently ranked all 50 governors on their attitudes toward China, information the CCP values as it attempts to mold the views of officials outside of Washington. As Dan Blumenthal has noted , Beijing "split[s] Americans into 'friends of China' who might lobby on their behalf and others who refuse to do so [and] will not be granted access to China's massive market."

In recent years, Beijing has provided glimpses of what economic coercion in the United States might look like. During the initial stages of the trade war, China's retaliatory tariffs disproportionally targeted Red states critical to Trump's 2016 election victory. Furthermore, China identified key officials able to influence U.S. policy, such as then-Wisconsin Representative Paul Ryan and Senate Majority Leader Mitch McConnell, and levied tariffs that threatened jobs in and exports from their states in a bid to pressure the politicians to split with Trump.

These actions are possible harbingers of economic pressures to come. Beijing may be tempted to pressure local officials to influence policy from the bottom up. As the aforementioned think tank report explicitly notes , Beijing believes that "State-level officials 'enjoy a certain degree of diplomatic independence,'" and that "Governors can ignore orders from the White House."

Recent downturns in public opinion in both countries, the result of several years of increasing competition, and an emerging view that the other views the pandemic as a strategic opportunity, could even see Beijing move beyond tariffs and drum up anti-U.S. sentiment. It could even encourage citizens to boycott American products, the political and economic effects of which could be devastating.

While the United States imports more from China than it exports, China-bound exports supported around one million U.S. jobs in 2018. According to the U.S.-China Business Council, 42 states counted China among their top five export destinations in 2019. Chinese FDI, which peaked at $46.5 billion in 2016, dropped to just over $3 billion in 2019 -- a decline of over 90 percent. Industries ranging from energy, agriculture, and manufacturing could be negatively affected by an exodus of Chinese investment, a freeze on new Chinese FDI into the United States, or increased tariffs on or bans of imports.

Given the astronomically high unemployment rate and ballooning federal and state debt levels, U.S. states are in no position to lose more investments or export-supporting jobs. Senator McConnell's recent call for states to file bankruptcy highlights their increasingly gloomy economic prospects, and already over 25 percent of state revenues have disappeared due to the coronavirus.

The United States certainly needs to diversify its supply chains so as not to depend so much on China. Washington has already rolled out several measures to better screen Chinese investments in the country and limit sensitive technology exports. The increasingly prevalent and politically expedient one-size-fits-all anti-China position espoused by many state-level politicians, however, could endanger China-state ties, the locus of the two countries' economic relationship, and threaten China-owned U.S.-based companies that pose no national security threats and provide hundreds of thousands of jobs.

Written by
Sam Bresnick
Lucas Tcheyan

[May 13, 2020] The Chinese Mindset in a Hybrid War With the US by Xiaoran Tong

While some observationare valid, the main drawback is that the guy does not understand the term "neoliberalism"
May 13, 2020 | original.antiwar.com
I recently came across a Facebook comment from a Hongkonger, arguing that the Chinese Communist Party (CCP) is nothing communist given China's prosperous private sector after 1979's reform . He then linked a video to mock the western electoral democracy that put Trump and Hitler into the office, leading to the conclusion that the West has no credential to criticize the one-party system of China for the lack of democracy. His comment represents the contemporary Chinese sentiment and is quite understandable given the ongoing color revolution in Hong Kong 2019 , which is still lukewarm to this day, and the unrelenting blame of COVID19 on China . Although the hybrid war waged on China is unjust, the current Chinese mindset does not help to diffuse but only fuels the conflict even further.

The Facebook comment was right about CPP not being Communist that seeks total control of the economy by the state. Yet, China is state capitalism, an oligarchy, or crony capitalism. China is a plutocracy by the marriage between the party leadership (the state), and the monopolizing mega-corporations (the money) like Huawei, Ali, the four state-owned commercial banks , and Sinopec Group .

It is far from a free-market where the only way to win a competition is to provide excellent products, where the state has no role in deciding the winner and no ability to finance itself by forcing the circulation of central-banknotes. China does have a private sector – the semi-free-market, the good part of our bad plutocracy. Still, even that part is weathering after supreme leader Xi took power, and most Chinese do no realize that we are marching back into a more planned, more communism, more Mao Zedong like system, slowly but surely. In China, life is artificially expensive under the tightening state control that imposes layers upon layers of covert taxation, to the point of causing hesitation to have more children .

However, the west, in general, is fundamentally the same, albeit having a façade electoral democracy where no crucial issues (i.e., war and peace, monetary policy, and downsizing the government) are allowed into a debate.

The real private sector (not the likes of Google and Lockheed Martin) is also dying. The states interfere with the market relentlessly, in the name of safety, welfare, and stimulating the economy, which achieved the opposite (i.e., the 1929 great depression, 2000 dot com bubble, and 2008 housing bubble). The Federal Reserve finances the government spending via debt, encourages malinvestment by atrocious QE packages , which all translate into taxing away people's purchasing power by creating tons of money out of thin air.

We see the same unholy marriage between the state and the money like big techs, big pharma, and, most disgustingly, the Military-Industrial Complex. People are either covertly forced, or duped into funding the nonsense by paying tax, no matter which party they elect.

Therefore, the Chinese are right about the West not in the position of a critic, but for the wrong reason. We either fail to realize or willfully deny that we are living under a harsh plutocracy. Instead, we are distracted by the never losing fake debate about which system elects the better government, since the "one-party system" is most attacked by western pro-democracy voices.

Strangely though, both systems have seemingly good intentions, either emphasizing a person's moral conduct and experience in low-tier office (the Chinese internal nomination), or the people's direct control of the government (the West electoral democracy). Strangely, both unanimously favor the use of "government power" the "right way."

Yet, power always corrupts its user by attracting the money, no matter how well-disciplined, how experienced he/she was. A system that operates on coercive power always finds its way to circumvent any laws and regulations meant to promote meritocracy. Both have tried to fight cronyism rigorously with new agencies and new legislation, but in the end, cronyism always prevails, for both. For the most part of history, the essence of the Chinese system is not much different from the West, since they are all plutocracies that conned the people into helplessly relying on more power to solve problems caused by power until it collapses.

In a 1979 Chinese opera broadcasted nationwide, the protagonist, a low tier official, finds himself risking his political career to enforce the law on the aristocrats who made the law; intoxicated, he yelled in desperation "谁做管官的官," which literally is " Quis custodiet ipsos custodes " in Chinese; in the end, he left his career behind – adding no more to the bloated, self-conflicting bureaucracy, to preserve his integrity. Maybe this was a coincidence, 1979 was the year the Chinese leadership decided to let the government govern less – kudos to them.

The year 1979, and the economic boom that followed, is one of the most common counter-arguments from a Chinese when you criticize the draconian practices of CCP. Admittedly, there are times the state power is not insane. In 1979 Deng Xiaoping at least gave up some government mandate to allow the private sector to grow , resulting in the exploitative system we see today, nonetheless a society much more productive than Mao Zedong's total state dominance. Some state heads refrained from moving the government "muscle" too much, such as Jimmy Carter's resistance to wars and money supply that reduced overspending and inflation since the Vietnam War. In these "less bad, more sensible" eras, it is easier for people's entrepreneurial spirit and creativity to overcome the innate irresponsibility of centralized capital management. As a result, we saw significant progress like the Chinese miracle, and the upswing during the Reagan presidency (even if he turned up wars, debt, and the Fed's money machine again). Sadly, the leaderships are eager to claim credits, creating the impression that it is the right administration resulting in progress and recovery when it is the lack of governing that allows the people to make sensible decisions on their own, achieving faster growth.

If we Chinese and the American attack each other's electoral system, it is like the two worst kids in the class picking on each other over their looks rather than their poor study and bullying of other kids, which only makes them both worse. In the real world, we leave the unhinged growth of government power – the real enemy of all people, Chinese and American alike, unattended.

Like that Hongkonger, most Chinese learned to mock Trump's personal, and naively conclude that the democracy that put him (and Hilter) in the office is a joke. Some more informed Chinese mock the media's clownish, unfair treatment of Trump, and naively conclude that the freedom of the press is a joke. However, a bombastic president, the democracy, and the media are not the problems; neither are the aggressive sino-phobic policies of which Trump pretends to be in charge. The actual problem is the monstrous government, married with big money, capable of waging costly war, funding wasteful programs that drain the middle class to enrich a selected few, no matter who is in the office. It can either be the well-spoken Obama loved by the media, who started seven wars and won the Nobel peace prize, or the bombastic, scandalous New Yorker hated by the press, who nonetheless continued these wars. People coerced into funding this abusive machine themselves are part of, with their hard-earned tax dollars, is the problem. Yet, you do not see the Chinese majority mocking this miserable setup and come to realize that we are under the same situation!

For us, the Chinese, the real issue is not the superficial corruption that the supreme leader XI fiercely fought, nor the insanity, the incompetence, and the betrayal of the oath of some party members. It is our innate reliance on authorities and the love of collective glory, a part of our culture passing down through generations over more than 2400 years, being the problem. We can never break the dynastic cycle if we do not see the path to the self-destruction of unhinged state power, such as Mao's era . If we are still yearning for a "just leader" to solve issues like retirement, education, and medication, still admiring exhaustive achievements such as the Belt and Road, the South China Sea, and Taiwan, we then have learned nothing from the downfall of thirteen dynasties and countless hegemonies throughout the history of China. The collective conscious of the Chinese have so far failed to realize the force driving the rise and fall of a dynasty is not the moral and intellect of the leaders, but the people's economic freedom relatively untouched or infringed at times, by a mixture of chance, sanity, and imperialism vainglory. The blind reliance on leaders and the love of collective grandiosity is only compounded when the Americans fail to take back their power from the government, who is warring with China and covertly overtaxing them. The collective enlightenment of the Chinese population is nearly impossible, since the tyrants in Beijing have no shortage of strawman to throw at the people and say "that is the problem, blame the belligerent Trump and the jealous Americans", and the Communist Dynasty will always enjoy the " mandate of heaven ".

Even with a sheep's mindset, the Chinese economy will overtake the US, despite the slow death of its most productive private sector. The sheer momentum of the slight right turn to liberty 40 years ago is good enough for China, since the Americans do not restore their free-market and liberty that had made them an exceptionally productive civilization for a long time. But then what? We Chinese are just molecules burnt to fuel the blinding flash of a new empire not far from its fourteenth dynastic downfall, just like the Achaemenids, the Romans, the Umayyads, the Ottomans, Napoleon's France, the British, and the Americans before us.

Xiaoran Tong has a Ph.D. in Epidemiology from the Michigan State University (MSU). He is originally from Kunming, Yunan, China and arrived in the US in 2014 to pursue his Ph.D. at MSU. He is Interested in the history of America and its similarities with ancient and contemporary China.

[May 12, 2020] A Tsunami Of Anger Chinese Officials Call For Renegotiation Of Phase One Trade Deal

May 11, 2020 | www.zerohedge.com
Amid the ongoing diplomatic spat between Washington DC and Beijing, which now also includes the deployment of B-1B bombers and warships in the South China Sea , late on Monday (local time) China's Global Times reported , citing sources close to the Chinese government, that some "hawkish" officials in China are calling for a renegotiation the the "phase one" trade deal with Washington as well as a "tit-for-tat approach on spiraling trade issues after US' malicious attacks on China ignited a tsunami of anger among Chinese trade insiders."

The calls to renegotiate the current version of the deal - which has yet to be actively implemented - emerge amid dissatisfaction because "China has made compromise for the deal to press ahead."

While in the past, these same trade negotiators "believed that it would be worthwhile to make certain compromise to reach a partial truce in the 22-month trade war and ease escalating tensions", given what the Global Times called "President Donald Trump's hyping an anti-China conspiracy that aims to cover up his mishandling of the COVID-19 pandemic", advisors close to the trade talks have suggested Chinese officials rekindling the possibility of invalidating the trade pact and negotiating a new one to tilt the scales more to the Chinese side, sources close the matter told the Global Times.

A former Chinese trade official told the Global Times on condition of anonymity on Monday that China could complete such procedures based on force majeure provisions in the pact.

"It's in fact in China's interests to terminate the current phase one deal. It is beneficial to us. The US now cannot afford to restart the trade war with China if everything goes back to the starting point," another trade advisor to the Chinese government told the Global Times, pointing to the staggering US economy and the coming of the US presidential election this year.

"After signing the phase one deal, the US intensifies crackdown in other areas such as technology, politics and the military against China. So if we don't retreat on trade issues, the US could be trapped," the former official noted.

Some could disagree, and counter that Trump can certainly restart the trade war especially since it suits his pre-election agenda - after all, now that the fate of the market is entirely in the hands of the Fed which has gone full MMT, Trump is no longer afraid by the market's response to a renewed trade war. In fact, with over 60% of the US population seeking to distance US from China, it would appear that Trump's best bet to winning independent votes is precisely to keep hammering China.

Confirming this, Trump said on Friday that he was "very torn" about whether to end the China-US phase one deal, Fox News reported, with some observers interpreting his words as equating to a threat from the US to re-launch a trade war against China.

Then again, over the weekend, the SCMP reported that US source familiar with recent discussions stated US officials acknowledged China was largely delivering its pledges on structural issues such as opening market access and improving IP protection but they have yet to agree in some details including IP action plan and easing equity caps for foreign investors. Furthermore, the source stated fallout from the virus meant agreement on purchasing US goods has become much more important and that many believe China needs to increase pace on purchases.

Meanwhile, Gao Lingyun, an expert at the Chinese Academy of Social Sciences who advises the government on trade issues, told the Global Times on Monday that China has "well documented" Washington's usual threats after previous rounds of confrontation. That means if the trade war restarts, "China knows how to respond, and it is able to retaliate quickly and inflict serious harm on the US economy," Gao said.

Still, as the Global Times concludes, analysts noted that terminating the phase one trade deal would be China's "last option" and one that China would only resort to under extremely hostile conditions.

[May 11, 2020] Note on US-China decoupling: it will be tough because the train had left the station and Chinese acted first

Notable quotes:
"... What does a developing country like China, still mired in socio-economic inequality, technological dependence, political corruption and environmental degradation do? Concentrate on its own hinterland while bidding its time? Confront the hegemon head-on which would lead to military conflict? Or control its responses while cultivating partnerships with ALL peace-loving countries, whether rich or poor, First World or Third World, Western or non-Western? ..."
May 08, 2020 | www.unz.com
antibeast , says: Show Comment May 9, 2020 at 5:46 pm GMT
Unlike Escobar, Roberts, et al, I am much more sanguine about the prospects of China's rise which has threatened the indispensable nation of Yankistan because China was not supposed to rise above its assigned role as the cheap cog of the globalist economy serving the Capitalist Oligarchy of the NWO. By dint of hard work, sly cunning and shrew tactics, China outgrew its role by becoming the hub of the international economy via its New Silk Road and the BRI.

What does a developing country like China, still mired in socio-economic inequality, technological dependence, political corruption and environmental degradation do? Concentrate on its own hinterland while bidding its time? Confront the hegemon head-on which would lead to military conflict? Or control its responses while cultivating partnerships with ALL peace-loving countries, whether rich or poor, First World or Third World, Western or non-Western?

The rapid decoupling of China's economy away from the USA started with the GFC 2008 but has since accelerated with Obama's "Pivot to Asia" and Trump's trade war with China. Exports to the USA account for less than 3% of China's GDP today with 60% of those exports being either US or foreign goods manufactured in China. So the real figure is 1% of China's GDP consists of Chinese goods exported to the US market, consisting mostly of industrial commodities or consumer products.

As China has already charted its own independent path of building trading/investment partnerships with Europe, Asia, Africa and Latin America, the USA has become threatened by China's successful decoupling from its export dependence on the US market as proven by its hostile reaction to Xi's BRI and China's New Silk Road. In addition, the US was caught off-guard by the sudden rise of Chinese tech firms such as Huawei which is the world's number one vendor of telecommunications equipment with undisputed world leadership in 5G technology.

Shocked to find its manhood as no longer exceptional, Uncle Sam feels the need to show off to the world: "Me Gringo! Big Dick!"

[May 10, 2020] Watch Is China Merely a Competitor of the U.S., or an Adversary or Even an Enemy

May 10, 2020 | theintercept.com

China has become, over the past two decades, the planet’s second-most powerful nation after the United States. Booming economic growth has lifted millions of its citizens out of poverty and catapulted it to the world’s second-largest economy, while increased military spending has made it the second-largest military power (though its military spending, and nuclear stockpile, are still a small fraction of the U.S.’s).

That growth — in both economic and military power — has led U.S. officials to conclude that they must do more to counteract what they regard as China’s growing influence. President Obama, early in his administration, memorably vowed an “Asia pivot,” whereby the U.S. would devote fewer resources and less attention to the Middle East and more toward China’s growing power in its own region.

That led to some moderate escalation in adversarial relations between the two countries — including the Trans Pacific Partnership trade agreement (TPP) and other regional skirmishes — but nothing approaching direct military confrontation. President Trump, since taking office, has largely heaped praise on the Chinese government and its leader President Xi Jinping, siding with Xi over democracy protests in Hong Kong and even Beijing’s handling of the coronavirus outbreak.

But this pandemic has seriously escalated tensions between the two countries given the increasingly hostile rhetoric emanating from various sectors of the west, making it more urgent than ever to grapple with the complex relations between the two countries and how China ought to be perceived.

The question is far more complex than the usual efforts to create a new U.S. Enemy because numerous power centres in the U.S. and the west generally — particularly its oligarchs, Wall Street, and international capital — are not remotely hostile to Beijing but, quite the contrary, are both fond of it and dependent upon it. That’s why — unlike with other U.S. enemies such as Saddam Hussein, Fidel Castro, the Iranian government or Nicolas Maduro — one finds very powerful actors, from Bill Gates to Michael Bloomberg to the consulting giant McKinsey to Trump himself, defending Chinese officials and urging better relations with them.

That, in turn, reflects a critical reality about U.S./China relations that defies standard foreign policy frameworks: while hawkish, pro-war political elements in both parties speak of China as an adversary that must be confronted or even punished, the interests of powerful western financial actors — the Davos crowd — are inextricably linked with China, using Chinese markets and abusive Chinese labor practices to maximize their profit margins and, in the process, stripping away labor protections, liveable wages and jobs from industrial towns in the U.S. and throughout the west.

That is why standard left-wing anti-imperialism or right-wing isolationism is an insufficient and overly simplified response to thinking about China: policy choices regarding Beijing have immense impact on workers and the economic well-being of citizens throughout the west.

Today’s new episode of SYSTEM UPDATE is devoted to sorting through the complexities of this relationship and how to think about China. I’m joined by two guests with radically different views on these questions: the long-time Singeporean diplomat who served as President of the U.N. Security Council, Kishore Mahbubani, whose just-released compelling book “Has China Won?” argues that the U.S. should view China as a friendly competitor and not as a threat to its interests; and Matt Stoller, who has worked on issues of economic authoritarianism and the U.S. working class in multiple positions in Congress and in various think tanks, culminating in his 2019 book “Goliath,” and who argues that China is a threat to the economic well-being of the U.S. working class and to civil liberties in the west.

The show, which I believe provides excellent insight into how to think about these questions, debuts this afternoon at 2:oo pm ET on the Intercept’s YouTube channel or can be viewed on the player below at 2:30 p.m. As always, a transcript of the program will be added shortly thereafter.

Update: May 7, 1:54 p.m. EDT

The debut time for this episode has been moved by 30 minutes; it will not debut on the Intercept’s YouTube channel at 2:30 pm ET.

[May 10, 2020] Trump and decoupling from China

Highly recommended!
May 10, 2020 | www.moonofalabama.org
I have been watching China's gradual rise in the world's GDP– as well as GDP-per-capita– charts and a concomitant fall in the United States' position in these charts, for nearly 20 years now. The United States' decline is still relative rather than absolute. In absolute terms, its GDP is still "Number 1!" But the decline was accelerated from 2003 on, when successive US presidents decided to pour massive amounts of government revenues into large-scale and always disastrous military adventures all around the world. As of last November, Brown University's "Costs of War" project tallied the U.S. budgetary costs of these wars, FY2001-2020, to be $6.4 trillion. These were funds that could have been invested, instead, in repair and upgrading of vital infrastructure here at home– including vital health infrastructure. But no. Instead, the money was shoveled into the pockets of the large military contractors who then used a portion of it on expensive lobbying operations designed to ensure that the sow of military spending continued feeding her offspring (them.)

When Donald Trump became president, in 2017, one of his early instincts was to pull back from the foreign wars. (This was about his only sound instinct.) The military-industrial complex then proved able to slow-walk a lot of the military-retraction moves he wanted to make One of the other abiding themes of Trump's presidency has been his desire to "decouple" the U.S. economy from the tight integration it had developed at many levels with the economy of China, as part of broader push to halt or slow the rise of China's power in the global system. At the economic level, we have seen the "tariff wars" and the campaign against Huawei. At the military level, we have seen a slight escalation in the kinds of "demonstration operations" the U.S. Navy has been mounting in the South China Sea. Mobilizing against "Chinese influence" also seems to come naturally to a president who shows no hesitation in denigrating anyone– even US citizens and politicians– who happens not to be of pale-complected European-style hue.

With the eruption of Covid-19 in U.S. communities nationwide, Pres. Trump's pre-existing proclivity to demonize and denigrate anything Chinese has escalated considerably– spurred on, it seems, by his evident desire to find an external scapegoat to blame for the terrible situation Covid-19 has inflicted on Americans and to detract voters' attention from the grave responsibility he and his administration bear for their plight.

He and his economic advisors clearly realize that, with the supply chains of major US industries still inextricably tied up with companies located in China and with China still holding $1.1 trillion-worth of U.S. government debt, he can't just cut the cord and decouple from China overnight. Yesterday, his Treasury Secretary and the US Trade Representative held a phone call with China's Vice Premier Liu He, the intent of which was to reassure both sides that a trade deal concluded four months ago would still be adhered to.

But today, less than 12 hours after the reassuring joint statement released after the phone call, Trump told Fox News that he was "very torn" about the trade deal, and had "not decided" whether to maintain it. This, as he launches frequent verbal tirades against China for having "caused" the coronavirus crisis. US GDP is highly inflated by counting financial moves on Wall Street (extracting money from suckers and moving money from one hand to another) as productive activity. China's purchasing power parity already exceeds the US and I suspect its actual GDP does as well. Only US financialization is able to mask the lack of actual productivity in the US economy.

likbez , May 9 2020 17:12 utc | 10

I am somewhat skeptical about China chances in this race. That will be much tougher environment for China from now on. And other major technological powers such as Germany, Korea and Japan are still allied with the USA.

The major problem for China is two social systems in one box: state capitalism part controlled by completely corrupt Communist Party (which completely abandoned the communist doctrine and became essentially a religious cult ) + no less corrupt neoliberalism part created with the help of the West.

The level of corruption inherent in the current setup (first adopted in Soviet NEP -- New Economic Policy) is tremendous, as the party has absolute political power and controls the major economic and financial areas while the entrepreneurs try to bribe state officials to get the leverage and/or enrich themselves at the state expense or bypass the bureaucratic limitations/inefficiencies imposed by the state, or offload some costs. So mafia style relationship between party officials and entrepreneurs is not an aberration, it is a norm. And periodic "purges" of corrupt Party officials do not solve the problem. Ecological problems in China are just one side effect of this.

The fact that a Chinese scientist from a biolab got 12 years jail sentence is pretty telling. https://www.nature.com/articles/d41586-020-00051-2

Add to this the certain pre-existing tendencies within Chinese society to put greed above everything else, the tendency clearly visible in some emigrants and to which Yen devoted one post recently. Riots in some Asians countries against Chinese diaspora are often at least partially caused by this diaspora behavior, not only by xenophobia. Note that several African countries with Chinese investments now intent to sue China for damages from COVID-19. This is not accidental.

Technologically the USA and its G7 satellites are still in the lead although outsourcing manufacturing to China helped Chinese tremendously to narrow the gap. For example, Intel CPUs still dominate both desktops and servers. All major operating systems (with the exception of some flavors of Linux) are all USA developed.

I do not see the possibility for China to quickly narrow this gap as the technology transfer might now be controlled in the same way it the USA controlled the trade with the USSR via COCOM ( https://en.wikipedia.org/wiki/Coordinating_Committee_for_Multilateral_Export_Controls )

Looks how easily the USA managed to kick Huawei in the butt and essentially deprive it of the major market.

vk , May 9 2020 17:48 utc | 12
@ Posted by: likbez | May 9 2020 17:12 utc | 10

You rise important points, but I respectfully disagree with all of them.

1) I don't think China is a "State capitalism" country. The term "State capitalism" was first coined by Lenin for a very specific situation the USSR was in. Yes, the similarities are striking - and Deng Xiaoping's reforms were clearly inspired by Lenin's NEP - but it is important to state that the CCP actively avoided the term and built upon the concept both theoretically and in practice. Besides, we don't need to read Lenin's works critically, an not take him as the second coming of Jesus: when he used the term "State capitalism", he used it in a clearly desperate moment of the USSR, almost by improvisation. Lenin's last years were definitely desperate times.

Besides, the NEP didn't culminate with the capitalist restoration of the USSR. On the contrary: it collapsed in 1926 (after another bad harvest) and gave way to the rise of Stalin and the radical faction of the CPSU. The Five-year plans were born (1928), and agriculture would be fully collectivized by the end of the 1930s (a process which catapulted Molotov to the second most powerful man in the USSR during the period). By the end of WWII, the USSR had a fully collectivized economy.

2) The corruption hypothesis is an attractive one - specially for the liberal middle classes of the post-war and for the Trotskyists - but it doesn't stand the empirical test. The USA was an extremely corrupt nation from its foundation to pre-war, and it never stopped it from growing and reaching prosperity. The Roman Empire and Republic were so corrupt that it was considered normal. There's no evidence the PRC is historically exceptionally corrupt. However, I can see why the CCP is worried about corruption, as it is a flank through which the West can sabotage it from within.

3) The COCOM tactic will be much harder to apply against China than against the USSR. For starters, the USSR lost circa 35% of its GDP in WWII. This gave it a delay from which it never recovered. Second, the USSR fought against capitalism when capitalism was at its apex. Third, the USSR collectivized and closed its economy too early, not taking into account that it still lived in a capitalist world.

China doesn't have that now. It is fighting against capitalism in a phase where it is weakened. It is open and intimately integrated economically with its capitalist enemies. It closed or is about to close the technological gap in many strategic sectors during a stage where the capitalists have low retaliation capacity. It found time to close at least the GDP gap. It found time to recover fully from its civil war and the Japanese Invasion of the Northeast.

Germany, South Korea and Japan are not technologically more advanced than the USA. This is a myth. Plus, they are too small. They may serve as very useful - even essential - pawns for the USA-side, but I don't see any of the three ever achieving Pax .

[May 09, 2020] Huawei's HiSilicon becomes first mainland Chinese chip company to enter top 10 in global sales, says IC Insights South China

Notable quotes:
"... Over 90 per cent of Huawei phones in China now use HiSilicon processors, according to CINNO ..."
May 09, 2020 | www.scmp.com

HiSilicon , Huawei Technologies ' in-house semiconductor and integrated circuit design company, has surpassed US chip giant Qualcomm in terms of smartphone processor shipments in China for the first time amid coronavirus-linked disruptions that have hit most major players, according to a report.

In the first quarter of 2020, HiSilicon shipped 22.21 million smartphone processors, according to Chinese research firm CINNO's latest monthly report on China's semiconductor industry. Although HiSilicon's shipments only increased slightly from the 22.17 million units it shipped in the first quarter of last year, it was the only major company that did not see a year-on-year decline in the quarter, CINNO said in a summary of the report posted on its official WeChat account.

As a result, the Huawei subsidiary's market share surged to 43.9 per cent, from 36.5 per cent during the same period last year, and beat Qualcomm for the first time to become China's top smartphone processor supplier. HiSilicon's steady performance comes at a time when the Chinese smartphone industry is being battered by delayed product launches and dampened consumer sentiment linked to the coronavirus pandemic. Smartphone shipments in the country slumped by 34.7 per cent – more than a third – to 47.7 million units in the first quarter of 2020, according to a report released earlier this month by the China Academy of Information and Communications Technology.

CINNO's report showed that there was a similar plunge in processor shipments, with overall smartphone processor shipments in the country dropping by 44.5 per cent in the first three months of 2020, compared to the same period last year. Huawei makes end-run around US trade ban by turning to its own chips 2 Mar 2020

US-based Qualcomm, the long-time market leader, fell to second place in the latest quarter with a year-on-year decline in its market share from 37.8 per cent to 32.8 per cent. Taiwan's Mediatek maintained its third-place position, but also saw its market share slide year-on-year from 14 per cent to 13.1 percent

. Table showing the market share of smartphone processor supplies according to CINNO Research. Source: CINNO Research / WeChat

Table showing the market share of smartphone processor supplies according to CINNO Research. Source: CINNO Research / WeChat

Huawei, HiSilicon's parent company, is at the centre of a high-profile US-China tech war. The Trump administration added the company to its Entity List last year, citing the risk that Huawei could give Beijing access to sensitive data from telecommunications networks. The trade blacklist effectively bars Huawei from buying US products and services. In response, the Chinese company, which has denied the allegations, is ramping up its own capabilities to produce more American component-free network gear, including through HiSilicon.

Huawei is also reportedly shifting production of HiSilicon-designed chips away from Taiwan Semiconductor Manufacturing Co (TSMC) and towards Shanghai-based Semiconductor Manufacturing International Corp (SMIC) as Washington readies new rules which would require foreign companies using US chipmaking equipment to obtain a license before supplying chips to Huawei – a move that would directly affect TSMC.

Over 90 per cent of Huawei phones in China now use HiSilicon processors, according to CINNO. However, Huawei founder Ren Zhengfei said in an interview with Yahoo Finance last year that the company would continue using chips from US vendors such as Intel and Qualcomm as long as it is still allowed by US regulators.

[May 08, 2020] Post-pandemic animosity by US - Global Times

May 08, 2020 | www.globaltimes.cn

In the face of the upcoming presidential elections, Republicans launched a new China Task Force committee in US Congress on Thursday to attract attention despite its futile efforts to pass the buck amid the pandemic. But this not-so-surprising move only shows how hysterical and desperate Republicans have become as criticism of the government's mishandling of the domestic coronavirus outbreak increases, experts said.

Following a series of anti-China moves the Trump administration has made when its epidemic prevention spiraled out of control with more than 1.2 million infections - the world's largest number - to date, House Minority Leader Kevin McCarthy announced on Thursday a proposal to set up a new "China Task Force" which will develop legislative policies to curtail Chinese influence. The committee currently consists of 15 Republicans with no Democrats joining.

McCarthy said the pandemic made it apparent "for a national strategy to deal with China." The task force will hold meetings and briefings on China-related issues, which include China's influence inside the US, presence on American campuses and control over important supply chains, the Washington Post reported.

A search for the members in the China Task Force revealed their antagonism toward China. One of them is Rep. Elise Stefanik, who in late April asked Secretary of State Mike Pompeo and the attorney general to bring China to the International Court of Justice for the handling of COVID-19, according to a report by The Adirondack Daily Enterprise.

Analysts said setting up the new China committee is the Republicans' new tactic to fuel anti-China sentiment, but this won't help stop power from shifting from the West to East, which was happening before the pandemic. The pandemic is very likely to speed up this process.

Democrats not joining the committee does not mean they are more China-friendly, but they don't want Republicans to shift the focus of President Donald Trump's failure to handle the pandemic. Since last year, both parties passed several bills regarding China's Xinjiang and Hong Kong, interfering in China's internal affairs, Diao Daming, an associate professor at the Renmin University of China in Beijing, told the Global Times on Friday.

Diao noted the Democrats in the Congress won't endorse the legislation but will support other anti-China measures that the new committee aims to push forward.

"The pandemic will very likely further weaken the US and strengthen China," he said.

A man covering his face walks in Manhattan, New York on April 6 amid the serious outbreak of COVID-19 in the US. Photo: AFP

Treating China as equals

In the past months, certain American politicians, including Pompeo, kept passing the buck, making groundless accusations that China was responsible for the outbreak, and hyped conspiracy theories by calling it the "China virus" to claim the virus originated from a Wuhan lab. At Friday's media briefing, Chinese Foreign Ministry spokesperson Hua Chunying joked that the press conference was almost all about refuting Pompeo's lies.

The extreme atmosphere has made many people in the US worry for a return of the McCarthy era, where free speech in the country was curtailed. A former US Ambassador to China pointed out in a CNN interview the US is now similar to Germany in the 1930s.

Li Haidong, a professor at the Institute of International Relations of the China Foreign Affairs University, told the Global Times on Friday the task force will fuel the existing unfriendly atmosphere toward China at the local level in the country.

Trump administration's China policy focuses on conflicts, and the task force could further aggravate tensions, he said.

Former US Ambassador to China Max Baucus said in an interview with CNN that "The [Trump] administration's rhetoric is so strong against China. It's over the top. We're entering a kind of an era which is similar to Joe McCarthy back when he was red-baiting the State Department, attacking communism."

"A little bit like Hitler in the 30s. A lot of people knew what was going on was wrong. They knew it was wrong, but they didn't stand up and say anything about it. They felt intimidated," he said.

Analysts warned that China needs to stay alert as the US is trying to create a new McCarthy era of international repression on China.

But, on the other hand, we should be aware that most countries won't follow the US, Li said.

"It's difficult for the US to mobilize the world against China. People know how selfish and self-centered the US is. So only a few of its allies will join," he told the Global Times.

The US interception of other countries' anti-virus medical supplies and pointing a finger at the WHO when international cooperation is urgently needed occupied world headlines.

Meanwhile, the Chinese government had provided over 150 countries and international organizations with supplies, hosted over 120 video conferences with health experts from more than 160 members of the international community, and dispatched 19 medical groups to 17 countries, according to the Zhang Ming, Chinese Ambassador to the European Union, at a Coronavirus Global Response pledging event on Monday.

Li told the Global Times that most countries, including its traditional allies, such as Germany and France, have different demands from the US. So they won't join this wave.

As early as February 1, the European Union had dispatched tons of medical supplies to assist China. And in March when the continent was hit hard, China immediately provided more than 2 million protective masks and sent medical groups. Positive reactions were constantly heard in Europe on China.

Meanwhile, it has been reported that China faces a rising wave of hostility led by the US amid the pandemic. The discrimination against Chinese people is growing in some parts of the world.

Li said "The rising hostility shows some Western countries are not accustomed to a rising China. It's a challenge for them to learn to see China on an equal footing, which adds to their anxiety."

He added that they need to learn to respect differences and deal with other countries equally.

Analysts noted that China should step up efforts to enhance its own capabilities in high-tech, military and other fields. It should also conduct far-reaching international cooperation and uphold multilateralism to share its benefits with other countries, rather than being distracted by the anti-China wave.

Cooperation amid competition

The task force on China is not the first one in the West. On April 24, several UK Conservative MPs launched a "China Research Group" to promote "factual debate" in dealing with the "rapidly changing nature of the relationship" between China and the UK. The group would attempt to look "beyond" the coronavirus pandemic to "examine China's long-term economic and diplomatic aims," BBC reported.

Kevin Hollinrake, an MP and a member of the group, told the Global Times that the group will make some inquiries on specific policy areas. The group will look at, for example, how the Chinese political system and business work.

It will look at certain work streams and develop fact-based reports based on those work streams. "They may be reported back to parliament or published in the public domain," Hollinrake said.

Although the group was set up at a time when the virus was rampant in the UK, "the pandemic itself is not the underlying issue," Hollinrake noted.

The China Research Group is likely to "lobby for a less cooperative approach to China, and for the UK to align more with the US on China policy," Tim Summers, senior consulting fellow on the Asia-Pacific program at Chatham House, told the Global Times.

However, Chris Wood, the British Consul General in Shanghai, told the Global Times that "We will see continued discussions and collaboration. There is no global challenge that can be solved without China's participation. We recognize that we very much want to work with China on these big global issues, and that will continue."

In the post-coronavirus era, China and Europe might continue to seek cooperation amid competition, analysts said, pointing out that Europe's anxieties are, to a large extent, provoked by the US.

In the early stages of the pandemic, despite old disputes, cooperation was the mainstream in China-Europe interactions. But things have changed since the US became the new epicenter, Sun Keqin, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times.

Sun told the Global Times that to reduce the negative influence from the US on European countries, China needs to make efforts to let its voice heard in international public opinion and seek cooperation opportunities. What the US is advocating is nothing but rumors and conspiracy, and China must smash these lies with sound and reasonable evidence and awaken European countries, Sun said.

[May 07, 2020] So, is it correct that the DNC had some kind of Obama-era "chi-merica" project to further their globalist, neolib project -- as it became obvious that the US was never going to be able to pull off the unipolar Empire -- into the new century with a sort of US/China alliance, with a substantial US aligned fifth-column (if that's the right phrase) working in China to further the project?

May 07, 2020 | smoothiex12.blogspot.com

Casey19 hours ago So, is it correct that the DNC had some kind of Obama-era "chi-merica" project to further their globalist, neolib project -- as it became obvious that the US was never going to be able to pull off the unipolar Empire -- into the new century with a sort of US/China alliance, with a substantial US aligned fifth-column (if that's the right phrase) working in China to further the project? Then Trump came in a screwed that all up, trying to pretend to be friendly to Russia, which the DNC promptly scuttled. And now the net result is Russia and China growing relations, which is a very real nightmare for the US, the absolute worst possible outcome for the globalists? Probably I have this all ass-backwards. Also, really, how long would it take to relocate important industries to the US? Wouldn't that need to be a multi-generational project because you can;t turn baristas into machinists over night? Also, what prevents the US from taking over Venezuela right now, militarily, instead of those apparently poorly organized attempts to infiltrate with mercenaries, as was recently revealed?

[May 05, 2020] I don't think the bankster parasites will sit on their hands and let the Trump idiots blow up their entire system. I think there would be a palace coup d'etat first.

May 05, 2020 | www.moonofalabama.org

Trailer Trash , May 4 2020 20:55 utc | 33

If Uncle Sam defaults on his debts, that would be the biggest own goal ever. The whole financial system is based on US Treasury bonds, and a default would send their value to zero. The US Social Security Trust Fund is still worth almost three trillion dollars, most of it in US Treasury bonds. Default means Goodbye Social Security Pensions, or at least a huge "haircut".

I think Pompous Ass is bluffing. One reason is that Wall Street parasites have been salivating over the Social Security trust fund for decades, and GW Bush was working on a plan to give it to them. I don't think the bankster parasites will sit on their hands and let the Trump idiots blow up their entire system. I think there would be a palace coup d'etat first.

[May 04, 2020] 'Turbocharging' exodus: US beats trade war drums to remove supply chains out of China

May 04, 2020 | www.rt.com

The US wants to сut industrial and supply dependence on China amid rising tensions between the two powers. However, not everyone is eager to pack their bags and leave the lucrative Chinese market in the midst of the previous row. The Trump administration has long been pushing American firms to get back to US soil, especially when trade tensions were flaring between the two biggest global economies. Now the US has revived the trade war rhetoric again. Read more Asian markets plunge amid escalating US-China tensions

"We've been working on [reducing the reliance of our supply chains in China] over the last few years but we are now turbo-charging that initiative," Under Secretary for Economic Growth, Energy and the Environment at the US State Department Keith Krach told Reuters.

Krach as well as other officials told the agency that some critical and essential manufacturing should be moved from the country, and the government may take steps on it soon. Apart from the US' seemingly favorite options of tariffs and sanctions, the plans may include tax incentives and potential reshoring subsidies as well as closer relations with Taiwan – a move which has always angered Beijing.

Washington is also mulling the creation of what one of the officials called 'Economic Prosperity Network' which would include companies and groups from some "trusted partners." The network is set to share the same standards "on everything from digital business, energy and infrastructure to research, trade, education and commerce."

China's vital role in global supply chains was felt sharply amid the coronavirus pandemic as many international giants – from tech to car industries – are reliant on the country. The pandemic has forced some US companies to seriously consider at least partial relocation and changing supply chain strategy, according to one of the latest polls conducted by the American Chamber of Commerce in China and its sister organization in Shanghai. However, the majority of firms said that the outbreak does push them to turn their backs on China.

Nevertheless, one of the "China hawks" told Reuters that the virus created "a perfect storm" as it "crystallised all the worries that people have had about doing business with China" and the damages from Covid-19 have eclipsed possible profits.

Also on rt.com 'No mass exodus': Most US firms don't want to wind down operations in China over pandemic

When the trade war showed no signs of abating last year and the US and China were still hitting each other with tariffs, another AmCham poll showed that the punitive measures were hurting US businesses operating in China. While over forty percent of the 250 respondents were "considering or have relocated" production facilities outside China, some 35 percent of companies said they would rather source within China and target the domestic market. Fewer than six percent wanted to move or already shifted their factory operations to the US.

Set aside the enormous relocation costs – which the White House has recently pledged to cover should an American company decide to ditch China – there is still another massive hurdle in this plan. China is still the world's top producer of rare earth metals – the group of elements vital for production of multiple devices, from cell phones to some advanced military gear. Should all the production be moved from China, it could ban exports of these materials. Last year Chinese media said the option was already being mulled by Beijing, and it could consider the drastic measure again if trade war tensions further escalate.

For more stories on economy & finance visit RT's business section

[May 02, 2020] The USA makes an expected move in trade war with china: complites access of china companies to US produced chips

May 02, 2020 | thenewkremlinstooge.wordpress.com

et Al April 28, 2020 at 2:17 am

Euractiv mit Neuters: US imposes new rules on exports to China to keep them from its military
https://www.euractiv.com/section/defence-and-security/news/us-imposes-new-rules-on-exports-to-china-to-keep-them-from-its-military/

The new rules will require licenses for US companies to sell certain items to companies in China that support the military, even if the products are for civilian use. They also do away with a civilian exception that allows certain US technology to be exported without a license.

They come as relations between the United States and China have deteriorated amid the new coronavirus outbreak
####

It's far too late and will be significantly damaging to US companies. No doubt Washington still expects Beijing to buy Boeing airliners. If Beijing were to pull that plug, then it would take out Arbus, P&W, GE, CFM all the suppliers, MRO ventures and collapse the whole western airline supply chain. It would obviously kill any Chinese or Russian airline program that has any western content . I doubt Beijing will go that far so they'll be looking at actions, not words.

t-Rump and co need to show something sym-bollox to the American electorate that yet again they are being 'tough on China' during this erection year but it requires China to play along. It simply might not. It is reported that China is currently purchasing large quantities of American LNG to fulfill 'Phase one' of t-Rump's Deal of the Century with China.

Maybe that is the obvious counter, threatening to pull the whole DoC, starting with dumping LNG purchases as a direct warning. t-Rump's Administration has pushed itself into a smaller and smaller box, all of its own making. As I've always said and I still believe to be true, the biggest threat to t-Rump's re-erection is t-Rump himself.

Like Like

Mark Chapman April 28, 2020 at 9:22 am
Paradoxically, the more Trump's belligerence and 'gut-based' trade policies damage international trade, the more convinced his supporters become that only Trump can handle increasingly-complicated trade relationships. This probably stems from his going into a meeting under difficult conditions, emerging to fire off a miracle tweet, "China will now buy massive quantities of our agricultural products", and ducking out the back without elaboration. This leads to a misplaced belief that Trump can perform miracles, as much of a jerk as he can be, because his loyalists rarely pay attention long enough for the rebuttal which always comes, laying out his serial exaggerations. Remember when U.S. Steel was building three new steel plants, on the strength of Trump's hard-ass negotiations in the Canada-Mexico-USA Free Trade deal? Lighthizer's hard-ass negotiations, actually. Anyway, yeah; totally made it up. He doesn't see anything wrong with making optimistic projections which have no basis in fact.

Mind you, it would be a bit of a downer to have to explain again to Biden what 'oil' is, every single time the subject comes up. But I wouldn't be too worried about that.

LNG is pretty cheap right now, like all energy products. I see China behaving much like Russia; once it strikes an international bargain, it will stick to it until the terms play out. But Trump might find a different China when he tries to strike the next agreement.

Like Like

et Al April 29, 2020 at 3:43 am
China can also take similar measures, sic (I read that) Alibaba and other gigantic Chinese companies that rely on server farms are switching over to Chinese made chippery and not buying foreign. Simply in lost sales for the foreseeable future is gigantic.

Like Like

Mark Chapman April 29, 2020 at 9:54 am
I imagine you are too young to remember Victor Kiam (he died in 2001) former president of the Remington Razor Company. He had a popular line of commercials in the late 80's in which he would say "I liked it so much, I bought the company".

https://www.youtube.com/embed/3NlMTkfI8Sc?version=3&rel=1&fs=1&autohide=2&showsearch=0&showinfo=1&iv_load_policy=1&wmode=transparent

The Chinese must have heard him, because they took his method to heart; Alibaba doesn't just buy Chinese-made chips, they bought the company. Right after the United States started up its we-have-to-keep-priceless-American-technological-secrets-out-of-the-hands-of-the-thieving-Chinks policies. Suit yourself, Sam.

https://www.reuters.com/article/us-csky-m-a-alibaba-idUSKBN1HR0VY

Shanghai-based Semiconductor Manufacturing International, a $5.4 Billion company and one of the largest such companies in China, pulled its listing from the NYSE.

https://www.cnbc.com/2019/05/24/major-chinese-chipmaker-delisting-from-the-nyse-but-says-it-has-nothing-to-do-with-trade-war.html

In 2018, Skyworks Solutions had 83% of its business in China. Apple had 20%, but 20% of Apple's revenue is a shitload of money. I had to laugh at the line, "Investors are increasingly concerned over the prospect of rising global protectionism." 'Global protectionism' pretty much covers The Donald's act.

https://www.cnbc.com/2018/04/04/chipmakers-may-have-the-most-to-lose-in-a-trade-war-with-china.html

[May 01, 2020] Assuming that the US did indeed seed the virus in Wuhan, then we might speculate that the seeding was timed to coincide with the flu season in China and with mass preparations for Chinese New Year.

May 01, 2020 | www.moonofalabama.org

Jen , Apr 29 2020 23:21 utc | 69

Jackrabbit @ 21, 53:

Justin GLyn @ 65 is correct: New Zealand Prime Minister Jacinda Ardern instituted a Stage 4 lockdown in her country in mid-to-late March with the aim of eliminating the virus from Kiwi shores. That goal is no longer feasible but the country has begun relaxing its lockdown to Stage 3 in an effort to revive its economy.

The US failure to anticipate blowback can be understood in one way: assuming that the US did indeed seed the virus in Wuhan, then we might speculate that the seeding was timed to coincide with the flu season in China and with mass preparations for Chinese New Year. The thinking was that the virus would spread through public transportation networks throughout the country and Beijing would have a full-time job on its hands just dealing with massive viral outbreaks all over the country, and fail to deal with them even adequately, leading to mass riots and eventually widespread resistance to Beijing, and maybe even the eventual disintegration of the CCP and its overthrow. US and other expatriates would be trapped in the country, and foreign embassies and consulates might even be torched, prompting a US-led coalition to invade parts of the country (like the south and the southeast) and take over in a start to the balkanisation of the country cunningly disguised as foreign help to keep order.

The US certainly did not anticipate that Chinese people trusted enough in Beijing to be willing to carry out whatever orders Beijing issued; the US assumption seems to be that everywhere around the planet, people yearn to be just as individualistic and suspicious of Big Government as Americans are, and that what they think of their local councils and regional governments is the same as what they think of their national governments.

The reality is that in many countries, whatever people think of their local councils and regional (state, provincial) governments may not be true of what they think of their national governments, because the functions of the three tiers of government in their countries may not overlap to the extent that they might do in the Anglocentric world.

Neither did the US anticipate that Chinese society could be advanced in its own way technologically with various functions such as public health, public transport and others integrated enough that the Chinese could respond to a rapidly spreading crisis in the way they did. That is in part because US society and values are based on competition, mutual suspicion and top-down orders among other things, rather than co-operation, collective behaviour and willingness to consider solutions based on ideas from divergent yet integrated sources.


Vasco da Gama , Apr 29 2020 23:47 utc | 75

Very good comment! Jen@69

That is a very plausible working hypothesis, and I mean it working, the main assumption is still to be proven but it explains many other observations of fact. But I will append a variable in the main assumption: we could even replace the initiative's agent with some non-state actor, ie Big Pharma. I am unable to "decide" between these possibilities. Are the Imperial forces conflicting to the extent implied? Are we yet at the point that a non-state actor is bold enough for such an action? I really don't want to stretch a perfectly good hypothesis but am I?

David KNZ , Apr 30 2020 1:39 utc | 90
===> Jen @ 69 Good Post; astute observations

I was in China at the time when this unfolded and note the following: 1: The Chinese cultural mindset is totally different from the Western one, and the gap much greater than most Westerners realise. Look at the videos of the 75th Anniversary of Modern China for a few clues 2: As the worlds largest atheist nation, death is considered final, rituals notwithstanding So they are motivated to survive..( and focus on delicious food to this end) 3: They talk. Incessantly. It is no accident that WeChat has grown exponentially.. What happens in one part of China is pretty quickly spread to other parts And on the Flipside, there are surveillance cameras everywhere

So when this unfolded, Mid Spring festival when the cities were emptied, the memory of the SARS epidemic sprang to forefront of the official mind. Xi JingPing appeared on most TV Channels, making it clear that he was taking responsibility for the government response. And implicitly, that if he failed, he would be gone, in keeping with the long tradition of Chinese leadership.

At this point we decided to bail, being prime targets to host the virus. Avoided getting quarantined in HongKong by 4 hours, and quarantine in Manus Island, Aus by one phone call.

There were 6 temperature checks and 4 police checks on route to HongKong Airport; arriving in New Zealand expecting some major medical checks. None. Just 2 nurses at a deck asking if we felt OK - handed a pamphlet and sent on our way. I did try to follow up but given official discouragement. So NZ was asleep at the wheel for weeks, and just plain lucky. However, once NZ woke up, the response was excellent; PM Jacinda Adern's speech was masterful and the response excellent. We had only two CoVid cases yesterday, as we move into level 3.

There are big problems in economic recovery here, but the alternative scenarios would have been far worse. And theres got to be a reason why various luxury private jets are turning up unannounced and often unmarked at the airports here :-)

Jackrabbit , Apr 30 2020 6:11 utc | 113
Jen @Apr29 23:21
karlof1 @Apr30 0:34

Each of your explanations are compelling in their own way.

A few things that your explanations left out (this is not meant to be a comprehensive list):


IMO any theory of deliberate release should consider these points.

Bolton's was asked to leave the administration because he was involved in pushing development of a virus which accidentally escaped the lab -OR- willingly left to give Trump/Deep State a scapegoat in case it became known that the use of the virus was deliberate? In either case, the virus was already "in the wild" ...

... which would explain why no medical professional resigned in Feb/March. It was never going to be possible to contain the virus in the West.

This would also explain why virus discussion were classified.

Trump did a trade deal with China that he knew they would have trouble to satisfy the terms of. The ARAMACO IPO - which had been delayed several times - came just about 6 weeks before the new virus was identified. And it was done despite the Houthi attack on ARAMACO facilities two months before (investors should've been very wary of the continuing war at the super high valuation).

<> <> <> <> <>

PS I do know that New Zealand had a lock-down but they did that as soon as they found 'community spread' and their vigilance has allowed them to start lifting the lock-down after only a short period.

!!

[Apr 30, 2020] No Weapon Left Behind The American Hybrid War on China by Pepe Escobar

Feb 21, 2020 | www.strategic-culture.org

Branding BRI as a "pandemic"

As the usual suspects fret over the "stability" of the Chinese Communist Party (CCP) and the Xi Jinping administration, the fact is the Beijing leadership has had to deal with an accumulation of extremely severe issues: a swine-flu epidemic killing half the stock; the Trump-concocted trade war; Huawei accused of racketeering and about to be prevented from buying U.S. made chips; bird flu; coronavirus virtually shutting down half of China.

Add to it the incessant United States government Hybrid War propaganda barrage, trespassed by acute Sinophobia; everyone from sociopathic "officials" to self-titled councilors are either advising corporate businesses to divert global supply chains out of China or concocting outright calls for regime change – with every possible demonization in between.

There are no holds barred in the all-out offensive to kick the Chinese government while it's down.

A Pentagon cipher at the Munich Security Conference once again declares China as the greatest threat , economically and militarily, to the U.S. – and by extension the West, forcing a wobbly EU already subordinated to NATO to be subservient to Washington on this remixed Cold War 2.0.

The whole U.S. corporate media complex repeats to exhaustion that Beijing is "lying" and losing control. Descending to sub-gutter, racist levels, hacks even accuse BRI itself of being a pandemic , with China "impossible to quarantine".

All that is quite rich, to say the least, oozing from lavishly rewarded slaves of an unscrupulous, monopolistic, extractive, destructive, depraved, lawless oligarchy which uses debt offensively to boost their unlimited wealth and power while the lowly U.S. and global masses use debt defensively to barely survive. As Thomas Piketty has conclusively shown, inequality always relies on ideology.

We're deep into a vicious intel war. From the point of view of Chinese intelligence, the current toxic cocktail simply cannot be attributed to just a random series of coincidences. Beijing has serial motives to piece this extraordinary chain of events as part of a coordinated Hybrid War, Full Spectrum Dominance attack on China.

Enter the Dragon Killer working hypothesis: a bio-weapon attack capable of causing immense economic damage but protected by plausible deniability. The only possible move by the "indispensable nation" on the New Great Game chessboard, considering that the U.S. cannot win a conventional war on China, and cannot win a nuclear war on China.

A biological warfare weapon?

On the surface, coronavirus is a dream bio-weapon for those fixated on wreaking havoc across China and praying for regime change.

Yet it's complicated. This report is a decent effort trying to track the origins of coronavirus. Now compare it with the insights by Dr. Francis Boyle, international law professor at the University of Illinois and author, among others, of Biowarfare and Terrorism . He's the man who drafted the U.S. Biological Weapons Anti-Terrorism Act of 1989 signed into law by George H. W. Bush.

Dr. Boyle is convinced coronavirus is an

"offensive biological warfare weapon" that leaped out of the Wuhan BSL-4 laboratory, although he's "not saying it was done deliberately."

Dr. Boyle adds, "all these BSL-4 labs by United States, Europe, Russia, China, Israel are all there to research, develop, test biological warfare agents. There's really no legitimate scientific reason to have BSL-4 labs." His own research led to a whopping $100 billion, by 2015, spent by the United States government on bio-warfare research: "We have well over 13,000 alleged life science scientists testing biological weapons here in the United States. Actually this goes back and it even precedes 9/11."

Dr. Boyle directly accuses "the Chinese government under Xi and his comrades" of a cover up "from the get-go. The first reported case was December 1, so they'd been sitting on this until they couldn't anymore. And everything they're telling you is a lie. It's propaganda."

The World Health Organization (WHO), for Dr. Boyle, is also on it: "They've approved many of these BSL-4 labs ( ) Can't trust anything the WHO says because they're all bought and paid for by Big Pharma and they work in cahoots with the CDC, which is the United States government, they work in cahoots with Fort Detrick ." Fort Detrick, now a cutting-edge bio-warfare lab, previously was a notorious CIA den of mind control "experiments".

Relying on decades of research in bio-warfare, the U.S. Deep State is totally familiar with all bio-weapon overtones. From Dresden, Hiroshima and Nagasaki to Korea, Vietnam and Fallujah, the historical record shows the United States government does not blink when it comes to unleashing weapons of mass destruction on innocent civilians.

For its part, the Pentagon's Defense Advanced Research Project Agency (DARPA) has spent a fortune researching bats, coronaviruses and gene-editing bio-weapons. Now, conveniently – as if this was a form of divine intervention – DARPA's "strategic allies" have been chosen to develop a genetic vaccine.

The 1996 neocon Bible, the Project for a New American Century (PNAC), unambiguously stated, "advanced forms of biological warfare that can "target" specific genotypes may transform biological warfare from the realm of terror to a politically useful tool."

There's no question coronavirus, so far, has been a Heaven-sent politically useful tool, reaching, with minimum investment, the desired targets of maximized U.S. global power – even if fleetingly, enhanced by a non-stop propaganda offensive – and China relatively isolated with its economy semi paralyzed.

Yet perspective is in order. The CDC estimated that up to 42.9 million people got sick during the 2018-2019 flu season in the U.S. No less than 647,000 people were hospitalized. And 61,200 died.

This report details the Chinese "people's war" against coronavirus.

It's up to Chinese virologists to decode its arguably synthetic origin. How China reacts, depending on the findings, will have earth-shattering consequences – literally.

Setting the stage for the Raging Twenties

After managing to reroute trade supply chains across Eurasia to its own advantage and hollow out the Heartland, American – and subordinated Western – elites are now staring into a void. And the void is staring back. A "West" ruled by the U.S. is now faced with irrelevance. BRI is in the process of reversing at least two centuries of Western dominance.

There's no way the West and especially the "system leader" U.S. will allow it. It all started with dirty ops stirring trouble across the periphery of Eurasia – from Ukraine to Syria to Myanmar.

Now it's when the going really gets tough. The targeted assassination of Maj. Gen. Soleimani plus coronavirus – the Wuhan flu – have really set up the stage for the Raging Twenties. The designation of choice should actually be WARS – Wuhan Acute Respiratory Syndrome. That would instantly give the game away as a War against Humanity – irrespective of where it came from.

[Apr 24, 2020] The USA is entering its Byzantine Empire phase

Apr 24, 2020 | www.unz.com

anonymous [589] Disclaimer , says: Show Comment April 23, 2020 at 8:52 pm GMT

YOU are completely MISreading the events so yo miss the target by 90% NO it wasnt the Russians . neither the Chinese..

IT was the FREEtraders NEOcons from Wallstreet and CFR, that transfer all american manufacturing overseas (china) deabsing the dollar into fiat money, banktupted the USA traesury The USA is entering its Byzanntyne Empire pahse a Spartan roque millitary nation while inploding intrenally the Angloamerican zionists already ecided toi amke China de first world power

[Apr 24, 2020] Sometime before the 20th century closed, there was a term coined: the "Princelings". These were the extravagantly wealthy offspring of many of the leadership of the CCP, and grandchildren of the men who endured the "Long March".

Apr 24, 2020 | www.unz.com

anachronism , says: Show Comment April 23, 2020 at 8:20 pm GMT

@Anonymous How should I describe it? The Chinese Communist Party has formed a plutarchy and an oligopoly "with Chinese characteristics".

Sometime before the 20th century closed, there was a term coined: the "Princelings". These were the extravagantly wealthy offspring of many of the leadership of the CCP, and grandchildren of the men who endured the "Long March".

"Genocide" is a term that is broadly applied to what is more accurately described as "ethnic cleansing". The Hans have taken over Tibet and Xin Jiang, and have oppressed the locals in a ruthless manner, that is comparable to what the Jews have done to Palestinians.

Systematically, the Chinese are converting the indigenous populations of poorer countries into indentured servants. These countries are so indebted to their Chinese "benefactors" that they have no hope for redemption, unless the Chinese are prepared to forgive the loans. So far, the Chinese have not been disposed to do so.

The effect and the consequence of these developments are close enough to warrant the comparison.

[Apr 10, 2020] Global Times blasts Outlaw US Empire COVID response:

Apr 10, 2020 | www.globaltimes.cn
Global Times blasts Outlaw US Empire COVID response :

"The vicious virus, the polarization of US politics and deepening international divergences have plunged humanity into unprecedented uncertainties. A jumbled, irresponsible and impulsive US greatly enhanced the risks the world is facing.

"What's worse, the US did not engage in any reflection, and the inability of its government was only attributed to partisanship. The anti-China element in its public opinion has been brewing with the instigation of the administration and some politicians. This has greatly crumbled the US' self-correction ability.

"The harm on humanity caused by a virus, no matter how frightening it is, only remains at the physical level. But the US destruction at the political level is amplifying this crisis that endangers global governance. Even if the pandemic is put under control, humanity has to face the turbulence post-pandemic. Such dual uncertainties have gone beyond the imagination of people even with their decades of living experience."

IMO and contrary to the editorial's conclusion, "populist politics" had nothing to do with Trump's beyond mediocre response; rather, it's all been ideological beginning with the utter lack of preparation.

Posted by: karlof1 | Apr 9 2020 17:22 utc | 108

[Mar 27, 2020] Senior officials in the Trump administration agreed to new measures to restrict the global supply of chips to China's Huawei Technologies, sources familiar with the matter said, as the White House ramps up criticism of China over coronavirus.

Mar 27, 2020 | www.moonofalabama.org

Likklemore , Mar 26 2020 21:56 utc | 66

Is the troop deployment along the Canadian border is to stop anyone interfering in the coming chaos?

Posted by: Ian2 | Mar 26 2020 20:34 utc | 36

You have a point there --the coming chaos after the COVID-19 Health crisis.

Wondering if Trudeau knows about the fences that were erected this morning?

Maybe I missed Trump's tweet on his declaration of War.

- He has imposed more sanctions on Iranians.
- Indicted Maduro of Venezuela on narco trafficking, sponsor of terrorism; placed a $15 million bounty on his head --straight from the Panama playbook.

and this beauty - continues his trade war on China because -----

Exclusive: U.S. prepares crackdown on Huawei's global chip supply - sources

(Reuters) - Senior officials in the Trump administration agreed to new measures to restrict the global supply of chips to China's Huawei Technologies, sources familiar with the matter said, as the White House ramps up criticism of China over coronavirus.

The move comes as ties between Washington and Beijing grow more strained, with both sides trading barbs over who is to blame for the spread of the disease and an escalating tit-for-tat over the expulsion of journalists from both countries.

Under the proposed rule change, foreign companies that use U.S. chipmaking equipment would be required to obtain a U.S. license before supplying certain chips to Huawei. The Chinese telecoms company was blacklisted last year, limiting the company's suppliers.[.]
"This is going to have a far more negative impact on U.S. companies than it will on Huawei, because Huawei will develop their own supply chain," trade lawyer Doug Jacobson said. "Ultimately, Huawei will find alternatives."[.]

Huawei has been doing just that - finding alternatives. Trade wars have been proven to end badly. They end up going hot.

[Mar 19, 2020] Much of the US elite is sinecured in the media, foreign policy, and national security state establishments

Mar 19, 2020 | www.unz.com

Anonymous [252] Disclaimer , says: Show Comment March 18, 2020 at 6:53 pm GMT

@Sean

Here was me thinking the Western elites wanted to continue making money on Chinese growth.

Much of the US elite is sinecured in the media, foreign policy, and national security state establishments, whose status depends on the relative power and prestige of the US state. The relative power and prestige of the US state is jeopardized by the continued growth of China.

If you follow US coverage of China in the US, you'll find that this US elite is generally critical of China, although style and presentation vary. The liberal "China watchers" among the US elite in the media and foreign policy establishment tend to focus on human rights, democracy promotion, and liberalism as vectors to attack the Chinese state. They tend to be polished and more subtle rather than explicitly hostile.

The US elite in the national security establishment tend to be more overt about military containment and or confrontation with China, and on developing an anti-China coalition in the Pacific.

[Mar 09, 2020] COVID-19 burst the asset price bubble. In a new low, Pompeo passes buck to Beijing

Mar 09, 2020 | www.moonofalabama.org

CitizenX , Mar 9 2020 2:58 utc | 57

"Perhaps this will finally burst the out-of-control asset price bubble and drop-kick the Outlaw US Empire's economy into the sewer as the much lower price will rapidly slow the recycling of what remains of the petrodollar. Looks like Trump's reelection push just fell into a massive sinkhole as the economy will tank."

Posted by: karlof1 | Mar 9 2020 1:29 utc | 49
....

Call me crazy- but this Virus provides great cover as to why the economy plummets, the Murikan sheeple will eat it up. Prepare for the double media blitz on the virus AND the economy tanking as its result.

Don't worry...just continue to go shopping and take those selfies.


vk , Mar 9 2020 3:37 utc | 60

Pompeo accuses China of giving "imperfect data" on COVID-19, blame it for US failure in containing the virus:

In new low, Pompeo passes buck to Beijing

It will be hard for the American people to swallow that one. From day 1 I've read a lot of "articles" and "papers" from know-it-all Western doctors and researchers from commenters here in this blog, all of them claiming to have very precise and definitive data on what was happening. A lot of bombastic conclusions I've read here (including one that claimed R0 was through the roof - it's funny how the R0 is being played down after it begun to infect the West; suddenly, it's all just a stronger cold...).

And that's just here, in MoA's comment section. Imagine what was being published in the Western MSM. I wouldn't be surprised there was a lot of rednecks popping their beers celebrating the fall of China already.

--//--

China to back global virus fight with production boost

Since China allegedly had a lot of idle industrial capacity - that is, if we take the Western MSM theories seriously (including the fabled "ghost towns" stories) - then boosting production wouldn't be a problem to China.

Disclaimer: it's normal for any kind of economy - socialist or capitalist - to have a certain percentage of idle capacity. That's necessary in order to insure the economy against unexpected oscillations in demand and to give space of maneuvre for future technological progress. Indeed, that was one of the USSR's mistakes with its economy: they instinctly thought unemployment should be zero, and waste should also be zero, so they planned in a way all the factories always sought to operate at 100% capacity. That became a problem when better machines and better methods were invented, since the factory manager wouldn't want to stop production so that his factory would fall behind the other factories in the five-year plan's goals. So, yes, China indeed has idle capacity - but it is mainly proposital, not a failure of its socialist planning.

--//--

... ... ...

vk , Mar 9 2020 3:56 utc | 61
This is important. The only reason I didn't comment about it is I hadn't the data:

Follow the money: Understanding China's battle against COVID-19

By the latest count, in addition to yuan loans worth 113 billion U.S. dollars granted by financial institutions and more than 70 billion U.S. dollars paid out by insurance companies, the Chinese government has allocated about 13 billion U.S. dollars to counter fallout from the outbreak.

The numbers could look abstract. However, breaking the data down reveals how the money is being carefully targeted. The government is allocating the money based on a thorough evaluation of the system's strengths.

...

Local governments are equipped with more local knowledge that allows them to surgically support key manufacturers or producers that are struggling.

Together, they have borne the bulk of the financial responsibility with an allocation of equivalently more than nine billion U.S. dollars. It is carefully targeted, divided into hundreds of thousands of individual grants that are tailor-made by and for each county, town, city and business.

This is the mark of a socialist system.

The affected capitalist countries will simply use monetary devices (so the private sector can offset the losses) and burn their own reserves with non-profitable palliatives such as masks, tests, other quarantine infrastructure etc.

Pft , Mar 9 2020 4:44 utc | 64
Sounds like US socialism. Basically corporate socialism. Loans are just dollars created out of thin air, same as in US. Insurance payouts come from premiums, nothing socialist about that, pure capitalism. Government hand outs to provinces, cities, state owned corporations,well all of these are run by the party elite, its called pork. US handed out a lot of pork during the last financial crisis. None of it trickled down to the little people. I doubt it does in China either.

All crisis are opportunities for the elite to get richer. Those Biolake firms in Wuhan will make out like bandits. Chinese firms will double the price of API's sold to India and US. China will knock out the small farmer in the wake of concurrent chicken and swine flu so the big enterprises take over, a mimicry of the US practice over the last century. China tech firms will double up on surveillance apps, censoring tools, surveillance and toughen up social credit restrictions. 5G will allow China to experiment with nanobots to monitor citizens health from afar (thanks to Harvards Dr Leiber).

Oh yes, socialism with Chinese characteristics is a technocratic capitalists dream. Thats why the West has never imposed sanctions on China since welcoming them to the global elites club. Sanctions are reserved for those with true socialism, especially those who preach equality and god forbid, democracy.

uncle tungsten , Mar 9 2020 8:35 utc | 83

CitizenX #57

Call me crazy- but this Virus provides great cover as to why the economy plummets, the Murikan sheeple will eat it up. Prepare for the double media blitz on the virus AND the economy tanking as its result.


Don't forget the Russians.. They have to be to blame. See they just kept the price of oil low so now the rest of the world gets gas cheaper than the USA. The USA motorist now has to bail out the dopey frackers and shale oil ponzis.

Global envy will eat murica. Maybe they will just pull out all their troops and go home. ;)

[Mar 06, 2020] Over eighty percent of the medicines used in the United States are manufactured in China

Mar 06, 2020 | www.unz.com

Anon 2 , says: Show Comment February 25, 2020 at 5:39 am GMT

As far as I know, no one here has mentioned that because of the globalization drive by Clinton, Bush, and Obama, 85% of the medicines used in the United States are manufactured in China. Even U.S. troops depend on medicines from China! China could bring the entire health system in the U.S. to a stop in a matter of months. This is what our inept elites have done to America – they gave away the shop. People are beginning to realize that manufacturing our own medicines is a matter of national security but it'll take years to bring the factories back to the U.S. So much for globalization.

Rod Dreher's blog IMHO is the best source for quick info on the coronavirus because he is in touch with American M.D.'s who are married to women from China who in turn are in contact with relatives at home and the Chinese media. Of course, Rod himself can be hysterical at times but, apparently, that's what it takes to have a successful blog. The M.D.'s are reporting that the U.S. is already beginning to run out of certain medications, and recommend stocking up on the basic necessities, i.e., recommend assuming the mental framework of the survivalists – have plenty of canned goods, etc and refill your prescriptions ASAP. This is what many people here seem to forget – the coronavirus's indirect effects due to having no access to medications may be much worse than the direct pathogenic effects.

[Feb 29, 2020] A very interesting and though provoking presentation by Ambassador Chas Freeman "America in Distress: The Challenges of Disadvantageous Change"

Highly recommended!
Notable quotes:
"... the American-led takedown of the post-World War II international system has shattered long-standing rules and norms of behavior. ..."
"... The combination of disorder at home and abroad is spawning changes that are increasingly disadvantageous to the United States. With Congress having essentially walked off the job, there is a need for America's universities to provide the information and analysis of international best practices that the political system does not. ..."
Feb 29, 2020 | angrybearblog.com

likbez , February 29, 2020 7:38 pm

A very interesting and though provoking presentation by Ambassador Chas Freeman "America in Distress: The Challenges of Disadvantageous Change"

https://www.youtube.com/watch?v=mvILLCbOFo4

I think this would be very informative for anybody seriously interested in the USA foreign policy. Listening to him is so sad to realize that instead of person of his caliber we have Pompous Pompeo, who forever is frozen on the level of a tank repair mechanical engineer, as the Secretary of State.

Published on Feb 24, 2020

In the United States and other democracies, political and economic systems still work in theory, but not in practice. Meanwhile, the American-led takedown of the post-World War II international system has shattered long-standing rules and norms of behavior.

The combination of disorder at home and abroad is spawning changes that are increasingly disadvantageous to the United States. With Congress having essentially walked off the job, there is a need for America's universities to provide the information and analysis of international best practices that the political system does not.

Ambassador Chas W. Freeman, Jr. is a senior fellow at Brown University's Watson Institute for International and Public Affairs, a former U.S. Assistant Secretary of Defense, ambassador to Saudi Arabia (during operations Desert Shield and Desert Storm), acting Assistant Secretary of State for African Affairs, and Chargé d'affaires at both Bangkok and Beijing. He began his diplomatic career in India but specialized in Chinese affairs. (He was the principal American interpreter during President Nixon's visit to Beijing in 1972.)

Ambassador Freeman is a much sought-after public speaker (see http://chasfreeman.net ) and the author of several well-received books on statecraft and diplomacy. His most recent book, America's Continuing Misadventures in the Middle East was published in May 2016. Interesting Times: China, America, and the Shifting Balance of Prestige, appeared in March 2013. America's Misadventures in the Middle East came out in 2010, as did the most recent revision of The Diplomat's Dictionary, the companion volume to Arts of Power: Statecraft and Diplomacy. He was the editor of the Encyclopedia Britannica entry on "diplomacy."

Chas Freeman studied at the Universidad Nacional Autónoma de México and in Taiwan, and earned an AB magna cum laude from Yale University as well as a JD from the Harvard Law School.

He chairs Projects International, Inc., a Washington-based firm that for more than three decades has helped its American and foreign clients create ventures across borders, facilitating their establishment of new businesses through the design, negotiation, capitalization, and implementation of greenfield investments, mergers and acquisitions, joint ventures, franchises, one-off transactions, sales and agencies in other countries.

He is the author of several books including the most recent

Interesting times: China, America, and the shifting balance of prestige (2013)

[Feb 20, 2020] China denounces US lies at the Munich Security Conference by Peter Symonds

Feb 19, 2020 | www.wsws.org

In unusually blunt statements, top Chinese officials hit back during last weekend's Munich Security Conference at Washington's confrontational stance toward Beijing on a range of issues, including the Chinese tech giant Huawei and China's response to the coronavirus.

Trump administration officials, supported to the hilt by top Democrats, took a particularly aggressive attitude at the conference, warning European powers that intelligence sharing could end if Huawei equipment were used in building 5G telecommunications networks.

US Secretary of State Mike Pompeo branded "Huawei and other Chinese state-backed tech companies" as "Trojan horses for Chinese intelligence." In his speech, US Defence Secretary Mark Esper accused Beijing of carrying out a "nefarious strategy" through Huawei.

In a bid to intensify its pressure on its European allies, the US last week announced new charges of racketeering and theft of trade secrets against Huawei. These follow the arrest of the company's chief financial officer, Meng Wanzhou, in Canada last year after the US filed charges of fraud and sanctions evasion, and sought her extradition.

Esper made clear that the US attack on China was across the board. He declared that under President Xi Jinping's rule, "the Chinese Communist Party is heading even faster and further in the wrong direction -- more internal repression, more predatory economic practices, more heavy-handedness, and most concerning for me, a more aggressive military posture."

Asked about the speeches by Pompeo and Esper, Chinese Foreign Minister Wang Yi did not mince words, branding the US allegations as "lies." He said their remarks were part of "a common scenario" everywhere they went. "I don't want to waste our time responding to each and every thing they've said. The thing I want to say is that all these accusations against China are lies and not based on facts."

Wang pointed to the driving force behind the confrontation -- the US drive to ensure its continued global domination by every available means. "The root cause of all these problems and issues is that the US does not want to see the rapid development and rejuvenation of China, still less would they want to accept the success of a socialist country, but that is not fair, China has the right to develop."

China, with its burgeoning markets, stock exchanges, billionaires and deep social divide, is not a socialist country. In fact, Huawei, as Wang said in countering US criticism, is a privately-owned company: the world's largest telecommunications equipment provider with nearly 200,000 employees.

Wang described the US attack on Huawei as "immoral" and asked: "Why can't America accept that other countries' companies can also display their talent in the economy, in technology? Perhaps deep down, it doesn't hope to see other countries develop." He accused the US of resorting to rumours to defame Huawei and declared there was no credible evidence that the company has a so-called back door that harms US security.

The US accusations against China and Huawei are utterly hypocritical. The revelations by the whistleblower Edward Snowden demonstrated that the US routinely spies electronically on the world's population, including governments and government leaders, allies and rivals alike, as well as its own citizens.

The US intelligence establishment has long relied on electronic "back doors" provided by American tech corporations to gather intelligence. The use of Huawei equipment not only threatens the economic position of US companies, but could undermine US spying operations.

China's forthright push back against heavy US criticism in Munich stems firstly from the relentless campaign by Washington, not only in propaganda, but through trade war measures and a huge military build-up in Asia against Beijing. Secondly, the Chinese regime is seeking support from the European powers. Wang's comments gained traction in Munich amid deepening conflicts between the US and its erstwhile European allies.

Britain has given the go-ahead for the inclusion of Huawei components in non-core aspects of its 5G rollout, while Germany and France have signaled they will do the same. The European decisions are largely driven by technical and economic factors, as Huawei is a leader in 5G technology and produces at a lower cost.

Washington's threats to end intelligence-sharing arrangements with the European powers could end up affecting US spying operations as much as those of its European rivals. The New York Times

The US has sought to exploit the coronavirus outbreak in China to add to the barrage of criticism against Beijing. Trump's economic adviser Larry Kudlow last week complained about the lack of Chinese transparency over the disease. He declared that Washington was disappointed that American health experts had not been allowed into China, and questioned Chinese statistics.

A considerable portion of Wang's speech to the Munich Security Conference was devoted to defending China's handling of the outbreak. He said the coronavirus largely had been confined to the city of Wuhan and Hubei Province, and the number of cases outside China was a small percentage of the total. Wang said this was the outcome of the rapid development of a test for the virus, the dispatch of 20,000 health workers to the area and the building of new health facilities.

Wang said: "In the spirit of openness and transparency, we promptly notified the world about the outbreak and shared the genetic sequence of the virus. We have been working closely with WHO [World Health Organisation], invited international experts to join our ranks, and provided assistance and facilitation to foreign nationals in China."

In comments to Reuters, the Chinese foreign minister effectively criticised the harsh travel restrictions imposed by the US on any foreign nationals coming from China. "Some countries have stepped up measures, including quarantine measures, which are reasonable and understandable, but for some countries they have overreacted which has triggered unnecessary panic," he said.

If Washington expected European support on the issue, its hopes were dashed. Conference chairman Wolfgang Ischinger praised China's response to the epidemic and declared it was "not getting a very fair deal I think China deserves a little bit of compassion and cooperation, and encouragement rather than only criticism."

China's reaction to the US criticisms in Munich underscores again the sharpening geo-political rivalries and break-up of longstanding alliances being fueled by worsening global economic conditions. Far from responding to the lack of support from Europe against China by moderating its confrontation, the US will intensify its provocative campaign, not just against Beijing, but any threat to its global position, including from its European allies.

[Feb 14, 2020] US Warms Up Its Own Old Spy Stories To Bash Putative Chinese Espionage

Feb 14, 2020 | www.moonofalabama.org

That such cynicism was wholly justified became evident when Edward Snowden revealed the NSA machinations. Soon thereafter Juniper Networks, a provider of large backbone equipment, was found to have at least two NSA backdoors in its operation system. Other 'western' telecommunication equipment companies were similarly manipulated :

Even neutral countries firms are not off-limits to NSA manipulations. A former Crypto AG employee confirmed that high-level US officials approached neutral European countries and argued that their cooperation was essential to the Cold War struggle against the Soviets. The NSA allegedly received support from cryptographic companies Crypto AG and Gretag AG in Switzerland, Transvertex in Sweden, Nokia in Finland, and even newly-privatized firms in post-Communist Hungary. In 1970, according to a secret German BND intelligence paper, supplied to the author, the Germans planned to "fuse" the operations of three cryptographic firms-Crypto AG, Grattner AG (another Swiss cipher firm), and Ericsson of Sweden.

So why was the allegedly secret CIA history of an already known story leaked right now? And why was it also leaked to a German TV station?

Sanho Tree points to the likely reason:

If you want to understand why the US intelligence community is so freaked out about Huawei, it's because they've been playing the same game for decades.

The WaPo story itself also makes that connection :

There are also echoes of Crypto in the suspicions swirling around modern companies with alleged links to foreign governments, including the Russian anti-virus firm Kaspersky , a texting app tied to the United Arab Emirates and the Chinese telecommunications giant Huawei .

The warmed up Crypto AG story is a subtle smear piece against Huawei and Kapersky.

The U.S. wants to convince European countries to not buy Huawei products for their 5G networks. It wants to remind them that telecommunication products can be manipulated. It wants to instill fear that China would use Huawei to spy on foreign countries just like the U.S. used Crypto AG.

This is also the reason for this recent misleading Reuters headline which the story itself debunked:

Germany has proof that Huawei worked with Chinese intelligence: Handelsblatt

"At the end of 2019, intelligence was passed to us by the U.S., according to which Huawei is proven to have been cooperating with China's security authorities," the newspaper quoted a confidential foreign ministry document as saying.

'U.S. intelligence' that is handed over to manipulate someone is of course not 'proof' for anything.

The U.S. is pressing its allies on a very high level:

Secretary of State Mike Pompeo declared the Chinese Communist Party "the central threat of our times" on Thursday, even as he sought to talk up the prospects of a United States trade deal with Britain, which rebuffed American pressure to ban a Chinese company from future telecommunications infrastructure.

The scathing criticism of the Chinese government was the strongest language Mr. Pompeo has used as the Trump administration seeks to convince American allies of the risks posed by using equipment from Huawei, a Chinese technology giant.

A week after Pompeo's panic message Trump took to the phone to convince Boris Johnson who was not impressed :

Donald Trump's previously close relationship with UK Prime Minister Boris Johnson looks close to collapse, following new revelations that the president slammed down the phone on him.

Trump's behaviour during last week's call was described by officials as „apoplectic," and Johnson has now reportedly shelved plans for an imminent visit to Washington.
...
The call, which one source described to the Financial Times as „very difficult," came after Johnson defied Trump and allowed Chinese telecoms company Huawei the rights to develop the UK's 5G network.

Trump's fury was triggered by Johnson backing Huawei despite multiple threats by Trump and his allies that the United States would withdraw security co-operation with the UK if the deal went ahead.

Trump's threats reportedly „irritated" the UK government, with Johnson frustrated at the president's failure to suggest any alternatives to the deal.

Huawei products are pretty good, relatively cheap and readily available. They are just as buggy as the products of other equipment providers. The real reason why the U.S. does not want anyone to buy Huawei products is that it is the one large network company the U.S. can not convince to provide it with backdoors.

European countries do not fear China or even Chinese spying. They know that the U.S. is doing similar on a much larger scale. Europeans do not see China as a threat and they do not want to get involved in the escalating U.S.-China spat:

"Whose side should your country take in a conflict between the US and China?"

Source - bigger

The U.S. just indicted four Chinese military officers for the 2017 hacking of Equifax during which millions of addresses and financial data were stolen. The former CIA Director General Michael Hayden had defended such pilfering as "honorable espionage" and Equifax had made it laughably easy to get into its systems :

[J]ust five days after Equifax went public with its breach -- KrebsOnSecurity broke the news that the administrative account for a separate Equifax dispute resolution portal catering to consumers in Argentina was wide open, protected by perhaps the most easy-to-guess password combination ever: "admin/admin."

To indict foreign military officers for spying when they simply pilfered barely protected servers is seen as offensive. What will the U.S. do when China does likewise?

Every nation spies. It is one of the oldest trades in this world. That the U.S. is making such a fuss about putative Chinese spying when it itself is the biggest sinner is unbecoming.

Posted by b on February 11, 2020 at 18:52 UTC | Permalink

[Feb 14, 2020] Why the USA is fighting Huawei without offering any super alternative

Feb 14, 2020 | www.moonofalabama.org

james , Feb 11 2020 20:13 utc | 13

thanks b...no shortage of hypocrisy in all this...

regarding @ 4 mike r which @8 ian2 linked properly to, i enjoyed the last paragraph which i think sums it up well.. here it is..

"I continue to believe that the United States cannot effectively restrict the spread of a technology under Chinese leadership without offering a superior product of its own. The fact that the United States has attempted to suppress Huawei's market leadership in the absence of any American competitor in this field is one of the oddest occurrences in the history of US foreign policy. If the US were to announce something like a Manhattan Project for 5G broadband and solicit the cooperation of its European and Asian allies, it probably would get an enthusiastic response. As matters stand, America's efforts to stop Huawei have become an embarrassment."


Petri Krohn , Feb 11 2020 20:38 utc | 16

The reason European customers trust Huawei is because Huawei uses open-source software or at least makes their code available for inspection by customers.

Closed-source software cannot provide secrecy or security. This was vividly demonstrated last month when NSA revealed a critical vulnerability in Windows 10 that rendered any cryptographic security worthless.

Critical Windows 10 vulnerability used to Rickroll the NSA and Github

Rashid's simulated attack exploits CVE-2020-0601, the critical vulnerability that Microsoft patched on Tuesday after receiving a private tipoff from the NSA. As Ars reported, the flaw can completely break certificate validation for websites, software updates, VPNs, and other security-critical computer uses. It affects Windows 10 systems, including server versions Windows Server 2016 and Windows Server 2019. Other versions of Windows are unaffected.

The flaw involves the way the new versions of Windows check the validity of certificates that use elliptic-curve cryptography. While the vulnerable Windows versions check three ECC parameters, they fail to verify a fourth, crucial one, which is known as a base point generator and is often represented in algorithms as 'G.' This failure is a result of Microsoft's implementation of ECC rather than any flaw or weakness in the ECC algorithms themselves.

The attacker examines the specific ECC algorithm used to generate the root-certificate public key and proceeds to craft a private key that copies all of the certificate parameters for that algorithm except for the point generator. Because vulnerable Windows versions fail to check that parameter, they accept the private key as valid. With that, the attacker has spoofed a Windows-trusted root certificate that can be used to mint any individual certificate used for authentication of websites, software, and other sensitive properties.

I do not believe this vulnerability was a bug. It is more likely a backdoor intentionally left in the code for NSA to utilize. Whatever the case, NSA must have known about it for years. Why did they reveal it now? Most likely someone else had discovered the back door and may have been about to publish it.

(I commented on these same issues on Sputnik a few weeks ago.)

Piotr Berman , Feb 11 2020 23:04 utc | 25
The other possible US objection is that Huawei will only let their customers spy, not third countries.

Posted by: Paul Cockshott | Feb 11 2020 21:57 utc | 24

It reminds me a joke about Emperor Napoleon arriving in a town. The population, the notables and the mayor are greeting him, and the Emperor says "No gun salute, hm?". Mayor replies "Sire, we have twenty reasons. Fist, we have canons", "Enough", replied Napoleon.

Isn't the "other possible US objection" exactly "Enough"? Of course, USA is not a mere "third country", USA is the rule maker of rule based international order.

[Feb 14, 2020] Last year I was so mad at USA bulling Huawei and ZTE, decided to buy a Huawei Honor View V20 PCT-L29 Smartphone.

Feb 14, 2020 | www.moonofalabama.org

JC , Feb 13 2020 0:11 utc | 90

Last year I was so mad at USA bulling Huawei and ZTE, decided to buy a Huawei Honor View V20 PCT-L29 Smartphone. Global version on T-Mobile network . Still fumbling at the setting. This smartphone installed GPS and BeiDou (BDS). I never used Google searches but instead DuckDuckGo long ago

[Feb 14, 2020] I'm amazed that Chief Poodle Boris did not obediently obey His Master's Voice.

Feb 14, 2020 | www.moonofalabama.org

Ash Naz , Feb 12 2020 0:20 utc | 32

I'm amazed that Chief Poodle Boris did not obediently obey His Master's Voice.

What is going on?

I could understand if this was DNC/CIA-MI6 passing orders down the line (a la Skripal) to upset Trump but the US Intel Community has no interest in such a snub from the UK Govt.

Obviously this isn't the UK Govt asserting their independence from US instruction because such a thing has never happened in my lifetime.

Wierd.

Anyway, too bad I won't be able to read the thread on my phone tomorrow as Bruce has just broken the thread with his million-character link. :-(


Piotr Berman , Feb 12 2020 3:11 utc | 33

I'm amazed that Chief Poodle Boris did not obediently obey His Master's Voice.

What is going on?

Posted by: Ash Naz | Feb 12 2020 0:20 utc | 39

However I cringe and the obedient vassals, and Boris who may well be the Chief Poodle, given that exceedingly cute Justin is from another breed, Newtrumplander. But even poodles have privacy concerns, you know? What you web surf, what you buy, whom do you send gifts and WHAT gifts (dominatrix set?). However you trust NSA to use all that info solely for good causes, well, you know, not everyone is an exhibitionist...

Laguerre , Feb 12 2020 9:23 utc | 49
I'm amazed that Chief Poodle Boris did not obediently obey His Master's Voice.

Posted by: Ash Naz | Feb 12 2020 0:20 utc | 32

The reason is said to be that they've already bought and installed a lot of the Huawei equipment, and the new decision is just a fake, to justify the position.

https://www.theguardian.com/commentisfree/2020/jan/28/huawei-security-boris-johnson

Ash Naz , Feb 12 2020 13:17 utc | 52

@Laguerre:

The reason is said to be that they've already bought and installed a lot of the Huawei equipment, and the new decision is just a fake, to justify the position.

The financial angle makes sense, but what is the price of disobedience?

@Piotr Berman:

But even poodles have privacy concerns

The preventing blackmail angle makes sense too

And how useful to be able to use blackmail to get allies to jump when ordered? It's often said that Washington has no real friends, just obedient vassals.

Jon_in_AU , Feb 12 2020 14:50 utc | 54

Ash Naz|Feb 12 2020 0:20 utc|32 & Posted by: Laguerre|Feb 12 2020 9:23 utc|47

It would appear to me that the UK, by allowing Huawei (limited) access to their market, are achieving several advantageous outcomes.

1) They are preventing potential for a duopoly of Eriksson & Nokia on the hardware by allowing a third player into the market.
2) By only allowing a maximum of 35% of the market share, they prevent Huawei from quickly out-competing the others on price and capturing a monopoly.
3) They are only allowing access to the network comm's market, and not the core of the system, which may or may not protect against unwanted data capture and intrusion (by exactly whom remains the question - as per the article above).
4) It allows the four main network providers (especially EE, owned by BT) and the accompanying state surveillance apparatus the ability to familiarise themselves with Huawei tech/code/vulnerabilities which may be invaluable going forward. On this point alone, the USA (and Australia, among others) are doing themselves a great disservice by missing out on a learning experience from arguably the world leader in this technology.

As md|Feb 12 2020 8:29 utc|44 alluded to, they are claiming to allow clintele access to all code (and the freedom to modify it as desired). So denying them access to a particular market only hinders the technical understanding of the technology and its implementation, leaving such states behind.

The USA (and its' vassal client states) once again shoot themselves in the foot in a vain attempt to create and re-create the archetypal "boogeyman" for the populace to wring their hands over and keep them up at night. Fools.

Ps. Thank you B for another illuminating read.

[Feb 14, 2020] Trump and US has a horrible hand to play regarding Huawei. It's desperation time!

Feb 14, 2020 | www.moonofalabama.org

daffyDuct , Feb 12 2020 3:51 utc | 35


Trump and US has a horrible hand to play regarding Huawei. It's desperation time!

Mike Pence tries to link UK/US trade deal with Trump Huawei ban.

https://www.politicshome.com/news/world/united-states/donald-trump/news/109751/mike-pence-hints-us-uk-trade-deal-risk-because


Among Huawei, Ericsson, Nokia, looks like Nokia's way behind.

https://www.itnews.com.au/news/fearing-huawei-curbs-deutsche-telekom-tells-nokia-to-shape-up-537710

U.S. to review new curbs on Huawei, China in Feb. meeting: sources (The Commerce Dept is keeping their potential "rules" vague to buy time)

https://uk.reuters.com/article/us-usa-huawei-tech-meeting/u-s-to-review-new-curbs-on-huawei-china-in-feb-meeting-sources-idUKKBN1ZZ01H?rpc=401&

Pentagon Cites Supply Chain Sustainability For Opposing Huawei Sanctions

https://wccftech.com/pentagon-huawe-sanctions-supply-chain/


Barr scoffs at White House's anti-Huawei 5G approach
https://www.axios.com/barr-scoffs-at-white-houses-anti-huawei-5g-proposal-e3afb2c2-7f21-4609-a02e-ae3753f514f5.html

To counter Huawei, U.S. could take 'controlling stake' in Ericsson, Nokia: attorney general

https://www.reuters.com/article/us-usa-china-espionage/to-counter-huawei-u-s-could-take-controlling-stake-in-ericsson-nokia-attorney-general-idUSKBN2001DL

(Jan 2018) Scoop: Trump team considers nationalizing 5G network
https://www.axios.com/trump-team-debates-nationalizing-5g-network-f1e92a49-60f2-4e3e-acd4-f3eb03d910ff.html

I enjoy David Goldman (Spengler) article at Asia Times. He accurately notes the vast lead Huawei/China has and then provides "but we can do something" bromides. What do mean "we", kimosabe?


daffyDuct , Feb 12 2020 3:55 utc | 36

Per a quote from Newt Gingrich's book ""Trump vs. China: Facing America's Greatest Threat", quoted recently by David Goldman. Gingrich didn't say who was the greatest threat, Trump or China.

"It is not China's fault that in 2017, 89% of Baltimore eighth graders couldn't pass their math exam

"It is not China's fault that too few Americans in K-12 and in college study math and science to fill the graduate schools with future American scientists

"It is not China's fault that, faced with a dramatic increase in Chinese graduate students in science, the government has not been able to revive programs like the 1958 National Defense Education Act

"It is not China's fault the way our defense bureaucracy functions serves to create exactly the 'military-industrial complex' that President Dwight Eisenhower warned about

"It is not China's fault that NASA has been so bureaucratic and its funding so erratic that there is every reason to believe that China is catching up rapidly and may outpace us. This is because of us not because of them

"It is not China's fault that the old, bureaucratic, entrenched American telecommunications companies failed to develop a global strategy for 5G over the 11 years that the Chinese company Huawei has been working to become a world leader "

farm ecologist , Feb 12 2020 3:59 utc | 37
I feel less uncomfortable about the possibility of being spied on by the Chinese than I do about the probability of being spied on by the US.
ak74 , Feb 12 2020 6:09 utc | 42
Here is another Orwellian irony that has been forgotten down the MemoryHole.

Way back in 2014, Edward Snowden revealed that the Americans (and the NSA in particular) were spying on Huawei dating back to at least 2007.

This American spying occurred before the current national security hysterics about Huawei, indeed, before most people in the USA had even heard of the company itself.

As this article states,

"In the final analysis, the NSA spying campaign against Huawei has two fundamental purposes. First, Huawei (unlike the American telecommunications companies) does not allow the NSA free access to its infrastructure to conduct spying on its products' users. Accordingly, as part of its mission of spying on the entire world's population, the NSA hacked into Huawei's systems in order to gather information traveling through its infrastructure.

Second, the spying campaign against Huawei is part of broader efforts to protect the profits and interests of American telecommunications companies at the expense of Huawei. This is the purpose of the NSA's particular interest in Huawei's executives and their 'leadership plans and intentions.'"

Edward Snowden exposes NSA spying against Chinese telecom firm Huawei
https://www.wsws.org/en/articles/2014/03/24/huaw-m24.html?view=print

md , Feb 12 2020 8:29 utc | 46
The other possible US objection is that Huawei will only let their customers spy, not third countries.
Posted by: Paul Cockshott | Feb 11 2020 21:57 utc | 20

So it seems. In the words of Ren Zhengfei 'When we transfer the tech, they can modify code on top of my tech, once that's through, it's not only shielded from me, it's shielded from everyone else in the world US 5G will be their own thing, there's no security concern, the only concern will be the U.S. keeping American companies (which bought it) in check.'

https://www.youtube.com/watch?v=LUUwK3DxGlA&feature=youtu.be

[Feb 03, 2020] Numerical illiteracy of the modern world

The Western MSM is relentlessly trying to sell this coronavirus epidemic as a China failure
Feb 03, 2020 | www.moonofalabama.org
Jeff Harrison , Feb 2 2020 17:24 utc | 9
This corona virus panic is interesting. RT has an interesting piece that points out that corona virus has been officially recognized in some 8,000 odd people and 200 odd people have died from it, we need a sense of perspective. World wide seasonal flu, kills between 350,000 and 600,000 people each year. Tuberculosis kills over 1,000,000 people each year. Malaria kills a similar number. AIDS killed over 500,000 last year. And we're panicking about 200 or so?

TJ , Feb 2 2020 19:11 utc | 23

Just had an email from a company I deal with in China, the relevant passages-

2. The company has been following instructions from the Chinese government to postpone the Spring Festival holiday to Feb. 9th, 2020 if not any further postpone. But, we believe most of our services should be provided as usual since then.

5. We also would like your attention that there's yet no evidence or cases to support the transmission of the novel coronavirus through packages or imported goods. According to the Centers for Disease Control and Prevention (CDC) of the US, because of poor survivability of these coronaviruses on surfaces, there is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures. The National Health Commission of the People's Republic of China advises that coronavirus is spread most often by respiratory droplets from one person to another, regular packages from Wuhan can be received as usual. Reference links are attached as the footnote below for your references.[1]
6. The Company will take proactive measures like ultraviolet light to ensure a safe and healthy environment of its warehouse. Disinfection work will be conducted before each delivery.

[Jan 21, 2020] How a Hidden Parliamentary Session Revealed Trump's True Motives in Iraq by Whitney Webb

Notable quotes:
"... The Americans are the ones who destroyed the country and wreaked havoc on it. They have refused to finish building the electrical system and infrastructure projects. They have bargained for the reconstruction of Iraq in exchange for Iraq giving up 50% of oil imports. So, I refused and decided to go to China and concluded an important and strategic agreement with it. Today, Trump is trying to cancel this important agreement. ..."
"... After my return from China, Trump called me and asked me to cancel the agreement, so I also refused, and he threatened [that there would be] massive demonstrations to topple me. Indeed, the demonstrations started and then Trump called, threatening to escalate in the event of non-cooperation and responding to his wishes, whereby a third party [presumed to be mercenaries or U.S. soldiers] would target both the demonstrators and security forces and kill them from atop the highest buildings and the US embassy in an attempt to pressure me and submit to his wishes and cancel the China agreement." ..."
"... It could also explain why President Trump is so concerned about China's growing foothold in Iraq, since it risks causing not only the end of the U.S. military hegemony in the country but could also lead to major trouble for the petrodollar system and the U.S.' position as a global financial power. Trump's policy aimed at stopping China and Iraq's growing ties is clearly having the opposite effect, showing that this administration's "gangster diplomacy" only serves to make the alternatives offered by countries like China and Russia all the more attractive. ..."
Jan 21, 2020 | www.unz.com

... ... ...

After the feed was cut, MPs who were present wrote down Abdul-Mahdi's remarks, which were then given to the Arabic news outlet Ida'at . Per that transcript , Abdul-Mahdi stated that:

The Americans are the ones who destroyed the country and wreaked havoc on it. They have refused to finish building the electrical system and infrastructure projects. They have bargained for the reconstruction of Iraq in exchange for Iraq giving up 50% of oil imports. So, I refused and decided to go to China and concluded an important and strategic agreement with it. Today, Trump is trying to cancel this important agreement. "

Abdul-Mahdi continued his remarks, noting that pressure from the Trump administration over his negotiations and subsequent dealings with China grew substantially over time, even resulting in death threats to himself and his defense minister:

After my return from China, Trump called me and asked me to cancel the agreement, so I also refused, and he threatened [that there would be] massive demonstrations to topple me. Indeed, the demonstrations started and then Trump called, threatening to escalate in the event of non-cooperation and responding to his wishes, whereby a third party [presumed to be mercenaries or U.S. soldiers] would target both the demonstrators and security forces and kill them from atop the highest buildings and the US embassy in an attempt to pressure me and submit to his wishes and cancel the China agreement."

"I did not respond and submitted my resignation and the Americans still insist to this day on canceling the China agreement. When the defense minister said that those killing the demonstrators was a third party, Trump called me immediately and physically threatened myself and the defense minister in the event that there was more talk about this third party."

Very few English language outlets reported on Abdul-Mahdi's comments. Tom Luongo, a Florida-based Independent Analyst and publisher of The Gold Goats 'n Guns Newsletter, told MintPress that the likely reasons for the "surprising" media silence over Abdul-Mahdi's claims were because "It never really made it out into official channels " due to the cutting of the video feed during Iraq's Parliamentary session and due to the fact that "it's very inconvenient and the media -- since Trump is doing what they want him to do, be belligerent with Iran, protected Israel's interests there."

"They aren't going to contradict him on that if he's playing ball," Luongo added, before continuing that the media would nonetheless "hold onto it for future reference .If this comes out for real, they'll use it against him later if he tries to leave Iraq." "Everything in Washington is used as leverage," he added.

Given the lack of media coverage and the cutting of the video feed of Abdul-Mahdi's full remarks, it is worth pointing out that the narrative he laid out in his censored speech not only fits with the timeline of recent events he discusses but also the tactics known to have been employed behind closed doors by the Trump administration, particularly after Mike Pompeo left the CIA to become Secretary of State.

For instance, Abdul-Mahdi's delegation to China ended on September 24, with the protests against his government that Trump reportedly threatened to start on October 1. Reports of a "third side" firing on Iraqi protesters were picked up by major media outlets at the time, such as in this BBC report which stated:

Reports say the security forces opened fire, but another account says unknown gunmen were responsible .a source in Karbala told the BBC that one of the dead was a guard at a nearby Shia shrine who happened to be passing by. The source also said the origin of the gunfire was unknown and it had targeted both the protesters and security forces . (emphasis added)"

U.S.-backed protests in other countries, such as in Ukraine in 2014, also saw evidence of a " third side " shooting both protesters and security forces alike.

After six weeks of intense protests , Abdul-Mahdi submitted his resignation on November 29, just a few days after Iraq's Foreign Minister praised the new deals, including the "oil for reconstruction" deal, that had been signed with China. Abdul-Mahdi has since stayed on as Prime Minister in a caretaker role until Parliament decides on his replacement.

Abdul-Mahdi's claims of the covert pressure by the Trump administration are buttressed by the use of similar tactics against Ecuador, where, in July 2018, a U.S. delegation at the United Nations threatened the nation with punitive trade measures and the withdrawal of military aid if Ecuador moved forward with the introduction of a UN resolution to "protect, promote and support breastfeeding."

The New York Times reported at the time that the U.S. delegation was seeking to promote the interests of infant formula manufacturers. If the U.S. delegation is willing to use such pressure on nations for promoting breastfeeding over infant formula, it goes without saying that such behind-closed-doors pressure would be significantly more intense if a much more lucrative resource, e.g. oil, were involved.

Regarding Abdul-Mahdi's claims, Luongo told MintPress that it is also worth considering that it could have been anyone in the Trump administration making threats to Abdul-Mahdi, not necessarily Trump himself. "What I won't say directly is that I don't know it was Trump at the other end of the phone calls. Mahdi, it is to his best advantage politically to blame everything on Trump. It could have been Mike Pompeo or Gina Haspel talking to Abdul-Mahdi It could have been anyone, it most likely would be someone with plausible deniability .This [Mahdi's claims] sounds credible I firmly believe Trump is capable of making these threats but I don't think Trump would make those threats directly like that, but it would absolutely be consistent with U.S. policy."

Luongo also argued that the current tensions between U.S. and Iraqi leadership preceded the oil deal between Iraq and China by several weeks, "All of this starts with Prime Minister Mahdi starting the process of opening up the Iraq-Syria border crossing and that was announced in August. Then, the Israeli air attacks happened in September to try and stop that from happening, attacks on PMU forces on the border crossing along with the ammo dump attacks near Baghdad This drew the Iraqis' ire Mahdi then tried to close the air space over Iraq, but how much of that he can enforce is a big question."

As to why it would be to Mahdi's advantage to blame Trump, Luongo stated that Mahdi "can make edicts all day long, but, in reality, how much can he actually restrain the U.S. or the Israelis from doing anything? Except for shame, diplomatic shame To me, it [Mahdi's claims] seems perfectly credible because, during all of this, Trump is probably or someone else is shaking him [Mahdi] down for the reconstruction of the oil fields [in Iraq] Trump has explicitly stated "we want the oil."'

As Luongo noted, Trump's interest in the U.S. obtaining a significant share of Iraqi oil revenue is hardly a secret. Just last March, Trump asked Abdul-Mahdi "How about the oil?" at the end of a meeting at the White House, prompting Abdul-Mahdi to ask "What do you mean?" To which Trump responded "Well, we did a lot, we did a lot over there, we spent trillions over there, and a lot of people have been talking about the oil," which was widely interpreted as Trump asking for part of Iraq's oil revenue in exchange for the steep costs of the U.S.' continuing its now unwelcome military presence in Iraq.

With Abdul-Mahdi having rejected Trump's "oil for reconstruction" proposal in favor of China's, it seems likely that the Trump administration would default to so-called "gangster diplomacy" tactics to pressure Iraq's government into accepting Trump's deal, especially given the fact that China's deal was a much better offer. While Trump demanded half of Iraq's oil revenue in exchange for completing reconstruction projects (according to Abdul-Mahdi), the deal that was signed between Iraq and China would see around 20 percen t of Iraq's oil revenue go to China in exchange for reconstruction. Aside from the potential loss in Iraq's oil revenue, there are many reasons for the Trump administration to feel threatened by China's recent dealings in Iraq.

The Iraq-China oil deal – a prelude to something more?

When Abdul-Mahdi's delegation traveled to Beijing last September, the "oil for reconstruction" deal was only one of eight total agreements that were established. These agreements cover a range of areas, including financial, commercial, security, reconstruction, communication, culture, education and foreign affairs in addition to oil. Yet, the oil deal is by far the most significant.

Per the agreement, Chinese firms will work on various reconstruction projects in exchange for roughly 20 percent of Iraq's oil exports, approximately 100,00 barrels per day, for a period of 20 years. According to Al-Monitor , Abdul-Mahdi had the following to say about the deal: "We agreed [with Beijing] to set up a joint investment fund, which the oil money will finance," adding that the agreement prohibits China from monopolizing projects inside Iraq, forcing Bejing to work in cooperation with international firms.

The agreement is similar to one negotiated between Iraq and China in 2015 when Abdul-Mahdi was serving as Iraq's oil minister. That year, Iraq joined China's Belt and Road Initiative in a deal that also involved exchanging oil for investment, development and construction projects and saw China awarded several projects as a result. In a notable similarity to recent events, that deal was put on hold due to "political and security tensions" caused by unrest and the surge of ISIS in Iraq, that is until Abdul-Mahdi saw Iraq rejoin the initiative again late last year through the agreements his government signed with China last September.

Chinese President Xi Jinping, center left, meet with Iraqi Prime Minister Adil Abdul-Mahdi, center right, in Beijing, Sept. 23, 2019. Lintao Zhang | AP

Notably, after recent tensions between the U.S. and Iraq over the assassination of Soleimani and the U.S.' subsequent refusal to remove its troops from Iraq despite parliament's demands, Iraq quietly announced that it would dramatically increase its oil exports to China to triple the amount established in the deal signed in September. Given Abdul-Mahdi's recent claims about the true forces behind Iraq's recent protests and Trump's threats against him being directly related to his dealings with China, the move appears to be a not-so-veiled signal from Abdul-Mahdi to Washington that he plans to deepen Iraq's partnership with China, at least for as long as he remains in his caretaker role.

Iraq's decision to dramatically increase its oil exports to China came just one day after the U.S. government threatened to cut off Iraq's access to its central bank account, currently held at the Federal Reserve Bank of New York, an account that currently holds $35 billion in Iraqi oil revenue. The account was set up after the U.S. invaded and began occupying Iraq in 2003 and Iraq currently removes between $1-2 billion per month to cover essential government expenses. Losing access to its oil revenue stored in that account would lead to the " collapse " of Iraq's government, according to Iraqi government officials who spoke to AFP .

Though Trump publicly promised to rebuke Iraq for the expulsion of U.S. troops via sanctions, the threat to cut off Iraq's access to its account at the NY Federal Reserve Bank was delivered privately and directly to the Prime Minister, adding further credibility to Abdul-Mahdi's claims that Trump's most aggressive attempts at pressuring Iraq's government are made in private and directed towards the country's Prime Minister.

Though Trump's push this time was about preventing the expulsion of U.S. troops from Iraq, his reasons for doing so may also be related to concerns about China's growing foothold in the region. Indeed, while Trump has now lost his desired share of Iraqi oil revenue (50 percent) to China's counteroffer of 20 percent, the removal of U.S. troops from Iraq may see American troops replaced with their Chinese counterparts as well, according to Tom Luongo.

"All of this is about the U.S. maintaining the fiction that it needs to stay in Iraq So, China moving in there is the moment where they get their toe hold for the Belt and Road [Initiative]," Luongo argued. "That helps to strengthen the economic relationship between Iraq, Iran and China and obviating the need for the Americans to stay there. At some point, China will have assets on the ground that they are going to want to defend militarily in the event of any major crisis. This brings us to the next thing we know, that Mahdi and the Chinese ambassador discussed that very thing in the wake of the Soleimani killing."

Indeed, according to news reports, Zhang Yao -- China's ambassador to Iraq -- " conveyed Beijing's readiness to provide military assistance" should Iraq's government request it soon after Soleimani's assassination. Yao made the offer a day after Iraq's parliament voted to expel American troops from the country. Though it is currently unknown how Abdul-Mahdi responded to the offer, the timing likely caused no shortage of concern among the Trump administration about its rapidly waning influence in Iraq. "You can see what's coming here," Luongo told MintPress of the recent Chinese offer to Iraq, "China, Russia and Iran are trying to cleave Iraq away from the United States and the U.S. is feeling very threatened by this."

Russia is also playing a role in the current scenario as Iraq initiated talks with Moscow regarding the possible purchase of one of its air defense systems last September, the same month that Iraq signed eight deals, including the oil deal with China. Then, in the wake of Soleimani's death, Russia again offered the air defense systems to Iraq to allow them to better defend their air space. In the past, the U.S. has threatened allied countries with sanctions and other measures if they purchase Russian air defense systems as opposed to those manufactured by U.S. companies.

The U.S.' efforts to curb China's growing influence and presence in Iraq amid these new strategic partnerships and agreements are limited, however, as the U.S. is increasingly relying on China as part of its Iran policy, specifically in its goal of reducing Iranian oil export to zero. China remains Iran's main crude oil and condensate importer, even after it reduced its imports of Iranian oil significantly following U.S. pressure last year. Yet, the U.S. is now attempting to pressure China to stop buying Iranian oil completely or face sanctions while also attempting to privately sabotage the China-Iraq oil deal. It is highly unlikely China will concede to the U.S. on both, if any, of those fronts, meaning the U.S. may be forced to choose which policy front (Iran "containment" vs. Iraq's oil dealings with China) it values more in the coming weeks and months.

Furthermore, the recent signing of the "phase one" trade deal with China revealed another potential facet of the U.S.' increasingly complicated relationship with Iraq's oil sector given that the trade deal involves selling U.S. oil and gas to China at very low cost , suggesting that the Trump administration may also see the Iraq-China oil deal result in Iraq emerging as a potential competitor for the U.S. in selling cheap oil to China, the world's top oil importer.

The Petrodollar and the Phantom of the Petroyuan

In his televised statements last week following Iran's military response to the U.S. assassination of General Soleimani, Trump insisted that the U.S.' Middle East policy is no longer being directed by America's vast oil requirements. He stated specifically that:

Over the last three years, under my leadership, our economy is stronger than ever before and America has achieved energy independence. These historic accomplishments changed our strategic priorities. These are accomplishments that nobody thought were possible. And options in the Middle East became available. We are now the number-one producer of oil and natural gas anywhere in the world. We are independent, and we do not need Middle East oil . (emphasis added)"

Yet, given the centrality of the recent Iraq-China oil deal in guiding some of the Trump administration's recent Middle East policy moves, this appears not to be the case. The distinction may lie in the fact that, while the U.S. may now be less dependent on oil imports from the Middle East, it still very much needs to continue to dominate how oil is traded and sold on international markets in order to maintain its status as both a global military and financial superpower.

Indeed, even if the U.S. is importing less Middle Eastern oil, the petrodollar system -- first forged in the 1970s -- requires that the U.S. maintains enough control over the global oil trade so that the world's largest oil exporters, Iraq among them, continue to sell their oil in dollars. Were Iraq to sell oil in another currency, or trade oil for services, as it plans to do with China per the recently inked deal, a significant portion of Iraqi oil would cease to generate a demand for dollars, violating the key tenet of the petrodollar system.

Chinese representatives speak to defense personnel during a weapons expo organized by the Iraqi defense ministry in Baghdad, March, 2017. Karim Kadim | AP

As Kei Pritsker and Cale Holmes noted in an article last year for MintPress :

The takeaway from the petrodollar phenomenon is that as long as countries need oil, they will need the dollar. As long as countries demand dollars, the U.S. can continue to go into massive amounts of debt to fund its network of global military bases, Wall Street bailouts, nuclear missiles, and tax cuts for the rich."

Thus, the use of the petrodollar has created a system whereby U.S. control of oil sales of the largest oil exporters is necessary, not just to buttress the dollar, but also to support its global military presence. Therefore, it is unsurprising that the issue of the U.S. troop presence in Iraq and the issue of Iraq's push for oil independence against U.S. wishes have become intertwined. Notably, one of the architects of the petrodollar system and the man who infamously described U.S. soldiers as "dumb, stupid animals to be used as pawns in foreign policy", former Secretary of State Henry Kissinger, has been advising Trump and informing his China policy since 2016.

This take was also expressed by economist Michael Hudson, who recently noted that U.S. access to oil, dollarization and U.S. military strategy are intricately interwoven and that Trump's recent Iraq policy is intended "to escalate America's presence in Iraq to keep control of the region's oil reserves," and, as Hudson says, "to back Saudi Arabia's Wahabi troops (ISIS, Al Qaeda in Iraq, Al Nusra and other divisions of what are actually America's foreign legion) to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar."

Hudson further asserts that it was Qassem Soleimani's efforts to promote Iraq's oil independence at the expense of U.S. imperial ambitions that served one of the key motives behind his assassination.

America opposed General Suleimani above all because he was fighting against ISIS and other U.S.-backed terrorists in their attempt to break up Syria and replace Assad's regime with a set of U.S.-compliant local leaders – the old British "divide and conquer" ploy. On occasion, Suleimani had cooperated with U.S. troops in fighting ISIS groups that got "out of line" meaning the U.S. party line. But every indication is that he was in Iraq to work with that government seeking to regain control of the oil fields that President Trump has bragged so loudly about grabbing. (emphasis added)"

Hudson adds that " U.S. neocons feared Suleimani's plan to help Iraq assert control of its oil and withstand the terrorist attacks supported by U.S. and Saudi's on Iraq. That is what made his assassination an immediate drive."

While other factors -- such as pressure from U.S. allies such as Israel -- also played a factor in the decision to kill Soleimani, the decision to assassinate him on Iraqi soil just hours before he was set to meet with Abdul-Mahdi in a diplomatic role suggests that the underlying tensions caused by Iraq's push for oil independence and its oil deal with China did play a factor in the timing of his assassination. It also served as a threat to Abdul-Mahdi, who has claimed that the U.S. threatened to kill both him and his defense minister just weeks prior over tensions directly related to the push for independence of Iraq's oil sector from the U.S.

It appears that the ever-present role of the petrodollar in guiding U.S. policy in the Middle East remains unchanged. The petrodollar has long been a driving factor behind the U.S.' policy towards Iraq specifically, as one of the key triggers for the 2003 invasion of Iraq was Saddam Hussein's decision to sell Iraqi oil in Euros opposed to dollars beginning in the year 2000. Just weeks before the invasion began, Hussein boasted that Iraq's Euro-based oil revenue account was earning a higher interest rate than it would have been if it had continued to sell its oil in dollars, an apparent signal to other oil exporters that the petrodollar system was only really benefiting the United States at their own expense.

Beyond current efforts to stave off Iraq's oil independence and keep its oil trade aligned with the U.S., the fact that the U.S. is now seeking to limit China's ever-growing role in Iraq's oil sector is also directly related to China's publicly known efforts to create its own direct competitor to the petrodollar, the petroyuan.

Since 2017, China has made its plans for the petroyuan -- a direct competitor to the petrodollar -- no secret, particularly after China eclipsed the U.S. as the world's largest importer of oil.

As CNBC noted at the time:

The new strategy is to enlist the energy markets' help: Beijing may introduce a new way to price oil in coming months -- but unlike the contracts based on the U.S. dollar that currently dominate global markets, this benchmark would use China's own currency. If there's widespread adoption, as the Chinese hope, then that will mark a step toward challenging the greenback's status as the world's most powerful currency .The plan is to price oil in yuan using a gold-backed futures contract in Shanghai, but the road will be long and arduous."

If the U.S. continues on its current path and pushes Iraq further into the arms of China and other U.S. rival states, it goes without saying that Iraq -- now a part of China's Belt and Road Initiative -- may soon favor a petroyuan system over a petrodollar system, particularly as the current U.S. administration threatens to hold Iraq's central bank account hostage for pursuing policies Washington finds unfavorable.

It could also explain why President Trump is so concerned about China's growing foothold in Iraq, since it risks causing not only the end of the U.S. military hegemony in the country but could also lead to major trouble for the petrodollar system and the U.S.' position as a global financial power. Trump's policy aimed at stopping China and Iraq's growing ties is clearly having the opposite effect, showing that this administration's "gangster diplomacy" only serves to make the alternatives offered by countries like China and Russia all the more attractive.

anonymous [331] Disclaimer , says: Show Comment January 18, 2020 at 5:54 am GMT

One can see how all these recent wars and military actions have a financial motive at their core. Yet the mass of gullible Americans actually believe the reasons given, to "spread democracy" and other wonderful things. Only a small number can see things for what they really are. It's very frustrating to deal with the stupidity of the average person on a daily basis.

This is not Trump's policy, it is American policy and the variation is in how he implements it. Any other person would have fallen in line with it as well. US policy has it's own inner momentum that can't change course. The US depends upon continuation of the dollar as the world's reserve currency. Were that to be lost the US likely would descend into chaos without end. When the USSR came apart it was eventually able to downsize into the Russian state. We don't have that here; there is no core ethnicity with it's own territory left anymore, it's just a jumble. For the US it's a matter of survival.

John Chuckman , says: Website Show Comment January 18, 2020 at 3:04 pm GMT
Yes, but we also have this

It is reported this morning (CNN) that Trump bragged about the killing to a crowd at a big fundraising dinner.

Just sick, official state murder for campaign donations.

That's what America is reduced to.

[Jan 21, 2020] Trump Is Pulling the Wool Over Voters' Eyes About What Is in the China Deal

Return to quote-based trade means total bankruptcy of neoliberalism ideology and practice. Another nail in the coffin so to speak.
Jan 21, 2020 | www.anti-empire.com

The Chinese, for now, are not contradicting the Trump administration on the promise of Chinese mega-purchases, because when Trump is more amicable their interests align. If an empty promise that wasn't even made means the trade war de-escalation goes on, that is fine with them. They would like to calm the markets as much as Trump would, and in this way they have added leverage on Trump. Should they change their minds they can always explode the fiction later on and injure Trump, perhaps strategically right around October.


Now that the dust has settled on the US-China trade deal and analysts have had some time to pore over its 90+ pages, various chapters and (non-binding) terms that comprise the body of the agreement, one high-level observation noted by Rabobank, is that the agreement foresees the total amount of goods exports from the US to China to reach above $ 290BN by end-2021.

The implication of this is that the chart for US exports to China should basically look like this for the next two years:

As Rabobank's senior economist Bjorn Giesbergen writes, t here are probably very few economists that would deem such a trajectory feasible (except for the perpetually cheerful economics team at Goldman , of course), seeing that it took the US more than 15 years to raise exports from around USD16bn in 2000 to USD 130bn in 2017.

Moreover, the Chinese purchases of goods are beneficial to US companies, but at the cost of other countries, and the agreement is only for two years. If China will buy more aircraft from the US, that could be to the detriment of the EU.

According to the document "the parties project that the trajectory of increases will continue in calendar years 2020 through 2025." But "to project" does not sound as firm as "shall ensure." So, as the Rabo economist asks, "are we going to see a repetition of the 2019 turmoil caused by the phase 1 trade negotiations after those two years? Or is this supposed to be solved in the phase 2 deal that is very unlikely to be made? What's more, while the remaining tariffs provide leverage for US trade negotiators, they are still a tax on US importers and US consumers of Chinese goods."

But before we even get there, going back to the chart shown above, Bloomberg today points out something we have pointed out in the past, namely that China's $200 billion, two-year spending spree negotiated with the Trump administration appears increasingly difficult to deliver, and now a $50 billion "hole" appears to have opened up : that is the amount of U.S. exports annually left out and many American businesses still uncertain about just what the expectations are.

Some background: while Trump officials stressed the reforms aimed at curbing intellectual-property theft and currency manipulation that China has agreed to in the "phase one" trade deal signed Wednesday, the Chinese pledge to buy more American exports has become an emblem of the deal to critics and supporters alike.

The administration has said those new exports in manufactured goods, energy, farm shipments and services will come over two years on top of the $130 billion in goods and $57.6 billion in services that the U.S. sent to China in 2017 -- the year before the trade war started and exports were hit by Beijing's retaliatory measures to President Donald Trump's tariffs.

And while Goldman said it is certainly feasible that China can ramp up its purchases of US goods , going so far as providing a matrix "scenario" of what such purchases could look like

that now appears virtually impossible, because as Bloomberg notes, the list of goods categories in the agreement covers a narrower group of exports to China that added up to $78.8 billion in 2017, or $51.6 billion less than the overall goods exports to the Asian nation that year. The goods trade commitment makes up $162.1 billion of the $200 billion total, with $37.9 billion to come from a boost in services trade such as travel and insurance.

Here, the math gets even more ridiculous:

The target for the first year that the deal takes effect is to add $63.9 billion in manufactured goods, agriculture and energy exports. According to Bloomberg economist Maeva Cousin's analysis, that would be an increase of 81% over the 2017 baseline. In year two, the agreement calls for $98.2 billion surge in Chinese imports, which would require a 125% increase over 2017.

Importantly for China, the deal requires those purchases to be "made at market prices based on commercial considerations," a caveat which spooked commodities traders, and led to a sharp drop in ags in the day following the deal's announcement.

Can China pull this off? Yes, if Beijing tears up existing trade deals and supply chains and imposes explicit procurement targets and demands on China's local business. As Bloomberg notes, "critics argue that such pre-ordained demand amounts to a slide into the sort of government-managed trade that U.S. presidents abandoned decades ago" and the very sort of act of central planning that U.S. officials have , paradoxically, spent years trying to convince China to walk away from.

This may also explain why a key part of the trade deal will remain secret: the purchase plan is based on what the administration insists is a specific – if classified – annex of Chinese commitments. "The 20-page public version of that annex lists hundreds of products and services from nuclear reactors to aircraft, printed circuits, pig iron, soybeans, crude oil and computer services but no figures for purchases."

Going back to the critics, it is this convoluted mechanism that has them arguing that China's stated targets will likely never be met: "This is ambitious and it will create some stresses within the supply system," said Craig Allen, the president of the U.S.-China Business Council.

That's not all: as Allen said, among the outstanding questions was whether China would lift its retaliatory duties on American products as the US keeps its tariffs on some $360 billion in imports from China as Trump seeks to maintain leverage for the second phase of negotiations.

Allen also made clear the overall purchase schedule left many U.S. companies uncomfortable even as they saw benefits in other parts of the deal. "The vast majority of our members are looking for no more than a level playing field in China," Allen said. "We are not looking for quotas or special treatment."

As a result, for many manufacturers what is actually changing -- and what China has committed to instead of given a "best efforts" promise to achieve -- remains unclear.

Major exporters such as Boeing Co., whose CEO Dave Calhoun attended Wednesday's signing ceremony, have stayed mum about what exactly the deal will mean for their business with China. In an attempt to "clarify", Trump tweeted that the deal includes a Chinese commitment to buy $16 billion to $20 billion in Boeing planes. It was unclear if he meant 737 MAX planes which nobody in the world will ever voluntarily fly inside again.

Finally, prompting the latest round of cronyism allegations, Trump's new China pact also includes plans for exports of American iron and steel , "a potential gain for an industry close to the president that has benefited from his tariffs and complained about Chinese production and overcapacity for years." As Bloomberg adds, the text of the agreement lists iron and steel products ranging from pig iron to stainless steel wire and railway tracks, but steel industry sources said they had been caught by surprise and not been given any additional details on China's purchase commitments.

It is unclear why Beijing would need US product s: after all, in its scramble to erect ghost cities and hit a goalseeked GDP print, China produces more than 50% of the world's steel, drawning criticism from around the world – if not Greta Thunberg – for the massive coal-derived pollution that comes from flooding global markets with cheap steel.

[Jan 19, 2020] Has US overplayed its tech advantage

Jan 19, 2020 | www.asiatimes.com

This partly explains why the US is taking its battle on 5G technology with the Chinese so seriously. As a faltering global leader, the Americans do not take it kindly when China tries to snatch a lunch right from under their nose. As such, the US-China trade war goes beyond economics and ideology. It is about global domination across every conceivable technology that consumers and governments worldwide are addicted to these days.

Metaphorically, technology is the new opium that rakes in money, power and control. Take a look at the way consumers across the world are utilizing technologies. From smartphones to mobile apps, from cloud-computing to cybersecurity, trillions of dollars are being spent by consumers and their governments. The Americans were laughing their way to the bank until the Chinese came along and upset their game.

As greed has no boundary or limit, every challenger or opposition to the consumption of this "new opium" means a loss in revenue, power and control for the US and its preferred allies. Sharing the spoils with others is looking like an inconceivable option for them at this stage.

To call the tension between the US and China a trade war undermines this greater reality. From unilateral sanctions to outright destruction of economies, it is starting to look as if the US is using technology to regain global domination at all costs.

[Jan 19, 2020] The US-China "Trade Deal" by Paul Craig Roberts

Notable quotes:
"... Trump is covering his retraction by calling it a trade deal. China's part of the deal is to agree to purchase the US goods that it already intended to purchase. ..."
Jan 18, 2020 | www.informationclearinghouse.info

The first thing to understand is that it is not a trade deal. It is Trump backing off his tariffs when he discovered that the tarrifs fall on US goods and American consumers, not on China. Trump is covering his retraction by calling it a trade deal. China's part of the deal is to agree to purchase the US goods that it already intended to purchase.

The purpose of tariffs is to protect domestic producers from foreign competition by raising the price of imported goods. What Trump, his administration, and the financial press did not understand is that at least half of the US trade deficit with China is the offshored goods produced in China by such corporations as Apple, Nike, and Levi. The offshored production of US global corporations counts as imports when they are brought into the US to be sold to Americans. Thus, the cost of the tariffs were falling on US corporations and US consumers.

Tariffs are not an effective way to bring offshored US manufacturing home. If Trump or any US government wants to bring US manufacturing back to the US from its offshored locations, the way to achieve this result is to change the way the US taxes corporations. The rule would be: If a US corporation produces in the US with US labor for US markets, the firm's profits are taxed at a low rate. If the corporation produces products for the US market abroad with foreign labor, the tax rate will be high enough to more than wipe out the labor cost savings.

As I have emphasized for years, the offshoring of US manufacturing has inflicted massive external costs on the United States. Middle class jobs have been lost, careers ended, living standards of former US manufacturing workers and families have dropped. The tax base of cities and states has shrunk, causing cutbacks in public services and undermining municipal and state pension funds. You can add to this list. These costs are the true cost of the increased profits from the lower foreign labor and compliance costs. A relatively few executives and shareholders benefitted at the expense of a vast number of Americans.

This is the problem that needs to be addressed and corrected.

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West , How America Was Lost , and The Neoconservative Threat to World Order . Donate and support Dr, Roberts Work.

[Jan 18, 2020] The US China Phase 1 Deal Interpeted: Break Thing, Claim to Fix Thing, Repeat

Highly recommended!
Jan 18, 2020 | econbrowser.com

...if nothing had happened in the US-China trade war. Well, me might have gotten to where we are supposed to be with the deal

..a honest question. In terms of the environment and global climate, is it a good thing that farmers will be producing more monoculture grains, dairy, beef and pork for export?

[Jan 18, 2020] The US-China Nothing Burger Trade Deal by Barkley Rosser

Jan 18, 2020 | angrybearblog.com

There has been much hype about the signing of Phase One (and probably only) US-China trade deal. However based on a front page story in today's Washington Post, there is not much there. The US did not raise tariffs as planned, but tarifsf still remain on two thirds of the sectors that had them, although some were halved. But numerous US sectors see no change at all and are now viewing the situation as not likely to improve, with them suffering losses of business likely to return. Among those are chemicals, apparel retailers, and auto parts. In these and other sectors there is not much reduction of uncertainty regarding US-China trade, so not likely much increase in investment.

The main items in it besides no worsening of tariffs, China has made promises not to pressure US firms to turn over technology and also to increase imports from the US by $200 billion over the next two years, especially in energy and agriculture. So maybe US soybean farmers will no longer need the bailouts of billions of $ Trump has been providing to them. However, such promises have been made in the past.

As it is, I am watching commentators on Bloomberg, and about the most any of them are willing to say is that this "puts a floor" on the "deterioration" of US-China trade relations. That is far from some dramatic breakthrough, and most of the tariffs put on as part of the US-China trade war remain in place.

Barkley Rosser


spencer , January 16, 2020 3:49 pm

This looks like it may be a way to make it a status quo or back burner issue until after the election.

Of course Trump will always be able to blow it up if he decides that would be to his advantage.

Bert Schlitz , January 16, 2020 4:53 pm

I don't see how they "buy" 200 billion worth of goods. The Chinese economy is slowing and that is why purchases were flattening by 2014.

Its noise and circuses.

pgl , January 16, 2020 5:48 pm

Bert – I agree. Menzie Chinn over at Econbrowser has a lot of details on this noise and circus. Check it out!

[Jan 18, 2020] Numerous US sectors see no change at all and are now viewing the situation as not likely to improve, with them suffering losses of business likely to return. Among those are chemicals, apparel retailers, and auto parts by Barkley Rosser

Jan 18, 2020 | angrybearblog.com

There has been much hype about the signing of Phase One (and probably only) US-China trade deal. However based on a front page story in today's Washington Post, there is not much there. The US did not raise tariffs as planned, but tarifsf still remain on two thirds of the sectors that had them, although some were halved. But numerous US sectors see no change at all and are now viewing the situation as not likely to improve, with them suffering losses of business likely to return. Among those are chemicals, apparel retailers, and auto parts. In these and other sectors there is not much reduction of uncertainty regarding US-China trade, so not likely much increase in investment.

The main items in it besides no worsening of tariffs, China has made promises not to pressure US firms to turn over technology and also to increase imports from the US by $200 billion over the next two years, especially in energy and agriculture. So maybe US soybean farmers will no longer need the bailouts of billions of $ Trump has been providing to them. However, such promises have been made in the past.

As it is, I am watching commentators on Bloomberg, and about the most any of them are willing to say is that this "puts a floor" on the "deterioration" of US-China trade relations. That is far from some dramatic breakthrough, and most of the tariffs put on as part of the US-China trade war remain in place.


spencer , January 16, 2020 3:49 pm

This looks like it may be a way to make it a status quo or back burner issue until after the election.

Of course Trump will always be able to blow it up if he decides that would be to his advantage.

Bert Schlitz , January 16, 2020 4:53 pm

I don't see how they "buy" 200 billion worth of goods. The Chinese economy is slowing and that is why purchases were flattening by 2014.

Its noise and circuses.

pgl , January 16, 2020 5:48 pm

Bert – I agree. Menzie Chinn over at Econbrowser has a lot of details on this noise and circus. Check it out!

[Jan 16, 2020] Battle of the Ages to stop Eurasian integration by Pepe Escobar

Jan 16, 2020 | www.asiatimes.com

Battle of the Ages to stop Eurasian integration

Coming decade could see the US take on Russia, China and Iran over the New Silk Road connection

The Raging Twenties started with a bang with the targeted assassination of Iran's General Qasem Soleimani.

Yet a bigger bang awaits us throughout the decade: the myriad declinations of the New Great Game in Eurasia, which pits the US against Russia, China and Iran, the three major nodes of Eurasia integration.

Every game-changing act in geopolitics and geoeconomics in the coming decade will have to be analyzed in connection to this epic clash.

The Deep State and crucial sectors of the US ruling class are absolutely terrified that China is already outpacing the "indispensable nation" economically and that Russia has outpaced it militarily . The Pentagon officially designates the three Eurasian nodes as "threats."

Hybrid War techniques – carrying inbuilt 24/7 demonization – will proliferate with the aim of containing China's "threat," Russian "aggression" and Iran's "sponsorship of terrorism." The myth of the "free market" will continue to drown under the imposition of a barrage of illegal sanctions, euphemistically defined as new trade "rules."

Yet that will be hardly enough to derail the Russia-China strategic partnership. To unlock the deeper meaning of this partnership, we need to understand that Beijing defines it as rolling towards a "new era." That implies strategic long-term planning – with the key date being 2049, the centennial of New China.

The horizon for the multiple projects of the Belt and Road Initiative – as in the China-driven New Silk Roads – is indeed the 2040s, when Beijing expects to have fully woven a new, multipolar paradigm of sovereign nations/partners across Eurasia and beyond, all connected by an interlocking maze of belts and roads.

The Russian project – Greater Eurasia – somewhat mirrors Belt & Road and will be integrated with it. Belt & Road, the Eurasia Economic Union, the Shanghai Cooperation Organization and the Asia Infrastructure Investment Bank are all converging towards the same vision.

Realpolitik

So this "new era", as defined by the Chinese, relies heavily on close Russia-China coordination, in every sector. Made in China 2025 is encompassing a series of techno/scientific breakthroughs. At the same time, Russia has established itself as an unparalleled technological resource for weapons and systems that the Chinese still cannot match.

At the latest BRICS summit in Brasilia, President Xi Jinping told Vladimir Putin that "the current international situation with rising instability and uncertainty urge China and Russia to establish closer strategic coordination." Putin's response: "Under the current situation, the two sides should continue to maintain close strategic communication."

Russia is showing China how the West respects realpolitik power in any form, and Beijing is finally starting to use theirs. The result is that after five centuries of Western domination – which, incidentally, led to the decline of the Ancient Silk Roads – the Heartland is back, with a bang, asserting its preeminence.

On a personal note, my travels these past two years, from West Asia to Central Asia, and my conversations these past two months with analysts in Nur-Sultan, Moscow and Italy, have allowed me to get deeper into the intricacies of what sharp minds define as the Double Helix. We are all aware of the immense challenges ahead – while barely managing to track the stunning re-emergence of the Heartland in real-time.

In soft power terms, the sterling role of Russian diplomacy will become even more paramount – backed up by a Ministry of Defense led by Sergei Shoigu, a Tuvan from Siberia, and an intel arm that is capable of constructive dialogue with everybody: India/Pakistan, North/South Korea, Iran/Saudi Arabia, Afghanistan.

This apparatus does smooth (complex) geopolitical issues over in a manner that still eludes Beijing.

In parallel, virtually the whole Asia-Pacific – from the Eastern Mediterranean to the Indian Ocean – now takes into full consideration Russia-China as a counter-force to US naval and financial overreach.

Stakes in Southwest Asia

The targeted assassination of Soleimani, for all its long-term fallout, is just one move in the Southwest Asia chessboard. What's ultimately at stake is a macro geoeconomic prize: a land bridge from the Persian Gulf to the Eastern Mediterranean.

Last summer, an Iran-Iraq-Syria trilateral established that "the goal of negotiations is to activate the Iranian-Iraqi-Syria load and transport corridor as part of a wider plan for reviving the Silk Road."

There could not be a more strategic connectivity corridor, capable of simultaneously interlinking with the International North-South Transportation Corridor; the Iran-Central Asia-China connection all the way to the Pacific; and projecting Latakia towards the Mediterranean and the Atlantic.

What's on the horizon is, in fact, a sub-sect of Belt & Road in Southwest Asia. Iran is a key node of Belt & Road; China will be heavily involved in the rebuilding of Syria; and Beijing-Baghdad signed multiple deals and set up an Iraqi-Chinese Reconstruction Fund (income from 300,000 barrels of oil a day in exchange for Chinese credit for Chinese companies rebuilding Iraqi infrastructure).

A quick look at the map reveals the "secret" of the US refusing to pack up and leave Iraq, as demanded by the Iraqi Parliament and Prime Minister: to prevent the emergence of this corridor by any means necessary. Especially when we see that all the roads that China is building across Central Asia – I navigated many of them in November and December – ultimately link China with Iran.

The final objective: to unite Shanghai to the Eastern Mediterranean – overland, across the Heartland.

As much as Gwadar port in the Arabian Sea is an essential node of the China-Pakistan Economic Corridor, and part of China's multi-pronged "escape from Malacca" strategy, India also courted Iran to match Gwadar via the port of Chabahar in the Gulf of Oman.

So as much as Beijing wants to connect the Arabian Sea with Xinjiang, via the economic corridor, India wants to connect with Afghanistan and Central Asia via Iran.

Yet India's investments in Chabahar may come to nothing, with New Delhi still mulling whether to become an active part of the US "Indo-Pacific" strategy, which would imply dropping Tehran.

The Russia-China-Iran joint naval exercise in late December, starting exactly from Chabahar, was a timely wake-up for New Delhi. India simply cannot afford to ignore Iran and end up losing its key connectivity node, Chabahar.

The immutable fact: everyone needs and wants Iran connectivity. For obvious reasons, since the Persian empire, this is the privileged hub for all Central Asian trade routes.

On top of it, Iran for China is a matter of national security. China is heavily invested in Iran's energy industry. All bilateral trade will be settled in yuan or in a basket of currencies bypassing the US dollar.

US neocons, meanwhile, still dream of what the Cheney regime was aiming at in the past decade: regime change in Iran leading to the US dominating the Caspian Sea as a springboard to Central Asia, only one step away from Xinjiang and weaponization of anti-China sentiment. It could be seen as a New Silk Road in reverse to disrupt the Chinese vision.

Battle of the Ages

A new book, The Impact of China's Belt and Road Initiativ e , by Jeremy Garlick of the University of Economics in Prague, carries the merit of admitting that, "making sense" of Belt & Road "is extremely difficult."

This is an extremely serious attempt to theorize Belt & Road's immense complexity – especially considering China's flexible, syncretic approach to policymaking, quite bewildering for Westerners. To reach his goal, Garlick gets into Tang Shiping's social evolution paradigm, delves into neo-Gramscian hegemony, and dissects the concept of "offensive mercantilism" – all that as part of an effort in "complex eclecticism."

The contrast with the pedestrian Belt & Road demonization narrative emanating from US "analysts" is glaring. The book tackles in detail the multifaceted nature of Belt & Road's trans-regionalism as an evolving, organic process.

Imperial policymakers won't bother to understand how and why Belt & Road is setting a new global paradigm. The NATO summit in London last month offered a few pointers. NATO uncritically adopted three US priorities: even more aggressive policy towards Russia; containment of China (including military surveillance); and militarization of space – a spin-off from the 2002 Full Spectrum Dominance doctrine.

So NATO will be drawn into the "Indo-Pacific" strategy – which means containment of China. And as NATO is the EU's weaponized arm, that implies the US interfering on how Europe does business with China – at every level.

Retired US Army Colonel Lawrence Wilkerson, Colin Powell's chief of staff from 2001 to 2005, cuts to the chase: "America exists today to make war. How else do we interpret 19 straight years of war and no end in sight? It's part of who we are. It's part of what the American Empire is. We are going to lie, cheat and steal, as Pompeo is doing right now, as Trump is doing right now, as Esper is doing right now and a host of other members of my political party, the Republicans, are doing right now. We are going to lie, cheat and steal to do whatever it is we have to do to continue this war complex. That's the truth of it. And that's the agony of it."

Moscow, Beijing and Tehran are fully aware of the stakes. Diplomats and analysts are working on the trend, for the trio, to evolve a concerted effort to protect one another from all forms of hybrid war – sanctions included – launched against each of them.

For the US, this is indeed an existential battle – against the whole Eurasia integration process, the New Silk Roads, the Russia-China strategic partnership, those Russian hypersonic weapons mixed with supple diplomacy, the profound disgust and revolt against US policies all across the Global South, the nearly inevitable collapse of the US dollar. What's certain is that the Empire won't go quietly into the night. We should all be ready for the battle of the ages.

[Jan 16, 2020] A Trade Deal Meant to Heal Rifts Could Actually Make Them Worse

Jan 16, 2020 | www.moonofalabama.org

vk , Jan 16 2020 18:16 utc | 9

An extremely rare candid and somewhat precise piece of journalism by the NYT (albeit telling the story from the point of view of the Americans/capitalists):

A Trade Deal Meant to Heal Rifts Could Actually Make Them Worse

Here's an interesting paragraph:

What it does not do is tackle the root causes of the trade war. The deal leaves untouched Beijing's subsidies for homegrown industries and its firm control over crucial levers of its hard-charging economy . The deal also keeps in place most of Mr. Trump's tariffs on $360 billion worth of Chinese goods, a much heavier tax than Americans pay for products from practically anywhere else.

Solving those issues could take years.

Interesting to see what the Americans consider to be China's "root causes of the trade war". And we still have people who believe the war against China is not a war between capitalism and socialism, but between "freedom and tyranny". Pure middle class liberal dellusion of grandeur.

--//--

In the last open thread, in my first comment, I highlighted how fast the Western MSM gave up the idea the Labour Party should have its first female leader in order to prop up their guy, Keir Starmer (literally the only male still in the dispute right now). The reason, of course, is that his main rival - Rebecca Long-Bailey - is Corbyn's successor and, as such, has Momentum's (and, probably, of the unions) support.

Well, this didn't stop the typical Western hypocrisy from working. Yesterday, a wave of accusations of Bernie Sanders happened (again).

I have been stating here for some time now that the function of the middle class is to serve as the battering ram of the capitalists. They are the class tasked with fabricating the narratives and "theories" which all the society should believe and never question. They are what that 007 villain (Spectre) called "visionaires", or what the far-rightists in America call "the experts".

If that's true, then postmodernism is their ideological weapon of choice nowadays.

karlof1 , Jan 16 2020 18:37 utc | 10

doesn't matter in which order they're read, but Escobar's latest intersects with Alastair Crooke's to provide Big Picture perspective.

Towards his conclusion, Escobar cites retired US Army Colonel Lawrence Wilkerson, Colin Powell's chief of staff from 2001 to 2005:

"We are going to lie, cheat and steal to do whatever it is we have to do to continue this war complex. That's the truth of it. And that's the agony of it."

But nowhere in the citation does Wilkerson say that any of this effort's being done to defend the USA, whereas its beyond clear that Iran, China and Russia are all working to protect their nations and people. Rather, it appears as if "the profound disgust and revolt against US policies all across the Global South" is finally being adopted by a majority of the USA's polity as it becomes clear that all the lying, cheating and stealing is being done at the expense of the 99% for the 1%'s benefit.

As Crooke alludes, wagging the dog a la Clinton might save Trump from being convicted and removed by the Senate, but such a move will likely cost him the election, although much depends on how those controlling the D-Party behave in the face of Sanders winning the nomination via the primaries prior to the Convention.

[Jan 16, 2020] US-China Phase One Deal Signed What Is Inside and What to Expect Next

Trust was destroyed, but it looks like China folded...
Jan 16, 2020 | sputniknews.com

Under the text of the Phase One deal - which was released later in the day by the Office of the US Trade Representative - both sides agree that they can formally complain to each other if either feels the other side is not holding up its end of the bargain.

China Accepts Deal to Buy $200Bln in US Goods

First and foremost, the document obliges Beijing to purchase at least $200 billion worth of US goods over the next two years.

"During the two-year period from January 1, 2020, through December 31, 2021, China shall ensure that purchases and imports into China from the United States of the manufactured goods, agricultural goods, energy products, and services identified in Annex 6.1 exceed the corresponding 2017 baseline amount by no less than $200 billion", the text of the agreement reads.

The agreement said China will ensure that it buys $32.9 billion worth of US manufactured goods this year and $44.8 billion in 2021; $12.5 billion in US agricultural goods this year and $19.5 billion in 2021; $18.5 billion in US energy products this year and $33.9 billion in 2021; and $12.8 billion in US services this year and $25.1 billion in 2021.

US, China Agree to Protect Patents, Fight Abuse of Trade Secrets

The United States and China agreed to protect patents, particularly in pharmaceuticals, and ban counterfeit products and the misappropriation of trade secrets.

"China shall permit pharmaceutical patent applicants to rely on supplemental data to satisfy relevant requirements for patentability, including sufficiency of disclosure and inventive step, during patent examination proceedings, patent review proceedings, and judicial proceedings", the text of the deal said. "The United States affirms that existing US measures afford treatment equivalent to that provided for in this Article".

Beijing and Washington also resolved to strengthen cooperation and coordination in combating piracy, including counterfeiting on e-commerce platforms, in the agreement.

On the protection of trade secrets, the United States said China will treat as "urgent" the use, or attempted use, of claimed trade secret information and provide its judicial authorities the authority to order a preliminary injunction based on case facts and circumstances. Washington pledged to do the same for China.

China to Boost US Energy Imports by $52 Bln

China also agreed to increase purchases of US energy products by $52 billion in the next two years.

The US energy products will be part of the total $200 billion worth of US goods that China will import through 2021, according to the agreement.

"For the category of energy products no less than $18.5 billion above the corresponding 2017 baseline amount is purchased and imported into China from the United States in calendar year 2020, and no less than $33.9 billion above the corresponding 2017 baseline amount is purchased and imported into China from the United States in calendar year 2021", the text of the deal said.

The agreement listed the US energy products that China will be buying as: crude oil, liquefied natural gas, refined petroleum and coal.

China is the world's largest buyer of oil and the United States is the largest producer of the commodity.

Oil prices, which hit five-week lows earlier on Wednesday, pared their losses after the energy deal was announced by the US and Chinese governments.

Avoiding Currency Manipulations

Under the Phase One deal China agrees to not engage in currency manipulation for the purpose of achieving trade advantages over the United States.

"The Parties shall refrain from competitive devaluations and not target exchange rates for competitive purposes, including through large-scale, persistent, one-sided intervention in exchange markets," the agreement states.

The United States and China will communicate regularly and consult on foreign exchange markets, activities and policies as well as consult with each other regarding the International Monetary Fund's assessment of the exchange rate of each country, the agreement states.

The agreement states that the United States and China should achieve and maintain a market-determined exchange rate regime.

The agreement comes after two years of wrangling and numerous halts in discussions, during which both sides piled hundreds of billions of dollars of tit-for-tat tariffs on each other.

Despite the signing of the accord, the Trump administration will maintain tariffs on $360 billion of Chinese goods in an attempt to hold Beijing accountable to the deal, US officials said. The Chinese government has also said it will decide later on the tariffs it has imposed on US imports, which last stood at $185 billion in value.

The US-China trade war sparked in January 2019, when the Trump administration announced duties on Chinese-made solar panels and washing machines. The Trump administration has since placed tariffs on $550 billion worth of Chinese products.

'Phase Two' Will End US-China Trade War?

US Treasury Secretary Steve Mnuchin commented earlier on Wednesday on the agreement and said that certain technology and cybersecurity issues would be resolved in the next chapter of the deal to end the trade dispute.

"I think a very significant amount of the technology issues are in Phase One. There are other certain areas of services away from financial services that will be in Phase Two. There are certain additional cybersecurity issues that will be in Phase Two [...] There still more issues to deal with and we'll address those", Mnuchin said, cited by CNBC.

Although the timing and details of Phase Two remain vague, Mnuchin ruled out Huawei being included, claiming that the Chinese tech giant is part of "the national security dialogue".

Trump claimed during a news conference on Wednesday that he does not foresee a Phase Three trade agreement with China, expecting to conclude the trade negotiations with Phase Two.

Buick Verano is assembled at General Motors' Orion Assembly plant in Orion Township © AP Photo / Carlos Osorio Fed Study Finds Trump's Trade Wars Backfired, Leading to Lost Jobs and Price Hikes Trump pointed out that his administration will begin Phase Two trade negotiations with China "shortly", without elaborating a timeline. US Vice President Mike Pence told Fox Business later in the day that the talks on the second phase were already underway.

"We've already begun discussions on a Phase 2 deal", Pence said, cited by Fox Business.

Trump said earlier that inking of the second phase of the deal may have to wait until after the 2020 presidential election to allow time to negotiate a better agreement.

Phase One and Phase Two could reportedly ease trade tensions between the two major economic powers but it would unlikely settle the dispute, The Washington Post reported.

According to the media outlet, the Trump administration is developing new export control regulations aimed at limiting flows of sophisticated technology to China, while US officials embarked on closely scrutinizing potential Chinese investments in the United States. Media reports of alleged new economic and technology levies against Beijing sparked speculation among analysts that Phase Three should not be excluded.

[Dec 25, 2019] US Must Pursue Targeted Decoupling From China's Economy, Says Former US Ambassador

Dec 25, 2019 | www.zerohedge.com

Despite the latest Sino-American phase one deal to ease tensions over trade, one former top US official is now calling for a decoupling between both economies, reported the South China Morning Post (SCMP).

Former US ambassador to India Ashley Tellis explains in a new book titled Strategic Asia 2020: US-China Competition for Global Influence -- that the world's two largest economies have entered a new period of sustained competition.

Tellis said Washington had developed a view that "China is today and will be for the foreseeable future the principal challenger to the US."

"The US quest for a partnership with China was fated to fail once China's growth in economic capabilities was gradually matched by its rising military power," he said.

Tellis said Washington must resume its ability to support the liberal international order established by the US more than a half-century ago, and "provide the global public goods that bestow legitimacy upon its primacy and strengthen its power-projection capabilities to protect its allies and friends."

He said this approach would require more strategic cooperation with allies such as Australia, Japan, and South Korea.

"The US should use coordinated action with allies to confront China's trade malpractices should pursue targeted decoupling of the US and Chinese economies, mainly in order to protect its defense capabilities rather than seeking a comprehensive rupture."

The latest phase one deal between both countries is a temporary trade truce -- likely to be broken as a strategic rivalry encompasses trade, technology, investment, currency, and geopolitical concerns will continue to strain relations in the early 2020s.

A much greater decoupling could be dead ahead and likely to intensify over time, as it's already occurring in the technology sector.

Tellis said President Trump labeling China as a strategic competitor was one of "the most important changes in US-China relations."

The decoupling has already started as Washington races to safeguard the country's cutting-edge technologies, including 5G, automation, artificial intelligence, autonomous vehicle, hypersonics, and robotics, from getting into the hands of Chinese firms.

A perfect example of this is blacklisting Huawei and other Chinese technology firms from buying US semiconductor components.

Liu Weidong, a US affairs specialist from the Chinese Academy of Social Sciences, told SCMP that increased protectionism among Washington lawmakers suggests the decoupling trend between both countries is far from over.

The broader shift at play is that decoupling will result in de-globalization , economic and financial fragmentation, and disruption of complex supply chains.

[Dec 21, 2019] Xi says phase-one China-U.S. trade deal benefits both sides, world - Xinhua English.news.cn

Dec 21, 2019 | www.xinhuanet.com

javascript:void(0)

BEIJING, Dec. 21 (Xinhua) -- The phase-one economic and trade deal between China and the United States benefits both sides and the whole world, Chinese President Xi Jinping said Friday.

In a phone conversation with his U.S. counterpart, Donald Trump, Xi noted that the two countries have reached the phase-one agreement on the basis of the principle of equality and mutual respect.

Against the backdrop of an extremely complicated international environment, the agreement benefits China, the United States, as well as peace and prosperity of the whole world, Xi said.

For his part, Trump said that the phase-one economic and trade agreement reached between China and the United States is good for the two countries and the whole world.

Noting that both countries' markets and the world have responded very positively to the agreement, Trump said that the United States is willing to maintain close communication with China and strive for the signing and implementation of the agreement at an early date.

Xi stressed that the economic and trade cooperation between China and the United States has made significant contributions to the stability and development of China-U.S. relations and the advancement of the world economy.

Modern economy and modern technologies have integrated the world as a whole, thus making the interests of China and the United States more intertwined with each other, Xi said, adding that the two sides will experience some differences in cooperation.

As long as both sides keep holding the mainstream of China-U.S. economic and trade cooperation featuring mutual benefits and win-win outcomes, and always respect each other's national dignity, sovereignty and core interests, they will overcome difficulties on the way of progress, and push forward their economic and trade relations under the new historical conditions, so as to benefit the two countries and peoples, Xi said.

China expresses serious concerns over the U.S. side's recent negative words and actions on issues related to China's Taiwan, Hong Kong, Xinjiang and Tibet, Xi said.

He noted that the U.S. behaviors have interfered in China's internal affairs and harmed China's interests, which is detrimental to the mutual trust and bilateral cooperation.

China hopes that the United States will seriously implement the important consensuses reached by the two leaders over various meetings and phone conversations, pay high attention and attach great importance to China's concerns, and prevent bilateral relations and important agendas from being disturbed, Xi said.

Trump said he is looking forward to maintaining regular communication with Xi by various means, adding he is confident that both countries can properly handle differences, and U.S.-China relations can maintain smooth development.

Xi said he is willing to maintain contacts with Trump by various means, exchange views over bilateral relations and international affairs, and jointly promote China-U.S. relations on the basis of coordination, cooperation and stability.

The two heads of state also exchanged views on the situation of the Korean Peninsula. Xi stressed that it is imperative to stick to the general direction of a political settlement, saying all parties should meet each other halfway, and maintain dialogue and momentum for the mitigation of the situation, which is in the common interests of all.

[Dec 17, 2019] A Great Deal Of Nonsense by Michael Every

If true this china capitulation. Or some shrewd tactical maneuver, as the next year it is China who hold trump cards -- it can derail Trump re-election with ease.
I have my doubts about Trump being the Grand Dealmaker he calls himself. Looking at seven bankruptcies as a proof of that ... mythical skill I don't find much. I recall Trump suing the Deutsche Bank after the bank wanted a credit back. His lawyers in court referred to the bank crisis, called the Deutsche Bank as a bank responsible for that and said that thus they don't deserve repayment. that was Chutzpah in the First Degree, For very obvious reasons Trump lost that case and did pay back.
When Trunmp recently went on searching lawyers to work and sue for him he didn't find any. A big corp lawyer anonymously briefly explained why: "Doesn't pay. Doesn't listen.'
Dec 17, 2019 | www.zerohedge.com

Submitted by Michael Every of Rabobank

A US-China trade deal was announced to chaotic fanfare late Friday Asian time – and we are sceptical. First, we still don't have details other than that December tariffs were postponed by both sides, the 15% US tariffs imposed on 1 September are to be reduced to 7.5% as a sign of goodwill, and the 25% tariffs on USD250bn stay in place . Second, we aren't going to get a signing ceremony between the US and Chinese leaders, which does not send an encouraging signal. And third, what we see is close to the terms we previously criticized for being unrealistic in reports such as 'A Great Deal of Nonsense" and "LOL-A-PLAZA".

The US Trade Representative (USTR) says the final text of the phase one agreement is still being finalised, and he will sign it early next year for a likely incept date of end-January 2020. The areas covered include: Intellectual Property (IP); Technology Transfer; Agriculture; Financial Services; Currency; Expanding Trade; and Dispute Resolution. Each of these promises much and yet potentially delivers little.

China has pledged to address issues of geographical indications, trademarks, and enforcement against pirated and counterfeit goods. That's just after a Chinese court ruled that Japanese retailer Muji doesn't own its own name in China and a local rival started years afterwards does. Enforcement matters, not promises: more on that in a moment.

China has agreed to end forcing or pressuring foreign companies to transfer their tech as a condition for obtaining market access or administrative approvals. Again, enforcement is all that matters here. China also " commits to refrain from directing or supporting outbound investments aimed at acquiring foreign technology pursuant to industrial plans that create distortion. " That is China's reason for outbound investment! For example, Sweden's Defence Research Agency just released a detailed survey of Chinese corporate acquisitions in their country showing at least half are correlated with the "Made in China 20205" plan.

China will " support a dramatic expansion of US food, agriculture and seafood product exports " , with the USTR stating the target is to jump to USD40bn in 2020, a USD16bn increase over the pre-trade war level of USD24bn, and to aim for USD50bn. Part of that reflects China's decimated pork herd, so is hardly a concession. Yet it is hard to conceive of how the total figure can be achieved without China using the US to displace agri imports from other nations, e.g., Argentinean and Brazilian soy, and perhaps Aussie and Kiwi farm goods. That also increases China's economic exposure to the US at a time of rising geopolitical tensions between the two (see news of the US' secret expulsion of two Chinese diplomats), and US' farmers exposure to China in kind. For its part, the Chinese press are not mentioning these US hard targets, and are talking about WTO trading terms, which bodes poorly.

The financial services chapter pledges China to an opening up already underway as it searches for new sources of USD inflows, so again is not a concession. Interestingly, it also says US ratings agencies will get access – which will be fun given the evident credit stresses emerging in China just as US banks will be trying to sell China as an investment destination. .

On currency the US is requiring "high-standard commitments" to refrain from competitive devaluations and targeting of exchange rates. Everyone knows the CNY is not freely-traded – but also that China is doing its best to prop it up, not to try to push it lower. The key message is CNY is not going to be allowed to do what it ought to be doing, i.e., weakening, as China is pledging new fiscal stimulus in 2020 that will decrease its external surplus. That runs counter to market forces, and smacks of a kind of Plaza Accord. Of course, as long as this US-China agreement holds that might be sustainable due to the promised higher capital inflows...

Eexcept the expanding trade chapter implies the opposite. The USTR says China is pledging to boost its 2020 imports of US goods and services by USD100bn over the level in 2017, and by USD100bn again in 2021, for a total increase of USD200bn . Given 2017 was pre-trade war and US exports to China dropped off a cliff in 2019, this means around a 110% y/y increase in purchases in 2020 – and agri is only a portion of that. The problems should be obvious. How can a slowing Chinese economy (imports are down y/y from most sources), see this kind of increase without substituting US for world exports or local goods? How can a China with a USD liquidity shortage serious enough to be driving said lowered import bill, and '1USD-in/1USD-out' de facto capital controls, cope with the net reduction on the trade side? As of November, the 12-month rolling Chinese global trade surplus with the US it was USD330bn and globally was USD440bn. We are talking about reducing that US figure by 2/3 and the global total by 1/2!

Which brings us to the last chapter: Dispute Resolution. Getting China to comply is far harder than getting it to sign. The USTR notes the agreement " establishes strong procedures for addressing disputes related to the agreement and allows each party to take proportionate responsive actions that it deems appropriate ." In other words, each side can unilaterally do what they want when they want! So much for the unilateral US control of the process.

So how to see this in summary? The reduction in tariffs from 15% to 7.5% is a positive, albeit far less than the Wall Street Journal had promised. (NB, the USTR took the extraordinary step of publicly chastising the WSJ journalists who wrote that story – regular readers may recall I have also called them out more than once in the past.) Indeed, if China really has agreed to all that is stated here then further incremental tariff rollbacks can be seen – though the USTR has said the 25% tariffs will stay as collateral for a phase two deal that nobody really expects to happen. Yet the terms of this phase one still seem to be A Great Deal of Nonsense. How can China stop buying foreign tech? How can it buy as much US stuff as pledged? How can it do so and not undermine the WTO? How can it do so and not weaken CNY? And how can it do so with a strong CNY without increasing its USD debts, its strategic reliance on the USD, and to US goods? In short, if China does as the USTR claims, the US is a huge winner here (and there are lots of losers); if China does not comply with what look an impossible import targets, then the US can frame China as the bad guy and the tariffs can go back up again. Arguably, the question is not if that will happen, but when.

[Dec 14, 2019] A Partial Trade Deal With China Mitigates One More Trump-Economy Risk

Dec 14, 2019 | nymag.com

The most important thing about the "phase one" trade agreement announced Friday by U.S. and Chinese officials is what won't happen: The two countries won't impose additional tariffs on Sunday that would have further escalated the trade war.

There will also be a bit of de-escalation. In September, Trump imposed 15 percent tariffs on $110 billion worth of Chinese consumer goods, such as clothing; those tariffs will be cut in half, to 7.5 percent. But the largest piece of Trump's China tariffs -- a 25 percent tariff on $250 billion in goods mostly sold to businesses rather than consumers -- will stay unchanged, for now.

[Dec 14, 2019] Looks like some limited trade deal was achived, but both sides are wary of each other now

Dec 14, 2019 | www.moonofalabama.org

karlof1 , Dec 13 2019 18:50 utc | 85

Awaited confirmation by China about the Trade Deal before writing about it. This article is what I waited to be published: "Phase one trade deal a step forward, a new beginning," yes, an optimistic tone, although tempered in the text:

"Rome was not built in a day. Trade protectionism has expanded in some places of the world, affecting some people's thinking. It is not easy for China and the US to agree on the text of the deal. But how to define this deal and whether it can keep its positive effects on the global market and even accumulate more positive energy will depend on further efforts from China and the US , as the global market has been disturbed by the trade war.

" We must see that the first phase of the trade agreement is a win-win outcome which will deliver tangible benefits to the world . The response from investors around the world is most real because they would not use their own money just to make a grand gesture. However, some people in both China and the US may hype that their own country suffers loss from this deal. This is a natural counter-stream of public opinion, but does not represent the mainstream attitude on either side." [My Emphasis]

Gee, "benefits for the whole world," not just China and Outlaw US Empire? What forced the Empire to compromise:

"The US-China trade war happens at a time when the US' strategic thinking on China has changed. This requires Washington to find a strategic impetus to end the trade war. So what would be such a strategic impetus?

"We believe as long as the US side is realistic, it is possible that such a strategic impetus can be formed and gradually expanded. The trade war is not an effective way to resolve the strategic competition between China and the US. It can neither scare China nor effectively weaken China, but will cause a gradual rise in the cost of the US economy" . [My Emphasis]

IMO, China's assessment's correct. The financialized economy of the Evil Outlaw US Empire has drained it of the resilience it once enjoyed and that China's economy has obtained. Plus, as I wrote several months ago, China's employing geoeconomic levers which the Empire can no longer deploy and is thus stuck with using the only remaining tool it has--its waning geopolitical levers.

[Dec 14, 2019] China's employing geoeconomic levers which the Empire can no longer deploy and is thus stuck with using the only remaining tool it has--its waning geopolitical levers.

Dec 14, 2019 | www.moonofalabama.org

karlof1 , Dec 13 2019 18:50 utc | 85

Awaited confirmation by China about the Trade Deal before writing about it. This article is what I waited to be published: "Phase one trade deal a step forward, a new beginning," yes, an optimistic tone, although tempered in the text:

"Rome was not built in a day. Trade protectionism has expanded in some places of the world, affecting some people's thinking. It is not easy for China and the US to agree on the text of the deal. But how to define this deal and whether it can keep its positive effects on the global market and even accumulate more positive energy will depend on further efforts from China and the US , as the global market has been disturbed by the trade war.

" We must see that the first phase of the trade agreement is a win-win outcome which will deliver tangible benefits to the world . The response from investors around the world is most real because they would not use their own money just to make a grand gesture. However, some people in both China and the US may hype that their own country suffers loss from this deal. This is a natural counter-stream of public opinion, but does not represent the mainstream attitude on either side." [My Emphasis]

Gee, "benefits for the whole world," not just China and Outlaw US Empire? What forced the Empire to compromise:

"The US-China trade war happens at a time when the US' strategic thinking on China has changed. This requires Washington to find a strategic impetus to end the trade war. So what would be such a strategic impetus?

"We believe as long as the US side is realistic, it is possible that such a strategic impetus can be formed and gradually expanded. The trade war is not an effective way to resolve the strategic competition between China and the US. It can neither scare China nor effectively weaken China, but will cause a gradual rise in the cost of the US economy" . [My Emphasis]

IMO, China's assessment's correct. The financialized economy of the Evil Outlaw US Empire has drained it of the resilience it once enjoyed and that China's economy has obtained. Plus, as I wrote several months ago, China's employing geoeconomic levers which the Empire can no longer deploy and is thus stuck with using the only remaining tool it has--its waning geopolitical levers.

[Dec 09, 2019] Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years

Dec 09, 2019 | www.moonofalabama.org

psychohistorian , Dec 9 2019 6:11 utc | 70

Below is a link from ZH about the tech front in the civilization war between the empire West/US and China

China Retaliates For Huawei: Beijing Orders All Government Offices And Public Companies To Replace Foreign PCs And Software

The take away quotes
"
...... the FT reports that Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years.
..........
The take home message here is that US PC and software giants are about to lose billions in sale to Chinese customers, a move that will infuriate Trump who will, correctly, see such attempts to isolate the Chinese PC market from US vendors.
"

This is going to be difficult for China but they have a domestic OS, the Kylin OS, that is Unix/Linux based, so much Open Source software is available to replace the Microsoft/Apple software they currently use until they develop their own.

This speaks to Trump saying he can wait for a trade deal until after the (s)election but it seems obvious that his negotiating position is going to get weaker by the day.

-------------------------------

Another aspect of the tech war that is financial also is that I am reading the China is on the cusp of releasing a digital fiat RMD currency. This will have serious disintermediation effects on the BIS, City of London Corp and others doing currency exchange if any can do such on their phones. I am reading about digital currencies needing a blockchain underpinning but if the US dollar can exist without one currently then what are the show stoppers except the private finance dead weight in the middle?

[Dec 04, 2019] One year pause in the US-China trade war is probably in the cards due to Trump re-election concerns. But only one year...

Notable quotes:
"... When you factor in reelection worries, Trump needs to find a mutually agreeable solution to at least pause the trade war. Such a move will surely revive economic growth hurt by sanctions and ensure the smoothest possible path toward a second term. People vote with their wallets, and Trump gets that. ..."
"... Nothing could be worse for Xi than the markets concluding that China is in a recession with one of its prime economic centers now in open revolt. Just as quickly as China was dubbed the next rising superpower, her economic and political obituary could be written. ..."
"... Here is where a so-called Phase One trade deal could help patch up the relationship and give both sides the short-term domestic boost their leaderships are looking for. ..."
"... But there are reasons to worry. A recent report in Axios claims that China is quite angry over Trump's decision to sign the Hong Kong bill, and as a result talks between the two nations have "stalled." Still, both sides have ample reasons to get a trade deal done. However, if Trump does indeed get reelected and China feels stable domestically once again, the pull of history -- specifically, which nation will dominate geopolitics in the 21st century -- may be too strong to resist. ..."
Dec 04, 2019 | www.theamericanconservative.com

Consider America's position. President Trump surely has incentives to push for what I would call a strategic pause in his quest to contain a rising China through tough trade moves. At the moment, staring down a possible vote on articles of impeachment and a Senate trial, rising trade tensions, which could reignite fears of a recession, are the last thing the president needs. When you factor in reelection worries, Trump needs to find a mutually agreeable solution to at least pause the trade war. Such a move will surely revive economic growth hurt by sanctions and ensure the smoothest possible path toward a second term. People vote with their wallets, and Trump gets that.

Chinese president Xi Jinping, meanwhile, has similar concerns. China's 6 percent economic growth, something Washington can only dream of, is likely a number that exists only on paper, for Beijing is known to cook their books. With growth more than likely just barely in positive territory, thanks in large part to U.S. trade tariffs, and the challenges in Hong Kong not looking as if they will subside anytime soon, Xi needs to deliver what he can claim is a victory that also revives economic growth, at least for the time being. This will help stabilize China domestically, plus give Xi time to allow Hong Kong's protests to burn out while not having to worry about economic troubles at the same time.

Nothing could be worse for Xi than the markets concluding that China is in a recession with one of its prime economic centers now in open revolt. Just as quickly as China was dubbed the next rising superpower, her economic and political obituary could be written.

Here is where a so-called Phase One trade deal could help patch up the relationship and give both sides the short-term domestic boost their leaderships are looking for. A potential deal could involve China rolling back tariffs on all U.S. goods, agreeing to a large purchase of American agricultural goods, and providing basic protections on all U.S. intellectual property involving high-technology goods (think 5G, computers, and robotics). In turn, America would roll back all tariffs -- something China wants very badly -- including, and most importantly, agreeing not to launch the scheduled new round of massive tariffs on December 15, which are viewed as potentially the most damaging to date. While such an interim deal is far from perfect -- China hawks will surely go ballistic, calling the deal nothing more than appeasement or select your other favorite neocon smear -- Xi and Trump are pragmatic enough to see that a deal is in both sides' interests.

But there are reasons to worry. A recent report in Axios claims that China is quite angry over Trump's decision to sign the Hong Kong bill, and as a result talks between the two nations have "stalled." Still, both sides have ample reasons to get a trade deal done. However, if Trump does indeed get reelected and China feels stable domestically once again, the pull of history -- specifically, which nation will dominate geopolitics in the 21st century -- may be too strong to resist.

Harry J. Kazianis is a senior director at the Center for the National Interest and the executive editor of The National Interest magazine.

[Dec 04, 2019] GUILFOYLE: Hong Kong Is Critical To US Effort To Secure A Trade Deal With China

Dec 04, 2019 | dailycaller.com

By offering Hong Kong official tools of support, President Trump has broadened the trade dispute...

Throughout negotiations, the Chinese have been reluctant to get a deal over the line, walking away from agreed upon terms several times. By supporting Hong Kong, President Trump is showing the Chinese Communist Party that he will not sit idly by while they jerk trade negotiations around.

[Dec 03, 2019] China was once very dependent on US chips for its phones by Mike Shedlock

Dec 03, 2019 | www.zerohedge.com

Authored by Mike Shedlock via MishTalk,

China was once very dependent on US chips for its phones. The latest Chinese phones have no US parts.

The Wall Street Journal reports Huawei Manages to Make Smartphones Without American Chips .

American tech companies are getting the go-ahead to resume business with Chinese smartphone giant Huawei Technologies Co., but it may be too late: It is now building smartphones without U.S. chips.

Huawei's latest phone, which it unveiled in September -- the Mate 30 with a curved display and wide-angle cameras that competes with Apple Inc.'s iPhone 11 -- contained no U.S. parts, according to an analysis by UBS and Fomalhaut Techno Solutions, a Japanese technology lab that took the device apart to inspect its insides.

In May, the Trump administration banned U.S. shipments to Huawei as trade tensions with Beijing escalated. That move stopped companies like Qualcomm Inc. and Intel Corp. from exporting chips to the company, though some shipments of parts resumed over the summer after companies determined they weren't affected by the ban.

Meanwhile, Huawei has made significant strides in shedding its dependence on parts from U.S. companies. (At issue are chips from U.S.-based companies, not those necessarily made in America; many U.S. chip companies make their semiconductors abroad.)

Huawei long relied on suppliers like Qorvo Inc., the North Carolina maker of chips that are used to connect smartphones with cell towers, and Skyworks Solutions Inc., a Woburn, Mass.-based company that makes similar chips. It also used parts from Broadcom Inc., the San Jose-based maker of Bluetooth and Wi-Fi chips, and Cirrus Logic Inc., an Austin, Texas-based company that makes chips for producing sound.

Yet Another Trump Trade Win

"When Huawei came out with this high-end phone -- and this is its flagship -- with no U.S. content, that made a pretty big statement," said Christopher Rolland, a semiconductor analyst at Susquehanna International Group.

Huawei executives told Rolland that the company was moving away from American parts, but it was still surprising how quickly it happened.

This was likely going to happen anyway, but Trump escalated the speed at which it happened.

Trade Deal?

me title=

Standard Assumption for 17 Months

Assuming there is a deal, the standard assumption for 17 months, Trump will announce two key elements.

Greatest Deal in History
  1. China will resume buying the same amount of soybeans as before.
  2. China will resume buying the same amount of chips as before.

​The longer this takes the more wins there will be.

With that in mind, please recall Another Trump Tariff Success Story: Vietnam .

And despite the fact that Trump's China Tariffs Made Matters Made the Global Manufacturing Recession Worse and has killed US farmers, It's important to remember, Trump is collecting "huge tariffs".

So please brush aside this recession warning: Freight Volumes Negative YoY for 11th Straight Month .


myne , 1 minute ago link

The trade war is the first act in the much larger game of hegemony.

Both sides are disentangling.

Apple finished their Indian plant.

Huawei went ex-US (but almost certainly not US IP)

Europe is already muttering about human rights in Hong Kong and Xiangjang.

We're nearly ready for act 2. That's when Europe joins in on squeezing trade, and the rest of the democratic world and a few others is bullied and bribed to follow.

greatdisconformity , 1 minute ago link

That was the game from day one.

Soon there will be no US parts in anything made in China.

Because there are no industries left here who can make them.

They have all died, or been bought and relocated.

Take away software and vapid entertainment programming, and the US has *** for consumer technology.

***.

Noob678 , 14 minutes ago link

Do you know why Russia still sells rocket engines to US after being hit US sanctions? Don't tell me they need US dollar.

Do you know that China is facing US embargo under the pretext of national security from 1949 until now and things allowed to export to China mostly agriculture produce, gas and oil? This is the reason they develop their own technologies which the media told me stolen from the US even that the US doesn't have like 5G, quantum satellite, hypersonic weapons just to name a few.

Do you know where soybeans in US came from?

Omega_Man , 12 minutes ago link

russia needs to stop selling those engines to merica and cut them out of space... what a dumb move... russia always trying to be friends with evil merica

schroedingersrat , 11 minutes ago link

Its because not everyone is as psychopathic as the US

victorher , 16 minutes ago link

Plainly, China will never buy the same amount of soybeans or chips than before as Russia will never accumulate US dollars in its Reserve. They have discovered than US is not a reliable partner.

davelis , 1 hour ago link

Those that think that China is only about ripping off US technology are going to be surprised. Sure that was once China's main method as it was for the early USA to rip off British textile secrets. Trump trying to take down China's biggest technology company has been a real wake up call for them. Now, they will own all of the content and will dominate in Asian markets, the middle east, etc. They already did it in solar panels and much else. They have a plan. They build infrastructure, we let it ours decay. They invest in education, we leave out students in debt up to their eyeballs and then give them Starbucks jobs. They have high speed trains everywhere, we have Amtrak. They are looking outward, we are looking inward. America first, rah rah. This will end badly - for the USA.

L00K0UTB3L0W , 55 minutes ago link

only bc ppl in the usa are pushing it that way

no average american benefits from international trade unless the product is unattainable state side. if we can grow it, we should. if we can make it, we should. excess can be sold outside the nation but since everything has been weaponized, we are the ones caught in the middle who suffer.

tariffs are good and we should use them to protect our industries. the problem is that our industry was destroyed before implementing tarrifs.. that part doesn't make sense and all of our major corporations have sold out anyways, further screwing john q public because lets be real, companies are out for profit and shareholder return, not protecting employees and consumers. so they could care less where its being made / sold as long as they see their bottom line increase, no worries.

The Palmetto Cynic , 52 minutes ago link

And if the US doing all of that internally was a good idea, someone would be building the manufacturing capacity as I type this....but they ain't.

L00K0UTB3L0W , 34 minutes ago link

problem is big business doesn't want to pay it. it has always been that way. when the money system was put in place, business owners didn't like the idea of increased competition (less slaves and more company owners) and therefore they were given the ability to claim you for tax purposes, hence why anytime you take a job they want your SS#. investment in the past happened because of things that were to come in the future. the future in america from her current vantage is trans/post humanism with the idea of automation, human/machine integration and that leaves little room or interest in building $100m slave factories for working class people to grind away in

L00K0UTB3L0W , 41 minutes ago link

chips have been made consistently in Malaysia, Taiwan and Korea for the better part of almost 25 years, not real sure how any of what you said is relative to current events. just syncrhonicity and morons like you saying dumb ****.

I am Groot , 1 hour ago link

Wow, the article is really insulting to the Chinese. Like building a smart phone for them was like landing on the moon or something. They steal everything from everyone anyways, so who cares what they build.......

beemasters , 1 hour ago link

Now the only NSA backdoor to Huawei is completely shut.

fezline , 1 hour ago link

This is why they are trying to ban Chinese hardware... not because they fear they are spying on us but because their govt mandated backdoors aren't installed on Chinese hardware. The US govt wants to ban their use because they can't spy on them... That is the real reason.

porco rosso , 1 hour ago link

US is losing the technology race against China. In the first phase China copied the tech, now it is on par, and in five to ten years the murican chip manufacturers are out of business.

The point is this: the muricans are lazy bastards, most of the brain power is imported. They lived too long off the dollar reserve currency status, soon enough nobody will interested in that toilet paper anymore.

Asoka_The_Great , 1 hour ago link

Two years ago, Donald *** Trumptard on behalf of his handler, the US War State/Dark State/Deep State , launched a world wide war against the Chinky company, Huawei, in order, to kill it.

But that failed spectacularly. Not only is Huawei not dead, but its revenue actually grown 24% in 2019.

Now, its smart phones, and 5G cell tower equipments are totally free of US components.

WHY IS THE US DARK STATE SO TERRIFIED OF HUAWEI'S 5G WIRELESS TECHNOLOGY?

The US Dark State/War State/Deep State, that is the NSA/CIA/Pentagon/MIC/MSM . . . etc has forced every western tech companies to install backdoors and malwares on their equipments, except Huawei. They have tried to force Huawei to install those NSA backdoors and malwares, in 2014, but the company categorically refused.

"The real issue is that nothing has changed since a 2014 report from The Register that Huawei categorically refuses to install NSA backdoors into their hardware to allow unfettered intelligence access to the data that crosses their networks.

All our emails, text messages, phone calls, internet searches, web browsing, library records, . . . etc, are recorded and stored by NSA/CIA's vast servers farms.

Now, Huawei is not only the leading 5G wireless provider, but it is the only one, so far. The other companies like Nokia and Ericsson are far behind.

5G is going to completely replace 4G and 3G. It is about 200 times faster than 4GLTE, in download speed.

What this means is that if the world adopts the Huawei equipments and standards, it will threaten to UNDO the US Dark State's vast global surveillance network.

This is what terrifies the US Dark State. Their vast Global Surveillance Network is the basis of its power, and tools to enslave mankind.

There is a very good reason, why the American Founding Fathers , enacted every measures, to protect our rights and privacy, so that we will not be controlled and enslaved by the tyranny of totalitarian government, which is already upon us, in the form of US Dark State/War State .

The US Dark State/Deep State/War State does not represent America. It is Un-American. It is not the American Republic founded by our Founding Fathers, and enshrined in the US Constitution.

Anonymous IX , 1 hour ago link

Maybe so, Asoka. I think the Rothschild Clan plays both sides. They are in China. Some purport the family carrying that lineage is named Li.

The U.S. is slowly but surely being isolated for The Great Fall...when we lose world currency status. The Banking Cartel will evidently make huge money and gain enormous power once the U.S. collapses. China already has the massive surveillance state, lack of privacy, institutionalized social scoring, and workers' living cubes located on factory premises...so the Rothshilds are in love. Sigh. So much control!! So much degradation!!! They're in love!!!

Asoka_The_Great , 50 minutes ago link

"I think the Rothschild Clan plays both sides. They are in China. Some purport the family carrying that lineage is named Li."

They are trying hard to infiltrate China. But the Chinese banks and financial service firms are State Owned . They are hard penetrate. That is why they are using Donald *** Trump to launch the Mother of All Great Trade War , to force the Chinese to open up their financial sector for infiltration and plundering.

Plus, Chinese and westerner looks distinctively different. And so, they are trying the inter-marriage trick with the rich and powerful Chinese families.

[Dec 02, 2019] Cheap, ubiquitous cameras, microphones, and location trackers are the real issue. If the state can track everyone's movements and conversations, then it can build a better Stasi even with crude, simple AI

Notable quotes:
"... Seeing Like a State ..."
"... More generally, I think AI gets far too much of the billing in authoritarian apocalypse forecasts. Cheap, ubiquitous cameras, microphones, and location trackers are the real issue. If the state can track everyone's movements and conversations, then it can build a better Stasi even with crude, simple ai. ..."
Dec 02, 2019 | crookedtimber.org

The theory behind this is one of strength reinforcing strength – the strengths of ubiquitous data gathering and analysis reinforcing the strengths of authoritarian repression to create an unstoppable juggernaut of nearly perfectly efficient oppression. Yet there is another story to be told – of weakness reinforcing weakness. Authoritarian states were always particularly prone to the deficiencies identified in James Scott's Seeing Like a State – the desire to make citizens and their doings legible to the state, by standardizing and categorizing them, and reorganizing collective life in simplified ways, for example by remaking cities so that they were not organic structures that emerged from the doings of their citizens, but instead grand chessboards with ordered squares and boulevards, reducing all complexities to a square of planed wood . The grand state bureaucracies that were built to carry out these operations were responsible for multitudes of horrors, but also for the crumbling of the Stalinist state into a Brezhnevian desuetude, where everyone pretended to be carrying on as normal because everyone else was carrying on too. The deficiencies of state action, and its need to reduce the world into something simpler that it could comprehend and act upon created a kind of feedback loop, in which imperfections of vision and action repeatedly reinforced each other.

So what might a similar analysis say about the marriage of authoritarianism and machine learning? Something like the following, I think. There are two notable problems with machine learning. One – that while it can do many extraordinary things, it is not nearly as universally effective as the mythology suggests. The other is that it can serve as a magnifier for already existing biases in the data. The patterns that it identifies may be the product of the problematic data that goes in, which is (to the extent that it is accurate) often the product of biased social processes. When this data is then used to make decisions that may plausibly reinforce those processes (by singling e.g. particular groups that are regarded as problematic out for particular police attention, leading them to be more liable to be arrested and so on), the bias may feed upon itself.

This is a substantial problem in democratic societies, but it is a problem where there are at least some counteracting tendencies. The great advantage of democracy is its openness to contrary opinions and divergent perspectives . This opens up democracy to a specific set of destabilizing attacks but it also means that there are countervailing tendencies to self-reinforcing biases. When there are groups that are victimized by such biases, they may mobilize against it (although they will find it harder to mobilize against algorithms than overt discrimination). When there are obvious inefficiencies or social, political or economic problems that result from biases, then there will be ways for people to point out these inefficiencies or problems.

These correction tendencies will be weaker in authoritarian societies; in extreme versions of authoritarianism, they may barely even exist. Groups that are discriminated against will have no obvious recourse. Major mistakes may go uncorrected: they may be nearly invisible to a state whose data is polluted both by the means employed to observe and classify it, and the policies implemented on the basis of this data. A plausible feedback loop would see bias leading to error leading to further bias, and no ready ways to correct it. This of course, will be likely to be reinforced by the ordinary politics of authoritarianism, and the typical reluctance to correct leaders, even when their policies are leading to disaster. The flawed ideology of the leader (We must all study Comrade Xi thought to discover the truth!) and of the algorithm (machine learning is magic!) may reinforce each other in highly unfortunate ways.

In short, there is a very plausible set of mechanisms under which machine learning and related techniques may turn out to be a disaster for authoritarianism, reinforcing its weaknesses rather than its strengths, by increasing its tendency to bad decision making, and reducing further the possibility of negative feedback that could help correct against errors. This disaster would unfold in two ways. The first will involve enormous human costs: self-reinforcing bias will likely increase discrimination against out-groups, of the sort that we are seeing against the Uighur today. The second will involve more ordinary self-ramifying errors, that may lead to widespread planning disasters, which will differ from those described in Scott's account of High Modernism in that they are not as immediately visible, but that may also be more pernicious, and more damaging to the political health and viability of the regime for just that reason.

So in short, this conjecture would suggest that the conjunction of AI and authoritarianism (has someone coined the term 'aithoritarianism' yet? I'd really prefer not to take the blame), will have more or less the opposite effects of what people expect. It will not be Singapore writ large, and perhaps more brutal. Instead, it will be both more radically monstrous and more radically unstable.

Like all monotheoretic accounts, you should treat this post with some skepticism – political reality is always more complex and muddier than any abstraction. There are surely other effects (another, particularly interesting one for big countries such as China, is to relax the assumption that the state is a monolith, and to think about the intersection between machine learning and warring bureaucratic factions within the center, and between the center and periphery).Yet I think that it is plausible that it at least maps one significant set of causal relationships, that may push (in combination with, or against, other structural forces) towards very different outcomes than the conventional wisdom imagines. Comments, elaborations, qualifications and disagreements welcome.


Ben 11.25.19 at 6:32 pm (no link)

This seems to equivocate between two meanings of bias. Bias might mean a flaw that leads to empirically incorrect judgements and so to bad decisions, and it's true that that type of bias could destabilize an authoritarian state. But what we usually worry about with machine learning is that the system will find very real, but deeply unjust, patterns in the data, and reinforce those pattern. If there's a particular ethnic group that really does produce a disproportionate number of dissidents, and an algorithm leads to even-more-excessive repression of that group -- I'm not sure why an authoritarian state would see a stability threat in that tendency.

More generally, I think AI gets far too much of the billing in authoritarian apocalypse forecasts. Cheap, ubiquitous cameras, microphones, and location trackers are the real issue. If the state can track everyone's movements and conversations, then it can build a better Stasi even with crude, simple ai.

faustusnotes 11.26.19 at 1:00 am (no link)
I'd just like to point out (re: the tweet in the original post) that the "Uighur face-matching AI" idea is bullshit invented by scaremongers, with no basis in fact and traceable to a shoddy reddit thread. The Chinese government is not using facial recognition to identify Uighur, and the facial recognition fears about the Chinese government are vastly overstated.

Australia's border control facial recognition software is far more advanced than China's, as is the UK's, and facial recognition is actually pretty common in democracies. See e.g. the iPhone.

The main areas in which China uses facial recognition are in verifying ID for some high cost functions (like buying high speed rail tickets), and it's quite easy to avoid these functions by joining a queue and paying a human. The real intrusiveness of the Chinese security state is in its constant bag searches and very human-centric abuses of power in everyday life in connection with "security". Whether you get stopped and searched depends a lot on very arbitrary and error prone judgments by bored security staff at railway stations, in public squares, and on buses, not some evil intrusive state technology.

Conversely, the UK is a world leader in installing and using CCTV cameras, and has been for a long time. Furthermore, these CCTV cameras are a huge boon to law-abiding citizens, since they act as both excellent forms of crime prevention (I have had this experience myself) and for finding serious criminals. The people responsible for the death of those 39 Vietnamese labourers in the ice truck were caught because of CCTV; so was the guy who murdered that woman on the street in Melbourne a few years ago.

Finally to address another point that's already been raised (sadly): China no longer harvests organs, and the 2019 report that says it does is a sham. The social credit system is also largely a myth, and nobody from China even seems to know wtf it is.

If you're going to talk about how state's work, and the relative merits of autocratic vs. democratic states and their interaction with technology, it's a really good idea to get the basic facts right first.

Nathanael 11.26.19 at 6:10 am (no link)
I'll add that John Quiggin's point that Xi has already lost control of the provinces is correct -- but it DOES threaten his position as dictator. Once the provincial governors know they can act with impunity, it is absolutely standard for the next step to be getting rid of that annoying guy who is pretending to be dictator. It may take a few years but Xi now has dozens of powerful insiders who know that he's a weakling. They'll bide their time but when he crosses too many of them they'll take him out. And if China doesn't shut down coal, he's going to look like a weakling internationally too, in a couple of years. This will create a new group of ambitious insiders with a different reason to take him out.

Xi broke the "technocratic consensus" which was present after Deng, of central committee members who strove for competence and fact-based decision-making. That was a surprisingly effective type of junta government which led to lots of thinkpieces about whether authoritarian China would beat the democratic west. But it succumbed to the succession problem, like all authoritarian systems; Xi made himself Premier-for-life and the country is now exhibiting all the usual failures of authoritarian countries.

Hidari 11.26.19 at 9:08 am (no link)
@11 Yes it's strange that allegations of Chinese use of facial recognition software is gaining so much traction at a time when the Trump regime is deliberately ratcheting up tensions with China to pursue nakedly imperial goals, when the objective facts of Israeli use of similar software, which the Israelis boast about ( https://www.nbcnews.com/news/all/why-did-microsoft-fund-israeli-firm-surveils-west-bank-palestinians-n1072116 ) doesn't cause so much interest, at a time when the Trump regime has simple decreed that the Israeli invasion/colonisation of Palestine is 'legal under international law'.

One of life's little mysteries I guess.

If we must talk about China could we at least bring it back to areas where we are responsible and where, therefore, we can do something about it?

https://www.theguardian.com/world/2019/feb/01/blackwater-founder-erik-prince-to-build-training-camp-in-chinas-xinjiang

[Nov 28, 2019] Futures Tumble After Trump Signs Bill Backing Hong Kong Protesters, Defying China

So in due course the trade war was replaced by the full scale cold war.
Notable quotes:
"... Needless to say, no differences will be "settled amicably" and now China will have no choice but to retaliate, aggressively straining relations with the US, and further complicating Trump's effort to wind down his nearly two-year old trade war with Beijing. ..."
"... The legislation, S. 1838, which was passed virtually unanimously in both chambers, requires annual reviews of Hong Kong's special trade status under American law and will allow Washington to suspend said status in case the city does not retain a sufficient degree of autonomy under the "one country, two systems" framework. The bill also sanctions any officials deemed responsible for human rights abuses or undermining the city's autonomy. ..."
"... The House cleared the bill 417-1 on Nov. 20 after the Senate passed it without opposition, veto-proof majorities that left Trump with little choice but to acquiesce, or else suffer bruising fallout from his own party. the GOP. ..."
"... In accordance with the law, the Commerce Department will have 180 days to produce a report examining whether the Chinese government has tried use Hong Kong's special trading status to import advanced "dual use" technologies in violation of US export control laws. Dual use technologies are those that can have commercial and military applications. ..."
"... The new law directs the US secretary of state to "clearly inform the government of the People's Republic of China that the use of media outlets to spread disinformation or to intimidate and threaten its perceived enemies in Hong Kong or in other countries is unacceptable." ..."
"... The state department should take any such activity "into consideration when granting visas for travel and work in the United States to journalists from the People's Republic of China who are affiliated with any such media organizations", the law says. ..."
"... Yes I think getting the western financial institutions out of HK is the plan. I'm sure they appreciate the US doing this for them, but of course they could never admit that. ..."
Nov 27, 2019 | www.zerohedge.com

Less than an hour after Trump once again paraded with yet another all-time high in the S&P...

... and on day 510 of the trade war, it appears the president was confident enough that a collapse in trade talks won't drag stocks too far lower, and moments after futures reopened at 6pm, the White House said that Trump had signed the Hong Kong bill backing pro-democracy protesters, defying China and making sure that every trader's Thanksgiving holiday was just ruined.

In a late Wednesday statement from the White House, Trump said that:

I signed these bills out of respect for President Xi, China, and the people of Hong Kong. They are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all.

Needless to say, no differences will be "settled amicably" and now China will have no choice but to retaliate, aggressively straining relations with the US, and further complicating Trump's effort to wind down his nearly two-year old trade war with Beijing.

Trump's signing of the bill comes during a period of unprecedented unrest in Hong Kong, where anti-government protests sparked by a now-shelved extradition bill proposal have ballooned into broader calls for democratic reform and police accountability.

"The Hong Kong Human Rights and Democracy Act reaffirms and amends the United States-Hong Kong Policy Act of 1992, specifies United States policy towards Hong Kong and directs assessment of the political developments in Hong Kong," the White House said in a statement. "Certain provisions of the act would interfere with the exercise of the president's constitutional authority to state the foreign policy of the United States."

The legislation, S. 1838, which was passed virtually unanimously in both chambers, requires annual reviews of Hong Kong's special trade status under American law and will allow Washington to suspend said status in case the city does not retain a sufficient degree of autonomy under the "one country, two systems" framework. The bill also sanctions any officials deemed responsible for human rights abuses or undermining the city's autonomy.

The House cleared the bill 417-1 on Nov. 20 after the Senate passed it without opposition, veto-proof majorities that left Trump with little choice but to acquiesce, or else suffer bruising fallout from his own party. the GOP.

Trump also signed into law the PROTECT Hong Kong act, which will prohibit the sale of US-made munitions such as tear gas and rubber bullets to the city's authorities.

While many members of Congress in both parties have voiced strong support for protesters demanding more autonomy for the city, Trump had stayed largely silent, even as the demonstrations have been met by rising police violence.

Until now.

The bill's author, Senator Marco Rubio of Florida, said that with the legislation's enactment, the US now had "new and meaningful tools to deter further influence and interference from Beijing into Hong Kong's internal affairs."

In accordance with the law, the Commerce Department will have 180 days to produce a report examining whether the Chinese government has tried use Hong Kong's special trading status to import advanced "dual use" technologies in violation of US export control laws. Dual use technologies are those that can have commercial and military applications.

One other less discussed but notable provision of the Hong Kong Human Rights Act targets media outlets affiliated with China's government. The new law directs the US secretary of state to "clearly inform the government of the People's Republic of China that the use of media outlets to spread disinformation or to intimidate and threaten its perceived enemies in Hong Kong or in other countries is unacceptable."

The state department should take any such activity "into consideration when granting visas for travel and work in the United States to journalists from the People's Republic of China who are affiliated with any such media organizations", the law says.

* * *

In the days leading up to Trump's signature, China's foreign ministry had urged Trump to prevent the legislation from becoming law, warning the Americans not to underestimate China's determination to defend its "sovereignty, security and development interests."

"If the U.S. insists on going down this wrong path, China will take strong countermeasures, " said China's foreign ministry spokesman Geng Shuang at a briefing Thursday in Beijing. On Monday, China's Vice Foreign Minister Zheng Zeguang summoned the U.S. ambassador, Terry Branstad to express "strong opposition" to what the country's government considers American interference in the protests, including the legislation, according to statement. The new U.S. law comes just as Washington and Beijing showed signs of working toward "phase-one" of deal to ease the trade war. Trump would like the agreement finished in order to ease economic uncertainty for his re-election campaign in 2020, and has floated the possibility of signing the deal in a farm state as an acknowledgment of the constituency that's borne the brunt of retaliatory Chinese tariffs.

Last week China's Vice Premier and chief trade negotiator Liu He said before a speech at the Bloomberg New Economy Forum in Beijing, that he was "cautiously optimistic" about reaching the phase one accord. He will now have no choice but to amend his statement.

In anticipation of a stern Chinese rebuke, US equity futures tumbled, wiping out most of the previous day's gains... Still, the generally modest pullback - the S&P was around 2,940 when Trump announced the Phase 1 deal on Oct 11 - suggests that despite Trump's signature, markets expect a Chinese deal to still come through. That may be an aggressive and overly "hopeful" assumption, especially now that China now longer has a carte blanche to do whatever it wants in Hong Kong, especially in the aftermath of this weekend's landslide victory for the pro-Democracy camp which won in 17 of the city's 18 districts.

"Following last weekend's historic elections in Hong Kong that included record turnout, this new law could not be more timely in showing strong US support for Hongkongers' long-cherished freedoms," said Rubio


The Palmetto Cynic , 1 hour ago link

Trade wars are good and easy to win. LOL.

Gonzogal , 32 minutes ago link

This is another attempt by the US to stop BRICS. They care NOTHING about HK, only its usefulness in the US war on Chinas growing importance in world trade.

Fascal Rascal upended , 27 minutes ago link

**** trading with communists.

lift foot, aim, pull trigger.

but no no no... trading with communists brings jobs to sell cheap crap. oh what was I thinking.... cheap crap, jobs, and the richest of the rich get richer... my bad.
it ain’t like the commies are going to use the money to build up their military..

silly me.

sentido kumon , 41 minutes ago link

Of course the obvious solution is to just let people choose whatever or whomever they want to associate with and be respected and left alone for their choice.

But no. We all have to live and abide by the wishes of other people bcuz of "unity" and ****.

This non sense is really getting tiresome.

Gonzogal , 51 minutes ago link

This criticism from a country that just this week renewed the "Patriot Act" that has taken away Americans rights and increased spying on US citizens.

The US should get its OWN house in order BEFORE moves against countries that do the SAME THING THE US DOES!

The world is sick of this hypocracy!

Helg Saracen , 1 hour ago link

Eh guys, you still do not understand that all this (not only China and Hong Kong) is a very big "elite" performance for ordinary people to keep you (the rest of the boobies) in subjection. It's like in boxing - contractual fights. Do you think world "elites" benefit from peace and order? You are mistaken - these guys have the world as death (the death of their Power and their Control). An example from the history of Europe - in the 18-19 and early 20th century, Europe only did what it fought. But the funny thing is that the monarchs (the real owners of Europe) were relatives among themselves. The First World War was popularly called “The War of Three Cousins” (English monarch, German Kaiser and Russian emperor). But the Europeans paid for the dismantling of relatives. Now the "monarchs" are bankers and your position has not changed, you changed only the owners after 1918.

He–Mene Mox Mox , 1 hour ago link

Problem with Hong Kong is, it is dependent on China to survive. That is not only true for the most basic neccessities, but also as a port for international trade. However, in the last 25 years, Shenzhen and Guangzhou have built up their own trade hubs, which has pulled trade away from being concentrated in Hong Kong, and consequently more dependent on China. Our ideas of Hong Kong remaining an independent island nation isn't going to work for three reasons:

1. Without being a doorway to China, there is no other reason for its existence.

2. Hong Kong is indeed Chinese sovereign territory, that was taken away from it to be made into a trade colony by the British in 1841, under the Treaty of Nanking. The British gave up Hong Kong in 1997, under the 1984 signed Sino-British Joint Declaration, in which Britain agreed to return not only the New Territories but also Kowloon and Hong Kong itself. China promised to implement a "One Country, Two Systems" regime, under which for fifty years Hong Kong citizens could continue to practice capitalism and political freedoms forbidden on the mainland. So, when the year 2047 comes around, Hong Kong will be fully absorbed and integrated in a One Country, One system Chinese regime. In otherwords, Hong Kong's fate was already sealed in 1984, and there is nothing America can legally do about it.

3. Hong Kong still needs the basic neccessities from China to survive. Don't count on either the British or the Americans to provide it.

Dzerzhhinsky , 1 hour ago link

Yes I think getting the western financial institutions out of HK is the plan. I'm sure they appreciate the US doing this for them, but of course they could never admit that.

[Nov 25, 2019] China doesn't aim to be an empire for the simple reason it learned from America's mistakes

Nov 25, 2019 | www.moonofalabama.org

psychohistorian , Nov 23 2019 6:37 utc | 58

Xi Jinping tells that bullshit little story about China's 5,000 year History, but the truth is really much more pragmatic: China doesn't aim to be an empire for the simple reason it learned from America's mistakes.

The CCP already knows that being the sole superpower is unsustainable and, in the medium term, goes even against its main objective, which is to establish a "moderately prosperous society" in China until 2030 (they consider the 2000s Belgium as the standard for "moderately prosperous").

Socialist China has shown, so far, an incredible capacity of learning from other nations' mistakes:

1) It correctly read the historical conjuncture of the late 1960s, by concluding that the historical cycle of socialist revolutions was over, and moved on to try to break the Cold War embargo in order to initiate a cycle of wealth production. They achieved that in 1972. This was when Mao Zedong was still alive and commanding China with absolute authority, so it's a myth China "freed itself" only when and because Mao died (1976);

2) It learned from the failed experiment of the Brazilian liberal dictatorship, by doing exactly the opposite of the Zona Franca de Manaus . The result was the creation of the Special Economic Zones, which allowed capitalist investment from abroad to come to China but in quarentene, and with technological transfer.

3) It learned from the trap the USSR fell, and used a peaceful geopolitical strategy. It avoided an arms race and was able to expand its allied nations portfolio and slowly tightened its grip over the American economy.

4) It learned from the the failure of Soviet socialism in producing very good quality consumer goods. It solved this problem by "opening up" for capitalist exploitation the sectors which produced and distributed consumer goods, without affecting the strategic sectors (defense, finance, natural resources, etc.).

5) It learned from the failure of the American empire of maintaining its status as the world's "lonely superpower" by not adopting a war culture in China and by being more tolerant with its neighbors. But that didn't mean they didn't consolidated position: military spending continues to go up and the Armed Forces continues to be modernized and under firm CCP control. The South China Sea is a "corridor of life" for the Chinese, so the CCP quickly, but in a peaceful manner, took control of it, very aware that it would probably cost the Vietnamese friendship. But that was the exception that proves the rule, an exceptional situation where the benefits were greater than the costs.

vk , Nov 23 2019 13:58 utc | 79

@

[Nov 25, 2019] China's trade has gradually steadied as the nation moves to explore third markets

Nov 25, 2019 | www.moonofalabama.org

karlof1 , Nov 22 2019 21:16 utc | 20

This isn't the only article I've read over the past several days suggesting China won't agree to a trade deal anytime soon. The following are amongst the reasons why:

"China's trade has gradually steadied as the nation moves to explore third markets. 'A substantial decline in trade and a drastic fall in economic growth which some international observers were worried about didn't occur, pointing to the potential and resilience of the Chinese economy,' he went on to say.

"The US, for its part, has seen its current account deficit as a percentage of GDP shoot up from 2.9 percent to 3.2 percent. This suggests the trade war is failing to address the issue of the US' current account deficit, stressed Zhu, who is currently the Chairman of the National Institute of Financial Research at Tsinghua University. He added that, more worryingly, tariffs mean additional costs are put on US companies and consumers."

Evil Outlaw US Empire planners in their hubristic zeal to decouple from China's economy erred massively in thinking China would be the one harmed and come begging for a trade deal. Instead, China's geoeconomic strategy is clearly working and is more potent than what the Empire can bring to the table--Oops! China can now play Trump.

uncle tungsten , Nov 23 2019 8:09 utc | 68
Peter AU1 #64

psychohistorian 63
I see Trump's envoy Kissinger is standing next to Xi. Seems like Trump is trying to cook something up with Kissinger regularly on the scene when it comes to Russia and China.

Interesting that Kissinger is there . Steve Pieczenik takes the very strong view that Pompeo is a dead man walking. Worth every second of his five minute discourse . What I like about Steve and his various takes on people of note is that he assassinates them immediately and intensely with a quick turn of phrase.

Peter AU1 , Nov 23 2019 8:20 utc | 69
uncle tungsten

Kissinger was also Nixon's envoy. He engineered the split between China and the Soviet Union amongst other things. China and Russia's current leadership though may be above Kissinger's pay grade.

[Nov 15, 2019] Asia Times Numbers show joke is on the US, not Huawei Article

Nov 15, 2019 | www.asiatimes.com

Numbers show joke is on the US, not Huawei US ban lit a fire under Huawei, seen taking lead in smartphones and awash in cash as bonds trade at a premium

By Umesh Desai

Unlisted Chinese telecommunications giant Huawei Technologies was made an international pariah by US regulators earlier this year after a ban on buying key parts and on access to crucial markets.

You think that sounded the death knell for the company? Think again.

This week, Huawei announced a US$286 million bonuses bonanza to its employees . Its bonds continue to trade above par, and its cash balances are massive. Hardly the signs of a company struggling under sanctions.

The company has repeatedly denied US allegations that it is a front for the Chinese government – the justification Washington cited for banning US companies from using Huawei-manufactured gear.

Huawei is the world's biggest telecom equipment maker and it's the second biggest smartphone maker.

According to data from International Data Corporation, smartphone shipments in the July-September quarter rose 18.6% to 66.6 million, just behind global leader Samsung's 78.2 million.

"Huawei has been gaining market share in China and overseas despite US trade war frictions and may become the leading smartphone maker in the next two quarters," said Nitin Soni, director of corporate ratings at Fitch Ratings.

He said telcos across emerging markets, which are facing capital expenditure pressures and limited 5G business viability in the short term, may be willing to buy Huawei's 5G equipment given it is cheaper and has better technology than European counterparts.

It's not just Soni. Industry leaders also acknowledge Huawei's quality standards .

Indian telco Bharti Enterprises' chairman Sunil Mittal said recently, for example, "I can safely say their products in 3G and 4G that we have experienced are significantly superior to Ericsson and Nokia. I use all three of them. "

Indeed, the bond-market performance of the unrated, unlisted company confirms Huawei's strength. Its dollar-denominated bonds traded in global markets are changing hands at above par, indicating bond investors are confident about the company's cash position and liquidity situation.

Its bonds due 2025, which pay a coupon of 4.125%, are trading at a price of $104 while the holder would only get $100 at maturity. The premium would be compensated by the annual coupon, which would reduce the yield. The bonds are currently yielding 3.4% compared with the 4.25% yield at the time of the issuance. In price terms the bonds have rallied from $99 in 2015 to $104. Prices move inversely to yields.

The financial highlights also betray no signs of weakness. The company has a cash hoard of $39 billion and generates $10 billion from operations each year.

So, in fact, the US ban on Huawei may be helping the company.

"A ban on US companies such as Google to supply software to Huawei may lead to faster innovation by Huawei to develop its own operating system and chips," said Soni.

[Nov 09, 2019] Asia Times America's misguided war on Chinese technology Article

Nov 09, 2019 | www.asiatimes.com

America's misguided war on Chinese technology Jeffrey D Sachs By Jeffrey D Sachs November 8, 2019

The worst foreign-policy decision by the United States of the last generation – and perhaps longer – was the "war of choice" that it launched in Iraq in 2003 for the stated purpose of eliminating weapons of mass destruction that did not, in fact, exist. Understanding the illogic behind that disastrous decision has never been more relevant, because it is being used to justify a similarly misguided US policy today.

The decision to invade Iraq followed the illogic of then-US vice-president Richard Cheney, who declared that even if the risk of WMD falling into terrorist hands was tiny – say, 1% – we should act as if that scenario would certainly occur.

Such reasoning is guaranteed to lead to wrong decisions more often than not. Yet the US and some of its allies are now using the Cheney Doctrine to attack Chinese technology. The US government argues that because we can't know with certainty that Chinese technologies are safe, we should act as if they are certainly dangerous and bar them.

Proper decision-making applies probability estimates to alternative actions. A generation ago, US policymakers should have considered not only the (alleged) 1% risk of WMD falling into terrorist hands, but also the 99% risk of a war based on flawed premises. By focusing only on the 1% risk, Cheney (and many others) distracted the public's attention from the much greater likelihood that the Iraq war lacked justification and that it would gravely destabilize the Middle East and global politics.

The problem with the Cheney Doctrine is not only that it dictates taking actions predicated on small risks without considering the potentially very high costs. Politicians are tempted to whip up fears for ulterior purposes.

That is what US leaders are doing again: creating a panic over Chinese technology companies by raising, and exaggerating, tiny risks. The most pertinent case (but not the only one) is the US government attack on the wireless broadband company Huawei. The US is closing its markets to the company and trying hard to shut down its business around the world. As with Iraq, the US could end up creating a geopolitical disaster for no reason.

I have followed Huawei's technological advances and work in developing countries, as I believe that fifth-generation (5G) and other digital technologies offer a huge boost to ending poverty and other Sustainable Development Goals. I have similarly interacted with other telecom companies and encouraged the industry to step up actions for the United Nations' SDGs. When I wrote a short foreword (without compensation) for a Huawei report on the topic, and was criticized by foes of China, I asked top industry and government officials for evidence of wayward activities by Huawei. I heard repeatedly that Huawei behaves no differently than trusted industry leaders.

The US government nonetheless argues that Huawei's 5G equipment could undermine global security. A "back door" in Huawei's software or hardware, US officials claim, could enable the Chinese government to engage in surveillance around the world. After all, US officials note, China's laws require Chinese companies to cooperate with the government for purposes of national security.

Given the technology's importance for their sustainable development, low-income economies around the world would be foolhardy to reject an early 5G rollout. Yet despite providing no evidence of back doors, the US is telling the world to stay away from Huawei

Now, the facts are these. Huawei's 5G equipment is low-cost and high-quality, currently ahead of many competitors, and already rolling out. Its high performance results from years of substantial spending on research and development, scale economies, and learning by doing in the Chinese digital marketplace. Given the technology's importance for their sustainable development, low-income economies around the world would be foolhardy to reject an early 5G rollout.

Yet despite providing no evidence of back doors, the US is telling the world to stay away from Huawei. The US claims are generic. As a US Federal Communications Commissioner put it , "The country that owns 5G will own innovations and set the standards for the rest of the world, and that country is currently not likely to be the United States." Other countries, most notably the United Kingdom, have found no back doors in Huawei's hardware and software. Even if back doors were discovered later, they could almost surely be closed at that point.

The debate over Huawei rages in Germany, where the US government threatens to curtail intelligence cooperation unless the authorities exclude Huawei's 5G technology. Perhaps as a result of the US pressure, Germany's spy chief recently made a claim tantamount to the Cheney Doctrine: "Infrastructure is not a suitable area for a group that cannot be trusted fully." He offered no evidence of specific misdeeds. Chancellor Angela Merkel, by contrast, is fighting behind the scenes to leave the market open for Huawei.

Ironically, though predictably, the US complaints partly reflect America's own surveillance activities at home and abroad. Chinese equipment might make secret surveillance by the US government more difficult. But unwarranted surveillance by any government should be ended. Independent UN monitoring to curtail such activities should become part of the global telecommunications system. In short, we should choose diplomacy and institutional safeguards, not a technology war.

The threat of US demands to blockade Huawei concerns more than the early rollout of the 5G network. The risks to the rules-based trading system are profound. Now that the US is no longer the world's undisputed technology leader, President Donald Trump and his advisers don't want to compete according to a rules-based system. Their goal is to contain China's technological rise. Their simultaneous attempt to neutralize the World Trade Organization by disabling its dispute settlement system shows the same disdain for global rules.

If the Trump administration "succeeds" in dividing the world into separate technology camps, the risks of future conflicts will multiply. The US championed open trade after World War II not only to boost global efficiency and expand markets for American technology, but also to reverse the collapse of international trade in the 1930s. That collapse stemmed in part from protectionist tariffs imposed by the US under the 1930 Smoot-Hawley Act , which amplified the Great Depression, in turn contributing to the rise of Adolf Hitler and, ultimately, the outbreak of World War II.

In international affairs, no less than in other domains, stoking fears and acting on them, rather than on the evidence, is the path to ruin. Let's stick to rationality, evidence and rules as the safest course of action. And let us create independent monitors to curtail the threat of any country using global networks for surveillance of or cyberwarfare on others. That way, the world can get on with the urgent task of harnessing breakthrough digital technologies for the global good.

Copyright: Project Syndicate, 2019.
www.project-syndicate.org

[Nov 03, 2019] Is China Playing Trump His Trade Team For Chumps

Nov 03, 2019 | www.zerohedge.com

The world's worst negotiating strategy is to give the other side everything they want in exchange for worthless empty promises, yet this is exactly what Trump and his trade team are doing. All the Chinese trade team has to do to get rid of tariffs and other U.S. bargaining chips is mutter some empty phrase about "agreeing in principle" and the U.S. surrenders all its bargaining chips.

If the other side are such naive chumps that they give you everything you want without actually committing to anything remotely consequential, why bother with a formal agreement? Just play the other side for the chumps they are: if they threaten to reinstate tariffs, just issue another worthless press release about "progress has been made."

The other guaranteed losing strategy in negotiation is advertise your own fatal weakness, which in Trump's case is his obsession with pushing the U.S. stock market to new highs. There is no greater gift he could hand the Chinese trade team than this monumental weakness, for all they have to do is talk tough and the U.S. stock market promptly tanks, sending the Trump Team into a panic of appeasement and empty claims of "progress."

The Chinese team has gotten their way for a year by playing Trump's team as chumps and patsies, so why stop now? The Chinese know they can get way without giving anything away by continuing to play the American patsies and using the president's obsession with keeping U.S. stocks lofting higher to their advantage: declare the talks stalled, U.S. stocks crater, the American team panics and rushes to remove anything that might have enforcement teeth, reducing any "trade deal" to nothing but empty promises.

Given their success at playing America's team, why do a deal at all? Just play the chumps for another year, and maybe Trump will be gone and a new set of even more naive patsies enter the White House.

If we put ourselves in the shoes of the Chinese negotiators, we realize there's no need to sign a deal at all: the Trump team has gone out of its way to make it needless for China to agree to anything remotely enforceable. All the Chinese have to do is issue some stern talk that crushes U.S. stocks and the Trump Team scurries back, desperate to appease so another rumor of a "trade deal" can be issued to send U.S. stocks higher.

It would be pathetic if it wasn't so foolish and consequential.

[Nov 01, 2019] Pompeo reused anti-soviet rhetoric in trade war with China

Notable quotes:
"... Pompeo said the United States had long cherished its friendship with the Chinese people, adding the Communist government was not the same thing as the people of China. ..."
"... We are in a civilization war about the global social contract and whether sovereign public finance gets a chance to be compared against the Western centuries old private finance controlled world. ..."
"... The USA has been successful at bribing foreign leaders, taking them under their wing, and getting them to accept their place in the world order. They think they can do this with anybody. ..."
"... The US never really counts on foreign leaders taking their peoples interests at heart and standing up to the hegemon. As far as Pompeo goes this is classic projection. It is a sign they are losing and are worried about it. ..."
Nov 01, 2019 | www.moonofalabama.org

psychohistorian , Oct 31 2019 15:18 utc | 4

Below is a Reuters posting about Mike Pompeo presenting the public/private finance "dog whistle" at a Hudson Institute think tank gala dinner....the pot calling the kettle black.

"
WASHINGTON (Reuters) - U.S. Secretary of State Mike Pompeo on Wednesday stepped up recent U.S. rhetoric targeting China's ruling Communist Party, saying Beijing was focused on international domination and needed to be confronted.

Pompeo made the remarks even as the Trump administration said it still expected to sign the first phase of deal to end a damaging trade war with China next month, despite Chile's withdrawal on Wednesday as the host of an APEC summit where U.S. officials had hoped this would happen.

Pompeo said the United States had long cherished its friendship with the Chinese people, adding the Communist government was not the same thing as the people of China.

"They are reaching for and using methods that have created challenges for the United States and for the world and we collectively, all of us, need to confront these challenges ... head on," Pompeo said in an address to a gala dinner in New York of the conservative Hudson Institute think tank.

"It is no longer realistic to ignore the fundamental differences between our two systems, and the impact that the differences in those systems have on American national security."
"

I posted the above about 6 hours ago on the Weekly Open thread and now get up to read that the financial markets are down and Trump is tweeting that it is the Fed's fault for not lowering rates even further even though there are a couple of ZH postings that refer to China's response to Pompeo's remarks as offensive and maybe a trade deal won't get signed...

We are in a civilization war about the global social contract and whether sovereign public finance gets a chance to be compared against the Western centuries old private finance controlled world.

goldhoarder | Oct 31 2019 16:35 utc | 16

4 @psychohistorian

Haha. The fight is an old one. Who is to be master and who is to be slave. China was supposed to happily be the world's cheap manufacturer and not get too big for its britches. The USA has been successful at bribing foreign leaders, taking them under their wing, and getting them to accept their place in the world order. They think they can do this with anybody.

They think every leader is a budding Lenin Moreno or that they can arrange a coup and force into office another Lenin Moreno. Russia, China, and India will not allow it.

All have at one time or another (Russia quite recently) been under the heel of Western empire. All have old and proud civilizations.

The US never really counts on foreign leaders taking their peoples interests at heart and standing up to the hegemon. As far as Pompeo goes this is classic projection. It is a sign they are losing and are worried about it.

[Oct 30, 2019] Chinese Patriotism Huawei Smartphone Sales Jump 66% In China As Apple iPhone Sales Slump

Oct 30, 2019 | www.zerohedge.com

Chinese Patriotism: Huawei Smartphone Sales Jump 66% In China As Apple iPhone Sales Slump by Tyler Durden Wed, 10/30/2019 - 13:50 0 SHARES We're starting to get first-hand knowledge of what we're coining as the " blowback period " in the trade war. This is a point in time when Chinese consumers, downright furious of President Trump's protectionist policies that targeted Chinese companies over the summer, have collectively stood up to an aggressor (the US), and have secretly fired back, targeting US firms by abandoning their products for domestic ones, all in the name of patriotism.

Honestly, over time, the trade war, if solved next month or next year, or who knows at this point when it'll be solved, will have devastating consequences for corporate America as their market share in China will erode as patriotism forces consumers to gravitate towards domestic brands.

A new report from Canalys , an independent research firm focused on technology, has linked patriotism in China for the jump in Huawei smartphone sales in the third quarter.

Huawei's 3Q19 smartphone sales soared by 66% YoY in China , compared with a 31% increase in 2Q19.

Between 2Q-3Q, President Trump escalated the trade war to near full-blown, and also attacked individual companies with economic sanctions and banned certain ones from doing business in the US. Chinese consumers responded by ditching American products, like Apple iPhones , as this is some of the first evidence we've seen of the blowback period, likely to worsen in 4Q19 through 1Q20.

As shown in the chart below, the July-September period of 2019 was a devastating quarter for Huawei's top rivals, including Vivo, Oppo, Xiaomi (other Chinese brands), along with depressing sales from Apple.

Smartphone shipments overall were 97.8 million, down 3% from 100.6 million for the same period last year.

Apple's YoY slump gained momentum from -14% in 2Q to -28% for 3Q .

Chinese patriotism allowed Huawei's market share in the country to expand from 24.9% to 42.4% over the past year.

Canalys analyst Mo Jia said, "The U.S.-China trade war is also creating new opportunities," adding that, " Huawei's retail partners are rolling out advertisements to link Huawei with being the patriotic choice, to appeal to a growing demographic of Chinese consumers willing to take political factors into account when making a purchase decision. "

The blowback period has begun, and corporate America should be terrified that their market share in China is about to evaporate.

[Oct 28, 2019] Sleepwalking Into the Abyss

Oct 28, 2019 | jessescrossroadscafe.blogspot.com

Sleepwalking Into the Abyss

"As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I've done before!) "

Donald J. Trump

"China uses a host of monopolizing strategies to extend its geopolitical and commercial power, everything from below cost pricing to grab market share, patent trolling, espionage, mergers, and financial manipulation. In fact, the CCP is best understood as a giant monopoly that also controls a nation of 1.4 billion people and a large military apparatus...

China's biggest asset in gaining power was how most people in the West just didn't realize that the CCP aimed to use it. Now China's cover is blown. The raw exercise of power to censor a random Houston Rockets basketball executive has made millions of people take notice. Everyone knows, the Chinese government isn't content to control its own nation, it must have all bow down to its power and authority.

Matt Stoller, How Joe Biden Empowered China's Censorship of the NBA


Matt overstates the headline I think. The empowerment of China may have gone into higher gear with Bill Clinton perhaps, but has been fully supported by every President, both parties, and especially the moneyed interests in the US, who place their short term greed first and foremost.

Follow the money. China is certainly not alone among organizations, and even nations, in playing on the personal greed, divided loyalties, and lust for power of our political and financial class.

This in itself is nothing new. But the extent of it, and the fashionable acceptance of it amongst our society's elites, the industrialization of political corruption and big money in politics, has been breathtaking.

[Oct 26, 2019] Can The US Beat China In A Trade War by Andre Vltcheck

That looks like vast and generally incorrect exaggeration. While China mode substantial progress in catching up with the West, the technology is still dominated by the West.
But as technological revolution is slowing down and in some areas coming to the end (die size in semiconductors in one example; it is impossible to shrink it further; smartphones reached saturation level, and hardware wise their capabilities are far above what a regular user needs or wants) it is easier for other countries to catch up.
In any case, the main reason for trade war with China is to try to slow down its ascendance.
The problem for China is that China converted to neoliberalism, and as such (like Russia) is subject to all the ills the neoliberal society tend to bring into the country. Including a very high level of inequality.
And while backlash against neoliberalism is growing and in the USA neoliberalism entered a prolong crisis with secular stagnation as the "new normal" , the question is what is that alternative ? And while backlash against neoliberalism is growing and in the USA neoliberalism entered a prolong crisis with secular stagnation as the "new normal" , the question is what is that alternative ?
Notable quotes:
"... Precisely! The war against the Soviet Union was hardly a war for economic survival of the United States. It was an ideological battle, which the United States, unfortunately won, because it utilized both propaganda and economic terror (the arms race and other means). ..."
"... Now, China is next on the list, and the White House is not even trying to hide it. But China is savvy. It is beginning to understand the game. And it is ready, by all means, to defend the system which has pulled almost all its citizens out of misery, and which could, one day soon, do the same for the rest of the world. ..."
"... China has more problems than the United States. Taiwan, Tibet, Hong Kong, persecuting Uyghurs in Xinjiang, Indonesia and Malaysia because of Islam, Inner Mongolia separatists, Kashmir and India, USA trade pressure, Japan and South Korea are competitors. ..."
Oct 25, 2019 | www.zerohedge.com

Authored by Andre Vltcheck via Off-Guardian.org,

It is very popular these days to talk and write about the "trade war" between the United States and China. But is there really one raging? Or is it, what we are witnessing, simply a clash of political and ideological systems : one being extremely successful and optimistic, the other depressing, full of dark cynicism and nihilism?

In the past, West used to produce almost everything. While colonizing the entire planet (one should just look at the map of the globe, between the two world wars), Europe and later the United States, Canada and Australia, kept plundering all the continents of natural resources, holding hundreds of millions of human beings in what could be easily described as 'forced labor', often bordering on slavery.

Under such conditions, it was very easy to be 'number one', to reign without competition, and to toss around huge amounts of cash, for the sole purpose of indoctrinating local and overseas 'subjects' on topics such as the 'glory' of capitalism, colonialism (open and hidden), and Western-style 'democracy'.

It is essential to point out that in the recent past, the global Western dictatorship (and that included the 'economic system) used to have absolutely no competition. Systems that were created to challenge it, were smashed with the most brutal, sadistic methods. One only needs recall invasions from the West to the young Soviet Union, with the consequent genocide and famines. Or other genocides in Indochina, which was fighting its wars for independence, first against France, later against the United States.

*

Times changed. But Western tactics haven't.

There are now many new systems, in numerous corners of the world. These systems, some Communist, others socialist or even populist, are ready to defend their citizens, and to use the natural resources to feed the people, and to educate, house and cure them.

No matter how popular these systems are at home, the West finds ways to demonize them, using its well-established propaganda machinery. First, to smear them and then, if they resist, to directly liquidate them.

As before, during the colonial era, no competition has been permitted. Disobedience is punishable by death.

Naturally, the Western system has not been built on excellence, hard work and creativity, only. It was constructed on fear, oppression and brutal force. For centuries, it has clearly been a monopoly.

*

Only the toughest countries, like Russia, China, Iran, North Korea or Cuba, have managed to survive, defending they own cultures, and advancing their philosophies.

To the West, China has proved to be an extremely tough adversary.

With its political, economic, and social system, it has managed to construct a forward-looking, optimistic and extraordinarily productive society. Its scientific research is now second to none. Its culture is thriving. Together with its closest ally, Russia, China excels in many essential fields.

That is precisely what irks, even horrifies the West.

For decades and centuries, Europe and the United States have not been ready to tolerate any major country, which would set up its own set of rules and goals.

China refuses to accept the diktat from abroad. It now appears to be self-sufficient, ideologically, politically, economically and intellectually. Where it is not fully self-sufficient, it can rely on its friends and allies. Those allies are, increasingly, located outside the Western sphere.

*

Is China really competing with the West? Yes and no. And often not consciously.

It is a giant; still the most populous nation on earth. It is building, determinedly, its socialist motherland (applying "socialism with the Chinese characteristics" model). It is trying to construct a global system which has roots in the thousands of years of its history (BRI – Belt and Road Initiative, often nicknamed the "New Silk Road").

Its highly talented and hardworking, as well as increasingly educated population, is producing, at a higher pace and often at higher quality than the countries in Europe, or the United States. As it produces, it also, naturally, trades.

This is where the 'problem' arises. The West, particularly the United States, is not used to a country that creates things for the sake and benefit of its people. For centuries, Asian, African and Latin American people were ordered what and how to produce, where and for how much to sell the produce. Or else!

Of course, the West has never consulted anyone. It has been producing what it (and its corporations) desired. It was forcing countries all over the world, to buy its products. If they refused, they got invaded, or their fragile governments (often semi-colonies, anyway) overthrown.

The most 'terrible' thing that China is doing is: it is producing what is good for China, and for its citizens.

That is, in the eyes of the West, unforgiveable!

*

In the process, China 'competes'. But fairly: it produces a lot, cheaply, and increasingly well. The same can be said about Russia.

These two countries are not competing maliciously. If they were to decide to, they could sink the US economy, or perhaps the economy of the entire West, within a week.

But they don't even think about it.

However, as said above, to just work hard, invent new and better products, advance scientific research, and use the gains to improve the lives of ordinary people (they will be no extreme poverty in China by the end of 2020) is seen as the arch-crime in London and Washington.

Why? Because the Chinese and Russian systems appear to be much better, or at least, simply better, than those which are reigning in the West and its colonies. And because they are working for the people, not for corporations or for the colonial powers.

And the demagogues in the West – in its mass media outlets and academia – are horrified that perhaps, soon, the world will wake up and see the reality. Which is actually already happening: slowly but surely.

*

To portray China as an evil country, is essential for the hegemony of the West. There is nothing so terrifying to London and Washington as the combination of these words: "Socialism/ Communism, Asian, success". The West invents new and newer 'opposition movements', it then supports them and finances them, just in order to then point fingers and bark: "China is fighting back, and it is violating human rights", when it defends itself and its citizens. This tactic is clear, right now, in both the northwest of the country, and in Honk Kong.

Not everything that China builds is excellent. Europe is still producing better cars, shoes and fragrances, and the United States, better airplanes. But the progress that China has registered during the last two decades, is remarkable. Were it to be football, it is China 2: West 1.

Most likely, unless there is real war, that in ten years, China will catch up in many fields; catch up, and surpass the West. Side by side with Russia.

It could have been excellent news for the entire world. China is sharing its achievements, even with the poorest of the poor countries in Africa, or with Laos in Asia.

The only problem is, that the West feels that it has to rule. It is unrepentant, observing the world from a clearly fundamentalist view. It cannot help it: it is absolutely, religiously convinced that it has to give orders to every man and woman, in every corner of the globe.

It is a tick, fanatical. Lately, anyone who travels to Europe or the United States will testify: what is taking place there is not good, even for the ordinary citizens. Western governments and corporations are now robbing even their own citizens. The standard of living is nose-diving.

China, with just a fraction of the wealth, is building a much more egalitarian society, although you would never guess so, if you exclusively relied on Western statistics.

*

So, "trade war" slogans are an attempt to convince the local and global public that "China is unfair", that it is "taking advantage" of the West. President Trump is "defending" the United States against the Chinese 'Commies'. But the more he "defends them", the poorer they get. Strange, isn't it?

While the Chinese people, Russian people, even Laotian people, are, 'miraculously', getting richer and richer. They are getting more and more optimistic.

For decades, the West used to preach 'free trade', and competition. That is, when it was in charge, or let's say, 'the only kid on the block'.

In the name of competition and free trade, dozens of governments got overthrown, and millions of people killed.

And now?

What is China suppose to do? Frankly, what?

Should it curb its production, or perhaps close scientific labs? Should it consult the US President or perhaps British Prime Minister, before it makes any essential economic decision? Should it control the exchange rate of RMB, in accordance with the wishes of the economic tsars in Washington? That would be thoroughly ridiculous, considering that (socialist/Communist) China will soon become the biggest economy in the world, or maybe it already is.

There is all that abstract talk, but nothing concrete suggested. Or is it like that on purpose?

Could it be that the West does not want to improve relations with Beijing?

On September 7, 2019, AP reported:

White House economic adviser Larry Kudlow compared trade talks with China on Friday to the U.S. standoff with Russia during the Cold War

"The stakes are so high, we have to get it right, and if that takes a decade, so be it," he said.

Kudlow emphasized that it took the United States decades to get the results it wanted with Russia. He noted that he worked in the Reagan administration: "I remember President Reagan waging a similar fight against the Soviet Union."

Precisely! The war against the Soviet Union was hardly a war for economic survival of the United States. It was an ideological battle, which the United States, unfortunately won, because it utilized both propaganda and economic terror (the arms race and other means).

Now, China is next on the list, and the White House is not even trying to hide it. But China is savvy. It is beginning to understand the game. And it is ready, by all means, to defend the system which has pulled almost all its citizens out of misery, and which could, one day soon, do the same for the rest of the world.


JBL , 1 minute ago link

hm....a crumbling neoliberal empire that sits idly by when its own children (your future) are chemically castrated as young as 5

versus a nation that blocks jewish regulatory capture of the commanding heights of their economy

lemme get more popcorn

BT , 12 minutes ago link

US is hemorrhaging around $1.7 trillion dollars(according to the bond king) a year with the “greatest economy ever” and near zero interest rate. Clearly, this is not sustainable and can’t last much longer. When the jig is up, whoever has the most guns(not gold) will prevail. .

Spiritual Anunnaki , 50 minutes ago link

China has more problems than the United States. Taiwan, Tibet, Hong Kong, persecuting Uyghurs in Xinjiang, Indonesia and Malaysia because of Islam, Inner Mongolia separatists, Kashmir and India, USA trade pressure, Japan and South Korea are competitors.

China has some bright spots with Pakistan, North Korea and a very open hand negotiated with the African Union to colonize that continent etc. Russia is neutral but if it is to fall it will probably be towards Europe not the East.

Vietnam is falling away leaving Myanmar and Cambodia. Thailand might already be a Western proxy.

JLee2027 , 55 minutes ago link

Let me break it down for you...when you have a buyer (USA) and a seller (China), the buyer is always in control when they can go somewhere else.

ALWAYS.

ChaoKrungThep , 26 minutes ago link

You've broken down nothing. China can sell somewhere else, since it makes all the stuff. The US makes very little and will pay far more Chinese equivalent goods. Further, China's GDP is now 80% domestically generated; of the remaining 20% export income, the US accounts for only 30% of it, ie 6%. China can stand a loss of 6% easily. While the Americans, led the Ape-in-Chief have been thumping their chests, the nimble Chinese have taken markets everywhere, diversified their manufacturing bases and transportation systems. The US is shouting at the Moon. Enjoy the tan...

Aussiekiwi , 1 hour ago link

'The war against the Soviet Union was hardly a war for economic survival of the United States. It was an ideological battle, which the United States, unfortunately won,'

Really !!! have a read of Gulag Archipelago before you come out with anything this stupid.

ChaoKrungThep , 24 minutes ago link

Read some American history. Their "gulags" are your "justice system", currently incarcerating the world's largest prison population.

PGR88 , 1 hour ago link

Crap article full of leftist slogans, and highly ideological Neo-marxist analysis of the West, while completely ignoring reality in China.

He–Mene Mox Mox , 1 hour ago link

The author apparently has never been to China to know what their perspective is. Instead, he is superimposing what western ideologs think it is. To Americans, it is political and ideological struggle. To the Chinese, it's basic economics and the welfare of its people. The Chinese know better than anyone else, what it was like being down in the gutter for almost 200 years, about the time the British showed up with their opium trade in the 1830's. The Chinese have made great strides in the last 45 years to get their people out of poverty, modernize, and build an industrialized economy that rivals any other economy in the world. The truth is, it's a feat that Americans are tacitly envious of, and will do whatever it takes to cut the Chinese down.

The problem is, America is not the shining example of success and exceptionalism it thinks it is. It has fallen behind the power curve and isn't competitive any longer. Free trade is far and away better in China than what you will find in America. Don't believe it? Go there and see for yourself. Then ask yourself, why did the greater chunk of American manufacturing left and went to China in the first place, (besides chasing cheap labor), If it wasn't for free trade?

Many other countries don't share the same ideology or values with Americans either, particularly when America can't provide for the welfare of its own people, so why would they want to copy that model of decay?

Cheap Chinese Crap , 1 hour ago link

Yet still they buy their safe haven bolt holes in Seattle rather than Shenzhen.

The old American term for this is : Voting with their feet.

Guess that model of decay is pretty attractive to a lot of rich, connected people in the mysterious orient.

zeratul108 , 24 minutes ago link

attractive properties in shenzhen or any tier 1 chinese cities are in the millions or tens of millions of dollars. not likely to jump higher anytime soon but whole lot of downside potential. Vancouver is full up. why not seattle, DC or somewhere with "cheap" prices?

BT , 35 minutes ago link

China and the rest of the world will continue to be held hostage until they have an alternative to SWIFT and Reinsurance.

ChaoKrungThep , 8 minutes ago link

They have two alternatives to SWIFT - CIPS & NSPK. Further, both Russia and China are using their own and local currencies in trade, bypassing not only SWIFT fees and delays, but the USD exchange rate rip-off.

Frankly ZH readers are about 10 yrs behind the latest developments, hence the rednecks ranting about their already lost cause. Do some research.

artistant , 1 hour ago link

So far, Trump...

1. Failed with Iran, Syria, Turkey, and the Middle East Peace Process

2. Failed with Russia

3. Failed with Venezuela

4. Failed with trade war

5. Failed with immigration

6. Kidnapped a Huawei executive

7. Set Hong Kong on fire

8. Stole an Iranian tanker

9. Stole a Venezuelan ship full of foods

10. Stole Jerusalem and the Golan Heights for the FAKE HEBREWS

11. Kept all wars in the Middle East going for APARTHEID Israhell

12. Faked Epstein’s death who’s now living comfortably in Apartheid Israhell

13. Faked it with N Korea

14. Does nothing but plays golf, tweets, and insults

15. Destroyed American farmers, coal miners, truckers, and manufacturers

16. Failed to hire competent staff

17. Failed to abolish the Fed

18. Failed to drain the Swamp

19. Failed to dismantle the Deep State

20. Failed the US economy

#TimeForTrumpToGo He's done enough damage.

Especially as Preparation for WAR WITH IRAN is underway .

Arising , 1 hour ago link

I don't really know what to say- there may be truths in this article but that big fat commie elephant in the room keeps getting in the way.

Theremustbeanotherway , 1 hour ago link

"So far, China has exercised restraint." ...because they don't want the world to see what a truly monstrous regime runs that country...much like Israhell tries to silence and stifle criticism of its monstrous racist and supremacist regime.

Meanwhile the West is on meds as it willingly takes the dagger someone is handing it to enable it to commit suicide..

I wonder who is pulling strings in the background?

This is quite interesting...

https://www.chabad.org/centers/default_cdo/country/China/jewish/Chabad-Centers-and-Synagogue-Directory.htm

contrast with

https://www.theguardian.com/world/2019/jan/13/china-christians-religious-persecution-translation-bible

https://www.persecution.org/2019/04/29/christianity-grows-china-despite-persecution/

Could the two be linked in any way?

Just asking....

east of eden , 1 hour ago link

Canada and australia most certainly did NOT plunder the world, at anytime. We have all the resources we will ever need,and we have never sought an empire. Don't try to drag us down into your pit for company. It is your pit, along with Britain. Let the British keep you company.

MaxThrust , 2 hours ago link

China "is ready to defend the system which has pulled almost all its citizens out of misery"

China is very late to the game of "printing debt" It has taken the USA 100 years to bankrupt itself. China with it's 350% of GDP has managed it in 30 years.

[Oct 26, 2019] Can The US Beat China In A Trade War

That looks like vast and generally incorrect exaggeration. While China mode substantial progress in catching up with the West, the technology is still dominated by the West.
But as technological revolution is slowing down and in some areas coming to the end (die size in semiconductors in one example; it is impossible to shrink it further; smartphones reached saturation level, and hardware wise their capabilities are far above what a regular user needs or wants) it is easier for other countries to catch up.
In any case, the main reason for trade war with China is to try to slow down its ascendance.
The problem for China is that China converted to neoliberalism, and as such (like Russia) is subject to all the ills the neoliberal society tend to bring into the country. Including a very high level of inequality.
Notable quotes:
"... Precisely! The war against the Soviet Union was hardly a war for economic survival of the United States. It was an ideological battle, which the United States, unfortunately won, because it utilized both propaganda and economic terror (the arms race and other means). ..."
"... Now, China is next on the list, and the White House is not even trying to hide it. But China is savvy. It is beginning to understand the game. And it is ready, by all means, to defend the system which has pulled almost all its citizens out of misery, and which could, one day soon, do the same for the rest of the world. ..."
Oct 25, 2019 | www.zerohedge.com

Authored by Andre Vltcheck via Off-Guardian.org,

It is very popular these days to talk and write about the "trade war" between the United States and China. But is there really one raging? Or is it, what we are witnessing, simply a clash of political and ideological systems : one being extremely successful and optimistic, the other depressing, full of dark cynicism and nihilism?

In the past, West used to produce almost everything. While colonizing the entire planet (one should just look at the map of the globe, between the two world wars), Europe and later the United States, Canada and Australia, kept plundering all the continents of natural resources, holding hundreds of millions of human beings in what could be easily described as 'forced labor', often bordering on slavery.

Under such conditions, it was very easy to be 'number one', to reign without competition, and to toss around huge amounts of cash, for the sole purpose of indoctrinating local and overseas 'subjects' on topics such as the 'glory' of capitalism, colonialism (open and hidden), and Western-style 'democracy'.

It is essential to point out that in the recent past, the global Western dictatorship (and that included the 'economic system) used to have absolutely no competition. Systems that were created to challenge it, were smashed with the most brutal, sadistic methods. One only needs recall invasions from the West to the young Soviet Union, with the consequent genocide and famines. Or other genocides in Indochina, which was fighting its wars for independence, first against France, later against the United States.

*

Times changed. But Western tactics haven't.

There are now many new systems, in numerous corners of the world. These systems, some Communist, others socialist or even populist, are ready to defend their citizens, and to use the natural resources to feed the people, and to educate, house and cure them.

No matter how popular these systems are at home, the West finds ways to demonize them, using its well-established propaganda machinery. First, to smear them and then, if they resist, to directly liquidate them.

As before, during the colonial era, no competition has been permitted. Disobedience is punishable by death.

Naturally, the Western system has not been built on excellence, hard work and creativity, only. It was constructed on fear, oppression and brutal force. For centuries, it has clearly been a monopoly.

*

Only the toughest countries, like Russia, China, Iran, North Korea or Cuba, have managed to survive, defending they own cultures, and advancing their philosophies.

To the West, China has proved to be an extremely tough adversary.

With its political, economic, and social system, it has managed to construct a forward-looking, optimistic and extraordinarily productive society. Its scientific research is now second to none. Its culture is thriving. Together with its closest ally, Russia, China excels in many essential fields.

That is precisely what irks, even horrifies the West.

For decades and centuries, Europe and the United States have not been ready to tolerate any major country, which would set up its own set of rules and goals.

China refuses to accept the diktat from abroad. It now appears to be self-sufficient, ideologically, politically, economically and intellectually. Where it is not fully self-sufficient, it can rely on its friends and allies. Those allies are, increasingly, located outside the Western sphere.

*

Is China really competing with the West? Yes and no. And often not consciously.

It is a giant; still the most populous nation on earth. It is building, determinedly, its socialist motherland (applying "socialism with the Chinese characteristics" model). It is trying to construct a global system which has roots in the thousands of years of its history (BRI – Belt and Road Initiative, often nicknamed the "New Silk Road").

Its highly talented and hardworking, as well as increasingly educated population, is producing, at a higher pace and often at higher quality than the countries in Europe, or the United States. As it produces, it also, naturally, trades.

This is where the 'problem' arises. The West, particularly the United States, is not used to a country that creates things for the sake and benefit of its people. For centuries, Asian, African and Latin American people were ordered what and how to produce, where and for how much to sell the produce. Or else!

Of course, the West has never consulted anyone. It has been producing what it (and its corporations) desired. It was forcing countries all over the world, to buy its products. If they refused, they got invaded, or their fragile governments (often semi-colonies, anyway) overthrown.

The most 'terrible' thing that China is doing is: it is producing what is good for China, and for its citizens.

That is, in the eyes of the West, unforgiveable!

*

In the process, China 'competes'. But fairly: it produces a lot, cheaply, and increasingly well. The same can be said about Russia.

These two countries are not competing maliciously. If they were to decide to, they could sink the US economy, or perhaps the economy of the entire West, within a week.

But they don't even think about it.

However, as said above, to just work hard, invent new and better products, advance scientific research, and use the gains to improve the lives of ordinary people (they will be no extreme poverty in China by the end of 2020) is seen as the arch-crime in London and Washington.

Why? Because the Chinese and Russian systems appear to be much better, or at least, simply better, than those which are reigning in the West and its colonies. And because they are working for the people, not for corporations or for the colonial powers.

And the demagogues in the West – in its mass media outlets and academia – are horrified that perhaps, soon, the world will wake up and see the reality. Which is actually already happening: slowly but surely.

*

To portray China as an evil country, is essential for the hegemony of the West. There is nothing so terrifying to London and Washington as the combination of these words: "Socialism/ Communism, Asian, success". The West invents new and newer 'opposition movements', it then supports them and finances them, just in order to then point fingers and bark: "China is fighting back, and it is violating human rights", when it defends itself and its citizens. This tactic is clear, right now, in both the northwest of the country, and in Honk Kong.

Not everything that China builds is excellent. Europe is still producing better cars, shoes and fragrances, and the United States, better airplanes. But the progress that China has registered during the last two decades, is remarkable. Were it to be football, it is China 2: West 1.

Most likely, unless there is real war, that in ten years, China will catch up in many fields; catch up, and surpass the West. Side by side with Russia.

It could have been excellent news for the entire world. China is sharing its achievements, even with the poorest of the poor countries in Africa, or with Laos in Asia.

The only problem is, that the West feels that it has to rule. It is unrepentant, observing the world from a clearly fundamentalist view. It cannot help it: it is absolutely, religiously convinced that it has to give orders to every man and woman, in every corner of the globe.

It is a tick, fanatical. Lately, anyone who travels to Europe or the United States will testify: what is taking place there is not good, even for the ordinary citizens. Western governments and corporations are now robbing even their own citizens. The standard of living is nose-diving.

China, with just a fraction of the wealth, is building a much more egalitarian society, although you would never guess so, if you exclusively relied on Western statistics.

*

So, "trade war" slogans are an attempt to convince the local and global public that "China is unfair", that it is "taking advantage" of the West. President Trump is "defending" the United States against the Chinese 'Commies'. But the more he "defends them", the poorer they get. Strange, isn't it?

While the Chinese people, Russian people, even Laotian people, are, 'miraculously', getting richer and richer. They are getting more and more optimistic.

For decades, the West used to preach 'free trade', and competition. That is, when it was in charge, or let's say, 'the only kid on the block'.

In the name of competition and free trade, dozens of governments got overthrown, and millions of people killed.

And now?

What is China suppose to do? Frankly, what?

Should it curb its production, or perhaps close scientific labs? Should it consult the US President or perhaps British Prime Minister, before it makes any essential economic decision? Should it control the exchange rate of RMB, in accordance with the wishes of the economic tsars in Washington? That would be thoroughly ridiculous, considering that (socialist/Communist) China will soon become the biggest economy in the world, or maybe it already is.

There is all that abstract talk, but nothing concrete suggested. Or is it like that on purpose?

Could it be that the West does not want to improve relations with Beijing?

On September 7, 2019, AP reported:

White House economic adviser Larry Kudlow compared trade talks with China on Friday to the U.S. standoff with Russia during the Cold War

"The stakes are so high, we have to get it right, and if that takes a decade, so be it," he said.

Kudlow emphasized that it took the United States decades to get the results it wanted with Russia. He noted that he worked in the Reagan administration: "I remember President Reagan waging a similar fight against the Soviet Union."

Precisely! The war against the Soviet Union was hardly a war for economic survival of the United States. It was an ideological battle, which the United States, unfortunately won, because it utilized both propaganda and economic terror (the arms race and other means).

Now, China is next on the list, and the White House is not even trying to hide it. But China is savvy. It is beginning to understand the game. And it is ready, by all means, to defend the system which has pulled almost all its citizens out of misery, and which could, one day soon, do the same for the rest of the world.

[Oct 26, 2019] The most dangerous aspect of Western logic of hegemony in general, and the American logic of hegemony in particular, is their basic belief that they own the world, and have the right to hegemony due to their supremacy in several fields

The USA is a real leader in technology and arm production. This is the country that created PC, Internet and smartphones, which changed the world. So technical supremacy paves the way to imperial behaviour.
CIA is one of the most powerful tools of the empire, the force that is instrumental in peeking the USA on globalist path now (looks at Russiagate) .
Oct 26, 2019 | www.unz.com

redmudhooch , says: October 26, 2019 at 1:37 am GMT

The CIA! http://www.informationclearinghouse.info/article30605.htm The CIA: 70 Years of Organized Crime: http://www.informationclearinghouse.info/47873.htm Regime Change and Capitalism: https://dissidentvoice.org/2018/07/regime-change-and-capitalism/

Hassan Nasrallah should know:

The path of U.S.-Israeli arrogance and domination, with its various dimensions, and with its direct and indirect extensions and alliances, which is witnessing military defeats and political failures, reflected successive defeats for the American strategies and plans, one after the other. All this has led [the U.S.] to a state of indecision, retreat, and inability to control the progress of events in our Arab and Islamic world. There is a broader international context for this – a context that, in its turn, helps to expose the American crisis, and the decline of the [U.S.] unipolar hegemony, in the face of pluralism, the characteristics of which are yet to be stabilized.

"The crisis of the arrogant world order is deepened by the collapse of U.S. and international stock markets, and by the confusion and powerlessness of the American economy. This reflects the height of the structural crisis of the model of capitalist arrogance. Therefore, it can be said that we are in the midst of historic transformations that foretell the retreat of the USA as a hegemonic power, the disintegration of the unipolar hegemonic order, and the beginning of the accelerated historic decline of the Zionist entity.

After World War II, the U.S. has adopted the leading, central hegemonic project. At its hands, this project has witnessed great development of the means of control and unprecedented subjugation. It has benefited from an accumulation of multi-faceted accomplishments in science, culture, technology, knowledge, economy, and the military, which was supported by an economic political plan that views the world as nothing but open markets subject to the laws of [the U.S.].

"The most dangerous aspect of Western logic of hegemony in general, and the American logic of hegemony in particular, is their basic belief that they own the world, and have the right to hegemony due to their supremacy in several fields. Thus, the Western, and especially American, expansionist strategy, when coupled with the enterprise of capitalist economy, has become a strategy of a global nature, whose covetous desires and appetite know no bounds.

The barbaric capitalism has turned globalism into a means to spread disintegration, to sow discord, to destroy identities, and to impose the most dangerous form of cultural, economic, and social plunder. Globalization reached its most dangerous phase, when it was transformed into military globalization by the owners of the Western hegemony enterprise, the greatest manifestation of which was evident in the Middle East, from Afghanistan to Iraq, to Palestine, and to Lebanon.

There is no doubt that American terrorism is the source of all terrorism in the world. The Bush administration has turned the U.S. into a danger threatening the whole world, on all levels. If a global opinion poll were held today, the United States would emerge as the most hated country in the world.

The most important goal of American arrogance is to take control of the peoples politically, economically, and culturally, and to plunder their resources.

– Hassan Nasrallah December 8, 2009

... ... ...

[Oct 19, 2019] China vice premier said China would expand investments in core technologies to ensure the economic restructuring of the economy was stable

Oct 19, 2019 | www.zerohedge.com

That said, as Bloomberg noted, Liu didn't address specifics about the trade talks in his speech. Instead, the vice premier said China would expand investments in core technologies to ensure the economic restructuring of the economy was stable, adding that economic activity in the year ahead is "very bright."

"We're not worried about short-term economic volatility. We have every confidence in our ability to meet macroeconomic targets for the year," he said.

As reported on Friday, ahead of the latest round of talks, President Trump's top economic advisors and industry experts warned him of an economic downturn if a further escalation in the trade war is seen by 2020. As such, it is likely that a lite trade deal could be on the table next month.

But as our readers have recently learned, the trade war didn't start the synchronized global downturn, which has been almost entirely a function of China's clogged up credit impulse...

... so any deal - lite or otherwise - won't result in an immediate acceleration of global growth; indeed, as some speculate, failure to observe a substantial economic rebound following a "deal" could well mark the point when central banks and governments finally throw in the towel, as they finally usher in the final lap in the global race to debase destroy fiat currencies and hyperinflate away the debt: MMT and Helicopter Money.


CashMcCall , 27 minutes ago link

Trump's pathetic Trade war accomplished nothing. US exports down 18% globally. Farmer destroyed. US markets for all goods harmed. The world is offloading any and all dependence on US products. Impulsive stupid jerk. 45% of the world population on US Sanctions, rising black markets, US supply chain disruptions, US manufacturing in a recession.

Tariffs are tax deductible so they do not accumulate any tax benefit to the US Treasury. They are virtually all rolled over into the national debt. So while the consumer may not notice a rising CPI, they are getting drown in Trump Debt, the largest spending deficits in US history, largest debt to GDP of over 110% and rising. Trump has the fastest acceleration of US debt of any white house occupancy nearly 4 trillion in 2.7 years. It is obvious Trump is clueless in virtually everything. Has no capacity to comprehend a thing.

Look at this scatterbrained Turkey Kurds fiasco. Impulsive, thoughtless and accomplished nothing. US troops now guarding Syrian oil. Astonishing. Everything this guy touches turned into a burning crap filled dumpster fire.

'I will be so good at the military, your head will spin'

https://youtu.be/dkKY8plxxzQ

"When those 'gunds' start shooting they tend to do things"

Then there are no deals from the self-proclaimed "art of the Deal"... nothing. Look at Iran. He has made negative progress across the board. Thank to the orange stupid nations across the globe are circumventing US Dollar Reserve. Each day the US importance and more importantly reliability is diminished.

Look at Trump in high tech... Merck has developed an Ebola vaccine in EUROPE not the USA. The USA hasn't even approved it yet. What is Trump doing... ATTACKING BIG PHARMA. Trumptards love seeing that. Yet it is the Trumptards that keep screaming to buy Murica products but if they have to pay more for them, then suddenly they demonize the US companies. Big Pharma will be the next sector to joint Semiconductor to leave the USA.

Trump blacklist Big tech. Why? Tech products have a very short shelf life. If the US doesn't sell tech product what do they have that others want? COAL? Soy Beans? From smart to stupid. Look at Intel and Microsoft. Trump band Intel Chip sales to China and threatens Microsoft operating software. In one year China now has RISC V chips from Alibaba, all open source and the Chinese Military has switched to Linux and UNIX GNU. So who loses here? The US tech businesses. Look at Micron dying on the vine, tossed from China.

Meanwhile China has 5G and has replaced all US components in its boards with the help of Hitachi and Panasonic who are doing the same with all their electronics to avoid Trump Blacklist compliance. Trump is low tech and dumb as dirt. The US Tech sector is being carpet bombed under Trump... and without tech, what products does the US have to sell that world markets want? Not a god damn thing.

Let's remember that Trump didn't want a partial deal... Now he will take anything to get him out of his self-made wreckage. Meanwhile impeachment is coming... Mista no deals is going down in flames.

CashMcCall , 13 minutes ago link

Brazil and Argentina

Last year 300,000 us farmers grew soy and had 110 mmt. This year there are 100,000 us Soy farmers left and they grew 34 mmt... not enough to export.

... Arbitrary and capricious meddling by US politicians in commodity contracts renders all contracts voidable under force majeure. I would have thought with your handle you would have known this. Those markets will never come back.

They will forever be marginalized and smaller. Trump's damage to US trade is permanent.

AllSoRight , 10 minutes ago link

In other words, consolidation among large corp farmers, decimation of the smaller family farmers? I am truly asking, but seems to remind me of the trend since the 1980s.

runningman18 , 48 minutes ago link

Trump and China claimed "substantial progress" this past spring, and it all fell apart within a couple months. The same thing will happen on this "deal"....

[Oct 15, 2019] Trump trade war with China is the start of a new Cold War, the Cold War III

Oct 15, 2019 | economistsview.typepad.com

Fred C. Dobbs , October 11, 2019 at 09:14 PM

Former World Leaders: The Trade War Threatens
the World's Economy https://nyti.ms/2MAFOTC
NYT - Kevin Rudd, Helen Clark and Carl Bildt - October 11

Despite an interim deal, global peace and prosperity
remain at risk if the United States and China do not
fully resolve their conflict.

(The authors are former prime ministers
of Australia, New Zealand and Sweden.)

This piece has been updated to reflect news developments.

The 18-month trade war between the United States and China represents the single greatest threat to global economic growth.

President Trump announced on Friday a preliminary trade détente with China, saying that the two countries have a verbal agreement for an initial phase of a deal. The agreement reportedly includes concessions from China to protect American intellectual property, to accept guidelines on managing its currency and to buy tens of billions worth of American agricultural products. Washington, for its part, will not go through next month with placing more tariffs on Chinese products.

This is an encouraging sign, but a verbal agreement is just a first step. A failure to bring the trade war to a final conclusion significantly increases the risk of recession next year in the United States, Europe, Japan and other developed and emerging economies. It would also seriously undermine China's near-term growth prospects.

That's why, as representatives of a group of 10 former prime ministers and presidents from center-left and center-right governments that have enjoyed close relations with both the United States and China, we are writing to urge Presidents Donald Trump and Xi Jinping to reach a substantive trade agreement by year's end. It's time to bring this source of global economic uncertainty to a close.

America's and China's prosperity have been built on global free trade. America has profited immensely from access to global markets since its birth. China, since opening up 40 years ago, has lifted millions of its people out of poverty largely through global trade. Indeed, much of the prosperity enjoyed by people across the world is anchored in our ability to sell goods and services freely across national boundaries.

Now, however, we see global growth in trade lagging behind general economic growth for the first time in decades. In part, this is the product of the expanding trade war between America and China, the world's two largest economies. In part, it is because of a more general outbreak of protectionism around the world. Both these factors threaten continued global prosperity.

We recognize, as former leaders of countries with longstanding economic relationships with China, the real difficulties regarding a number of Beijing's trade and economic practices. We understand, for example, the challenges that arise from Chinese policies on intellectual property and technology transfer, its restrictions on access to its markets, and its subsidization of private and public companies that are active in the global marketplace. We believe that these practices need to change in whichever countries may use them. But it is particularly important in China, because it is the world's second-largest economy.

At the same time, as countries long committed to the principles of free trade, we do not see the ever-widening tariff war, started by the United States, as an effective way to resolve trade and economic disputes. Tariffs, by definition, are the enemy of free trade. Their cumulative impact, particularly combined with the current resurgence of protectionism worldwide, only depresses economic growth, employment and living standards. Tariffs raise the cost of living for working families as consumer prices are driven up.

Stock markets rose on Friday with the news of the preliminary deal. The tariff war has been creating economic uncertainty, depressing international investor confidence, compounding downward pressure on growth and increasing the risk of recession. The disruption of global supply chains is already profound, and it may continue until a final deal is reached.

We believe that the World Trade Organization, despite its limitations, is best positioned to address China's trade practices. We also believe that the W.T.O. is the most appropriate forum in which to resolve trade disputes. So we urge the United States and China to work with other member states to strengthen the W.T.O.'s institutional capacity.

Our group of former prime ministers and presidents includes François Fillon of France, Joe Clark of Canada, Enrico Letta of Italy, Jan Peter Balkenende of the Netherlands, Felipe Calderón and Ernesto Zedillo of Mexico, and Han Seung-soo of South Korea. Given our collective experience, we are not naïve about the inherent complexities in negotiating trade agreements. Many of us have negotiated free-trade pacts with both the United States and China. We are deeply familiar with the concerns of each country, including the domestic political constituencies that argue for continued protection.

Many of those domestic concerns have focused on the long-term enforcement of any agreement. On this point, we argue that it is in China's own long-term economic interest to ensure the effective implementation of any new trade deal -- whether involving intellectual property, technology transfer, state subsidies or market access. Such policies would also need to apply to all of China's trading partners, just as they would need to apply to its relationship with the United States.

On the question of enforcement, China must be acutely aware that if it fails to comply with the terms of the agreement, an already damaging trade war is likely to resume. A new trade agreement should include strong enforcement provisions, along with strengthened W.T.O. dispute-resolution mechanisms, to give greater confidence to both parties.

For these reasons, and given the gravity of the global economic outlook for 2020, we urge both countries to exercise every effort to reach a substantive agreement this year. We also urge the United States to withdraw the punitive tariffs it has imposed -- and that China do the same with the reciprocal tariffs it has enacted.

Beyond trade, we are anxious about the wider strategic impact of any further decoupling of the Chinese and the American economies, particularly in technology and finance. Such a decoupling would present a long-term threat to global peace and security.

It would also effectively constitute the first step in the declaration of a new Cold War. As with the last Cold War, many nations would be forced to choose between the two powers. And that is a choice none of us wants to make.

[Oct 15, 2019] The Unwinnable Trade War

Notable quotes:
"... Meanwhile, Chinese consumers aren't paying higher prices for U.S. imports. A study by the Peterson Institute for International Economics shows that since the beginning of 2018, China has raised the average tariff rate on U.S. imports from 8.0 percent to 21.8 percent and has lowered the average tariff rate on all its other trading partners from 8.0 percent to 6.7 percent. China imposed tariffs only on U.S. commodities that can be replaced with imports from other countries at similar prices. It actually lowered duties for those U.S. products that can't be bought elsewhere more cheaply, such as semiconductors and pharmaceuticals. Consequently, China's import prices for the same products have dropped overall, in spite of higher tariffs on U.S. imports. ..."
"... Beijing has proved much more capable than Washington of minimizing the pain to its consumers and economy. ..."
"... The uncomfortable truth for Trump is that U.S. trade deficits don't spring from the practices of U.S. trading partners; they come from the United States' own spending habits. ..."
"... The United States has run a persistent trade deficit since 1975, both overall and with most of its trading partners. Over the past 20 years, U.S. domestic expenditures have always exceeded GDP, resulting in negative net exports, or a trade deficit. ..."
"... Even a total Chinese capitulation in the trade war wouldn't make a dent in the overall U.S. trade deficit. ..."
"... The U.S. economy, on the other hand, has had the longest expansion in history, and the inevitable down cycle is already on the horizon: second-quarter GDP growth this year dropped to 2.0 percent from the first quarter's 3.1 percent. ..."
"... If the trade war continues, it will compromise the international trading system, which relies on a global division of labor based on each country's comparative advantage. Once that system becomes less dependable -- when disrupted, for instance, by the boycotts and hostility of trade wars -- countries will start decoupling from one another. ..."
Oct 15, 2019 | economistsview.typepad.com

Fred C. Dobbs said in reply to Fred C. Dobbs... , October 12, 2019 at 02:41 AM

The Unwinnable Trade War
https://www.foreignaffairs.com/articles/asia/2019-10-08/unwinnable-trade-war
Foreign Affairs - Weijian Shan - November/December 2019

Everyone Loses in the US-Chinese Clash
-- but Especially Americans

... Economists reckon the dead-weight loss arising from the existing tariffs on $200 billion in Chinese imports to be $620 per household, or about $80 billion, annually. This represents about 0.4 percent of U.S. GDP. If the United States continues to expand its tariff regime as scheduled, that loss will more than double.

Meanwhile, Chinese consumers aren't paying higher prices for U.S. imports. A study by the Peterson Institute for International Economics shows that since the beginning of 2018, China has raised the average tariff rate on U.S. imports from 8.0 percent to 21.8 percent and has lowered the average tariff rate on all its other trading partners from 8.0 percent to 6.7 percent. China imposed tariffs only on U.S. commodities that can be replaced with imports from other countries at similar prices. It actually lowered duties for those U.S. products that can't be bought elsewhere more cheaply, such as semiconductors and pharmaceuticals. Consequently, China's import prices for the same products have dropped overall, in spite of higher tariffs on U.S. imports.

Beijing's nimble calculations are well illustrated by the example of lobsters. China imposed a 25 percent tariff on U.S. lobsters in July 2018, precipitating a 70 percent drop in U.S. lobster exports. At the same time, Beijing cut tariffs on Canadian lobsters by three percent, and as a result, Canadian lobster exports to China doubled. Chinese consumers now pay less for lobsters imported from essentially the same waters.

THE INESCAPABLE DEFICIT

Beijing has proved much more capable than Washington of minimizing the pain to its consumers and economy. But the trade war would be more palatable for Washington if its confrontation with China were accomplishing Trump's goals. The president thinks that China is "ripping off" the United States. He wants to reduce the United States' overall trade deficit by changing China's trade practices. But levying tariffs on Chinese imports has had the paradoxical effect of inflating the United States' overall trade deficit, which, according to the U.S. Census Bureau, rose by $28 billion in the first seven months of this year compared with the same period last year.

The uncomfortable truth for Trump is that U.S. trade deficits don't spring from the practices of U.S. trading partners; they come from the United States' own spending habits.

The United States has run a persistent trade deficit since 1975, both overall and with most of its trading partners. Over the past 20 years, U.S. domestic expenditures have always exceeded GDP, resulting in negative net exports, or a trade deficit. The shortfall has shifted over time but has remained between three and six percent of GDP.

Trump wants to boost U.S. exports to trim the deficit, but trade wars inevitably invite retaliation that leads to significant reductions in exports. Moreover, increasing the volume of exports does not necessarily reduce trade deficits unless it is accompanied by a reduction in the country's spending in terms of consumption and investment. The right way to reduce a trade deficit is to grow the economy faster than concurrent domestic expenditures, which can be accomplished only by encouraging innovation and increasing productivity. A trade war does the opposite, damaging the economy, impeding growth, and hindering innovation.

Even a total Chinese capitulation in the trade war wouldn't make a dent in the overall U.S. trade deficit. If China buys more from the United States, it will purchase less from other countries, which will then sell the difference either to the United States or to its competitors.

For example, look at aircraft sales by the U.S. firm Boeing and its European rival, Airbus. At the moment, both companies are operating at full capacity. If China buys 1,000 more aircraft from Boeing and 1,000 fewer from Airbus, the European plane-maker will still sell those 1,000 aircraft, just to the United States or to other countries that might have bought instead from Boeing.

China understands this, which is one reason it hasn't put higher tariffs on U.S.-made aircraft. Whatever the outcome of the trade war, the deficit won't be greatly changed.

A RESILIENT CHINA

The trade war has not really damaged China so far, largely because Beijing has managed to keep import prices from rising and because its exports to the United States have been less affected than anticipated.

This pattern will change as U.S. importers begin to switch from buying from China to buying from third countries to avoid paying the high tariffs. But assuming China's GDP continues to grow at around five to six percent every year, the effect of that change will be quite modest.

Some pundits doubt the accuracy of Chinese figures for economic growth, but multilateral agencies and independent research institutions set Chinese GDP growth within a range of five to six percent.

Skeptics also miss the bigger picture that China's economy is slowing down as it shifts to a consumption-driven model. Some manufacturing will leave China if the high tariffs become permanent, but the significance of such a development should not be overstated. Independent of the anxiety bred by Trump's tariffs, China is gradually weaning itself off its dependence on export-led growth. Exports to the United States as a proportion of China's GDP steadily declined from a peak of 11 percent in 2005 to less than four percent by 2018. In 2006, total exports made up 36 percent of China's GDP; by 2018, that figure had been cut by half, to 18 percent, which is much lower than the average of 29 percent for the industrialized countries of the Organization for Economic Cooperation and Development. Chinese leaders have long sought to steer their economy away from export-driven manufacturing to a consumer-driven model.

To be sure, the trade war has exacted a severe psychological toll on the Chinese economy. In 2018, when the tariffs were first announced, they caused a near panic in China's market at a time when growth was slowing thanks to a round of credit tightening. The stock market took a beating, plummeting some 25 percent. The government initially felt pressured to find a way out of the trade war quickly. But as the smoke cleared to reveal little real damage, confidence in the market rebounded: stock indexes had risen by 23 percent and 34 percent on the Shanghai and Shenzhen exchanges, respectively, by September 12, 2019. The resilience of the Chinese economy in the face of the trade war helps explain why Beijing has stiffened its negotiating position in spite of Trump's escalation.

China hasn't had a recession in the past 40 years and won't have one in the foreseeable future, because its economy is still at an early stage of development, with per capita GDP only one-sixth of that of the United States. Due to declining rates of saving and rising wages, the engine of China's economy is shifting from investments and exports to private consumption. As a result, the country's growth rate is expected to slow. The International Monetary Fund projects that China's real GDP growth will fall from 6.6 percent in 2018 to 5.5 percent in 2024; other estimates put the growth rate at an even lower number.

Although the rate of Chinese growth may dip, there is little risk that the Chinese economy will contract in the foreseeable future. Private consumption, which has been increasing, representing 35 percent of GDP in 2010 and 39 percent last year, is expected to continue to rise and to drive economic growth, especially now that China has expanded its social safety net and welfare provisions, freeing up private savings for consumption.

The U.S. economy, on the other hand, has had the longest expansion in history, and the inevitable down cycle is already on the horizon: second-quarter GDP growth this year dropped to 2.0 percent from the first quarter's 3.1 percent. The trade war, without taking into account the escalations from September, will shave off at least half a percentage point of U.S. GDP, and that much of a drag on the economy may tip it into the anticipated downturn. (According to a September Washington Post poll, 60 percent of Americans expect a recession in 2020.) The prospect of a recession could provide Trump with the impetus to call off the trade war. Here, then, is one plausible way the trade war will come to an end. Americans aren't uniformly feeling the pain of the tariffs yet. But a turning point is likely to come when the economy starts to lose steam.

If the trade war continues, it will compromise the international trading system, which relies on a global division of labor based on each country's comparative advantage. Once that system becomes less dependable -- when disrupted, for instance, by the boycotts and hostility of trade wars -- countries will start decoupling from one another.

China and the United States are joined at the hip economically, each being the other's biggest trading partner. Any attempt to decouple the two economies will bring catastrophic consequences for both, and for the world at large. Consumer prices will rise, world economic growth will slow, supply chains will be disrupted and laboriously duplicated on a global scale, and a digital divide -- in technology, the Internet, and telecommunications -- will vastly hamper innovation by limiting the horizons and ambitions of technology firms. ...

[Oct 15, 2019] President Trump's placement of Huawei on the US entity list was a body blow. But Huawei is still standing

Notable quotes:
"... Yes, the U.S. government can hurt Huawei in the short term by limiting their access to technology (and to certain foreign markets). But, absent a viable competitor, this won't have much impact in the long term. Because Huawei is fundamentally not a technology company. Huawei is a human resources company. And is kind of obsessed with survival. ..."
"... Huawei's fundamental purpose has always been about survival. ..."
"... Huawei, like most engineering-based enterprises, has only one real resource, which is the cumulative brainpower of its people. This is the resource that creates the products and sells them to their customers. And as technology changes quickly, they must continually create and recreate the products – and therefore the value of the enterprise. Huawei's main strength is the system they have developed for the creation, assessment and distribution of value by over 190,000 people. It's about HR strategy. ..."
Oct 15, 2019 | economistsview.typepad.com

anne , October 10, 2019 at 12:30 PM

https://news.cgtn.com/news/2019-10-10/Huawei-is-going-to-beat-Trump-with-human-resources-KFEpAxznJ6/index.html

October 10, 2019

Huawei is going to beat Trump with human resources
By Jeff Towson

President Trump's placement of Huawei on the U.S. entity list was a body blow. The magnitude of the hit should not be understated. Being cut off from U.S. technology so suddenly staggered the multinational. But, to their credit, Huawei didn't go down. They took the hit and stayed on their feet.

I'm not really sure what the U.S. government thought it would achieve with the ban. To stop Huawei's growth in international markets? To shift 5G market share to Ericsson and Nokia? To cripple the company? Just an assertion of principle?

I think they really just don't understand Huawei.

Yes, the U.S. government can hurt Huawei in the short term by limiting their access to technology (and to certain foreign markets). But, absent a viable competitor, this won't have much impact in the long term. Because Huawei is fundamentally not a technology company. Huawei is a human resources company. And is kind of obsessed with survival.

Huawei's core strategy has always been about survival.

If you read Ren Zhengfei's talks and papers going back to the early 1990's, what jumps out at you is how different Huawei is. The goal of the company has never really been about money. Nor about becoming a tech giant. Nor about innovation. And it has definitely not been about going public and getting a big payday. Huawei's fundamental purpose has always been about survival.

"Being big and strong temporarily is not what we want. What we want is the ability and resilience to survive sustainably," said Ren in 2001.

Actually he has been talking for literally decades about how Huawei can survive long-term – and about the common causes of corporate decline. My simplistic take is that Ren came up with a fairly logical plan for long-term survival: Serve your customers no matter what. Then get big and slowly grind your competitors down with lower costs and greater R&D spending. And within this, the only resource you really have are your people and their cumulative brainpower.

Huawei's main resource is its people.

Huawei, like most engineering-based enterprises, has only one real resource, which is the cumulative brainpower of its people. This is the resource that creates the products and sells them to their customers. And as technology changes quickly, they must continually create and recreate the products – and therefore the value of the enterprise. Huawei's main strength is the system they have developed for the creation, assessment and distribution of value by over 190,000 people. It's about HR strategy.

Unlike the companies in the U.S. and Europe, where the shareholders are the stakeholders with ultimate say or multiple stakeholders, such as employees, owners and the community, at Huawei, the only stakeholders you ever really hear about are the current employees. It's all about the top contributing, current employees. Shareholders, providers of capital, retired employees and even the founders are all a distant second in importance.

Note how different this is to other large engineering-focused companies (say GM and Bosch), where much of the value goes into guaranteed salaries (regardless of contribution) and into post-retirement benefits (i.e., not current employees). Huawei is not only focused primarily on this one group, they are also operating much more as a meritocracy with regards to labor.

Huawei to me looks a lot like what 3G capital has been doing in consumer-facing companies like Budweiser and Burger King. They have instituted "meritocracy and partnership" on a massive scale in a knowledge business. There is a lot of ownership. And you rise and fall based on your performance.

Huawei is awesome at inspiring dedication in their top contributing, current employees. And that is pretty logical. If brainpower is Huawei's main resource, this is the group that creates that value. So recruiting and motivating this group is the biggest priority. And they don't just want them motivated. They want them "all in."

In practice, this is actually pretty complicated. It's a big company. Employees are at different stages of their lives and careers. How do you get current staff, senior staff and incoming staff to go "all in" in creating value for customers – and therefore the enterprise?

My outsider's take is that Huawei is mostly focused on motivating teams and team managers. High-performance teams with aggressive and dedicated managers are the engine of Huawei. And these are mostly in sales and marketing and R&D. They make the largest contributions to the customers and therefore the enterprise. You motivate at the team level and within the departments that matter most. And then you scale it up.

But how do you assess contributed value?

Staff are rated every 6-12 months across metrics such as sales performance (usually team-based), talent, dedication, and the potential for advancement. The phrases I keep coming across in my reading are "dedicated employees" and "high-performance teams." In fact, the book on their HR book is titled Dedication.

Once assessed, how do you reward performance?

High-performing contributors are given higher bonuses, of course. But they are also identified and given more opportunities (and responsibilities). They are given more training and the option to participate in the employee share ownership program (very important). Low performers, in contrast, are demoted or exited. Meritocracy works in both directions.

And this brings us back to the main point of this article: How does the U.S. tech ban impact any of this? How does it impact an HR system for motivating the more than 190,000 employees that continually recreate the company and ensure its survival?

In the long term, it doesn't.

Yes, the company took a big hit in the short term in terms of its access to tech (especially in semiconductors and in the consumer business) and to a few markets. But the core of the company is still churning along like it has for 30 years. And I think it is very likely Huawei will overcome these supply chain problems. And, ironically, the current crisis is probably resulting in increased motivation and dedication across the company.


Jeff Towson is a Peking University professor.

[Sep 29, 2019] White House Weighs Blocking Chinese Companies From U.S. Exchanges

Sep 29, 2019 | economistsview.typepad.com

anne , September 28, 2019 at 09:13 AM

https://www.nytimes.com/2019/09/27/us/politics/trump-china-stock-exchange.html

September 27, 2019

White House Weighs Blocking Chinese Companies From U.S. Exchanges
By Alan Rappeport and Ana Swanson

WASHINGTON -- The Trump administration is discussing whether to block Chinese companies from listing shares on American stock exchanges, the latest push to try to sever economic ties between the United States and China, according to people familiar with the deliberations.

The internal discussions are in their early stages and no decision is imminent, these people cautioned.

The talks come as senior officials from both countries are scheduled to resume trade negotiations in Washington early next month. President Trump, who has continued to give mixed signals about the prospect of a trade deal with China, said earlier this week that an agreement could come "sooner than you think." His decision to delay an increase in tariffs until mid-October and China's recent purchases of American agricultural products has fueled optimism that the talks could produce an agreement.

But the prospect of further limiting American investment in China underscores the challenge that the two sides will continue to face even as they try to de-escalate a trade war that has shaken the global economy. The administration has already increased scrutiny of foreign investment with a particular eye toward China, including expanding the types of investments that can be subject to a national security review.

Last week, the Treasury Department unveiled new regulations detailing how a 2018 law, the Foreign Investment Risk Review Modernization Act, will work to prevent foreign firms from using investments like minority stakes to capture sensitive American information. And the United States has already blacklisted some Chinese companies, including Huawei, effectively barring them from doing business with American companies.

Stocks dropped on Friday after a report on the deliberations was published by Bloomberg News. The market continued to slide through most of the day. At close, the S&P 500 was down 0.5 percent and the Nasdaq composite index was down 1.1 percent.

Losses were particularly steep in the technology sector, and among semiconductor stocks, two parts of the market that have been sensitive to the latest updates on the economic tensions between China and the United States.

Details of how the United States would restrict Chinese companies from American stock markets were still being worked out and the idea remained in its early stages, the people familiar with the deliberations said.

China hawks within the administration have discussed the possibility of tighter restrictions on listed Chinese companies for many months. Supporters say the efforts would close longstanding loopholes that have allowed Chinese companies with links to its government to take advantage of America's financial rules and solicit funds from American investors without proper disclosure.

Skeptics caution that the move could be deeply disruptive to markets and the economy and risk turning American investors and pension funds into another casualty of the trade war.

The effect of limiting Chinese firms from raising capital inside the United States could be significant. As of the beginning of this year, 156 Chinese companies were listed on American exchanges and had a total market capitalization of $1.2 trillion, according to the U.S.-China Economic and Security Review Commission.

"The underlying concerns have merit, but how to deal with them without creating a lot of collateral damage is tricky," Patrick Chovanec, managing director at Silvercrest Asset Management, wrote in a post on Twitter. "Abruptly delisting Chinese firms en masse would clearly send shock waves through markets."

The idea gained traction on Capitol Hill this summer when Republicans and Democrats in the Senate and the House introduced legislation that would delist firms that were out of compliance with American regulators for three years. The lawmakers argued that Chinese companies have been benefiting from American capital markets while playing by a different set of rules.

American complaints center on a lack of transparency into the ownership and finances of Chinese firms. The business community has long criticized China for classifying some auditor reports on company finances as state secrets and outlawing cross-border transfers of auditors' documentation.

In 2015, the Chinese affiliates of the Big Four accounting firms -- Deloitte Touch Tohmatsu, KPMG, PricewaterhouseCoopers and Ernst & Young -- paid $500,000 each to settle a dispute about their refusal to provide documentation on Chinese companies to the Securities and Exchange Commission, which an American judge had ruled was a violation of United States law.

The White House has grown more interested in blocking Chinese firms in recent weeks, with some in the administration describing it as a top priority. Officials say the topic is not yet an issue in bilateral negotiations with the Chinese and inserting it into the talks could lead negotiations to fall apart again.

"This would be another step in ratcheting up the pressure," said Michael Pillsbury, a China scholar at the Hudson Institute who said he raised the concept of investment restrictions with the White House after negotiations with China broke down in the spring.

The White House declined to comment.

The concept has divided Mr. Trump's advisers along their usual fault lines, with Peter Navarro, Mr. Trump's trade adviser, advocating action and Treasury Secretary Steven Mnuchin urging caution....

[Sep 26, 2019] A house bill bans using Huawei and ZTE phones; also adds 1 billion in taxpayer paid for equipment to be donated to to USA companies so the USA companies can trash the China made equipment and exchange if for 1 billion in USA and Israel made equipment.

Sep 26, 2019 | www.moonofalabama.org

snake , Sep 25 2019 18:50 utc | 12

A house bill bans using Huawei and ZTE phones; also adds 1 billion in taxpayer paid for equipment to be donated to to USA companies so the USA companies can trash the China made equipment and exchange if for 1 billion in USA and Israel made equipment.

I wonder does this mean the USA and Israel cannot compete with the Chinese?


huawei ban

huawei ban

huawei ban
huawei ban

[Sep 23, 2019] Huawei launched its Mate 30 series on Friday, the first new device produced by the Shenzhen telecommunications firm since it has been blacklisted by the United States government and excluded from American technology markets.

Notable quotes:
"... With the inaugural "Huawei AppGallery" emerging with the Mate 30, the company has now positioned itself on an investment trajectory to create a new "Huawei core" to compete with the world of Google-led Android systems outright. ..."
"... Beyond Apple and the iPhone, the Android operating system dominates in the global smartphone market. Describing it as an "operating system" is barely fitting; it might otherwise be described as "an ecosystem" with a wide range of Google orientated services within it. ..."
"... They include the popular browser Chrome, the YouTube video service, Google mail and, most critically, the "Google Playstore," which, owing to its popularity, attracts more developers and investors than any other unofficial App stores. This "ecosystem" creates a "web of comfort" which effectively entrenches the consumer in the Android orbit. ..."
"... p until May 2019, Huawei was a part of this orbit. Its subsequent estrangement from Android owing to the American government's decision has forced some difficult choices. It has made markets keen to observe how the Mate 30 will perform given its lack of Google applications and the need for users to obtain some apps through third-party stores. ..."
"... So, the question is: How are they now adapting and making that transition? Bengt Nordstrom of North Stream research in Sweden notes that "they have a strategy to become completely independent from U.S. technology. And in many areas, they have become independent." ..."
"... Huawei's announced bid to invest over 1 billion U.S. dollars in developing its own application "core" or ecosystem. This, in essence, is an effort to get developers to establish applications for the new "Huawei App store" and thus establish a self-reliant, independent path from the world of Android. ..."
"... To achieve this, the company has pledged a competitive revenue sharing scheme of 15 percent to developers, half of that what Apple and Google demand for participation in their own app-stores. ..."
Sep 23, 2019 | economistsview.typepad.com

anne , September 21, 2019 at 06:30 AM

https://news.cgtn.com/news/2019-09-21/Huawei-s-pivotal-moment-KabssDHWdq/index.html

September 21, 2019
Huawei's pivotal moment
By Tom Fowdy

Huawei launched its Mate 30 series on Friday, the first new device produced by the Shenzhen telecommunications firm since it has been blacklisted by the United States government and excluded from American technology markets.

The subsequent result of the listing had led Google to sever ties with the company and prohibit new devices from using its Play Store services and operating system, something which ultimately impacts the Mate 30 Series, which is using an open-source version of Android.

The impact of it all has led Western commentators to ask questions about Huawei's future in Western smartphone markets, particularly what applications can it access.

However, not all is bleak, and what may start off as a hindrance for the company is set to transform into an opportunity. The United States' assault on the company has forced Huawei to innovate.

With the inaugural "Huawei AppGallery" emerging with the Mate 30, the company has now positioned itself on an investment trajectory to create a new "Huawei core" to compete with the world of Google-led Android systems outright.

In this case, what seems like a detriment is part of a broader pivotal moment for Huawei. The company's portfolio is about to change forever.

Beyond Apple and the iPhone, the Android operating system dominates in the global smartphone market. Describing it as an "operating system" is barely fitting; it might otherwise be described as "an ecosystem" with a wide range of Google orientated services within it.

They include the popular browser Chrome, the YouTube video service, Google mail and, most critically, the "Google Playstore," which, owing to its popularity, attracts more developers and investors than any other unofficial App stores. This "ecosystem" creates a "web of comfort" which effectively entrenches the consumer in the Android orbit.

U p until May 2019, Huawei was a part of this orbit. Its subsequent estrangement from Android owing to the American government's decision has forced some difficult choices. It has made markets keen to observe how the Mate 30 will perform given its lack of Google applications and the need for users to obtain some apps through third-party stores.

So, the question is: How are they now adapting and making that transition? Bengt Nordstrom of North Stream research in Sweden notes that "they have a strategy to become completely independent from U.S. technology. And in many areas, they have become independent."

First of all, we are well aware that Huawei is developing its own Harmony Operating System as a contingency measure, although it has not chosen to apply it to the Mate 30 as an olive branch to Google.

Second, and most excitingly is Huawei's announced bid to invest over 1 billion U.S. dollars in developing its own application "core" or ecosystem. This, in essence, is an effort to get developers to establish applications for the new "Huawei App store" and thus establish a self-reliant, independent path from the world of Android.

To achieve this, the company has pledged a competitive revenue sharing scheme of 15 percent to developers, half of that what Apple and Google demand for participation in their own app-stores.

This effort is combined with a wider scope in research and development from the company, which is also designed to forfeit dependence upon American technology chains in terms of critical components and other parts.

We have already seen massive investment pledges from Huawei to build new research and development centers in the United Kingdom, Belgium, Italy and Brazil. They are not empty promises, but a serious and strategic effort.

In this case, what was intended to be a political effort to destroy and contain Huawei is likely to prove a pivotal turning point in the company's history with huge repercussions for global smartphone and technology markets.

Instead of having once been reliant on and thus beneficial to American technology markets, the outcome is that Huawei will re-emerge independent of and competing against it.

Armed with a pending new operating system, a new application development drive and a broader research effort, what seemed otherwise a detriment is likely to bring a massive opportunity. Thus, it is very important to examine the long-term prospects for the company's fortunes ahead of short-term challenges.

[Sep 23, 2019] Smartest and fastest: Huawei reveals new smartphone chip Kirin 990 5G

Notable quotes:
"... "The Kirin 990 is not only an SoC and a 5G modem glued together. We put a lot of effort in integrating the two chips. So the new chip uses less power and generates less heat while getting the job done," said Huawei fellow Ai Wei before the launch event. ..."
"... The whole Kirin 990 5G chip is so dense that it contains 10.3 billion semiconductors, the first and largest of its kind. ..."
"... Another example is AI-based video quality improvements, which takes in a low quality video and render a better one. Objects in the rendered video have much sharper edges. Huawei technicians refused to explain how they made it, but the underlying tech seems to be object recognition, content-based pixel generation and noise reduction, since these are the tricks AI does well. ..."
"... Huawei's P30 Pro smartphone, together with the Kirin 980 chip, has taken "smartphone zoom to the next level," according to third-party review site DxOMark. The phone was on top of all smartphones when it comes to photography in DxOMark's ranking. The Kirin 990 is packed with more graphic features to continue Huawei's dominance. ..."
Sep 23, 2019 | economistsview.typepad.com

anne -> anne... , September 20, 2019 at 04:51 PM

https://news.cgtn.com/news/2019-09-06/Smartest-and-fastest-Huawei-reveals-new-smartphone-chip-Kirin-990-5G-JLGH1KVKeI/index.html

September 6, 2019

Smartest and fastest: Huawei reveals new smartphone chip Kirin 990 5G
By Gong Zhe

Chinese smartphone giant Huawei, which has been under heavy attack from the U.S. government during the last few months, just revealed its next-generation smartphone system-on-a-chip (SoC) product "Kirin 990 5G," signaling the company's business is not stalled by foreign strangling.

The launch event was held simultaneously at IFA electronic show in Berlin, Germany, and in Beijing on Friday.

In his keynote speech, Huawei's head of gadgets Richard Yu told the press that the chip is more advanced than other flagship smartphone SoCs, because it has a built-in 5G modem.

Current rivals of the chip, like Qualcomm's Snapdragon 855, have no 5G modem and have to rely on an extra chip to support 5G.

"The Kirin 990 is not only an SoC and a 5G modem glued together. We put a lot of effort in integrating the two chips. So the new chip uses less power and generates less heat while getting the job done," said Huawei fellow Ai Wei before the launch event.

The whole Kirin 990 5G chip is so dense that it contains 10.3 billion semiconductors, the first and largest of its kind.

Flexible AI power

The chip also features three AI cores, two larger than the other smaller. This design, first in smartphones, saves battery power by only using the small core to process simple AI tasks, while resorting to the larger cores for more complex jobs.

The company named the cores "Ascend Lite" and "Ascend Tiny" to relate the cores to Huawei's new, self-proclaimed "fastest AI training chip in the world," the Ascend 910.

Huawei built a showcase at the Beijing launch event to demonstrate the chip's AI power. They showed a FaceID-like face recognition feature in a Kirin 990-powered developer board that can work when the person is four meters away from the phone, times further than Apple's current product.

Another example is AI-based video quality improvements, which takes in a low quality video and render a better one. Objects in the rendered video have much sharper edges. Huawei technicians refused to explain how they made it, but the underlying tech seems to be object recognition, content-based pixel generation and noise reduction, since these are the tricks AI does well.

Even better photos

Huawei's P30 Pro smartphone, together with the Kirin 980 chip, has taken "smartphone zoom to the next level," according to third-party review site DxOMark. The phone was on top of all smartphones when it comes to photography in DxOMark's ranking. The Kirin 990 is packed with more graphic features to continue Huawei's dominance.

A Kirin 990-powered smartphone can shoot 4K videos (3840 x 2160 pixels) at 60 frames per second, on par with market flagship phones.

The chip can also run DSLR-level noise-reduction algorithm – namely "Block Match 3D" – to bring professional tech to consumer devices.

"Porting an algorithm from DSLR to smartphone may be easy. But getting the program to run fast enough can be hard for any phone maker," Ai told CGTN Digital.

Non-U.S. tech

The design of Kirin 990 is still based on technology Huawei bought from British tech company ARM, used by several mainstream brands.

After the U.S. began imposing restrictions on Huawei, ARM cut ties with the Chinese phone maker. Despite this, Huawei has been able to use and modify AMRv8 technology thanks to its permanent ARM license. Hence why chips like Kirin 990 can still be legally built and sold.

In addition to ARM, there are other major smartphone tech companies cutting ties with Huawei, forcing the Chinese company to create its own alternatives. After Google announced to bar Huawei phones from installing their apps, Huawei started porting its IoT system "Harmony" to smartphones.

But Huawei still wishes to use technologies from all over the world. As Ai Wei explained at the launch event, "Huawei will not deliberately remove all U.S. tech from its smartphones. But when the supply from U.S. was cut, Huawei has to find a way to survive."

"That's why Huawei chose to create its own technology," Ai added....

anne -> anne... , September 20, 2019 at 05:01 PM
The point in article after article is that China is emphasizing technical advance in building the economy from rural to urban applications and the emphasis will not be lessened. The rural applications I am reading about are especially exciting.
point -> anne... , September 21, 2019 at 07:36 AM
https://www.kcrw.com/culture/shows/scheer-intelligence/america-keeps-getting-china-all-wrong

Terrific discussion on how the West perceives China et al and vice versa. Much new to me.

anne -> point... , September 21, 2019 at 08:39 AM
I appreciate the interview, but Clayton Dube as director of the University of Southern California's U.S.-China Institute knows remarkably little about China or American relations with China. Possibly Dube is being especially cautious, but still:

"The air in Los Angeles," the academic explains by way of an example, "is influenced by the air coming out of northern China. But of course, that bad air in China is produced by factories often producing for the American market. And so we have not only outsourced production, we've outsourced pollution."

This is absurdly wrong. China has been working on cleaning the environment for years now and the effects as monitored have been dramatic.

point -> anne... , September 21, 2019 at 09:16 AM
The idea that China thinks of 1849 to 1949 as a colonial period that took them 100 years to get free from, for instance, immediately helps me understand some of where they are coming from.
anne -> point... , September 21, 2019 at 09:45 AM
The idea that China thinks of 1849 to 1949 as a colonial period that took them 100 years to get free from, for instance, immediately helps me understand some of where they are coming from.

[ Surely so, this very day is "International Day of Peace in Nanjing" in memory of the victims of the terrible Japanese occupation:

http://www.xinhuanet.com/english/2019-09/21/c_138410902.htm ]

anne -> point... , September 21, 2019 at 08:40 AM
https://www.nytimes.com/2018/03/12/upshot/china-pollution-environment-longer-lives.html

March 12, 2018

Four Years After Declaring War on Pollution, China Is Winning
Research gives estimates on the longer lives that are now possible in the country.
By Michael Greenstone

On March 4, 2014, the Chinese premier, Li Keqiang, told almost 3,000 delegates at the National People's Congress and many more watching live on state television, "We will resolutely declare war against pollution as we declared war against poverty."

...

anne -> point... , September 21, 2019 at 08:46 AM
China, for instance, has over 420,000 electric busses. The United States has 300:

https://www.bloomberg.com/news/articles/2019-05-15/in-shift-to-electric-bus-it-s-china-ahead-of-u-s-421-000-to-300

im1dc -> anne... , September 21, 2019 at 09:16 AM
China has had the benefit of skipping over other advanced nation's Legacy infrastructure.

Leapfrogging ahead in some areas of development is smart and saves money for China as well, but that doesn't make China superior to other advanced nations.

anne -> anne... , September 21, 2019 at 09:26 AM
China, for instance, has over 420,000 electric busses. The United States has 300:

https://www.bloomberg.com/news/articles/2019-05-15/in-shift-to-electric-bus-it-s-china-ahead-of-u-s-421-000-to-300

May 15, 2019

The U.S. Has a Fleet of 300 Electric Buses. China Has 421,000
The rest of the world will struggle for years to match China's rapid embrace of electric transit.
By Brian Eckhouse - Bloomberg

anne -> anne... , September 21, 2019 at 09:27 AM
https://www.nytimes.com/2019/09/14/business/chinese-train-national-security.html

September 14, 2019

Fearing 'Spy Trains,' Congress May Ban a Chinese Maker of Subway Cars
By Ana Swanson

CHICAGO -- America's next fight with China is unfolding at a glistening new factory in Chicago, which stands empty except for the shells of two subway cars and space for future business that is unlikely to come.

A Chinese state-owned company called CRRC Corporation, the world's largest train maker, completed the $100 million facility this year in the hopes of winning contracts to build subway cars and other passenger trains for American cities like Chicago and Washington.

But growing fears about China's economic ambitions and its potential to track and spy on Americans are about to quash those plans. Congress is soon expected to approve legislation that would effectively bar the company from competing for new contracts in the United States, citing national security and economic concerns. The White House has expressed its support for the effort....

anne -> anne... , September 21, 2019 at 09:38 AM
https://news.cgtn.com/news/2019-09-18/Chinese-make-300-mln-daily-trips-through-green-transport-K5xRBUQiZO/index.html

September 18, 2019

Chinese make 300 mln daily trips through green transport

[ China has 65% of the world total mileage of high-speed rail service, but what do the Chinese know about trains anyway? ]

anne -> point... , September 21, 2019 at 09:20 AM
Terrific discussion on how the West perceives China...

[ Actually a discussion that shows a remarkable misperception of China even by an American China academic-specialist. As such the discussion is important though discouraging. ]

[Sep 22, 2019] Trump May Get Much of the World's Manufacturing Out of China, but It Won't Be Coming Back to the US

Notable quotes:
"... I always thought globalization was about the opportunity for a handful of businesses and corporations to control major industries around the world. ..."
"... There is an anti-China hawks faction based in the Republican party that has made its present felt. People like Robert Lighthizer, Peter Navarro and Steve Bannon. I have seen this sentiment spill over into Australian politics but they have not reached the stage where they are asking: "Are you now, or have you ever been, born Chinese?". ..."
"... We have also seen hawk factions against Russia, Iran and not long ago Venezuela. The ones for Russia and Iran have been long going but the ones against China and Venezuela were sudden and new. It may be that tomorrow that Trump will do the same against Cuba and threaten any country that does trade with them. Who knows what other country may fall within his sights? ..."
"... it seems business people in the government are being pushed aside by hawkish factions who do not care what effect it has on the economy or the country. Great! ..."
"... Those are the same "hawks" that are busy destroying the rest of America as well. ..."
"... As it is now, China literally has the US by the jewels, and if a serious conflict ever arose, could squeeze them hard. Just their dominance in manufacturing a large percentage of the pharmaceuticals consumed by US patients alone creates a serious vulnerability. ..."
"... Situating the manufacturing in countries that are part of the Chinese sphere of influence won't help much in a conflict. China would probably be able to sweep through much of Southeast Asia quickly or interdict shipments if there was war. ..."
"... the world wide presence/threat of the USA military and diplomatic corps allows globalization to be less risky for USA businesses, so, in effect, the patriotic "spreading of democracy" around the world via military actions is a factor in USA job loss. This is yet another cost of the bloated military to the general USA population. ..."
"... Trump, as usual, got his strings pulled by the Deep State when he went for actual implementation of a campaign promise. The DS doesn't care about working Americans, they are simply against China. ..."
"... as Julius Krein, editor of American Affairs, writes: "United States industry is losing ground to foreign competitors on price, quality and technology. In many areas, our manufacturing capacity cannot compete with what exists in Asia." ..."
"... Back in the early 80s I saw a massive warehouse full of machine tools, Bridgeport mills, and such lined up, it seemed forever, the guy there said they were going to China. I asked my Dad about it, and he told me we were selling them to the Chinese for the price of scrap. The whole thing is mindless and pathetic, but the really maddening thing is the slippery way our 'leaders' can keep dodging the blame by simply pointing a finger in whatever direction, and everybody's eyes move in unison. ..."
"... The argument/discussion is not about how and where to outsource our jobs, it's about how stupid it was to do it in the first place ..."
"... Also the Chinese internal market continues to attract MNC's and this attraction will continue to grow far into the future. China's middle class is already larger than the total population of the US and it continues to grow rapidly. While down presently the Chinese internal consumption continues to grow at an annual rate of some 8.5%. ..."
"... Trump's approach to trade is isolating the US, blocking its Co's from the Chinese market, and incentivizing the Chinese to offer better conditions to Co's of the rest of the world. How can that help the US ? ..."
"... The relentless neoliberal race to the bottom, outsourcing, and austerity that marked the death blow to American Labor is over. In that light it makes little difference whether our corporations pull out of China, go to Vietnam, or come home. The exploitation of the poorest is coming to an end. And none too soon. ..."
"... I hope some candidates discuss the imperative to have the US start making it's own medications again. ..."
"... I could not believe the government has allowed the entire supply chain of building blocks of ALL our antibiotics to be sourced almost solely from China. To me THAT'S the national security issue we need to deal with immediately. As well as other vital drugs.. ..."
"... Chinese manufacturers have the wealth and experience to teach production line workers and make things anywhere. Western companies manufacturing in China have belatedly looked for facilities in neighboring countries and found the Chinese are already there. ..."
"... Trump doesn't give a damn about getting manufacturing jobs back into the United States! (Or at least his advisors don't). ..."
"... Low housing costs, lead to lower wages so UK employers were able to compete in a free trade world. William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics. ..."
"... He thinks we have been on the wrong path for one hundred years. Free trade requires a low cost of living and what was known in the 19th century had disappeared by the 20th. The West's high cost of living means high wages and an inability to compete in a free trade world. ..."
Sep 21, 2019 | www.nakedcapitalism.com

By Marshall Auerback, a market analyst and commentator. Produced by Economy for All, a project of the Independent Media Institute

"Chimerica" is a term originally coined by the historian Niall Ferguson and economist Moritz Schularick to describe the growing economic relationship between the U.S. and China since the latter's entry into the World Trade Organization (WTO) in 2001. In the words of Ferguson : "The Chinese did the saving, the Americans the spending. The Chinese did the exporting, the Americans the importing. The Chinese did the lending, the Americans the borrowing." Much of the pre-crisis boom in global trade was driven by this economic symbiosis, which is why successive American presidents tolerated this marriage of convenience despite the increasing costs to the U.S. economy . The net benefits calculation, however, began to change after 2008, and the conflict has intensified further after the 2016 presidential election result. Today, the cumulative stress of Donald Trump's escalating trade war is leading to if not an irreparable breach between the two countries, then certainly a significant fraying. The imminent resumption of trade talks notwithstanding, the rising cost of the tariffs is already inducing some U.S. manufacturers to exit China. But in most instances, they are not returning to home shores.

It may have taken Trump to point out the pitfalls of the Chimerica link, but coming up with a coherent strategy to replace it is clearly beyond the president's abilities. America is likely to remain a relative manufacturing wasteland, as barren as Trump's own ill-conceived ideas on trade. At the same time, it's not going to be an unmitigated victory for China either, as Beijing is increasingly suffering from a large confluence of internal and external pressures.

Chimerica helped to launch China as a global trade power. To the extent that this marriage helped the U.S. economy, it skewed toward the largely blue state coastal regions. Wall Street banks located on the East Coast happily collected lucrative commissions and investment banking fees, as China's export proceeds were recycled into U.S. treasuries, stocks, and high-end real estate while the capital markets boomed; on the West Coast, "new economy" companies thrived, their growth and profitability unhindered by the onslaught of Chinese manufactured exports. By contrast, facilitated by technological advances that permitted large-scale outsourcing by U.S. manufacturers, Chimerica laid waste to much of what was left of America's Rust Belt, and the politics of many of the displaced workers mutated to the extent that Donald Trump became an appealing alternative to the establishment in 2016.

The major legacy of Chimerica, then, is that too many American workers have been semi-permanently replaced by low-cost offshored labor. Prior to great advances in technology, along with globalization, displacement of the current labor force could only have occurred through immigration of workers into the country. Historically, displacement by immigrants generally began at the menial level of the labor force, and became more restrictive as when it became correlated with significant unemployment. Given the rise of globalization and the corresponding liberalization of immigration in the past few decades, however, policy no longer arrests the displacement of American workers. The policy backlash has consequently manifested itself more via trade protectionism. Trump has sought to consolidate his Rust Belt base of supporters by launching a trade war, especially versus Beijing, the ultimate effects of which he hoped would be to re-domicile supply chains that had earlier migrated to China.

Early on in his presidency, there was some hope that Trump's protectionism was at best a bluff or, at worst, an aberration, and that the return of a Democrat to the White House in 2020 would eventually reestablish the status quo ante. But the president still can't get a wall, and his protectionism has become more pronounced almost as if to compensate. The problem today is that even if Trump is voted out of office in 2020, corporate America is becoming less inclined to wait out the end of his presidency to return to the pre-Trump status quo of parking the bulk of their manufacturing in China. There is too much risk in putting all of one's eggs in the China basket, especially given growing national security concerns . Hence, U.S. companies are taking action. In spite of decades of investment in these China-domiciled supply chains, a number of American companies are pulling out: toy manufacturer Hasbro , Illinois-based phone accessories manufacturer Xentris Wireless, and lifestyle clothing company PacSun are a few of the operators who are exiting the country.

But they are not coming back to the U.S., relocating instead to places like Vietnam, Bangladesh, Mexico, the Philippines and Taiwan. The chief financial officer of Xentris, Ben Buttolph, says that the company will never return to China: "We are trying to have multiple locations certified for all of our products, so that if all of a sudden there's an issue with one of the locations, we just flip the switch." Likewise, the CEO of Hasbro, Brian Goldner, recently spoke of "great opportunities in Vietnam, India and other territories like Mexico."

All is not lost for the U.S., however, as Goldner did celebrate the success of Hasbro's facility in East Longmeadow, Massachusetts, which has resumed production of Play-Doh in the U.S. for the first time since 2004 . It is doubtful, however, that this represents the recapturing of the high value-added supply chains that Trump envisaged when he first launched his trade assault on Beijing.

In general, as Julius Krein, editor of American Affairs , writes: "United States industry is losing ground to foreign competitors on price, quality and technology. In many areas, our manufacturing capacity cannot compete with what exists in Asia."

These are not isolated examples. Defense One also notes the following development:

It came without a breaking news alert or presidential tweet, but the technological competition with China entered a new phase last month. Several developments quietly heralded this shift: Cross-border investments between the United States and China plunged to their lowest levels since 2014, with the tech sector suffering the most precipitous drop. U.S. chip giants Intel and AMD abruptly ended or declined to extend important partnerships with Chinese entities. The Department of Commerce halved the number of licenses that let U.S. companies assign Chinese nationals to sensitive technology and engineering projects.

This development consequently makes it hard to proclaim Beijing a winner in this dispute either. The country still needs access to U.S. high tech. The government announced yet another fiscal stimulus to the economy earlier this month in response to a cluster of weakening economic data, much of which is related to the trade shock. It is also the case that China is being buffeted politically, both externally and internally: externally, in addition to the escalating trade war, China's own efforts to counter the effects of rising protectionism by creating a " reverse Marshall Plan " via the Belt and Road Initiative is floundering . China's "iron brother," Pakistan, is increasingly being victimized by India's aggressive Hindu-centric nationalism . It is hard to imagine the Modi government opportunistically taking the step of annexing Kashmir and undermining Pakistan, had it not sensed Beijing's increasing vulnerability.

Internally, Beijing is finding it increasingly challenging as it seeks to enforce its "One China" policy in Hong Kong and Taiwan. The withdrawal of the controversial extradition law that first precipitated widespread demonstrations in Hong Kong has not alleviated the political pressures in the territory, but simply allowed an even bigger protest culture to take root and strengthen an independent political mindset. Similarly, Taiwan has also openly supported the Hong Kong protesters, pledging help to those seeking asylum . Both regions now constitute both a huge humiliation and challenge to the primacy of China's ruling Communist Party. And now on top of that, foreign manufacturers are leaving the country, weakening a totally leveraged manufacturing complex.

The implications of this divorce go well beyond the U.S. and China. They constitute another step toward regionalization, another step away from a quaint ideological "post-history" construct that saw Washington, D.C., as the head office and the rest of the world as a bunch of branch plants for "America, Inc." It's hardly comforting to contemplate that the last time we reached this historic juncture was the early 1900s, when a similarly globalized economy broke down, followed by the Great War. As Niall Ferguson points out , "a high level of economic integration does not necessarily prevent the growth of strategic rivalry and, ultimately, conflict." There's no doubt that both Washington and Beijing will likely making soothing noises to the markets in order to create favorable conditions for the trade talks in October, but their actions suggest that they are both digging in for a longer struggle . Today's trade wars, therefore, are likely to morph into something more destructive, which is a lose-lose in an era where human advancement depends on greater integration between economic powers.

somecallmetim , September 21, 2019 at 2:43 am

So ultimately trade peace or symbiosis is chimerical?

John , September 21, 2019 at 4:09 am

I always thought globalization was about the opportunity for a handful of businesses and corporations to control major industries around the world.

Who knew that there were people in any country that benefit?

The first country that would address affordable housing, healthcare and education so that people don't need more jobs will win.

The Rev Kev , September 21, 2019 at 4:30 am

There may be another aspect to this development and that is of geopolitics. You can see that in Marshall's article when the CFO of Xentris said: "We are trying to have multiple locations certified for all of our products, so that if all of a sudden there's an issue with one of the locations, we just flip the switch." There is an anti-China hawks faction based in the Republican party that has made its present felt. People like Robert Lighthizer, Peter Navarro and Steve Bannon. I have seen this sentiment spill over into Australian politics but they have not reached the stage where they are asking: "Are you now, or have you ever been, born Chinese?".

So we have seen a long string of sanctions and tariffs at play so that China will change its laws and institutions to suit American interests. Yeah, I can't see that happening anytime soon but hey, America First, Baby. We have also seen hawk factions against Russia, Iran and not long ago Venezuela. The ones for Russia and Iran have been long going but the ones against China and Venezuela were sudden and new. It may be that tomorrow that Trump will do the same against Cuba and threaten any country that does trade with them. Who knows what other country may fall within his sights?

That being the case if you were running an international country, you can no longer just have your manufacturing base or service operations just in one country. If Xentris is an example, US companies may have to split manufacturing into several countries in case one fine day that Trump will sanction yet another country that your company depends on.

I would imagine that it would not be so efficient but it seems business people in the government are being pushed aside by hawkish factions who do not care what effect it has on the economy or the country. Great!

Leroy , September 21, 2019 at 11:51 am

Those are the same "hawks" that are busy destroying the rest of America as well. Another four years of this will, effectively, dismantle what democracy is left. The world trade won't be the big issue. The departure of millions of Americans will.

drumlin woodchuckles , September 22, 2019 at 4:42 pm

If that happens, be sure to thank the Catfood Democrats for it. Because they are the people who will do their very best and hardest to throw the next election to Trump, one way or another.

jeremyharrison , September 21, 2019 at 5:23 am

It seems like diversification of supply chains can only be a good thing. As it is now, China literally has the US by the jewels, and if a serious conflict ever arose, could squeeze them hard. Just their dominance in manufacturing a large percentage of the pharmaceuticals consumed by US patients alone creates a serious vulnerability.

I really don't think it matters if manufacturing jobs are repatriated to the US, or just set up and spread around elsewhere for now – since they'll be obsolete jobs in the near future anyway, as robotics and AI get increasingly efficient at doing the work that human workers currently do.

rd , September 21, 2019 at 5:25 pm

Situating the manufacturing in countries that are part of the Chinese sphere of influence won't help much in a conflict. China would probably be able to sweep through much of Southeast Asia quickly or interdict shipments if there was war.

Dan , September 21, 2019 at 6:28 am

So the status quo was preferable? The tone of the article seems to suggest that America should accept it place as a third-world manufacturer, as if these Asian nations have some magical sauce that can't be replicated. Gawd.

The US does have a lot of magic. Like one third of FDI related to tax evasion. Pulling Mac Book manufacturing out of Austin for the lack of one 'screw', etc. So is the premise of going after China on trade and IP policies good. I would agree. Maybe not in strategy, but at least someone has opened the box.

John Wright , September 21, 2019 at 3:26 pm

I agree with your comment, the article suggests the status quo was preferable. Of note, Trump has shown his supporters that something CAN be done other than follow the "resistance is futile" path of the Bill Clinton/Bush Jr./Obama administrations.

I also suggest that the world wide presence/threat of the USA military and diplomatic corps allows globalization to be less risky for USA businesses, so, in effect, the patriotic "spreading of democracy" around the world via military actions is a factor in USA job loss. This is yet another cost of the bloated military to the general USA population.

I worked in the electronics industry for 30+ years and watched high margin manufacturing move to Asia. Now the lower level component manufacturers (PCBs, passives) are firmly established in Asia as the USA companies have helped train worthy competitors overseas. It took 25+ years to move much of USA manufacturing overseas, indicating to me that it will take a long time to bring it back significantly, well outside the Trump time frame.

But I suspect Trump voters will appreciate Trump's headline efforts. If the Democrats push for more Free Trade as good for the USA, it will hurt them at the ballot box.

GramSci , September 21, 2019 at 6:51 am

The second time as farce. How tragicomic that Trump has succeeded in little more than repatriating the manufacture of Play-Doh. On the other hand, the shipping cost of unbaked brick seems a rational factor in Hasbro's decision. A GND that shortens supply lines would be more effective in repatriating heavy industry, but then printed circuit boards aren't all that heavy .

a different chris , September 21, 2019 at 8:42 am

The thing is Trump, as usual, got his strings pulled by the Deep State when he went for actual implementation of a campaign promise. The DS doesn't care about working Americans, they are simply against China.

So he goes and puts tariffs on a country, not a product. And surprise, said product doesn't come back on-shore. Comical (and yeah, cosmically a bit just) that Vietnam is getting so much of that manufacturing. Wasn't what he was elected for.

Glen , September 21, 2019 at 9:44 am

In general, as Julius Krein, editor of American Affairs, writes: "United States industry is losing ground to foreign competitors on price, quality and technology. In many areas, our manufacturing capacity cannot compete with what exists in Asia."

As a engineer up to my elbows in manufacturing for forty years, this was awfully easy to predict way back then (I gave up complaining about it about 2000), and then watch happen – real time. And to once again state the obvious, China did not TAKE American jobs, American CEOs GAVE them our jobs. We will not fix this problem until we identify and fix the root cause.

Now the only way to fix it is (once again obviously) massive government investment such as mandated by the GND. We need the GND, it is not only required to save the world, it will save our country.

Leroy , September 21, 2019 at 11:57 am

Fully agree Glen. How can we say China stole our "technology" when we placed it on their doorstep and asked them to make some of these for us please ?

Watt4Bob , September 21, 2019 at 3:19 pm

Agree, it was predictable, and it was predicted. What we've been talking about is the "Giant sucking sound" Ross Perot foretold would happen prior to the passing of NAFTA. It wasn't hard back then to see that he was right, but it took a few decades for the public to feel the impact, boiling frogs and all that.

Back in the early 80s I saw a massive warehouse full of machine tools, Bridgeport mills, and such lined up, it seemed forever, the guy there said they were going to China. I asked my Dad about it, and he told me we were selling them to the Chinese for the price of scrap. The whole thing is mindless and pathetic, but the really maddening thing is the slippery way our 'leaders' can keep dodging the blame by simply pointing a finger in whatever direction, and everybody's eyes move in unison.

rd , September 21, 2019 at 5:39 pm

NAFTA and China are two completely separate things. I have actually supported NAFTA in principle because we should encourage trade to be focused on our immediate neighbors. A wealthier and safer Mexico and Central America would create markets for us and virtually eliminate illegal immigrants as the southern border.

China is on the other side of the world and is not part of NAFTA. While we should have cordial relations with it, if we are looking for inexpensive labor, south of the border is the better place to focus on that. So Trump's tariffs on China are not the wrong thing to do per se. The problem is that they are being done in a vacuum of general trade policy where he is looking at everything as transaction bilateral relations with every country on the planet, which requires an immense amount of detailed thought and negotiation, neither of which appear to be a focus of this administration.

The countries that the companies are talking about moving their operations to are generally part of the new TPP which the US is not part of. So, we have removed ourselves from having trade relations with countries US CEOs are setting up operations in, but those countries are now starting to work together to counter both China (original TPP purpose) and the US (now that the US has bailed on it). Sounds like a recipe for a replay of China's giant sucking sound.

Watt4Bob , September 21, 2019 at 6:48 pm

The argument/discussion is not about how and where to outsource our jobs, it's about how stupid it was to do it in the first place. Anyone smart enough to breath knows that Mexico is next door, and China is on the other side of the world, but they are both part of the same giant sucking sound. The fact that you support both NAFTA ,think it was unwise to back out of the TPP, and think the issue is the present administration's lack of " detailed thought and negotiation " indicate a truly unbelievable level of denial.

drumlin woodchuckles , September 22, 2019 at 4:47 pm

NAFTA and MFN for China were two different actions towards the same goal . . . the use of Free Trade to dismantle thingmaking in America and re-mantle thingmaking in foreign export-aggression platforms to use against America.

Free Trade is the new Slavery. Militant Belligerent Protectionism is the new Abolition.

John Wright , September 21, 2019 at 5:41 pm

I remember when a Midwest Democrat (Stabenow?) tried to get a law passed that would prohibit a US corporation from deducting, from their federal taxes, the cost of moving factories overseas. A very minor disincentive, but a disincentive nonetheless. The Repubs beat it down as "anti-business". Concern about American workers is something to express in political speeches around election time but not in legislation.

eg , September 21, 2019 at 7:31 pm

This. As so ably described in Judith Stein's "Pivotal Decade" https://yalebooks.yale.edu/book/9780300171501/pivotal-decade

And the consequences of which forewarned in James Goldsmith's "The Trap" https://www.goodreads.com/en/book/show/2091182.The_Trap

https://m.youtube.com/watch?v=wwmOkaKh3-s

Ignacio , September 21, 2019 at 10:41 am

Hidden within this narrative is the fact that some countries, and not only China, have for long been playing beggar-thy-neighbor policies by restraining internal consumption and redirecting savings to the rest of the world that in turn finance their exporting machines. IMO, the biggest mistake made by China has been not to force fast enough a transition from a saving economy to a consumer economy with more balanced external relationships.

These kind of policies are confrontational. As confrontational as tariffs or even as economic sanctions in my view. Yet, the prevailing economic narrative is that saving and exporting is the right economic thing to do. In this sense I think it matters a lot to which countries are being re directed investments of american companies leaving China. My intuition is that, for instance, Vietnam migth be willing to play this game while Mexico not. Investing in countries that save too much migth be counterproductive.

I very much regret this aggressive narrative that has become common place in which countries are identified simply as competitors, if not enemies, in a global chess game. Political moves are confrontational and or humiliating. These Game of Thrones dynamics are played precisely when some international consensus in more important things like figthing climate change would be more than desirable. We are headed to truly bad times.

laodan , September 21, 2019 at 11:33 am

Here is an article by Steve Dickinson from the layers office Harris Bricken McVay Sliwoski that is based on his Co's China practice. Steve's conclusion goes as follows:

The Chinese system put in place from 1992 to 2005 was a unique system and not likely to be replaced in S.E./South Asia or in any other region of the world. So for manufacturers, moving to a new region means doing the analysis from the ground up. Simply taking what they do in China and moving it to a new location is not likely to be a workable solution.

Also the Chinese internal market continues to attract MNC's and this attraction will continue to grow far into the future. China's middle class is already larger than the total population of the US and it continues to grow rapidly. While down presently the Chinese internal consumption continues to grow at an annual rate of some 8.5%.

Personal savings deposited in bank accounts reach the equivalent of some $US 30 Trillion ! Compare that to consumer debt at some $US 6.5 Trillion. In other words China is growing into the largest consumer market on earth and the biggest advantage that its internal market procures is its 'economies of scale' that make Chinese productions hyper-competitive. In other words China is gaining the kind of advantage that the US had along the 20th century. The advantage of a super large market size that dwarfs other national markets.

Trump's approach to trade is isolating the US, blocking its Co's from the Chinese market, and incentivizing the Chinese to offer better conditions to Co's of the rest of the world. How can that help the US ?

The biggest problem of the West and particularly the US is its ideological approach to economics. The Chinese adopted a pragmatic approach and it has served them well. Time to relearn the meaning of political economics (économie politique).

JTMcPhee , September 21, 2019 at 3:42 pm

I read Dickinson's PR piece linked by laodan. I used to work for a big law firm that had an international practice group focusing on moving US businesses to China ( I was not involved in that practice area, did environmental law and litigation.) The firm's PR department tasked lawyers with certain expertise to generate these kinds of come-ons as part of the compensation weighting scheme -- publish, and bring in business, or lose out in the annual "whining for dollars" partnership division of spoils. Eat what you kill.

Dickinson is talking his book, of course. I have no idea if his read of the history and the current state of affairs in China and the "Asian Tigers" (does anyone use that term any more?) is accurate and complete, but what he describes is his firm's readiness to help supranational (emphasize SUPRAnational) and post-national corporate entities get a leg up in the race to the bottom. He'll help you find the places where the ruling class will give away the biggest share of the "national birthright" so the corporate entity can maximize profit by streamlining production and consumption, and of course growth. All the stuff that is killing the planet. But his time frame, his personal time frame, presumably, as well as the framing of the corporate shark entities which he is a remora to, cares nothing for the bigger economic and ecological effects of more stuff, more shipping, more energy use, and of course more combustion and consumption.

And I'd note that he carefully omits all the baksheesh and greasing of palms that i read is such an important part of "doing business" at any kind of scale, to varying degrees everywhere in the world. I wonder if his custom analyses of the relative merits of, say, Vietnam vs. China vs. Cambodia vs. Taiwan includes sketching out the bribes that have to be paid to close on the sale of national birthrights on the way to the bottom that the globalist business model drives everything toward?

I'm sure he would be happy to have the ear and hourly billings of all the great decision makers of all the various kinds of businesses, high to low tech, wanting to take full advantage of the "opportunities" that may be on offer, on how to ride the asymptotically downward curve of the race to the bottom, for fun and profit

Looks like China has had a pretty effective industrial policy, unlike the US where corporate vampire capital dominion and corruption have bled the mopery white (not a racial reference, of course ) Do economists and policy wonks in the US even dare to use the phrase "industrial policy" any more? Or is it just presumed that "shareholder value" trumps all else? Especially as the author puts it, again quoting Ferguson, where we are "in an era where human advancement depends on greater integration between economic powers."

Right.

Susan the other` , September 21, 2019 at 3:06 pm

The relentless neoliberal race to the bottom, outsourcing, and austerity that marked the death blow to American Labor is over. In that light it makes little difference whether our corporations pull out of China, go to Vietnam, or come home. The exploitation of the poorest is coming to an end. And none too soon.

mtnwoman , September 21, 2019 at 7:22 pm

For national security reasons at minimum, I hope some candidates discuss the imperative to have the US start making it's own medications again. Makes more sense to subsidize our production of medication than to give billions in subsidies to very profitable oil companies.

https://www.tribdem.com/news/editorials/rosemary-gibson-u-s-dependence-on-china-for-medicine-a/article_db7c66e6-a407-11e9-a63e-5b2bf9c80820.html

Merf56 , September 22, 2019 at 9:04 am

I agree. I could not believe the government has allowed the entire supply chain of building blocks of ALL our antibiotics to be sourced almost solely from China. To me THAT'S the national security issue we need to deal with immediately. As well as other vital drugs..

Anecdotally, I have started making this my number one political conversation issue – replete with references ( because of course not a soul believes it at first).. I have yet to find a single person Repub or Demo who isn't horrified and against it . Any nation with this much power over our drug supply they could kill millions of us in short order

RBHoughton , September 21, 2019 at 10:06 pm

Even getting manufacturing out of China will not bankrupt that country as intended. If USA is intent on pursuing a nationalistic basis to sanctions, I think its bound to fail. Trade always finds a way as we can well remember from our own commercial / industrial development.

Chinese manufacturers have the wealth and experience to teach production line workers and make things anywhere. Western companies manufacturing in China have belatedly looked for facilities in neighboring countries and found the Chinese are already there. What's still available is land far from roads and rivers with little power supply.

Another thing is preserving wealth. US Industrialists will keep their money offshore and remit only as much as they need in the homeland. A major problem imo is a mental restraint in USA thinking. Life is all about competition and winning. The actual activity, whatever it is, provides no joy unless you win. That fearful tag "No-one remembers who came second" is banded about. Thats not a philosophy for happiness. It forces the population into displacement activities few of which are wholesome. Here endeth the lesson.

TG , September 21, 2019 at 10:48 pm

It's not a bug, it's a feature! Trump doesn't give a damn about getting manufacturing jobs back into the United States! (Or at least his advisors don't).

The trick is to move them out of nationalistic China, which is setting itself up as a competitor for power, and move the jobs into nice docile low-wage colonies, like Mexico and Indonesia and Bangladesh.

The only catch: China has all the integrated supply lines and is stable. Moving your manufacturing into a dozen different uncoordinated unstable third-world banana republics has its own down side.

Sound of the Suburbs , September 22, 2019 at 3:10 am

The UK repealed the Corn Laws to embark on free trade. This reduced the price of bread, and lowered the cost of living, so UK employers could pay internationally competitive wages. Disposable income = wages – (taxes + the cost of living)

Employees get their money from wages and the employer pays through wages, so the employer is paying for that bread through wages. Expensive bread leads to higher wages making UK employers unable to compete in a free trade world. "The interest of the landlords is always opposed to the interest of every other class in the community" Ricardo 1815 / Classical Economist

Disposable income = wages – (taxes + the cost of living) Employees get their money from wages and the employer pays via wages. Employees get less disposable income after the landlords rent has gone. Employers have to cover the landlord's rents in wages reducing profit. Ricardo is just talking about housing costs, employees all rented in those days. The appalling conditions UK workers lived in during the 19th century were well documented.

Low housing costs, lead to lower wages so UK employers were able to compete in a free trade world. William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics.

https://www.youtube.com/watch?v=g6iXBQ33pBo&t=2485s

He thinks we have been on the wrong path for one hundred years. Free trade requires a low cost of living and what was known in the 19th century had disappeared by the 20th. The West's high cost of living means high wages and an inability to compete in a free trade world.

Never mind our companies can off-shore to where employers can pay lower wages for higher profits. Look at the US cost of living Donald; this is why those jobs ain't coming back. It's hard to make a good profit in the US, when employers have to cover the US cost of living in wages, reducing profit. The cost of living = housing costs + healthcare costs + student loan costs + other debt repayments + food + other costs of living

Sound of the Suburbs , September 22, 2019 at 3:15 am

A multi-polar world became a uni-polar world with the fall of the Berlin Wall and Francis Fukuyama said it was the end of history.
It was all going so well, until the neoliberals got to work.

The US created an open, globalised world with the Washington Consensus.

China went from almost nothing to become a global super power.
That wasn't supposed to happen, let's get the rocket scientists onto it.

Maximising profit is all about reducing costs.
China had coal fired power stations to provide cheap energy.
China had lax regulations reducing environmental and health and safety costs.
China had a low cost of living so employers could pay low wages.
China had low taxes and a minimal welfare state.
China had all the advantages in an open globalised world.

It did have, but now China has become too expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.

An open, globalised world is a race to the bottom on costs.

"The Washington Consensus was always going to work better for China than the US" the rocket scientists.

The West never really stood a chance.

drumlin woodchuckles , September 22, 2019 at 5:00 pm

Several years ago Naked Capitalism ran an article about how a young George Ball was one of the New Immoralists for International Corporate Globalonial Plantationism. And that was before neoliberalism.

Phillip Allen , September 22, 2019 at 8:06 am

"[A]n era where human advancement depends on greater integration between economic powers."

Oh, by all the gods, no. And what, pray, defines 'human advancement'? What the hell is Mr Auerback talking about?

Further integration only propels the speed at which resources are extracted and the planet dies incrementally more. The future will not be one fully integrated planet guided by whatever-the-hell oligarchs and their 'meritocratic' servitors deign the best options. The future will of necessity be vastly more local, vastly more hand-made, vastly less energy- and resource-intensive, and there will be vastly less intercontinental and intra-continental trade. World-spanning – even continent-spanning political-economic arrangements have no long term viability whatsoever. Trying to maintain such is a foolish waste of effort and resources that could be more usefully be directed at de-growth and de-industrialization.

And with that, The Lord Curmudgeon shook his cane one last time at the kids on his lawn and returned to the troll's cave from which he came.

Merf56 , September 22, 2019 at 9:11 am

I hope you have read James Howard Kunstler's World Made By Hand novelettes. They outline such a future. Interesting and quick reads if you haven't

Sound of the Suburbs , September 22, 2019 at 5:02 pm

The last engine of global growth, China, has now reached the end of the line as they have seen their Minsky Moment coming. China was the latest victim of neoclassical economics. The biggest danger to capitalism is neoclassical economics; it brought capitalism to its knees in the 1930s and is having another go now.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

1929 and 2008 look so similar because they are; it's the same economics and thinking. Richard Vague has analysed the data for 1929 and 2008 and they were even more similar than they initially appear. Real estate lending was actually the biggest problem in 1929. Margin lending was another factor in 2008.

This has happened globally. At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6

The 1920s US mistake is now global. Japan, the UK, the US, Euro-zone and now China. The last engine of global growth, China, has now reached the end of the line as they have seen their Minsky Moment coming. The debt fuelled growth model not only runs out of steam, all the debt in the economy then acts like a drag anchor holding the economy back. Japan has been like this for thirty years.

Richard Koo explains the processes at work in the Japanese economy since the 1990s, which are at now at work throughout the global economy.

https://www.youtube.com/watch?v=8YTyJzmiHGk

The repayment of debt to banks destroys money and this is the problem.

[Sep 17, 2019] Stop the Trade War in the Name of Prosperity

Notable quotes:
"... Furthermore, because of the horrific legacy of the one-child policy, China faces a rapidly aging population that will strain resources and reduce the number of working-age people . By 2050, it is estimated that the average Chinese will be 56 years of age. In contrast, the average American will be 44. No amount of spending or legal reform will prevent Beijing's coming demographic crisis. ..."
Sep 16, 2019 | www.theamericanconservative.com

Part of the Trump administration's latest round of 15 percent tariffs on Chinese imports went into effect Sunday, with the rest to follow on December 15. These increases will impact the prices of many consumer goods that Americans rely on, including clothing, appliances, televisions, smartwatches, textbooks, diapers, coffee, and even whiskey. And given their timing, they'll likely have an effect on holiday shopping. This makes all the more welcome President Trump's recent statement during the G7 summit that China is looking to end the trade war and that he too is open to making a deal.

Trump is right to negotiate with Chinese President Xi Jinping, as finding an off-ramp from the trade war should be Washington's priority. America's interest is in out-competing Beijing, not hurting our own economy in an attempt to damage theirs. The United States has a better hand here, but we must play it to our advantage.

America's great strength is in our freedom, our market economy, and our democratic system. The United States has attained a level of prosperity unseen in human history, and that economic engine is what fuels our military power. Without a strong economy, we cannot have a strong military. Thus an endless trade war endangers American security in the long term: as both sides pile on retaliatory tariffs, the risk of recession increases. American consumers will feel each new trade barrier as it hits their pocketbooks.

Washington must not pursue policies that hurt those it governs. And the suffering inflicted by a trade war wouldn't just be limited to the pricing of consumer goods. It would also make us weaker for no good reason. And it would lower tax revenues, requiring America to go further into debt to maintain our present level of security.

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Moreover, long-term trade attacks on China are unnecessary, because China already has more problems than America. Beijing suffers from high national debt, a lack of clear economic reform, and a rapidly aging population. It has few, if any, good or timely solutions to these pressing issues.

According to the Institute of International Finance, China's total national, corporate, and household debt is now over 300 percent of its GDP. What makes this especially bad for Beijing is that the debt was taken on very quickly after the 2008 global recession, without the power of a global reserve currency to make borrowing easier, as the United States has. Moreover, this debt is largely corporate and China's state-capitalist system makes it harder for Chinese companies survive market pressures. Beijing has used cheap credit to fuel its exports and its economic rise through fully and partially state-controlled national companies.

The Chinese economic system has undergone some reforms in recent years but still remains too top-down and too focused on exports over consumption as compared to more developed economies. In other words, China needs to transition to a full market economy like Taiwan and South Korea did on their paths to prosperity, but it hasn't done so yet.

Furthermore, because of the horrific legacy of the one-child policy, China faces a rapidly aging population that will strain resources and reduce the number of working-age people . By 2050, it is estimated that the average Chinese will be 56 years of age. In contrast, the average American will be 44. No amount of spending or legal reform will prevent Beijing's coming demographic crisis.

China Has Already Lost the Trade War Tariffs Are Economic Patriotism, Putting Americans First

This comparative weakness is why it makes sense to find a trade war off-ramp sooner rather than later. China needs one badly and will eventually want a deal -- if it doesn't already. As for the United States, recession may be inevitable, but it would be better if it were not self-inflicted.

Already the trade war has cost American billions in higher prices for imported products. American farmers have been hit hard by China's retaliatory tariffs and, according to a report by IHS Markit, U.S. manufacturing has shrunk for the first since 2009. Economists polled by Reuters believe the trade war has increased the risk of a recession, with a median of those surveyed giving a 45 percent chance of a downturn over the next two years. Additionally, major banks have expressed concerns , as the stock market takes hits with every new tariff increase and angry statement between Washington and Beijing.


AllenQ 9 hours ago

I couldnt disagree more. I want more tariffs against China and Europe. I want closed borders and zero migration. China has infiltrated our government, our defense agencies, our nuclear agencies, our major research centers, our college campuses, our media and bribed our politicians. China is an imminent threat to Hong Kong, Taiwan and its militarization of the islands in the South China Sea are a threat to all of South Asia. China has been stealing US, Canadian and European technology for decades to leapfrog the US into technological dominance globally. China's plan is to force the US our of the Asia Pacific. China has infiltrated Canada and Australia to a similar degree (if not more) than the US. If you pander to these free trade globalists then you will be paving the way for a military conflict between Chinese and American Hegemony in Asia and elsewhere around the world. I dont know about you but I will take a tariff and trade war over a military war any day. Ramp up those tariffs and shift those supply chains out of China toward more benevolent allies and the world be be all the safer for it.
Mr. B 9 hours ago
China has been waging a one sided trade war against us for over 30 years, it's about time we resisted. Becoming more economically intertwined with our dangerous and genocidal rival doesn't sound like the right answer to me, especially when China will continue protectionist policies and currency manipulation regardless of what we do. America has allowed its industrial base to hemorrhage since the 70s, and bending over for our enemy to keep cheap trash flowing and American factories closed is not the right answer.
tz1 8 hours ago
Is this a white box article the Chamber of Commerce is using to astroturf?

China is a Monstrous regime that is killing and enslaving its citizens. It will simply kill everyone over 65, then 60 if it becomes convenient like they did with their one child policy. Problem solved.

You wish to keep trading with criminals, polluters, and pirates so you can get cheap junk at WalMart?

You have a job. I wish you would lose yours and that dozens of blue collar had working but laid off Americans can find one. It isn't how much something costs in dollars (or how much of your soul it costs), it is how much it costs in your virtuous labor. I'd rather pay double for stuff but get triple wages rather than pay half but be all but permanently unemployed.

ThaomasH 8 hours ago
Well said. Calling off the trade would be good for US consumers and the economy in general. But while we are on the subject,calling off the war on immigration would also be good for US consumers and the economy in general.
Adriana Pena 8 hours ago
Shoulda have voted for Hillary....
Kent 8 hours ago
Wow. This article is off-base on any number of levels.

"These increases will impact the prices of many consumer goods that Americans rely on,"

No, no they won't. Tariffs are paid for by the importer, not the consumer. If the importer could randomly increase prices, they would do so without tariffs. The market sets prices.

"America's interest is in out-competing Beijing, not hurting our own economy in an attempt to damage theirs."

If America could out-compete Beijing, American manufacturing would not have moved to China. It turns out, the American people simply don't want to live according to 3rd world standards. We want decent homes and stuff. We don't want to live in a cesspool of pollution. I'm sure the Chinese people have the same preferences, they just don't get a choice.

"Moreover, long-term trade attacks on China are unnecessary, because China already has more problems than America."

I agree with the author here, but not for the same reasons. Attacking China doesn't resolve anything. American companies will just move to a different 3rd world country with whom we can't complete. Why should I care if my clothes come from China or Vietnam?

AllenQ 5 hours ago
I am 100% supportive of the trade war and building the wall and tariffs. I say zero immigration and make all Chinese Tariffs permanent. Negotiate a trade deal with the tariffs intact. Id rather have a trade war with China and permanent tariffs than a war with China.

China has been stealing technology and has infiltrated media, government, defense, education, government officials (usually through bribes) from the US, Canada, Australia and Europe. China is proving itself to be a threat to Hong Kong, Taiwan, Vietnam, Philippines, Indonesia, India and South Asia.

Much of this "so called Russia Collusion" is actually a deflection of democratic politicians China is bribing to take down Trump in order to continue their military and technological theft, their existing preferential trade and their existing network. China is a serious danger to the US and the rest of the world. It is preferential to sacrifice a small amount of prosperity today for long term peace with China.

Mark B. 5 hours ago
Bring a thousand trade wars to blossom to save the climate, planet, middle classes. dignity and to fight rising extreme inequality.
kalendjay 3 hours ago
Propaganda. The aging of Chinese population? Not to worry, China has no real Social Security system, and so relies on massive surpluses of savings. The 300% consumer debt ratio? That would cripple any country with no help from trade. Should we let Wells Fargo and Goldman refinance them?

Farmers hit hard? As I recall we have had the worst corn harvest in decades, and shame on us for not growing more wheat, oats, and sugar cane. Our beef and poultry prices will be affected, not to mention our fast food industry, which has been whipsawed by political correctness. But China will effectively ration its pork, as it faces an even worse African Swine Flu crisis, and an additional one on grains from the Black Army Worm.

US decline in manufacturing? Look first at our glut of automobiles, and the self vetting of plant capacity by GM. Don't forget the crisis in car leases, which have made older cars worth less than their outstanding loans. And note, that the fall in lithium prices indicates that China's car electrification initiative is falling flat.

One thing left out of the equation is oil. And why should China live high on Iranian oil (mostly wastefully burned in power plants, mind you, and not cars) while we suffer attacks on Saudi oil from Iranian proxies (all on ChiRussia's dime)? Puts our trade negotiations in clear perspective, doesn't it?

Michael 3 hours ago
Stopping the war will not bring back China as our major trading partner. China is not going to be in this vulnerable position with America again. She is going to develop other markets

[Sep 14, 2019] How to lose 100 millions trying to enter the USA subway cars mar anne ,

Sep 14, 2019 | economistsview.typepad.com

https://www.nytimes.com/2019/09/14/business/chinese-train-national-security.html

September 14, 2019

Fearing 'Spy Trains,' Congress May Ban a Chinese Maker of Subway Cars
By Ana Swanson

CHICAGO -- America's next fight with China is unfolding at a glistening new factory in Chicago, which stands empty except for the shells of two subway cars and space for future business that is unlikely to come.

A Chinese state-owned company called CRRC Corporation, the world's largest train maker, completed the $100 million facility this year in the hopes of winning contracts to build subway cars and other passenger trains for American cities like Chicago and Washington.

But growing fears about China's economic ambitions and its potential to track and spy on Americans are about to quash those plans. Congress is soon expected to approve legislation that would effectively bar the company from competing for new contracts in the United States, citing national security and economic concerns. The White House has expressed its support for the effort.

Washington's attempt to block a Chinese company from selling train cars inside America is the latest escalation in a trade war that has quickly expanded from a spat over tariffs and intellectual property to a broader fight over economic and national security.

President Trump and lawmakers from both parties are increasingly anxious about the economic and technological ambitions of China, which has built cutting-edge global industries, including those that produce advanced surveillance technology. Those fears have prompted Washington to take an expansive view of potential risks, moving beyond simply trying to curtail Chinese imports.

In addition to slapping tariffs on $360 billion worth of Chinese products, the administration has banned Chinese companies like Huawei, the telecom giant, from buying sensitive American technology. It is moving to curb the ability of firms to export technology like artificial intelligence and quantum computing from the United States to China. And Congress has given the administration expansive power to block Chinese investment on national security grounds.

Now lawmakers have added a provision to a military spending bill that would prevent the use of federal grants to buy subway trains from state-owned or state-controlled companies, a measure that would effectively block CRRC's business.

The bill has gained bipartisan support from lawmakers who say companies like CRRC pose a threat to the United States. Part of the concern is economic: Flush with cash from its rapid growth, China has pumped money into building globally competitive businesses, often creating overcapacity in markets like steel, solar panels and trains.

That has lowered prices for consumers -- including American taxpayers who pay for subway cars. While a subway car has not been manufactured solely by an American company in decades, CRRC's low prices have raised concerns among American freight train companies that the company could ultimately move into -- and demolish -- their business.

CRRC has consistently underbid its competitors, winning over urban transit agencies that are saddled with aging infrastructure and tight budgets. For the Chicago L, CRRC's Chicago subsidiary bid $1.55 million per car, compared with a bid of $1.82 million per car by Bombardier, the Canadian manufacturer. And CRRC also proposed to build the Chicago facility and create 170 new jobs.

Legislators argue that Chinese state-owned companies are not pursuing profit, but the policy aims of the Chinese government to dominate key global industries like electric cars, robotics and rail.

"When you can subsidize, when you can wholly own an enterprise like China does, you can create a wholly unlevel playing field," said Senator Tammy Baldwin, a Wisconsin Democrat who is a co-sponsor of the legislation. "We're used to that unlevel playing field existing between the U.S. and China, but now it's happening in our own backyard."

Another more nefarious worry is also at play. Lawmakers -- along with CRRC's competitors -- say they are concerned that subway cars made by a Chinese company might make it easier for Beijing to spy on Americans and could pose a sabotage threat to American infrastructure, though CRRC says it surrenders control of all technology in the cars to its buyers. Nonetheless, critics speculate that the Chinese firm could incorporate technology into the cars that would allow CRRC -- and the Chinese government -- to track the faces, movement, conversations or phone calls of passengers through the train's cameras or Wi-Fi.

Scott Paul, the president of the Alliance for American Manufacturing, which represents manufacturers and the United Steelworkers, said the risks of giving a Chinese company the ability to monitor or control American infrastructure could not be understated given recent laws requiring Chinese companies to turn over data to Beijing upon request.

"I just think it would be irresponsible to assume the Chinese government to which this firm must answer would be a reliable security partner, given its well documented track record," Mr. Paul said.

Whether those fears are justified remains uncertain. Proponents of the bill have not made clear how subway cars manufactured by a Chinese company would pose a greater espionage threat than everything else that China makes and sells in the United States, including laptops, phones and home appliances.

Dave Smolensky, a spokesman for CRRC, said the company was being unfairly targeted by companies that wanted to legislate a competitor out of business under the guise of national security. He said the firm was a victim to "an aggressive multimillion-dollar media disinformation campaign," funded mostly by domestic freight train companies, intended to play on popular fears about China's rise.

Employees at the Chicago factory also dismissed the concerns, saying they had not seen any evidence that they were working to construct "spy trains."

"I haven't seen any secret wires yet," said Perry Nobles, an electrician for CRRC who was rigging wires in the interior of the trains. "With the world full of cellphones and computers, I'd think there's an easier way to get information."

Rising fears of China's ambitions in Washington have prompted officials to adopt an unsparing view, with policymakers and national security officials warning domestic and foreign governments not to trust Chinese equipment.

American officials have waged a global offensive against Huawei, telling other countries that allowing a Chinese company to build the world's next generation of wireless networks would be akin to handing national secrets to a foreign agent.

Like CRRC, the fear surrounding Huawei is largely based on concerns about technological dominance by China's authoritarian government. No one has yet disclosed finding a backdoor in Huawei's products that would allow it to snoop -- but officials say by the time one is discovered, it may be too late.

"The Chinese are working to put their systems in networks all across the world so they can steal your information and my information," Secretary of State Mike Pompeo said in an interview in May. "This administration is prepared to take this on."

As Senator John Cornyn, Republican of Texas, introduced the provision in March, he said, "China poses a clear and present danger to our national security and has already infiltrated our rail and bus manufacturing industries."

Representative Kevin McCarthy, a Republican whose California district is home to a Chinese bus maker, BYD, had opposed a version of the provision that would apply to buses as well as trains. House lawmakers dropped the bus provision, but the Senate bill would apply to both. Congress will take the issue up again in the coming weeks as part of the annual defense bill.

The legislation would not affect the thousands of American subway cars that CRRC previously won contracts to build, including an 846-car order for the Chicago L. But it would block the company from future contracts, such as those under consideration by the Chicago Metra and the Washington Metro.

The Chicago facility is the company's second in the United States. A factory in Massachusetts that employs more than 150 people is already building trains for Boston, Los Angeles and Philadelphia, prompting concerns that the company plans to expand rapidly in the United States as it has in other foreign markets.

Like many Chinese state enterprises, CRRC is guided by Beijing's Made in China 2025 plan, which lays out an agenda to dominate key industries.

In its 2018 annual report, Liu Hualong, the company's chairman and party secretary, pledged to pursue the dual goals of "Party construction as well as developing into a world-leading company with global competitiveness."

"We conscientiously followed the important instructions of General Secretary Xi Jinping," the report said, referring to the Chinese president and Communist Party leader.

The last American firm to make passenger rail cars, the Pullman Company, produced its final car in 1981. Since then, major American cities have bought subway cars from Bombardier and Japanese manufacturers like Kawasaki, Hyundai and Hitachi.

But American manufacturers of freight rail cars, including the Greenbrier Companies and TrinityRail, which is based in Mr. Cornyn's home state of Texas, say CRRC could use its footing in the United States to steal its business. Together with unions and others, they have mounted a lobbying campaign against CRRC under an umbrella group known as the Rail Security Alliance.

The group says American taxpayer dollars should not be spent in China, where the empty rail cars are made before being shipped to the United States for further work at the company's facilities in Illinois or Massachusetts.

"We think those dollars should stay here," said Erik Olson, the vice president of the Rail Security Alliance.

CRRC sends over experts from its giant headquarters in Qingdao, China, to plants in other countries. In Chicago, the American employees call these Chinese citizens "shifu," a polite term for a skilled worker meaning "master" or "teacher."

On a sunny day in July, the company break room was split between shifus, wearing white jumpsuits and eating stuffed buns, and American workers, many of whom had joined the company in the last few months. The gleaming concrete factory floor was bare, save for a few dozen people installing wiring, air ducts and other components into the empty shells of two rail cars.

"We are a little concerned because it's our livelihood," said Mr. Nobles, who was hired in March from a previous factory job making frames for the Ford Explorer.

This summer, CRRC replaced the Chinese flag outside the factory with a Chicago flag. It has also retained two Washington lobbying firms, Squire Patton Boggs and Crossroads Strategies, to plead its case in Congress.

It may be too late. Senator Sherrod Brown, Democrat of Ohio, said he helped sponsor the bill to prevent the American transit system from being "controlled by a foreign country that is not particularly friendly to us."

"They spell out in black and white they're going to use foreign investment as a weapon, and we're taking action to defend ourselves," Mr. Brown said.

[Sep 10, 2019] Trade Wars Are a Fool's Game -- Strategic Culture

Sep 10, 2019 | www.strategic-culture.org

Eric MARGOLIS

According to the great military thinker, Maj. Gen. J.F.C. Fuller, 'the object of war is not victory. It is to achieve political goals.'

Too bad President Donald Trump does not read books. He has started economic wars against China, Russia, Iran, Cuba and Venezuela without any clear strategic objective beyond inflating his ego as the world's premier warlord and punishing them for disobedience.

Trump's wars are economic. They deploy the huge economic and financial might of the United States to steamroll other nations that fail to comply with orders from Washington. Washington's motto is 'obey me or else!' Economic wars are not bloodless. Imperial Germany and the Central Powers were starved into surrender in 1918 by a crushing British naval blockade.

Trade sanctions are not making America great, as Trump claims. They are making America detested around the globe as a crude bully. Trump's efforts to undermine the European Union and intimidate Canada add to this ugly, brutal image.

Worse, Trump's tariff war against China has damaged the economy of both nations, the world's leading economic powers, and raised tensions in Asia. The world is facing recession in large part due to Trump's ill-advised wars. All to prove Trump's power and glory.

Trump and his advisors are right about China's often questionable trade practices. I did 15 years of business in China and saw a kaleidoscope of chicanery, double-dealing, and corruption. A favorite Chinese trick was to leave imports baking in the sun on the docks, or long delaying them by 'losing' paperwork.

I saw every kind of craziness in the Wild East Chinese market. But remember that it's a 'new' market in which western-style capitalism is only one generation old. Besides, China learned many of its fishy trade practices from France, that mother of mercantilism.

China indeed steals technical and military information on a mass scale. But so does the US, whose spy agencies suck up information across the world. America's claims to be a victim are pretty rich.

What Trump & Co don't understand is that China was allowed into America's Greater Asia Co-Prosperity Sphere by the clever President Nixon to bring it under US influence – just as Japan and South Korea were in the 1950's. China's trade surplus with the US is its dividend for playing by Washington's rules. If China's trade bonus is stripped away, so will China's half-hearted acceptance of US policies. Military tensions will rise sharply.

In China's view, the US is repeating what Great Britain did in the 19th century by declaring war to force opium grown in British-ruled Burma onto China's increasingly addicted people. Today the trade crop is soya beans and wretched pigs.

Trump's ultimate objective, as China clearly knows, is to whip up a world crisis over trade, then dramatically end it – of course, before next year's elections. Trump has become a master dictator of US financial markets, rising or lowering them by surprise tweets. No president should ever have such power, but Trump has seized it.

There is no telling how much money his minions have made in short or long selling on the stock market thanks to insider information. America's trillion dollar markets have come to depend on how Trump feels when he wakes up in the morning and watches Fox news, the Mother of Misinformation.

It staggers the imagination to believe that Trump and his minions actually believe that they can intimidate China into bending the knee. China withstood mass devastation and at least 14 million deaths in World War II in order to fight off Japanese domination. Does the White House really think Beijing will cave in over soya beans and semi-conductors in a daft war directed by a former beauty contest and casino operator? China's new emperor, Xi Jinping, is highly unlikely to lose face in a trade war with the US. Dictators cannot afford to retreat. Xi can wait it out until more balanced minds again occupy the White House.

Trade wars rarely produce any benefits for either side. They are the equivalent of sending tens of thousands of soldiers to be mowed down by machine guns on the blood-soaked Somme battlefield in WWI. Glory for the stupid generals; death and misery for the common soldiers

This fool's war of big egos will inevitably end in a face-saving compromise between Washington and Beijing. Get on with it.

ericmargolis.com

[Sep 10, 2019] 'The New Normal' Trump's 'China Bind' Can Be Iran's Opportunity by Alastair Crooke

Notable quotes:
"... The old adage that the 'sea is always the sea' holds true for US foreign policy. And Iran repeating the same old routines, whilst expecting different outcomes is, of course, one definition of madness. A new US Administration will inherit the same genes as the last. ..."
"... And in any case, the US is institutionally incapable of making a substantive deal with Iran. A US President – any President – cannot lift Congressional sanctions on Iran. The American multitudinous sanctions on Iran have become a decades' long knot of interpenetrating legislation: a vast rhizome of tangled, root-legislation that not even Alexander the Great might disentangle: that is why the JCPOA was constructed around a core of US Presidential 'waivers' needing to be renewed each six months. Whatever might be agreed in the future, the sanctions – 'waived' or not – are, as it were, 'forever'. ..."
"... "[So] decoupling is already in motion. Like the shift of tectonic plates, the move towards a new tech alignment with China increases the potential for sudden, destabilizing convulsions in the global economy and supply chains. To defend America's technology leadership, policymakers must upgrade their toolkit to ensure that US technology leadership can withstand the aftershocks. ..."
"... "The key driver of this shift has not been the President's tariffs, but a changing consensus among rank-and-file policymakers about what constitutes national security. This expansive new conception of national security is sensitive to a broad array of potential threats, including to the economic livelihood of the United States, the integrity of its citizens personal data, and the country's technological advantage". ..."
"... A Quinnipiac University survey last week found for the first time in Trump's presidency, more voters now say the economy is getting worse rather than better, by a 37-31 percent margin – and by 41-37 percent, voters say the president's policies are hurting the economy. ..."
"... This is hugely significant. If Trump is experiencing a crisis of public confidence in respect to his assertive policies towards China, the last thing that he needs in the run-up to an election is an oil crisis, on top of a tariff/tech war crisis with China. A wrong move with Iran, and global oil supplies easily can go awry. Markets would not be happy. (So Trump's China 'bind' can also be Iran's opportunity ). ..."
Sep 09, 2019 | www.strategic-culture.org

There is consensus amongst the Washington foreign policy élite that all factions in Iran understand that – ultimately – a deal with Washington on the nuclear issue must ensue. It somehow is inevitable. They view Iran simply as 'playing out the clock', until the advent of a new Administration makes a 'deal' possible again. And then Iran surely will be back at the table, they affirm.

Maybe. But maybe that is entirely wrong. Maybe the Iranian leadership no longer believes in 'deals' with Washington. Maybe they simply have had enough of western regime change antics (from the 1953 coup to the Iraq war waged on Iran at the western behest, to the present attempt at Iran's economic strangulation). They are quitting that failed paradigm for something new, something different.

The pages to that chapter have been shut. This does not imply some rabid anti-Americanism, but simply the experience that that path is pointless. If there is a 'clock being played out', it is that of the tic-toc of western political and economic hegemony in the Middle East is running down, and not the 'clock' of US domestic politics. The old adage that the 'sea is always the sea' holds true for US foreign policy. And Iran repeating the same old routines, whilst expecting different outcomes is, of course, one definition of madness. A new US Administration will inherit the same genes as the last.

And in any case, the US is institutionally incapable of making a substantive deal with Iran. A US President – any President – cannot lift Congressional sanctions on Iran. The American multitudinous sanctions on Iran have become a decades' long knot of interpenetrating legislation: a vast rhizome of tangled, root-legislation that not even Alexander the Great might disentangle: that is why the JCPOA was constructed around a core of US Presidential 'waivers' needing to be renewed each six months. Whatever might be agreed in the future, the sanctions – 'waived' or not – are, as it were, 'forever'.

If recent history has taught the Iranians anything, it is that such flimsy 'process' in the hands of a mercurial US President can simply be blown away like old dead leaves. Yes, the US has a systemic problem: US sanctions are a one-way valve: so easy to flow out, but once poured forth, there is no return inlet (beyond uncertain waivers issued at the pleasure of an incumbent President).

But more than just a long chapter reaching its inevitable end, Iran is seeing another path opening out. Trump is in a 'China bind': a trade deal with China now looks "tough to improbable", according to White House officials, in the context of the fast deteriorating environment of security tensions between Washington and Beijing. Defense One spells it out:

"It came without a breaking news alert or presidential tweet, but the technological competition with China entered a new phase last month. Several developments quietly heralded this shift: Cross-border investments between the United States and China plunged to their lowest levels since 2014, with the tech sector suffering the most precipitous drop. US chip giants Intel and AMD abruptly ended or declined to extend important partnerships with Chinese entities. The Department of Commerce halved the number of licenses that let US companies assign Chinese nationals to sensitive technology and engineering projects.

"[So] decoupling is already in motion. Like the shift of tectonic plates, the move towards a new tech alignment with China increases the potential for sudden, destabilizing convulsions in the global economy and supply chains. To defend America's technology leadership, policymakers must upgrade their toolkit to ensure that US technology leadership can withstand the aftershocks.

"The key driver of this shift has not been the President's tariffs, but a changing consensus among rank-and-file policymakers about what constitutes national security. This expansive new conception of national security is sensitive to a broad array of potential threats, including to the economic livelihood of the United States, the integrity of its citizens personal data, and the country's technological advantage".

Trump's China 'bind' is this: A trade deal with China has long been viewed by the White House as a major tool for 'goosing' the US stock market upwards, during the crucial pre-election period. But as that is now said to be "tough to improbable" – and as US national security consensus metamorphoses, the consequent de-coupling, combined with tariffs, is beginning to bite. The effects are eating away at President Trump's prime political asset: the public confidence in his handling of the economy: A Quinnipiac University survey last week found for the first time in Trump's presidency, more voters now say the economy is getting worse rather than better, by a 37-31 percent margin – and by 41-37 percent, voters say the president's policies are hurting the economy.

This is hugely significant. If Trump is experiencing a crisis of public confidence in respect to his assertive policies towards China, the last thing that he needs in the run-up to an election is an oil crisis, on top of a tariff/tech war crisis with China. A wrong move with Iran, and global oil supplies easily can go awry. Markets would not be happy. (So Trump's China 'bind' can also be Iran's opportunity ).

No wonder Pompeo acted with such alacrity to put a tourniquet on the brewing 'war' in the Middle East, sparked by Israel's simultaneous air attacks last month in Iraq, inside Beirut, and in Syria (killing two Hizbullah soldiers). It is pretty clear that Washington did not want this 'war', at least not now. America, as Defense One noted , is becoming acutely sensitive to any risks to the global financial system from "sudden, destabilizing convulsions in the global economy".

The recent Israeli military operations coincided with Iranian FM Zarif's sudden summons to Biarritz (during the G7), exacerbating fears within the Israeli Security Cabinet that Trump might meet with President Rouhani in NY at the UN General Assembly – thus threatening Netanyahu's anti-Iran, political 'identity' . The fear was that Trump could begin a 'bromance' with the Iranian President (on the Kim Jong Un lines). And hence the Israeli provocations intended to stir some Iranian (over)-reaction (which never came). Subsequently it became clear to Israel that Iran's leadership had absolutely no intention to meet with Trump – and the whole episode subsided.

Trump's Iran 'bind' therefore is somehow similar to his China 'bind': With China, he initially wanted an easy trade achievement, but it has proved to be 'anything but'. With Iran, Trump wanted a razzmatazz meeting with Rohani – even if that did not lead to a new 'deal' (much as the Trump – Kim Jung Un TV spectaculars that caught the American imagination so vividly, he may have hoped for a similar response to a Rohani handshake, or he may have even aspired to an Oval Office spectacular).

Trump simply cannot understand why the Iranians won't do this, and he is peeved by the snub. Iran is unfathomable to Team Trump.

Well, maybe the Iranians just don't want to do it. Firstly, they don't need to: the Iranian Rial has been recovering steadily over the last four months and manufacturing output has steadied. China's General Administration of Customs (GAC) detailing the country's oil imports data shows that China has not cut its Iranian supply after the US waiver program ended on 2 May, but rather, it has steadily increased Iranian crude imports since the official end of the waiver extension, up from May and June levels. The new GAC data shows China imported over 900,000 barrels per day (bpd) of crude oil from Iran in July, which is up 4.7% from the month before.

And a new path is opening in front of Iran. After Biarritz, Zarif flew directly to Beijing where he discussed a huge, multi-hundred billion (according to one report ), twenty-five-year oil and gas investment, (and a separate) 'Road and Belt' transport plan. Though the details are not disclosed, it is plain that China – unlike America – sees Iran as a key future strategic partner, and China seems perfectly able to fathom out the Iranians, too.

But here is the really substantive US shift taking place. It is that which is termed "a new normal" now taking a hold in Washington:

"To defend America's technology leadership, policymakers [are] upgrading their toolkit to ensure that US technology leadership can withstand the aftershocks Unlike the President's trade war, support for this new, expansive definition of national security and technology is largely bipartisan, and likely here to stay.

with many of the president's top advisers viewing China first and foremost as a national security threat, rather than as an economic partner – it's poised to affect huge parts of American life, from the cost of many consumer goods to the nature of this country's relationship with the government of Taiwan.

"Trump himself still views China primarily through an economic prism. But the angrier he gets with Beijing, the more receptive he is to his advisers' hawkish stances toward China that go well beyond trade."

"The angrier he gets with Beijing" Well, here is the key point: Washington seems to have lost the ability to summon the resources to try to fathom either China, or the Iranian 'closed book', let alone a 'Byzantine' Russia. It is a colossal attenuation of consciousness in Washington; a loss of conscious 'vitality' to the grip of some 'irrefutable logic' that allows no empathy, no outreach, to 'otherness'. Washington (and some European élites) have retreated into their 'niche' consciousness, their mental enclave, gated and protected, from having to understand – or engage – with wider human experience.

To compensate for these lacunae, Washington looks rather, to an engineering and technological solution: If we cannot summon empathy, or understand Xi or the Iranian Supreme Leader, we can muster artificial intelligence to substitute – a 'toolkit' in which the US intends to be global leader.

This type of solution – from the US perspective – maybe works for China, but not so much for Iran; and Trump is not keen on a full war with Iran in the lead up to elections. Is this why Trump seems to be losing interest in the Middle East? He doesn't understand it; he hasn't the interest or the means to fathom it; and he doesn't want to bomb it. And the China 'bind' is going to be all absorbing for him, for the meantime.

[Sep 08, 2019] https://twitter.com/DeanBaker13/status/1170197985168199680

Sep 08, 2019 | twitter.com

Dean Baker‏ @DeanBaker13

Hey #SchoolyardDonnie, China is not paying for the tariffs, the price of our imports from China are down just 1.6 percent over the last year

https://www.bls.gov/news.release/ximpim.t07.htm

Your tariffs are 10-25 percent, that means the great workers in the U.S. are paying the bill.

Donald J. Trump @realDonaldTrump

"China is eating the Tariffs." Billions pouring into USA. Targeted Patriot Farmers getting massive Dollars from the incoming Tariffs! Good Jobs Numbers, No Inflation (Fed). China having worst year in decades. Talks happening, good for all!

9:51 PM - 6 Sep 2019 Reply Saturday, September 07, 2019 at 10:06 AM

Plp said in reply to anne... Btw family farmers prefer high demand for their output

Not high subsidies

They know the difference between earned and unearned dollars Reply Saturday, September 07, 2019 at 10:22 AM

Fred C. Dobbs said... Fun fact:

Trump has a favorite number
when he makes big claims: 10,000
https://www.bostonglobe.com/news/politics/2019/09/06/trump-has-favorite-number-when-makes-big-claims/WpS2YPcnjeJQzQchHJLXhP/story.html?event=event25 via @BostonGlobe

Jordan Fabian - Bloomberg - September 6

When President Donald Trump wants to convey that something is a big deal, he often reaches for the same big number: 10,000.

He says it's the number of points the Dow Jones Industrial Average would be up had the Federal Reserve not raised interest rates. It's the number of people attending his rallies -- or the number forced to wait outside because they couldn't get in.

It's also the number of jobs a company plans to create, the headcount of captured Islamic State fighters, the number of migrants in a caravan headed to the U.S., and the Allied casualty count on D-Day.

Sometimes the number is accurate. Other times, it's a wild guess -- or wildly wrong.

Trump on Wednesday predicted the Dow would be up -- another 10,000 points -- if he hadn't embarked on a trade war with China.

"If I wanted to do nothing with China, my stock market -- our stock market -- would be 10,000 points higher than it is right now," Trump told reporters in the Oval Office.

That would be a dramatic rise. With the Dow closing at 26,728 on Thursday, another 10,000 points would represent a 37% increase.

Memorable Number

From a marketing standpoint, there's a great reason to use 10,000: It's memorable.

"He uses this round number in particular because it seems big," said Jonah Berger, marketing professor at the Wharton School of the University of Pennsylvania, which Trump often boasts of attending.

"He wants to convey something is a big problem, or something would be quite different, so he uses a big round number to try and sway his audience," said Berger, author of "Contagious: Why Things Catch On."

Trump has used the number since his 2016 campaign -- in speeches, remarks to reporters and one-on-one interviews -- but it could take on new significance as he seeks to burnish his record with the approach of the 2020 election.

The president has repeatedly sought to use 10,000 to his political advantage, even when it doesn't neatly match reality.

'Horrible People'

For instance, he said in January that Immigration and Customs Enforcement officers last year removed 10,000 known or suspected gang members whom he described as "horrible people." (The agency actually reported arresting that number but removing 5,872 known or suspected gang members in fiscal year 2018.)

The White House declined to comment on Trump's use of 10,000.

The president has other verbal habits. He has often cited self-imposed two week deadlines for major announcements.

While Trump is often faulted by fact-checkers for making false statements, his spokeswoman has said journalists take the president's words too literally.

"I think the president communicates in a way that some people, especially the media, aren't necessarily comfortable with," White House press secretary Stephanie Grisham told the Washington Post in a recent interview. "A lot of times they take him so literally. I know people will roll their eyes if I say he was just kidding or was speaking in hypotheticals, but sometimes he is."

'Truthful Hyperbole'

Trump defended his use of what he called "truthful hyperbole" in his 1987 book "The Art of the Deal," calling it an "innocent form of exaggeration."

"People may not always think big themselves, but they can still get very excited by those who do," Trump wrote. "People want to believe that something is the biggest and the greatest and the most spectacular."

Wittingly or not, Trump has taken to a number that comes up often in history, religion and culture.

The army of the Ten Thousand marched against Artaxerxes II of Persia. During the conquest of Mecca, Muhammad was said to have 10,000 soldiers. The King James Bible has dozens of references to 10,000. Minnesota's nickname is the Land of 10,000 Lakes. A television game show called "The $10,000 Pyramid" debuted in the U.S. in the early 1970s.

But Trump's references typically are rooted in current affairs.

The president used the number in July to talk about attendance at a North Carolina rally where his supporters chanted "Send her back!" after he invoked the name of Representative Ilhan Omar, a Minnesota Democrat.

"We had thousands and thousands of people that wanted to come, and we said, 'Please don't come,'" Trump said. "It held 10,000 people. It was packed. We could've sold that arena 10 times."

Authorities said 8,000 people got into the arena in Greenville, filling it to capacity, according to WITN-TV in North Carolina. About 2,000 were denied entry and between 750 and 1,000 were in an overflow area, the station said, citing police estimates.

Booing Ryan

In July, Trump used the number to attack former House Speaker Paul Ryan after the Wisconsin Republican was quoted in a book saying the president doesn't know how government works.

"I remember a day in Wisconsin -- a state that I won -- where I stood up and made a speech, and then I introduced him and they booed him off the stage -- 10,000 people," Trump told reporters at the White House.

The president appeared to be referring to a December 2016 post-election rally in West Allis, Wisconsin, where he publicly thanked Ryan, who was in the crowd. Audible, but not deafening, boos were heard as Trump tried to quiet his supporters by telling them that Ryan had improved "like a fine wine."

Then there's job creation -- a Cameron LNG liquefied natural gas export facility in Louisiana or an Intel Corp. semiconductor plant in Arizona.

In separate statements, Trump said they'd each create 10,000 jobs.

Bringing Credibility

Whether Trump's use of the number is accurate or not, the specificity can bring credibility to the president's claims, said Manoj Thomas, a behavioral scientist and marketing professor at Cornell University's SC Johnson College of Business.

"Using a number to quantify a claim -- even implausible numbers -- makes it more credible because numbers are concrete," Thomas said. "Claims without any numbers, for example, 'The Dow would be much higher if not for the trade war,' are more difficult for the human mind to instinctively process because the information is abstract and lacks specificity."

Trump could add even more credibility to his claim by making the number even more specific, Thomas said.

For instance, Thomas suggested: "The Dow would be 4,600 points higher if not for the trade war."


Reply Saturday, September 07, 2019 at 09:44 AM

[Sep 07, 2019] People familiar with Chinese economic policymaking have said in recent weeks that Chinese leaders remain interested in reaching a trade deal with the United States, but that they are wary of what appear to be ever-increasing demands from the United States and what they describe as frequent shifts in the American negotiating position.

Sep 07, 2019 | economistsview.typepad.com

Fred C. Dobbs , September 05, 2019 at 03:49 PM

Markets Soar on News of China Talks, but Hopes
for Progress Are Low https://nyti.ms/2LrdVwH
NYT - Ana Swanson and Matt Phillips - September 5

WASHINGTON -- President Trump's decision to renew talks with China in the coming weeks sent financial markets soaring on Thursday, as investors seized on the development as a sign that both sides could still find a way out of an economically damaging trade war.

The rally sent the S&P 500 up more than 1 percent, underscoring just how much financial markets are subsisting on hopes and fears about the trade war. Shares fell through most of August, as Mr. Trump escalated his fight with China and imposed more tariffs, only to snap back on Thursday after news of the talks.

But expectations for progress remain low, and many in the United States and China see the best outcome as a continued stalemate that would prevent a collapse in relations before the 2020 election. Both Mr. Trump and President Xi Jinping of China are under pressure from domestic audiences to stand tough, and the talks will happen after Mr. Trump's next round of punishing tariffs take effect on Oct. 1.

"Continuing to talk soothes markets a little bit," said Eswar Prasad, the former head of the China division at the International Monetary Fund. "But the political cost to making major concessions is, I think, too high for either side."

The skepticism stems in part from what is emerging as a familiar pattern for Mr. Trump, for whom China is both a source of leverage and a potential vulnerability heading into an election year. The president has so far imposed tariffs on more than $350 billion worth of Chinese goods and routinely shifts from blasting China and threatening additional punishment to trying to calm the waters in the face of jittery markets and negative economic news.

Over two weeks, Mr. Trump has called Mr. Xi an enemy of America, ordered companies to stop doing business in China and suggested the United States was in no rush to reach a trade deal. On Sunday, he moved ahead with his threat to eventually tax every golf club, shoe and computer China sends into the United States, placing tariffs on another $112 billion of Chinese goods.

Stock investors have zeroed in on the threat the trade war poses to the economy, buying and selling in tandem with Mr. Trump's trade whims. Thursday's rally was the fifth positive performance for the market in the past six sessions. It brought the S&P 500 to within striking distance -- less than 2 percent -- of its high of 3025.86, reached on July 26.

The coming weeks could result in more of the same, analysts say: tough words when the president wants to rally his base and a temporary cooling off when it seems to be hurting an economy that is one of his main arguments for re-election.

Mr. Trump and his advisers are wary of a potential challenge from Democrats who will try to paint the president as weak on China. Officials are cognizant that striking a deal based on the kind of limited concessions China is currently offering would most likely be a political liability in the president's bid for re-election. Democrats, along with some Republicans, have previously accused Mr. Trump of buckling on China after he reached a deal that allowed ZTE, the Chinese telecom company, to avoid tough American punishment.

Yet as collateral damage from the trade war increases, Mr. Trump is facing pressure to relent. The bond market has been flashing warning signs of a potential recession, and both consumer confidence and the manufacturing sector have slowed.

The trade war is also clearly weighing on the Chinese economy, which is growing at its slowest pace in more than two decades. But China has responded defiantly, imposing retaliatory tariffs on $75 billion worth of American goods. The country is preparing to celebrate the 70th anniversary of its founding on Oct. 1, and analysts say Beijing would be unlikely to make concessions at such a politically delicate moment.

People familiar with Chinese economic policymaking have said in recent weeks that Chinese leaders remain interested in reaching a trade deal with the United States, but that they are wary of what appear to be ever-increasing demands from the United States and what they describe as frequent shifts in the American negotiating position.

The Chinese government continues to insist that it will not accept any agreement that is unequal, or that prevents it from pursuing economic policies that it needs for continued growth.

While both countries have motivation to come to an agreement, each is still insisting the other will be the first to bend.

"China and the US announced new round of trade talks and will work to make substantial progress," Hu Xijin, the editor of the state-run Global Times, wrote on Twitter. "Personally I think the US, worn out by the trade war, may no longer hope for crushing China's will. There's more possibility of a breakthrough between the two sides." ...

[Sep 03, 2019] Wallerstein on China

Notable quotes:
"... Can China then depend on widening internal demand to maintain its global edge? There are two reasons why not. The present authorities worry that a widening middle stratum could jeopardize their political control and seek to limit it.[a] ..."
"... The second reason, more important, is that much of the internal demand is the result of reckless borrowing by regional banks, which are facing an inability to sustain their investments. If they collapse, even partially, this could end the entire economic edge[b] of China. ..."
Sep 03, 2019 | www.nakedcapitalism.com

From Wallerstein's site, " What About China? " (2017):

A structural crisis is chaotic. This means that instead of the normal standard set of combinations or alliances that were previously used to maintain the stability of the system, they constantly shift these alliances in search of short-term gains. This only makes the situation worse. We notice here a paradox – the certainty of the end of the existing system and the intrinsic uncertainty of what will eventually replace it and create thereby a new system (or new systems) to stabilize realities .

Now, let us look at China's role in what is going on. In terms of the present system, China seems to be gaining much advantage. To argue that this means the continuing functioning of capitalism as a system is basically to (re)assert the invalid point that systems are eternal and that China is replacing the United States in the same way as the United States replaced Great Britain as the hegemonic power. Were this true, in another 20-30 years China (or perhaps northeast Asia) would be able to set its rules for the capitalist world-system.

But is this really happening? First of all, China's economic edge, while still greater than that of the North, has been declining significantly. And this decline may well amplify soon, as political resistance to China's attempts to control neighboring countries and entice (that is, buy) the support of faraway countries grows, which seems to be occurring.

Can China then depend on widening internal demand to maintain its global edge? There are two reasons why not. The present authorities worry that a widening middle stratum could jeopardize their political control and seek to limit it.[a]

The second reason, more important, is that much of the internal demand is the result of reckless borrowing by regional banks, which are facing an inability to sustain their investments. If they collapse, even partially, this could end the entire economic edge[b] of China.

In addition, there have been, and will continue to be, wild swings in geopolitical alliances. In a sense, the key zones are not in the North, but in areas such as Russia, India, Iran, Turkey, and southeastern Europe, all of them pursuing their own roles by a game of swiftly and repeatedly changing sides. The bottom line is that, though China plays a very big role in the short run, it is not as big a role as China would wish and that some in the rest of the world-system fear. It is not possible for China to stop the disintegration of the capitalist system. It can only try to secure its place in a future world-system.

As far as Wallerstein's bottom line: The proof is in the pudding. That said, there seems to be a tendency to regard Xi as all-powerful. IMNSHO, that's by no means the case, not only because of China's middle class, but because of whatever China's equivalent of deplorables is. The "wild swings in geopolitical alliances" might play a role, too; oil, Africa's minerals.

NOTES [a] I haven't seen this point made elsewhere. [b] Crisis, certainly. "Ending the entire economic edge"? I'm not so sure.

[Aug 27, 2019] Trump s China Trade War Gaslighting Will There Eveh Be a Deal

Notable quotes:
"... That assumption looks to be incorrect. New Deal Democrat sent us the latest post from China Law Blog, written by lawyers who specialize in Chinese law with an eye to helping businesses get set up and operate in China. The post by Dan Harris is every bit as firm as its headline: Repeat After Me: There Will be No US-China Trade Deal . It also contains a good summary of key developments and detail on the various goods targeted. Key sections: ..."
"... But what should you make of President Trump's ordering US companies to immediately start looking for an alternative to China? He can't really do that, can he? No, but in many respects this is exactly what Trump has been doing since the U.S.-China trade war began. Trump cannot literally require American companies to pull out of China, but he can and has made it so difficult that they all but have to leave China. And this is what most of the international lawyers and international trade lawyers at my firm have come to believe has been Trump's plan all along. ..."
"... Every step of the way, Trump has made it all but impossible for China to make a trade deal with the United States, which is why this blog has been consistently clear that there will be no trade deal between the United States and China . If the US-China trade war/cold war were really about trade imbalances, it would have ended long ago with China buying more soybeans and Boeing airplanes from the United States. But from the very beginning, the U.S. has demanded China stop stealing IP and open its markets for foreign companies, and there is just no way China will agree to either of these things. Lead negotiator Robert Lighthizer is without a doubt smart enough to have known this all along. All this leads us to believe that the U.S. plan has always been to force a slow decoupling of the U.S. and China and then work to convince the rest of the democratic world (the EU, Australia, Canada, Latin America, Japan, etc.) to decouple from China, as well. In June, in Does China WANT a Second Decoupling? The Chinese Texts Say That it Does we wrote of how China wants this decoupling, as well. ..."
"... The fact that Trump issues this "order" amidst rising recession fears only highlights how ending U.S.-China trade is at the top of his to-do list. ..."
"... The critical part of the China Law Blog's reading is that the Trump Administration is deadly serious about its two big asks, intellectual property and market access. It's credible to attribute that to Trump's US Trade Representative, Lighthizer. As Lambert put it, Lighthizer is the closest thing this Administration has to a Jim Baker. Lighthizer started at Covington & Burling, then served in the Regan Administration as Deputy USTR before going to Skadden. Lighthizer is as fierce a China hawk as they come and has a long history of saying that the entry of China into the WTO was at the expense of US jobs (see here , for instance) and even making a full-throated defense of protectionism . ..."
"... In April, China made a concession to the US by designating all fetanyl products as controlled substances, in the hope that that would reduce shipments to the US. The DEA has stated that China is the main source of US fentanyl . Fentanyl accounted 18,000 overdose deaths in 2018, one fourth of the total. If you count all synthetic opioids, the toll rises to 28,000. China nevertheless claimed even then that fentanyl shipments to the US were "extremely limited" . ..."
"... Fentanyl featured in the escalation on Friday, and it could conceivably serve as the basis for a national emergency threat (even though, per the discussion earlier, it would have good odds of being overturned). One of Trump's four tweets urged US carriers to do more to halt shipments arriving from China or other destinations (Mexico is believed to be a route for the entry of Chinese fentanyl to the US). ..."
"... In May I had a conversation with a long-time friend. My friend works for a global manufacturer with a household name. He has helped oversee construction of plants around the world. He helps source components from around the world. He told me that "everybody's moving out" (of China). ..."
"... A few short years ago they had the Trans-Pacific Partnership being negotiated. This was nicknamed the "everybody but China" pact as that was its mission – to cut China out of the Pacific. Add to that the "Pivot to Asia" introduced by Obama which was to militarily threaten China and the writing was on the wall for China. They were to be boxed in and shut down. Trump may be the front man now for this effort but all the China-hawks have come out of the woodwork to be let loose in the government. ..."
"... I suppose that the plan is to force US companies to bail out of China and relocate to places like Vietnam, India, Bangladesh, etc. But the question is whether these countries have the infrastructure to support these new factories? ..."
"... I have mentioned before the idea of a multipolar world and I believe that we re seeing it now in action. The US and its vassals will be one pole and another one is forming around China, Iran and Russia. I doubt that the EU will be another as they are following what Trump orders even if reluctantly. There may be another factor. For centuries we have had an economy predicated on growth but I suspect that by the end of this century will will have one based on contraction due to climate change and depletion of resources. Better strap in. It could be a bumpy ride. ..."
Aug 26, 2019 | www.nakedcapitalism.com

Trump has been up to what he seems to like to do best: whipsawing those who might be affected by his plans. On Friday, he put Mr. Market and huge swathes of Corporate America in a tizzy by retaliating against China's tariff increases. China announced that it would impose new tariffs on $75 billion of US goods and the restart of tariffs on autos and auto parts. Trump tweeted that he would increase tariffs on Chinese goods already subject to tariffs: the $250 billion at 25% would go to 30% on October 1and the $300 billion at 10% would go to 15% in phases, on September 1 and December 1. Trump also "hereby ordered" US companies to pull out of China, suggesting that he'd rely on the International Emergency Economic Powers Act of 1977.

Then, as most of you have likely heard, Trump made remarks at the G-7 summit that we widely interpreted as an indicator that he'd back off again, by admitting to regrets about how the trade spat was going. When the press took up that line, Trump doubled down, with the White House releasing a statement that Trump's sole regret was not raising tariffs higher.

Needless to say, the all-too-typical Trump to-ing and fro-ing made for an easy target. From the Washington Post :

Former treasury secretary Lawrence Summers, a veteran of the Clinton and Obama administrations, said the White House's conflicting statements were just the latest in a string of mixed messages that had made it impossible for people to understand its agenda.

"Deeply misguided policy and strategy has been joined for some time by dubious negotiating tactics, with promises not kept and threats not carried out on a regular basis," Summers said in an interview. "We are at a new stage now with very erratic presidential behavior and frequent denials of obvious reality. I know of no U.S. historical precedent."

And despite rousing himself to make a show of his resolve, the Administration did back down on one part of Trump's Friday missives, that of "ordering" US companies to get out of Dodge, um, China. From the Wall Street Journal :

Aides to President Trump said Sunday he has no plans to invoke emergency powers and force companies to relocate operations from China

"What he is suggesting to American businesses," [economic adviser] Mr. [Larry] Kudlow said, is that "you ought to think about moving your operations and your supply chains away from China and secondly, we'd like you to come back home."

Treasury Secretary Steven Mnuchin also weighed in, telling "Fox News Sunday" that the president didn't have plans to invoke emergency powers to force U.S. companies out of China.

"I think what he was saying is he's ordering companies to start looking," Mr. Mnuchin said."

The Journal also pointed out that Trump might have trouble forcing companies to exit:

Both Messrs. Mnuchin and Kudlow said that the president could theoretically force U.S. companies to leave China by invoking a law known as the International Emergency Economic Powers Act of 1977, or IEEPA .

According to the Congressional Research Service, IEEPA can be used to deal with "any unusual and extraordinary threat" outside the U.S. "to the national security, foreign policy or economy of the United States, if the president declares a national emergency with respect to such threat."

The president is required "in every possible instance" to consult with Congress before exercising authorities granted by IEEPA, and to specify in a report to lawmakers why the circumstances constitute a threat and why the actions are necessary, CRS said in a briefing paper on the law issued earlier this year. The president must submit follow-up reports every six months .

Rod Hunter, a partner at Baker McKenzie and expert on international trade, said Mr. Trump could declare a state of emergency and issue the order, but that doesn't mean it will stand.

"Congress could effectively override such a decision, and private parties would certainly challenge the action as an unconstitutional takings, a violation of due process rights and beyond the statutory authority granted to the president by Congress," Mr. Hunter said in an email.

Mind you, just like Brexit, there is a way to do what Trump wants to do that would not be so destructive and shambolic. Trump's China policy appears to be intended to make American more economically self-sufficient so as to improve the prosperity of US workers, as well as curb a competing imperialist.

But as we've described at some length in earlier posts, restoring America's manufacturing capabilities isn't just a matter of weaning itself off cheap Chinese imports. The US has ceded a tremendous amount of know-how, from the factory floor on up. Getting that back is a generation-long undertaking, requiring commitment to a national strategy that would include significant government investment in fundamental research, renewed emphasis on education, including much cheaper higher education and vocational training for those that aren't suited or inclined to go to college, and a reorientation of government spending and subsidies to favor productive sectors over the connected. Not only would it be difficult to get any Administration to embrace open industrial policy, particularly one that would break a lot of rice bowls (such as in our hugely wasteful arms industry and our bloated financial sector), maintaining it beyond even a two-term Presidency would be an even taller order.

But where is the Trump tariff cage match likely to wind up? Given how often Trump has backed off when Mr. Market has had a hissy, most commentator appear to have assumed before Friday's tit for tat that Trump would back down, if nothing else, in the form of allowing a lot of exceptions, and the US and China would find a way for Trump to get enough concessions from China that he could declare peace with honor.

That assumption looks to be incorrect. New Deal Democrat sent us the latest post from China Law Blog, written by lawyers who specialize in Chinese law with an eye to helping businesses get set up and operate in China. The post by Dan Harris is every bit as firm as its headline: Repeat After Me: There Will be No US-China Trade Deal . It also contains a good summary of key developments and detail on the various goods targeted. Key sections:

The US-China Trade War Is and Will be the New Normal

I hate to say we told you so, but for nearly a year, WE TOLD YOU SO. Since October, 2018 we have been all but screaming at anyone and everyone who has product made in China and sold into the United States to get out of China fast, if at all possible. We say this and we set out the below timeline to prove this not so much to show that we have been right all along, but to try to convince you that we are right when we now say there will be no resolution to the US-China trade war for a very long time and you need to act accordingly.

The below is our timeline/proof of our having predicted a straight-line decline in US-China trade relations

But what should you make of President Trump's ordering US companies to immediately start looking for an alternative to China? He can't really do that, can he? No, but in many respects this is exactly what Trump has been doing since the U.S.-China trade war began. Trump cannot literally require American companies to pull out of China, but he can and has made it so difficult that they all but have to leave China. And this is what most of the international lawyers and international trade lawyers at my firm have come to believe has been Trump's plan all along.

Every step of the way, Trump has made it all but impossible for China to make a trade deal with the United States, which is why this blog has been consistently clear that there will be no trade deal between the United States and China . If the US-China trade war/cold war were really about trade imbalances, it would have ended long ago with China buying more soybeans and Boeing airplanes from the United States. But from the very beginning, the U.S. has demanded China stop stealing IP and open its markets for foreign companies, and there is just no way China will agree to either of these things. Lead negotiator Robert Lighthizer is without a doubt smart enough to have known this all along. All this leads us to believe that the U.S. plan has always been to force a slow decoupling of the U.S. and China and then work to convince the rest of the democratic world (the EU, Australia, Canada, Latin America, Japan, etc.) to decouple from China, as well. In June, in Does China WANT a Second Decoupling? The Chinese Texts Say That it Does we wrote of how China wants this decoupling, as well.

This latest Trump "order" does not have the force of law, so in that respect it is not an order at all. But in most other respects it is. This order indicates Trump's passionate desire to rid the United States of what he sees as the China scourge . More importantly, it is yet another clear signal that he will continue to escalate this war with China until such time as he considers the United States to be victorious. The fact that Trump issues this "order" amidst rising recession fears only highlights how ending U.S.-China trade is at the top of his to-do list.

So in terms of what this means for your business, it means that you must stop believing there will be a solution to the trade war that will allow you to go back to doing business with China the way you used to do business with China. You need to instead recognize that this situation is the New Normal as between the United States and China and that, if anything, things are way more likely to get worse than they are to get better.

I'm persuaded by this point of view because these writers have adopted the perspective that we've found to be very useful in other geopolitical negotiations, which is to look at the bargaining position of both sides and see if there is any overlap. If there isn't, there won't be an agreement unless one of both parties makes a significant concession.

One reason that other observers have likely missed what the China Law Blog discern is that there's an Anglo-American tendency to assume that differences can be settled and a deal can be had. But as Sir Ivan Rogers pointed out with Brexit, and you have similar dynamics with the US and China, there aren't precedents for trade deals where the two sides want to get further apart rather than closer. Sir Ivan is of the point of view that the desire to disengage makes it much harder to come to terms.

The critical part of the China Law Blog's reading is that the Trump Administration is deadly serious about its two big asks, intellectual property and market access. It's credible to attribute that to Trump's US Trade Representative, Lighthizer. As Lambert put it, Lighthizer is the closest thing this Administration has to a Jim Baker. Lighthizer started at Covington & Burling, then served in the Regan Administration as Deputy USTR before going to Skadden. Lighthizer is as fierce a China hawk as they come and has a long history of saying that the entry of China into the WTO was at the expense of US jobs (see here , for instance) and even making a full-throated defense of protectionism .

A part of the trade spat that hasn't gotten the attention it warrants and seems to confirm the China Law Blog's thesis is the arm-wrestling over China's fetanyl exports to the US. It's not hard to see that this is an inherently important issue, since as I understand it, fentanyl is so potent that it is very easy to overdose on it, making it markedly more dangerous than other addictive drugs. In other words, the high death rate of fentanyl may make reducing supply a more effective strategy than it normally is in "the war on drugs". Substitution with just about any other controlled substance would be less dangerous. And if Trump were to make a dent in this problem, it would serve as a PR offset to some of the costs of his China strategy, like lost soyabean exports.

In April, China made a concession to the US by designating all fetanyl products as controlled substances, in the hope that that would reduce shipments to the US. The DEA has stated that China is the main source of US fentanyl . Fentanyl accounted 18,000 overdose deaths in 2018, one fourth of the total. If you count all synthetic opioids, the toll rises to 28,000. China nevertheless claimed even then that fentanyl shipments to the US were "extremely limited" .

On August 2, Trump said Xi had welshed on his promise to halt fentanyl shipments . China objected, saying it had made "unprecedented efforts" and the US was to blame for its opioid crisis. On August 21, the US sanctioned three Chinese individuals it depicted as drug kingpins, eliciting more unhappy noises from China.

Fentanyl featured in the escalation on Friday, and it could conceivably serve as the basis for a national emergency threat (even though, per the discussion earlier, it would have good odds of being overturned). One of Trump's four tweets urged US carriers to do more to halt shipments arriving from China or other destinations (Mexico is believed to be a route for the entry of Chinese fentanyl to the US).

In other words, it's not clear where this row ends, but there doesn't seem to be a path to depressurization, much the less resolution.

Update 5:00 AM EDT: Just as this post went live, the Wall Street Journal reported Trump Says China Called U.S. to 'Get Back to the Table' After Latest Tariff Spat . Trump is still hostage to Mr. Market, so it's awfully useful for him to talk up negotiations. From the story:

President Trump said China called U.S. officials on Sunday evening and said "let's get back to the table," a day after the White House said the president regretted not escalating tariffs further on Chinese goods.

Speaking to reporters alongside Egyptian President Abdel Fattah Al Sisi, Mr. Trump called the discussions a "very positive development." .

The Chinese government didn't immediately respond to Mr. Trump's remarks or to requests to corroborate the president's account of a phone call having taken place. Chinese government officials have repeatedly said that Beijing wants to negotiate differences on trade. On Monday, Beijing's lead trade negotiator, Vice Premier Liu He, told a conference that China still wants to continue trade talks with the U.S. following heightened tensions in the past few days.


DSB , August 26, 2019 at 8:58 am

In May I had a conversation with a long-time friend. My friend works for a global manufacturer with a household name. He has helped oversee construction of plants around the world. He helps source components from around the world. He told me that "everybody's moving out" (of China).

The ones who can have not waited for Trump's message of Friday.

The Rev Kev , August 26, 2019 at 9:09 am

A few short years ago they had the Trans-Pacific Partnership being negotiated. This was nicknamed the "everybody but China" pact as that was its mission – to cut China out of the Pacific. Add to that the "Pivot to Asia" introduced by Obama which was to militarily threaten China and the writing was on the wall for China. They were to be boxed in and shut down. Trump may be the front man now for this effort but all the China-hawks have come out of the woodwork to be let loose in the government.

I suppose that the plan is to force US companies to bail out of China and relocate to places like Vietnam, India, Bangladesh, etc. But the question is whether these countries have the infrastructure to support these new factories? Do they have a trained, educated workforce to man these factories? Is there a will to move to such places? As far as those countries are concerned, these new companies could be seen as a two-edged sword. Yes they will bring investment and opportunities in those countries. But how will they know if a Trump or someone like him later on will not order those factories out if there is a dispute or if the US demands that those countries change their laws and open themselves up to financial exploitation? Trump is demanding the same of China right now. And will Trump demand that all the other western countries move out of China?

I have mentioned before the idea of a multipolar world and I believe that we re seeing it now in action. The US and its vassals will be one pole and another one is forming around China, Iran and Russia. I doubt that the EU will be another as they are following what Trump orders even if reluctantly. There may be another factor. For centuries we have had an economy predicated on growth but I suspect that by the end of this century will will have one based on contraction due to climate change and depletion of resources. Better strap in. It could be a bumpy ride.

Susan the other` , August 26, 2019 at 11:45 am

This is all pretty interesting. More theater than trade. And the reason is that there is no demand. Demographics has a lot to do with it as well. It might not make any difference now how much a company can cut costs by moving to SE Asia because nobody will be very eager to buy more crap anyway. And manufacturing cannot up and move cheaply if they have to reinvent and retool their processes to make them more environmentally acceptable. It's a sea change. And a tap-dance.

Ian Perkins , August 26, 2019 at 9:18 am

According to this article," The DEA has stated that China is the main source of US fentanyl. " I followed the link, and found "The DEA has said China is a main source of fentanyl and other synthetic opioids." Which I take as meaning that even if the US could totally shut down Chinese synthetic opioid production, someone will still be making and supplying it.

grizziz , August 26, 2019 at 11:42 am

So, if the facts as given above are reconfigured, all it would take is for the Chinese producers of synthetic opioids to pay the US patent holders their due. Problem solved! All kidding aside, the demands to get intellectual property paid for requires a very pliant judicial system to actually recognize that an idea should be rightfully owned by a person.

Individual agency is a product of 'enlightenment' thinking which opened the pathway for an idea to be the creation of a person who willed the idea into existence. A few steps later, a corporation becomes a person and then a group of people can somehow own a single idea and be able to rent that idea out. To think that the Chinese would accept this cockamamie/historically embedded/English common law idea would be to deny their own culturally based motivated reasoning.

I don't know how this situation will be resolved, but it is quite laughable that the diversion through tariffs of IP revenues which in US legal logic should be paid to Corporations is actually going to go to the US Treasury.

Ptb , August 26, 2019 at 9:46 am

"All this leads us to believe that the U.S. plan has always been to force a slow decoupling of the U.S. and China and then work to convince the rest of the democratic world (the EU, Australia, Canada, Latin America, Japan, etc.) to decouple from China, as well"

That is about right, and I do not doubt that this is the desire of Trump's negotiating team. Nor do I doubt that they can easily steer talks to fail as described (by asking for concessions on market access favorable to the US side, AND by refusing to back down on Huawei etc).

However, while effectively forcing a decoupling of China and US is straightforward, controlling its speed is not. Pull the plug too fast (which China can threaten to accelerate), and some big US companies eat it. While Lighthizer and friends may be willing to pay that price, it will make a lot of others very nervous.

Then, perhaps more importantly, is forcing the rest of the world to follow suit (or else there is no point). JP, ROK, DE (the high tech suppliers besides US) all trade at least as much with China as US. The world market buying Chinese made goods is also bigger than the US. It would take some skillful diplomacy to make it happen. This is not only beyond the level of the Trump admin, but I would say all US administrations since the year 2000, with the Iran deal maybe the only exception I can think of.

China will end up defending itself by getting the overly aggressive and self-discrediting Team Trump reelected. By openly provoking a small proxy conflict for example. Trump gets to do his Ronald Reagan act, which is what his audience wants. It will be a weird political symbiosis. (an oversized personality can't survive without a suitably inflated enemy, and Joe Biden is no Hillary Clinton. The media will play along – such drama is the only thing keeping them in business now.)

Anyway, if there is a counterbalancing force to prevent this, I would think it is wall street.

Frank Little , August 26, 2019 at 10:04 am

Apparently the US federal workers pension plan has started investing in index funds which include some Chinese companies that have been in Trump & Co's target list. From the FT this morning:

The letter -- a copy of which was seen by the Financial Times -- said an impending investment shift by the FRTIB would mean that about $50bn in US government pensions becomes exposed to the "severe and undisclosed" risks of being invested in selected Chinese companies.

The letter, dated August 26, was copied to senior US officials including Mike Pompeo, US secretary of state, and Steven Mnuchin, Treasury secretary.

"The Federal Retirement Thrift Investment Board made a short-sighted -- and foolish -- decision to effectively fund the Chinese government and Communist party's efforts to undermine US economic and national security with the retirement savings of members of the US Armed Services and other federal employees," Mr Rubio told the Financial Times.

One thing I remember from early on in this dispute was the US wanting more opportunities to invest in the Chinese market beyond just exports/manufacturing. If pension funds are getting involved I would think that private investors would like to do the same thing, which would make long-term decoupling more difficult, especially if US businesses also want to sell things to people in China even if those things are made elsewhere.

As always your post was very informative and helpful and I certainly believe that pulling the US out of China is the goal of this whole trade dispute. I just wonder if things like this will put a damper on their plans.

[Aug 26, 2019] China Did Not Trick the US -- Trade Negotiators Served Corporate Interests

Aug 19, 2019 | economistsview.typepad.com

anne , August 23, 2019 at 12:37 PM

http://cepr.net/publications/op-eds-columns/china-did-not-trick-the-us-trade-negotiators-served-corporate-interests

August 19, 2019

China Did Not Trick the US -- Trade Negotiators Served Corporate Interests
By Dean Baker

The New York Times ran an article * last week with a headline saying that the 2020 Democratic presidential contenders faced a serious problem: "how to be tougher on trade than Trump." Serious readers might have struggled with the idea of getting "tough on trade." After all, trade is a tool, like a screwdriver. Is it possible to get tough on a screwdriver?

While the Times's headline may be especially egregious, it is characteristic of trade coverage which takes an almost entirely Trumpian view of the topic. The media portray the issue of some countries, most obviously China, benefiting at the expense of the United States. Nothing could be more completely at odds with reality.

China has a huge trade surplus with the United States, about $420 billion (2.1 percent of GDP) as of 2018. However, this doesn't mean that China is winning at the expense of the United States and because of "stupid" trade negotiators, as Trump puts it.

The U.S. trade deficit with China was not an accident. Both Republican and Democratic administrations signed trade deals that made it easy to manufacture goods in China and other countries, and then export them back to the United States.

In many cases, this meant that large U.S. corporations, like General Electric and Boeing, outsourced parts of their operations to China to take advantage of low-cost labor there. In other cases, retailers like Walmart set up low-cost supply chains so that they could undercut their competitors in the U.S. market.

General Electric, Boeing, Walmart and the rest did not lose from our trade deficit with China. In fact, the trade deficit was the result of their efforts to increase their profits. They have little reason to be unhappy with the trade deals negotiated over the last three decades.

It is a very different story for workers in the United States. As a result of the exploding trade deficit, we lost 3.4 million manufacturing jobs between 2000 and 2007, 20 percent of the workers in the sector. This is before the collapse of the housing bubble led to the Great Recession. We lost 40 percent of all unionized jobs in manufacturing.

This job loss not only reduced the pay of manufacturing workers, but as these displaced workers flooded into other sectors, it put downward pressure on the pay of less-educated workers generally. This is a pretty awful story, but it is not a story of China tricking our so-called stupid negotiators; it is a story of smart negotiators who served well the interest of corporations.

For some reason, the media always accept the Trumpian narrative that the large trade deficits the U.S. runs with China (and most of the rest of the world) were the result of other countries outsmarting our negotiators, or at least an accidental result of past trade deals. The media never say that large trade deficits were a predictable outcome of a trade policy designed to serve the wealthy.

The fact that trade is a story of winners and losers within countries, rather than between countries, is especially important now that our trade conflicts are entering a new phase, especially with China. While not generally endorsing Trump's reality TV show tactics, most reporting has taken the position that "we" in the U.S. have genuine grounds for complaint with China.

The complaints don't center on the under-valuation of China's currency, which is a problem for manufacturing workers. Rather, the issue that takes center stage is the supposed theft by China of our intellectual property.

While this sort of claim is routinely asserted, the overwhelming majority of people in the United States have never had any intellectual property stolen by China. It is companies like Boeing, GE, Pfizer and Merck that are upset about China not respecting their patent and copyright claims, and they want the rest of us to have a trade war to defend them.

If the goals of trade policies were put to a vote, these companies would be hugely outnumbered. However, they can count on the strong support of the media in both the opinion pages, and more importantly, the news pages. The issue is entirely framed in their favor, and dissenting voices are as likely to be heard as in the People's Republic of China.

There is a lot at stake in preserving the myth that ordinary workers were hurt as just an accidental byproduct of globalization. The story is that it just happens to be the case that hundreds of millions of people in the developing world are willing to do the same work as our manufacturing workers for a lot less money.

Yes, the loss of millions of manufacturing jobs is a sad story, but is just part of the picture. There are also millions of smart ambitious people in the developing world who are willing to do the same work as our doctors, dentists, lawyers and other professions for a lot less money.

But the people who design trade policy have made sure that these people don't have the opportunity to put the same downward pressure on our most highly paid workers, as did their counterparts working in families. And, for what it's worth, the trade model works the same when we're talking about doctors as manufacturing workers. Less pay for U.S. doctors means lower cost health care, just as lower pay for textile workers means cheaper clothes.

The key point is that winners in the global economy, along with the big corporations, got their good fortune because they rigged the process, not because of anything inherent in the nature of globalization. (This is the point of my book Rigged: How the Rules of Globalization and the Modern Economy Were Structured to Make the Rich Richer. ** )

On this basic point, the media have no more interest in truth than Donald Trump. Hence, we can expect further media parroting about being "tough" on trade.

* https://www.nytimes.com/2019/08/10/us/politics/democrats-trade-trump.html

** https://deanbaker.net/images/stories/documents/Rigged.pdf

[Aug 26, 2019] China's response so far has been fairly modest and measured, at least considering the situation

Notable quotes:
"... Still, even if Trump isn't making sense, will China give in to his demands? The short answer is, "What demands?" Trump mainly seems exercised by China's trade surplus with America, which has multiple causes and isn't really under the Chinese government's control. ..."
"... Others in his administration seem concerned by China's push into high-technology industries, which could indeed threaten U.S. dominance. But China is both an economic superpower and relatively poor compared with the U.S.; it's grossly unrealistic to imagine that such a country can be bullied into scaling back its technological ambitions ..."
"... Which brings us to the question of how much power the U.S. really has in this situation. ..."
"... So while Trump's tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall. ..."
"... At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw this week, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging. ..."
"... And America's ability to counter these moves is hindered by a combination of technical and political factors. The Fed can cut rates, but not very much given how low they are already. We could do a fiscal stimulus, but having rammed through a plutocrat-friendly tax cut in 2017, Trump would have to make real concessions to Democrats to get anything more -- something he probably won't do. ..."
"... So Trump is in a much weaker position than he imagines, and my guess is that China's mini-devaluation of its currency was an attempt to educate him in that reality. But I very much doubt he has learned anything. His administration has been steadily hemorrhaging people who know anything about economics, and reports indicate that Trump isn't even listening to the band of ignoramuses he has left. ..."
Aug 26, 2019 | economistsview.typepad.com

anne , August 23, 2019 at 12:38 PM

https://www.nytimes.com/2019/08/08/opinion/trump-china-trade.html

August 8, 2019

China Tries to Teach Trump Economics
But he doesn't seem to be learning.
By Paul Krugman

If you want to understand the developing trade war with China, the first thing you need to realize is that nothing Donald Trump is doing makes sense. His views on trade are incoherent. His demands are incomprehensible. And he vastly overrates his ability to inflict damage on China while underrating the damage China can do in return.

The second thing you need to realize is that China's response so far has been fairly modest and measured, at least considering the situation. The U.S. has implemented or announced tariffs on virtually everything China sells here, with average tariff rates not seen in generations. The Chinese, by contrast, have yet to deploy anything like the full range of tools at their disposal to offset Trump's actions and hurt his political base.

Why haven't the Chinese gone all out? It looks to me as if they're still trying to teach Trump some economics. What they've been saying through their actions, in effect, is: "You think you can bully us. But you can't. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?"

There is, however, no indication that this message is getting through. Instead, every time the Chinese pause and give Trump a chance to rethink, he takes it as vindication and pushes even harder. What this suggests, in turn, is that sooner or later the warning shots will turn into an all-out trade and currency war.

About Trump's views: His incoherence is on view almost every day, but one of his recent tweets was a perfect illustration. Remember, Trump has been complaining nonstop about the strength of the dollar, which he claims puts America at a competitive disadvantage. On Monday he got the Treasury Department to declare China a currency manipulator, which was true seven or eight years ago but isn't true now. Yet the very next day he wrote triumphantly that "massive amounts of money from China and other parts of the world is pouring into the United States," which he declared "a beautiful thing to see."

Um, what happens when "massive amounts of money" pour into your country? Your currency rises, which is exactly what Trump is complaining about. And if lots of money were flooding out of China, the yuan would be plunging, not experiencing the trivial (2 percent) decline that Treasury condemned.

Oh well. I guess arithmetic is just a hoax perpetrated by the deep state.

Still, even if Trump isn't making sense, will China give in to his demands? The short answer is, "What demands?" Trump mainly seems exercised by China's trade surplus with America, which has multiple causes and isn't really under the Chinese government's control.

Others in his administration seem concerned by China's push into high-technology industries, which could indeed threaten U.S. dominance. But China is both an economic superpower and relatively poor compared with the U.S.; it's grossly unrealistic to imagine that such a country can be bullied into scaling back its technological ambitions .

Which brings us to the question of how much power the U.S. really has in this situation.

America is, of course, a major market for Chinese goods, and China buys relatively little in return, so the direct adverse effect of a tariff war is larger for the Chinese. But it's important to have a sense of scale. China isn't like Mexico, which sends 80 percent of its exports to the United States; the Chinese economy is less dependent on trade than smaller nations, and less than a fifth of its exports come to America.

So while Trump's tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall.

At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw this week, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging.

And America's ability to counter these moves is hindered by a combination of technical and political factors. The Fed can cut rates, but not very much given how low they are already. We could do a fiscal stimulus, but having rammed through a plutocrat-friendly tax cut in 2017, Trump would have to make real concessions to Democrats to get anything more -- something he probably won't do.

What about a coordinated international response? That's unlikely, both because it's not clear what Trump wants from China and because his general belligerence (not to mention his racism) has left America with almost nobody willing to take its side in global disputes.

So Trump is in a much weaker position than he imagines, and my guess is that China's mini-devaluation of its currency was an attempt to educate him in that reality. But I very much doubt he has learned anything. His administration has been steadily hemorrhaging people who know anything about economics, and reports indicate that Trump isn't even listening to the band of ignoramuses he has left.

So this trade dispute will probably get much worse before it gets better.

Plp -> anne... , August 24, 2019 at 12:20 PM
As dean points out Liberals aren't learning from Chinese policy triumphs either

Denialism isn't just a reactionary character flaw

Plp -> Plp... , August 24, 2019 at 12:21 PM
Imagine communists party hacks running the most successful economic development op in human history
point -> Plp... , August 24, 2019 at 07:00 PM
but, but, that conclusion cannot be reached within the space spanned by our assumptions, therefore it cannot happen.
point -> point... , August 25, 2019 at 04:49 AM
:)
ilsm -> anne... , August 25, 2019 at 08:15 AM
Conscience of a "liberal"?

""You think you [Trump] can bully us [Xi]. But you can't. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?""

Krugman is putting his "liberal" thinking in to Xi's mind.

US farmers are the darling of the "liberal"? I suspect not so much unless to oppose Trump.

To see the mechanism that China could crash the stock market requires some thinking.

How could China do such a thing? Tariffs on $100B (in a $19,000B economy) in US exports is emotional to the exchanges. Dumping US debt would raise interest rates and make T Bills attractive over stocks, which is not a bad thing. The "liberals" know a 'deplorable' 36000 Dow is a dream. Then what does China do with all those USD?

The issue is a lot of "liberals" do not want Trump to succeed in efforts to reverse the MNC expulsion of labor from the US to developing countries.

I look forward to Trump asking the DNC select why he or she "wants Xi to win over labor in the US?"

The underlying loser in the Trump scheme are the MNC's so will the DNC go all in for MNC's at the expense of the worker?

Don't surprise me, none!

Paine -> ilsm... , August 26, 2019 at 05:06 AM
Trump has no considered
long range plan
Just goals and tactics
Both chosen largely
for show
And ameroca's great white hero story line
Paine -> Paine... , August 26, 2019 at 05:09 AM
The MNCs are not losing

It's global developments
they watch emerge
Largely
Create and eclectically react to

anne , August 23, 2019 at 12:41 PM
https://glineq.blogspot.com/2019/08/nostalgia-for-past-that-never-was-part.html

August 8, 2019

Nostalgia for a past that never was; Part 1 review of Paul Collier's "The future of capitalism"

Paul Collier's new book "The future of capitalism" is a very hard book to review. It is short (215 pages) but it covers an enormous area, from social and economic interpretation of the past seventy years in the West, to pleas for "ethical" companies, "ethical" families and even an "ethical" world, to a set of proposals for reform in advanced economies.

The most uncharitable assessment would be to say that, at times, the book comes close (I emphasize "close") to nationalism, "social eugenics", "family values" of the moral majority kind, and conservativism in the literal sense of the word because it posits an idealized past and exhorts us to return there. But one could also say that its diagnosis of the current ills is accurate and remarkably clear-sighted. Its recommendations are often compelling, sophisticated and yet common-sensical.

I have therefore decided to divide my review in two parts. In this part I will explain the points, mostly methodological and historical, on which I disagree with Collier. In the second part, I will discuss the diagnoses and recommendations on which I mostly agree.

Pragmatism. Collier positions himself as a "pragmatist" battling both (1) ideologues: Utilitarians, Rawlsian (who are accused, somewhat strangely, of having introduced identity politics) and Marxists; and (2) populists who have no ideology at all but simply play on people's emotions. All three kinds of ideologies are wrong because they follow their script which is inadequate for current problems while populists do not even care to make things better but only to rule and have a good time. It is only a pragmatic approach that, according to Collier, makes sense.

Pragmatism however is an ideology like any other. It is wrong to believe oneself exempt from ideological traps if one claims to be a "pragmatist". Pragmatism collects whatever are the ruling ideologies today and rearranges them: it provides an interpretative framework like any other ideology. Pragmatists are, as Keynes said in a similar context "practical men, who believe themselves to be quite exempt from any intellectual influences, [but] are usually the slaves of some defunct economist [or ideologue; my addition]."

Adam Smith. The second building block of Collier book is based on his interpretation of Adam Smith, which has become more popular recently and tries to "soften" the hard edge of the Adam Smith of the "Wealth of Nations" (self-interest, profit, and power) by a more congenial Smith from "The Theory of Moral Sentiments". This is an old debate that goes almost 200 years back ("Die Adam Smith Frage").

There are, I think, if not two Smiths, then one Smith for two sets of circumstances: in TMS, it is the Smith for our behavior with family, friends and community; in the WoN, it is the Smith of economic life, our behavior as "economic agents". I discuss this in "Capitalism, Alone". David Wootton in "Power, Pleasure and Profit" very persuasively makes the same point. And even Collier says exactly the same thing towards the end of his book, but in the early parts he argues that the Adam Smith of TMS applies to economics as well.

Now, for an economist only the Smith from the WoN matters. Economists do not claim (or should not claim) to have particularly valuable insights regarding how people behave outside of economics. So it is fully consistent for economists to use a model of Smith's homo economicus who is pursuing monetary gains only, or more broadly, his own utility only. That of course does not exclude, as Collier and some other writers (e.g., Peter Turchin) seem to believe, cooperation with others. It is obvious that many of our monetary objectives are better achieved through cooperation: I am better off cooperating with people at my university than setting my own university. But whether I do one or the other, I am pursuing my own selfish interest. I am not doing things for altruistic reasons -- which perhaps I might do in my interactions with family or friends.

My point in "Capitalism, Alone" is that under hyper-commercialized globalization Smith's economic sphere is rapidly expanding and "eating up" the sphere where the Smith of TMS applies. Commodification "invades" family relations and our leisure time. Both Collier and I agree on that. But while I think that this is an inherent feature of hyper-commercialized globalization, Collier believes that the clock can be turned back to an "ethical world" which existed in the past while somehow keeping globalization as it is now. This is an illusion and leads me to Collier's nostalgia.

Social-democracy. In Collier's view of the Golden Age (1945-75), social-democracy that brought it about did this for ethical reasons. In several places he repeats more of less this breathtaking sentence "[Roosevelt] was elected because people recognized the New Deal was ethical". He argues that the origin of social-democracy lies in a (nice) co-operative movement, not that the reforms in capitalism after WW1 and WW2 were the product of a century of often violent struggle of social democratic parties to improve workers' conditions. It is not because ethical leaders decided suddenly to make capitalism "nicer" but because the two world wars, the Bolshevik revolution, the growth of social-democratic and communist parties, and their links with powerful trade unions, exacted the change of course from bourgeoisie under the looming threat of social disorder and expropriation. So it is not through the benevolence of the right that capitalism was transformed, but because the upper classes, chastised by past experience, decided to follow their own enlightened self-interest: give up some in order to preserve more. (For similar interpretations, see Samuel Moyn, Avner Offer,)

This difference in the interpretations of history is important because Collier's view applied to today basically calls for ethical rulers -- to somehow appear. This is why at the end of the book he discusses how political leaders should be elected (not by party members or primaries, but by the elected representatives of their parties). My interpretation implies that unless there are strong social forces that would push back financial sector excesses, tax evasion, and high inequality nothing will be changed. What matters is not ethics or ethical leaders but group/class interest and relative power.

The facts. And finally the Arcadia of the trente glorieuses * when Collier holds that moral giants strode the Earth, companies cared about workers, families were "full" and "ethical", never really existed, at least not in the way it is described in the book. Yes, like many others I have pointed out that the trente glorieuses were very good years for the West both in terms of growth and surely in terms of narrowing of wealth and income inequalities. But they were no Arcadia and in many respects they were much worse than the present.

The period of Collier's "ethical family" in which "the husband was the head" when every member cared for each other, and several generations lived together, was a hierarchical patriarchy that even legally forbid any other types of family-formation. (I remember that in my high school in Belgium, only fathers were allowed to sign off on pupils' grades or school absences. Not mothers.)

In the USA, the Golden Age was the age of social mimicry and conservatism, widespread racial discrimination, and gender inequality. When it comes to politics, it is often forgotten that during the Golden Age, France was basically twice on the edge of a civil war: during the Algerian war and in 1968. Spain, Portugal, and Greece were ruled by quasi-fascist regimes. Terrorism of RAF and Brigate Rosse came in the 1970s. Finally, if these years were so good and "ethical" why did we have the universal 1968 rebellion, from Paris to Detroit?

That imagined world never was, and we are utterly unlikely to return to it; not only because it never was but because the current word is entirely different. Collier overlooks that the world of his youth to which he wants people to return was the world of enormous income differences between the rich world and the Third World. It is for that reason that the English working class could (as he writes) feel very proud and superior to the people in the rest of the world. They cannot feel so proud and superior now because other nations are catching up. Implicitly, regaining self-respect for the English working class requires a return to such worldwide stratification of incomes.

The book is thus built on the quicksand of a world that did not exist, will not exist, and on a methodology that I find wanting. 2020s will not be the imagined 1945, however loudly we clamor for it. But this does not mean that the analyses of current problems and the recommendations are wrong. Many of them are very good. So I will turn to them next.

* https://en.wikipedia.org/wiki/Trente_Glorieuses

-- Branko Milanovic

anne -> anne... , August 23, 2019 at 12:41 PM
https://glineq.blogspot.com/2019/08/how-to-create-ethical-county-if-not.html

August 10, 2019

How to create an ethical county, if not the world: Part 2 review of Paul Collier's "The future of capitalism"

This is the second part of my review of Paul Collier's "The future of capitalism". The first part is here. *

In this review of Collier's policy recommendations, I will break the discussion into three parts, following Collier's own approach: how to make companies more ethical, families stronger, and the world better.

Ethical firm. Collier argues that, in order for companies to be seen as ethical and to offer their workforce meaningful jobs, companies should include workers in management, give much more power to the middle-level management, and do profit-sharing. These are all well-taken recommendations, and I believe, like Collier, that they would increase companies' profitability in addition to providing "better" jobs. The question however is how many companies nowadays can afford to provide such meaningful and (relatively) stable jobs because of fast-evolving changes driven by globalization. Nevertheless the idea is correct.

Collier then moves to what may be the most intriguing recommendation in the book and that goes beyond the usual "let's have higher and more progressive taxes". He looks at the big divide between the successful global cities (like New York and London) and their left-behind hinterlands. The success of metropolises comes from economies of scale, specialization, and complementarity (gains of agglomeration). People can specialize because the demand for specialized skills is high (the best tax accountants are located in New York not in small dilapidated cities). Companies can enjoy economies of scale because the demand is high and specialized workers benefit from complementarity in skills from other workers with whom they are in close geographical and intellectual contact.

So who are the main winners from metropolises' success, asks Collier? People who own land and housing (as housing prices skyrocket) and highly skilled professionals who, after paying higher rents, still make more in global cities than elsewhere. Collier's suggestion then, based on his work with Tony Venables, is to tax heavily these two groups of people, i.e., to introduce supplemental taxes which would be geographical: tax housing and high income individuals living in London.

How to help hinterland catch up? Use the money collected in London or New York to give subsidies to large cluster-like companies (like Amazon) if they set they businesses in the left-behind cities like Sheffield or Detroit. One can quibble with this idea but the logic of the argument is, I think, quite compelling, and the taxation suggested by Collier has the advantage of going beyond the indiscriminate increase in taxes for all. We are talking here of targeted taxation and targeted subsidies. This is the lieu fort of Collier's book.

Ethical family. I am less enthusiastic about the suggestions in this area. Here Collier is at his most conservative although that social conservatism is masked under the cover of scientific studies that show that children living in "full" families with two heterosexual parents are doing much better than children living with one parent only.

Collier almost implies that (say) mothers should stay in unloving or abusive relationships so that there would be both parents present in the family. Such families should, according to Collier, be given support and for all children public pre-K and K education should be free (very reasonable). Collier also very persuasively describes manifold advantages that the children of the rich receive, not only through inheritance but through intangible capital of parental knowledge and connections. This type of social capital inheritance is not a well-researched topic and I hope this changes since its importance in real life is substantial.

Collier displays clear preference for "standard" families and even some "social eugenics" as when he criticizes UK policy that provides free housing and since 1999 extra benefits for single mothers to have encouraged "many women...to bear children who will not be raised well".

The argument that parents should sacrifice themselves (regardless of the psychic cost) for children is also dangerous. It leads us to a family formation of the 19th century when women often lived in terrible marriages because of social pressure not to be seen as abandoning or not caring for their children. This is neither a desirable nor a likely solution for today. An ethical family should consider interests of all members equally, not subjugate the happiness of some (mostly mothers) to that of others.

Ethical world. Collier has surprisingly little to say about the ethical world. His ethical world is a world largely closed to new migration which Collier rejects based on a not unreasonable view going back to Assar Lindbeck and George Borjas of cultural incompatibility between the migrants and the natives. Interestingly, Collier does not quote either of these two authors nor any others. (The book is directed at the general audience so the mentions of other authors are extremely rare except when it comes to Collier himself and a few of his co-authors).

It is slightly disconcerting that Collier who has spent more than three decades working on Africa has almost nothing to say about how Africa and African migration fits into this "ethical world". There are only two ways in which he addresses migration.

First, migrants or refugees should stay in countries that are geographically close to the source countries: Venezuelans in Colombia, Syrians in Lebanon and Turkey, Afghanis in Pakistan. Why the burden of migrants should be exclusively borne by the limitrophe countries ** that are often quite poor is never explained. Surely, an ethical world would require much more from the rich.

Second, he argues that the West should help good companies invest in poor countries in order to increase incomes there and reduce migration. But how is this to be achieved is never explained. It is mentioned almost as an afterthought and is considered deserving of two sentences only (in two different parts of the book). This is in contrast with a detailed explanation, discussed above, of how governments should encourage and subsidize large companies to relocate to second-tier cities. Could a similar scheme be designed for investments in Africa? Nothing is said.

Further, where does it leave African migrants crisscrossing the Mediterranean as I write? There are no geographically close countries where they could go (surely not to Libya) nor can they wait for years in Mali for the Western companies to bring them jobs. Again, nothing is said on that. It is not surprising that Collier is very supportive of Emmanuel Macron whose anti-immigration policy is quite obvious, and of Danish Social Democrats that are in the process of creating a kind of national social democracy with new laws that practically reduce immigration to a trickle. Collier favors Fortress Europe although he does not say so explicitly.

In keeping with his anti-immigration stance, Collier argues that migration is not an integral part of globalization. Why –in principle– goods, services and one factor of production (capital) should be allowed to move freely while another factor of production (labor) is to remain stuck is not clear. Surely, the fact that trade is driven by comparative advantage and migration by absolute is not the reason to be against migration. On exactly the same grounds, one could be against movement of capital too.

In conclusion, I think that the recommendations regarding the "ethical firm" and metropolis-hinterland divergence are spot on; the recommendations on "ethical family" are a combination of very perceptive and sensible points, and a view of the family that at times comes from a different age, and almost nothing is said about an "ethical world". This latter is a big omission in the era of globalization, but perhaps Collier was solely interested in how to improve nation-states.

* https://glineq.blogspot.com/2019/08/nostalgia-for-past-that-never-was-part.html

** Territories situated on a border or frontier. In a broad sense, it means border countries -- any group of neighbors of a given nation which border each other thus forming a rim around that country.

-- Branko Milanovic

[Aug 26, 2019] Trump ordering companies around about where they can invest is a form of national socialism

Notable quotes:
"... This strategy is not popular with US corporations and will earn Trump some more opposition. Former Rep. Joe Walsh (R-Ill.) on Sunday announced he would mount a primary challenge to President Trump ..."
Aug 26, 2019 | www.moonofalabama.org

Don Bacon , Aug 25 2019 17:08 utc | 20

Trump has put US companies on alert that he might force them to withdraw from China, where they have $256 billion invested. He says he is given this power by the 1977 law called the International Emergency Economic Powers Act, or IEEPA.

The Republican Party has spent over a century warning against government involvement in the private sector, but now their leader is doing it big time. Trump ordering companies around about where they can invest is a form of fascism or rightwing national socialism. Left socialism is about public sector economic activity for the good of people. National socialism is the state usurping economic resources on behalf of a small corporate and high-official elite.

Tara Golshan at Vox explained how Trump unilaterally raised China tariffs in the first place by 25% (he is threatening to go to 30%):

"Trump's White House cited Section 232 of the Trade Expansion Act of 1962, a provision that gives the secretary of commerce the authority to investigate and determine the impacts of any import on the national security of the United States -- and the president the power to adjust tariffs accordingly."

So one thing that is going on is that measures passed by Congress for limited and extreme situations are being misused by presidents for everyday policy-making. . . here

This strategy is not popular with US corporations and will earn Trump some more opposition. Former Rep. Joe Walsh (R-Ill.) on Sunday announced he would mount a primary challenge to President Trump . . . here

[Aug 25, 2019] Trump Says He Regrets Escalating Trade War With China, White House Immediately Retracts

Notable quotes:
"... During his meeting with Johnson on Sunday at the G7 in France, the US president raised eyebrows when he responded in the affirmative to questions from reporters on whether he had any second thoughts about the tariff move. ..."
Aug 25, 2019 | www.zerohedge.com

While one may accuse the US president of many things, having second thoughts is hardly one of them: once Trump has decided on a course of action, he tends to follow through. Which is why the global press gasped when a rare case of doubt emerged this morning during Trump's breakfast meeting with the UK's Boris Johnson at the Biarritz G-7, when the US president acknowledged having second thoughts about the escalating the trade war with China... only for his top spokeswoman to later retract and say Trump meant he regretted not raising tariffs even more.

During his meeting with Johnson on Sunday at the G7 in France, the US president raised eyebrows when he responded in the affirmative to questions from reporters on whether he had any second thoughts about the tariff move.


TheRapture , 14 minutes ago link

Every president of the USA for the past 50 years has cultivated US exports to China. You want to just throw it away, only two or three years before the purchasing power of China exceeds that of the USA???

China - 1.5 billion.
USA - 326 million

China growth rate 2018: 6.4%
USA growth rate 2018: 2.8%
source

China now produces twice as many graduates a year as the US
source

As of 2015, China had already taken global lead in manufacturing output: source
China - $2,010 billion
USA - $1,867 billion

World market size, based on population: source
China - 18.7%
USA - 4.3%

LoveTruth , 1 hour ago link

Greedy US corporations have been in bed with China robbing the US citizen with all those job exports to China.

If things were produced in US, the corporations would have made less money, but the US citizen would have been better off. The trade deficit which has been running for decades wouldn't have been that much.

Let it Go , 1 hour ago link

Anyone with a lick of commonsense knew Trump's detractors would be gunning for him during his trip to Europe. Trump has not disappointed these people by continuing his effort to come across as too clever for his own good. Trump gave these people more ammunition when he said he has doubts about his actions.

During breakfast with the UK's Boris Johnson at the G-7 meeting in Biarritz, France Trump acknowledged having second thoughts about the escalating the trade war with China. The article below explores how this may cause Trump a great deal of grief.

https://Trump Continues His Effort To B Too Clever By Half.html

cmurali , 1 hour ago link

https://www.theguardian.com/us-news/video/2019/aug/25/sure-why-not-trump-admits-second-thoughts-on-china-trade-war-video

[Aug 25, 2019] China Hits Back at Trump With Higher Tariffs on Soy, Autos

Beijing just might be able to doom the president's chance of reelection. They can tune tariffs to hurt Trump base.
Notable quotes:
"... China's tariff threats take aim at the heart of Trump's political support -- factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down. Soybean prices sank to a two-week low ..."
"... The tariffs beginning in September include 10% on pork, beef, and chicken, and various other agricultural goods, while soybeans will have the extra 5% tariff on top of the existing 25%. Starting in December, wheat, sorghum, and cotton will also get a 10% tariff. ..."
Aug 25, 2019 | www.bloomberg.com

Some of the countermeasures will take effect starting Sept. 1, while the rest will come into effect from Dec. 15, according to the announcement Friday from the Finance Ministry. This mirrors the timetable the U.S. has laid out for 10% tariffs on nearly $300 billion of Chinese shipments

An extra 5% tariff will be put on American soybeans and crude-oil imports starting next month. The resumption of a suspended extra 25% duty on U.S. cars will resume Dec. 15, with another 10% on top for some vehicles. With existing general duties on autos taken into account, the total tariff charged on U.S. made cars would be as high as 50%.

China's tariff threats take aim at the heart of Trump's political support -- factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down. Soybean prices sank to a two-week low

.... ... ...

The tariffs beginning in September include 10% on pork, beef, and chicken, and various other agricultural goods, while soybeans will have the extra 5% tariff on top of the existing 25%. Starting in December, wheat, sorghum, and cotton will also get a 10% tariff.

[Aug 25, 2019] U.S. Decoupling From China Forces Others To Decouple From U.S.

G7 is not less then 50% of world economics.
Notable quotes:
"... "The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hickup in the U.S. economy leads to large scale recessions elsewhere." ..."
"... It has also become a primary tool for the US to assert extraterritorial jurisdiction over the world to enforce extreme uses of sanctions, as in blowing up the Iran deal. Already the EU has explored ways to get around that to work with Iran. ..."
"... The over use of sanctions, and abuse of the US financial position in order to govern others, reinforces the desire to deal with fears that dependence on the dollar risks vulnerability to economic depression due to US irresponsibility. ..."
"... The US is creating a perfect storm for the dollar, with is exactly what it would take to make others undertake the expense and difficulty of replacing it as the world reserve currency and presumed standard of exchange. ..."
"... I just had a thought. The USSA has been doing it all wrong for all these decades. There are at least two responses the USSA could have applied to the obviously impending debacle of simply allowing the Chinese to thoroughly undermine its industrial system. The most obvious response would have been tariffs, which could be perceived as an aggressive policy, but certainly not as the outright aggression of sanctions. ..."
"... Or probably even much better, a 'negative sales tax' on USSA manufactured products, which could in no way be perceived as aggressive at all. Note that there is (I presume) a vast difference between simply subsidizing companies (since subsidies coud then flow directly into the pockets of the companies' capitalists) and providing the companies' customers with a 'negative tax' on USSA produced products (basically an instant rebate). This could effectively provide price parity for the goods produced for the two countries, and could maintain the viability of the USSA manufacturing system. ..."
"... The US ruling class cannot grow out of its desire to extend its rule to the rest of the planet. But humanity is not as malleable as the American people-with their dreams of sharing in the dividends when America (Great Again) (aka its ruling class) orders the rest of the world around and exploits everyone the way that it exploits the working people in the United States. ..."
"... Are you not aware that the Bank of Japan basically owns 70% of the Japanese stock market in the from of ETFs? ..."
"... While Europe and Japan are failing economically at least America is at war with the second biggest power on the planet, making drastic moves justified in the face of a national emergency. ..."
"... I imagine now that John Maynard Keynes'ghost, if it were observing our current global political and economic affairs, would be having a laugh. It was Keynes who suggested the notion of International trade using a common trading currency created purely for International trade purposes, in a system in which nations would not be allowed to build up continuous balance-of-payments surpluses or deficits over several years, but would be required to spend their surpluses on countries forced to go into deficit because of other countries' desires for annual surpluses, leading to trade policies or currency manipulations to achieve such a dubious goal. ..."
"... The real solution though is a different system with some global exchange medium that can not be manipulated by one country or a block of selfish countries. ..."
Aug 25, 2019 | www.moonofalabama.org

The U.S. is decoupling itself from China. The effects of that process hurt all global economies. To avoid damage other countries have no choice but to decouple themselves from the U.S.

Today's Washington Post front page leads with a highly misleading headline:

The headline above the article is also wrong:

Trump retaliates in trade war by escalating tariffs on Chinese imports and demanding companies cut ties with China

It was China, not Trump, which retaliated. Trump reacted to that with a tweet-storm and by intensifying the trade war he started . The piece under the misleading headline even says that :

President Trump demanded U.S. companies stop doing business with China and announced he would raise the rate of tariffs on Beijing Friday, capping one of the most extraordinary days in the long-running U.S.-China trade war.
...
The day began with Beijing's announcement that it would impose new tariffs on $75 billion in goods, including reinstated levies on auto products, starting this fall. It came to a close Friday afternoon with Trump tweeting that he would raise the rate of existing and planned tariffs on China by 5 percentage points.

Beijing's tariff retaliation was delivered with strategic timing, hours before an important address by Powell, and as Trump prepared to depart for the G-7 meeting in Biarritz.

After Trump's move the stock markets had a sad. Trade wars are, at least in the short term, bad for commerce. The U.S. and the global economy are still teetering along, but will soon be in recession.

The Trump administration is fine with that. (As is Dilbert creator Scott Adams (vid).)

U.S. grand strategy is to prevent other powers from becoming equals to itself or to even surpass it. China, with with a population four times larger than the U.S., is the country ready to do just that. It already built itself into an economic powerhouse and it is also steadily increasing its military might.

China is thus a U.S. 'enemy' even though Trump avoided, until yesterday, to use that term.

Over the last 20+ years the U.S. imported more and more goods from China and elsewhere and diminishes its own manufacturing capabilities. It is difficult to wage war against another country when one depends on that country's production capacities . The U.S. must first decouple itself from China before it can launch the real war. Trump's trade war with China is intended to achieve that. As Peter Lee wrote when the trade negotiations with China failed:

The decoupling strategy of the US China hawks is proceeding as planned. And economic pain is a feature, not a bug.
...
Failure of trade negotiations was pretty much baked in, thanks to [Trump's trade negotiator] Lightizer's maximalist demands.

And that was fine with the China hawks.

Because their ultimate goal was to decouple the US & PRC economies, weaken the PRC, and make it more vulnerable to domestic destabilization and global rollback.

If decoupling shaved a few points off global GDP, hurt American businesses, or pushed the world into recession, well that's the price o' freedom.

Or at least the cost of IndoPACOM being able to win the d*ck measuring contest in East Asia, which is what this is really all about.

Trump does not want a new trade deal with China. He wants to decouple the U.S. economy from the future enemy. Trade wars tend to hurt all involved economies. While the decoupling process is ongoing the U.S. will likely suffer a recession.

Trump is afraid that a downturn in the U.S. could lower his re-election chances. That is why he wants to use the Federal Reserve Bank to douse the economy with more money without regard for the long term consequences. That is the reason why the first part of his tweet storm yesterday was directed at Fed chief Jay Powell:

In his order for U.S. companies to withdraw from China, some close to the administration saw the president embracing the calls for an economic decoupling made by the hawks inside his administration.

The evidence of the shift may have been most apparent in a 14-word tweet in which Trump appeared to call Xi an "enemy."

"My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?" he said in a Tweet posted after Powell gave a speech in Jackson Hole that contained implicit criticism of Trump's trade policies and their impact on the U.S. and global economies.

Jay Powell does not want to lower the Fed interest rate. He does not want to increase bond buying, i.e. quantitative easing. Interest rates are already too low and to further decrease them has its own danger. The last time the Fed ran a too-low interest rate policy it caused the 2008 crash and a global depression.

Expect Trump to fire Powell should he not be willing to follow his command. The U.S. will push up its markets no matter what.

From Powell's perspective there is an additional danger in lowering U.S. interest rates. When the U.S. runs insane economic and monetary policies U.S. allies will also want decouple themselves - not from China but from the U.S. The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hickup in the U.S. economy leads to large scale recessions elsewhere.

That is why even long term U.S. ally Britain warns of such danger and looks for a way out :

Bank of England Governor Mark Carney took aim at the U.S. dollar's "destabilising" role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.

The dollar's dominance of the global financial system increased the risks of a liquidity trap of ultra-low interest rates and weak growth, Carney told central bankers from around the world gathered in Jackson Hole, Wyoming, in the United States.
...
Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system.
...
China's yuan represented the most likely candidate to become a reserve currency to match the dollar, but it still had a long way to go before it was ready.

The best solution would be a diversified multi-polar financial system, something that could be provided by technology, Carney said.

Carney speaks of a "new Synthetic Hegemonic Currency (SHC)" which, in a purely electronic form, could be created by a contract between the central banks of most or all countries. It would replace the dollar as the main trade currency and lower the risk for other economies to get infected by U.S. sicknesses (and manipulations).

Carney did not elaborate further but is an interesting concept. The devil will be, as always, in the details. Will one be able to pay ones taxes in that currency? How will the value of each sovereign currency in relation to SHC be determined?

That the U.S. dollar is used as a global reserve currency under the Bretton Woods system is, in the words of the former French Minister of Finance Valéry Giscard d'Estaing, an "exorbitant privilege". It if wants to keep that privilege it will have to go back to sane economic and monetary policies. Otherwise the global economy will have no choice but to decouple from it.

Posted by b on August 24, 2019 at 19:22 UTC | Permalink


Mark Thomason , Aug 24 2019 19:54 utc | 2

"The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hickup in the U.S. economy leads to large scale recessions elsewhere."

It has also become a primary tool for the US to assert extraterritorial jurisdiction over the world to enforce extreme uses of sanctions, as in blowing up the Iran deal. Already the EU has explored ways to get around that to work with Iran.

The over use of sanctions, and abuse of the US financial position in order to govern others, reinforces the desire to deal with fears that dependence on the dollar risks vulnerability to economic depression due to US irresponsibility.

The US is creating a perfect storm for the dollar, with is exactly what it would take to make others undertake the expense and difficulty of replacing it as the world reserve currency and presumed standard of exchange.

No one currency is quite as good now, but one could be improved, or a basket approach could be used. In the ancient world, they used such a nominal currency as a standard by which to value real currencies. We could again.

dltravers , Aug 24 2019 20:45 utc | 11

Trump does not want a new trade deal with China. He wants to decouple the U.S. economy from the future enemy.

That may well be what is going on here. Something between total insanity and managed insanity. The next president will unravel all of this in a year or so of effort. That is what is so damaging. No business can plan on what is next. No policy is long term.

This is pure Trumpian logic unhinged. Hit them twice as hard as they hit you. I would not dare to guess who is winding him up and pointing him in this direction. Trump has had one of his busiest weeks yet.

I see Elisabeth Warren's crowd sizes are getting very large. I will feel better when no one shows up to a Trump rally. China has time to wait this out and the ability to raise some chaos on their own to help undermine Trump.

Jackrabbit , Aug 24 2019 20:46 utc | 12
NemesisCalling @7, donkeytale @8

Sorry guys, it was the realization that the Empire had driven Russia into China's arms that sparked the 'get tough' attitude on China.

The Empire HAD TO isolate China but their horrendous treatment of Russia provided an opportunity for China to escape the coming 'smack down' by joining with Russia to challenge Western global domination.

As usual, it is us 'little people that will suffer for the mistakes of our elites. And elite propaganda means that most will suffer in silence, not realizing what really happened.

It should be clear by now that elite adventurism is a choice that is not subject to democratic controls. The sheeple will sleepwalk into WWIII.

Silver lining? Maybe a multi-lateral world saves us from the the more terrible dystopia of a unilateral world.

blues , Aug 24 2019 20:46 utc | 13
I just had a thought. The USSA has been doing it all wrong for all these decades. There are at least two responses the USSA could have applied to the obviously impending debacle of simply allowing the Chinese to thoroughly undermine its industrial system. The most obvious response would have been tariffs, which could be perceived as an aggressive policy, but certainly not as the outright aggression of sanctions.

Or probably even much better, a 'negative sales tax' on USSA manufactured products, which could in no way be perceived as aggressive at all. Note that there is (I presume) a vast difference between simply subsidizing companies (since subsidies coud then flow directly into the pockets of the companies' capitalists) and providing the companies' customers with a 'negative tax' on USSA produced products (basically an instant rebate). This could effectively provide price parity for the goods produced for the two countries, and could maintain the viability of the USSA manufacturing system.

But... no, we didn't do anything like that. Our Harvard trained economics geniuses hatched the 'far superior' strategy of 'quantitative easing'. They simply eased all the money out of the system and into the absurdly deep pockets of the oligarchs, supposedly in order to 'save the system'. What a masterful strategy! So the options are all used up, and theres no sane way forward. Great job.

So here's my plan. First, of course, we 'take care of' the lawyers. Well... no. First we we bulldoze Harvard. Then we institute the mother of all class action lawsuits, the 99% as plaintiffs and the 1% as defendants, and we clean them out (they will surely run off to China, but good riddance). We will be left with all their fake money, but at least we can try to start over.

Sasha , Aug 24 2019 20:51 utc | 14
@Posted by: Sasha | August 24, 2019 at 20:42

From the article linked above...Just another model of political technology,....and of civilization....

Titled 'Green is gold: the strategy and actions to China´s ecological civilization', the plan that was analyzed during the UNEA assembly explains, in its beginning, its starting point and destination: "Enjoying a beautiful house, a blue sky, a green land and clean water is the dream of any Chinese citizen and, therefore, the center of the Chinese dream (...) To achieve this vision, the government has decided to highlight the concept of eco-civilization and incorporate it into every aspect of the economy, politics, culture and social development of the country."

Definitely, a different political technology from that of Bannon...

Dianxi Xiaoge's YouTube channel is contemporary political technology at its finest. Recommended viewing for all future world leaders.

https://twitter.com/therealsurkov/status/1164310392014811137

bevin , Aug 24 2019 20:58 utc | 15
Can one really get rid of one without just getting a new master?
Contributor@4

Why not? Progress is not inevitable but it is possible.

The US ruling class cannot grow out of its desire to extend its rule to the rest of the planet. But humanity is not as malleable as the American people-with their dreams of sharing in the dividends when America (Great Again) (aka its ruling class) orders the rest of the world around and exploits everyone the way that it exploits the working people in the United States.

Somehow the profits of Empire never quite trickle down to the people who do the work and man the armies.
Elsewhere, however the dream of ruling the planet either never occurred or was grown out of. And people would be very happy to live good lives and make the earth a better place for future generations.

RenoDino , Aug 24 2019 20:59 utc | 16
Spot on in the first part of article about the inevitable new Cold War between China and America and the serious fallout from the breakup of close economic ties. But not so good on the second half wherein America central bankers are acting "insane" while the rest of the developed world looks on in horror. Are you forgetting most of the interest rates in Europe are now negative?

Are you not aware that the Bank of Japan basically owns 70% of the Japanese stock market in the from of ETFs? America is way behind the curve when it comes to complete surrender to "market forces." Trump wants Powell to play catchup now that it's game on with China. While Europe and Japan are failing economically at least America is at war with the second biggest power on the planet, making drastic moves justified in the face of a national emergency.

China is a bigger threat to America than Russia ever was because their economic model has been so successful compared to the U.S. This is made more so because we no longer have a government per se, only competing economic forces, while the Chinese have a government that runs everything. If they lose this war, they still have a system. If we lose this war, we lose everything.

Jen , Aug 24 2019 21:04 utc | 17
I imagine now that John Maynard Keynes'ghost, if it were observing our current global political and economic affairs, would be having a laugh. It was Keynes who suggested the notion of International trade using a common trading currency created purely for International trade purposes, in a system in which nations would not be allowed to build up continuous balance-of-payments surpluses or deficits over several years, but would be required to spend their surpluses on countries forced to go into deficit because of other countries' desires for annual surpluses, leading to trade policies or currency manipulations to achieve such a dubious goal.

The EU would be looking very different as a result, without a southern zone of debtor nations with unstable economies and high unemployment, and a northern zone of smug nations with full employment whose social welfare programs depend on an army of unemployed southerner immigrants willing to work for peanuts.

AntiUSA , Aug 24 2019 21:07 utc | 19
When an American claims China has been behaving unfairly, what they really mean is that the Chinese played America's rigged game and ended up outsmarting the dealer.
b , Aug 24 2019 21:10 utc | 20
Why would others want to de-couple from US? What difference it would make to UK or other EU vassals to serve FED/petro-dollar or to serve CCP/petro-yuan? Can one really get rid of one without just getting a new master?

Posted by: Contributor | Aug 24 2019 20:02 utc | 4

The US$ is overvalued because there is, as it is the global reserve currency, a higher demand for it than otherwise justifiable. In consequence U.S. companies buy up companies in UK and Europe with an overvalued dollar. When the Fed lowers the price for US$ loans it increases that effect. The Fed also creates bubbles, see the mortgage crisis, and the currently overvalued stock markets, that have effects on foreign countries.

Said differently: The U.S. abuses is 'exorbitant privilege'. The hope is that China would be less inclined to do so.

The real solution though is a different system with some global exchange medium that can not be manipulated by one country or a block of selfish countries.

NemesisCalling , Aug 24 2019 21:36 utc | 23
... ... ...

Here is an interesting article entitled "The Dialectic of Globalization," that raises several important questions pertaining to the phenomenon of globalism from the end of colonialism to the height of "transnationalism" with the end of the cold war.

I can just about agree with its conclusions and provide my own opinion as to the end of the "dialectic of globalism," that Trump seems to have, whether wittingly or not, ushered into its next phase.

International neoliberalism needs vast amounts of regulating, but I do not believe that Supranational governing agencies will be able to do this fairly and in the light of day. The only other option then is to reassert state-controlled notions of legality which is what vast proportions of the west seems to be clamoring for as can be seen with the Trump-phenomenon.

[Aug 23, 2019] Trump Hikes Tariffs On Chinese Goods In Retaliation To Trade War Escalation

Aug 23, 2019 | www.zerohedge.com

Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%. Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%.

dibiase , 38 seconds ago link

ideally america would start rebuilding it's massive rust belt and get the hell out of the middle east..

[Aug 23, 2019] An interesting observation in the NYT about the US China trade war

Aug 23, 2019 | www.moonofalabama.org

vk , Aug 23 2019 13:38 utc | 85

Interesting observation in the NYT:

From the same flaw the western MSM must suffer: did the NYT really expected China would just treat Trump like a child, wait for him to lose the 2020 election and suddenly make amends with the USA?

Did it really think this trade war was just a bad taste joke? Did it really think China would just cave in in order to "defend globalisation"?

Do they really think of America as some kind of transcendental, abstract idea, and not a concrete entity made of real human beings?

Are they really that dense?


donkeytale , Aug 23 2019 13:43 utc | 86

China announces tit for tat tariffs as yuan sinks to new low against the dollar.

Also sinking is Trump's popularity among US voters. AP has him at 36% approval versus 62% disapproval. Remarkably, Trump's highest mark of 46% approval is for his handling of the economy.

A no deal Brexit which Trump supports is just the thing to set off a recession in the EU which spreads to Asia and the US.

What will his approval rating be then?

donkeytale , Aug 23 2019 13:43 utc | 86 vk , Aug 23 2019 13:47 utc | 87
Wrong configuration from the last post (#85). I politely ask the administer to delete it.

From the NYT:

China to Raise Tariffs on $75 Billion in U.S. Goods

The interesting part is the sub-headline:

The plan to retaliate against President Trump's tariffs suggests that neither side in the trade war is prepared to back down.

I doubted this theory for a very long time, but now I'm beginning to believe it: Americans really don't think they are responsible for the politicians they elect. They expect the rest of the world to interpret any wrongdoings of their country as individual flaws of random politicians. They expect the rest of the world to swallow the abuses by their POTUS under the idea that they will elect another one the next election cycle. They expect the rest of the world to be suportive, loyal and patient with their contry forever.

From the same flaw the western MSM must suffer: did the NYT really expected China would just treat Trump like a child, wait for him to lose the 2020 election and suddenly make amends with the USA? Did it really think this trade war was just a bad taste joke? Did it really think China would just cave in in order to "defend globalisation"? Do they really think of America as some kind of transcendental, abstract idea, and not a concrete entity made of real human beings? Are they really that dense?

[Aug 22, 2019] Anti-China Cult Gets U.S. Government Money - Runs Large Pro-Trump Ad Campaign

Aug 22, 2019 | www.moonofalabama.org

jb , Aug 21 2019 18:32 utc | 1

"The Democrats could up their game by taking a deeper look into this issue." you mean the CIA democrats like Mark Warner? the US has nothing to offer the world except war, which is why the people of the US must destroy this country. there is 1000% bipartisan agreement on the war drive against both china & russia. both parties spend their days yelling at each other about who is the most commie, like Moscow Mitch or Comrade Nancy, b/c they are unified in their war drive. as they are on anything else that matters. this country exists to wage war, as the platform for projection of power, against competitors. nothing else. the illusion that any of the operators w/in the system, any of them at all, are doing anything but crafting a persona in relation to power for self-aggrandizement, not challenging power in the slightest, is not helpful.

ab initio , Aug 21 2019 18:56 utc | 2

b, what makes you think the Democrats are not in on the scam?

Also, just like the US funds NGOs in other countries, China too spends hugely and has bought many influential lobbyists and think-tanks as well as media personalities and politicians in the US. Not very different than Israel lobbyists through AIPAC and the massive Israel First big money. China influence operations in the US is likely significantly larger than US influence operations in China since China is a closed CCP controlled system.

psychohistorian , Aug 21 2019 18:57 utc | 3
b wrote
"
The Democrats could up their game by taking a deeper look into this issue.
"
I agree with jb at comment #1

Yes there are "good" Democrats which are very much in the minority. The rest D/R are acolytes for the God of Mammon finance/war based social order of the West.

Yes, we are in a very strange WWIII with lots of spinning plates and propaganda action and shedding of blood mostly where the Western public does not "see" it

vk , Aug 21 2019 19:15 utc | 5
Well, unless the crisis catches the USA first:

Deficit Will Reach $1 Trillion Next Year, Budget Office Predicts

This time, the world may not be able to prop the Dollar up : the "rest of the world" is also maxed out.

karlof1 , Aug 21 2019 20:37 utc | 15
Excellent work b! Funding what on the surface appears to be a propaganda op aimed at another nation becomes a form of campaign finance for a president's reelection campaign! I wonder how many such funds went to similar work on previous occasions?

It seems that at some point in time those within the Outlaw US Empire deemed it unimportant that other nations learn the funding for numerous NGOs seeking to subvert them are overtly financed by the USG and are thus not NGOs at all but CIA appendages; and that despite the overtness, the USG still claims those organizations to be legitimate NGOs.

I find it worthy in an ironic manner that the USA will soon be eclipsed by the nation it might have become had it not sought to be a global empire. In fact, it's the very product of those Open Door policy advocates that will soon become the bane of their descendants who opted for a financialized Free Lunch economy for themselves instead of a massively robust, resilient industrial/commercial economy for all Americans.

William Gruff , Aug 21 2019 20:40 utc | 16
Falun Gong is kinda like Scientology crossed with Amway. Get rich quick while simultaneously healing your goiters. In its best days it was a terrible scam. Now it is just a blunt instrument that the US State Department uses to try and beat China with.
FSD , Aug 21 2019 21:01 utc | 18
The Epoch Times' Jeff Carlson has been in the thick of uncovering the broad Democratic Party coup (in league with transnational intelligence assets) against the Trump Presidency. Thus b's depiction here of the Dems potentially acting in the role of white knight subverts mountains of evidence. As for Falun Gong's potential affiliations with the CIA and NED that's another quite plausible storyline altogether.
DrivelP , Aug 21 2019 21:32 utc | 19
Funny thing, after watching a Vesti News video on youtube I saw a video ad for the Epoch Times. It had a young white millennial saying a bunch of propaganda drivel about the evil communist Chinese with regards to the Hong Kong protests.

Money is flowing.

[Aug 20, 2019] Trumponomics on the march: Israeli and EU farmers say thank you to Trump .

Notable quotes:
"... "The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, the chairman of the American Soybean Association. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting. ..."
"... The Republican senator Chuck Grassley, who represents Iowa, a state heavily reliant on agriculture, has called for a quick resolution to the dispute. "Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war," Grassley said in a statement. ..."
May 14, 2019 | www.theguardian.com

American farmers are likely to feel the pain first. Soybean exports to China collapsed last year when the trade war began, and agricultural exports will be hit harder when, or if, the new tariffs are imposed. Farmers are also suffering from extensive flooding that has delayed planting.

"The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, the chairman of the American Soybean Association. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting."

The new round of tariffs will hit other parts of the US food industry, with beans, lentils, honey, flour, corn and oats all on the list of goods that will be taxed.

... ... ...

The Republican senator Chuck Grassley, who represents Iowa, a state heavily reliant on agriculture, has called for a quick resolution to the dispute. "Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war," Grassley said in a statement.

[Aug 20, 2019] China Warns Trump It Won't Make Trade Concession If US Plays Hong Kong Card

Aug 20, 2019 | www.zerohedge.com

China Warns Trump It Won't Make Trade Concession If US "Plays Hong Kong Card"

by Tyler Durden Tue, 08/20/2019 - 09:15 0 SHARES

Just days after Trump for the first time linked the ongoing Hong Kong protests with his assessment of the US-China trade war, Beijing has issued an ultimatum to the White House: the United States should not link trade negotiations with China to the Hong Kong protests, denouncing such a move as a miscalculation.

In a short commentary published by Communist Party mouthpiece People's Daily late on Monday, the author said that events in Hong Kong were the internal affairs of China, and linking them with trade negotiations was a "dirty" aim.

"Making a fuss about Hong Kong will not be helpful to economic and trade negotiations between China and the US," the commentary said. " They would be naive in thinking China would make concessions if they played the Hong Kong card " the oped cautioned.

Chinese diplomatic observers also said Beijing considered the worsening situation in Hong Kong a sovereignty issue and would be highly unlikely to cave to Washington's pressure.

The remarks followed a statement by US Vice-President Mike Pence on Monday which reiterated President Donald Trump's demand to tie the largely stalled trade talks with Hong Kong's deepening crisis, a day after hundreds of thousands of people marched peacefully in defiance of repeated intimidation from Beijing. In an address at the Detroit Economic Club on Monday, Pence said the Trump administration would continue to urge Beijing to resolve differences with the protesters peacefully and warned that it would be harder for Washington to make a trade deal with Beijing if there was violence in the former British territory. Separately, Mike Pompeo said that China should allow Hong Kong protesters the freedom to express themselves, in what China saw as clear interference in its own internal matters.

The Chinese article countered by saying that the top priority for Hong Kong was to stop violence and restore order, adding that US politicians should not send the wrong message to people creating chaos in the city. "In the face of political intimidation, we not only dare to say no, but also take countermeasures," it warned.

Global Times, a tabloid controlled by the flagship state-run newspaper People's Daily, also warned in an editorial on Monday that American political and public opinion elites should not harbour the illusion they could influence China's decisions on Hong Kong.

"Because of the trade war, the US has lost the ability to impose additional pressure on China," it said.

"The US should stop its meaningless threat of linking the China-US trade talks with the Hong Kong problem. Beijing did not expect to quickly reach a trade deal with Washington. More Chinese people are prepared that China and the US may not reach a deal for a long time."

Chinese analysts noted Trump appeared to have hardened his stance on Hong Kong in the past week or so, under growing pressure from US lawmakers and extensive media coverage of the increasingly violent protests. Indeed, it was only a month ago when we reported that " Trump Abandoned Support For Hong Kong Protests To Revive Trade Talks With Beijing ." Now that trade war is once again front and center, with Trump using it as leverage for further Fed rate cuts, the US president is once again refocusing his attention on Hong Kong.

As the SCMP writes , Trump initially focused on making a deal with China ahead of his 2020 re-election bid and adopted a hands-off approach by characterizing the protests as "riots" which were a matter for China to handle. Over the past few days, he suggested Chinese President Xi Jinping should resolve the situation by meeting with protest leaders and warned that any violence in the handling of the Hong Kong crisis would exacerbate difficulties for attempts to bring an early end to the trade war.

"Trump's about-face on Hong Kong, from being neutral to piling pressure on Beijing, is largely due to domestic political pressure ahead of the presidential elections," said Shi Yinhong, an international relations expert at Renmin University and an adviser to the State Council which is China's cabinet.

" But the Hong Kong issue concerns China's sovereignty and the government's ability to maintain stability, which in Beijing's view is of superior priority . China cannot afford to make much compromise and will do everything to fend off interventions from abroad, in spite of all the risks and ramifications," he said.

Despite the soured mood between China and the US over their spiralling trade war – as well as escalating tensions over Huawei, Taiwan and other geopolitical rifts – both sides were planning further trade talks in the coming 10 days, according to White House chief economic adviser Larry Kudlow on Sunday.

Any progress would be virtually impossible with analysts cautioning that the US attempt to "play the Hong Kong card" would further complicate the trade talks.

Meanwhile, in the latest significant escalation in diplomatic tensions, China responded angrily to Washington's decision on a US$8 billion sale of F-16 fighter jets to Taiwan and Trump's warning against Huawei citing national security threats.

"When a long list of old problems between the two countries remains unsolved, the US side is now ramping up the pressure on Hong Kong," said Shen Dingli, a professor of US studies at Fudan University. "China has so far refused to make concessions in the absence of adequate mutual respect and trust and I don't think we'll have much room to compromise on Hong Kong or other issues. We'll have to wait and see what the US would do next," he said.

Shi also said none of the flashpoints in the bilateral ties – from Hong Kong, Taiwan, to the South China Sea and the denuclearisation of North Korea – had any easy solution in sight, with both sides showing little willingness to cooperate and accommodate the other's interests. He said the increasingly hardline, confrontational approach on China by Trump – who faced mounting pressure in his bid for re-election, especially amid signs of a looming global economic recession – would only make a trade deal increasingly unattainable.

"Even if there were no Hong Kong crisis, could the US and China reach a trade deal? Even if Beijing caved into Washington's pressure on Hong Kong, would it make it easier for them to bridge their glaring differences in the trade talks and cut a deal?"

Of course not, and since Trump is far more interested in keeping trade war simmering and on the verge of a substantial escalation if only to keep the Fed on its toes and ready for far more aggressive rate cuts, and even "some quantitative easing", that's precisely what the US president wants.

[Aug 17, 2019] Charge us More by Michael Hudson

Aug 15, 2019 | michael-hudson.com

Trump's claim that China is paying for the tariffs is completely false and basically serves to redirect income from his poor supporters to his wealthy supporters.

Not only that, the policy will have the consequence of further isolating the United States, says Michael Hudson.

[Aug 13, 2019] Trump Is Delaying Tariffs on China for Holiday Shopping Season

Aug 13, 2019 | economistsview.typepad.com

im1dc , August 13, 2019 at 09:46 AM

Ho Ho Ho

https://www.thedailybeast.com/trump-is-delaying-tariffs-on-china-for-holiday-shopping-season?ref=home

"Trump Is Delaying Tariffs on China for Holiday Shopping Season"

by Shira Feder...08.13.19...11:04AM ET

"The Trump administration announced Tuesday that tariffs set to be imposed Sept. 1 on Chinese consumer products like electronics, sneakers, and video game consoles will not go into effect until Dec. 15."...

Fred C. Dobbs , August 13, 2019 at 09:50 AM
(Ho, ho, ho!)

US to Delay Some China Tariffs Until Stores Stock
Up for Holiday Shoppers https://nyti.ms/2H50NMv
NYT - Ana Swanson - August 13

The Trump administration on Tuesday narrowed the list of Chinese products it plans to impose new tariffs on as of Sept. 1, delaying levies on cellphones, laptop computers, toys and other consumer goods until after stores stock up for the back-to-school and holiday shopping seasons. Stocks soared on the news.

The move, which pushed a new 10 percent tariff on some goods until Dec. 15 and spared others entirely, came as President Trump faces mounting pressure from businesses and consumer groups over the harm they say the continuing trade war between the United States and China is doing.

Mr. Trump's earlier tariffs on Chinese imports were carefully crafted to hit businesses in ways that everyday Americans would mostly not notice. But his announcement this month of the 10 percent tariff on $300 billion of Chinese goods meant consumers would soon feel the trade war's sting more directly.

On Tuesday, Mr. Trump acknowledged as much.

"We're doing this for the Christmas season," he told reporters around noon. "Just in case some of the tariffs would have an impact on U.S. customers." ...

Fred C. Dobbs said in reply to Fred C. Dobbs... , August 13, 2019 at 09:54 AM
... Mr. Trump's comments about the tariffs' impact on consumers followed the United States trade representative's office announcement that while the new tariffs would take effect as Mr. Trump had threatened, some notable items would not immediately be subject to them.

Consumer electronics, video game consoles, some toys, computer monitors and some footwear and clothing items were among the items the trade representative's office said would not be hit with tariffs until retailers had time to stockpile what they needed for their busiest time of year.

The administration also said some products were being removed from the tariff list altogether "based on health, safety, national security and other factors." A spokesman for the trade representative's office said the products being excluded from the tariffs included car seats, shipping containers, cranes, certain fish and Bibles and other religious literature.

The S&P 500 climbed nearly 2 percent after the announcement, lifted partly by stocks of retailers and computer chip producers that have been sensitive to indications that trade tensions were getting either better or worse.

Best Buy, which gets a many of the products it sells from China, was among the best-performing stocks in the S&P 500, up more than 8 percent in morning trading. The Nasdaq composite index rose more than 2 percent. ...

[Aug 11, 2019] How much of US China trade imbalance are due to each country's trade policy

Aug 11, 2019 | economistsview.typepad.com

anne , August 10, 2019 at 07:06 AM

https://twitter.com/paulkrugman/status/1160183976771936257

Paul Krugman @paulkrugman

OK, I'm having a very nerdy moment. Trying to understand why US-China bilateral trade imbalance is so large. NOT because it's important, but just because it's kind of a puzzle; I guess it's my inner @Brad_Setser 1/

6:39 AM - 10 Aug 2019

So last year US goods imports from China were $539.5 billion, US goods exports $120.3 billion. That's 4.5 to 1. Why so much asymmetry? I think 4 reasons: Hong Kong, macroeconomics, value-added, and oil 2/

Hong Kong: effectively part of the Chinese economy, and the US runs a large surplus - $37 b in exports, only $6 b in imports. Basically a lot of US goods appear to enter China via HK (something similar in Europe, where US exports to Germany go via Belgium/Netherlands) 3/

Adding HK reduces the export imbalance to "only" 3.5 to 1. Now macro: the US runs overall trade deficit, with imports 1.5 times exports. China runs overall surplus, with imports only 0.8 exports. On some sort of gravity-ish story, this suggests ratio "should" be around 2 4/

Now add China's role as "great assembler", with value-added in exports really coming from elsewhere; famous case of iPhone. Much less true than it used to be, but still means that Chinese surplus is partly optical illusion 5/

Lastly, China imports a lot of oil, which means other things equal needs to run a surplus on everything else. Used to be true of US, but with fracking we're now almost self-sufficient in hydrocarbons (but not exporting to China) This adds a further reason for bilateral 6/

Someone with more time and patience should try to do the full accounting, but I think the US-China bilateral can mainly be explained by "natural causes"; doesn't have much to do with either country's trade policy 7/

RC (Ron) Weakley said in reply to anne... , August 10, 2019 at 07:17 AM
I guess that Krugman is just a natural law kind of guy wherein IP protectionism and arbitrage seeking cross border capital flows in an exorbitantly privileged global reserve currency are just natural phenomenon like meteor showers and rain.
anne -> RC (Ron) Weakley... , August 10, 2019 at 07:17 AM
I tried, but have no idea what this criticism means; whereas I understand Paul Krugman.

[Aug 08, 2019] China Retaliation Is '11' on Scale of 1 to 10, Wall Street Warns

Notable quotes:
"... "While there were measures that could have been chosen with larger direct effects on supply chains, the announcements from Beijing represent a direct shot at the White House and seem designed for maximum political impact," Krueger said. " We expect a quick (and possibly intemperate) response from the White House, and consequently expect a more rapid escalation of trade tensions." ..."
"... In a mid-day note, Krueger added that "the next stop on the currency manipulation road is probably off the map." Krueger expects Trump's "drumbeat on currency" will get louder, with the potential for the president to use a "charge of currency manipulation to justify some combination of (more) tariffs, investment restrictions and export controls." ..."
"... Instructing state-owned Chinese firms to halt U.S. crop purchases triggered "the obligatory flight-to-quality," which pushed 10-year yields to 1.74%, with two-year yields keeping pace. That was "an impressive move that suggests August will not experience the traditional summer doldrums. Who needs vacation anyway?" ..."
"... Bank investors' eyes were "glued to the yield curve last week," with Trump's tariff tweet on Thursday, Graseck wrote in a note. They're now asking about Morgan Stanley's net interest margin (NIM), outlook. ..."
Aug 08, 2019 | economistsview.typepad.com

Fred C. Dobbs , August 05, 2019 at 01:39 PM

China Retaliation Is '11' on Scale of 1 to 10, Wall Street Warns
Bloomberg - Felice Maranz - August 5, 2019

https://www.bloomberg.com/news/articles/2019-08-05/china-retaliation-is-11-on-scale-of-1-to-10-wall-street-warns

Analysts continued to warn about the dangers of an escalating trade war on Monday, as China moved to strike back at the U.S., hitting U.S. stocks and boosting Treasuries.

Semiconductors, with direct exposure to trade, and banks stocks, which are sensitive to interest rates, were among the decliners. The biggest U.S. banks slid, with the KBW Bank Index dropping as much as 4.1% to the lowest since June 4. Bank of America Corp. led index decliners, with a drop of 5.5%, the most since Dec. 4, while Citigroup Inc. shed more than 4% and JPMorgan Chase & Co. slipped 3.8%.

Micron Technology Inc. fell 6.2% while Texas Instruments Inc. lost 4.4% and Intel Corp. was down 4%. Apple Inc. dropped 5.6%, the most since May 13. Shares in Chinese tech giants Alibaba Group Holding and JD.com Inc. fell near two month lows in U.S. Trading.

Agriculture equipment makers Deere & Co. and AGCO Corp. tumbled as China suspended imports of U.S. agricultural products. The escalating trade tensions are also a major risk for the U.S. automotive industry, which has a significant exposure to the country. According to UBS's Global Wealth Management Chief Investment Officer Mark Haefele, the latest spat raises the possibility that "tariffs could also be placed on auto imports."

President Donald Trump tweeted about China and the Fed on Monday morning, saying: "China dropped the price of their currency to an almost a historic low. It's called 'currency manipulation.' Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!"

Here's a sample of some of the latest commentary:

Cowen, Chris Krueger
Krueger called China's retaliation "massive," adding that "on a scale of 1-10, it's an 11." He cited the Chinese government calling on state buyers to halt U.S. agricultural purchases, while there's "increased anecdotal evidence that the Chinese government is tightening its overview of foreign firms."

"While there were measures that could have been chosen with larger direct effects on supply chains, the announcements from Beijing represent a direct shot at the White House and seem designed for maximum political impact," Krueger said. " We expect a quick (and possibly intemperate) response from the White House, and consequently expect a more rapid escalation of trade tensions."

"There now will be increased expectations that the Fed will cut again in September to offset the drag caused by this escalation in the trade war," he added. "Such moves will only be a partial, lagged offset to the recessionary headwinds a cycle of retaliation would cause."

In a mid-day note, Krueger added that "the next stop on the currency manipulation road is probably off the map." Krueger expects Trump's "drumbeat on currency" will get louder, with the potential for the president to use a "charge of currency manipulation to justify some combination of (more) tariffs, investment restrictions and export controls."

BMO, Ian Lyngen
"The wait is over for those wondering how Beijing would respond to Trump's recent tariff announcement," BMO said. "The result: the yuan was allowed to depreciate well beyond 7.0."

Instructing state-owned Chinese firms to halt U.S. crop purchases triggered "the obligatory flight-to-quality," which pushed 10-year yields to 1.74%, with two-year yields keeping pace. That was "an impressive move that suggests August will not experience the traditional summer doldrums. Who needs vacation anyway?"

"The most significant unknown at this moment," Lyngen added, "is how much further the yuan will be allowed to fall given that it's already the weakest since 2008."

Morgan Stanley, Betsy Graseck (bank analyst)

Bank investors' eyes were "glued to the yield curve last week," with Trump's tariff tweet on Thursday, Graseck wrote in a note. They're now asking about Morgan Stanley's net interest margin (NIM), outlook.

Graseck didn't change her NIM assumptions -- yet. "We bake one additional cut of 25 basis points in 2019 in-line with our economist, and bake in the 10-year at 1.75% by mid 2020," she wrote. She'll update NIM and earnings per share estimates "if it looks like these trade tariffs are going through as September approaches."

Morgan Stanley, Michael Zezas (policy strategist)

"The dynamics of U.S.-China negotiation and macro conditions mean the next round of tariffs will likely be enacted, and investors are likely to behave as if further escalation will follow in 2019 until markets price in impacts," Zezas wrote. "This supports our core view of weaker growth and skews the Fed dovish."

Zezas sees incentives for the U.S. to escalate quickly. If the administration "understands the Fed's trade policy reaction function, then it may also perceive that a more rapid escalation could deliver one or more of three beneficial points ahead of the 2020 election: 1) A quicker, potentially more aggressive Fed stimulus response that could help the economy heading into the election; 2) More time to re-frame the potential economic downside; and 3) A major concession by China (not our base case, but it is, of course, a possibility)."

Veda, Henrietta Treyz

"The U.S. and China are moving into one of their most aggressive phases yet in the year-plus long trade war and we fully expect things to escalate from here," Treyz wrote in a note.

Treyz added that China's ability to quickly adjust their currency is an advantage they have over the U.S. that "goes to the heart of the issue for the Trump administration." The administration may view China's communist regime as a "systemic advantage" versus "free markets and democracy" in the U.S., as the Chinese can "subsidize domestic industry, quickly, enact lower tax rates and provide stimulus."

Furthermore, her conversations with Republicans point to the belief that "China's economy is on the brink of collapse," she said, with turmoil in Hong Kong "considered evidence of an organic domestic uprising that many believe the Chinese government cannot contain."

Republicans may also believe Trump will "galvanize" his base behind him, while attracting "anti-trade and union Democrats in the Rust Belt as he takes on the mantle of a war time president going into 2020 by engaging in this trade war." ...

[Aug 08, 2019] There's a revealing puzzle in the China tariffs

Aug 08, 2019 | economistsview.typepad.com

anne , August 06, 2019 at 12:26 PM

http://larrysummers.com/2019/05/15/theres-a-revealing-puzzle-in-the-china-tariffs/

May 15, 2019

There's a revealing puzzle in the China tariffs

On Monday, China announced new tariffs on $60 billion of U.S. exports, and the United States threatened new tariffs on up to $300 billion of Chinese goods. These actions were cited as the principle reason for a decline of more than 600 points in the Dow Jones industrial average, or about 2.4 percent in broader measures of the stock market. With the total value of U.S. stocks around $30 trillion, this decline represents more than $700 billion in lost wealth.

This was not an isolated event. Again and again in the past year, markets have gyrated in response to the state of trade negotiations between the United States and China.

The market sensitivity to threats and counter-threats in the trade war is quite remarkable. Monday's announcement by the Chinese, for example, would be expected to raise China's tariffs by about $10 billion. Much of this will show up as higher prices for Chinese importers, and some of it will be avoided by diverting exports of goods such as liquid natural gas to other markets, so the impact on U.S. corporate profits will be far less than $10 billion. Meanwhile, U.S. tariffs are likely to raise corporate profits as higher import costs push some business to domestic producers.

There is the further consideration that reasonable market participants should not have entirely discounted the possibility of tariff increases Monday and that there surely remains some chance a trade deal will be reached. So, in fact, the market should not even have moved in full proportion to the change in corporate profitability associated with new tariffs.

There is a revealing puzzle here. Events whose direct impact on corporate profits is a few billion dollars seem to be driving market fluctuations that change the total value of corporations by hundreds of billions of dollars. To be sure, there would be many ways of refining my calculation of the profit impact to recognize various feedbacks, and certainly the imposition of tariffs increases uncertainty, which in general depresses markets. But with any plausible calculation of the direct impact of tariff changes on profitability or uncertainty about profitability, it is not possible to justify the kinds of changes in market value we observed Monday or on many other days when there was news about the status of the U.S.-China trade negotiations.

Part of the answer to the puzzle, I suspect, lies in markets' tendency to sometimes overreact to news, especially in areas where they do not have long experience. This idea is supported by the tendency illustrated by the market's Tuesday rally, which took place without any particularly encouraging U.S.-China developments.

A larger part of the answer probably lies in the idea that the current trade conflict is a possible prelude to a far larger conflict between the two nations with the largest economies and greatest power for as far as can be foreseen. When it appears less likely that a conflict over well-defined and ultimately not-that-difficult commercial issues can be resolved, rational observers conclude that it is also less likely the United States and China can manage issues ranging from 5G wireless technology to North Korea, from the future of Taiwan to global climate change, and from the management of globalization to the security architecture of the Pacific region.

A world where relations between the United States and China are largely conflictual could involve a breakdown of global supply chains, a splinternet (as separate, noninteroperable internets compete around the world), greatly increased defense expenditures and conceivably even military conflict. All of this would be catastrophic for living standards and would also have huge adverse effects on the value of global companies.

It is, I suspect, the greater risk of catastrophic medium-run outcomes, rather than the proximate impact of trade conflicts, that is driving the outsize market reactions to trade negotiation news.

This carries with it an important lesson for both sides: It is risky to turn the pursuit of even vital national objectives into an existential crusade. Rather, even when nations have objectives that are in conflict, it is important to seek compromise, to avoid inflammatory rhetoric and to confine rather than enlarge the areas where demands are being made. Establishing credibility that promises will be kept and surprises will be avoided is as or more important with adversaries as with friends.

As the Trump administration carries on the trade negotiations, and as the presidential campaign heats up, Americans will do well to remember that there is no greater threat to the success of our national enterprise over the next quarter-century than mismanagement of the relationship with China. It is not just possible but essential to be strong and resolute without being imprudent and provocative.

-- Larry Summers

anne -> anne... , August 06, 2019 at 12:29 PM
Correcting date:

May 15, 2019

[Aug 08, 2019] White House To Unveil Rule Banning Agencies From Doing Business With Huawei

Aug 08, 2019 | www.zerohedge.com

As has long been expected, the White House is preparing to release a new rule on Wednesday barring government agencies from buying equipment or doing any kind of business with Chinese telecoms giant Huawei - ratcheting up tensions between the world's two largest economies at an already precarious time for the global economy.

Here's more from CNBC :

The Trump administration is expected to release a rule Wednesday afternoon that bans agencies from directly purchasing telecom, video surveillance equipment or services from Huawei. The prohibition was mandated by Congress as part of a broader defense bill signed into law last year.

"The administration has a strong commitment to defending our nation from foreign adversaries, and will fully comply with Congress on the implementation of the prohibition of Chinese telecom and video surveillance equipment, including Huawei equipment," said Jacob Wood, a spokesman for the Office of Management and Budget.

Per CNBC, the new rule is expected to take effect a week from Wednesday, and it applies not only to Huawei, but also to a list of other telecom companies that have drawn security concerns, such as ZTE and Hikvision.

The official said contractors will be able to seek waivers from individual federal agencies if they believe their business with any of the targeted companies should be exempt from the rule.

Moreover, the new rule will also set a deadline of August 2020 for a broader ban on federal contractors doing business with Huawei and other firms.

The law passed by Congress is separate from the Trump Administration's own efforts to keep Huawei in check.

The Commerce Department instigated the tensions between the US and China after it placed Huawei on a blacklist that effectively bans the company from buying goods or doing any kind of business with Huawei. A 90-day grace period that kept Huawei off the blacklist temporarily is now almost over. And President Trump has apparently walked back his promised, made at the G-20 Summit in Osaka, to ease the pressure on Huawei.

However, US chipmakers and tech firms can request waivers, and the CEOs of Google, Qualcomm, Micron, Intel and others met with President Donald Trump at the White House last month and urged the administration to issue those decisions quickly.

In an interview on CNBC, Huawei CSO Andy Purdy defended the company's track record, arguing that European leaders in the UK and Germany had told their counterparts in the US that they had found no evidence that Huawei was a security threat.

"We have tested the products of all vendors to international standards so that there's trust through verification," Purdy said.

But that likely won't change anybody's mind.


TheRapture , 9 hours ago link

Expect a new rule from China:

All Chinese government agencies will be prohibited from buying CISCO and other American telecommunications products. Furthermore, contractors dealing with Chinese government agencies will also be so prohibited from buying American telecom products.

America - population 329 million. Economic growth rate: 2.8%
China - population 1.4 billion. Economic growth rate: 6.5%
source: Wikipedia

China is rapidly industrializing, and has the largest manufacturing base in the world. The USA is already a mature industrial economy, and since NAFTA has offshored most of its manufacturing base. The USA leads the world in the design, manufacture and export of weapons, but relies on coercive political relationships (such as NATO) rather than the "free market" to sell its overpriced and line of products to captive satellite countries. China is rapidly expanding in the weapons manufacturing sphere, as is Russia, and offer increasingly competitive products at lower prices, and with fewer political strings attached.

Something to think about before breastbeating and cheering ourselves on.

CashMcCall , 10 hours ago link

Trump is getting the **** kicked out of him on CNBC and every Financial media on the internet. When China dug in, that was the end of the Trump bluff. For the first time, the absurd articles about China losing are gone and now the new reality is that China is going to squeeze the life out of Trump.

Huawei is just another of Trump's wayward policies of getting Canadian poodles to kidnap Huawei's founder's daughter. Nice dirty **** Trump. Women already hate Trump this ices that cake.

Last week Huawei overtook Apple as the second largest smart phone maker. Huawei announced it no longer had any dependence on US manufacturers for 5G, another body blow to the blowhard.

Dozens of certifying agencies have no studied Huawei products and have found zero instances of spyware or any instance of this hardware being used for spying. In short, Trump and the NSA and CIA look like a bunch of assholes. This will only accelerate Huawei's 5G rollout.

Trump is being **** canned in every direction. The great part of Trump von hitler's personality is that he knows his 10% Sept Tariffs were essentially the end of his presidency, but is too arrogant to reverse course. Instead, he is screaming at the Fed for more loose money to support his bad policies. And he wants more Farmer WELFARE. That dog don't hunt!

China is not going to roll over over for Trump. The financial media is now tearing Trump a new ******* every hour. Markets are not responding to Trump plunge team efforts. They continue to sell off.

Where's the endgame they ask? This is the same deal as Trump closing down the gov for nothing. Trumptards cheered as the orange idiot painted himself in the corner and accomplished nothing. Not one inch of wall has been constructed since Trump took office. Trump floats on a raft of ********. Meanwhile Trump has a 20 year history of hiring Illegals for Trump Organization. Total Fraud and self dealer.

The GOP is now climbing the walls. Today Trump Screamed at the Fed to reduce rates emergently and then said it had nothing to do with China. Astonishing.

When China put an end to US Ag purchases effective immediately they were basically saying they were tired of Trump's ********. The farmer associations are turning on Trump round the clock. Where is Trump? He's hiding out. But of course this has NOTHING to do with China.

But here is Trump once again playing the phony national Security card with Huawei when a dozen independent organizations have published reports and cleared Huawei of the Trump Administration's phony security claims.

vincenze , 11 hours ago link

Huawei Honor smartphones and tablets are really good. The top models are even better than iPhones.

There were some Chinese smartphones at Best Buy the last time I checked.

But I just bought the 128Gb Lenovo Zuk for $280 from Banggoog a couple years ago when it was on sale. It's a little problematic to update Android, but it works perfectly anyway. There is a forum for Lenovo phones, though, with all answers.

There is no need to buy from Best Buy or Amazon, buy cheaper directly from China.
https://www.banggood.com/Wholesale-Smartphones-c-1567.html

me or you , 11 hours ago link

Back into reality.: Huawei to invest £1.2bn in new Shanghai R&D Centre, Build 'Self-Reliance' Amid US Trade War on

Tachyon5321 , 11 hours ago link

Poland's state security agency arrested Huawei sales director Wang Weijing and a Polish national over spying.

Dongfan Chung The 74-year-old former Boeing Co. engineer was convicted in July of six counts of economic espionage and other federal charges for keeping 300,000 pages of sensitive papers in his home

Chi Mak He copied and sent sensitive documents on U.S. Navy ships, submarines and weapons to China by courier.

Don't waste my time. A 20 second google search shows you have no point, but the one on the top of your head.

Thus, Given the Chinese government's record on espionage, "a good-faith assertion from Andy is not enough."

Asoka_The_Great , 12 hours ago link

Trumptard and the US Dark State's campaign to KILL Huawei has failed spectacularly.

Huawei reported revenue growth of 23% in the first half of 2019.

https://www.huawei.com/en/press-events/news/2019/7/huawei-announces-h1-2019-revenue

"In Huawei's carrier business , H1 sales revenue reached CNY146.5 billion, with steady growth in production and shipment of equipment for wireless networks, optical transmission, data communications, IT, and related product domains. To date, Huawei has secured 50 commercial 5G contracts and has shipped more than 150,000 base stations to markets around the world.

In Huawei's enterprise business , H1 sales revenue was CNY31.6 billion. Huawei continues to enhance its ICT portfolio across multiple domains, including cloud, artificial intelligence, campus networks, data centers, Internet of Things, and intelligent computing. It remains a trusted supplier for government and utility customers, as well as customers in commercial sectors like finance, transportation, energy, and automobile.

In Huawei's consumer business , H1 sales revenue hit CNY220.8 billion. Huawei's smartphone shipments (including Honor phones) reached 118 million units, up 24% YoY . The company also saw rapid growth in its shipments of tablets, PCs, and wearables. Huawei is beginning to scale its device ecosystem to deliver a more seamless intelligent experience across all major user scenarios. To date, the Huawei Mobile Services ecosystem has more than 800,000 registered developers, and 500 million users worldwide.

"Revenue grew fast up through May," said Liang. "Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That's not to say we don't have difficulties ahead. We do, and they may affect the pace of our growth in the short term."

He added, "But we will stay the course. We are fully confident in what the future holds, and we will continue investing as planned – including a total of CNY120 billion in R&D this year. We'll get through these challenges, and we're confident that Huawei will enter a new stage of growth after the worst of this is behind us."

[1

Tachyon5321 , 11 hours ago link

Just more proof that Huawei is selling into the USA at below cost. A massive drop in American sales improved the razor thin profit of the company...

Asoka_The_Great , 11 hours ago link

"Just more proof that Huawei is selling into the USA at below cost. "

WHAT A DUMB ****!

HUAWEI HAS NO MARKETSHARE IN US.

Huawei Networking Equipments was banned in US, years ago. None of three major US cellular networks use Huawei's equipment or sell its smartphones.

Tachyon5321 , 4 hours ago link

WHAT A DUMB ****!: Thanks!!! That makes me 3 times smarter than you because Huawei subcontractors do sell Huawei products in the USA. You are an ignorant Asian that should go back to his village and the one room dirt floor hut... LOL

Edit: 8% margins....LOL

Everybodys All American , 12 hours ago link

I'd be the first to say that I don't know everything about this telecom but I will say this seems like a reasonable decision on it's face for the US government not to put in Chinese telecommunications equipment. Of course China is going to not like it because with Hillary she just gave them direct access to damn near anything through her email server.

Archeofuturist , 12 hours ago link

Exactly. Every penny .gov spends should mandated that it MUST be from America companies. Every nut, every bolt.

[Aug 06, 2019] Pretty glum outlook on US China trade war

Aug 06, 2019 | www.moonofalabama.org

Passer by , Aug 5 2019 22:48 utc | 61

b, the trade war is escalating, For The First Time In 25 Years, US Treasury Just Designated China A Currency Manipulator.

Can you make an article on the situation?

karlof1 , Aug 6 2019 0:26 utc | 65

Passer by @61--

First, Trump coerced the Fed into lowering interest rates which made US Dollars cheaper to buy then he increased domestic taxation 10% though increasing the tariff on selected Chinese goods. China then blocks the importation of all US foodstuffs and lowers the price of the Yuan an amount equal to the tariff increase--and the US treasury and Trump have the gall to call China the currency manipulator! NO, as usual with the Outlaw US Empire, it's accusations are psychological projection of what itself does. Hudson discusses it here . US financial markets have finally awakened to Trump's moves and have fallen 5% over the last three trading days, with more likely to follow. Hudson on Trump:

"It's all a diversion so that people won't look at what's really happening, only at what Trump is saying. But as people find that they have to pay higher prices, I don't think they'll believe Trump. I think he's lost all credibility. That's why the stock market's collapsing. They're aghast. They think that even Trump can't get away with this big a lie when it's so obviously false."

As I commented last Friday on the AP article my local paper ran about the tariff hike, it finally told the truth about who'll pay--US Consumers or China: US Consumers! AP, All Propaganda, tore a gapping hole into Trump's narrative--but will people believe a media outlet that's lied so often?

Trump can't win his global trade war. China won't capitulate; it's economy and society are 100x healthier than the Outlaw US Empire's and are resilient where the USA can only claim to have been once upon a time. Why that is has been explained before. The transcript of this interview's poor, but the topic covers the answer by showing how Canada's economy became a victim of the same predators as the USA's.

We know what happened, how and why. What we don't know how to do is reverse the situation politically. Hudson compares the dire situation to that of Rome:

"So they obviously, the left-wingers such as Bernie Sanders, want to run for president as a kind of educational campaign to make their policy clear to the people, but they know that there's no way in which the ruling class will let them win.

"It's been very clear, if they did win, they would be assassinated very quickly. I've been told that by presidential candidates. The threat is, you'll never be president, we have ways of keeping you out, and should you succeed, we will do to you what the Romans did to every advocate of democracy century after century, assassination."

It seems the best those of us residing within the Outlaw US Empire can hope for is that Trump's policies will decimate US financial institutions worse than what occurred in 2008. Hudson's perspective:

"I don't see any popular movement yet. You can very easily see why collapse is inevitable....

"There's no way of knowing when there will be a break in the chain of payment. Usually it's a bankruptcy of a big company, very often by fraud, as the 2008 crisis was bank mortgage fraud. You don't know when people will fight back. Often, surprisingly, they only fight back when things are getting better. But things still have a way to go to get much worse in Canada, much worse in the United States, so I don't see any possibility of reform within the next 4 to 8 years."

Pretty glum outlook.

[Aug 05, 2019] Impulsive and aggreesive President: not a good combination

Aug 05, 2019 | www.moonofalabama.org

Passer by , Aug 4 2019 23:56 utc | 56

Trump Overruled All Advisors Except Navarro "In Heated Exchange" Before Launching New China Tariffs

https://www.zerohedge.com/news/2019-08-04/trump-overruled-all-advisors-except-navarro-launching-new-china-tariffs

So much for Trump being a "moderate" and "not a hawk".

In my assessment Trump is very aggressive President foreign policy wise. Way more aggressive than Obama.

[Aug 04, 2019] Bank of America What Trump Did Is A Game Changer

Price of clothing is already noticeably higher with some categories (shooes) affected more then others.
Aug 04, 2019 | www.zerohedge.com

However, all that is about to change, because as Bank of America team of economists writes, Trump's latest tariff announcement from last Thursday, when the president shockingly unveiled 10% tariffs on $300BN in Chinese imports starting September 1, "is a major escalation." The reason for this is that past measures had mostly avoided consumer goods. By contrast, the threatened tariffs would cover $120bn of consumer goods, out of $300bn in total, and since BofA expects the tariffs to be implemented, either on schedule or later this year, the period of dormant trade war inflation is about to end with a bang, not a whimper.

... ... ...

Was Trump's announcement a negotiating tactic?

For the past year, one of the points of biggest contention among economists and traders is that despite what is now a 1+ year trade war with China, inflation due to higher tariffs has been strangely missing, with some claiming that the goods targeted in previous tariff rounds were either not "consumer" enough, or simply had more affordable substitutes from other, non-Chinese supply chains, allowing US consumer to avoid having higher prices passed upon them.

However, all that is about to change, because as Bank of America team of economists writes, Trump's latest tariff announcement from last Thursday, when the president shockingly unveiled 10% tariffs on $300BN in Chinese imports starting September 1, "is a major escalation." The reason for this is that past measures had mostly avoided consumer goods. By contrast, the threatened tariffs would cover $120bn of consumer goods, out of $300bn in total, and since BofA expects the tariffs to be implemented, either on schedule or later this year, the period of dormant trade war inflation is about to end with a bang, not a whimper.

bitzager , 7 minutes ago link

"Game Changer" - What's in your wallet? We'll soon find out in

the Walmart near you.. :)))

2banana , 13 minutes ago link

Well, a silly "feedback loop" as for the first three years of Trump being elected - the Fed RAISED rates eight (8) times.

In the face of all the tariffs during that time period and a trade war with China.

Also - the Fed started the Great QE unwind in the same time period - "withdrawing" $700 billion from circulation.

[Aug 04, 2019] Commentary China will never buckle under Washington's old trick of trade bullying

Notable quotes:
"... As the U.S. administration is ready to impose a 10 percent tariff on the remaining 300 billion U.S. dollars of Chinese imports, its sincerity in reaching a mutually beneficial trade deal with Beijing that can accommodate each other's major concerns has gone bust. It seems that in the eyes of Washington's China hawks, trade talks are no more than a formality with which to rip China off. ..."
"... While the White House is boasting about taxing China until a trade deal is reached, it should keep in mind that China will only accept a win-win agreement on the basis of mutual respect and equal treatment. ..."
"... Beijing's position has been consistent and clear: China does not want a trade war, but it is not afraid of one and will fight one if necessary. ..."
"... It is therefore hoped that Washington should drop its fantasy to bring Beijing down to its knees with its same and old tricks of maximun pressure. If it truly wants a deal, then they will need to show some real sincerity first. ..."
Aug 02, 2019 | www.xinhuanet.com

Despite calling the just-concluded China-U.S. trade talks in Shanghai "constructive" and hoping for more "positive dialogue," the White House on Thursday announced plans to impose extra tariffs on Chinese imports from Sept. 1.

Washington's unilateral escalation of trade disputes is a serious breach of trust after the two sides reached in June consensus to restart trade talks on the basis of equality and mutual respect.

Apart from undermining the momentum of the newly resumed China-U.S. trade talks, the U.S. flip-flopping again exemplifies Washington's untrustworthiness in striking a deal and its disturbing propensity for bullying.

The U.S. administration should bear in mind that its bullying and tariff threat, which has not worked in the past, will not work this time.

For over a year, the U.S.-initiated trade disputes with China have bogged down not just economic growth of the two countries but that of the whole world. Meanwhile, an increasingly capricious Washington is harming the current world order with more uncertainties.

As the U.S. administration is ready to impose a 10 percent tariff on the remaining 300 billion U.S. dollars of Chinese imports, its sincerity in reaching a mutually beneficial trade deal with Beijing that can accommodate each other's major concerns has gone bust. It seems that in the eyes of Washington's China hawks, trade talks are no more than a formality with which to rip China off.

Also, the new twist in China-U.S. trade talks shows that some Washington politicians are trying to play tough against China on trade matters and gain cheap political points as the new cycle of U.S. presidential election is looming.

Unlike previous rounds of taxing Chinese imports, the U.S. administration this time is targeting a wide swath of consumer goods, and therefore, is "using American families as a hostage" in its trade negotiations, according to Matt Priest, president of the Footwear Distributors and Retailers of America.

While the White House is boasting about taxing China until a trade deal is reached, it should keep in mind that China will only accept a win-win agreement on the basis of mutual respect and equal treatment.

Beijing's position has been consistent and clear: China does not want a trade war, but it is not afraid of one and will fight one if necessary.

In response to Washington's tariff assaults since March 2018, China has had to take forceful counter measures. This instance will be no exception.

Still, Beijing remains committed to handling its trade problems with Washington as long as the settlement is based on mutual respect and equality, and conform to China's core interests. China, which still sees a steady economic growth and boasts enormous potential for further development, will always find a way to withstand any pressure if there no deal is reached.

It is therefore hoped that Washington should drop its fantasy to bring Beijing down to its knees with its same and old tricks of maximun pressure. If it truly wants a deal, then they will need to show some real sincerity first.

[Aug 03, 2019] China's UN Envoy Says If US Wants To Fight, We Will Fight, Warns Beijing Will No Longer Allow Hong Kong Protests

Aug 03, 2019 | www.zerohedge.com

he war of words between the world's top superpowers is getting more heated by the hour.

China's new ambassador to the United Nations, Zhang Jun, said on Friday that if the United States wanted to fight China on trade, "then we will fight" and warned that Beijing was prepared to take countermeasures over new U.S. tariffs, Reuters reports.

"China's position is very clear that if U.S. wishes to talk, then we will talk, if they want to fight, then we will fight," he told reporters. Calling Trump latest tariff announcement an "irrational, irresponsible act", Jun said that China "definitely will take whatever necessary countermeasures to protect our fundamental right, and we also urge the United States to come back to the right track in finding the right solution through the right way." The ambassador also took a stab at the disintegration of good relations between the US and North Korea (with Beijing's blessing no doubt), saying that "you cannot simply ask DPRK to do as much as possible while you maintain the sanctions against DPRK, that definitely is not helpful" Yun said siding the the Kim regime. It was more than obvious who the "you" he referred to was.

Pouring more salt on the sound, the Chinese diplomat said North Korea should be encourage, and "we think at an appropriate time there should be action taken to ease the sanctions", explicitly taking Pyongyang's side in the ongoing diplomatic saga between Kim and Trump.

When asked if China's trade relations with the United States could harm cooperation between the countries on dealing with North Korea, Zhang said it would be difficult to predict. He added: "It will be hard to imagine that on the one hand you are seeking the cooperation from your partner, and on the other hand you are hurting the interests of your partner."

As North Korea's ally and neighbor, China's role in agreeing to and enforcing international sanctions on the country over its nuclear and ballistic missile programs has been crucial.

However, it is what he said last that was most notable, as it touched on what will likely be the next big geopolitical swan, namely Hong Kong. To wit, Jun said that while Beijing is willing to cooperate with UN member states, it will never allow interference in "internal affairs" such as the controversial regions of Xinjiang and Tibet, and - last but not least - Hong Kong.

And in the latest warning to the defiant financial capital of the Pacific Rim, Jun virtually warned that a Chinese incursion is now just a matter of time, he said that Hong Kong protests are "really turning out to be chaotic and violent and we should no longer allow them to continue this reprehensible behavior."

... ... ...

[Aug 03, 2019] Bloomberg Economics initial estimate of the additional costs of U.S. tariffs and Chinese retaliation sees both economies taking a 0.2% hit to GDP by 2021

This might speed up "Trump recession"
Aug 03, 2019 | www.bloomberg.com

President Donald Trump's threat Thursday to put 10% tariffs on the remaining $300 billion of Chinese imports that aren't subject to his existing levies sent markets tumbling from Asia to Europe and in the U.S. on Friday. The new tax would hit American consumers, and businesses are going to face even more supply disruptions . China has already vowed to retaliate if Trump follows through.

Bloomberg Economics ' initial estimate of the additional costs of U.S. tariffs and Chinese retaliation sees both economies taking a 0.2% hit to GDP by 2021.

Meanwhile, a simmering trade fight between Japan and South Korea is boiling over , putting the health of two Asian export powers at stake. In Europe, concerns are mounting for a hard U.K. exit from the European Union.

The week ended with fresh numbers out of Washington that show U.S. trade actually declined during the first six months of the year as exports flattened out.

[Aug 03, 2019] "The objective is to gain financial control of global resources and make trade 'partners' pay interest, licensing fees and high prices for products in which the United States enjoys monopoly pricing 'rights' for intellectual property.

Aug 03, 2019 | www.moonofalabama.org

ben , Aug 3 2019 1:05 utc | 40

karlof1 , Aug 3 2019 1:17 utc | 41

Passer by @36--

One of Neoliberalism's assets as Hudson explains is "Intellectual Property" which is another rent-seeking economic segment and part of Trump's Unilateral Pirate Ship. I think you'll benefit from this Hudson paper detailing Cold War 2.0:

"The objective is to gain financial control of global resources and make trade 'partners' pay interest, licensing fees and high prices for products in which the United States enjoys monopoly pricing 'rights' for intellectual property. A trade war thus aims to make other countries dependent on U.S.-controlled food, oil, banking and finance, or high-technology goods whose disruption will cause austerity and suffering until the trade 'partner' surrenders."

The Empire's dilemma is it's made education costs so high it can't get the domestic talent it requires to continue its rapidly diminishing technological superiority, thus the need for "more allies to bypass Huawei"--note the word usage, "bypass", not compete with or surpass, the connotation being its removal as a rival, thus continuing dependency on US-based tech.

Not entirely unrelated is my comment to vk at 8 above. The Outlaw US Empire is most certainly classified as a Complex Society that tries to solve its problems with ever more complex solutions that eventually lead to negative returns that further complicate the problem. (Listen to the podcast here by Joseph Tainter, author of The Collapse Of Complex Societies , where you can also download a pdf copy!) With the USAF and the military as a whole, increasing amounts of money are thrown at ever increasingly complex weapons systems yet performance in all sectors deteriorates while the ability to recruit also degrades. The problems are widely written about and are often cited here. And as we see with Iran and other examples, elegant simplicity can defeat multilayered complexity. But Imperial policy makers continue to double-down which further increases the complexity of the situation. Ouch!!

[Aug 02, 2019] Global Smartphone Shipments Plunge Again, Huawei Displaces Apple As No.2

Aug 02, 2019 | www.zerohedge.com

The global smartphone bust is currently underway (has been for some time) - but there's a new, surprising trend that could highlight one reason why the Trump administration has waged economic war against China.

First, let's start with the global smartphone shipment data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker.

This new data details how worldwide smartphone shipments fell 2.3% in 2Q19 YoY. It also states that smartphone manufacturers shipped 333.2 million phones in 2Q19, which was up 6.5% QoQ.

An escalating trade war between the US and China contributed to sharp declines in shipments in both countries over the last year. However, the declines weren't nearly as severe as expected in China over 1H19 versus 1H18, suggesting that three years of a smartphone bust in Asia could be nearing a recovery phase. Asia/Pacific (excluding Japan and China) maintained solid momentum in 2Q YoY, with shipments up 3% in the quarter fueled by Southeast Asia markets.

The surprising trend IDC detected is that Huawei surpassed Apple in 2Q19, making it the first time in seven years that Samsung and Apple weren't the top smartphones manufactures in the world.

Now it seems that a South Korea company [Samsung] and a Chinese company [Huawei] are the world leaders in smartphone shipments, something that has irritated the Trump administration.

Samsung ranked No.1 with 75.5 million shipments in 2Q19, a 5.5% YoY increase. Huawei was No.2 with 58.7 million shipments in 2Q19, a 8.3% YoY jump. Apple was No.3 with 33.8 million shipments in 2Q19, a -18.2% YoY plunge.


Cheap Chinese Crap , 1 minute ago link

So let's see if I got this straight:

1) Huawei announces a .6% decline in shipments worldwide over the Q1 numbers.

2) Huawei announces an all-time high in domestic operations that now take up 62% of its sales.

What do these two numbers hide?

That Huawei's shipments to the international market must have suffered a considerable decline.

That the rise in sales in low-value Chinese phones doesn't begin to offset the large drop in high-value developed world sales except on a purely nominal numerical basis of numbers of phones sold. The money isn't in the phones. It's in the plans. In fact, China pioneered the idea of giving the phones away for free and then making it all back on the gated connection plans.

But there's no way that one Chinese plan equals one western plan in profitability back to the company, so buffing up the domestic numbers at the expense of the cash cow numbers overseas is ultimately not a good business strategy.

Plus of course Huawei can report any number it wants inside China and nobody has any way of testing its veracity. They could have shipped 20,000,000 phones to distributors on consignment and then marked it up as sales.

TheABaum , 6 minutes ago link

Apple's been running on momentum since 2011. Cook isn't Jobs.

Max.Power , 19 minutes ago link

Apple is trapped in a once-brilliant marketing strategy which it struggles to escape now: hi-end expensive devices.

It's not a hi-end product anymore, so it becomes more difficult to justify the price even for true fans.

Omni Consumer Product , 4 minutes ago link

It's still high-end, per se. But the price premium is no longer justified because other companies have commoditized the high-end features.

Frankly, the company was doomed the moment Jobs died and the reins were turned over to Cook - an accountant by training, who clearly has no futurist vision or marketing skill whatsoever.

Jobs might have been a puffed up peacock, but he was a master of creating the Reality Distortion Field.

deFLorable hillbilly , 36 minutes ago link

Smartphones are no longer fun or new or anything other than a commodity.

Now they're also devices which even the dumbest know track your every thought, purchase, move, etc...

It's like having a little East German Stasi agent in your pocket.

I hope they all go broke.

TheABaum , 4 minutes ago link

The curse of always on, always with you, always spying and always misplaced.

He–Mene Mox Mox , 39 minutes ago link

There is one big problem that no one is talking about. The cell phone market is over saturated! Practically everyone has got a cell phone these days. It's like the auto industry. There has been an over production 10 billion automobiles in the world for 7.2 billion people, of which half really can't afford to buy, much less drive, or even have a place to park it. I have seen people with 3 and 4 cell phones, but you only have 2 ears. How are more cell phones going to help you? Even women don't multitask that well.

The only thing that would make sales better on cell phones is if you could combine the computing power of a Cray computer into a roll-up tablet. Or, maybe a brain implant would be even better.

deFLorable hillbilly , 33 minutes ago link

No, they'll realize that it's far easier to design phones that fall apart after 18 month than to keep building quality products. Like American cars.

Iconoclast422 , 40 minutes ago link

who the hell is buying 11 million pieces of iCrap each month?

navy62802 , 57 minutes ago link

Apple has slowly but steadily declined overall since Steve Jobs' death. It's really sad to see the company steadily decline like it has.

adr , 1 hour ago link

Apple's iPhone shipments and sales have been falling for five years. Yet the company added $600billion in marketcap during that time.

That is the insanity of Wall Street.

Max.Power , 22 minutes ago link

In modern days, even having a negative profit for years doesn't mean you can't increase market capitalization.

thereasonableinvestor , 1 hour ago link

Apple has moved on from the iPhone.

Tim Cook: "When you step back and consider Wearables and Services together two areas where we have strategically invested in last several years, they now approach the size of a Fortune 50 company."

[Aug 01, 2019] Trump will put additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China on Sept 1, 2019

Aug 01, 2019 | www.zerohedge.com

Just as investors thought it was safe to buy-the f**king-dip after Powell's plunge, President Trump steals the jam out of their donut by announcing new China tariffs...

"... on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country "

In a series of tweets, Trump laid out the state of the China trade deal... in a word - terrible...

Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal. We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing. More recently, China agreed to...

...buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and...

...during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...

...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!

[Aug 01, 2019] Fortunately, as Trump said, 'Trade Wars are easy to win!

Notable quotes:
"... Mr. Trump's anger was fueled, in part, by the fact that China has not begun buying large amounts of American farm products, which the president promised farmers would happen after a June meeting with Chinese President Xi Jinping. ..."
"... Mr. Trump took credit for China's weakening economy, saying the tariffs he's placed on $250 billion worth of Chinese goods have put enormous pressure on the country, costing it jobs and prompting companies to leave. ..."
"... American and Chinese negotiators finished talks on Wednesday with little progress toward ending a trade war that has shaken the world's economic confidence and rattled markets. ..."
"... Instead, both sides appear to be settling in for a lengthy economic conflict. ..."
"... Senior Chinese officials who gathered at an economic meeting on Tuesday run by China's top leader, Xi Jinping, stressed that the country had to rely on domestic demand to manage "new risks and challenges" and ward off what they described as "downward pressure on the economy," according to the Chinese state news media. China could turn "a crisis into an opportunity," the report added. ..."
"... A lengthy trade war presents China's leaders with some difficult options. China is enduring an economic slowdown that has been made worse by the trade tensions. Beijing has responded by ratcheting up spending on infrastructure and other big-ticket projects, a reliable growth strategy that nevertheless could worsen the country's debt problems and do little to solve economic imbalances that could hinder its long-term prospects. ..."
"... At a daily news briefing on Wednesday, Hua Chunying, a spokeswoman for the Chinese Foreign Ministry, said that "only if the U.S. shows sufficient integrity and sincerity, and conducts trade talks with the spirit of equality, mutual respect, mutual understanding and mutual accommodation, can the trade talks make progress." ... ..."
"... the trade pressure by the United States on China has from the beginning been about undermining Chinese development. The US point has always been to stop Chinese scientific and technological advance but the Chinese have always understood and that is just not ever going to happen. ..."
"... Accept United States restrictions on Chinese investments in sensitive technologies without retaliating. ..."
"... Open up its services and agricultural sectors to full American competition. ..."
Aug 01, 2019 | economistsview.typepad.com

Fred C. Dobbs , July 30, 2019 at 10:52 AM

President Trump took credit for weakening
China's economy and downplayed the likelihood
of a trade deal before the 2020 election.

His comments came as his top negotiators were sitting
down to dinner with their counterparts in Shanghai.

Trump Goads China as Trade Talks
Resume https://nyti.ms/32X4vBj
NYT - Ana Swanson and Jeanna Smialek - July 30

WASHINGTON -- President Trump lashed out at China on Tuesday morning as trade talks between the two nations resumed, taking credit for weakening China's economy and downplaying the likelihood of a deal before the 2020 election.

The president's comments, in posts on Twitter and remarks to the press, came just as his top negotiators were sitting down to dinner with their counterparts at the Fairmont Peace Hotel in Shanghai. While both sides are trying to get trade talks back on track, Mr. Trump's angry words underscored the diminishing prospects for a transformative trade deal anytime soon and the extent to which the bilateral relationship has not unfolded in the way that Mr. Trump expected.

"I think the biggest problem to a trade deal is China would love to wait and just hope," the president said. "They hope -- it's not going to happen, I hope, but they would just love if I got defeated so they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden or any of these people, because then they'd be allowed and able to continue to rip off our country like they've been doing for the last 30 years."

Mr. Trump's anger was fueled, in part, by the fact that China has not begun buying large amounts of American farm products, which the president promised farmers would happen after a June meeting with Chinese President Xi Jinping. Mr. Trump emerged from that meeting in Osaka, Japan, saying he had agreed to postpone tariffs on an additional $300 billion of Chinese products and allow American firms to resume sales of nonsensitive goods to the Chinese telecom firm Huawei. In return, Mr. Trump said China would immediately start buying American agricultural goods, touting it as a big win for farmers.

But no such purchases have happened, and, in the weeks since, Chinese officials disputed that they had agreed to buy more farm products as a condition of the talks. On Sunday, Chinese state media reported that "millions of tons" of American soybeans had been shipped to China. But Mr. Trump on Tuesday said no such purchases had materialized.

China "was supposed to start buying our agricultural product now -- no signs that they are doing so," Mr. Trump tweeted. "That is the problem with China, they just don't come through."

His comments on Tuesday appeared to be an effort to give his negotiators more leverage and to pressure China into making concessions in talks this week. Mr. Trump took credit for China's weakening economy, saying the tariffs he's placed on $250 billion worth of Chinese goods have put enormous pressure on the country, costing it jobs and prompting companies to leave.

But he seemed to veer between goading China to quickly accede to America's demands and suggesting the country could get a better deal if it waits and a Democrat wins the 2020 presidential election. ...

Fred C. Dobbs , July 31, 2019 at 06:50 AM
US-China Trade Talks End With No Deal
in Sight https://nyti.ms/2GE3LHt
NYT - Alexandra Stevenson - July 31

American and Chinese negotiators finished talks on Wednesday with little progress toward ending a trade war that has shaken the world's economic confidence and rattled markets.

Treasury Secretary Steven Mnuchin and Robert E. Lighthizer, the Trump administration's top trade negotiator, were seen leaving trade talks on Wednesday, the Chinese state news media said.

Both sides "conducted frank, efficient and constructive in-depth exchanges on major issues of common interest in the economic and trade field," said a statement late in the day that was released by CCTV, China's state broadcaster.

Another round of high-level talks will take place in the United States in September, CCTV reported.

The Trump administration had not yet released its own statement.

The meeting marked the first formal resumption of talks after negotiations fell apart almost three months ago, with each side pointing fingers at the other for derailing a deal. They agreed to try again after meeting last month on the sidelines of the Group of 20 summit meeting in Osaka, Japan.

Instead, both sides appear to be settling in for a lengthy economic conflict.

Senior Chinese officials who gathered at an economic meeting on Tuesday run by China's top leader, Xi Jinping, stressed that the country had to rely on domestic demand to manage "new risks and challenges" and ward off what they described as "downward pressure on the economy," according to the Chinese state news media. China could turn "a crisis into an opportunity," the report added.

A lengthy trade war presents China's leaders with some difficult options. China is enduring an economic slowdown that has been made worse by the trade tensions. Beijing has responded by ratcheting up spending on infrastructure and other big-ticket projects, a reliable growth strategy that nevertheless could worsen the country's debt problems and do little to solve economic imbalances that could hinder its long-term prospects.

Should China reach a quick deal, on the other hand, the country's leaders risk looking weak in the face of foreign powers, undermining the Communist Party's historical claim to rule.

At a daily news briefing on Wednesday, Hua Chunying, a spokeswoman for the Chinese Foreign Ministry, said that "only if the U.S. shows sufficient integrity and sincerity, and conducts trade talks with the spirit of equality, mutual respect, mutual understanding and mutual accommodation, can the trade talks make progress." ...

anne -> Fred C. Dobbs... , July 31, 2019 at 07:36 AM
As I have repeatedly documented on Economist's View, the trade pressure by the United States on China has from the beginning been about undermining Chinese development. The US point has always been to stop Chinese scientific and technological advance but the Chinese have always understood and that is just not ever going to happen.
anne -> Fred C. Dobbs... , July 31, 2019 at 07:37 AM
https://www.washingtonpost.com/news/wonk/wp/2018/05/04/trump-is-asking-china-to-redo-just-about-everything-with-its-economy/

May 4, 2018

Trump is asking China to redo just about everything with its economy
By Heather Long - Washington Post

The Trump administration has finally presented the Chinese government with a clear list of trade demands. It's long and intense (there are eight sections), and President Trump isn't just asking Chinese President Xi Jinping for a few modifications. He's asking Xi to completely change his plans to turn the Chinese economy into a tech powerhouse.

The demands include the following:

• China will cut the $336 billion U.S.-China trade deficit by at least $200 billion by 2020, a 60 percent reduction.
• China will stop subsidizing tech companies.
• China will cease stealing U.S. intellectual property.
• China will cut its tariffs on U.S. goods by 2020.
• China will not retaliate against the United States (including against U.S. farmers).
• The Chinese government will open China to more U.S. investment.

anne -> Fred C. Dobbs... , July 31, 2019 at 07:38 AM
https://www.nytimes.com/2018/05/04/business/china-us-trade-talks.html

May 4, 2018

U.S.-China Trade Talks End With Strong Demands, but Few Signs of a Deal
By Keith Bradsher

BEIJING -- The extensive list of United States trade demands was unexpectedly sweeping, and showed that the Trump administration has no intention of backing down despite Beijing's assertive stance in the last few days. "The list reads like the terms for a surrender rather than a basis for negotiation," said Eswar Prasad, an economics professor at Cornell University.

Here are the highlights of the demands:

China must

■ Cut its trade surplus by $100 billion in the 12 months starting in June, and by another $100 billion in the following 12 months.

■ Halt all subsidies to advanced manufacturing industries in its so-called Made In China 2025 program. The program covers 10 sectors, including aircraft manufacturing, electric cars, robotics, computer microchips and artificial intelligence.

■ Accept that the United States may restrict imports from the industries under Made in China 2025.

■ Take "immediate, verifiable steps" to halt cyberespionage into commercial networks in the United States.

■ Strengthen intellectual property protections.

Accept United States restrictions on Chinese investments in sensitive technologies without retaliating.

■ Cut its tariffs, which currently average 10 percent, to the same level as in the United States, where they average 3.5 percent for all "noncritical sectors."

Open up its services and agricultural sectors to full American competition.

The United States also stipulated that the two sides should meet every quarter to review progress.

Fred C. Dobbs said in reply to anne... , July 31, 2019 at 07:51 AM
Fortunately, as Trump said,
'Trade Wars are easy to win!'

[Jul 21, 2019] On the alleged Arendt´s banality of evil, well, some more evil than others, if not because of their clearly over the top ambitions

Notable quotes:
"... If you believe the US media if they just removed Putin, Russia would go back to being a good little puppet state just like under Yeltins. Which is a shockingly naïve way to look at international relations. ..."
"... It is not just Chinese but Asian in general. Watch several seasons of the Japanese cartoon "Gundam" and get back to me about who the good guys are and who the bad guys are in it. ..."
"... People always suffer when they allow corrupt sociopaths to gain power. That is as true today as it was in Germany in 1930's and 40's. ..."
"... According to news reports since the moron in charge announced that he had signed an executive order 'blacklisting' Huawei, those lovely humans at Google are denying Huawei phones access to gmail and playstore. The android operating system is open source and still available to Huawei. ..."
"... Doubtless FB and M$ will follow suit. Getting rid of all the nasty stuff that spies on users 24/7/365 now means that Huawei phones have all the advantages with none of the disadvantages. ..."
"... In Games of Thrones, the good characters are regularly disembowled, choked and drowned to death. Or turn evil. The evil characters grow in power and menace and rarely perish. The overwhelming message is that all people and all power are evil. There is no good in the world or what good there is will be quickly stomped out. Resistance is useless. ..."
"... The main message is really that resistance is futile . If the powers that be can condition the contemporary (and naturally idealistic) Western youth to accept that hypothesis, any threat to their depredations and financial tyranny is rendered impotent. If resistance is futile, said youth will simply have to accept how things are and try to stay out of the way of tyrannical kings, rapacious queens, brutal captains of the guards and wanton dragons. I.e. sit down and shut up while HRC, John Bolton, John Brennan and James Clapper ruin the planet. ..."
"... In the US 33% supported unilateral action, 70% of congress voted for the unilateral military action ..."
"... Thomas Jefferson said: "I tremble for my countrymen because I know God is just..." ..."
"... "The powerful do what they can and the weak suffer what they must." ..."
"... The movies Hollywood produced are often telling psychological conflicts as the central story. Each character has a certain fixed attitude and the interacting of the characters create the story. It does not matter if the setting is in antic times or in the far future. In the end there are always the bad and the good guy slamming it out in a fistfight. ..."
"... The historic Chinese drama which I currently favor are based on sociological storytelling. As they develop the stories form their characters. Their attitudes change over time because the developing exterior circumstances push them into certain directions. Good becomes bad and again good. The persons change because they must, not because the are genetically defined. I find these kind of movies more interesting. ..."
"... The take away quote "Wang also reiterated the principled stand against the "long-arm jurisdiction" imposed by the United States." Empire is having its hand slapped back in Venezuela, Iran, Syria, ??? ..."
"... I see empire as a war junkie and they are starting to twitch in withdrawals which is dangerous but a necessary stage. Trumps latest tweets show that level of energy. The spinning plates of empire are not wowing the crowds like before.....what is plan Z? ..."
"... My own view is that, as with everything the US has done lately, it already lost the war before it even stepped into battle in the theater. ..."
"... Strangest thing of all that the US itself would do the forcing out of itself from the world's trust. ..."
"... As I've written previously, the political philosophers of the nascent USA thought they would have a Natural Aristocracy ( here and here ) somewhat based on a meritocratic system instead of the Old World's Inherited Aristocracy based on blood relations and closed to anyone not within a very small circle. Yet it was still an Aristocracy with all it inherent evils, and it is that vast assortment of evils the US citizenry has yet to overcome in its supposed--idealized--quest for self-government. ..."
"... If you are interested in watching a film with a sociological approach to telling a story and you are close to a cinema, Mike Leigh's "Peterloo" just started screening last Thursday in Australia. The film is an exploration of British society during the Regency period (in the early 19th century), the class attitudes and opinions prevalent then, and the conditions and events that led to 60,000 - 100,000 labouring class people gathering at St Peter's Field in Manchester in August 1819, and how it was viciously broken up by cavalry and foot soldiers acting on orders of the aristocracy. ..."
"... The culture I am immersed in (USA) is heavily weighted toward the dramatic and two dimensional. Simply put, mass perspective engineering is geared to over simplify and reinforce these views with media imprinting via hollywood, madison ave. etc. The lenses through which impressions from the "outside world" pass through engineered to give the desired results rather than expand consciousness or engender critical thinking. In short, we are breeding for weakness and gullibility. ..."
"... If it is Hollywood, then you can be certain the intention is to manipulate the younger generation to supporting and idolising their permanent wars. On the face of it, that indeed appears to be the case. ..."
May 21, 2019 | www.moonofalabama.org

Oliver K , May 19, 2019 3:32:24 PM | 5

" Why The Takedown Of Heinz-Christian Strache Will Strengthen The Right | Main May 19, 2019 The story in the American Conservative is very weak: that "the Americans" have already won the war is just due to the built-in superiority: the "land of the free" against "communist dictatorship" (so everybody knows who has to win). Or, a variation, "free market" against "state-owned".

A typical statement of that article: "China views commercial relations with other countries as an extension of the political conflict between Western democracies and itself -- that is, an extension of war." -- a very defining element of the "American" character, to project the own aggression onto others.

There was another opinion-piece somewhere, can't find it anymore, where the author argued that hopefully that "trade-war" will do really good for the Chinese economy -- forget about the US, and develop the home market.

As I believe that the sanctions are a great gift to Russia, I also believe that this "trade-war" is a (potential) great gift to China.

Kadath , May 19, 2019 4:21:27 PM | 0

That was an interesting article on psychological vs sociological storytelling and it makes a good companion piece when thinking about how the US media personalizes US geo-political conflicts with the heads of rival state (Putin, Xi, Castro, Kim Jong-un, Khomeini, Gaddafi).

If you believe the US media if they just removed Putin, Russia would go back to being a good little puppet state just like under Yeltins. Which is a shockingly naïve way to look at international relations. States have permanent interests and any competent head of State will always represent those interests to the best of their ability. True, you could overthrow the government and replace every senior government figure with a compliant puppet (which the US always tries to do), but the permanent interests that arise from the inhabitants of the State will always rise up and (re)assert themselves. When the State leadership is bribed or threatened into ignoring or acting against these needs it ultimately creates a failed State.

Even the US media seems to subconsciously understand this, when they talk of "overly ambitious US goals of remaking societies", however, they never make the logical next step of investigating why these States do not wish to be remade as per the US imagined ideal, what the interests of these actually are and how diplomacy can resolve conflicts.

According to the US media everything boils down to the US = good, anyone who disagrees with our policies = bad and diplomacy is just a measure of how vulgar our threats are during talks. I'm specifically thinking of the US Ambassador to Russia, John Huntsman's boast of a US aircraft carrier in the Mediterranean as being 100,000 tons of diplomacy to Russia - of all the ridiculous and stupid things to says to Russia when supposedly trying to "ease" tensions (I still can't believe Huntsmen, former Ambassador to China under Obama, is regarded a "serious" professional ambassador within the State departments when compared to all the celebrity ambassadorships the US President for fundraiser).

KC , May 19, 2019 4:31:39 PM | 1
@WJ #8 - That's probably a daily occurrence there anyway.
KC , May 19, 2019 4:35:35 PM | 2
Somewhat on-topic, China's state media is broadcasting Anti-American movies .
William Gruff , May 19, 2019 4:43:17 PM | 4
Cresty @9

It is not just Chinese but Asian in general. Watch several seasons of the Japanese cartoon "Gundam" and get back to me about who the good guys are and who the bad guys are in it.

The whole notion that the "good guys" and the "bad guys" are set in stone is antithetical to any worldview founded in Buddhism/Confucianism, or influenced by the same. Can you imagine western children's programming teaching ambiguity between good and evil? That which is which depends upon the observer's perspective? This is the sort of concept that few western people get exposed to until graduate level ethics and philosophy courses.

Or maybe not. I have never seen a single episode of "Game of Thrones" and maybe that delves into ethical complexities that typical western mass media avoids. I wouldn't know. What I do know is that this moral and ethical complexity is something that most Asian children are introduced to before they hit their teens.

Kadath , May 19, 2019 4:59:33 PM | 5
Trump just tweeted "If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!". Needless to say, more ridiculousness, Trump is pretty close to plagiarizing himself with his prior comments regarding North Korean "North Korean Leader Kim Jong Un just stated that the "Nuclear Button is on his desk at all times." Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!". I think Trump is getting desperate now waiting by the phone for the Iranians to call him. Trump is certainly still smarting after the failed Venezuela coup and wants to avoid a second embarrassing defeat, however I doubt the Iranians will care that much about his latest threat by tweet.
Nemesiscalling , May 19, 2019 5:18:09 PM | 6
GOT was jarring this season. In the penultimate episode, a dragon wreaks havoc on a western capital city, brutally murdering most of its inhabitants.

It is impossible not to make the correlation of the dragon as China and kings landing (The city) as Washington d.c.

From this one can glean that they were attempting to show the ascendancy of China and the utter destruction of the U.S. With shades of gray thrown about as to if the people of the city deserved to be burned alive and as to whether the dragon and its rider, China, have become what they originally set out to vanquish. The old Nietzsche maxim...those who fight with monsters...

It was indeed unsettling because there are no moral winners. It is well realised for this reason but poorly written and produced in other aspects as noted above by other posters.

Sasha , May 19, 2019 5:26:49 PM | 7
On the alleged Arendt´s banality of evil, well, some more evil than others, if not because of their clearly over the top ambitions:

Interesting comment linking some sources and articles on US military strategy from decades ago , some of which I am not able to get to anymore, as the article at ICH numbered 3011:

"First published From Parameters, Summer 1997, pp. 4-14: US Army War College: "There will be no peace. At any given moment for the rest of our lifetimes, there will be multiple conflicts in mutating forms around the globe. Violent conflict will dominate the headlines, but cultural and economic struggles will be steadier and ultimately more decisive. The de facto role of the US armed forces will be to keep the world safe for our economy and open to our cultural assault. To those ends, we will do a fair amount of killing."

"Excerpts From Pentagon's Plan: 'Prevent the Re-Emergence of a New Rival':

"Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union.

This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power. These regions include Western Europe, East Asia, the territory of the former Soviet Union, and Southwest Asia.

There are three additional aspects to this objective: First, the U.S. must show the leadership necessary to establish and protect a new order that holds the promise of convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests.
Second, in the non-defense areas, we must account sufficiently for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order. Finally, we must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role. An effective reconstitution capability is important here, since it implies that a potential rival could not hope to quickly or easily gain a predominant military position in the world."

... access to vital raw materials, primarily Persian Gulf oil"

Jackrabbit , May 19, 2019 6:01:23 PM | 9
Nemesiscalling @16

GOT is an allegory that explores the nature of power. If you see China's destruction of Washington it says more about you than the show. Firebombing of Dresden might be a more apt analogy.

People always suffer when they allow corrupt sociopaths to gain power. That is as true today as it was in Germany in 1930's and 40's.

The complaints about poor writing are just fan sadness at unexpected horrors that actually make sense for the show. Loose ends created by these horrors will likely be resolved in the last episode tonight.

Maximus , May 19, 2019 6:09:55 PM | 1
Link not working above here it is: https://twitter.com/realgollumtrump?lang=en
Roy G , May 19, 2019 7:12:22 PM | 3
WJ @13 thanks for the link, I am eternally hopeful that this particular thread gets pulled on until it unravels.

One of my distinct memories of the immediate aftermath of 9/11 (I lived in NYC at the time), was the trumpeting of the Post and other tabloids about 'the Dancing Arabs,' which obviously fanned the flames of hatred towards the designated villains. Once it was revealed that they were actually Israelis, then crickets until the whole thing was shoved down the memory hole.

Dolores P Candyarse , May 19, 2019 7:30:47 PM | 4
I'm going out today to buy a couple of Huawei 'phones'.

According to news reports since the moron in charge announced that he had signed an executive order 'blacklisting' Huawei, those lovely humans at Google are denying Huawei phones access to gmail and playstore. The android operating system is open source and still available to Huawei.

Doubtless FB and M$ will follow suit. Getting rid of all the nasty stuff that spies on users 24/7/365 now means that Huawei phones have all the advantages with none of the disadvantages.

They put their own chips in newer models and I have no doubt will find enough bright sparks to take over apps integration meaning that this divergence point will become a boon not a hurdle. Even better a Huawei costs 60% of a comparable korean model and half the price of the fbi backdoored american shit.
I really like thinking expressed by an un-named english politician in a Henry Jackson Society report: ""Huawei has long been accused of espionage" – a claim repeatedly denied by the firm – and notes that "while there are no definitely proven cases", a precautionary principle should be adopted."

All politicians are crooks and liars, everybody says so, lets lock em all up right now, no need for evidence or trial or any of that due process nonsense, the precautionary principle should apply.

Uncoy , May 19, 2019 7:32:02 PM | 5
William Gruff wrote:
I have never seen a single episode of "Game of Thrones" and maybe that delves into ethical complexities that typical western mass media avoids. I wouldn't know.

Having suffered through four seasons of Game of Thrones, after a degree in philology and literature, I'd be happy to share my impressions with you. In Games of Thrones, the good characters are regularly disembowled, choked and drowned to death. Or turn evil. The evil characters grow in power and menace and rarely perish. The overwhelming message is that all people and all power are evil. There is no good in the world or what good there is will be quickly stomped out. Resistance is useless.

The main message is really that resistance is futile . If the powers that be can condition the contemporary (and naturally idealistic) Western youth to accept that hypothesis, any threat to their depredations and financial tyranny is rendered impotent. If resistance is futile, said youth will simply have to accept how things are and try to stay out of the way of tyrannical kings, rapacious queens, brutal captains of the guards and wanton dragons. I.e. sit down and shut up while HRC, John Bolton, John Brennan and James Clapper ruin the planet.

Despite impressive production values, excellent acting (for the most part) and majestic locations, Game of Thrones is truly the most evil large scale creative work I've ever seen. On a philosophical level, Game of Thrones has no redeeming features. At best an impressionable mind might come away with a hedonist mindset, i.e. the traditional salve of weak spirits, carpe diem .

PS. There's some very good comments at the tail end of the Takedown of Heinz-Christian Strache including one of my own covering in some depth the Austrian political background to this event. Worth revisiting if you only saw the early comments.

Colin , May 19, 2019 7:39:27 PM | 6
Analysis from a poll sometimes cited by Chomsky.

See Gallup International poll pg 134
https://www.circap.org/uploads/1/8/1/6/18163511/pollsoniraq-nonus15.pdf

Using populations per country from '03 we get the following conclusions:

of the 36 countries outside the US we get 33% of the world population where less than 8% supported unilateral military action by American and her allies and 57% supported under no circumstances

this list excludes 42 additional countries with another 40% of world population who have had their governments overthrown or attempted to be overthrown by the US since WWII

In the US 33% supported unilateral action, 70% of congress voted for the unilateral military action

Being that the invasion was illegal and unpopular, the Bush admin invented a 'coalition of the willing to give the appearance of support.

The Trump admin needed to create a similar type of facade for the Venezuelan coup. Such things are needed specifically because the move is so unpopular and illegal.

KC , May 19, 2019 8:21:46 PM | 0
At least the alternative media is taking notice of the warmongering tactics of John Bolton .
NemesisCalling , May 19, 2019 9:03:28 PM | 4
@ Jen 29

I suppose that is a valid theory. But as the viewer we know the motivations of Dany and why in some small regard the people in King's Landing deserve a little roughing up.

Thomas Jefferson said: "I tremble for my countrymen because I know God is just..."

The difference here is that we judge Assad even though we don't see what he is truly doing.

Here we see what Dany has done, mass slaughter, and think to ourselves...we kinda had it coming.

NemesisCalling , May 19, 2019 9:21:34 PM | 5
@25 uncoy

Concerning your take on GoT: Isn't this really the thesis of Thucydides through and through reflected in GoT almost to a T?

"The powerful do what they can and the weak suffer what they must." GoT is not disturbing to be nihilistic and shocking. It is holding up a mirror to history. But the quality of the show has declined since they have come to the end of the road in adapting the source material. The show has overtaken the books.

psychohistorian , May 19, 2019 9:51:22 PM | 7
Below is a link from Xinhuanet about the China financial sector opening up China to further open up financial sector: central bank

The take away quote
"
As of the end of March, overseas investors bought a net of 1.77 trillion yuan (about 260.3 billion U.S. dollars) of bonds at the country's interbank bond market, up 31 percent from a year earlier, and held 5.4 trillion yuan of yuan-denominated financial assets, up 19 percent year on year, according to the central bank.
"
What us peasants don't know is the extent to which China will let foreign investment influence their socialistic ways. That said, China is the new empire, private or public is yet to be determined but guess where all the "smart" money in the world is going? The money movements are a giant sucking sound that will leave America under the global economic bus.

Or not and China maintains its socialistic ways including projecting them around the world.

vk , May 19, 2019 10:06:03 PM | 8
The movies Hollywood produced are often telling psychological conflicts as the central story. Each character has a certain fixed attitude and the interacting of the characters create the story. It does not matter if the setting is in antic times or in the far future. In the end there are always the bad and the good guy slamming it out in a fistfight.

The historic Chinese drama which I currently favor are based on sociological storytelling. As they develop the stories form their characters. Their attitudes change over time because the developing exterior circumstances push them into certain directions. Good becomes bad and again good. The persons change because they must, not because the are genetically defined. I find these kind of movies more interesting.

That's the difference between materialism (marxism) and idealism (kantism, hegelianism and noekantism). Besides, an idealist tv series helps selling more merch and doing more sequels, hence the capitalist preference for idealism.

S , May 19, 2019 10:50:33 PM | 3
@KC #12:
China's state media is broadcasting Anti-American movies.

How are these movies "anti-American"? These movies are simply the truth.

psychohistorian , May 19, 2019 10:55:01 PM | 6
Below is my final Xinhuanet link about China/US relations

Chinese FM urges U.S. to avoid further damage of ties in phone call with Pompeo

The take away quote "Wang also reiterated the principled stand against the "long-arm jurisdiction" imposed by the United States." Empire is having its hand slapped back in Venezuela, Iran, Syria, ???

Where are they going to get their war on?

I see empire as a war junkie and they are starting to twitch in withdrawals which is dangerous but a necessary stage. Trumps latest tweets show that level of energy. The spinning plates of empire are not wowing the crowds like before.....what is plan Z?

ben , May 19, 2019 10:58:49 PM | 7
Hot tip, GOT is just a movie. Please, no more psychological insights. What fans really need, is some REAL WORLD justice, something that's noticeably missing in today's world.
Grieved , May 19, 2019 11:21:32 PM | 8
@5 Oliver K

I agree that the American Conservative article was weak - as b obviously thought. It has the US trade war against China completely wrong. I side with b in his hunch that China will win. My own view is that, as with everything the US has done lately, it already lost the war before it even stepped into battle in the theater.

And let's counter the author's point, in the weak article, that China needs the US trade surplus more than the US needs the imports from China. The author says that China has no way to substitute for exports to the US. There's abundant recent analysis on this, showing the relatively small part of China's economy that hinges on this trade, but here's a good Sputnik interview that illustrates how easily China can simply absorb goods into its own domestic market:

Trade War: US to Pay Heavy Price for Underestimating China – Chinese Businessman

I especially liked this part:

"...we have our colossal domestic market, which has no competitors throughout the world. Our consumer and innovation markets provide us with a large number of advantages and room, giving China an opportunity to make a manoeuvre. Therefore, their blockage gives China a chance to become even stronger. We must express our appreciation to our mentor, Trump, for this, for this lesson and for forcing China to figure out how to withstand the threats on its own."

The US used to be an important nation to do business with - commercial, diplomatic, military. But as it has become "agreement incapable", nations are forced to replace it. This takes a little time and readjustment, but then the change is permanent.

Strangest thing of all that the US itself would do the forcing out of itself from the world's trust.

ben , May 19, 2019 11:24:01 PM | 9
For those with a penchant for movie dissection, I offer this from Truthdig;

https://www.truthdig.com/articles/game-of-thrones-an-american-parable/

Zack , May 19, 2019 11:50:54 PM | 0
Trump, Saudi Arabia warn Iran against Middle East conflict
Crown Prince Mohammed bin Salman discussed regional developments, including efforts to strengthen security and stability, in a phone call with U.S. Secretary of State Mike Pompeo, the Saudi Media Ministry tweeted on Sunday.

"We want peace and stability in the region but we will not sit on our hands in light of the continuing Iranian attack," Jubeir said. "The ball is in Iran's court and it is up to Iran to determine what its fate will be."

He said the crew of an Iranian oil tanker that had been towed to Saudi Arabia early this month after a request for help due to engine trouble were still in the kingdom receiving the "necessary care". The crew are 24 Iranians and two Bangladeshis .

Is this a veiled threat on the lives of these crew members?

Kadath , May 20, 2019 12:41:41 AM | 2
Re@ 51 James, well Sputniknews is reporting that the Saudi's claim that the Houthis are planning to attack 300 critical infrastructure facilities in Saudi Arabia and the United Arab Emirates in the coming weeks so that might be the instigating event your concerned about
karlof1 , May 20, 2019 12:45:56 AM | 3
Grieved @44--

Thanks for your kudos! As I've written previously, the political philosophers of the nascent USA thought they would have a Natural Aristocracy ( here and here ) somewhat based on a meritocratic system instead of the Old World's Inherited Aristocracy based on blood relations and closed to anyone not within a very small circle. Yet it was still an Aristocracy with all it inherent evils, and it is that vast assortment of evils the US citizenry has yet to overcome in its supposed--idealized--quest for self-government.

Recall that George Washington was deemed safe to become the first president because he could be trusted not to proclaim himself king --something often forgotten by students of US History.

I've often lamented on the nature of the 1787 Constitution because it allows any POTUS to become a king with almost zero hindrances on the power wielded. Sure, compared with other systems of government at the time, the USA's was revolutionary, but only down to the waist to borrow a phrase from Gilbert & Sullivan. Madison's theory, IMO, was--other than being Aristocratic--okay until his most important check/balance was removed--that of the "dueling oval office" where the losing POTUS candidate was awarded the Vice-Presidency--imagine Hillary Clinton as Veep with Trump in the driver seat! IMO, the 12th Amendment fatally wounded Madison's construction of a government that arrived at great decisions based on a consensus of genuine national interests instead of partisanship.

Arguing that action is the great fault that must be corrected doesn't get much play nowadays. Indeed, it's very difficult to debate Constitutional Reform given the engineered political climate since the current situation suits the Ruling Oligarchy just fine.

I hope everyone had an opportunity to click the link I provided to the series of paintings known as The Course of Empire . ICYMI, here it is again . Please note which Empire's being copied and compare that with the predominant architectural theme in the Outlaw US Empire's Imperium. Creditors ruled and eventually destroyed that Empire. That's one historical lesson that's totally omitted from the historiography of the USA.

By and large, we know what and where the problems are. The fundamental question is, will we ever get the opportunity to fix them?

somebody , May 20, 2019 1:26:48 AM | 5
Posted by: Grieved | May 19, 2019 11:21:32 PM | 48

Their disadvantage is that they have to import energy. So they need export if they do not wish to run a trade deficit. They do not necessarily need the US for this though if they can trade in Yuan.

TJ , May 20, 2019 5:16:46 AM | 1
Speaking of Chinese stories, here in the UK I grew up watching The Water Margin , from the opening titles 'The ancient sages said "do not despise the snake for having no horns, for who is to say it will not become a dragon?" So may one just man become an army.' and also Monkey , the opening titles gave us "The irrepressible spirit of Monkey" .
Thirsty , May 20, 2019 7:55:53 AM | 5
b, it is generally fund raising time during this time for some publishers (i.e. counterpunch etc) and I would like to send you something as well. Can you please post the payment information. Thanks.
Jen , May 20, 2019 8:28:59 AM | 6
Peter AU 1 @ 62:

If you are interested in watching a film with a sociological approach to telling a story and you are close to a cinema, Mike Leigh's "Peterloo" just started screening last Thursday in Australia. The film is an exploration of British society during the Regency period (in the early 19th century), the class attitudes and opinions prevalent then, and the conditions and events that led to 60,000 - 100,000 labouring class people gathering at St Peter's Field in Manchester in August 1819, and how it was viciously broken up by cavalry and foot soldiers acting on orders of the aristocracy.

The film is at least 150 minutes long and is a highly immersive experience. There is not much plot in the Hollywood sense of the term. I believe reviews have been mixed with most film critics complaining about the film being too long and boring. But if you are prepared to watch a film that uses a sociological approach to telling a narrative, then you'll agree with me that the film actually isn't long enough.

Chevrus , May 20, 2019 9:19:33 AM | 0
@Hmpf-59

Very interesting studies and the ideas that they might spawn. The near parallels of the micro and macro as well as the flow patterns.

The culture I am immersed in (USA) is heavily weighted toward the dramatic and two dimensional. Simply put, mass perspective engineering is geared to over simplify and reinforce these views with media imprinting via hollywood, madison ave. etc. The lenses through which impressions from the "outside world" pass through engineered to give the desired results rather than expand consciousness or engender critical thinking. In short, we are breeding for weakness and gullibility.

In regard to large scale dynamics resembling the physics of things like the laws of thermodynamics, I am wondering if phenomena like those alluded to above might be engulfed and influenced by these kinds of natural patterns. So for example: Looking past the drama of sanctions, trade wars, and good guys vs. bad guys, wont the large scale movements caused by these things begin to move according to a kind of physics?

I keep wondering what the result of this latest round of economic warfare will lead to. If the USA continues to sanction, embargo and blockade (at the behest of banking cartels?) will this not cause a mass exodus from dollar reserves, SWIFT, BIS and the like? I hear all sorts of opinions, bushels of dis-info and I'm mostly at a loss as to what to think. We are clearly nearing the end of the Bretton-Woods era so a reset is in order. The USA is a mere 6% of the world population and some would say at the end of it's due date as far an being an "international influencer".

So if they and their EU poodles go ahead and sanction every nation who refuses to bend the knee what's stopping these nations from simply bypassing these decrees and going about their business? I get the sense that this is already happening quietly. Russia, China and various partner nations are creating alternatives in many forms, be they interweb servers, financial networks, OBOR, SCO and more I have never heard of.

Perhaps the ratcheting up of tensions could also be swept up in the turbulence of thermodynamics? If sanctions become embargoes and then blockades, what happens to the "compressions ratios in the Straits of Hormuz?

BM , May 20, 2019 9:26:11 AM | 1
Re: Game of Thrones

Well, I've come across a few advertisements, but I always thought it was some kind of children's video game. I cannot imagine why anyone other than a socially stunted and mis-developed American or Americanised adolescent could want to watch such infantile deranged garbage.

If it is Hollywood, then you can be certain the intention is to manipulate the younger generation to supporting and idolising their permanent wars. On the face of it, that indeed appears to be the case.

OK, I've got that off my chest now!

[Jul 20, 2019] Escobar Western Intellectuals Freak Over Frankenstein China

Jul 20, 2019 | www.zerohedge.com

Decoupling

Assuming the decoupling would take place, that could be easily perceived as "strategic blackmail" imposed by the Trump administration. Yet what the Trump administration wants is not exactly what the US establishment wants – as shown by an open letter to Trump signed by scores of academics, foreign policy experts and business leaders who are worried that "decoupling" China from the global economy – as if Washington could actually pull off such an impossibility – would generate massive blowback.

What may actually happen in terms of a US-China "decoupling" is what Beijing is already, actively working on: extending trade partnerships with the EU and across the Global South.

And that will lead, according to Li, to the Chinese leadership offering deeper and wider market access to its partners. This will soon be the case with the EU, as discussed in Brussels in the spring.

Sun Jie, a researcher at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said that deepening partnerships with the Association of Southeast Asian Nations (Asean) will be essential in case a decoupling is in the cards.

For his part Liu Qing, an economics professor at Renmin University, stressed the need for top international relations management, dealing with everyone from Europe to the Global South, to prevent their companies from replacing Chinese companies in selected global supply chains.

And Wang Xiaosong, an economics professor at Renmin University, emphasized that a concerted Chinese strategic approach in dealing with Washington is absolutely paramount.

All about Belt and Road

A few optimists among Western intellectuals would rather characterize what is going on as a vibrant debate between proponents of "restraint" and "offshore balancing" and proponents of "liberal hegemony". In fact, it's actually a firefight.

Among the Western intellectuals singled out by the puzzled Frankenstein guy, it is virtually impossible to find another voice of reason to match Martin Jacques , now a senior fellow at Cambridge University. When China Rules the World , his hefty tome published 10 years ago, still leaps out of an editorial wasteland of almost uniformly dull publications by so-called Western "experts" on China.

Jacques has understood that now it's all about the New Silk Roads, or Belt and Road Initiative:

"BRI has the potential to offer another kind of world, another set of values, another set of imperatives, another way of organizing, another set of institutions, another set of relationships."

Belt and Road, adds Jacques, "offers an alternative to the existing international order. The present international order was designed by and still essentially privileges the rich world, which represents only 15% of the world's population. BRI, on the other hand, is addressing at least two-thirds of the world's population. This is extraordinarily important for this moment in history."

[Jul 12, 2019] Nine Consequences of the Upcoming US-China Trade War by Renaud Anjoran

Highly recommended!
This author really knows what he is talking about
Notable quotes:
"... When tariffs went up from 0 to 10% on some product categories last year, many suppliers agreed to absorb half that amount (5%) in exchange for larger orders. The logic was as follows: higher orders lead to better deals with component suppliers and to higher production efficiencies, which means lower costs. ..."
"... Do you ship American wood for processing in China and re-exporting to the US? You might have issues getting that material into China as smoothly as before. And then, the US Customs office might give you a hard time when you bring the goods in, too! ..."
"... Who knows what non-monetary barriers the Chinese will erect. One can count on their creativity ..."
"... Several US companies asked our company to look for assembly plants in Vietnam and, in those cases where we found some options, they were much more expensive than China. There is a reason why China's share of hard goods production in Asia has kept growing in recent years -- competition is often non-existent. ..."
"... Now, with China's products suddenly much more expensive, what are these competing countries going to do? Won't they take advantage of it and push wages further up, at least for the export manufacturing sector? ..."
"... Mexico should be the clear winner of this trade war. They are next to the US, their labor cost is comparable to that of China, and many American companies have long had extensive operations there. ..."
May 09, 2019 | qualityinspection.org

https://qualityinspection.org/9-consequences-us-china-trade-war/

Based on all the articles I have read about the current geopolitical situation, I am not optimistic about the affect of the US-China trade war on American importers. Dan Harris, who wrote " the US-China Cold War start now, " announced that a "mega-storm" might be coming, and he may be right.

Now, if things turn out as bad as predicted, and if tariffs apply on more goods imported from China to the US -- and at higher rates -- what does it mean for US importers?

What will the damage from the US-China trade war look like?

These are my thoughts about who or what is going to be hit hard by the ongoing 'trade war:'

1. Small importers will be hit much harder than larger ones

If you work with very large Chinese manufacturers, many of them have already started to set up operations outside of mainland China, for the simple reason that most of their customers have been pushing for that.

They are in Vietnam, Malaysia, etc. And this is true in most industries -- from apparel to electronics.

Do they still have to import most of their components from China? It depends on their footprints. As I wrote before :

You set up a mammoth plant and you don't want your high-value component suppliers to be more than 1 hour away from you, for just-in-time inventory replenishment? They can be requested to set up a new manufacturing facility next to you.

2. A higher total cost of goods purchased from China

This one is obvious. If you have orders already in production, they will cost you more than expected.

The RMB might slide quite a bit, and that might alleviate the total cost. I hope you have followed my advice and started paying your suppliers in RMB , to benefit from it automatically.

Beijing might also give other forms of subsidies to their exporters. They might be quite visible (e.g. a higher VAT rebate) or totally 'under the table'.

3. Difficult negotiations with Chinese suppliers

Can you say the tariffs are Beijing's fault, and so your suppliers should absorb the tariffs? That's not going to work.

When tariffs went up from 0 to 10% on some product categories last year, many suppliers agreed to absorb half that amount (5%) in exchange for larger orders. The logic was as follows: higher orders lead to better deals with component suppliers and to higher production efficiencies, which means lower costs.

When tariffs go from 10% to 35%, what else can US buyers give their counter-parties? Payments in advance? Lower quality standards? I don't believe that.

4. Difficulties at several levels in the supply chain

Do you ship American wood for processing in China and re-exporting to the US? You might have issues getting that material into China as smoothly as before. And then, the US Customs office might give you a hard time when you bring the goods in, too!

Who knows what non-monetary barriers the Chinese will erect. One can count on their creativity

5. Short-term non-elasticity of alternative sources

There are a finite number of Vietnamese export-ready manufacturers that can make your orders. And, chances are, their capacity is already full. If you haven't prepared this move for months (or years), other US companies have. The early bird gets the worm

Same thing with Thailand, Indonesia, India, and so on, with the exception of apparel and (maybe) footwear.

Several US companies asked our company to look for assembly plants in Vietnam and, in those cases where we found some options, they were much more expensive than China. There is a reason why China's share of hard goods production in Asia has kept growing in recent years -- competition is often non-existent.

6. Faster cost increases in other low-cost Asian countries

As I wrote before, since China announced their 5-year plan to increase wages, other Asian countries adopted similar plans . That's how we got to this upward trend across the board:

Minimum wage comparison

Now, with China's products suddenly much more expensive, what are these competing countries going to do? Won't they take advantage of it and push wages further up, at least for the export manufacturing sector?

There could be some 'silver linings' due to the trade war

It is not all bad news though. We may see these benefits caused by China and the USA slugging it out too:

7. Many opportunities for Mexico

Mexico should be the clear winner of this trade war. They are next to the US, their labor cost is comparable to that of China, and many American companies have long had extensive operations there.

8. Rapid consolidation in the Chinese manufacturing sector

The fittest will survive. Many uncompetitive manufacturers and traders will fold. Consolidation will accelerate. I often look at what happened in Japan and South Korea . Each of these countries developed very fast and, when the going got tough, the export manufacturing sector got devastated. Only the most competitive survived.

9. Relaxed enforcement of anti-pollution regulations in China?

I'd bet that, if the tariffs hit hard, far fewer operations will get closed for environmental reasons. Preserving employment and social peace will prevail.

[Jul 01, 2019] The cover story is that foreign exchange controls and purchases of U.S. securities keep the renminbi's exchange rate low, artificially spurring its exports. The reality, of course, is that these controls protect China from U.S. banks creating free 'keyboard credit' to buy out Chinese companies to buy out Chinese companies or load down its economy with loans to be paid off in renminbi whose value will rise against the deficit-ridden dollar

Jul 01, 2019 | www.moonofalabama.org

karlof1 , Jun 30, 2019 8:50:06 PM | 83

A while ago we discussed the obfuscation of classical economics in order to elevate the Junk Economics of Randian Neoliberalism. And with Trump's Trade War and the 2020 election cycle's start, I think it wise to revisit what's proven to be a timeless Michael Hudson essay from 2010, "America's China Bashing: A Compendium of Junk Economics" , which provided the ground work for the subsequent book he published on the topic.

The following excerpt remains the underlying issue prompting Trump's Trade War with China:

"The cover story is that foreign exchange controls and purchases of U.S. securities keep the renminbi's exchange rate low, artificially spurring its exports. The reality, of course, is that these controls protect China from U.S. banks creating free 'keyboard credit' to buy out Chinese companies to buy out Chinese companies or load down its economy with loans to be paid off in renminbi whose value will rise against the deficit-ridden dollar. It's the Wall Street arbitrage opportunity of the century that banks are pressing for, not the welfare of American workers ."

As the years between have shown, the Chinese aren't fools and probably know more about economics than their politicized US counterparts, Trump especially included.

psychohistorian , Jun 30, 2019 9:12:34 PM | 85

@ William Gruff with the dh-mtl update about "control" during the early part of last century....I agree and thanks

@ karlof1 with the Michael Hudson link.....I put a comment up last night with a quote from Xinhuanet
"
BEIJING, June 30 (Xinhua) -- China on Sunday rolled out revised negative lists for foreign investment market access, introducing greater opening-up and allowing foreign investors to run majority-share-controlling or wholly-owned businesses in more sectors.
"
It makes me worry about how much of "China" will be allowed to be bought/controlled by the private finance folk. I have been wondering about this since 2008 when the US started running the "printing presses" bigly enough to double the deficit in less than 10 years.....I didn't get any of those trillions, did you? At some point I expect there to be a meeting of global "big wigs" who say they own this or that and wonder how that meeting will turn out relative to Bretton Woods.

I still see China throwing out a faux lifeline to the private finance folk that will be reeled in after the transition to a China led world.....want to make it look like the Koch brothers and Soros with their new peace tank are leading the parade.....

[Jun 30, 2019] Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix - The New York Times

Notable quotes:
"... Mr. Lidow is among the semiconductor executives in the United States who have become concerned that the trade war with China -- particularly the Trump administration's ban on selling chips to some prominent Chinese customers -- won't just squeeze current revenue. He fears that recent events have convinced Chinese companies that American component makers can no longer be seen as dependable partners and are permanently shifting away from them. ..."
"... In May, President Trump ordered American companies on national-security grounds to stop selling components to companies like Huawei , China's big maker of mobile phones and networking equipment. And the administration placed five other Chinese entities on the same blacklist this month, including the computer maker Sugon and three subsidiaries. ..."
"... China has responded by saying it would put together its own "unreliable entities list," including many American tech companies. ..."
"... "The U.S. is in danger of becoming the vendor of last resort for China," said Walden Rhines, chief executive emeritus of Mentor, a unit of Siemens that sells software for designing chips ..."
Jun 30, 2019 | www.nytimes.com

SAN FRANCISCO -- Alex Lidow has sold semiconductors in China for decades, starting at a company, called International Rectifier, that his father and grandfather founded in the Los Angeles area in 1947.

Now Mr. Lidow runs Efficient Power Conversion, which makes chips that manage electrical power in cars and other products. Efficient Power has a strong foothold in China, but has lately run into resistance from customers there that he traces to moves in Washington.

Mr. Lidow is among the semiconductor executives in the United States who have become concerned that the trade war with China -- particularly the Trump administration's ban on selling chips to some prominent Chinese customers -- won't just squeeze current revenue. He fears that recent events have convinced Chinese companies that American component makers can no longer be seen as dependable partners and are permanently shifting away from them.

"In my 40 years in this business, I've had friends in China that viewed me as a trusted supplier," Mr. Lidow said. "They can't now." His experience is part of the fallout affecting the American chip industry, one of the tech sectors hardest hit by the tit-for-tat between the United States and China over trade and national security.

In May, President Trump ordered American companies on national-security grounds to stop selling components to companies like Huawei , China's big maker of mobile phones and networking equipment. And the administration placed five other Chinese entities on the same blacklist this month, including the computer maker Sugon and three subsidiaries.

China has responded by saying it would put together its own "unreliable entities list," including many American tech companies.

Even if a new trade deal eases tensions -- Mr. Trump is set to meet with President Xi Jinping of China in Osaka, Japan, on Saturday -- American chip executives and others said lasting damage had already been done. They said Chinese officials and companies would step up efforts to design and make more chips domestically. And Chinese customers seem likely to turn to vendors from countries like Japan, South Korea and Taiwan if no homegrown chips are available.

"The U.S. is in danger of becoming the vendor of last resort for China," said Walden Rhines, chief executive emeritus of Mentor, a unit of Siemens that sells software for designing chips

Already, big American chip makers have taken a financial hit from the China bans. Micron Technology, which sells two of the most widely used varieties of memory chips, disclosed Tuesday that the Huawei ban had lowered sales in its most recent quarter by nearly $200 million. Huawei is Micron’s largest customer, accounting for around 13 percent of its revenue.

[Jun 30, 2019] The Art Of The Deal Vs. The Art Of War by Lance Roberts

Notable quotes:
"... "The problem, is that China knows time is short for the President and subsequently there is 'no rush' to conclude a 'trade deal' for several reasons: ..."
"... The pressure is on the Trump Administration to conclude a "deal," not on China. Trump needs a deal done before the 2020 election cycle AND he needs the markets and economy to be strong. ..."
"... corporate profits continued to come under pressure. As noted previously, corporate profits have declined over the last two quarters and are at the same level as in 2014 with the stock market higher by almost 60%. ..."
"... But, if you think China is going to acquiesce any time soon to Trump's demands, you haven't been paying attention. China has launched a national call in their press to unify support behind China's refusal to give into Trump's demands. To wit: ..."
"... "Lying behind the trade feud is America's intention to stifle China's development. The U.S. wants to be a permanent leader in the world, and there is no way for China to avoid the 'storm' through compromise. ..."
Jun 30, 2019 | www.zerohedge.com

Authored by Lance Roberts via RealInvestmentAdvice.com,

... ... ...

By agreeing to continue talks without imposing more tariffs on China, China gains ample running room to continue to adjust for current tariffs to lessen their impact. More importantly, Trump gave up a major bargaining chip – Huawei.

"One of the things I will allow, however, is -- a lot of people are surprised we send and we sell to Huawei a tremendous amount of product that goes into a lot of the various things that they make -- and I said that that's OK, that we will keep selling that product."

No, a lot of people weren't surprised, just Trump as there has been pressure applied by U.S. technology firms to lift the ban on Huawei. While he may have appeased his corporate campaign donors for now, Trump gave up one of the more important "pain points" on China's economy.

This gives China much needed room to run.

Let's review what we said a couple of months ago as to why their will ultimately be no deal.

"The problem, is that China knows time is short for the President and subsequently there is 'no rush' to conclude a 'trade deal' for several reasons:

  1. China is playing a very long game. Short-term economic pain can be met with ever-increasing levels of government stimulus. The U.S. has no such mechanism currently, but explains why both Trump and Vice-President Pence have been suggesting the Fed restarts QE and cuts rates by 1%. (Update: Trump says the U.S. should have Mario Draghi at the helm of U.S. monetary policy.)
  2. The pressure is on the Trump Administration to conclude a "deal," not on China. Trump needs a deal done before the 2020 election cycle AND he needs the markets and economy to be strong. If the markets and economy weaken because of tariffs, which are a tax on domestic consumers and corporate profits, as they did in 2018, the risk off electoral losses rise. China knows this and are willing to 'wait it out' to get a better deal.
  3. As I have stated before, China is not going to jeopardize its 50 to 100-year economic growth plan on a current President who will be out of office within the next 5-years at most. It is unlikely, the next President will take the same hard line approach on China that President Trump has, so agreeing to something that is unlikely to be supported in the future is unlikely. It is also why many parts of the trade deal already negotiated don't take effect until after Trump is out of office when those agreements are unlikely to be enforced.

In the meantime, as noted in #3 above, corporate profits continued to come under pressure. As noted previously, corporate profits have declined over the last two quarters and are at the same level as in 2014 with the stock market higher by almost 60%.

... ... ...

But, if you think China is going to acquiesce any time soon to Trump's demands, you haven't been paying attention. China has launched a national call in their press to unify support behind China's refusal to give into Trump's demands. To wit:

"Lying behind the trade feud is America's intention to stifle China's development. The U.S. wants to be a permanent leader in the world, and there is no way for China to avoid the 'storm' through compromise.

History proves that compromise only leads to further dilemmas. During previous trade tensions between the U.S. and Japan, Japan made concessions. As a result, its political stability and economic development were adversely affected, with structural reform being suspended and hi-tech companies being severely damaged.

China, with a population of 1.4 billion, is the world's largest manufacturing base. Industrial upgrading and hi-tech innovation are crucial to China's economic development. China needs to leave more resources to its descendants by protecting the environment, and reaping the dividends of further opening-up. These are the core interests of China, and it will never give them up.

The only way for a country to win a war is through development, not compromise. To achieve development, China will open its door wider to the world and fight to the end."

These are Xi Jinping's mandates, dictated directly from his party, for the meeting with the United States president in Osaka.

The only possible outcome for Trump was exactly what happened. Nothing. Just an agreement to talk more.

While Trump may be following his "Art Of The Deal" tactics, Xi is clearly operating on the foundation of Sun Tzu's "The Art Of War."

"If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. I f your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected. "

China has been attacking the "rust-belt" states, which are crucial to Trump's 2020 re-election, states with specifically targeted tariffs. As noted by MarketWatch:

"China has lashed back with tariffs on $110 billion in American goods, focusing on agricultural products in a direct and painful shot at Trump supporters in the U.S. farm belt."

While Trump is operating from a view that was a ghost-written, former best-seller, in the U.S. popular press, Xi is operating from a centuries-old blueprint for victory in battle.

China clearly won this round, and the pressure is now squarely on Trump to get a deal done before the 2020 election.

That isn't likely going to happen.

[Jun 27, 2019] Crisis of neoliberalism hits the US military industrial complex by Matt Stoller and Lucas Kunce

Notable quotes:
"... This story of lost American leadership and production is not unique. In fact, the destruction of America's once vibrant military and commercial industrial capacity in many sectors has become the single biggest unacknowledged threat to our national security. Because of public policies focused on finance instead of production, the United States increasingly cannot produce or maintain vital systems upon which our economy, our military, and our allies rely. Huawei is just a particularly prominent example. ..."
"... Higher budgets would seem to make sense. According to the 2018 National Defense Strategy, the United States is shifting away from armed conflicts in the Middle East to "great power" competition with China and Russia, which have technological parity in many areas with the United States. As part of his case for higher budgets, Mattis told Congress that "our military remains capable, but our competitive edge has eroded in every domain of warfare -- air, land, sea, space, and cyber." ..."
"... And yet, the U.S. military budget, even at stalled levels, is still larger than the next nine countries' budgets combined. So there's a second natural follow-up question: is the defense budget the primary reason our military advantage is slipping away, or is it something deeper? ..."
"... The loss of manufacturing capacity has been devastating for American research capacity. "Innovation doesn't just hover above the Great Plains," Mottl said. "It is built on steady incremental changes and knowledge learned out of basic manufacturing." Telecommunications equipment is dual use, meaning it can be used for both commercial and military purposes. The loss of an industrial base in telecom equipment meant that the American national security apparatus lost military capacity. ..."
"... "The middle-class Americans who did the manufacturing work, all that capability, machine tools, knowledge, it just became worthless, driven by the stock price," he said. "The national ability to produce is a national treasure. If you can't produce you won't consume, and you can't defend yourself." ..."
"... In the commercial sector, rebuilding the industrial base will require an aggressive national mobilization strategy. This means aggressive investment by government to rebuild manufacturing capacity, selective tariffs to protect against Chinese or foreign predation, regulation to stop financial predation by Wall Street, and anti-monopoly enforcement to block the exploitation of market power. ..."
Jun 27, 2019 | www.theamericanconservative.com

Wall Street's short-term incentives have decimated our defense industrial base and undermined our national security.

Early this year, U.S. authorities filed criminal charges -- including bank fraud, obstruction of justice, and theft of technology -- against the largest maker of telecommunications equipment in the world, a Chinese giant named Huawei. Chinese dominance in telecom equipment has created a crisis among Western espionage agencies, who, fearful of Chinese spying, are attempting to prevent the spread of Huawei equipment worldwide, especially
in the critical 5G next-generation mobile networking space.

In response to the campaign to block the purchase of Huawei equipment, the company has engaged in a public relations offensive. The company's CEO, Ren Zhengfei, portrayed Western fears as an advertisement for its products, which are, he said, "so good that the U.S. government is scared." There's little question the Chinese government is interested in using equipment to spy. What is surprising is Zhengfei is right about the products. Huawei, a relatively new company in the telecom equipment space, has amassed top market share because its equipment -- espionage vulnerabilities aside -- is the best value on the market.

In historical terms, this is a shocking turnaround. Americans invented the telephone business and until recently dominated production and research. But in the last 20 years, every single American producer of key telecommunication equipment sectors is gone. Today, only two European makers -- Ericsson and Nokia -- are left to compete with Huawei and another Chinese competitor, ZTE.

This story of lost American leadership and production is not unique. In fact, the destruction of America's once vibrant military and commercial industrial capacity in many sectors has become the single biggest unacknowledged threat to our national security. Because of public policies focused on finance instead of production, the United States increasingly cannot produce or maintain vital systems upon which our economy, our military, and our allies rely. Huawei is just a particularly prominent example.

When national security specialists consider preparedness, they usually think in terms of the amount of money spent on the Pentagon. One of President Donald Trump's key campaign promises was to aggressively raise the military budget, which he, along with Congress, started doing in 2017. The reaction was instant. "I'm heartened that Congress recognizes the sobering effect of budgetary uncertainty on America's military and on the men and women who provide for our nation's defense," then-defense secretary Jim Mattis said. Budgets have gone up every year since.

Higher budgets would seem to make sense. According to the 2018 National Defense Strategy, the United States is shifting away from armed conflicts in the Middle East to "great power" competition with China and Russia, which have technological parity in many areas with the United States. As part of his case for higher budgets, Mattis told Congress that "our military remains capable, but our competitive edge has eroded in every domain of warfare -- air, land, sea, space, and cyber."

In some cases, our competitive edge has not just been eroded, but is at risk of being -- or already is -- surpassed. The Chinese surge in 5G telecom equipment, which has dual civilian and military uses, is one example. China is making key investments in artificial intelligence, another area of competition. They even seem to be able to mount a rail gun on a naval ship , an important next generation weapons technology that the U.S. Navy has yet to incorporate.

And yet, the U.S. military budget, even at stalled levels, is still larger than the next nine countries' budgets combined. So there's a second natural follow-up question: is the defense budget the primary reason our military advantage is slipping away, or is it something deeper?

Why the Regulators Went Soft on Monopolies The Conservative Case for Antitrust

The story of Huawei, and many others, suggests the latter.

♦♦♦

For over a century, America led the world in producing telecommunications equipment. The American telecom industry, according to Zach Mottl of Atlas Tool Works, a subcontractor in the industry, used to be a "crown jewel of American manufacturing." Mottl's company had been a manufacturing supplier to AT&T and its Bell Labs from the early 1900s until the early 2000s. "The radar system was invented here. The transistor came out of Bell Labs. The laser. I mean all of these high-tech inventions that have both commercial and military applications were funded out of the research," Mottl told TAC . More than just the sexy inventions, there was a domestic industrial sector which could make the equipment. Now, in a strategic coup for our adversaries, that capability is gone.

Yet it wasn't one of those adversaries that killed our telecommunications capacity, but one of our own institutions, Wall Street, and its pressure on executives to make decisions designed to impress financial markets, rather than for the long-term health of their companies. In 1996, AT&T spun off Bell Labs into a telecom equipment company, Lucent Technologies, to take advantage of investors' appetite for an independent player selling high-tech telecom gear after Congress deregulated the telecommuncations space. At the time, it was the biggest initial public offering in history, and became the foundation of a relationship with financial markets that led to its eventual collapse.

The focus on stock price at Lucent was systematic. The stock price was posted daily to encourage everyone to focus on the company's relationship with short-term oriented financial markets. All employees got a small number of "Founder's Grant Share Options," with executives offered much larger slugs of stock to solidify the connection. When Richard McGinn became CEO in 1997, he focused on financial markets.

Lucent began to buy up companies. According to two scholars , "The perceived need to compete for acquisitions became a 'strategic' justification for keeping stock prices high. This in turn demanded meeting or exceeding quarterly revenue and earnings targets, objectives with which Lucent top executives, led by the hard-driving McGinn, became obsessed."

Lucent got even more aggressive. McGinn's subordinate, an executive named Carly Fiorina, juiced returns with a strategy based on lending money to risky startups who would then turn around and buy Lucent equipment. Fiorina collected $65 million in compensation as the stock soared. And then, when the dot-com boom turned to bust, the company, beset by accounting scandals designed to impress shareholders and the financial markets, embarked on massive layoffs. CEO McGinn was among those laid off, but with a $12.5 million severance package -- royal compensation for taking one of America's strategic industrial assets down the road toward total destruction.

In the early 2000s, the telecom equipment market began to recover from the recession. Lucent's new strategy, as Mottl put it, was to seek "margin" by offshoring production to China, continuing layoffs of American workers and hiring abroad. At first, it was the simpler parts of the telecom equipment, the boxes and assembly, but soon contract manufacturers in China were making virtually all of it. American telecom capacity would never return.

Lucent didn't recover its former position. Chinese entrants, subsidized heavily by the Chinese state and using Western technology, underpriced Western companies. American policymakers, unconcerned with industrial capacity, allowed Chinese companies to capture market share despite the predatory subsidies and stolen technology. In 2006, French telecom equipment maker Alcatel bought Lucent, signifying the end of American control of Bell Labs. Today, Huawei, with state backing, dominates the market.

The erosion of much of the American industrial and defense industrial base proceeded like Lucent. First, in the 1980s and 1990s, Wall Street financiers focused on short-term profits, market power, and executive pay-outs over core competencies like research and production, often rolling an industry up into a monopoly producer. Then, in the 2000s, they offshored production to the lowest cost producer. This finance-centric approach opened the door to the Chinese government's ability to strategically pick off industrial capacity by subsidizing its producers. Hand over cash to Wall Street, and China could get the American crown jewels.

The loss of manufacturing capacity has been devastating for American research capacity. "Innovation doesn't just hover above the Great Plains," Mottl said. "It is built on steady incremental changes and knowledge learned out of basic manufacturing." Telecommunications equipment is dual use, meaning it can be used for both commercial and military purposes. The loss of an industrial base in telecom equipment meant that the American national security apparatus lost military capacity.

This loss goes well beyond telecom equipment. Talking to small manufacturers and distributors who operate in the guts of our industrial systems offers a perspective on the danger of this process of financial predation and offshoring. Bill Hickey, who headed his family's metal distributor, processor, and fabricator, has been watching the collapse for decades. Hickey sells to "everyone who uses steel," from truck, car, and agricultural equipment manufacturers to stadiums and the military.

Hickey, like many manufacturers, has watched the rise of China with alarm for decades. "Everyone's upset about the China 2025 plan," he told TAC , referencing the current Chinese plan causing alarm among national security thinkers in Washington. "Well there was a China 2020 plan, 2016 plan, 2012 plan." The United States has, for instance, lost much of its fasteners and casting industries, which are key inputs to virtually every industrial product. It has lost much of its capacity in grain oriented flat-rolled electrical steel, a specialized metal required for highly efficient electrical motors. Aluminum that goes into American aircraft carriers now often comes from China.

Hickey told a story of how the United States is even losing its submarine fleet. He had a conversation with an admiral in charge of the U.S. sub fleet at the commissioning of the USS Illinois , a Virginia-class attack submarine, who complained that the United States was retiring three worn-out boats a year, but could only build one and a half in that time. The Trump military budget has boosted funding to build two a year, but the United States no longer has the capacity to do high quality castings to build any more than that. The supply chain that could support such surge production should be in the commercial world, but it has been offshored to China. "You can't run a really high-end casting business on making three submarines a year," Hickey said. "You just can't do it." This shift happened because Wall Street, or "the LBO (leveraged buy-out) guys" as Hickey put it, bought up manufacturing facilities in the 1990s and moved them to China.

"The middle-class Americans who did the manufacturing work, all that capability, machine tools, knowledge, it just became worthless, driven by the stock price," he said. "The national ability to produce is a national treasure. If you can't produce you won't consume, and you can't defend yourself."

The Loss of the Defense Industrial Base

But it's not just the dual-use commercial manufacturing base that is collapsing. Our policy empowering Wall Street and offshoring has also damaged the more specialized defense base, which directly produces weaponry and equipment for the military.

How pervasive is the loss of such capacity? In September 2018, the Department of Defense released findings of its analysis into its supply chain. The results highlighted how fragile our ability to supply our own military has become.

The report listed dozens of militarily significant items and inputs with only one or two domestic producers, or even none at all. Many production facilities are owned by companies that are financially vulnerable and at high risk of being shut down. Some of the risk comes from limited production capability. Mortar tubes, for example, are made on just one production line, and some Marine aircraft parts are made by just one company -- one which recently filed for bankruptcy.

At risk is everything from chaff to flares to high voltage cable, fittings for ships, valves, key inputs for satellites and missiles, and even material for tents. As Americans no longer work in key industrial fields, the engineering and production skills evaporate as the legacy workforce retires.

Even more unsettling is the reliance on foreign, and often adversarial, manufacturing and supplies. The report found that "China is the single or sole supplier for a number of specialty chemicals used in munitions and missiles . A sudden and catastrophic loss of supply would disrupt DoD missile, satellite, space launch, and other defense manufacturing programs. In many cases, there are no substitutes readily available." Other examples of foreign reliance included circuit boards, night vision systems, batteries, and space sensors.

The story here is similar. When Wall Street targeted the commercial industrial base in the 1990s, the same financial trends shifted the defense industry. Well before any of the more recent conflicts, financial pressure led to a change in focus for many in the defense industry -- from technological engineering to balance sheet engineering. The result is that some of the biggest names in the industry have never created any defense product. Instead of innovating new technology to support our national security, they innovate new ways of creating monopolies to take advantage of it.

A good example is a company called TransDigm. While TransDigm presents itself as a designer and producer of aerospace products, it can more accurately be described as a designer of monopolies. TransDigm began as a private equity firm, a type of investment business, in 1993. Its mission, per its earnings call , is to give "private equity-like returns" to shareholders, returns that are much higher than the stock market or other standard investment vehicles.

It achieves these returns for its shareholders by buying up companies that are sole or single-source suppliers of obscure airplane parts that the government needs, and then increasing prices by as much as eight times the original amount . If the government balks at paying, TransDigm has no qualms daring the military to risk its mission and its crew by not buying the parts. The military, held hostage, often pays the ransom. TransDigm's gross profit margins using this model to gouge the U.S. government are a robust 54.5 percent. To put that into perspective, Boeing and Lockheed's profit margins are listed at 13.6 percent and 10.91 percent. In many ways, TransDigm is like the pharmaceutical company run by Martin Shkreli, which bought rare treatments and then price gouged those who could not do without the product. Earlier this year, TransDigm recently bought the remaining supplier of chaff and one of two suppliers of flares, products identified in the Defense Department's supply chain fragility report.

TransDigm was caught manipulating the parts market by the Department of Defense Inspector General in 2006 , again in 2008 , and finally again this year. It is currently facing yet another investigation by the Government Accountability Office .

Yet, Trandigm's stock price thrives because Wall Street loves monopolies, regardless of who they are taking advantage of. Take this analysis from TheStreet from March 2019, published after the latest Inspector General report and directly citing many of the concerning facts from the report as pure positives for the investor:

The company is now the sole supplier for 80% of the end markets it serves. And 90% of the items in the supply chain are proprietary to TransDigm. In other words, the company is operating a monopoly for parts needed to operate aircraft that will typically be in service for 30 years . Managers are uniquely motivated to increase shareholder value and they have an enviable record, with shares up 2,503% since 2009.

Fleecing the Defense Department is big business. Its executive chairman W. Nicholas Howley, skewered by Democrats and Republicans alike in a May 2019 House Oversight hearing for making up to 4,000 percent excess profit on some parts and stealing from the American taxpayer, received total compensation of over $64 million in 2013 , the fifth most among all CEOs, and over $13 million in 2018 , making him one of the most highly compensated CEOs no one has ever heard of . Shortly after May's hearing, the company agreed to voluntarily return $16 million in overcharges to the Pentagon, but the share price is at near record highs.

L3 Technologies, created in 1997, has taken a different, but also damaging, approach to monopolizing Defense Department contracts. Originally, it sought to become "the Home Depot of the defense industry" by going on an acquisition binge, according to its former CEO Frank Lanza. Today, L3 uses its size, its connections within the government, and its willingness to offer federal employees good-paying jobs at L3, to muscle out competitors and win contracts, even if the competitor has more innovative and better priced products . This practice attracted the ire of two Republican congressmen from North Carolina, Ted Budd and the late Walter Jones, who found in 2017 that L3 succeeds, in part, due to "blatant corruption and obvious disregard of American foreign interest in the name of personal economic profit."

Like TransDigm, this isn't L3's first brush with trouble. It was temporarily suspended from U.S. government contracting for using "extremely sensitive and classified information" from a government system to help its international business interests. It was the subject of a scathing Senate Armed Services Committee investigation for failing to notify the Defense Department that it supplied faulty Chinese counterfeit parts for some of its aircraft displays. And it agreed to pay a $25.6 million settlement to the U.S. government for knowingly providing defective weapon sights for years to soldiers serving in Iraq and Afghanistan.

Yet, also like TransDigm, L3 has thrived despite its troubles. When the company was granted an open-ended contract to update the Air Force's electronics jamming airplane in 2017, Lieutenant General Arnold Bunch outlined the Air Force's logic at a House Armed Services Subcommittee meeting. L3, he said, is the only company that can do the job. "They have all the tooling, they have all the existing knowledge, and they have the modeling and all the information to do that work," he said.

In other words, because L3 has a monopoly, there was no one else to pick. The system -- a system designed by the financial industry that rewards monopoly and consolidation at the expense of innovation and national security -- essentially made the pick for him. It is no wonder our military capacities are ebbing, despite the large budget outlays -- the money isn't going to defense.

♦♦♦

In fact, in some ways, our own defense budgets are being used against us when potential adversaries use Wall Street to take control of our own Pentagon-developed technologies.

There's no better example than China's takeover of the rare earth metal industry, which is key to both defense and electronics. The issue has frequently made the front page during the recent trade war, but the seldom-discussed background to our dependence on China for rare earths is that, just like with telecom equipment, the United States used to be the world leader in the industry until the financial sector shipped the whole thing to China.

In the 1970s and 1980s, the Defense Department invested in the development of a technology to use what are known as rare-earth magnets. The investment was so successful that General Motors engineers, using Pentagon grants, succeeded in creating a rare earth magnet that is now essential for nearly every high-tech piece of military equipment in the U.S. inventory, from smart bombs and fighter jets to lasers and communications devices. The benefit of DARPA's investment wasn't restricted to the military. The magnets make cell phones and modern commercial electronics possible.

China recognized the value of these magnets early on. Chinese Premier Deng Xiaoping famously said in 1992 that "The Middle East has oil, China has rare earth," to underscore the importance of a rare earth strategy he adopted for China. Part of that strategy was to take control of the industry by manipulating the motivations of Wall Street.

Two of Xiaoping's sons-in-law approached investment banker Archibald Cox, Jr. in the mid-1990s to use his hedge fund as a front for their companies to buy the U.S. rare-earth magnet enterprise. They were successful, purchasing and then moving the factory, the Indiana jobs, the patents, and the expertise to China. This was not the only big move, as Cox later moved into a $12 million luxury New York residence . The result is remarkably similar to Huawei: the United States has entirely divested of a technology and market it created and dominated just 30 years ago. China has a near-complete monopoly on rare earth elements, and the U.S. military, according to U.S. government studies, is now 100 percent reliant upon China for the resources to produce its advanced weapon systems.

Wall Street's outsized control over defense contracting and industry means that every place a foreign adversary can insert itself into American financial institutions, it can insert itself into our defense industry.

At an Armed Services Committee hearing in 2018, Representative Carol Shea-Porter talked about how constant the conflict between financial concentration and patriotism had been in her six years on the committee. She recounted a CEO once telling her, in response to her concern about the outsourcing of defense industry parts, that he "[has] to answer to stockholders."

Who are these stockholders that CEOs are so compelled to answer to? Oftentimes, China. Jennifer M. Harris , an expert in global markets with experience at the U.S. State Department and the U.S. National Intelligence Council, researched a recent explosion of Chinese strategic investment in American technology companies. She found that China has systematically targeted U.S. greenfield investments, "technology goods (especially semiconductors), R&D networks, and advanced manufacturing."

The trend accelerated, until the recent flare-up of tensions between the United States and China. "China's foreign direct investment (FDI) stock in the U.S. increased some 800% between 2009 and 2015," she wrote. Then, from 2015 to 2017, "Chinese FDI in the U.S. climbed nearly four-fold, reaching roughly $45.6 billion in 2016 , up from just $12.8 billion in 2014."

This investment runs right through Wall Street, the key lobbying group trying to ratchet down Trump's tough negotiating posture with the Chinese. Rather than showing concern about the increasing influence of a foreign power in our commerce and industry, Wall Street banks have repeatedly followed Archie Cox down the path of easy returns.

In 2016, J.P. Morgan Chase agreed to pay a $264 million bribery settlement to the U.S. government for creating a program, called "Sons and Daughters," to gain access to Chinese money by selectively hiring the unqualified offspring of high-ranking Communist Party officials and other Chinese elites. Several other banks are under investigation for similar practices, including Citigroup and Goldman Sachs, who, not coincidentally, hired the son of China's commerce minister. It appears to have worked out for them. In 2017, Goldman Sachs partnered with the Chinese government's sovereign wealth fund to invest $5 billion Chinese government dollars in American industry.

In short, China is becoming a significant shareholder in U.S. industries, and is selectively targeting those with strategic implications. Congresswoman Shea-Porter's discovery that defense industry CEOs aren't able to worry about national security because they "[have] to answer to shareholders" was disturbing enough. But the fact that it potentially translates as CEOs not being able to worry about national security because they have to answer to the Chinese should elevate the issue to the top of our national security discussion. This nexus of China, Wall Street, and our defense industrial base may be the answer to why our military advantage is ebbing. Even when American ingenuity can thrive, too often the fruits go to the Chinese.

In short, the financial industry, with its emphasis on short-term profit and monopoly , and its willingness to ignore national security for profit, has warped our very ability to defend ourselves.

How Did We Get Here?

Believe it or not, America has been here before. In the 1920s and 1930s, the American defense industrial base was being similarly manipulated by domestic financiers for their own purposes, retarding innovation and damaging the nation's ability to defend itself. And American military readiness was ebbing in the midst of an increasingly dangerous world full of rising autocracies.

Today it might be artificial intelligence or drones, but in the 1930s the key military technology was the airplane. And as with much digital technology today, while Americans invented the airplane, many of the fruits went elsewhere. The reason was similar to the problem of Wall Street today. The American aerospace industry in the 1930s was undermined by fights among bankers over who got to profit from associated patent rights.

In 1935, Brigadier General William Mitchell told Congress that the United States didn't have a single plane that could go against a "first-class power." "It is a disgraceful situation and is due," he said, "for one thing, to this pool of patents." The lack of aerospace capacity reflected a broader industrial problem. Monopolists refused to invest in factories to produce enough steel, aluminum, and magnesium for adequate military readiness, for fear of losing control over prices.

New Dealers investigated, and by the time war broke out, the Roosevelt administration was in the midst of a sustained anti-monopoly campaign. The Nazi war machine, like China today, gave added impetus to the problem of monopoly in key technology-heavy industries. In 1941, an assistant attorney general for the antitrust division, Norman Littell, gave a speech to the Indiana State Bar Association about what he called "The German Invasion of American Business."

The Nazis, he argued, used legal techniques, like patent laws, stock ownership, dummy corporations, and cartel arrangements, to extend their power into the United States. "The distinction between bombing a vital plant out of existence from an airplane and preventing that plant from coming into existence in the first place [through cartel arrangements]," he said, "is largely a difference in the amount of noise involved."

Nazis used their American subsidiary corporations to spy on U.S. industrial capacity and steal technology, such as walkie-talkies, intertank and ground-air radio communication systems, and shortwave sets developed by the U.S. Army and Navy. They used patents or cartel arrangements to restrict the production of stainless steel, tungsten-carbide, and fuel injection equipment. According to the U.S. military after the war, I.G. Farben, the Nazi chemical monopoly, had influence over American production of "synthetic gas and oils, dyestuffs, explosives, synthetic rubber ('Buna'), menthol, cellophane, and other products," and sought to keep the United States "entirely dependent" on Germany for certain types of electrical equipment.

The Nazis took advantage of an industrial system that was, like the current one, organized along short-term objectives. But seeing the danger, New Dealers attacked the power of financiers through direct financing of factories, excess profits taxes, and the breaking of the power of the Rockefeller, Dupont, and Mellon empires through bank regulation and antitrust suits. They separated the makers of airplanes from airlines, a sort of Glass Steagall for aerospace. During the war itself, antitrust chief Thurman Arnold, and those he influenced, sought to end international cartels and loosen patent rules in part because they allowed control over American industry by the Nazis.

After the war, the link between global cartels and national security vulnerabilities was a key driver of American trade and military strategy. America pursued globalization, but with two differences from the form we have today. First, strategists sought to prevent the recurrence of global cartels and monopolies. Second, they sought to become industrially intertwined with allies, not rivals. While multinational corporations stretched across the West, they did not locate production or technology development in Moscow or among strategic rivals, as we do today in China.

Domestically, anti-profiteering institutions and rules protected against corruption, especially important when the defense budget comprised a large chunk of overall American research and development. The Defense Department's procurement agency -- the Defense Logistics Agency -- was enormously powerful and oversaw procurement and supply challenges. The Pentagon had the power to force suppliers of sole source products -- contractors that had monopolies -- to reveal cost information to the government. The financial health of defense contractors mattered, but so did value to the taxpayer, a skilled defense industrial workforce, and the ability to deliver quality products to aid in national defense.

A fragmented base of contractors and subcontractors ensured redundancy and competition, and a powerful federal apparatus with thousands of employees with expertise in pricing and negotiation kept prices reasonable. The Defense Department could even take ownership of specialized tooling rights to create competition in monopolistic markets with specialized spare part needs -- which is precisely where TransDigm specializes. This authority and expertise had been carefully cultivated over decades to provide the material necessary to equip American soldiers for World War II, the Korean and Vietnam wars, and the first Gulf war.

In the 1980s, while Ronald Reagan allowed Wall Street free rein elsewhere in the economy, he mostly kept Wall Street from going after the defense base. But scholars began debating whether it made sense to have such a large and expensive negotiating apparatus to deal with contractors, or if a more "cooperative" approach should be taken. Business consultants argued that the Pentagon could save money if it would simply be "a better customer, by being less adversarial and more trusting" of defense contractors.

With the end of the Cold War, these arguments found new resonance. Bill Clinton took the philosophical change that Reagan had pushed on the civilian economy, and moved it into the defense base. In 1993, Defense Department official William Perry gathered CEOs of top defense contractors and told them that they would have to merge into larger entities because of reduced Cold War spending. "Consolidate or evaporate," he said at what became known as "The Last Supper" in military lore. Former secretary of the Navy John Lehman noted, "industry leaders took the warning to heart." They reduced the number of prime contractors from 16 to six; subcontractor mergers quadrupled from 1990 to 1998. They also loosened rules on sole source -- i.e. monopoly -- contracts, and slashed the Defense Logistics Agency, resulting in thousands of employees with deep knowledge of defense contracting leaving the public sector.

Contractors increasingly dictated procurement rules. The Clinton administration approved laws changing procurement, which, as the Los Angeles Times put it, got rid of the government's traditional goals of ensuring "fair competition and low prices." They reversed what the New Dealers had done to insulate American military power from financiers.

The administration also pushed Congress to allow foreign imports into American weapons through waivers of the Buy America Act, and demanded procurement officers stop asking for cost data. Mass offshoring took place, and businesses could increase prices radically.

This environment attracted private-equity shops, and swaths of the defense industry shifted their focus from aerospace engineering to balance sheet engineering. From 1993 to 2000, despite dramatic declines in Cold War military spending and declines in the number of workers in the defense industrial base and within the military, defense stocks outperformed the S&P.

Today, the American defense establishment quietly finds itself in the same predicament it did in the 1930s. Despite spending large amounts of money on weapons systems, it often gets substandard equipment. It is dependent for key sources of supply on business arrangements with potentially hostile powers. The problem is so big, so toxic, and so difficult that few lawmakers even want to take it on. But the increasingly obvious danger of Chinese power means we can no longer ignore it.

The Fix

Fortunately, this is fixable. Huawei's predatory pricing success has shown policymakers all over the world what happens when we don't protect our vital industrial capacity. Last year, Congress strengthened the Committee on Foreign Investment in the United States, the committee that reviews foreign investment and mergers. The Trump tariffs have begun forcing a long-overdue conversation across the globe about Chinese steel and aluminum overcapacity, and Democrats like Representative Dan Lipinski are focused on reconstituting domestic manufacturing ability.

Within the defense base itself, every example -- from TransDigm to L3 to Chinese infiltration of American business -- has drawn the attention of members of Congress. Representatives Ted Budd and Paul Cook are Republicans and Representatives Jackie Speier and Ro Khanna are Democrats. They are not alone. Democratic Senator Elizabeth Warren and Representative Tim Ryan have joined Khanna's demand for a TransDigm investigation.

Moreover, focus on production is bipartisan. One of the most ardent opponents of consolidation in the 1990s is current presidential candidate Bernie Sanders, who in 1996 passed an amendment to block Pentagon subsidies for defense mergers, or what he called "Payoffs for Layoffs." On the other end of the spectrum, Trump has refocused national security and trade officials on the importance of domestic manufacturing.

Defense officials have also become acutely aware of the problem. In a 2015 briefing at the Pentagon, in response to questions about Lockheed's acquisition of Sikorsky, then secretary of defense Ash Carter emphasized the importance of not having "excessive consolidation," including so-called vertical integration, in the defense industry because it is "[not] good for the defense marketplace, and therefore, for the taxpayer and warfighter in the long run." Carter's acquisition chief, Frank Kendall, also noted the "significant policy concerns" posed by the "continuing march toward greater consolidation in the defense industry at the prime contractor level" and the effect it has on innovation.

American policymakers in the 1990s lost the ability to recognize the value of production capacity. Today, many of the problems highlighted here are still seen in isolation, perhaps as instances of corruption or reduced capacity. But the problems -- diminished innovation, marginal quality, higher prices, less redundancy, dependence on overseas supply chains, a lack of defense industry competition, and reduced investment in research and development -- are not independent. They are the result of the financialization of industry and of monopoly. It's time for a new strategic posture, one that puts a premium not just on spending the right amount on military budgets, but also on ensuring that financial actors don't capture what we do spend. We must begin once again to recognize that private industrial capacity is a vital national security asset that we can no longer allow Wall Street to pillage. By seeing the problem in its totality, we can attack the power of finance within the commercial and defense base and restore our national security capacity once again.

There are many levers we can use to reorder our national priorities. The Defense Department, along with its new higher budgets, should have more authority to promote competition, break up defense conglomerates, restrict excess defense contractor profits, empower contracting officers to get cost information, and block private equity takeovers of suppliers. Congress could reinstate the authority of the Defense Department to simply take ownership of specialized tooling rights to create competition in monopolistic markets with specialized spare part needs, a power it once had.

In the commercial sector, rebuilding the industrial base will require an aggressive national mobilization strategy. This means aggressive investment by government to rebuild manufacturing capacity, selective tariffs to protect against Chinese or foreign predation, regulation to stop financial predation by Wall Street, and anti-monopoly enforcement to block the exploitation of market power.

Policymakers must recognize that industrial capacity is a public good and short-term actors on Wall Street have become a serious national security vulnerability. While private businesses are essential to our common defense, the public sector must once again structure how we organize our national defense and protect our defense industrial base from predatory finance. For several decades, Wall Street has been organizing not just the financing of defense contractors, but the capabilities of our very defense posture. That experiment has been a failure. It is time to wake up, before it's too late.

Matt Stoller is a fellow at the Open Markets Institute. His book, Goliath: The 100-Year War Between Monopoly Power and Democracy, is due out this fall from Simon & Schuster. Lucas Kunce spent 12 years in the United States Marine Corps, and is a veteran of the Iraq and Afghanistan wars. The views presented are those of the authors and do not necessarily represent the views of the Department of Defense or its components. This article was supported by the Ewing Marion Kauffman Foundation. The contents of this publication are solely the responsibility of the authors.


polistra24 13 hours ago

Best article of the century. Gets everything right, in full detail.

But I doubt that the problem is fixable. It could have been fixable if we turned around in 1980, but all the factories and SKILLS are gone now.

kouroi 15 hours ago
Sobering read. However, it is likely that only a major war will spur legislators and administrators into action. Until then Wall Street will reign and the US administrations will keep threatening countries with sanctions if they buy equipment that prevents the US to conduct an easy bombing campaign on them.
chris chuba kouroi 8 hours ago
I've heard similar stories about the imminent collapse of the Russian Defense sector, they can't make their own parts, they lack diversity of suppliers, there is a huge brain drain, no customers (somewhat true since we practice extortion).

I'm not dismissing the author, actually quite the opposite and I am agreeing with you. The secret ingredient is an actual sense of danger. The Russians are terrified, we pretend to be terrified but know it's all threat inflation. If we had honest people in Congress proposing targeted budgets for real needs rather than 'freedom of navigation' when we know it's power projection then the fear of God might return to our habits. The author brought up the 20/30's I bet WW2 gave us that fear again.

MontDLaw 6 hours ago
Dude, your government stopped being able to do anything this complicated somewhere around 1995. Your infrastructure is in shambles and diabetics are dying because of an insulin monopoly that forces them to ration medication. The rope remark resembles you.
soliton 7 hours ago
No need to worry about L3. They were acquired by Harris, making another monster.
vpurto 12 hours ago • edited
This is the longest litany about demise of American prowess in technology that I've ever read in TAC so far. The story of destruction of Bell Labs, described in details by Matt Stoller is very accurate: I have been eyewitness to it from 1983 and up to its gruesome end. Carly Fiorina, one of the runners for President in 2016, delivered American icon coup-the-grace. She even justified her claim on presidency on business experience: destruction of another icon of American high-tech – Hewlett-Packard. Alas, there is the most fundamental reason for the current situation in the 21-st century USA, was formulated 100+ years ago by Vladimir Lenin: "For profit capitalists will be eager to sell us rope, with which we'll hung them" .

Would anybody protest today that profit IS the Nature of capitalism ? And more: those who substitute Reality with their wet dreams might be cured by watching Democratic 2020 debates.

soliton vpurto 6 hours ago
CF pretty much destroyed the best test equipment house in the world to make printers PCs.
Steve Smith 16 hours ago
Great piece. There are lots of good articles here but not that many that tell something I really didn't already know. Great perspective on the whole China issue. Amazing how sick our financialized economy really is when you look under the hood.

This is excellent information. Hope folks on the Hill are reading this.

Kessler 11 hours ago
The Wall Street and finance industry depend on US military, long-term this is a disaster, but they care only for short-term profits. Whoever thought that principles of free market apply internationally, where other goverments are free to influence "free trade" in any way they wish, while US goverment will do nothing is an idiot.

[Jun 26, 2019] In the first five months of 2019, imports of agricultural products from the US to China declined by half

Large part of it is probably diversification and it does not affect the US exporters as they also can diversify.
Notable quotes:
"... The bottom line is Trump and his misfit Cabinet didn't thoroughly think through all of the likely negative ramifications of "Making America Great Again" !! He impulsively makes decisions and when then fail - as they do often do - he blames others or creates diversionary chaos to change the subject. Trump's a fxxxxing overweight, repulsive imbecile, and the farmers are going to let him have it in 2020.....along with millions who rolled the dice him in 2016 but he crapped out on all of them..... ..."
"... What is happening to US cars in China? I know the market has taken a dump there, but are US cars losing market share as well? Are Chinese consumers shunning goods from US manufacturers? ..."
Jun 26, 2019 | www.zerohedge.com
published new data Monday that shows agricultural imports from the US have fallen, as Chinese buyers shift supply chains out of the US to other countries because of the deepening trade war.

In the first five months of 2019, imports of agricultural products from the US crashed 55.3% YoY . Much of decline was due to a 70.6% YoY decline of soybeans in the same period.

Chinese importers went to Brazil, Argentina, and ASEN countries (Thailand, Indonesia, Malaysia, Singapore, Philippines, Vietnam, Brunei, Myanmar (Burma), Cambodia, and Laos). Data showed imports from the EU, Australia, and Canada also jumped in the first five months as Chinese buyers ditched American products.


steverino999 , 8 minutes ago link

The bottom line is Trump and his misfit Cabinet didn't thoroughly think through all of the likely negative ramifications of "Making America Great Again" !! He impulsively makes decisions and when then fail - as they do often do - he blames others or creates diversionary chaos to change the subject. Trump's a fxxxxing overweight, repulsive imbecile, and the farmers are going to let him have it in 2020.....along with millions who rolled the dice him in 2016 but he crapped out on all of them.....

angle-asshole identity , 24 seconds ago link

C'mon man, it's not a Trump thing, it's been the whole American policy since Ronald Reagan. Trump didn't start the fire, he's just half-assing things the best he can.

hoytmonger , 12 minutes ago link

What happened to all those articles stating that US farm production was devastated by weather?

Corn, wheat, soy, cotton were all allegedly affected.

If US farmers have no crop to sell, then what is the Chinese refusing to buy?

rockstone , 11 minutes ago link

We cannot withstand another year in which our most important foreign market continues to slip away and soybean prices are 20 to 25%, or even more, below pre-tariff levels," said John Heisdorffer, chairman of the American Soybean Association, in a statement published on May 13.

Or.........what? You should've voted for Clinton and you'll vote for Bernie/Biden/Warren? Come on man, spit it out. Or what?

haruspicio , 14 minutes ago link

What is happening to US cars in China? I know the market has taken a dump there, but are US cars losing market share as well? Are Chinese consumers shunning goods from US manufacturers?

angle-asshole identity , 13 minutes ago link

Duh

[Jun 26, 2019] Huawei Says US Ban Hurting More Than Expected, To Wipe $30 Billion Off Revenue

Jun 26, 2019 | news.slashdot.org

From a report: Ren's downbeat assessment that the ban will hit revenue by $30 billion , the first time Huawei has quantified the impact of the U.S. action, comes as a surprise after weeks of defiant comments from company executives who maintained Huawei was technologically self-sufficient. [...]

Huawei had not expected that U.S. determination to "crack" the company would be "so strong and so pervasive," Ren said, speaking at the company's Shenzhen headquarters on Monday.

Two U.S. tech experts, George Gilder and Nicholas Negroponte, also joined the session. "We did not expect they would attack us on so many aspects," Ren said, adding he expects a revival in business in 2021.

[Jun 22, 2019] A case of shark calling barracuda a piranha.

Jun 22, 2019 | www.zerohedge.com

Insufferably Insouciant , 15 hours ago link

"The Communist Party of China has used its access to U.S. consumer and capital markets for a predatory economic strategy... "

... which is a threat to our monopoly on such activity.

Have they no sense of irony?

DEDA CVETKO , 16 hours ago link

"The Communist Party of China has used its access to U.S. consumer and capital markets for a predatory economic strategy... "

A case of shark calling barracuda a piranha.

[Jun 22, 2019] China Vows To Fight Trade War To The End As Huawei Sues Commerce Department

It was neoliberalism that moved production to China and created condition for the Chinese own companies to compete. Now Trump goes against neoliberal dogma. So it is not accidental that he was under attack and Russiagate was launched to ensure his resignation.
Notable quotes:
"... in an editorial in the state-run People's Daily, Beijing has warned that China has "the strength and patience to withstand the trade war, and will fight to the end if the U.S. administration persists." ..."
"... China's controversial telecom giant, Huawei, filed a civil lawsuit against the US Commerce Department over the mishandling of telecommunications equipment seized by American officials, demanding its release. ..."
"... However, the equipment was not shipped back to China. It was "purportedly" seized en route and is currently sitting in Alaska, as US officials wanted to investigate whether the shipment required a special license . Such requests are usually processed within 45 days, but nearly two years have already passed since then. ..."
"... "The equipment, to the best of HT USA's knowledge, remains in a bureaucratic limbo in an Alaskan warehouse," Huawei said in its lawsuit, which was filed on Friday in federal court in Washington. ..."
"... Huawei contends that the equipment did not require a license because it did not fall into a controlled category and because it was made outside the United States and was being returned to the same country from which it came. ..."
"... The lawsuit comes amid a bitter row between two world's largest economies, and Washington's crackdown on Huawei. In May, the Trump administration added Huawei to the entity list, barring it from buying needed U.S. parts and components without U.S. government approval. The US alleges that Huawei could be spying for the Chinese government, a claim which the company has repeatedly denied. ..."
"... Of course, Huawei is not the only Chinese tech company that the White House decided to put on its trade blacklist. On Friday, five Chinese organizations – supercomputer maker Sugon, three its affiliates, and the Wuxi Jiangnan Institute of Computing Technology – were added to entity list on the grounds that their activities are allegedly contrary to US national security and foreign policy interests. ..."
"... don't expect a breakthrough: as Goldman's trade deal odds index found last week... the probability of a breakthrough between the two nations is roughly one in five. ..."
Jun 22, 2019 | www.zerohedge.com
It's the weekend, which means the trade war between the US and China moved to the front page of the local propaganda media (in both the US and China). And while Trump has yet to slam Beijing, focusing this morning on the all time high in the market instead, China has been busy and in an editorial in the state-run People's Daily, Beijing has warned that China has "the strength and patience to withstand the trade war, and will fight to the end if the U.S. administration persists."

Echoing what China's notorious twitter mouthpiece Hu Xijin said yesterday, the editorial said that just days ahead of the much anticipated G-20 summit in Osaka where Trump and Xi are set to meet, " the U.S. must drop all tariffs imposed on China if it wants to negotiate on trade, and only an equal dialogue can resolve the issue and lead to a win-win", according to Bloomberg.

The communist party's official paper also said the US had failed to take into account the interests of its own people, and they are paying higher costs due to the trade dispute. "Wielding a big stick of tariffs" also disregards the condition of the U.S. economy and the international economic order, according to the editorial.

Beijing's official warning to the US ended as follows: if the U.S. chooses to talk, "then it must show some good faith, take account of key concerns from both sides and cancel all tariffs."

And just to prove that China isn't a paper tiger whose threats will be confined to the local newspapers, Reuters reported that overnight China's controversial telecom giant, Huawei, filed a civil lawsuit against the US Commerce Department over the mishandling of telecommunications equipment seized by American officials, demanding its release.

In an almost absurd reversal, the company whose entire existence can be traced to stealing and reverse-engineering foreign technology and trampling over corporate ethics , the complaint alleges that the US government took possession of hardware, including an ethernet switch and computer server, which was transported from China to an independent laboratory in California for testing and certification back in 2017.

However, the equipment was not shipped back to China. It was "purportedly" seized en route and is currently sitting in Alaska, as US officials wanted to investigate whether the shipment required a special license . Such requests are usually processed within 45 days, but nearly two years have already passed since then.

"The equipment, to the best of HT USA's knowledge, remains in a bureaucratic limbo in an Alaskan warehouse," Huawei said in its lawsuit, which was filed on Friday in federal court in Washington.

Huawei contends that the equipment did not require a license because it did not fall into a controlled category and because it was made outside the United States and was being returned to the same country from which it came.

The company is not seeking any financial compensation and is not challenging the seizure itself, but is sending a message to Washington, saying "post-seizure failures to act are unlawful", in effect charging the Trump admin with doing precisely what it, itself has been accused of. Huawei wants to force the Commerce Department to decide whether an export license is really necessary and, if not, release the withheld equipment.

The lawsuit comes amid a bitter row between two world's largest economies, and Washington's crackdown on Huawei. In May, the Trump administration added Huawei to the entity list, barring it from buying needed U.S. parts and components without U.S. government approval. The US alleges that Huawei could be spying for the Chinese government, a claim which the company has repeatedly denied.

Huawei CFO Meng Wanzhou, daughter of the company's founder, has been detained in Canada since December on a U.S. warrant. She is fighting extradition on charges that she misled global banks about Huawei's relationship with a company operating in Iran.

Of course, Huawei is not the only Chinese tech company that the White House decided to put on its trade blacklist. On Friday, five Chinese organizations – supercomputer maker Sugon, three its affiliates, and the Wuxi Jiangnan Institute of Computing Technology – were added to entity list on the grounds that their activities are allegedly contrary to US national security and foreign policy interests.

The fresh US blacklisting comes ahead of crucial talks between US President Donald Trump and Chinese President Xi Jinping in Osaka, Japan, which are intended to ease tensions between the two sides. Still, don't expect a breakthrough: as Goldman's trade deal odds index found last week... the probability of a breakthrough between the two nations is roughly one in five.

[Jun 22, 2019] Over 600 US Companies Sign Letter Supporting Trump Tariffs On China

Jun 22, 2019 | www.zerohedge.com

A letter from over 600 US companies businesses in support of President Trump's tariffs on approximately $300 billion of Chinese imports was scheduled to be submitted on Friday before the Office of the United States Trade Representative (USTR), according to the Daily Caller , which reviewed the document.

It is the intention of Coalition for a Prosperous America (CPA), Chief Economist, Jeff Ferry to present the letter Friday morning during his testimony to the USTR. This letter pushes back on the letter last week that asks Trump to stop the tariffs on China. Those signers were mostly big-box retailers who manufacture their products in China.

This all comes as President Donald Trump said that he is considering slapping China with more tariffs if Chinese President Xi Jinping does not meet with him during the G-20 summit in late June. Since, the warning, the two have agreed to meet. However, Trump said if Xi does not attend the event, he will immediately impose new tariffs on $300 billion in Chinese imports , including a number of consumer products. - Daily Caller

In May, Trump raised tariffs on around $200 billion of Chinese goods from 10% to 25%. Three days later, China slapped around $60 billion in US goods with reciprocal tariffs.

"The global integration project with China, through liberalized trade, has failed. The Communist Party of China has used its access to U.S. consumer and capital markets for a predatory economic strategy to grow its state-owned enterprises, finance its military build up, imprison its citizens in modern day concentration camps and challenge America's geopolitical power," according to Coalition for a Prosperous America CEO Michael Stumo.

"Our American companies and workers have been weakened by this failed experiment. We want it to stop," he added.

The Automotive Parts Remanufacturing Association (APRA) president, Joe Kripli. said, "for years now the Chinese 'knock-off' of starters and alternators that have been entering the country at ridiculously low cost and have been hurting the small [U.S.] remanufacturer that is located in every state and has been in our communities since WWII. - Daily Caller

"Fitzgerald USA is one of the few Made in America truck conglomerates. We recently started a U.S. truck parts business as the trucking industry increasingly moves its operations to China. America needs a strong manufacturing economy for jobs and national security. We support President Trump and his use of tariffs on China," said Fitzgerald USA Director of Government Relations, Jon Toomey.

Guess who didn't sign the letter? Apple - which is desperately trying to lobby the Trump administration to ease the tariffs - arguing this week in front of the USTR that "U.S. tariffs on Apple's products would result in a reduction of Apple's U.S. economic contribution," and "weigh on Apple's global competitiveness


unklemunky , 4 hours ago link

Cheap easy credit in USA has made us all debtors. The cheap money has been used to purchase lots of cheap chinese **** from the large global publicly traded companies. The big box stores partnered with American brands to move operations overseas and make **** real cheap and sell those well known household brand names back to unsuspecting consumers.....to the very people they have put out of a job. THIS is the largest redistribution of wealth in the history of the planet. Free money, low paying jobs and cheap ****. As far as I am concerned, if china steals a company's technology, cry me a ******* river. They deserve it.

native grunt , 10 hours ago link

The super-capitalists as usual screw everybody else - the honest manufacturers, labour - while destroying the fabric of society in their insane pursuit of profits for themselves and their confreres.

tschanakya , 12 hours ago link

Did Amazon also sign the petition? What about Facebook ,Google? I want to see the big MNC's signing the letter. Let me see the country before profit there.

truthalwayswinsout , 15 hours ago link

Automation is taking over.

The key dynamic is low energy costs, cheap land, low corporate taxes and low shipping costs to the market.

All four of those are in the US.

Factories will be built where the demand is located and there is and will be no longer any advantage to produce products overseas.

Plants that used to take 1000 workers to run now take just 50 or less.

Automation would have impacted the work force in the US in 10 years but thanks to minimum wage hikes it is happening right now and will grow exponentially in 2 years.

Insufferably Insouciant , 15 hours ago link

"The Communist Party of China has used its access to U.S. consumer and capital markets for a predatory economic strategy... "

... which is a threat to our monopoly on such activity.

Have they no sense of irony?

merchantratereview , 15 hours ago link

To all who profited from selling out America. Your money is worthless in hell. See you on purge night.

MarkD , 15 hours ago link

Why is it that folks put the blame on China? Our corporations are the ones that looked for manufacturers that could make their product for less than American workers could.

Watch older episodes of Shark Tank and they all said time and time again that they have contacts in China and could have the product made for peanuts....... That's how our corporations make money.

Why don't we boycott Apple? We can't because it's in everyone's retirement portfolio one way or another.

francis scott falseflag , 16 hours ago link

Tariffs are a great way to cut imports into your country.

And retaliatory tariffs are a great way to cut your country's exports.

Its a win-win for global depression. Yay for Trump

DEDA CVETKO , 16 hours ago link

"The Communist Party of China has used its access to U.S. consumer and capital markets for a predatory economic strategy... "

A case of shark calling barracuda a piranha.

Brazen Heist II , 16 hours ago link

Them commies are under our beds!

If the US was such a "free market" powerhouse, why not heed your own values instead of doing protectionism? Answer: another myth destroyed that America is all about "free markets". Add that to the mythology about being pro-dumbocracy, freedumb and all for international "law".

[Jun 21, 2019] US Blacklists More Chinese Tech Companies Over National Security Concerns

Jun 21, 2019 | news.slashdot.org

(nytimes.com) 70 restricting China's access to American technology and stoking already high tensions as President Trump and President Xi Jinping of China prepare to meet in Japan next week. From a report: The Commerce Department announced that it would add four Chinese companies and one Chinese institute to an "entity list," saying they posed risks to American national security or foreign policy interests [Editor's note: the link may be paywalled; alternative source ] . The move essentially bars the entities, which include one of China's leading supercomputer makers, Sugon, and a number of its subsidiaries set up to design microchips, from buying American technology and components without a waiver from the United States government.

The move could all but cripple these Chinese businesses, which rely on American chips and other technology to manufacture advanced electronics. Those added to the entity list also include Higon, Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, and Wuxi Jiangnan Institute of Computing Technology, which lead China's development of high performance computing, some of which is used in military applications like simulating nuclear explosions, the Commerce Department said. Each of the aforementioned companies does businesses under a variety of other names.

Anonymous Coward , Friday June 21, 2019 @02:40PM ( #58800664 )

Short term pain for long term gain ( Score: 1 )

Blocking Chinese access to any particular technology just gives them an incentive to pour massive resources into developing their own versions. They've learned that US companies are not reliable suppliers. Same as many former allies have learned that being an ally of the US is a double edged sword.

Cuts in sales to China by US companies means less money for US companies to invest in developing advanced products. Don't be surprised if by 2030 China will be the sole supplier of the worlds best, most advanced technology. Just look at what happened to the robotics industry. Or better yet, go back to the previous century, when the US decided to unload their steel mills to China at a huge discount to China to invest in financial instruments, then whined like crazy that China was able to make steel cheaper because their new-to-them steel mills had less debt to fund per to. Of steel produced.

If China had had to buy new steel mills, the cost of production per ton would have been higher. But no, trading pieces of paper or bits in bank accounts was easier.

hackingbear ( 988354 ) , Friday June 21, 2019 @02:42PM ( #58800686 )
The Chinese should thank the US ( Score: 3 )

The Chinese hi-tech companies should thank the US for clearing out American products from the biggest market [datenna.com], so they can eventually enter the lucrative cycles of being able to sell primitive products and re-invest the proceeds to create more advanced products, without having to compete with the most advanced American products upfront, and in a few short year they will produce more advanced ones.

Oh, don't the US know that Chinese supercomputers already cleared out of American chips [wikipedia.org] and achieve top performance long time ago?

[Jun 19, 2019] Dell, HP, Intel and Microsoft Join Forces to Oppose Trump Tariff

Jun 19, 2019 | www.bloomberg.com

Dell Technologies Inc ., HP Inc. , Intel Corp. and Microsoft Corp. are joining forces to oppose President Donald Trump's proposed tariffs on laptop computers and tablets among $300 billion in Chinese goods targeted for duties.

The companies submitted joint comments opposing the tariff escalation, saying it would hurt consumer products and industry, while failing to address China's trade practices. The tariffs are poised to hit during the peak holiday and back-to-school sales period, they said.

"The tariffs will harm U.S. technology leaders, hindering their ability to innovate and compete in a global marketplace," the companies said in comments posted online.

Dell, HP, and Microsoft said they account for about half of the notebooks and detachable tablets sold in the U.S. Prices for laptops and tablets will increase by at least 19% -- about $120 for the average retail price of a laptop -- if the proposed tariffs are implemented, according to a study released this week by the Consumer Technology Association .

The companies said they spent a collective $35 billion on research and development in 2018 alone, and tariff costs would divert resources from innovation while providing "a windfall" to manufacturers based outside the U.S. that are less dependent on American sales.

The Trump administration is considering public comments on the proposed duties and hearing testimony from more than 300 U.S. companies and trade groups through June 25. The tariffs could be imposed after a rebuttal period ends July 2.

The U.S. and China said their presidents will meet in Japan next week to relaunch trade talks after a month-long stalemate.

[Jun 18, 2019] China prepares for economic 'prolonged war' with Trump

Notable quotes:
"... The facts of the US economy and politics show clearly the correctness of the analysis in China that any expectation of 'mercy' from the Trump administration will in reality lead to heightened attacks by the US. ..."
"... The medium-term trajectory of the US economy [is] to slow down during 2019 and 2020 – which is necessarily a negative factor for President Trump's chances of re-election in 2020 and which interacts with the adverse effects of US tariff policy on US consumers such as price rises and falls in prices to farmers. ..."
"... Trump administration already acknowledges in practice that its policies will be a US 'lose', that is they will inflict pain on the US economy, and it is merely attempting to ensure that the 'lose' for China is bigger than the 'lose' for the US. ..."
"... Bloomberg and others calculate that the losses in a full year of the trade war would be $600 billion. ..."
"... In addition to these tariff effects the Trump administration US is equally concerned about the consequences of consumer boycotts, or restrictions, on US companies which would be equivalent to those it has carried out against Huawei. ..."
"... 'Beijing has scope for retaliation. Levers at its disposal include blocking access to its market -- a move that Goldman Sachs analysts estimate could reduce Apple's earnings per share by nearly 30 per cent.' ..."
"... These specific examples clearly illustrate that in practice, despite its claims to the contrary, the Trump administration starts from the framework that its policies will inflict pain on the US economy, but that it will be able to limit this loss. China's route to success is therefore to inflict pain on the US economy to a point that is unacceptable for Trump in seeking re-election. ..."
"... 'If Trump wants to slow China's ascent as a superpower, a trade war might be an effective way to do it. If the harm to the US is modest and the costs for China are severe and lasting, Trump might conclude that the former are acceptable losses.' On this logic: 'Geopolitical primacy, not maximum prosperity for Americans' was 'the president's true objective.' ..."
"... Forces in China claiming that the Trump administrations attacks will be stopped by 'appeasement', or by appeals for mercy, are presenting the reverse of the truth – such policies will lead to the Trump administration becoming more aggressive. This flows inevitably from the fact that the Trump administration's policy is not to seek a 'win-win' for the US but to create a 'lose-lose' with the aim that the 'lose' in terms of economic pain for the US should be 'modest'. This logic of the Trump administration's position means that any weakening of China's position, any alleviation of the pain inflicted on the US, will lead to the Trump administration becoming more aggressive, not less. ..."
"... it is also clear that Trump's measure of what is bearable is not the interests of the US people, but whether it affects the President's chances of re-election. In summary, only if the economic pain suffered by the US is sufficiently severe that it endangers Trump's re-election chances will the Trump administration desist from its attacks on China. ..."
"... When the 'lose' or 'pain' in US financial markets is not great the Trump administration proceeds to attack China. When, on the contrary, China's reaction increases pain in US financial markets Trump acts more reasonably. That is, whenever the Trump administration feels in a stronger position it increases its attacks on China, whenever the Trump administration feels weaker due to the pain in US financial markets it acts more reasonably to China. ..."
"... But once the Trump administration embarked on the course of a lose-lose confrontation then such a struggle can only be won by China relying on its own strength. Sufficient pain must be inflicted on the Trump administration that it decides it is better to abandon the lose-lose. And the criteria by which it will judge whether the pain in the 'lose-lose' is bearable is the effect on its chances of re-election. ..."
Jun 18, 2019 | www.learningfromchina.net

'At least two other organizations have more power over [US financial] markets than the White House. They are the US Federal Reserve and the Chinese Communist Party. Trump does not directly control either of them.'

This brutal analysis is particularly significant as it is by one of the most senior and accurate Western specialists on financial markets – John Authers , Senior Bloomberg Editor for Markets and former Chief Markets Commentator for the Financial Times . It encapsulates the interaction of economic and political problems facing President Trump. As will be seen it also summarises the relative strengths of China and the US in the 'trade war', dictates the US administration's tactics in attacking China, and determines the policies which will prevent the Trump administration carrying out its attempt to block China achieving its development goals.

Analysis of these real facts of US financial markets and policy strongly confirms the assessment emphasised by China's President Xi Jinping in his recent speech in Yudu County, the place being highly symbolic as it was the starting point for China's famous Long March, that China has to rely on its own strength in resisting this attempt by the US administration to prevent China achieving prosperity and national rejuvenation.

While the situation of China itself in the trade/economic war is naturally the most important issue there are of course two sides involved in this conflict – the other aspect of the situation is within the US. Analysis of this, which forms the subject of this article, shows clearly why the Trump administration refuses to accept 'win-win' relations with China and what is the inevitable outcome of this administration's 'lose-lose' logic. Such analysis in turn shows that frequent comparisons made in China to the Long March of 1934-35, or to Mao Zedong's famous essay 'On Protracted War', are not simply rhetorical metaphors, or references to the historical traditions of the Communist Party of China (CPC), but provide an accurate framework to understand the situation.

The Trump administration made a very serious miscalculation in launching the 'trade war' with China. It believed that either, or both, the leadership of China would submit to the Trump administrations threats or the Chinese population would not be prepared for a serious struggle with the US. Both calculations have proved entirely wrong. China's leadership did not surrender to but hit back against the US attacks. Furthermore anyone who follows China's domestic discussion, on what is now by far the world's largest internet community, knows that this line was strongly supported by the Chinese population.

The difference to the historical comparisons now frequently used in China, of course, is that this is an economic war and not a military one. Therefore, the weapons are different, and it is necessary to analyse what are the pressure points on the US, and what armaments are most powerful for China. In turn this examination of the situation in the US economy fully confirms the analyses made of the situation in China and the reaction of different social layers to the present conflict with the US.

Trends in China and the US

Examining the Chinese side of the 'trade war' Wang Wen has presented an excellent analysis of the reaction of different social strata in China to the Trump administration's economic aggression. Its analysis can be noted: ' The vast majority of ordinary people are highly supportive of the state's policy of counter-bullying in the United States, and the current fear of the US exists mainly in some social elites.'

But it is particularly striking that this analysis of trends within China, made by a Chinese citizen, is fully confirmed from another 'external' angle – that of the situation in the US and the forces operating on the Trump administration. The facts of the US economy and politics show clearly the correctness of the analysis in China that any expectation of 'mercy' from the Trump administration will in reality lead to heightened attacks by the US.

Trump's economic policy is determined by the coming US Presidential electio. The starting point of any analysis of the situation in the US is that President Trump is already entirely aware of the most important date he faces – 3 November 2020, the next US Presidential election. Securing re-election is his paramount goal and this therefore determines the shaping of the Trump administration's policies. Three time frames are crucial for this.

  1. The impact of events in financial markets, which can occur in a very short time frame – in some cases minutes/hours and almost invariably having a strong impact over a period of days to months.
  2. The medium-term trajectory of the US economy [is] to slow down during 2019 and 2020 – which is necessarily a negative factor for President Trump's chances of re-election in 2020 and which interacts with the adverse effects of US tariff policy on US consumers such as price rises and falls in prices to farmers.
  3. Attempts to slow China's economy in the medium/longer term, through forcing or persuading it to abandon its socialist path of development.

All three time frames however confirm a fundamental reality – that while China's relations with most countries, and indeed with some previous US presidents, can be most successful based on 'win-win' this will not occur with the Trump administration.

This is due to the fact that the Trump administration already acknowledges in practice that its policies will be a US 'lose', that is they will inflict pain on the US economy, and it is merely attempting to ensure that the 'lose' for China is bigger than the 'lose' for the US.

The Trump administration's 'lose-lose' analysis

An illustration on a small scale of the Trump administration's understanding of the need to attempt to limit the extent of economic pain on the US is its recent announcement of $16 billion of subsidies to US farmers – the bill for which will be financed by other US taxpayers as is increasingly understood in the United States. As CNN noted: 'Just as Mexico was supposed to pay for the wall, but isn't, now China is supposed to pay for President Donald Trump's plan to bail out US farmers. Neither statement is true, of course.'

Affecting wider sections of the US population, calculations by the Western economics company Oxford Economics, which has no connection with China, found: 'Chinese manufacturing lowered prices in the United States for consumer goods, dampening inflation and putting more money in American wallets trade with China saved these families up to $850 that year.' Regarding the overall impact on the global economy, including the adverse effect on US allies, Bloomberg and others calculate that the losses in a full year of the trade war would be $600 billion.

In addition to these tariff effects the Trump administration US is equally concerned about the consequences of consumer boycotts, or restrictions, on US companies which would be equivalent to those it has carried out against Huawei. The Financial Times noted for example that the immediate goal of the US sanctions against Huawei are not simply or primarily to stop the supply of chips and software but to destroy the consumer market for Huawei's products in the West – where customers want guaranteed access to Google dependent products: 'Google's decision this week to stop selling its Android operating system to Huawei for new handsets makes little difference in China, where Huawei should be able to convince buyers to switch to its operating system, now under development.

But customers are more wedded to Android in international markets. Independent analyst Richard Windsor estimates it will lose all those sales.' But the Financial Times simultaneously noted that consumer retaliation against China would have a devastating financial effect on Apple, one of the US's core and most valuable companies: 'Beijing has scope for retaliation. Levers at its disposal include blocking access to its market -- a move that Goldman Sachs analysts estimate could reduce Apple's earnings per share by nearly 30 per cent.'

These specific examples clearly illustrate that in practice, despite its claims to the contrary, the Trump administration starts from the framework that its policies will inflict pain on the US economy, but that it will be able to limit this loss. China's route to success is therefore to inflict pain on the US economy to a point that is unacceptable for Trump in seeking re-election.

US financial markets

A decisive reason that such pain for the US is possible is that while the sums noted in relation to US consumers, farmers, and allies above sound large the Trump administration can in fact deal with amounts such as $16 billion to farmers. But even such sums as the $600 billion loss for the global economy are small compared to potential impacts on the size of US financial markets. The loss of $600 billion in a year for the global economy is less than the amount that can be lost in US financial markets in a single day, while a loss of $16 billion can occur in seconds.

Due to the sheer scale of US financial markets the Trump administration does not remotely have the resources to control the more than $30,000 billion US share market or the $16,000 billion US Treasury bond market. Pain inflicted on the US in such financial markets is therefore on a scale which is destabilising to the Trump administration.

Examination of all three time frames operating on the Trump administration considered above would require three separate analyses or an inordinately long article. Therefore, due to their sheer scale, this article examines only the first, most short term, but extremely powerful of these issues – the impact of the trade war on US financial markets.

The real situation facing US presidents

John Authers' blunt comment cited at the beginning of this article, reveals accurately the real domestic economic situation of a US President – which is very different to the frequent perception in China. Unlike China, under the US governmental system the President has little direct control over the most powerful levers of the economy – there is no large state owned economic sector which can be instructed by the President to increase its activity, the Federal budget is decided by the Congress not by the President, and interest rates are controlled by the Federal Reserve which under US law cannot be instructed by the President.

The new factor in the trade war which Authers drew attention to, which is also outside the US President's control, is China itself. The facts amply confirm that the impact of China's statements and actions on US financial markets is now very large – as will be demonstrated.

Larry Summers, former US Treasury Secretary, clearly spelt out this numerically in a commentary for the Washington Post: 'On Monday [13 May], China announced new tariffs on $60 billion of US exports, and the United States threatened new tariffs on up to $300 billion of Chinese goods. These actions were cited as the principal reason for a decline of more than 600 points in the Dow Jones industrial average, or about 2.4 percent in broader measures of the stock market. With the total value of US stocks around $30 trillion, this decline represents more than $700 billion in lost wealth.'

This $700 billion loss to US shareholders directly resulted from China's response to President Trump's announcement he was raising US tariffs against China from 10% to 25%. To illustrate this direct impact Authers' accurately noted the difference on US share markets between the week following Trump's announcement of raising tariffs against China, during which there was no announcement of a precise Chinese response, and the US financial markets' reaction when China announced its counter tariffs: 'It's fair to say that Wall Street did not anticipate China's retaliation to US tariffs. Last week, the negative reaction to President Donald Trump's announcement of new tariffs on China was oddly muted. On Monday, after China's response was announced just before the market opened, the S&P 500 fell by more than it had done in the entire previous week.'

Authers similarly noted the increasing skill of China's response and its impact on US markets: 'The problem is that China knows how to respond. China knows it can attack the presidential weak spot by acting in a way that damages the Dow. Hence, it not only retaliated with tariffs of its own, but announced them just as the New York market was about to open, at night in China, for maximum effect.'

As already noted, the $700 billion loss in a single day on US share markets was larger than the projected loss to the world economy for an entire year due to the trade war – and over 40 times the $16 billion bill for Trump's subsidies to US farmers. But even this sum is small compared to losses on US financial markets that can occur due to others of China's economic actions. As Authers noted: 'In the last five years, the event that scared the US market the most, by a wide margin, was the surprise Chinese yuan devaluation in 2015.'

The impact of this RMB devaluation was clear. Between 10 August and 24 August 2015, only 14 days, the RMB's exchange rate fell by 3.0%. The US S&P500 tracked the RMB down falling by 11.2% by 25 August. In terms of current valuations of US share markets this was equivalent to a loss of $3.8 trillion – more than six times the total projected loss to the global economy of the trade war in a year, or over 200 times Trump's subsidies to farmers.

The real aim of Trump's policy

This identification of the degree of pain which can be inflicted by China on US financial markets, and on the US economy, is crucial because Trump's tariff policies cannot, indeed are not intended to, improve the situation of the US itself. Bloomberg columnist Noah Smith summarised the Trump administration's real aim very accurately under the self-explanatory headline 'The Grim Logic of Trump's Trade War With China – Maximizing American prosperity probably isn't the goal.' Apart from comprador apologists for the US within China, noted by Wang Wen, this logic of Trump's policy is by now well understood in China. But, nevertheless, it is worth quoting this Bloomberg analysis at length as it summarises very accurately from a US perspective the logic of the Trump administration:

'The trade war has cost to the US. Economists have shown that the actual burden of tariffs has fallen mostly on American consumers -- in other words, the prices consumers pay for imported goods has risen And higher prices on capital goods and intermediate goods is raising expenses for US manufacturers, making them less competitive. Meanwhile, Chinese retaliation has hurt US farmers

'So with losses mounting, it looked like there was little reason to continue the trade war. Yet Trump is doubling down. Why?

'If Trump wants to slow China's ascent as a superpower, a trade war might be an effective way to do it. If the harm to the US is modest and the costs for China are severe and lasting, Trump might conclude that the former are acceptable losses.' On this logic: 'Geopolitical primacy, not maximum prosperity for Americans' was 'the president's true objective.'

In other words, as was already shown in the case of farm subsidies, the Trump administration quite accurately does not believe that tariffs and other forms of economic aggression against China aid US economic prosperity – on the contrary they cause economic pain. But it decides to inflict this pain on US citizens and companies in order to pursue neo-con policies trying to block China's prosperity and national rejuvenation. But this policy requires that 'the harm to the US is modest.' The problem is that the more tariffs are imposed , and above all if China retaliates, the greater the pain not only for US financial markets but for US consumers – that is US voters. As Authers noted: 'Meanwhile, the US can still impose more tariffs, but the goods it has chosen to attack have been largely invisible to consumers. Any further tariffs will take it into consumer products where price rises will be visible and painful, and might even, again, act as a spur to raise [interest] rates.' The effect on US financial markets, as already noted, can be far more severe than the direct effect of the tariffs.

Why win-win will not work with the Trump administration

Understanding the Trump's administrations real aim shows not only why its goal is not to improve the economic position of the US economy or US citizens but simultaneously makes clear why its policies will not be stopped by appeals to reason or 'win-win'. Forces in China claiming that the Trump administrations attacks will be stopped by 'appeasement', or by appeals for mercy, are presenting the reverse of the truth – such policies will lead to the Trump administration becoming more aggressive. This flows inevitably from the fact that the Trump administration's policy is not to seek a 'win-win' for the US but to create a 'lose-lose' with the aim that the 'lose' in terms of economic pain for the US should be 'modest'. This logic of the Trump administration's position means that any weakening of China's position, any alleviation of the pain inflicted on the US, will lead to the Trump administration becoming more aggressive, not less.

This makes clear while most countries seek a 'win-win' with China, and can therefore rightly be approached on this basis, and indeed this forms the basis of China's foreign policy, this will not work with the Trump administration because it is not seeking a 'win' – it is merely seeking that the 'lose' for the US it knows will occur should not be sufficiently large to threaten Trump's re-election.

It follows from this situation that the only thing that will deter the Trump administration, and force it off its path of attacks on China, is if the 'lose' for the US is bigger than it had anticipated – that is if the economic pain is too large to be bearable from the point of view of the interests of the Trump administration. From what has already been analysed, it is also clear that Trump's measure of what is bearable is not the interests of the US people, but whether it affects the President's chances of re-election. In summary, only if the economic pain suffered by the US is sufficiently severe that it endangers Trump's re-election chances will the Trump administration desist from its attacks on China.

The only 'win' which the Trump administration takes into account is, therefore, if the 'lose/pain' of the confrontation with China is seen as endangering Trump's re-election chances and the 'win' is then simply the lessening of that pain to a point where it is no longer seen as endangering Trump's election campaign.

Confirmation of the forces acting on the Trump administration

This situation of the Trump administration which flows from its 'lose-lose' logic is fully confirmed even in the extremely short term by the chronology of President Trump's own personal responses to events in US financial markets in announcing the increase in tariffs against China from 10% to 25%.

The short term pattern was therefore extremely clear. When there was no reaction from China, US financial markets did not fall, and Trump continued his aggression against China. When, on the contrary, China responded strongly, US financial markets fell and Trump attempted to present a picture he was lessening his attack on China.

In addition to these short-term movements analysed above the same process over a longer term also explains the dynamic of the 'hardening' and 'softening' of the Trump administration's positions in the course of its negotiations with China.

This therefore clearly reflects the 'lose-lose' framework in which the Trump administration operates. When the 'lose' or 'pain' in US financial markets is not great the Trump administration proceeds to attack China. When, on the contrary, China's reaction increases pain in US financial markets Trump acts more reasonably. That is, whenever the Trump administration feels in a stronger position it increases its attacks on China, whenever the Trump administration feels weaker due to the pain in US financial markets it acts more reasonably to China.

What is the Trump administration's bottom line?

While the above clearly shows why the Trump administration will not respond to a 'win-win' framework, but only to economic pain, to avoid any misunderstanding it should be made clear that it does not lead to the conclusion that the US and China are locked in a 'war to the death'. All the evidence is that President Trump is less interested in the long-term interests of the US than most Presidents. The precise economic pain which is unacceptable to his administration is that which would lead to endangering his re-election in 2020.

A relevant comparison which helps understand this dynamic is that is to a real war, not just a trade one, which the US lost – the Vietnam war. Vietnam's tactics in this were skilful in that political impacts guided military goals. The two largest Vietnamese offensives of the war, the Tet Offensive in 1968 and the Easter Offensive in 1972, were launched in US presidential election years. Neither resulted in US military defeat but the political damage done to US presidents ensured Vietnam's victory – Johnson was forced to abandon as hopeless any attempt to run for re-election as president after Tet, and Nixon was so convinced that his position as president would be threatened by the war that he started a progressive US military withdrawal after 1968 and decided on a total US withdrawal of US forces after the 1972 Easter Offensive.

In short, the 'bottom line' for Vietnam's victory against the US was not total military defeat of the US, which was never achieved, but inflicting such pain on US presidents that to safeguard their own position they were forced to withdraw. The military struggle in Vietnam was the means by which the decisive political victory in the US was achieved.

But the precondition for that US political defeat was the military struggle in Vietnam. If Vietnam had ceased inflicting pain on the US, both economic in terms of the gigantic cost of the war and in terms of losses of American forces, then the US instead of withdrawing would have increased its attacks on Vietnam. This can be clearly seen in the opposite case in which the US achieved a great victory – the destruction of the USSR. Gorbachev attempted to appease the US and beg for mercy. The US did not lessen but increased its attacks as a result – culminating in the catastrophic disintegration of the USSR itself, characterised by Putin as 'the greatest geopolitical catastrophe of the [20th] century'.

After this tremendous defeat of Russia this again did not lead to a lessening but to further intensification of attacks on Russia by the US – incorporating almost all of Eastern Europe and large parts of the former USSR into NATO and launching of attacks on Russia's position in its strategically decisive neighbour of Ukraine.

The strategic conclusion of the present US attacks on China fully confirms the speech by Xi Jinping emphasising that the most important thing is to rely on ourselves. China has not been seeking a confrontation with the US, a lose-lose. On the contrary China has been seeking a win-win. But once the Trump administration embarked on the course of a lose-lose confrontation then such a struggle can only be won by China relying on its own strength. Sufficient pain must be inflicted on the Trump administration that it decides it is better to abandon the lose-lose. And the criteria by which it will judge whether the pain in the 'lose-lose' is bearable is the effect on its chances of re-election.

Fortunately, the present struggle is an economic war and not a real war. The 'small arms' in that economic war are not rifles and revolvers but tariffs against farmers and the subsidies these require, its medium weapons are consumer boycotts, its heavy artillery are such issues as the impact on US financial markets analysed above. It is a measure of the gigantic historical progress made by China since 1949 under the People's Republic that it now only has to deal with economic attacks by the Trump administration – for a century before that China had to deal with actual military invasions.

The sacrifices made by the heroes of the Long March were far greater than anything the people of China face today in the economic attacks by the Trump administration. But the comparisons made by Xi Jinping to the Long March are entirely apposite and not at all merely references to the CPC's historical tradition.

The Kuomintang's Fifth Encirclement Campaign, the origin of Long March, was designed by the KMT to destroy and annihilate the forces opposing it – why it is also called the 'Fifth Extermination Campaign'. It was purposeless to have attempted to appease or beg for mercy from the KMT, which was determined to destroy the forces which later created the New China. Any appeasement, or appeal for mercy, would have been met by the KMT crushing and massacring the forces they opposed. Only resistance to the KMT created the possibility to later create the People's Republic of China and lay the basis for China's national rejuvenation.

Similarly, the Trump administration is determined to block China's national rejuvenation. As already shown, there is no point to attempt to appease it or beg for mercy from it, this will merely lead to it becoming more aggressive. The ultimate aim of the neo-cons at present directing the Trump administration's policies is to block China's national rejuvenation and the final way to ensure that is to ensure that that China should suffer the same historical catastrophe as the USSR under Gorbachev.

Who is the 'elite' of Chinese society?

Analysis in China shows it is ordinary people who have understood the aggressive actions of the Trump regime and supported the firm positions against this taken by President Xi Jinping and other CPC leaders.

It is some parts of the 'social elite' which have entirely misunderstood the situation and believed that appeasement and appeals for mercy would lead to the Trump administration lessening its attack on China. The latter forces are the exact opposite of an 'intellectual elite' – because to be an intellectual elite means to see the situation accurately and, as seen, they are entirely in error. It is the ordinary people of China who have shown they are the 'intellectual elite' in accurately understanding the Trump administration and supporting the positions taken by the CPC leadership. Those who wrongly analysed the situation may or may not be a social elite but they are an intellectual 'non-elite' – those who fail to see the situation accurately and have naïve illusions.

Conclusion

The analysis of the situation of the US economy and financial markets therefore fully confirms the analysis made by others of the situation in China.

It shows why the Trump administration cannot be dealt with on the basis of 'win-win' but only on the basis of China's strength and through ensuring that the Trump administration suffers severely in the 'lose-lose' path it has unfortunately chosen. Only after the US administration has found that it suffers pain from its present path will it be possible to return to a 'win-win' framework between China and the US.

* * * The Chinese version of this article appeared at Guancha.cn .

[Jun 18, 2019] US-China Trade War Stepping Away from the Brink - FPIF

Jun 18, 2019 | fpif.org

US-China Trade War: Stepping Away from the Brink

Trump's trade war with China could quickly morph into a shooting war.

By Emanuel Pastreich , June 14, 2019 .

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President Donald Trump has announced that he will decide whether or not to add another $300 billion in tariffs on imports from China, in addition to the $200 billion he has already imposed, and that he will do so in the two weeks following the G20 summit in Osaka. Trump's "Art of the Deal" pressure tactics are familiar. He wants to try to make China give even greater concessions, perhaps following a frosty meeting between the two leaders on the sidelines of the G20, or perhaps no meeting at all.

China, however, is in no mood to make concessions.

Behind Trump's impulsiveness can be glimpsed a profound shift in U.S. trade policy, and in US diplomacy, which has transformed the nature of international relations, with particularly disturbing implications in the case of U.S.-China ties.

Donald Trump, acting on the advice of U.S. trade representative Robert Lighthizer and Secretary of the Treasury Steven Mnuchin, is making demands of China -- or for that matter Mexico, Germany, or France -- in a unilateral manner. He has attempted to immediately implement tariffs and other forms of punishment (such as bans for reasons of national security in the case of Huawei phones) without any institutional consultative process.

The U.S. constitution has a "commerce clause" that clearly assigns to Congress the power "to regulate commerce with foreign Nations, and among the several states, and with the Indian Tribes." Since 2002, the trade promotion authority (an upgraded version of the fast-track authority established in 1974) gives the president the right to negotiate trade agreements that Congress can vote for or against, but cannot amend.

Over the last 20 years, fast-tracking has become the center of trade policy to a degree that undermines the balance of powers and the constitution.

Although the executive's usurpation of trade authority has a long history, only now is the president making such a transparent move to exclude the legislature -- not to mention economic experts, let alone citizens -- from the formulation of trade policy. That means that a handful of people can make decisions that impact every aspect of the U.S. economy.

Newspapers rarely mention the role of Congress in trade negotiations with China. It's almost as if the various congressional committees involved in formulating trade policy have no role in this process.

Equally striking is the absence from the policy debate of multilateral institutions that address trade issues according to common practices and international law. For instance, the World Trade Organization was established in 1993 with an explicit mandate to address trade and tariff issues. The WTO and its trade experts once played a central role in U.S. trade discussions -- when U.S. policy ostensibly conformed to established global norms, and Washington even set new models for the world to follow.

Trump's unilateral demands of China make it crystal clear that Trump, and Trump alone, is empowered to decide trade policy. What institutions and mechanisms remain to assure that the president's authority in trade negotiations will not be abused and that trade is conducted with the long-term interests of the country in mind?

But it goes further than that. Now Trump is demanding "detailed and enforceable commitments" from China as a condition for a trade deal, suggesting that the United States alone determines whether or not China is conforming with the agreement. Such an approach makes sense in Washington these days. After all, the U.S. Commerce Department imposed an export ban on the Chinese telecommunications company ZTE last year because it did not pay fines for violating U.S. sanctions against sales to North Korea and Iran. In other words, the United States thinks it can unilaterally set sanctions and punish violators without any consultation with multilateral institutions.

This step goes beyond what the Chinese can tolerate.

"China is not a criminal. Nor is it making any mistakes. Why does the US want to supervise us?" remarked Professor Wang Yiwei of Renmin University of China in a recent interview , "If there's a supervision team to oversee the implementation, just like what happened to ZTE, it is definitely directed at sovereignty and can't be accepted."

These "enforceable commitments" are offensive to China for a reason. This approach to trade seems little different from the sanctions regimes that the United States put in place against Iraq before its military invasion, or against Iran as part of an increasing military buildup that could end in a military conflict. Moreover, the increased U.S. military drills off the Chinese coast has given the trade negotiations process a negative spin.

The recent comments about the political protests in Hong Kong by secretary of state Mike Pompeo suggest that those tariffs could quickly become sanctions -- which require even less adherence to international norms.

And then, in the midst of all that tension, the U.S. military released an Indo-Pacific Stategy Paper that refers to Taiwan as a "country," the first time the United States has done so officially in 40 years. The agreement between the United States and the People's Republic of China, after the normalization of diplomatic relations, required that the United States not recognize Taiwan as a country, and the People's Republic of China has stated explicitly that military action was an option in the case of U.S. interference in the Taiwan question.

The combination of these actions threatens to erase all established norms between the two nations.

The United States is now considering ending agricultural exports to China, and China is considering cutting off the sales of rare earth elements to the United States. The latter are essential for the guidance systems and for sensors in missiles and advance fighter planes. A F-35 Fighter, for instance, requires 920 pounds of rare earth elements like neodymium iron boron magnets and samarium cobalt magnets, according to the Asia Times .

The risk of a rapid acceleration in tensions is no longer theoretical. Remember: the U.S. decision to end the sale of scrap metal and copper to Japan in 1940, followed by the oil embargo on August 1, 1941, transformed a trade war into a real war.

Trade should remain separate from security concerns. Moreover, it should not be the plaything of a small number of men in the White House. The United States and China need to open a broad dialogue on common concerns, from climate change and rapid technological evolution to the growing concentration of wealth globally. That dialogue should rely more on citizen-led dialogues and scholar-led conferences in order to move beyond the narrow negotiation process that has brought the two countries to the brink of war.

[Jun 17, 2019] How Americans Are Losers In The US-China Trade War

No matter who pay them, tariffs improves government revernues. They are in essence another form of "value added tax".
Jun 17, 2019 | www.youtube.com

Kevin Fa , 1 week ago

Jimmy carter : US is the most warlike nation in the history of the world.

john hanrahan , 1 day ago div tabindex="0" role="artic

le"> Tariffs raise the cost of goods. Higher generate the opportunities for alternative sources as well as incentivize domestic production. Never forget that the higher price of domestic production is offset by the reduction in the costs associated with domestic unemployment. The reduction of wealth leaving the nation is a primary goal and responsibility of the federal government. As is maintaining a secure border and civil and economic well being of it's citizens.

[Jun 17, 2019] Why China Doesn't Want Your Trash Anymore

Jun 17, 2019 | www.youtube.com

Magnificent Birb , 2 months ago

How ironic that western countries condemns the other countries to not pollute, yet they are exporting waste to Asian countries..

huiyuforever , 1 month ago

US: Send all the trash to China and blame China for pollution. China: No more trash. US:?????????????

mr. phantom , 2 months ago

Wow China taking care of trash unlike US which is creating trash I support your decision

Dante X , 2 months ago

Enjoyed that report. It's refreshing to see a seemingly non-biased examination of Chinese Economic and Geopolitical relationships. Enjoying the improved air in quality Beijing.

Asim Alharbi , 3 weeks ago

lol Americans are 4% of worlds population, yet they preduces 25% of the world trash. Is that even possible to happen?

[Jun 16, 2019] The Misadventures of 'Tariff Man' by John Feffer

Jun 05, 2019 | fpif.org

For Donald Trump, tariffs are a substitute for diplomacy, just as harassment in his personal life is a substitute for normal human interaction

Trump has two tools at his disposal as president. The first is his mouth: the insults and threats that he issues verbally or by Twitter.

The second is the tariff. Trump has imposed trade restrictions left and right, on allies and adversaries, for economic and political reasons, as part of a long-term offensive and out of short-term pique.

If Trump could use tariffs even more indiscriminately, no doubt he would. He would delight in slapping trade penalties on the Democratic Party, on Robert Mueller, on the mainstream media, on all the women who have accused him of harassment, even on the First Lady for slapping away his hand at the airport in Tel Aviv.

Trump the man favored the legal suit as his attack of first resort; Trump the president has discovered the tariff.

With his penchant for naming names, Trump calls himself "Tariff Man," as if boasting of a new superhero power. It's all-too-reminiscent of the cult film Mystery Men where the superpowers are either invisible or risible (Ben Stiller's character, Mr. Furious, for instance, gets really really angry).

Trump uses tariffs like a bad cook uses salt. It covers up his lack of preparation, the poor quality of his ingredients, the blandness of his imagination. It's the only spice in his spice rack.

The latest over-salted dish to come out of the White House kitchen is the president's threat to impose a 5 percent tariff on all Mexican goods on June 10. The threat has nothing to do with what Mexico has done economically (that's a different set of threatened tariffs). Rather, it's all about immigration. This time, Trump will keep inflating the cost of Mexican goods "until such time as illegal migrants coming through Mexico, and into our Country, STOP." The tariffs will, supposedly, rise 5 percent every month until they reach 25 percent in October.

Trump promised as a candidate that Mexico would pay for the wall he wanted to construct along the southern border. Now, it seems, Mexico will pay for the lack of a wall as well.

The escalation is quite clear. What Mexico has to do to avoid these tariffs is not.

"So, there's no specific target, there's no specific percent, but things have to get better," Chief of Staff Mick Mulvaney told Fox News Sunday . "They have to get dramatically better and they have to get better quickly."

Such is the usual Sunday morning quarterbacking that happens with White House officials as they scramble to explain the inexplicable to a baffled news media.

Although they remain in the dark about what's expected of them, Mexican leaders have warned that they will apply counter-tariffs if necessary and that the United States will suffer economically from such a tariff war.

These are not idle threats. Mexico is the third largest U.S. trading partner. Even congressional Republicans, desperate to avoid this spat, are talking about trying to block the tariffs. Trump has called them "foolish" to do so. He plans to move forward anyway.

Full Spectrum Offensive

Mexico is only the latest country to feel the wrath of Tariff Man.

In 2018, Trump used Section 201 of the Trade Act to impose tariffs on solar cells and washing machines, targeting primarily East Asian countries. Shortly thereafter, he upped his game by assessing a 25 percent tariff on all steel imports, with Canada, Mexico, and the EU getting hit the hardest.

China, however, has borne the brunt of Trump's animosity. In early May, the Trump administration announced a surge in tariffs from 10 percent to 25 percent on $200 billion worth of Chinese goods. He has also threatened to apply tariffs to the remaining $325 billion worth of Chinese goods entering the country.

The escalation tactics don't seem to have done much to improve the prospects of a trade deal between the two countries. China has naturally countered with its own tariffs.

When Trump lashed out against countries competing against the U.S. steel industry, one of the major exceptions was Australia. That probably won't last long. Just before his Mexico decision, the president was planning on imposing a tariff on Australian aluminum as well. His advisors managed to dissuade him , at least temporarily.

Canada and Mexico, meanwhile, continue to get a pass on the steel tariffs as long as the two countries sign a replacement deal for NAFTA. But Trump's latest move against Mexico may throw that pending agreement into jeopardy.

Push Back

The threat and even the reality of retaliatory tariffs seem to have little effect on Trump. He likes such geopolitical games of chicken. Congressional opposition only whets his appetite for more confrontation, for he holds even his Republican allies in contempt.

He disregards the more level-headed advice of economic mandarins -- as well as seven former ambassadors to Mexico -- because he relishes flouting conventional wisdom in favor of his own unconventional stupidity. If farmers in swing states protest that the markets for their soybeans have dried up, Trump will just authorize another massive government purchase of their product -- and suddenly prisoners all over America will be surprised by tofu and edamame on their cafeteria menus.

Republican voters overwhelmingly support Trump's trade policies -- and the president really doesn't care a fig about anyone else.

The only pushback that might have some influence with Trump might be the business community. The auto sector is forecasting billions of dollars in costs associated with the Mexico tariffs. The Chamber of Commerce, which has come up with a more precise annual price tag for U.S. consumers of $17.3 billion for a tariff level of 5 percent, is considering a legal challenge.

If the stock market goes into bearish hibernation, then the president is out of luck. Tweeted Ian Shepherdson, the chief economist at Pantheon Macroeconomics, "he's going to have to blink on tariffs, because the market can't live with this level of crazy."

Shepherdson is wrong. The market has lived with this kind of crazy for more than two years. And there are plenty of people who see profit in precisely the kind of volatility that Trump has brought to financial markets.

When Trump went on a fundraising tour of New York recently, some big-name financiers leapt at the opportunity to fete the president. Howard Lutnick, the head of Cantor Fitzgerald, predicted in 2017 that Trump would provide a big bump for the world of finance (and, therefore, his own bottom line). Last month, as a reward for that bump, Lutnick invited Trump to his triplex penthouse in Manhattan and raised over $5 million toward his reelection.

That's the kind of crazy that the market is entirely comfortable with.

Misunderstanding Trade

Tariffs make sense for certain countries.

For instance, East Asian countries used tariffs very successfully to protect their infant industries -- steel, shipbuilding, information technology -- against the overwhelming market advantages of more advanced economies. Those tariffs raised the price of imports and encouraged consumers to buy domestic. Tariffs can be part of a smart industrial policy of picking potential economic winners.

Tariffs can also protect a way of life -- Japanese rice culture, Mexican tortilla makers, Vermont dairy farmers. Without some kind of trade protection, cheaper goods from outside will completely overwhelm domestic producers and destroy long-standing traditions. Of course, there are other methods of preserving such traditions, from government price supports to geographical designations (think: champagne).

Trump's tariffs have nothing to do with either of these aims. U.S. steel is not an infant industry in need of protection. Trump doesn't care about protecting traditional lifestyles. He has neither a progressive industrial policy of picking winners and losers in the economy nor a conservative approach to ensuring the integrity of communities.

For Donald Trump, tariffs are a substitute for diplomacy, just as harassment in his personal life is a substitute for normal human interaction. Tariff Man can think of only one way of dealing with other countries: grabbing them by their trade policies until they squeal.

He believes, mistakenly, that trade is zero-sum (if they lose, American wins). He also labors under the misconception that the U.S. Treasury somehow grows fat with the proceeds of tariffs (it doesn't). He is as ignorant of the relations among nations as he is of the relations among people.

Tariff Man's superpower is even more ridiculous than that of Mr. Furious. It's worse than impotent. It's self-defeating. Let's hope that principle applies ultimately to the 2020 elections as well. Share this:

John Feffer is the director of Foreign Policy In Focus and the author of the dystopian novel Frostlands.

[Jun 15, 2019] Hollywood becomes unlikely victim of Trump's trade war

Notable quotes:
"... Trump's declaration of economic war against China is like everything he does - impulsive, ill-considered, ill-prepared, and without any coherent strategy or series of tactics to achieve that strategy. ..."
"... NOTE - I am not pro-China, but anti-stupid, anti-disorganized, and anti-clueless, which is how everything gets done in the Trump WH, especially since his "economic advisors" really do not know anything about economics. ..."
Jun 14, 2019 | www.washingtonpost.com

Last month, "Avengers: Endgame" became the highest-grossing American film in the history of China. It was a seminal moment, suggesting the partnership between China and Hollywood, which over the years has moved in fits and starts, was finally firing on all cylinders. But the $614 million that Disney-Marvel booked may turn out to be an outlier.

As the United States ups the stakes in a trade war, there are growing signs that China is quietly retaliating against the U.S. entertainment business.

Beijing is now constricting Hollywood's ability to peddle its product in the country, say four people who conduct business in China or closely monitor its relations with Hollywood.

"I don't want to use the words 'total freeze,' but it's real," said John Penotti, the producer of "Crazy Rich Asians" and head of SK Global who specializes in Asian productions. "They're not saying it officially, but the industry is operating as if it's close to a total shutdown."

In contrast to many countries, distribution in China requires government approval, and according to these sources, the Chinese government is unlikely to offer distribution slots to more than a small handful of movies. The latest Spider-Man, Secret Life of Pets and Toy Story movies appear likely to get the nod, but most other summer and even fall hopefuls face being locked out of the world's second-largest film market.

Hollywood relies on China to power its foreign box office, which in turn powers its film revenue, and the standoff reflects how much of a conundrum China represents for Hollywood.

The availability of so many overseas ticket-buyers at a time of intense entertainment competition at home has been a boon for U.S. studios. But at the same time, the mercurial ways of Chinese regulators and the ways that market penetration is subject to geopolitical crosswinds also make the nation a vexing place for studios to do business.

If the trade war wears on and the market remains cut off, it could result in a reduction of the budgets of studio movies, since it's Chinese yuan that make them possible.

"I think this poses a dire situation for Hollywood," said Aynne Kokas, a professor at the University of Virginia and author of "Hollywood Made In China," about the complicated relationship between the two entities. "There definitely will be a trickle-back effect. It's a very dangerous financial position to be reliant on Chinese box office to recoup profits."

The Chinese market has become a place of increasing importance to the American movie business. As the country has rapidly built theaters -- it now has more than 65,000 screens, a dozenfold increase compared to a decade ago -- it has become a cash cow for American studios. Three of Hollywood's top five movies at the worldwide box office last year -- "Avengers: Infinity War," "Jurassic World: Fallen Kingdom" and "Aquaman" -- each collected more than a quarter of their overseas dollars in China.

Other movies owe the country even more of their success. The underwater adventure "The Meg" notched 40 percent of its foreign total in China, while Steven Spielberg's gamer-themed hit "Ready Player One" approached 50 percent. China could become the biggest film market as soon as 2020, according to PricewaterhouseCoopers.

But to keep the dollars flowing, studios need those distribution slots. And that's where matters get dicey.

China officially has a quota allowing in several dozen Hollywood movies per year -- 38 in 2019, 35 the year before. Those numbers are up by more than 20 percent in the past five years.

The Film Bureau and its China Film Group division determine what movies are given a distribution slot. But with blackout periods, 11th-hour allowances and other unpredictable factors, even those who study the market say it can be impossible to parse what makes the cut. And lately, with the trade war raging, few movies are.

Vanamali, 6 hours ago

As they say, "Everything is fair in love and war" - the Chinese are using whatever means they have at their disposal
Trump is using Tariffs to hurt the Chinese economy and business and the Chinese of course are going to retaliate with whatever weapon they have

But gotta love the Trumptards "logic" - "They need our exports, without them they will starve, there will be rioting in the streets" and "We are doing them a big favor by importing their products, if we shut off our market, their companies will collapse, massive unemployment, there will be rioting in the streets"
Bizarre "logic"

jayster, 12 hours ago (Edited)

Trump's declaration of economic war against China is like everything he does - impulsive, ill-considered, ill-prepared, and without any coherent strategy or series of tactics to achieve that strategy.

China will defend its interests and retaliate as necessary, especially as they know Trump is an absolute moron.

NOTE - I am not pro-China, but anti-stupid, anti-disorganized, and anti-clueless, which is how everything gets done in the Trump WH, especially since his "economic advisors" really do not know anything about economics.

ES175GC 12 hours ago

Trump is such a vengeful, hating person that it wouldn't surprise me at all that he deliberately wants to hurt all those Hollywood liberals who despise him so much. "When I get hit, I hit back 10 times harder" is a famous Trump saying.

He operates on a juvenile level, as we all know, like a spoiled whining brat who has to get even with anyone who slights him. It makes perfect sense that Trump will do everything he can to destroy Hollywood's business with China.

buhaobob, 12 hours ago

I agree except your premise that Trump would do this deliberately would require that Trump have a plan, and he has demonstrated that his attention span is about the same as that of the average goldfish.

Zop1066, 15 hours ago (Edited)

We certainly do not need Chinese government influence in Hollywood or in any US media, period. Several films recently have shied away from any even marginally critical reference to China for fear of losing Chinese box office receipts or Chinese investment.

And the Chinese investors have not even tried to hide that they do indeed influence film scripts to suit the Chinese government. Enough of that. Best they keep their money and invest perhaps in even harsher great wall internet controls, internment camps, and super creepy internal population controls.

That'll sure keep the cinema in China boring and nonthreatening. Certainly wouldn't want anyone there to think for themselves and question their government, no siree.

derek13, 3 hours ago

But the economy needs the dollars.

[Jun 15, 2019] Trump's Trade Threats are really Cold War 2.0 by Michael Hudson

Notable quotes:
"... Threats are cheap, but Mr. Trump can't really follow through without turning farmers, Wall Street and the stock market, Walmart and much of the IT sector against him at election time if his tariffs on China increase the cost of living and doing business. His diplomatic threat is really that the US will cut its own economic throat, imposing sanctions on its own importers and investors if China does not acquiesce. ..."
"... China has a great sweetener that I think President Xi Jinping should offer: It can nominate Donald Trump for the Nobel Peace Prize. We know that he wants what his predecessor Barack Obama got. And doesn't he deserve it more? After all, he is helping to bring Eurasia together, driving China and Russia into an alliance with neighboring counties, reaching out to Europe. ..."
Jun 13, 2019 | www.unz.com

President Trump has threatened China's President Xi that if they don't meet and talk at the upcoming G20 meetings in Japan, June 29-30, the United States will not soften its tariff war and economic sanctions against Chinese exports and technology.

Some meeting between Chinese and U.S. leaders will indeed take place, but it cannot be anything like a real negotiation. Such meetings normally are planned in advance, by specialized officials working together to prepare an agreement to be announced by their heads of state. No such preparation has taken place, or can take place. Mr. Trump doesn't delegate authority.

He opens negotiations with a threat. That costs nothing, and you never know (or at least, he never knows) whether he can get a freebee. His threat is that the U.S. can hurt its adversary unless that country agrees to abide by America's wish-list. But in this case the list is so unrealistic that the media are embarrassed to talk about it. The US is making impossible demands for economic surrender – that no country could accept. What appears on the surface to be only a trade war is really a full-fledged Cold War 2.0.

America's wish list: other countries' neoliberal subservience

At stake is whether China will agree to do what Russia did in the 1990s: put a Yeltsin-like puppet of neoliberal planners in place to shift control of its economy from its government to the U.S. financial sector and its planners. So the fight really is over what kind of planning China and the rest of the world should have: by governments to raise prosperity, or by the financial sector to extract revenue and impose austerity.

U.S. diplomacy aims to make other countries dependent on its agricultural exports, its oil (or oil in countries that U.S. majors and allies control), information and military technology. This trade dependency will enable U.S. strategists to impose sanctions that would deprive economies of basic food, energy, communications and replacement parts if they resist U.S. demands.

The objective is to gain financial control of global resources and make trade "partners" pay interest, licensing fees and high prices for products in which the United States enjoys monopoly pricing "rights" for intellectual property. A trade war thus aims to make other countries dependent on U.S.-controlled food, oil, banking and finance, or high-technology goods whose disruption will cause austerity and suffering until the trade "partner" surrenders.

China's willingness to give Trump a "win"

Threats are cheap, but Mr. Trump can't really follow through without turning farmers, Wall Street and the stock market, Walmart and much of the IT sector against him at election time if his tariffs on China increase the cost of living and doing business. His diplomatic threat is really that the US will cut its own economic throat, imposing sanctions on its own importers and investors if China does not acquiesce.

It is easy to see what China's answer will be. It will stand aside and let the US self-destruct. Its negotiators are quite happy to "offer" whatever China has planned to do anyway, and let Trump brag that this is a "concession" he has won.

China has a great sweetener that I think President Xi Jinping should offer: It can nominate Donald Trump for the Nobel Peace Prize. We know that he wants what his predecessor Barack Obama got. And doesn't he deserve it more? After all, he is helping to bring Eurasia together, driving China and Russia into an alliance with neighboring counties, reaching out to Europe.

Trump may be too narcissistic to realize the irony here. Catalyzing Asian and European trade independence, financial independence, food independence and IT independence from the threat of U.S. sanctions will leave the U.S. isolated in the emerging multilateralism.

America's wish for a neoliberal Chinese Yeltsin (and another Russian Yeltsin for that matter)

A good diplomat does not make demands to which the only answer can be "No." There is no way that China will dismantle its mixed economy and turn it over to U.S. and other global investors. It is no secret that the United States achieved world industrial supremacy in the late 19 th and early 20 th century by heavy public-sector subsidy of education, roads, communication and other basic infrastructure. Today's privatized, financialized and "Thatcherized" economies are high-cost and inefficient.

Yet U.S. officials persist in their dream of promoting some neoliberal Chinese leader or "free market" party to wreak the damage that Yeltsin and his American advisors wrought on Russia. The U.S. idea of a "win-win" agreement is one in which China will be "permitted" to grow as long as it agrees to become a U.S. financial and trade satellite, not an independent competitor.

Trump's trade tantrum is that other countries are simply following the same economic strategy that once made America great, but which neoliberals have destroyed here and in much of Europe. U.S. negotiators are unwilling to acknowledge that the United States has lost its competitive industrial advantage and become a high-cost rentier economy. Its GDP is "empty," consisting mainly of the Finance, Insurance and Real Estate (FIRE) rents, profits and capital gains while the nation's infrastructure decays and its labor is reduced to a prat-time "gig" economy. Under these conditions the effect of trade threats can only be to speed up the drive by other countries to become economically self-reliant.


nsa , says: June 14, 2019 at 5:04 am GMT

The crux of the "trade" dispute is never discussed: the Chinese refusal to allow the international financial services sector to penetrate the Chinese economy and operate freely. Get it? The Chinese won't let the Jews in to loot the place and the Jews are pissed. Trumpstein, the cryto Jew, has promised his sponsors to rectify the situation. The Chinese witnessed what happened when Yeltsin allowed the IMF to parachute Jeffrey Sachs and his Jew Boys into Russia in 1991 Jews looted the place mercilessly, calling it democracy and capitalism, and Russia is still recovering. The Chinese have a bright future, as long as they keep the Jews out.
sally , says: June 14, 2019 at 5:35 am GMT
I agree.
I am afraid spokes person Trump and those he is speaking for have it wrong. They believe external trade is interfering with the La-Zi-Faire fat cat monopoly powered corporations the CPI (congress, president and Israeli governance represent.
Few western companies can compete because only monopoly endowed Global corporations are allowed or licensed to compete. Individual ability, the creative mind of the lone rangers with highly disruptive inventions and ideas, are not allowed access to the knowledge or money to play. Making people pay for sleazy operating systems when better ones are free, allowing big corporations to hack the data of everyone, and on and on.

Even when a person finds a way to play and actually produces a product or concept, the financial condition of the inventor is so weak or the barriers to promote his product is so strong that as soon as the idea or product is patented or copyrighted it somehow absorbed into one of the monopoly powered giants; in other words, competition is only allowed if the competitor gives the profits to one of the monopoly powered giants. China should be complaining, at least their competitors can produce, in the USA governed America unlicensed competition is denied.

Copyright, patents, standardized testing and licensing every breath have terminated competition in America.
America still competes with Americans as long as the business does not compete with the global corporations.

The problem Trump thinks he can solve, is not sourced in India, China, Iran, Russia, or any other nation. The problem is at home, in government policy, laws that turn capitalistic competition into monopolistic fat-cat wealth storing private domain havens. Education by degree and license by examination and standardization of performance are used to restrict competition. Education, is a bureaucracy and no matter its efficiency; a degree cannot provide competitive performance. The USA governance over America has served only the interest of monopoly endowed corporations and their oligarch owners and investors. Trump is trying to overcome foreign competition, by threat and blocking maneuvers, to deny foreigners the fruits of their competitive successes I do not believe he can be successful. Already the Russian and Chinese have developed a new currency and banking system to circumvent the Trump block. Work around-s are in progress everywhere.. Soon even the USA will not be allowed to compete I fear.
It is not a matter of where the competition comes from, its that the monopoly powers have used the behavior enforcing rule making capacity of the USA to deny native American creativity; creativity that America needs to be competitive. USA policy continues to be to enrich a few by channeling and encapsulating all effort within the confines of the monopoly holders instead of encouraging every back yard to be a new competitor. It will be many years before Americans will be able to compete..

Trade is not the issue, competition is!

schrub , says: June 14, 2019 at 6:15 am GMT
What Trump is now demanding reminds me of the brutally efficient system that Trump grew up in: New York City business. (Author Tom Wolfe has a great line in his book The Bonfire Of The Vanities that the strange, unrelenting background droning sound one hears in NYC is that of "people constantly braying for money").

New York City real estate in particular is an area of business that is so brutally competitive, unscrupulous , and backstabbing that it is best described as war under another name. It is a business arena where a close friend one day can turn into a staunch enemy the next. Trust is rare.

New York real estate, in fact, brings to mind the old saying about sausage making: You would never eat it if you saw it being made. Yet deals are made. In fact, a lot of them. This is the milieu Trump comes from.

Trump isn't one of those more genteel, old-time American negotiators of prior years the author of this article speaks fondly of. These are the very same people who so readily agreed to disasters like NAFTA or allowed, for instance, Or allowed Japan to levy two hundred percent duties on things like American made Harley Davidson motorcycles while the USA was pressured (or bribed) to apply few if any comparable duties on Japanese motorcycles or automobiles (or virtually anything else Japan sold in the USA). These toothless. genteel types also stood back for decades and allowed Japan to use red tape (like obscure safety regulations for instance) to make it almost impossibly difficult to sell American products like automobiles in Japan.

These very same US negotiators, politicians, and bureaucrats have more recently stood back and allowed China to absolutely devastate American manufacturing.

Screw China, It's now payback time. The Chinese are shaking in their boots because the previously hoodwinked and comatose Americans are finally waking up. No more wimpy Obama or Bush looking out for our interests. It is now Truly Scary Trump instead.

Wait until the negotiations are concluded to see if they are successful. The sausage that comes out of them might be very appealing for the first time in many, many decades.

Sam J. , says: June 14, 2019 at 6:38 am GMT
" His diplomatic threat is really that the US will cut its own economic throat, imposing sanctions on its own importers and investors if China does not acquiesce "

I get that the US financial system is up to no good with their positions on China but the criticisms Trump made of China are correct. They have lots of tariffs on finished goods from the US. They require technology transfer to do business there. Their government and industry are tied at the hip and they are manipulating their currency. All these things are true and if we keep trading with them with the same terms we have been we would lose ALL our industrial infrastructure. Now we hear over and over how we can't build anything but the Chinese went from being dirt farmers to the largest industrial power in a fairly short period of time. Could we not do the same at least for our own countries market? Certainly global trade destruction between countries is not a good thing but we'd be fools to keep on as we are now. At some point when you dig a hole you have to stop to get yourself out.

I don't think we have a choice if we wish to continue to be an industrialized country. All those that say China will do fine without us are not taking into account how all the other countries who are being handled the exact same way as we are, are going to handle China's trade with them. Will they keep allowing China to have large tariffs on their products while they Chinese ship whatever they wish into theirs? I'm not so sure they will. If the US starts refusing the Chinese free entry without reciprocal trade then I can easily see others following our lead.

We should have stopped this many years ago but as bad as the situation is now it will only get worse if we don't act.

Let them remove their tariffs. We should take every single anti-trade act and tariff they have on us, weigh them on China and "then" negotiate. If they don't wish to it's their country they can do what they please and so can we.

animalogic , says: June 14, 2019 at 6:39 am GMT
"The crux of the "trade" dispute is never discussed: the Chinese refusal to allow the international financial services sector to penetrate the Chinese economy and operate freely. Get it? "
Absolutely. Like inviting a handful of worms into your apple -- economy hollowed out in an eye blink.
However, there is another side to this "trade dispute" coin.
FIRE want to economicly destroy China. The neocon', MIC, security sector wants to destroy China's 2025 plan to become high-tech world leaders. 5G, AI, semi conductors etc are some of the areas that China's public/private sectors are voraciously pushing. Hence, the (wonderfully "free market") US attacks on Heiwai.
These short term US gambles are more than likely to pay off by the medium-long term undermining of US hegemony via Eurasian integration led by China & Russia.
And all the time we are left wondering whether the US will choose the "Samson Option" rather than accept reduced status. (Insane with power lust, the US can't even accept "first among equals")
Justsaying , says: June 14, 2019 at 9:54 am GMT

The US is making impossible demands for economic surrender – that no country could accept. What appears on the surface to be only a trade war is really a full-fledged Cold War 2.0

.

Typical mobster protection racket threats. Now the US has moved from waging military wars on behalf of their Jewish owners to aggressively push their neoliberal economic warfare for them. The facade for promoting democracy and human rights is no longer required.

And to call attempts at starving the population and murdering children by denying them essential medicines as has happened in Iraq and now is going on in Iran and Venezuela, a Cold War 2.0 is a gross understatement. It is a flagrant act of war. America is launching a war of attrition on the world and who better to spearhead that war than an idiot manipulated by Zionist Jews? The fact that many countries remain silent is testament to their surrender. But China may prove to be a different proposition.

PeterMX , says: June 14, 2019 at 10:51 am GMT
"the United States achieved world industrial supremacy in the late 19th and early 20th century" That is a myth. The US may have had the highest GDP because it was the leader in manufacturing, as China is now, but Europe and in particular Germany was far ahead of the US in technology and science. If you compare China to the US today the situation is very similar to comparing the US to Germany before 1939. Germany was far ahead of the US in the number of Nobel Prizes received thru 1945 and very few of the Americans that did receive the Nobel Prize were native born. The US received a few Nobel Prizes starting in the 1940's because some recent European immigrants that became US citizens received it for work they had done in Europe. The three biggest technological breakthroughs of WW II were the jet, the rocket and the atomic bomb. Germany invented the jet, built the first modern rockets and the German scientist Otto Hahn split the atom in 1939 (for which he received the Nobel Prize in 1944) kicking off the USA's atomic bomb project and Germany's limited attempt. The people that eventually achieved success in the US were almost all recent European immigrants (Bethe, Teller, etc.), many being Jewish.

I basically agree with the rest of the article. I believe Trump's tactics make sense. The problem is it's too late. The US economy can't be fixed by anyone. The US has 22 trillion dollars in debt and will never be able to pay it back. The dollar is going to take a deep dive within the next few years and it will lose its status as the reserve currency. I believe this based upon what people like Peter Schiff, Paul Craig Roberts, David Stockman and Ron Paul say.

I think the two biggest events of the last 75 years were WW II, completely changing the countries that run the world and the emergence of a backwards and dirt poor China to become an economic powerhouse and I think they will get stronger.

Sean , says: June 14, 2019 at 11:02 am GMT

The US is making impossible demands for economic surrender – that no country could accept.

Yes country. If the world was one big free trade area, it there were no bloks or even no countries in the sense we understand them then the population of the would be wealthier, on average. But countries are not primarily economic units, even if one can look at them as such.

Nation states exist and have the emergent quality that they to survive against other nation states and the best way to do that is to gain extra power relative to other states, or at least maintain their position. Why would America agree to terms of trade that do not maintain its position relative to China.

U.S. negotiators are unwilling to acknowledge that the United States has lost its competitive industrial advantage

There is no absolute standards by which such an advantage could be judged. The terms of trade that are finally settled on will be a compromise and reflect the interests of both, and the total balance of forces between the two.

Sally Snyder , says: June 14, 2019 at 11:48 am GMT
As shown in this article, both Russia and China have plans in place to work around American sanctions:

https://viableopposition.blogspot.com/2019/06/putin-and-xi-defeating-american.html

The combination of both nations will make it extremely difficult for Washington to impose its hegemonic agenda without serious repercussions as two of the world's leading military forces seek to increase the level of co-operation between their nations.

Incitatus , says: June 14, 2019 at 11:50 am GMT
Trump's Trade Tariff Theatre 2018 results:
Country/Trade Balance/2018 vs. 2017

Mexico: trade DEFICIT -$81.5 billion; up 14.9% from 2017;
Canada: trade DEFICIT -$19.8 billion; up 15.8% from 2017;
China: trade DEFICIT -$375.6 billion; up 11.6% from 2017;
South Korea: trade DEFICIT -$17.9 billion; down 22.4% from 2017;
Japan: trade DEFICIT -$67.7 billion; down 1.8% from 2017
Germany: trade DEFICIT -$68.3 billion; up 7.2% from 2017;
France: trade DEFICIT -$16.2 billion; up 5.8% from 2017;
Kingdom of Saudi Arabia: trade DEFICIT -$10.5 billion; up 313.3% from 2017;
Russia: trade DEFICIT -$14.1 billion; up 40.9% from 2017;

Asia: trade DEFICIT -$622.2 billion; up 8.8% from 2017;
Europe: trade DEFICIT -$202.4 billion; up 16.6% from 2017;
World: trade DEFICIT -$795.7 billion; up 10.4% from 2017

https://www.census.gov/foreign-trade/balance/index.html

'Art of the Deal'?

rafael martorell , says: June 14, 2019 at 11:57 am GMT
To all of the "free traders", the media ,and academia ,i have this simple question:
why i cant purchase a Toyota work van(the best and must popular of the world),neither here in the USA nor abroad and bring it in?
how come that even in Cuba there are more of those Toyota work van than here in all continental USA.
In 25 year i has to purchase more than 6 work vans,and like Penelope i have been waiting for the Toyota ,and still waiting.
They ,the free traders,did not has allowed not even one.
DESERT FOX , says: June 14, 2019 at 12:27 pm GMT
The problem with the zio/US is the control of the US by the zionists and this control is derived via the zionist privately owned FED and IRS that they got installed in 1913 and then came the debt and wars and the hijacking of the foreign policy by the satanic zionists and the US gov was started on a down hill slide pushed started by the zionists!

The trade policy of the zio/US has turned Russia into the largest grain exporter in the world and turned Russia into an agriculture miracle , this can be shown by watch videos of Russian agriculture on youtube. Germany is also in Russia building cars and other industrial products for Russia thus bypassing the zio/US trade sanctions and last but not least Russia is trading in non dollars in trade with more and more countries such as China thus effectively rendering the dollar non and void in international trade.

So the people of the zio/US can thank their zionist masters for the demise of America and true to form the zionist parasites are killing their American host

Agent76 , says: June 14, 2019 at 1:08 pm GMT
May 14, 2019 Trade Wars: The Truth About Tariffs

Join Mike Maloney as he examines the latest moves in the US/China trade war, and visits some compelling arguments from the Foundation for Economic Education.

https://www.youtube.com/embed/c1r7uO0D-R0?feature=oembed

Aug 26, 2015 How the West Re-colonized China

The "Chinese dragon" of the last two decades may be faltering but it is still hailed by many as an economic miracle. Far from a great advance for Chinese workers, however, it is the direct result of a consolidation of power in the hands of a small clique of powerful families, families that have actively collaborated with Western financial oligarchs.

https://www.youtube.com/embed/WxFSvPUY_oc?feature=oembed

Realist , says: June 14, 2019 at 1:15 pm GMT
@Thinking Out Loud Plus E-verify.
George , says: June 14, 2019 at 1:20 pm GMT
"Threats are cheap, but Mr. Trump can't really follow through without turning farmers, Wall Street and the stock market, Walmart and much of the IT sector against him at election time if his tariffs on China increase the cost of living and doing business. "

Tariffs are taxes and both governments like collecting taxes.

Farmers. Farmers sell a commodity so if they cannot sell to China one result is they will sell to other customers while China buys more from other producers.

Cost of living. DC does not care. There is a solid inflation lobby in the fed that supports increasing the cost of living.

"Walmart and much of the IT sector against him." I am not buying it.

Rogue , says: June 14, 2019 at 2:20 pm GMT
@PeterMX

Germany invented the jet

Well, more accurate to say that Germany and Britain invented the jet engine independently of each other. Just as they both invented radar independently of each other as well.

As it is, the post-war jet engine was based primarily on the British design of Frank Whittle, though some of the German ideas were also later incorporated.

But, overall, the British design was superior.

Miggle , says: June 14, 2019 at 2:26 pm GMT
@schrub It wasn't the Chinese who hoodwinked the Americans, it was American financiers who hoodwinked the Americans.

[Jun 12, 2019] Huawei asks Verizon to pay over $1 billion for over 230 patents source by David Shepardson

Jun 12, 2019 | finance.yahoo.com

Huawei Technologies Co Ltd has told Verizon Communications Inc that the U.S. carrier should pay licensing fees for more than 230 of the Chinese telecoms equipment maker's patents and in aggregate is seeking more than $1 billion, a person briefed on the matter said on Wednesday.

Verizon should pay to "solve the patent licensing issue," a Huawei intellectual property licensing executive wrote in February, the Wall Street Journal reported earlier. The patents cover network equipment for more than 20 of the company's vendors including major U.S. tech firms but those vendors would indemnify Verizon, the person said. Some of those firms have been approached directly by Huawei, the person said.

The patents in question range from core network equipment, wireline infrastructure to internet-of-things technology, the Journal reported. The licensing fees for the more than 230 patents sought is more than $1 billion, the person said.

Huawei has been battling the U.S. government for more than a year. National security experts worry that "back doors" in routers, switches and other Huawei equipment could allow China to spy on U.S. communications. Huawei has denied that it would help China spy.

Companies involved, including Verizon have notified the U.S. government and the dispute comes amid a growing feud between China and the United States. The licensing fee demand may be more about the geopolitical battle between China and the United States rather than a demand for patent fees.

Huawei and Verizon representatives met in New York last week to discuss some of the patents at issue and whether Verizon is using equipment from other companies that could infringe on Huawei patents.

Verizon spokesman Rich Young declined to comment "regarding this specific issue because it's a potential legal matter."

However, Young said, "These issues are larger than just Verizon. Given the broader geopolitical context, any issue involving Huawei has implications for our entire industry and also raise national and international concerns."

Huawei and U.S. wireless carriers T-Mobile US Inc and AT&T Inc did not respond to Reuters' requests for comment. Sprint Corp declined to comment.

The United States last month put Huawei on a blacklist that barred it from doing business with U.S. companies on security grounds without government approval, prompting some global tech firms to cut ties with the world's largest telecoms equipment maker.

Washington is also seeking the extradition of Huawei Chief Financial Executive Meng Wanzhou from Canada after her arrest in Vancouver last December on a U.S. warrant.

China has since upped the pressure on Canada, halting Canadian canola imports and in May suspended the permits of two major pork producers.


(Reporting by Arjun Panchadar in Bengaluru and David Shepardson in Washington; Editing by Anil D'Silva, Sriraj Kalluvila and Sandra Maler)

[Jun 10, 2019] Chinese in the US are reporting harassment and interrogations by US immigration authorities

Jun 08, 2019 | off-guardian.org

On June 4th the Chinese government issued a travel alert for Chinese tourists thinking of visiting the United States, a day after it issued a similar advisory to Chinese students thinking of studying in the US over concerns for their safety and security.

Chinese in the US are reporting harassment and interrogations by US immigration authorities and many now have the impression they are not welcome in the US.

The Global Times , speaking on behalf of the government stated:

The Chinese people find it difficult to accept the fact that they are being taken as thieves. The US boasts too much superiority and has been indulged by the world. Due to its short history, it lacks understanding of and respect for the rules of countries and laws of the market.

The Americans of the early generations accumulated prosperity and prestige for the US, while the current US administration behaves like a wastrel generation by ruining the world's respect for the US."

... ... ...

The situation has become so tense that the Global Times on June 6,th in an op ed by Wei Jianguo, said:

China is able to withstand US maximum pressure, due to the country's economic resilience, and Chinese people's resolute determination. Suffering from a century of humiliation, the Chinese nation has been accustomed to such pressure, as shown in the War of Resistance against Japanese Aggression, as well as the Korean War or the War to Resist US Aggression and Aid Korea. The unity of Chinese people is a vital reason for the country's fundamental victory in history."

The Peoples' Daily stated, "America is the enemy of the world."

[Jun 10, 2019] China to roll out export controls on sensitive technology

Trump is not a thinker, and never was. He is an impulsive narcissist. So the question is whether the USA committed a blunder by unleashing open trade war with China, the war which now extent the Cold War 2 to another nation (cementing emerging alliance between Russia and China which is a death sentence to the USA global hegemony) and where the USA faces very resilient and inventive opponent. And they will lose even if they win.
I actually am amazed by the level of reclines and arrogance the USA democratic is such topic. I do not see multiyear preparation, mobilization of engineering talent and resources that is needed for successfully procuring such a war. It looks like completely impulsive decision partially based on the attempt to get some additional concessions from China. That attempt which spectacularly failed and fueled very dangerous for the USA a wave of Chinese nationalists within mainland china.
The key issue here is that is current stage of neoliberal decine the USA can't rely on loyalty of its own key players and citizets ("greed is good" is the motto of neoliberalism; plus Chinese have probably a very good access to Taiwan high technology industry, the access which is impossible to cut). Such a low level loyalty previously existed just before the USA collapse, when the CIA was able to tranfere to the West a mid level cipher officer from KGB headquarters ( Sheymov defected to the United States in May 1980) and recruit at least one general (Kalugin). Actually KGB was at the center and the main driving force of neoliberal counterrevolution in Russia (Trojan Horse so to speak), as under Andropov they switch sides. So they were naturally allied with CIA at this point
the point is that it does not take too much efforts for foreign intelligence agency now to recruit the US citizens as the collapse of neoliberal ideology creates fertile ground for such an efforts, much like the collapse of Bolsheviks ideology did for the USA. Some can just volunteer appalled by the actions of neoliberal empire. In this sense cases of Manning and Snowen should serve the US administration a stern warning sign that it is a very dangerous to rock the boat if the country experience a collapse of imperial ideology (Neoliberalism). In this case the trade war might be more difficult then they think.
China has more people and produce per year more engineers in STEM. So the USA does not hoild allthe cards. it it has some advantages over the USA in the long term. Also the current technologies are pretty established and "innovation" is often is limited to shriking the silicon die and adding more core for CPUs.
Actually Intel CPUs have a horrible really outdated CISC instruction set and there might be chance to use different instruction set with better overall chanracteristics. Only the billions that Intel get from sales allow it to outpace the rivals. Failed stqrtup Transmeta, for exampel, in late 1990th tried to emulate it via RISK. If throwing out emulation layer speeds up things twice or more, why not to use this path giving enough man power, money and level of animosity toward the USA?
Jun 10, 2019 | businesstelegraph.co.uk

The mechanism would "prevent and resolve national security risks", Xinhua said. Details would be released soon, it added.

The announcement comes amid a souring of relations with the US after the most recent round of trade negotiations ended without a deal in May.

Since then, the Trump administration has blacklisted Chinese telecommunications equipment maker Huawei, while China has threatened to punish foreign companies that cut off ties with Huawei by listing them as "unreliable".

The new Chinese regulations could prove similar to US export controls on strategic technologies. Those controls -- covering military equipment, some encryption technologies, and some dual-use products -- have long irked China. Chinese negotiators have often claimed that their trade surplus could be trimmed if the US would relax controls on high-tech goods.

The mechanism will be developed by the National Reform and Development Commission under the guidelines of China's national security law , passed in 2015, Xinhua said.

"This is a major step to improve [China's system] and also a move to counter the US crackdown," tweeted Hu Xijin, editor-in-chief of the Global Times, a nationalist tabloid that is sometimes used to float ideas that are not official policy. "Once taking effect, some technology exports to the US will be subject to the control." Last month, the NDRC implied it would block exports of rare earths , a material with many strategic applications. After the trade talks broke down in May, Chinese president Xi Jinping visited a manufacturer of rare earths magnets, used in electric vehicles and other new technology applications, as a reminder that China holds some trump cards of its own. READ Massages and free fish help east Europe tackle labour shortages

Rare earth are used in smartphones, lasers, instrument panels, wind turbines and MRI machines and more than 90 per cent of hybrid and electric cars.

[Jun 10, 2019] China Threatens 'Dire Consequences' If Tech Giants Comply With Trump Ban

Notable quotes:
"... Now, each of the two superpowers appears to be crafting new economic weapons to aim at the other. What was once a fraught, but deeply enmeshed, trade relationship is threatening to break apart almost entirely, raising the specter of a new geopolitical reality in which the world's two superpowers would compete for economic influence and try to freeze each other out of key technologies and resources. - New York Times ..."
"... "This is now extremely delicate [time] because the Trump administration, through its brinkmanship tactics, has destabilized the entire relationship, commercial and otherwise," according to China expert Scott Kennedy - senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy. ..."
Jun 08, 2019 | www.zerohedge.com
Beijing put big tech on notice last week, threatening 'dire consequences' if companies such as Microsoft, Dell and Samsung comply with the Trump administration's ban on sales of key American technology to Chinese companies, according to the New York Times . Any companies which cooperate with the new policy ' could face permanent consequences ,' according to the Times. Chinese authorities also suggested using DC lobbyists to resist the government's moves.

China - which is already ditching Microsoft Windows for military applications - held a flurry of meetings on Tuesday and Wednesday after tech firms for discussions amid the backdrop of Beijing's planned blacklist of blacklisting of US firms on an "unreliable entities list."

Also participating in meetings were semiconductor companies Arm of Britain and SK Hynix of South Korea, according to the report, which cites a KPMG estimate that around 60% of all semiconductors sold are connected to China's supply chain, so maybe by that new computer sooner than later.

The breakneck unraveling of the world's most important trade relationship has left companies and governments around the world scrambling . While the dispute had already been nettlesome for Chinese-U.S. relations, the sudden ban on Huawei last month caught many by surprise , raising the stakes by striking at the heart of China's long-term technological ambitions.

Now, each of the two superpowers appears to be crafting new economic weapons to aim at the other. What was once a fraught, but deeply enmeshed, trade relationship is threatening to break apart almost entirely, raising the specter of a new geopolitical reality in which the world's two superpowers would compete for economic influence and try to freeze each other out of key technologies and resources. - New York Times
"This is now extremely delicate [time] because the Trump administration, through its brinkmanship tactics, has destabilized the entire relationship, commercial and otherwise," according to China expert Scott Kennedy - senior adviser at the Washington-based Center for Strategic and International Studies who studies Chinese economic policy.

More broadly, the warnings also seemed to be an attempt to forestall a fast breakup of the sophisticated supply chains that connect China's economy to the rest of the world . Production of a vast array of electronic components and chemicals, along with the assembly of electronic products , makes the country a cornerstone of the operations of many of the world's largest multinational companies. - New York Times

"The Chinese government has regularly resorted to jawboning multinationals to try to keep them in line when there are disputes between China and others that could lead these companies to reduce their business in China."

For example, in 2015 Xi dropped by Seattle before heading to meet with President Obama. While there, he had a chat with Amazon executives and Chinese tech executive in order to woo them on the prospect of future business, while the Obama administration was reportedly trying to push back against China's anticompetitive trade practices .

That said, China is far less likely to succeed this time around , according to Kennedy, who says that " American companies aren't going to violate American laws, especially in such a high-profile context where their actions are scrutinized."

"The companies are between a rock and a hard place, but that hard place will win out."

Three Chinese government bodies are involved in the recent discussions; the National Development and Reform Commission (China's central economic planning agency), the Ministry of Commerce and the Ministry of Industry and Information Technology. The Times posits that the fact that the three are all involved suggests the meetings came from the top-down in an attempt to rally support for Huawei - which was not specifically named.

" There is a strong perception in Beijing that the U.S. government is intent on blunting China's technology rise , and that if this process is not slowed or stopped, the future of China's entire digital economy is at risk," said Eurasia Group head of geotechnology, Paul Triolo, adding "Mr. Xi and the party will be seen as unable to defend China's economic future" it Huawei's 5G rollout is derailed by the Trump administration.

As the trade relationship between the United States and China has broken down, fears have risen in China that major companies will seek to move production elsewhere to avoid longer-term risks . In the meetings this week, Chinese officials explicitly warned companies that any move to pull production from China that seemed to go beyond standard diversification for security purposes could lead to punishment , according to the two people. - New York Times


SuzSez , 31 minutes ago link

"China Threatens 'Dire Consequences' If Tech Giants Comply With Trump Ban"

"And US Threatens Jail If They Don't"

Love it love it love it. Reminds me of the great line from Pride & Prejudice, "You're mother will never speak to you again if you marry him, and I (your father) will never speak to you again if you don't."

john.b , 49 minutes ago link

In R&D spending, China ranks 2nd place after US. China has over 8M new grads each year. Do you really believe stealing can make a country great. The trade war is about suppressing a new rising power of technology and economy.

VisionQuest , 4 hours ago link

There's a whole lot more to what China is up to than buying and selling. They've been working on how to rule the whole earth for 5000 years and the CCP thinks maybe now is the time. Here's a brief history of Chinese power games. They play for keeps. https://www.newenglishreview.org/custpage.cfm?frm=189701&sec_id=189701

straightershooter , 6 hours ago link

China's fightback strategy is simple: Force non-us corporations to abandon us-sourced technologies, and, hence, non-us corporations will not be bound by US laws, and, hence, won't subject to us blackmail laws.

The strategy already worked. ARM's founder said it will have to abandon US-sourced technology ( eventually abandon US-located headquarters) to keep the Chinese market, and, so other non-us corporations, such as Europe, Japanese, or Korean based corporations will have to follow. They have no other feasible choices.

In short, the world is divided into two groups: US group and non-us group. Congratulations to Trump: He has succeeded in isolating US from the world.

First step is to encourage, urge and force non-us corporations to make the choice using the gigantic china market.

Second step is to drive out us corporations at the time when there is alternative for US-made parts. Whenever US corporation is not the sole supplier, then China will declare that any product containing that part will be forbidden in the Chinese market. And, to make the situation even worse for US-sourced technology, any parts produced by non-us corporations using US-sourced technology will not be allowed in the Chinese market.

This is the reverse of the entity list.

In this game, one that has a bigger market prevails. China just happened to have 1.4 billion consumers while US has less than 0.4 billion. China wins. By poisoning American sourced technology, China will succeed in isolating US corporations.

LifeLibertyProperty , 5 hours ago link

You seem to be confused. ARM created a separate joint venture in China called ARM mini China that will license existing tech to China as a way to circumvent US rules. However, this creates a Chinese ARM license separate from the rest of the world. So it is China that is actually separated from further innovation outside of China.

JeanTrejean , 8 hours ago link

Today China, tomorrow EU.

Washington had always saboted what could be a strong competitor for the USA

Cheap Chinese Crap , 11 hours ago link

The Roman Emperor Caligula is best known for appointing his horse to one of the vacant consulships. Given the current quality of professional politicians on offer in the western world, he does not seem as crazy as he once was thought to be.

But he is also known for something else-- the phrase "Oderint dum Metuant" -- which is Latin for "Let them hate (us), so long as they fear (us)."

Not my favorite motto but I'll take it over "Here's my wallet. Don't you like me now?"

[Jun 09, 2019] Much More Than A Trade War

Notable quotes:
"... The US has decided that China can't be allowed to become a technological power any more than it is now. It's fine if all they do is make T-shirts, and low-tech crap, but anything more advanced then a digital alarm clock can not be allowed. ..."
"... Anytime you weaponize something (the dollar), countermeasures will be invented to neutralize that weapon........only a matter of time. ..."
"... We're so balls deep in debt la la land now that having a conversation about wealth creation via production feels a lot like making balloon animals while wearing a clown suit. ..."
"... Much More Than a Trade War ..."
"... it signals the implosion of America's tinsel, derivative-based economy ..."
"... the high dive of the middle class into serfdom ..."
"... Politicians here in the US are desperate for me to believe it is all China's fault. Not the lying, stealing politicians and MBAs that have stolen my future but China. I am not buying it. Even if China has stolen America's wealth, who let them? Who helped and got rich? That's right, US politicians and MBAs. ..."
"... The only reason why this is a trade war in the first place, is because we're attempting to undo the shitty deals signed by Bill Clinton. Let this be a lesson: Don't sign shitty deals. No matter how much they donate to your campaign. ..."
"... Asking this of a politician is like asking a leech to stop living off blood. ..."
Jun 09, 2019 | www.zerohedge.com
frankthecrank , 12 minutes ago link

I watch Fox News Sunday and today all of the usual suspects were blaming Trump for everything under the sun--including committing crimes and needing to be put in jail. It bears repeating that they said the same things about Reagan and his trade wars--which benefited Americans immensely.

Trump will win unless the Dems can get rid of him. China is a paper tiger and always has been.

They are a totalitarian communist state and as such are a sworn enemy of the US and its historic peoples. They must be taken down and that is not hyperbole--they never should have been allowed to trade with the civilized world in the first place without first shutting down the Kims in Norkland and dismantling their communist state.

Russia would have been more in order in 1992 than China. ******* Clintons.

sgt_doom , 21 minutes ago link

America's Wall of Shame:

(Those companies and organizations which have contributed to and/or financed the creation of the Chinese Communist Party's ultra-Orwellian system for command and control: Social Credit System.)

Recommended Reading:

Recommended Viewing:

Further sources and reading:

Tiananmen Square referenced:

blueseas , 22 minutes ago link

Is it so hard to understand that the chinks KNOW that the yuan is trash and that's why both the CB and the public are stacking gold. They're preparing for what comes next. According to Jim Willie, that will be an Asian gold trade note as proposed by the PM of Malaysia.

monty42 , 21 minutes ago link

Which would mean war if the D.C. regime's past behavior is any indication.

quesnay , 23 minutes ago link

"China and its citizens would greatly benefit from eliminating barriers."

It's too bad they never did this, but now it no longer matters. The US has decided that China can't be allowed to become a technological power any more than it is now. It's fine if all they do is make T-shirts, and low-tech crap, but anything more advanced then a digital alarm clock can not be allowed.

China would do best to forget about the US and hope that it can make due with it's domestic market. With 1.3 billion people this seems like it should be possible.

bshirley1968 , 9 minutes ago link

They need dollars to buy US goods and services. They also need them to buy oil from Saudis. They have dollar based loans that require payment in dollars.

bshirley1968 , 24 minutes ago link

"The United States has discovered the Achilles heel of China. The same one Japan had in the 80s when it seemed that it was going to invade the world. Its dependence on the US dollar to maintain its large domestic imbalances, a very fragile house of cards of excess capacity, real estate bubble and unproductive spending."

Oh, yeah. .......we just "figured" that one out. It's not like we haven't used that scheme on.......well, EVERYONE. Even our own citizens are slaves to a debt dollar system. It is all we got left......well that and the A-bomb. But at the same time, it is our biggest weakness because if we can't get the world to expand dollar debt, 5 hen we will have to do it ourselves. Hence the, "China is not the largest holder of US bonds in the world, not even close. It's the US . In fact, China has already reduced part of its holdings in US bonds and yields fell ."

We are the largest holder of our own debt.....and can print up what we need to buy what is necessary to drive yields down. But at some point it will be like playing monopoly with yourself......a zero sum game. Anytime you weaponize something (the dollar), countermeasures will be invented to neutralize that weapon........only a matter of time.

schroedingersrat , 23 minutes ago link

Yeah like the US is any less totalitarian than China.

bshirley1968 , 18 minutes ago link

Indeed. Anyone pushing that narrative is part of the totalitarian regime or is dumb as a bag of hammers. Either way, they lose all credibility in my opinion.

Scipio Africanuz , 28 minutes ago link

Propaganda is also a tool of warfare, but in war, resilience wins, cheers...

Mustafa Kemal , 19 minutes ago link

"**** Communism"

**** Finance Capitalism

smacker , 12 minutes ago link

China went from communism to fascism in 20 years. It wasn't a big step. Do try to keep up ;-) 🙄

Mike Rotsch , 9 minutes ago link

They still seem to use the hammer and sickle though. . . the conniving sneeky bastards.

He–Mene Mox Mox , 31 minutes ago link

The author has never been to China to know anything about it, much less write about it, and he knows even less about the trade relationships of the two countries.

For instance, He says: " China has a trade deficit with most of its other partners".... WRONG!!!! It is the U.S. who has the deficits with other countries, not China! China has a manufacturing economy, not a consumer economy, so the trade balance is in its favor, as manufacturing economies are in demand and have very little deficit.

And the author also reveals his biases about China by saying: "China's Achilles heel has been to try to be a reserve currency whilst maintaining capital controls and increasing state intervention...." What do you think the U.S. Federal Reserve does, if it is not the very same thing? Weren't they the ones who sets interest rates, control the rates of inflation, dictating the supply of money, and doing economic bailouts to the banks in 2008 and 2009 with our money?

Secondly, he is just regurgitating the same old propaganda already put out about China, and really doesn't provide anything new. Why can't ZH find better writers to publish than this?

Marman , 20 minutes ago link

You are correct. China usually runs surpluses. But not with everyone.

In 2018, China posted a trade surplus of USD 351.76 billion, the lowest since 2013, as exports increased 9.9 percent, its strongest performance in seven years, while imports were up 15.8 percent. The biggest trade surpluses were recorded with Hong Kong, the US, the Netherlands, India, the UK, Vietnam, Singapore and Indonesia. China recorded trade deficits with Taiwan, South Korea, Australia, Germany, Brazil and South Africa.

https://tradingeconomics.com/china/balance-of-trade

Author is wrong here.

"China's Achilles heel has been to try to be a reserve currency whilst maintaining capital controls and increasing state intervention...."

This is impossible. One cannot institute strong capital controls and have a reserve currency at the same time. China knows this and has never tried to become the reserve currency.

francis scott falseflag , 36 minutes ago link

wait till Muricans have to pay Trumps Tariff Tax

monty42 , 35 minutes ago link

yeah, they said they'd work on "migration" into their country, and try to do something about those staged caravans..but what they didn't do is say they'd stop their citizens from invading the US like they have been doing for decades, and they didn't say they'd secure their side of the border between the US and Mexico. So, how is the border more secure exactly? Oh, and they didn't say they'd pay for a wall.

These same games go on, round and round, between both parties, with people twisting everything, including nothing burgers and actual defeats into some kind of bizarre "winning" ********, to avoid legitimate criticism of their idol in the White House. Trumpets and Obamabots are peas in a pod in more ways than they realize, but watch out, you'll get an eye jab if you walk between them, with all the fingers pointing.

DingleBarryObummer , 28 minutes ago link

Winning, like alcohol, is addictive. Sometimes you find yourself all out of booze, so you find yourself taking swigs of Aqua Velva. Lots of Aqua Velva heads around here.

Marman , 43 minutes ago link

Same old script: China bad. China steals. China need to shape up or else. USA good. USA too soft on China. USA will be great again when China surrenders to US slavery. Think that about sums up these articles.

medium giraffe , 26 minutes ago link

It's a battle between rich assholes who just want you to pay your taxes and stfu.

Duc888 , 18 minutes ago link

I agree. The "investor" class. And by that i do not mean all investors, just the non productive LEECHES at the top playing games with fake "financial instruments"

They are non producers. They are lampreys. Same as on the bottom. I have absolutely no problem with rich people. I am blessed to hang with many self made millionaires who are all about designing / manufacturing unique products sold all over the world. They produce wealth and a product, not by skimming.

medium giraffe , 5 minutes ago link

Lampreys is right.

We're so balls deep in debt la la land now that having a conversation about wealth creation via production feels a lot like making balloon animals while wearing a clown suit.

Duc888 , 2 minutes ago link

But.... it actually works. There will ALWAYS be a market for well engineered quality products . ALWAYS.

Don't chase that race to the bottom. That is what was sold to the Us Consooooooooooooooooooooooooooomer (**** I hate that name, I am not a consumer) for the last thirty year. They bought the ****, they own it. **** em, let 'em choke on the icrapple and other swarf.

Ha.

I am not balls deep in debt. My total life debt so far is $800. USA incorporated... THEY have debt. That is not my debt.

Deep Snorkeler , 45 minutes ago link

Much More Than a Trade War

  1. it signals the implosion of America's tinsel, derivative-based economy
  2. the high dive of the middle class into serfdom
  3. the permanent collapse of the real estate circus
  4. the end of family farms
  5. the attack of robot droids on jobs
Marman , 35 minutes ago link

Yes.

Politicians here in the US are desperate for me to believe it is all China's fault. Not the lying, stealing politicians and MBAs that have stolen my future but China. I am not buying it. Even if China has stolen America's wealth, who let them? Who helped and got rich? That's right, US politicians and MBAs.

rickv404 , 31 minutes ago link

Yes, we have Democrat and Republican pols at the federal level spending this country into decline by trillions, and financing it all with inflation, which is why we're paying higher prices for virtually everything now, than we've ever paid.

francis scott falseflag , 29 minutes ago link

You forgot 6.

The annual Thank You Big Brother Day parade

frankthecrank , 4 minutes ago link

you just make **** up. 93% of American farms that do more than $1,000,000.00/year in business are family owned . even higher percentage below that.

Mike Rotsch , 55 minutes ago link

The only reason why this is a trade war in the first place, is because we're attempting to undo the shitty deals signed by Bill Clinton. Let this be a lesson: Don't sign shitty deals. No matter how much they donate to your campaign.

sticky_pickles , 45 minutes ago link

Asking this of a politician is like asking a leech to stop living off blood.

HideTheWeenie , 38 minutes ago link

Everybody bitches about tariffs but domestic tariffs, in the form of legislative monopolies are ok ?

[Jun 09, 2019] Xinhua Headlines Long-arm jurisdiction exposes U.S. law-of-the-jungle mentality - Xinhua English.news.cn

Jun 09, 2019 | www.xinhuanet.com
by Xinhua writer Zhao Wencai

BEIJING, June 9 (Xinhua) -- For years, non-U.S. transnational firms, vying to carve a niche in the global market with cutting-edge technologies or products, often find themselves fronting an opponent far more powerful and brutal than any commercial rival they have ever contested with -- the U.S. government.

Many foreign entities, whose business may seem irrelevant to the United States, have been forced by Washington with threats of sanctions to comply with U.S. domestic laws and regulations.

"After so many years fancying itself as the champion of the Rule of Law, the U.S. seems to be making headway in forging a world under the rule of law," said Zhou Qing'an, an analyst of international relations at China's Tsinghua University. "Only it's the American law of the jungle."

WEAPONIZED JURISDICTIONAL SYSTEM

In recent years, the U.S. government has slapped sanctions on and posed threats to an increasing array of foreign entities under the pretext of infringements of its tailor-made rules and regulations concerning anticorruption, taxation, investment and arms exports, crafting a long-range weapon with its jurisdictional system, the very foundations undergirding a country's authority.

Citing Cuba as an example of the U.S. jurisdictional overreach, Mauricio Santoro, head of the Department of International Relations at the State University of Rio de Janeiro, said that for many times, the United States has enacted new laws and regulations to justify its punishments on foreign companies having commercial contacts with Cuba, a country that has long been taken as a thorn in the flesh by Washington.

In the latest round of sanctions against the Caribbean country, Washington activated Title III of the Helms-Burton Act, which put companies operating on properties confiscated by the Cuban government at risk of being sued in U.S. courts.

It's not just the entities from countries deemed by the United States as rivals or competitors that were exposed to the arbitrary abuse of Washington's jurisdictional power. Firms of its allied countries which refuse to yield to the U.S. supremacy can also find themselves under fire of such an overstretched jurisdictional "weapon."

In 2014, the U.S. Department of Justice fined Alstom, a French power and transportation conglomerate, 772 million U.S. dollars, alleging the French company has broken America's Foreign Corrupt Practices Act, which eventually led to the partial acquisition of Alstom by General Electric, its arch rival in the United States.

Last month, the U.S. Commerce Department put Huawei, a Chinese company that has taken the lead in 5G technology, and its affiliates on a blacklist that requires the federal government approval for any sale and transfer of U.S. technologies to the Chinese firm.

Up to now, the United States is still lobbying other countries to exclude Huawei from 5G networks construction over groundless accusations of spying.

"What is the most effective way to win a losing race? You change the rules and draw a foul on your competitors, rude but effective," Zhou explained with a metaphor. "That is exactly what the United States is doing to its competitors, even allies."

UNABASHED INTERNATIONAL DARWINIST

For decades, the United States has been touting itself as the flag-bearer of "freedom, equality, justice and humanity," but in recent words and deeds, the Washington government is exposing itself as an international Darwinist who sees the world as a jungle where the powerful preys on the vulnerable.

By overstretching its jurisdiction and applying unilateral sanctions, the United States is challenging the sovereignty of other countries, said Philippe Bonnecarrere, a French senator, denouncing the U.S. extraterritorial jurisdiction as power logic.

Echoing the senator's words, Swaran Singh, professor at School of International Studies in Jawaharlal Nehru University, noted that extending jurisdiction of U.S. domestic laws beyond its border "has no legal standing whatsoever."

"It's only its position of power in international system that has allowed the United States to arbitrarily impose its domestic laws abroad while rejecting several other universally recognized international laws and norms," said the professor.

However, it is also the "universally recognized international laws and norms," which the United States once paid, even sacrificed so much to build several decades ago and now is turning its back on, that helped the country build its advantages over other countries.

Thanks to economic globalization, large European firms all have capital from different countries, including the United States, and due to Washington's threat of sanctions, they have to comply with American rules, said Bonnecarrere.

Even though an international Darwinist's obsession with the jungle law can not be changed overnight, if the past is any prologue, "the obsession with power relations," as the French senator put it, "is mortifying."

BACKLASHES FROM ALL AROUND

In a world where multilateralism and win-win cooperation are still the mainstream of the times, an international Darwinist with zero-sum mentalities like the United States is bound to face backlashes from within and outside the country.

David S. Cohen, a former deputy director of the CIA and former undersecretary of U.S. Treasury Department, warned in an article published in April that the U.S. sanctions will not only weaken countries being punished, but "breed resentment and alienate would-be international partners."

"In the long run, it works against U.S. foreign policy interests and threatens the American economy," said the article.

As the world's biggest economy, the United States enjoys "an outsize role in business transactions around the world." The U.S. extraterrestrial jurisdiction, a typical prelude to economic sanctions, would certainly cast a bigger shadow over the whole world.

Managing Director of the International Monetary Fund (IMF) Christine Lagarde said earlier this week that the existing and potential tariff hikes resulted from the U.S.-initiated trade tensions with China could reduce global gross domestic product (GDP) by 0.5 percent in 2020.

Earlier this year, The Economist sounded a warning in an article for Washington. "Far from expressing geopolitical might, America's legal overreach would then end up diminishing American power," it said.

(Xinhua reporters Tang Ji and Ying Qiang in Paris, Hu Xiaoming in New Delhi, Zhou Xingzhu in Brasilia contributed to the story.)

[Jun 09, 2019] The looming 100-year US-China conflict by Martin Wolf

Highly recommended!
Notable quotes:
"... Across-the-board rivalry with China is becoming an organising principle of US economic, foreign and security policies. ..."
"... An effort to halt China's economic and technological rise is almost certain to fail. Worse, it will foment deep hostility in the Chinese people. In the long run, the demands of an increasingly prosperous and well-educated people for control over their lives might still win out. But that is far less likely if China's natural rise is threatened. ..."
"... The tragedy in what is now happening is that the administration is simultaneously launching a conflict between the two powers, attacking its allies and destroying the institutions of the postwar US-led order. ..."
Jun 04, 2019 | archive.fo
The disappearance of the Soviet Union left a big hole. The "war on terror" was an inadequate replacement. But China ticks all boxes. For the US, it can be the ideological, military and economic enemy many need. Here at last is a worthwhile opponent. That was the main conclusion I drew from this year's Bilderberg meetings.

Across-the-board rivalry with China is becoming an organising principle of US economic, foreign and security policies.

Whether it is Donald Trump's organizing principle is less important. The US president has the gut instincts of a nationalist and protectionist. Others provide both framework and details. The aim is US domination. The means is control over China, or separation from China.

Anybody who believes a rules-based multilateral order, our globalised economy, or even harmonious international relations, are likely to survive this conflict is deluded. The astonishing white paper on the trade conflict , published on Sunday by China, is proof. The -- to me, depressing -- fact is that on many points Chinese positions are right.

The US focus on bilateral imbalances is economically illiterate. The view that theft of intellectual property has caused huge damage to the US is questionable . The proposition that China has grossly violated its commitments under its 2001 accession agreement to the World Trade Organization is hugely exaggerated.

Martin Wolf chart on US/China

Accusing China of cheating is hypocritical when almost all trade policy actions taken by the Trump administration are in breach of WTO rules, a fact implicitly conceded by its determination to destroy the dispute settlement system .

The US negotiating position vis-à-vis China is that "might makes right". This is particularly true of insisting that the Chinese accept the US role as judge, jury and executioner of the agreement .

A dispute over the terms of market opening or protection of intellectual property might be settled with careful negotiation. Such a settlement might even help China, since it would lighten the heavy hand of the state and promote market-oriented reform.

But the issues are now too vexed for such a resolution. This is partly because of the bitter breakdown in negotiation. It is still more because the US debate is increasingly over whether integration with China's state-led economy is desirable. The fear over Huawei focuses on national security and technological autonomy.

[Neo]liberal commerce is increasingly seen as "trading with the enemy".

Martin Wolf chart on US/China

A framing of relations with China as one of zero-sum conflict is emerging. Recent remarks by Kiron Skinner, the US state department's policy planning director (a job once held by cold war strategist George Kennan) are revealing. Rivalry with Beijing, she suggested at a forum organised by New America , is "a fight with a really different civilisation and a different ideology, and the United States hasn't had that before".

She added that this would be "the first time that we will have a great power competitor that is not Caucasian". The war with Japan is forgotten.

But the big point is her framing of this as a civilizational and racial war and so as an insoluble conflict. This cannot be accidental. She is also still in her job. Others present the conflict as one over ideology and power.

Those emphasising the former point to President Xi Jinping's Marxist rhetoric and the reinforced role of the Communist party . Those emphasising the latter point to China's rising economic might. Both perspectives suggest perpetual conflict.

Martin Wolf chart on US/China

This is the most important geopolitical development of our era. Not least, it will increasingly force everybody else to take sides or fight hard for neutrality. But it is not only important. It is dangerous. It risks turning a manageable, albeit vexed, relationship into all-embracing conflict, for no good reason. China's ideology is not a threat to liberal democracy in the way the Soviet Union's was. Rightwing demagogues are far more dangerous.

An effort to halt China's economic and technological rise is almost certain to fail. Worse, it will foment deep hostility in the Chinese people. In the long run, the demands of an increasingly prosperous and well-educated people for control over their lives might still win out. But that is far less likely if China's natural rise is threatened.

Moreover, the rise of China is not an important cause of western malaise. That reflects far more the indifference and incompetence of domestic elites. What is seen as theft of intellectual property reflects, in large part, the inevitable attempt of a rising economy to master the technologies of the day. Above all, an attempt to preserve the domination of 4 per cent of humanity over the rest is illegitimate.

Martin Wolf chart on US/China

This certainly does not mean accepting everything China does or says. On the contrary, the best way for the west to deal with China is to insist on the abiding values of freedom, democracy, rules-based multilateralism and global co-operation. These ideas made many around the globe supporters of the US in the past.

They still captivate many Chinese people today. It is quite possible to uphold these ideas, indeed insist upon them far more strongly, while co-operating with a rising China where that is essential, as over protecting the natural environment, commerce and peace.

Martin Wolf chart on US/China

A blend of competition with co-operation is the right way forward. Such an approach to managing China's rise must include co-operating closely with like-minded allies and treating China with respect.

The tragedy in what is now happening is that the administration is simultaneously launching a conflict between the two powers, attacking its allies and destroying the institutions of the postwar US-led order.

Today's attack on China is the wrong war, fought in the wrong way, on the wrong terrain. Alas, this is where we now are.

[email protected]

[Jun 09, 2019] The unintended consequences of Trump's ban on Huawei are starting to appear

This is end of the classic neoliberal globalization and the start of isolation of the USA from China and forming an alternative, led by China trading block, unless the deal is reached. WTO rules were the door openers, which allowed Google and Facebook pollute millions of smartphones outside the USA. By rejecting them the USA start the process of self-isolation. Now local government who were afraid to act might want to get even and you can get a stronger backlash then anticipated.
The only factor here is that while the USA citizens are afraid of their own government snooping more then snooping by Chinese's government, the same is true to many foreign countries too. Citizens of those countries move to Gmail because they care less about the USA snooping then the snooping of their local government by the local webmail providers. This is a widespread illusion. They should use foreign based ISP for that.
Removal of Facebook is actually a big plus which increases attractiveness of Huawei phones. But truth be told the value of smartphone is exaggerated. Combination of a tablet and basic flip flop phone works even better. The same but to lesser extent is true with Google spying applications, especially Gmail. Only complete idiot uses Gmail as Web client, as Gmail is the central point of collection of data for both Google and the US government (actually all "Five eyes" goverments). It is like giving keys for you home or apartment to them. Not the Microsoft is much better. Using your own Internet Service Provider (ISO) is the best option in the current environment. It also allows more effectively to combat spam. Unless you want to be a bug under microscope -- no Google on you your phone is a good, sound policy
Notable quotes:
"... These actions add to the potential fallout for American companies to reckon with. US tech enterprises will lose out on sales to Huawei ..."
"... Restrictions could boomerang back on Google and Facebook, which count on their apps being widely installed around the world to collect data and sell advertising against. And then there's the potential for damaging retaliation by China, which could blacklist important US companies like Apple that do business there. ..."
"... And if the crackdown lasts (an important if -- some expect the Huawei restrictions to be lifted should a trade deal be reached) and the Chinese telecom comes out intact, it could emerge even stronger, having been forced to develop new technology in-house. If the American blacklist fails to strangle Huawei, it could come out stronger and more innovative than it was before. ..."
Jun 09, 2019 | qz.com

The US crackdown on Huawei was bound to have unintended consequences. Some of them are starting to come to the surface.

The Trump administration is looking to shut out the Chinese telecom company from selling its technology in the US, as well as banning American firms from selling products to the company. Now Google, which banned Huawei from updates of its ubiquitous Android operating system, is warning that the restriction could become a national security issue, according to the Financial Times (paywall). That's because Huawei, the world's No. 2 handset maker, will likely move quickly to develop its own parallel version of Android, which could have more software bugs and be more susceptible to hacking.

That's just one of many potential consequences as the US clampdown ripples through everything from semiconductor supplies to ambitions for self-driving cars. The American government blacklisted Huawei for long-simmering espionage concerns after trade talks between the world's two largest economies broke down. The Trump administration has since given companies a 90-day window to adjust to the new restrictions.

In the meantime, chipmakers including Qualcomm, Intel, and Xilinx are reportedly halting sales of technology (paywall) to Huawei. The embattled Chinese company has responded by stockpiling chips and components and ramping up its development of alternatives.

Facebook, which has more than 2 billion users around the world, will no longer allow its app to come preinstalled on Huawei phones, according to Reuters . Huawei phone buyers can still download the app from the Google Play store for now, but that option will go away if Google's relationship with the Chinese company is severed.

These actions add to the potential fallout for American companies to reckon with. US tech enterprises will lose out on sales to Huawei, and the ban could also slow the implementation of new technologies around the world. The rollout of self-driving cars, for instance, may get a boost from 5G gear, and Huawei appears to be the only supplier that can provide reliable 5G kit widely and at low cost. Restrictions could boomerang back on Google and Facebook, which count on their apps being widely installed around the world to collect data and sell advertising against. And then there's the potential for damaging retaliation by China, which could blacklist important US companies like Apple that do business there.

And if the crackdown lasts (an important if -- some expect the Huawei restrictions to be lifted should a trade deal be reached) and the Chinese telecom comes out intact, it could emerge even stronger, having been forced to develop new technology in-house. If the American blacklist fails to strangle Huawei, it could come out stronger and more innovative than it was before.

[Jun 09, 2019] The US and China on a collision course

Jun 03, 2019 | www.wsws.org

In a series of provocative actions, the United States is making clear it is prepared to fight a war to block Beijing's rise as an economic and geostrategic competitor.

The "cold war" between the United States and China took a major step toward becoming a "hot" war over the weekend at the annual Shangri-La defense summit in Singapore. The Financial Times, not known for hyperbole, wrote that "The growing dispute between the US and China on trade and technology is increasing the risk of military conflict or outright war."

At the summit, representatives of the Pacific nations that would be caught in the crossfire of such a conflict warned of the imminent possibility of a new Pacific war.

"Our greatest fear, therefore, is the possibility of sleepwalking into another international conflict like World War One," said Philippines Defense Minister Delfin Lorenzana. "With the untethering of our networks of economic interdependence comes growing risk of confrontation that could lead to war."

US officials used the summit to continue their efforts to encircle China militarily and strangle it economically, with acting US Defense Secretary Patrick Shanahan declaring China to be "the greatest long-term threat to the vital interests of states across this region."

Just days earlier, Vice President Mike Pence, addressing the graduating class at West Point, predicted war in the Pacific, in Europe and in the Americas within the graduates' lifetimes.

"It is a virtual certainty that you will fight on a battlefield for America at some point in your life Some of you will join the fight on the Korean Peninsula and in the Indo-Pacific, where North Korea continues to threaten the peace, and an increasingly militarized China challenges our presence in the region. Some of you will join the fight in Europe, where an aggressive Russia seeks to redraw international boundaries by force. And some of you may even be called upon to serve in this hemisphere.

"And when that day comes, I know you will move to the sound of the guns and do your duty, and you will fight, and you will win."

The United States' actions are extraordinarily reckless and provocative. Seeing a challenge to its dominance, it is seeking to use every tool at its disposal, including military force, to compel China's submission to its will. The United States is simultaneously escalating conflicts around the world -- including its regime change operation in Venezuela and its dispatch of additional troops to the Middle East to "counter" Iran -- to shore up its flagging global hegemony through military means.

Chinese Defense Secretary Wei Fenghe responded to the US threats with militarist bluster of his own, saying, "Should anybody risk crossing the bottom line, the [People's Liberation Army] will resolutely take action and defeat all enemies." He warned the United States against encouraging Taiwanese separatism, declaring, "If anyone dares to split Taiwan from China, the Chinese military has no choice but to fight at all costs."

The divisions between the United States and China are centered on the Chinese state initiative called "Made in China 2025." The plan envisions a substantial expansion of Chinese industry into high-value-added and high-technology manufacturing, areas traditionally dominated by the United States and its allies.

In recent decades, Chinese companies have made substantial developments in the high-technology sector, including robotics, mobile phones and IT infrastructure. This development was expressed most directly in the growth of Huawei, the Chinese mobile phone and telecommunications firm, which was on track to become the world's leading smartphone maker by the end of the year.

Last month, the United States moved to effectively destroy Huawei as a global competitor to Apple and Samsung by banning US companies from selling it software and components. Google locked the company out of the Android operating system and associated services, while Broadcom and Qualcomm announced they would no longer sell the company chips it needs to continue production.

The move enjoys broad bipartisan support beyond the Trump White House. There is an emerging consensus within the American ruling class that China must be prevented from becoming a global technological, and thus military, peer of the United States.

The growth of US-China tensions has overshadowed the 30th anniversary of the Tiananmen Square massacre. At the summit, Wei defended the bloody crackdown against the 1989 protests by workers and students, declaring the protests were "political turmoil that the central government needed to quell, which was the correct policy."

He continued, "Due to this, China has enjoyed stability, and if you visit China you can understand that part of history."

But three decades of "stability" -- the effective transformation of China into a gigantic sweatshop for American and world capitalism -- have come at a tremendous cost. China is not an imperialist country. It remains dependent on foreign corporate investment and finance. Now, it is once again in the crosshairs of a nuclear-armed United States determined to go to any lengths to secure its global hegemony.

In the immediate aftermath of the Tiananmen Square massacre, the International Committee of the Fourth International wrote, "The repression in China is being carried out in the direct interests of the imperialists. In attacking the Chinese workers, the bureaucracy is acting as their agent, seeking to restore 'labor discipline' and to repress the mass opposition of the working class to the policies of capitalist restoration and the rampant exploitation and social inequality which it has engendered."

While publicly condemning the massacre, the first Bush administration secretly made clear to the Chinese government that the event was an "internal affair" and affirmed the value of the Sino-American relationship "to the vital interests of both countries."

The ICFI statement continued, "Imperialism gloats over the broken bodies of the Chinese workers, seeking to exploit them for the purpose of crude anticommunist propaganda, while at the same time calculating that the brutal state repression will translate into higher rates of exploitation and even greater profits from the tens of billions of dollars worth of direct investment and joint ventures already operating on Chinese soil."

This is precisely what happened. Following Deng Xiaoping's Southern Tour of 1992, in which he encouraged Chinese entrepreneurs to "get rich," US investment in China ballooned, leading to a profit bonanza for American corporations, along with the fantastic enrichment of the upper echelons of the Chinese Communist Party, through the exploitation of the Chinese working class.

The arguments by leading Chinese figures that an accommodation and partnership with US imperialism would offer a peaceful road toward China's national development have proven to be a pipe dream.

If Chinese officials accept US demands, it will be a massive blow to the Chinese economy, causing mass unemployment and engendering protests and political turmoil. But to stand up to the United States means, sooner or later, to fight a war between nuclear powers, in which millions dead on both sides would be an optimistic scenario.

Thirty years after the Tiananmen Square massacre, all the arguments that the laws of imperialism identified by Lenin after the outbreak of World War I had been superseded by globalization and technological development have proven false. The capitalist system, riven by a new scramble for a re-division of the world, is hurtling toward a new world war.

The only thing standing between humanity and this catastrophe is the international working class. It is urgently necessary for the workers of China, the United States and the whole world to unify their struggles in a common fight against the capitalist system, which is the root cause of imperialist war. This means building sections of the International Committee of the Fourth International in China and all over the world as the vanguard of a working class movement against imperialist war.

Andre Damon

[Jun 09, 2019] US defense secretary issues military threat against China by Nick Beams

Jun 03, 2019 | www.wsws.org

The US trade war against China, which started just over a year ago, has now escalated to a full-scale economic confrontation backed by the military might of American imperialism.

The rapid acceleration of the US drive against China and its increasingly bellicose character was underscored in a major speech delivered by the acting US Defense Secretary Patrick Shanahan on the weekend.

Over the past month, the US has hiked tariffs on hundreds of billions of dollars worth of Chinese goods, threatened the imposition of new imposts on all Chinese imports and virtually black banned the telecoms giant Huawei from the supply of US-made components in an attempt to cripple its global operations.

Speaking at the annual Shangri-La Dialogue in Singapore, organised by the International Institute for Strategic Studies, which included participants from China, Shanahan delivered a 40-minute blast against Beijing in which he emphasised US readiness to use military power to secure its interests.

The speech coincided with the release of an Indo-Pacific Strategy Report by the US Defense Department accusing China of seeking "Indo-Pacific hegemony in the near-term and, ultimately global pre-eminence in the long-term."

The report called China a "revisionist" power that sought to undermine the international system from within, attempting to exploit its benefits while eroding the values and principles of the "rules-based order" -- the standard reference to US dominance.

While claiming that the US "does not seek conflict," Shanahan said "we know that having the capability to win wars is the best way to deter them." The US had already committed $125 billion for "operational readiness and sustainment" for the next financial year and is preparing to allocate an additional $104 billion for research and development of emerging technologies.

"This finding will boost the depth and capacity of our armed forces, and also help expand our training -- including with allies and partners -- to improve mission readiness critical to meeting this region's challenges" he said.

The read out of his remarks provided by the Defense Department said the Indo-Pacific was "our priority theatre." The US Pacific Command had four times more assigned forces than in any other area, with more than 370,000 service members devoted to the region.

The US had "more than 2000 aircraft, providing the ability to project power across the vast distances of this region" together with "more than 200 ships and submarines to ensure freedom of navigation."

The integrated character of the US offensive -- on the economic, diplomatic, political and military fronts -- was emphasised in remarks clearly directed against China.

"[Some] actors undermine the system by using indirect, incremental actions and rhetorical devices to exploit others economically and diplomatically, and coerce them militarily. They destabilise the region, seeking to reorder its vibrant and diverse communities towards their exclusive advantage."

This characterisation most closely fits the actions of the United States, extending over decades -- from the dropping of two atomic bombs on Japan in the dying days of World War Two, the launching of the Korean War in 1950 in which an estimated 2.5 million people lost and the Vietnam War in which killed more than three million.

US intervention has not been confined to military action. In the wake of the Asian financial crisis of 1997-98, the International Monetary Fund, at the direction of Washington, imposed an economic "restructuring" program across the region which plunged it into a crisis, equivalent in scope and depth to the Great Depression of the 1930s.

The enduring image of that intervention is the photograph of IMF managing director Michel Camdessus standing over seated Indonesian president Suharto as he signed a so-called IMF bailout program to impose what was known as the "Washington consensus."

Economic devastation resulted in Indonesia and across the region as "structural adjustment" was imposed. Indonesian real wages feel by 30 percent, the incidence of poverty doubled and more than 20 million workers were made jobless. Unemployment rates in South Korea and Malaysia tripled.

In the years since then, the IMF policies -- directed by the US Treasury Department -- have been branded as a "mistake." They were anything but. The economic firestorm was a consciously directed operation.

At that point the US feared its economic supremacy in the region was being threatened by Japan. When the crisis broke in July 1997, with the devaluation of the Thai baht, setting off currency devaluations and a financial crisis across Southeast Asia, Tokyo intervened with a proposal to set up a $100 billion Asian Monetary Fund in order to safeguard its economic interests in the region.

This was forcefully rejected at a September 1997 meeting of the IMF and G7 in Hong Kong. Faced with the prospect of a conflict with the US, Japan withdrew its proposal, opening the way for the imposition of Washington's "restructuring" demands, based on the breaking up of the economic and financial ties between the countries of the region and Japan.

However, the Asian crisis was to bring about a major economic shift in which China was to become the major global manufacturing centre. Following Deng Xiaoping's southern tour in 1992, foreign capital flowed into the country, secure in the knowledge that, as the Tiananmen Square Massacre of June 1989 and the far broader suppression of the working class in all the major industrial centres had demonstrated, the regime would act as the guarantor of its profit interests.

By the end of the 1990s, China had become integrated into the global circuit of capital and on that basis its entry into the World Trade Organisation (WTO) was backed by the Clinton administration. After China's admission into the WTO in 2001, the flow of global capital increased as the regime committed itself to further market opening.

The policy of the US was grounded on the premise that collaboration with China would be encouraged so long as it remained a producer and assembler of consumer goods, boosting the profits of US and other corporations that used it as a base for their manufacturing operations. A new term was coined to describe this collaboration "Chimerica."

However, the eruption of the global financial crisis in 2008, centred in the US financial system, marked another major turning point, with far-reaching consequences in China as more than 23 million workers lost their jobs. Fearful of an eruption in the working class, the Chinse regime undertook a massive stimulus program, spending more than $500 billion and opening up credit for the provision of vast infrastructure projects.

This policy, based on a rapid expansion of credit, could not continue indefinitely and under President Xi Jinping a new turn was initiated. In order to maintain economic growth and prevent a crisis that would call into question the legitimacy of the regime, a new policy had to be initiated.

This was the origin of the "Made in China 2025" plan in which China would move up the value chain, not only producing cheap consumer goods and relying on infrastructure spending but also moving into the development of high-tech manufacturing in areas such as telecommunications, health and pharmaceutical products and artificial intelligence.

This, however, is regarded by the US as an existential threat to its global economic and military dominance, which, as the latest strategic report by the Defense Department and the speech by Shanahan has underscored, it is determined to crush by all means necessary including war.

[Jun 08, 2019] US-China Trade War The New Long March

Notable quotes:
"... The short-term impact on China could be smaller than previously expected. Factories that sold only to the United States have developed new markets over the past year. Even if those factories stop exporting to the U.S., they will not go bankrupt immediately. It helps that the service sector is experiencing a labor shortage and could absorb some slack. For example, in China a delivery man sometimes makes more than an average office worker. ..."
"... Shipments to the United States and shipping prices have dropped since the new tariffs were announced. ..."
"... Researchers at the New York Fed have determined that the new round of tariffs on Chinese products will cost the typical American household an additional $831 per year. ..."
"... "China has been slaughtering USA" It is American corporations not China. ..."
"... “The Communist Party didn’t fight Japan,” said the sprightly 97-year-old, who once served as a translator with the storied Flying Tigers aviation brigade. “They made up a whole bunch of stories afterward, but it was all fabricated.” ..."
Jun 08, 2019 | www.zerohedge.com

... ... ...

...The main takeaway from our notes below: The Chinese are buckling up for a long ride.

The consequences of a protracted trade war are manifold. The economic impact includes a drag on economic growth, import price inflation which will allow U.S. domestic and other foreign policy makers to raise prices, and the knock-on effects to other trading partners as the shuffle begins to find new sources and markets for different products. Researchers at the New York Fed have determined that the new round of tariffs on Chinese products will cost the typical American household an additional $831 per year. Trade barriers between the world's economic superpowers will slow global growth and put political pressure on all affected governments, stoking increasing nationalism and protectionism overseas while increasing inflation and reducing living standards at home.

The investment implications of a protracted trade war are still playing out. We have seen how sensitive markets have been to the trade news, with a strong risk-off bias resulting from adverse developments in the fourth quarter. While volatility will continue, there is no indication that the Chinese will attempt to liquidate their large holdings of U.S. Treasury securities. To do so would only drive down the value of the dollar, which would run counter to Beijing's desire for a weaker yuan. There is also no imminent change to monetary policy from the Federal Reserve as a result of trade saber-rattling, but if the financial markets begin to spiral out of control because of tariffs, then we could see a repeat of 1998, when the Fed eased as a result of the Asian financial crisis. With neither side apparently willing to step back from the brink, investors should be discounting a higher probability for a drawn-out fight.

... ... ...

The conclusions are obvious. Unless the current trajectory is quickly changed, the Chinese are digging in for a long fight. The cost to the United States will be high; the cost to the Chinese will be higher. The only question is who will endure and be the most innovative in this battle of wills. As I have written before in "No One Wins a Trade War," the short-term costs are likely to outweigh the long-term benefits regardless of who "wins."

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Tachyon5321 , 13 minutes ago link

Several important point. They are:

1. Guggenheim Partners is based in Chicago and represent Obama's point of view

2. Apr 4, 2018 Scott Minerd predicted at 50% plunge in the stock market

3. Once again Scott predicting a 50% drop in the market in 2020

4. April 29, 2019 Scott predicted a rate hike by the Fed

The Long march is a propaganda piece hoping people will invest more in their bond mutual funds. Scott should spend a lot less time on TV and more time in the office.

The longer this trade war goes on the more and more unstable the Chinese economy will become. Because the current tariffs on China are small peanuts to the remaining $200+ billion which will shut down their electronics industry.

mervyn , 27 minutes ago link

Agreed with the second point, that they are finding new markets and shifting production line to new place. A new leather goods factory just opened in Cambodia, majority owner is a Chinese friend, rest is a Cambodian business group. His products are in every major markets, and third party label for our brand names. Business as usual for him, he can’t close his China shops because he lives there.

john.b , 8 minutes ago link

"China has been slaughtering USA" It is American corporations not China.

mervyn , 13 minutes ago link

You don’t get the point. We are printing worthless paper to exchange the actual products, such as computers, furniture and machines. We don’t “eat” money, we consume products. To an extent that we can maintain dominance is to innovate and turn into “affordable” products domestically and overseas.

Now all the foreigners including not white anglo saxon protestant waking up and will circumvent dollars/sterlings, that’s bad trend. Germany and Russian would be pleased.

OLD-Pipe , 57 minutes ago link

Umm.. If you want to gauge the effect of the Chino - Mericah Trade Tariff Circus, then it doesn't get real until Trump goes after the mid-point trans shipment points....all those mutually accessible ports of call that have equal access to both party's...Geeezzze, is everyone working for CNN, Clown News Network......Trump and Friends are just going to set up different ways to ship goods into and out of the Merikah.... it's that simple!!!!!

BIWEEE , 1 hour ago link

Most 'Muricans think in terms of seconds or minutes. The Chinks think in terms of decades.

LaugherNYC , 1 hour ago link

China - a great society??

https://www.nytimes.com/2019/06/07/world/asia/china-journalist-liu-wanyong.html

The LAST man brave enough to publish anything critical of Chicoms throws in the towel. Not worth the prison terms, the violence, the relentless state attacks on journalists and their families. Totalitarian cuks with their asshat trolls. Glad Trump will starve them out with tariffs. Be happy never to trade with China until their people throw out the commie murderous imperialists - let them do business with their like-minded asshat buddies in Moscow -

https://www.bbc.com/news/world-europe-48561980

Staged arrest with planted drugs, beaten upon arrest, protesters immediately arrested (even though they protested one at a time to avoid the law making group protests illegal - the mark of every totalitarian regime). THIS is your brave PUTIN. Cannot allow any TRUTH about his corrupt kleptostate, lest Russians finally have ENOUGH of the rape and thievery that pillages their national assets and resources for the oligarchs' gain, with their lips on Putin's sphincter as he gives them a reach around.

Tell me again how GREAT China and Russia are, and how the USA sucks. We don't arrest and kill our journalists. In fact, they are allowed to stage absurd, fact-free assaults on the ruling party without end.

I'll take freedom over tyranny every time.

Proud-Christian-White-American-Man , 1 hour ago link

Laugher NYC: Best post of the afternoon! This is the type of post that makes Zero Hedge comments worth reading.

Proud-Christian-White-American-Man , 1 hour ago link

"As I have written before in No One Wins a Trade War ,” the short-term costs are likely to outweigh the long-term benefits regardless of who “wins.""

Translation: The US should give up fighting the trade war and go back to losing the trade war. Americans don't want to withstand short term pain , so just give up and surrender to the Chinese communist government.

Reality Check: If the US stays the course then the following will happen:

New factories will open up to replace the Chinese suppliers.

More US workers will be employed with rising wages.

The US will reopen critical industries like rare earths making the US much more militarily secure.

Existential menaces like Fentanyl exported from China will be drastically reduced.

Sounds like a win to me.

B-Bond , 1 hour ago link

"New Long March" Cross Rubicon─Save/Lose. The CCP Didn’t Fight Imperial Japan; the KMT Did. While the KMT military defended China against Japan during WWII, the CCP built up strength for the civil war.

This was not by accident but by design. The CCP had a choice: it could have prioritized defending the country against Japan during the war, or it could have prioritized seizing control of China from those who did fight the Japanese. It chose the latter. Meanwhile, by choosing to actually try to defend China against Japan during the war, the Nationalists handed the country to the CCP afterwards.

Which is why Xi and the CCP’s decision to create a national observance day to honor its defense of China during the second Sino-Japanese War represents the height of hypocrisy. It’s one thing to try to suppress all information exposing the Party’s failings, which killed millions of Chinese, while demanding Japan take a correct view of history (which Tokyo should do). It’s another thing altogether to falsely claim credit for one of the defining moments of your country’s modern history. And it’s really something unprecedented to create a national holiday to honor your Party for doing something it consciously avoided; namely, putting China’s defense over the CCP itself. Classy.

https://thediplomat.com/2014/09/the-ccp-didnt-fight-imperial-japan-the-kmt-did/

✅ China gives little credit — and less help — to Kuomintang vets who fought in WWII

“The Communist Party didn’t fight Japan,” said the sprightly 97-year-old, who once served as a translator with the storied Flying Tigers aviation brigade. “They made up a whole bunch of stories afterward, but it was all fabricated.”

Most independent historians agree that it was the forces of the Kuomintang, led by Mao’s archrival, Chiang Kai-shek, that led the anti-Japanese struggle and suffered the vast majority of casualties.

Following the war’s end, the exhausted and divided Kuomintang were defeated by the communist s in a renewed civil war and fled to Taiwan, cementing Mao’s claim to having defeated imperialism, unified the country and overthrown the old feudal order.

“This joint victory over the external enemy and the internal one, including the landlord class, is a fundamental component of (the party’s) founding myth,” said Harvard University China scholar Anthony Saich.

https://www.japantimes.co.jp/news/2015/08/31/asia-pacific/china-gives-little-credit-and-less-help-to-kuomintang-vets-who-fought-in-wwii/#.XPh60IgzaDI

Proud-Christian-White-American-Man , 1 hour ago link

B-Bond: Interesting history background. The commies have always been the cowards waiting to pounce on an exhausted opponent. Same formula in Russia 1917. The Czar exhausted his soldiers in WWI which opened the door for Lenin to cowardly sneak in on a sealed train courtesy the German government. That treachery only got the Germans a very temporary victory in the Treaty of Brest Litovsk for a few months. Post war, the commies came close to overthrowing the new Weimar republic. That's what happens when you make deals with a Godless murderous cult based on hate and envy called communism.

Cheap Chinese Crap , 1 hour ago link

So, if I understand this correctly one globalist stooge contacted a bunch of other globalist stooges and asked them to confirm his pre-conceived talking points.

Big surprise, they were happy to do so. As usual, they blather about no winners in a trade war-- then launch into an explanation of how badly the US consumer will lose and how beneficial this will ultimately be to China. That sure sounds like an apportionment of trade war winners and losers if you ask me.

What emerges is a picture of cynical beneficiaries of the current global order trying to frighten the Americans into giving up by harping upon the costs, yet trying to assuage their national pride by suggesting that giving up will actually be scored as a draw, which is the best result they can ever hope for due to the fact that there are no winners and losers in a trade war.

Yet it is China who is comparing this event to the Long March -- not a time of glory but of acknowledgement of crushing defeat and gigantic sacrifice to set the table for a future triumph. They seem to understand that they could lose this war if they are not fanatically dedicated to victory. They sure as **** aren't telling their people that nobody wins a trade war. Wonder why this dichotomy exists?

Well, Scott Guggenheim can tell you. It's because HE LOSES if Trump wins. Him and his profitable Chinese pals. They'd all have to go out and find a new gig rather than keep sucking off their current comfy one.

Creative destruction starts with knocking **** down and it is high time and beyond that we knocked this **** down. Even if it puts Scott and his buddies on the unemployment line.

Proud-Christian-White-American-Man , 1 hour ago link

Cheap Chinese Crap:" So, if I understand this correctly one globalist stooge contacted a bunch of other globalist stooges and asked them to confirm his pre-conceived talking points." Good cogent analysis of Scott Guggenheim's real motivation. it's the old WIFFM mentality. What's In It For Me. If Scott is such a cheerleader for the Chinese, then it might be time for him to move to China and 'enjoy' his social credit score.

holmes , 1 hour ago link

I don't give a **** about who wins the "trade war". We are fighting for our national security against the Chinks. That I care about. MAGA

ExPat2018 , 35 minutes ago link

**** the USA and **** you. Bullies and warmongers always get their comeuppance. Its your turn, Americunt asswipe!!!

JibjeResearch , 20 minutes ago link

National security? .... You need to think harder .. How was 911? If you serious about national security... you should inspect DC more often!

libfrog88 , 2 hours ago link

It's not about who wins but about who looses. Chinese are used to hardship, not the Americans. Even if the pain is greater for Chinese, it will be political suicide in the USA for their administration to pursue this policy....

iSage , 2 hours ago link

A centrally planned, in huge debt, social credit focused country like China, will NOT survive the long term damage. They have one billion plebes to feed and keep happy. Think T Square.

JibjeResearch , 2 hours ago link

Are you talking about this debt at $22 Trillions? lolz

hoytmonger , 2 hours ago link

The business of China is business. The business of the US is war. China is better situated to endure a long fight. They've made themselves self sufficient, have ambitious economic plans with the Belt and Road initiative, and are sitting on a mountain of gold. The US depends on an economic hegemony that is dwindling and doesn't think long term. The US empire is in a managed decline

Cheap Chinese Crap , 2 hours ago link

Self sufficient in what? Oil? Raw Materials? Food?

hoytmonger , 2 hours ago link

The Chinese can manufacture anything. The US can't say that. Their agricultural technology is second to none and their energy sector is advancing by leaps and bounds. They are innovative, the US has lost it's innovative curiosity. Too many public education mouth breathers staring at their TVs and phones to be bothered with thinking. Just the way the state like it.

Chinese investment in Africa is solving their raw materials and energy issues, hence the Belt and Road initiative. People think that building roads and ghost cities in the African desert is a bad idea, but they know the desert is greening and are thinking long term. The US, on the other hand, sends troops.

LaugherNYC , 1 hour ago link

"Their agricultural technology is second to none..." Stop reading there.

China can not come close to feeding itself, and its agritech is decades behind the US. TFP ranking, growth..by any measure, China's ag sector, while it has improved, is far behind the US.

Population growth and the "growing middle class" has also reversed the growth in ag acreage, while fewer young Chinese are going in to farming. Even with the most optimistic growth projections from CHINA itself, it won't reach even 75% of its needs domestically by 2030, far less if growth continues to slow.

If China pisses off enough of the world, it will once again starve. That's one way to control population growth.

libfrog88 , 2 hours ago link

You really don't understand Chinese culture. Wishfull thinking does not become reality. Americans will revolt a lot faster than the Chinese will.

Ghost-of-Vince-Foster , 2 hours ago link

Why are all these Democrats and RINOs siding with China instead of Americas?

Simple. It's because like China -- Joe Biden, Sen. Mitch McConnell, Rep. Justin Amash, the U.S. Chamber of Commerce, etc., etc., they have all been bought off with Chinese money.

Kayman , 1 hour ago link

@Ghost

The dumb American Political Sellouts have been bought with U.S. dollars. Now how dumb is that, when the Thief that is buying your favor, plucks it out of your right pocket to hand you the loot.

Mustafa Kemal , 2 hours ago link

"n 20 years China has destroyed our manufacturing, and we are supposed to give in to this? "

The US is a victim? Lordy lordy, poor us.

Duc888 , 2 hours ago link

"Why are all these Democrats and RINOs siding with China instead of Americas?"

It's simple. They are not Nationalistic. They are complete Globalist sell outs . In their book, USA comes LAST. Anything that weakens mom and pop USA makes them stronger.

Cheap Chinese Crap , 1 hour ago link

That large scale competitive advantage is moving offshore from China as well. You are suggesting a rust belt world ultimately ruled by Vietnam.,

Dogspurt , 1 hour ago link

Destroyed? Didn't the USA kick itself where it hurts by outsourcing to places such as China? Well now those chickens are coming home to roost.

Cheap Chinese Crap , 1 hour ago link

Yes, and its high time we reversed this disastrous error, don't you agree?

blindfaith , 2 hours ago link

Scott Minerd, Global CIO of Guggenheim

Click bait investment firm with Chinese investments that are not going well, so he wants your support. This should be an add off the the side not a FEATURE Tylers.

mikee2481 , 2 hours ago link

This is a GOOD thing. We have lost our manufacturing to China (and Asia) to benefit Wall street and the globalist and the Rich. There is no solution except to have these tariffs. With our government taxes and structure there is no way we can have 1 or 2 dollar wages. It might take an adjustment, but we MUST stop this cheap stuff from coming in. Sad but True>

RealRussianBot99 , 2 hours ago link

WRONG. you have not LOST, you GAVE IT AWAY

Cheap Chinese Crap , 2 hours ago link

Okay, and now we're taking it back. It's all heading your way instead because you want to be junior partners in the Chinese Empire.

boostedhorse , 1 hour ago link

Good luck pinning your hopes on Trump for bringing jobs back lol. Why would you want those jobs back anyway, I thought you had a ton more job openings than needed?

HopefulJoe , 2 hours ago link

Please, this is not a trade war, this is a trade reset, it is needed to make MAGA. China is dependent on foreign trade to be successful. Well over 40% of their economy is dependent on exporting.

Trump knows the central bank economy is on a path to total destruction. He knows that soon we will have a global reset. Anything he can do to weaken China now will ensure they continue to be weak at the time of the reset. By diverting the USA supply chain away from China by bringing it back to the USA or getting new suppliers from other nations he is helping to ensure a better position for the USA at the time of the reset.

Yes, this is no trade war, it is a trade reset...people are being filled with propaganda like the wording "trade war" even though the truth is right there in front of them...it is a big puzzle, just need to find the pieces and they then fit like a glove (not OJ'S glove) and you have the real truth...

Bull Bear Nice Pair , 1 hour ago link

Only 18% of Chinese GDP is export. Of this, only 18% goes to the U.S. So less than 4% of Chinese GDP is export to the U.S. The fact that you could not set such records straight makes the rest of your post pointless.

blindfaith , 2 hours ago link

Researchers at the New York Fed have determined that the new round of tariffs on Chinese products will cost the typical American household an additional $831 per year.

Why is it these so called experts never say what doing nothing HAS cost the American household...like lost jobs?

Duc888 , 2 hours ago link

Correct, NOT doing this has cost Americans billions in lost earnings / revenue over the last 30 years. They certainly don't want to factor THAT wet mess into the equation.

[Jun 08, 2019] Washington's Huawei hypocrisy US government is instrument of American corporations

Jun 08, 2019 | www.rt.com

US Secretary of State Mike Pompeo doubled down on vilification of Сhinese telecoms giant Huawei as "an instrument of government" suggesting that the company was a national security threat by acting as an agent for Beijing. Like his boss, President Trump, and many others in Washington, Pompeo seems blind to an alternative glaring reality. The US government is the consummate instrument of American corporations. Its congenital service to corporate profit-making is the real national security risk to American citizens and a global security threat for all people of the world due to the wars that Washington unswervingly pursues on behalf of US corporate interests.

The irony could not be richer. President Trump has banned Huawei from US markets by executive order on the grounds that the company's smartphones could be spying devices for the Chinese government. This move by a nation whose government espionage agencies were exposed using every US telecom, tech and social media company as a conduit for their global harvesting of private citizens' data as well as that of foreign heads of state.

Also on rt.com 'Naked economic terrorism': China rails against trade war provocateurs & bullies

Moreover, the White House claim that Huawei is an instrument of Beijing state authorities is a risible form of guilt projection. The Trump administration's ban on Huawei is nothing more than US government abusing its state power to hamper a Chinese competitor from outperforming American tech corporations. Huawei's products are reputedly cheaper and smarter than US rivals. Some observers also point out that the Chinese technology is invulnerable to hacking by the American spy agency, the NSA, further adding to its consumer appeal. Outperformed on market principles, the US government takes a legalistic, propagandistic sledge hammer to smash Huawei from the marketplace in order to bestow an unfair advantage to inferior American corporations.

So, just who exactly is being an instrument for whom?

Governments in all nations of course use their legislative, fiscal and policy resources to try to build up key companies for their national economic development. It's standard practice throughout history and the world over. Governments can use subsidies and grants to boost companies, or tariffs to shield them from foreign competition.

Also on rt.com Huawei ban will harm over 1,200 American firms & billions of global consumers, company warns

The US, however, is a stellar example of how government intervenes strenuously at every stage in the market to benefit private corporations. Without massive injections of public money for grants, tax deductions, subsidies, and so on, American corporations would not have risen to the scale they have, as Michael Parenti documents in 'Democracy for the Few'. This relationship, of course, negates the myth of US " free market capitalism ." In reality, American corporations are publicly supported entities whose profits go to private shareholders. The overarching agent for this process of centrally-planned corporate capitalism is the American government.

From its earliest days as a European colony, it was the newfound federal authorities who rolled back frontiers with the native Americans through genocidal wars in order to benefit cattle and cereal companies, mining magnates, transport and telecoms, oil firms, and firearms manufacturers.

In its young years as an imperial power, it was Washington that organized and dispatched federal troops to wage wars in the Caribbean and Latin America – all for the sole benefit of Wall Street and the expanding agro-industry. Retired Marine Major General Smedley Butler, in his 1930s book 'War is a Racket', described the American military as a henchman for US corporate profits. But without the government acting as recruiter, financier and commander-in-chief, the US Army could not function as a henchman for the corporations.

Let's take a few specific examples in history to illustrate the instrumental role of the US government in advancing or defending corporate interests. In 1953, President Eisenhower authorized the coup in Iran organized by the CIA and Britain's MI6. A main objective of that intervention was to seize Iranian oil. Five US corporations subsequently exploited the Iranian feast, until the revolution in 1979 kicked them out along with the American puppet dictator, Shah Mohammad Reza Pahlavi. It's a fair bet that current military threats from the Trump administration against Iran are prompted by a strategic desire to reclaim American corporate interests.

Also on rt.com US-China trade war could cost global economy $600 billion

In 1954, Guatemala's elected leader Jacobo Arbenz set out to nationalize underused agricultural land to benefit the rural poor. His land reforms involved expropriating properties belonging to the American-owned United Fruit Company, as William Blum details in 'Killing Hope.' Acting on United's interests, Washington intervened with a CIA-backed coup against Arbenz, which subsequently led to decades of mass murder of indigenous Guatemalans under US-backed military dictatorships.

Following the Cuban revolution in 1959, one of the main protagonists for US military invasion of the island and for covert sabotage operations was the American soft drinks industry, headed up by Coca-Cola and Pepsi. They feared the nationalization of sugar plantations by the Castro government would hit their profits.

There are also suggestions that President John F Kennedy may have been assassinated by powerful US state forces, working in cahoots with American corporate interests, because he didn't adopt a sufficiently aggressive policy towards Cuba after the Bay of Pigs fiasco in 1961. Related to JFK's assassination was his reluctance to go to war in Vietnam in the early 1960s, which big oil companies and weapons manufacturers were all avidly pushing. His successor, the Texan Senator Lyndon Baines Johnson, who was close to both industries, duly obliged by paving the way for all-out war in Indochina after 1964. Up to two million Vietnamese were killed, as were some 58,000 US troops. Millions more maimed. The corporations made huge profits from the decade-long slaughter. But the US economy began a long descent that continues today from incurring fiscal debts over Vietnam, which prompted Washington to abandon the gold standard, and heralded the age of funny money with the dollar acting as an overrated international reserve currency.

Many more examples could be cited to illustrate how US government – both the White House and Congress – are agents for corporate profits, often to the horrendous detriment of international peace and the common good of ordinary Americans.

Read more  Trump's backing of Saudi war in Yemen is 'business decision' © Reuters / Naif Rahma Trump's backing of Saudi war in Yemen is 'business decision'

The 2003 war on Iraq – killing over one million civilians and maiming tens of thousands of Americans – was widely seen as a pretext for grabbing Iraqi oil for US corporations like Halliburton, for whom then vice president Dick Cheney was previously an executive board member.

The present warmongering towards Venezuela by Washington is openly touted by White House National Security Advisor John Bolton as being about US corporate lust for the country's oil reserves – which are reckoned to be the biggest on the planet.

Out of the top 12 corporate financial donors to politicians in Washington, three of them are weapons companies: Boeing, Lockheed Martin, and Northrop Grumman; a fourth is oil titan Exxon-Mobil. There is an obvious correlation between corporate bidding and foreign policies embarked on by US governments which leads to conflict and wars, which in turn repays these corporations with soaring profits.

The American government is the best instrument that corporate money can buy.

Thus, when Trump, Pompeo and other Washington political (and media) prostitutes pontificate and rail against Huawei, just remember: these talking heads are bought and paid for – lock, stock and barrel.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

[Jun 06, 2019] What A Technology 'Cold War' Could Look Like

Technoimperialism is effective, but what it Huawei can switch to some derivative CPU and chipsets?
Notable quotes:
"... Authored by Fan Yu via The Epoch Times, ..."
"... A wide-ranging ban similar to the one imposed on Huawei and its affiliates would effectively bar other foreign companies whose products contain at least 25 percent U.S.-sourced technology from supplying the Chinese. ..."
"... What does this mean in practice? More companies may begin to adopt localized R&D and manufacturing practices. Instead of Chinese factories supplying the world when labor costs were low, localized operations to directly supply the China market may be set up. ..."
"... Around 33.2 percent of American companies operating in China are delaying or cancelling investments in China altogether, according to the most recent American Chamber of Commerce in China survey released on May 22. If the tariffs are more permanent in nature, U.S. companies will likely move production outside of China, which is increasingly seen as a prudent choice given rising political instability within China and growing labor costs. ..."
"... If Bibi ask Chump to drop the tariffs on China for the security of Israel, What do you think will be Chump's answer? ..."
Jun 06, 2019 | www.zerohedge.com
Authored by Fan Yu via The Epoch Times,

During the Cold War , around half of the world ran on the technologies, machinery, and political ideologies developed by the Soviet Union. The other half - the free world - adopted those of the United States and its allies.

As trade war tensions between the United States and China escalate, could we be on the cusp of a new version of the cold war, one which is driven by technology and finance?

Since U.S. President Donald Trump has deemed Chinese telecommunications giant Huawei Technologies as a national security threat and barred it from purchasing key U.S. equipment, Beijing has engaged in an escalating tit-for-tat that could have lasting ramifications on the technology industry going forward.

And Huawei may just be the beginning. Several other Chinese companies are being considered to join the blacklist with Huawei.

If a technology cold war does come to pass, it would significantly alter the existing technology landscape, dismantle global supply chains, and cleave off the global trade network that has underpinned China's rise as a global economic power .

Decoupling of the Global Supply Chain

Global consumers are used to seeing this familiar description donning Apple products' packaging for years: "Designed by Apple in California. Assembled in China."

That's the model followed by most technology companies during the past few decades. American companies develop new technologies and products in the United States, which are assembled by comparatively cheap labor in China, and then shipped for sale globally.

Going forward, purchase orders would likely need to be rerouted.

A wide-ranging ban similar to the one imposed on Huawei and its affiliates would effectively bar other foreign companies whose products contain at least 25 percent U.S.-sourced technology from supplying the Chinese.

What does this mean in practice? More companies may begin to adopt localized R&D and manufacturing practices. Instead of Chinese factories supplying the world when labor costs were low, localized operations to directly supply the China market may be set up.

Around 33.2 percent of American companies operating in China are delaying or cancelling investments in China altogether, according to the most recent American Chamber of Commerce in China survey released on May 22. If the tariffs are more permanent in nature, U.S. companies will likely move production outside of China, which is increasingly seen as a prudent choice given rising political instability within China and growing labor costs.

Another 35.5 percent of respondents are adopting an "In China, for China" approach to mitigate the impact of tariffs , according to the AmCham survey. That refers to manufacturing products to be sold in China, within China. That strategy may be broadened in a full-on technology cold war, as research and innovation may also need to be localized and companies may need to erect internal information barriers.

Losers, Big and Small

Chinese companies will be the main losers -- there are no existing domestic replacements for many U.S.-sourced components. For example, Huawei's chip-making arm HiSilicon currently derives its Kirin chip architecture on license from UK-based semiconductor firm ARM Holdings. But in May, ARM notified Huawei that it would stop licensing its chip designs to HiSilicon due to having certain U.S.-sourced origins.

Huawei also lost access to Google's Android software platform, which is the main operating system running on all Huawei smartphones. As of the end of May, the U.S. Commerce Department gave Huawei a temporary, 90-day license to provide security patches to existing phones.

In addition, Huawei has been suspended from the Wi-Fi Alliance, an industry standard-setting body for technology protocols.

These events don't just hobble Huawei -- they effectively ground its ambitions to a halt. Without access to these technologies, there's simply no way for Huawei to reach its goal of overtaking Samsung as the world's No. 1 smartphone supplier. And on the networking front, Japan's SoftBank became the latest potential customer to reject Huawei for 5G networking equipment, announcing on May 31 that it would be turning to European telecom giants Nokia and Ericsson instead.

Should similar bans extend to other Chinese companies -- many of which have far smaller operational support and balance sheets than Huawei -- many of them could cease operations altogether.

Sign in to comment filter_list Viewing Options arrow_drop_down

holyvanguard , 46 minutes ago link

The article writer seems to be pro trade war. I am no expert but I feel this article is not seeing a bigger picture.

black rifles are cool , 32 minutes ago link

Epoch Times is a Falun Gong newspaper: https://en.wikipedia.org/wiki/The_Epoch_Times That's likely why it sounds pro trade war.

MarkD , 1 hour ago link

China's empire is growing and the US empire s shrinking. Unfortunately many can't grasp that and will deny it till the end instead of accepting it and working with the next world power. All empires come to an end.

Our economy is a consumer based economy not a manufacturing based economy like it once was. Can we return to a manufacturing based economy? Not sure if Americans are ready to push their kids into getting a job at the factory making boots, footballs, washing machines...... instead of swaying them into going to college. Don't forget, someone has to work in the factories if we are going to make stuff.

Winston Churchill , 42 minutes ago link

Twenty years lead time on them as well, if you reformed public education tomorrow.

youshallnotkill , 29 minutes ago link

If you study high wage manufacturing driven economies like Germany, you will notice that the productivity of their workers is sky high (as it has to be in order to remain competitive). The plants are highly automated. Workers are very well trained and have expert skills in keeping the production line running at peek pace and quality.

Frankly, I just don't think American workers have what it takes to adopt that kind of model.

Nunny , 24 minutes ago link

Not with the education system we have now....the Fed has killed off the industrial trades, and everyone thinks they will can spend $100,000 a year for an education to sit behind a desk and play solitaire......or become a politician.

Nunny , 27 minutes ago link

Someone has to fix the machines and get their hands dirty. Not all our kids are IT 'coders'. Now we want the gooberment to give them 'free' college for a 'diversity degree' and they graduate with NO SKILLS and no knowledge. So we drug up our youth with drugs imported by China and open the flood doors for worker bees. Sounds like a plan.

frankthecrank , 1 hour ago link

The free world flourished during the cold war. it was great for the West. Technology advanced by leaps and bounds and the middle class grew. Nothing bad about this at all.

youshallnotkill , 28 minutes ago link

We were competing with a command and control economy. Contemporary China is much more dynamic and market oriented.

Bull Bear Nice Pair , 1 hour ago link

So you believe Epoch Times, a Falun Gong publication? What's missing in the article is the most obvious: the trade war will force China to climb the value chain a lot quicker. The most like scenario is that China will become a high-tech manufacturing powerhouse before much, if anything, is moved back to U.S.

DCFusor , 1 hour ago link

What would make any sane person believe that stopping the ARM license would stop them being made in China? Has that ever worked for anything else, ever?

frankthecrank , 1 hour ago link

their tech will fall behind as the US advances. Same thing happened with the Soviet Union once they ran out of Germans and US tech. By '91, they were woefully behind the West--like 35 years.

Winston Churchill , 58 minutes ago link

There was never anything wrong with Research in the USSR, Development was their problem, now as Russia again they remain at the leading edge of Research, and seem to have finally gotten a handle on Development. They have never been behind in Research, any serious scientist in the West can and will read Russian just to keep up.

Its been that way all my life, the US seems to have forgotten it though, because they believe they're exceptional and only they can do research.Hubris will kill you.

The Russians are pulling way ahead because of that Ubermensch stupidity, laughing the whole time at it. That smirk of Putins, its there for a reason.

Shemp 4 Victory , 33 minutes ago link

What would make any sane person believe that stopping the ARM license would stop them being made in China?

No kidding. For instance, take this statement:

Chinese companies will be the main losers -- there are no existing domestic replacements for many U.S.-sourced components.

Propaganda via lies of omission. This could easily be turned around to say:

American companies will be the main losers -- there are no existing domestic replacements for many Chinese-manufactured "U.S.-sourced" components.

But hey, the Epoch Times is a propaganda mill for the Falun Gong cult which the Chinese government banned 20 years ago, so it's kind of the anti-China equivalent of The Gatestoned Institution .

https://www.zerohedge.com/news/2019-05-13/fighting-communism-yen-shun-evil-cult-or-meditation-group

besnook , 1 hour ago link

the chinese domestic market is the new big dog on the block. it is big enough to dictate what the rest of the world will use. the hubris of the usa is arrogance squared. the consequences are potentially damning to usa tech. this is the dumbest move in business and geopolitical history.

Normal , 1 hour ago link

Western central bankers are not Chinese, but China can now proceed without the West. I think we have a problem.

oneno , 1 hour ago link

The West is in for a big surprise. China has technologically advanced neighbors (Russia, India) and a host of countries who want to do business who are also technologically advanced. The Silk Road is well advanced to supplant trade with North America. Germany is already in place in Russia and China and will not lose sleep with the loss of North America. It is the US that has the most to lose.

Winston Churchill , 1 hour ago link

They cannot see past their own jingo. The Chinese just thanked Trump at the Moscow summit, for forcing them to do what inertia stopped them doing years ago. Seems like its already backfiring, and now full dedollarization is now the official agenda. Yuan futures in most everything, convertible to gold, were just announced at one press conference. The ruble looks around -95% undervalued right now.

frankthecrank , 1 hour ago link

umm--you do know that it wasn't so long ago that Russia defaulted on all of its loans, right? and that no one with a brain is going back into that market again, right?

Nunny , 1 hour ago link

No worries, the PTB in our fed government (both sides) and the globalists want cheap labor from the illiterates that are allowed to flood our country and Europe. We will look much like the cheap labor in China. I find it funny that 'open border' morons like the D's demand $15/hour min wage laws for flipping a hamburger. They are nuts. Can't have it both ways.

The central planners , 1 hour ago link

To the chumptards: If Bibi ask Chump to drop the tariffs on China for the security of Israel, What do you think will be Chump's answer?

Winston Churchill , 1 hour ago link

No they didn't, they were disconnected from Gargoyle Play.Android is open source and HW played a big part in its development. Maybe more than Gargoyle.. This kind of disinformation discredits the whole article, the author is a no nothing hack, probably Mosley moonlighting from his janitors job.

Nunny , 2 hours ago link

My small anecdotal experience was back in 2008 when I worked for a US Company who made large components for nuclear projects. Like AP1000. Within a year of my working there, we were hosting the chinese and actually sending our engineers and quality people to live in China for 6 months at a time to TEACH THEM HOW TO MAKE THE PRODUCT. The quality people came back disgusted because they didn't care about 'tolerances'. I have since left there, but it was eye opening how US companies willingly sell our technology to them.

In the meantime, the corp bosses built a huge addition onto our building with luxurious soundproof walls/doors/windows to move in. Big bucks stuff. No expense spared.

nmewn , 1 hour ago link

Not really, the Chi-Com government OWNERSHIP of businesses is dramatic.

When a chinese government entity (think strawman, shell company, a "holding company") answerable and subservient to the state party apparatus owns the majority of any company's stock and/or gives it direction from on high, it cannot be said to be "a private company". At least not by any kind of western standard of the meaning of the word "private".

They're trying to fake people out (and succeeding to some degree) as the western mind may misinterpret it as merely being crony-socialism but in fact it's communist via the shell corps.

quesnay , 1 hour ago link

What you describe sounds like fascism i.e. capitalism is allowed, private companies are allowed but are directly answerable to government.

Anyways you look at it, China has a strong capitalist element. They have private property now. They have billionaires as a result of these companies FFS. They have a stock market . They have realestate developers. That's no longer 'communism'.

nmewn , 51 minutes ago link

The largest corporations are government owned and a "private company" is not given direction by any government entity in what to supply or in what quantities to supply to "the market", there are no government mandated quotas.

And you are confused (or being evasive) about what socialism and capitalism are, fascism & communism are both Marxist.

With capitalism, the market decides all, from pricing to profits to wages and companies rise & fall on what is sold into that market ...thats why rickshaws never caught on here because people didn't have to eat their horses for meat and we eventually produced affordable cars for transport...lol.

Need I remind you that the CCP means the Chinese Communist Party?

Perhaps they need some better capitalist marketers to "rebrand" their, ahem, operation ;-)

ted41776 , 2 hours ago link

this statement would be true 10 years ago. today there are no secrets or intellectual property left to steal

The central planners , 2 hours ago link

You complain more about China stealing manufacturing secrets than the manufacturers himself.

[Jun 02, 2019] Trump clearly undermines neoliberalism rules of the game, fastening its demise

Notable quotes:
"... China assembled an "unreliable entities list" for retaliation against foreign companies, individuals and organizations that "do not follow market rules, violate the spirit of contracts, blockade and stop supplying Chinese companies for noncommercial reasons, and seriously damage the legitimate rights and interests of Chinese companies." ..."
"... And out of nowhere, Trump warned Mexico to stop the immigrant flow in 10-days or face tariffs. Global CEOs who were rushing to rearchitect their China supply chains, digested the risk that these investments could be instantly devastated by some future tariff - imposed to achieve Americas geopolitical objectives - and they prepared to warn shareholders they're putting new investment on hold. As the US treasury yield curve inverted, with 3mth bills at 2.34% and 10yrs at 2.12%. Which of course, is one of the most reliable warnings of looming recession. ..."
"... "Tariffs are being used as a proactive, combative tool. The GDP hit will be at least double. Modelling these tariffs require more complex frameworks." ..."
"... " Global trade was already in the process of fracturing ," added the strategist. "Now Huawei can't use Google's operating system." Their phones are as good as paperweights. "But do you really want to bet that Huawei can't spend the next 6mths building a competing operating system?" We're entering a world of competing superpowers. " The overall impact will be to operate economies with redundant technologies, fewer efficiencies, lower ROEs, lower ROAs. And ironically, or perhaps by design, it'll be bad for profits, but okay for labor ." ..."
Jun 02, 2019 | www.zerohedge.com

China Used This Exact Phrase Ahead Of Their War With India And Vietnam -

Submitted by Eric Peters, CIO of One River Asset Management

"Don't say we didn't warn you!" declared the China People's Daily. And historians rushed to remind us that Beijing used the phrase in advance of their 1962 border war with India and 1979 war with Vietnam.

China assembled an "unreliable entities list" for retaliation against foreign companies, individuals and organizations that "do not follow market rules, violate the spirit of contracts, blockade and stop supplying Chinese companies for noncommercial reasons, and seriously damage the legitimate rights and interests of Chinese companies."

Pence responded by warning Beijing we could double tariffs. "Engaging in activities that run afoul of US sanctions can result in severe consequences, including a loss of access to the US financial system," warned the US Treasury's undersecretary for terrorism – you see, the Europeans are building systems to circumvent American sanctions. Today, those sanctions are directed at Iran, Russia, North Korea, Venezuela, but tomorrow they may be directed at China.

Naturally, the Europeans threatened only themselves - 1,500-year habits are hard to break. Germany and France fought bitterly over who would become European Commission President. Brussels warned Rome to honor its obligation to contain its growing debt. Italy's Salvini threatened to launch a parallel currency – step #1 in the process to abandon the euro and default.

And out of nowhere, Trump warned Mexico to stop the immigrant flow in 10-days or face tariffs. Global CEOs who were rushing to rearchitect their China supply chains, digested the risk that these investments could be instantly devastated by some future tariff - imposed to achieve Americas geopolitical objectives - and they prepared to warn shareholders they're putting new investment on hold. As the US treasury yield curve inverted, with 3mth bills at 2.34% and 10yrs at 2.12%. Which of course, is one of the most reliable warnings of looming recession.

Framework

"Economists generally use tax frameworks to evaluate the trade war," said my favorite strategist. "They calculate a -0.4% hit to GDP, which is not such a big deal. But they're using the wrong tool." Tax frameworks treat tariffs as a tax. They then model how a nation's currency adjusts to the tax, how corporate profit margins shrink to absorb the tax, and how consumers shoulder the remaining burden. "Tariffs are being used as a proactive, combative tool. The GDP hit will be at least double. Modelling these tariffs require more complex frameworks."

"If all of the affected nations simply agreed to adopt new tax regimes, then the tax framework would work fine," continued my favorite strategist. "But the world has built specialized supply chains. So if Nation A tries to hurt Nation B, and Nation B is part of critical supply chains that impact Nation A, then there are many things B can do to harm A in non-linear ways." Banning rare earth metal exports is a small example. "Once Apple locks down their product production for Nov 2019 release, China knows exactly how to push that past Feb 2020."

" Global trade was already in the process of fracturing ," added the strategist. "Now Huawei can't use Google's operating system." Their phones are as good as paperweights. "But do you really want to bet that Huawei can't spend the next 6mths building a competing operating system?" We're entering a world of competing superpowers. " The overall impact will be to operate economies with redundant technologies, fewer efficiencies, lower ROEs, lower ROAs. And ironically, or perhaps by design, it'll be bad for profits, but okay for labor ."

[Jun 02, 2019] Trade War Has Not Made America Great Again-- China Lashes Out At US Which Is -Solely To Blame- -

Notable quotes:
"... "It is foreseeable that the latest U.S. tariff hikes on China, far from resolving issues, will only make things worse for all sides," according to the white paper, which also listed details of what it described as U.S. backtracking. ..."
"... As Vice Commerce Minister Wang Shouwen, who led the working-level team in the negotiations, said China is willing to work with the US to find solutions, but the latter's strategy of maximum pressure and escalation can't force concessions from China: "When you give the U.S. an inch, it takes a yard", he said. ..."
Jun 02, 2019 | www.zerohedge.com

And, as of this weekend, we now appear to be in the "despondent acceptance" phase (unlike the Kubler-Ross model, acceptance precedes anger and nuclear war), because as Xinhua reported overnight, China is now laying the blame squarely on the US for the breakdown of trade talks between the world's two biggest economies, but hinted at its willingness to resume stalled negotiations with Washington while rejecting any attempt to force concessions from Beijing.

In a white paper on China's official position on the trade talks released by the State Council Information Office on Sunday, Beijing made it clear the US government "should bear the sole and entire responsibility" for the current stalemate, and hit back at allegations that Beijing had backtracked from its earlier promises.

The trade war has not " made America great again," the white paper said, but has done serious harm to the U.S. economy by increasing production costs, causing higher prices hikes, damaging growth and people's livelihoods, as well as creating barriers to U.S. exports to China.

"It is foreseeable that the latest U.S. tariff hikes on China, far from resolving issues, will only make things worse for all sides," according to the white paper, which also listed details of what it described as U.S. backtracking.

"The Chinese government rejects the idea that threats of a trade war and continuous tariff hikes can ever help resolve trade and economic issues," according to the white paper. "Guided by a spirit of mutual respect, equality and mutual benefit, the two countries should push forward consultations based on good faith and credibility in a bid to address issues, narrow differences, expand common interests, and jointly safeguard global economic stability and development," it said, according to Bloomberg .

As Vice Commerce Minister Wang Shouwen, who led the working-level team in the negotiations, said China is willing to work with the US to find solutions, but the latter's strategy of maximum pressure and escalation can't force concessions from China: "When you give the U.S. an inch, it takes a yard", he said.

Meanwhile, when asked about US firms’ complaints that customs clearance was taking longer since the start of the trade war, he advised companies to contact the relevant authorities. “If certain firms are faced with specific issues, they can talk to local commerce departments,” he said.

On the increasingly touchy matter of exports of rare earth minerals, Wang repeated Beijing’s comments of the past week. “With the world’s richest rare earth resources we are willing to satisfy the normal needs of other countries,” he said. “But it’s unacceptable if other countries use rare earths imported from China to suppress China’s development.”

But in what could be the worst news for bulls who are clutching at any straw now to indicate an improvement in diplomatic relations, when asked about the possibility of a summit between Xi and Trump on the sidelines of the Group of 20 summit in Osaka, Japan later this month – as suggested by the American president in May – Wang said he had no information on the matter, according to the SCMP.

Shi Yinhong, an adviser to China’s State Council and a specialist in US affairs at Renmin University in Beijing, said that despite the pressure from the US, Beijing had shown restraint in its efforts to fight back... which it has indeed, suggesting that Trump's read of the calculus - one according to which China has more to lose than gain from taking trade war to the next level - is the correct one.

“In the areas of trade and technology, China has less leverage than the US, but it has kept its retaliatory measures within these areas,” he said. “If it extended its efforts to areas like North Korea and Iran, it could do much greater damage to Trump.”

The punchline: when addressing the chances of the two sides achieving a breakthrough in their trade negotiations by the time of the G20 summit, Shi said: “The difference is too wide and would be impossible for them to bridge in a month.”

The full White Paper can be found here.

[Jun 02, 2019] Pompeo Again Threatens Germany- Drop Huawei Or Intelligence Sharing Blocked -

Notable quotes:
"... Meanwhile on Thursday a Chinese Foreign Ministry spokesman responded to the White House position at a moment Pompeo keeps up the pressure campaign on European allies, saying, the US has not offered proof that Huawei's products present a security risk. ..."
"... "We hope that the United States can stop these mistaken actions which are not at all commensurate with their status and position as a big country," said spokesman Geng Shuang, according to Reuters. ..."
"... And Huawei, for its part, is reportedly taking steps to block its employees from taking part in technical meetings with American contacts, which has even included sending home American employees that were based at its Chinese headquarters in Shenzen. ..."
Jun 02, 2019 | www.zerohedge.com

Pompeo Again Threatens Germany: Drop Huawei Or Intelligence Sharing Blocked

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by Tyler Durden Sun, 06/02/2019 - 07:35 5 SHARES Twitter Facebook Reddit Email Print

Secretary of State Mike Pompeo has again put Germany and the rest of Europe on notice regarding China's controversial telecom giant Huawei, warning they could be cut off from crucial US intelligence sharing over Huawei's 5G networks now being built.

Pompeo issued the ultimatum following a meeting with German Foreign Minister Heiko Maas on Friday, saying the decision on whether to allow Huawei equipment would have severe consequences, according to Reuters . His words came at the start of a five-day European tour: "They [Germany] will take their own sovereign decisions, [but we] will speak to them openly about the risks ... and in the case of Huawei the concern is it is not possible to mitigate those anywhere inside of a 5G network ," Pompeo said .

U.S. Secretary of State Mike Pompeo with German Foreign Minister Heiko Maas. File photo via RFERL

Germany, alongside the UK and France, has refused to budge amidst the ratcheting pressure from the US over worries that China's intelligence is using its next generation networks as "back door" for aggressive telecommunications eavesdropping.

Pompeo told the news conference further: "(There is) a risk we will have to change our behavior in light of the fact that we can't permit data on private citizens or data on national security to go across networks that we don't have confidence (in)."

As we reported previously the Trump administration first notified its Berlin counterparts of the intelligence sharing concerns in early March, when US Ambassador to Germany Richard A. Grenell told Germany's economics minister in an official letter that the European ally and intelligence partner "wouldn't be able to keep intelligence and other information sharing at their current level if Germany allowed Huawei or other Chinese vendors to participate in building the country's 5G network."

It was noted at the time the warning is "likely to cause alarm among German security circles" amid persistent terror threat, largely the result of Merkel's disastrous "Open Door" policies which allowed over 1 million middle eastern immigrants into he country. And yet it appears Germany's national security state establishment has remained unmoved, or at least unable to prevail over Merkel's government.

Meanwhile on Thursday a Chinese Foreign Ministry spokesman responded to the White House position at a moment Pompeo keeps up the pressure campaign on European allies, saying, the US has not offered proof that Huawei's products present a security risk.

"We hope that the United States can stop these mistaken actions which are not at all commensurate with their status and position as a big country," said spokesman Geng Shuang, according to Reuters.

And Huawei, for its part, is reportedly taking steps to block its employees from taking part in technical meetings with American contacts, which has even included sending home American employees that were based at its Chinese headquarters in Shenzen.

[Jun 01, 2019] PATRICK LAWRENCE- The US-China Decoupling by Patrick Lawrence

Notable quotes:
"... The long, dense economic relationship appears to have passed its peak, writes Patrick Lawrence. ..."
"... The fallout from these mutually imposed taxes on trade will be considerable all by itself. Global supply chains will inevitably be disrupted -- a potential threat to worldwide economic stability. U.S. importers are expected to start shifting purchases away from China in favor of alternative suppliers with lower cost structures. American investors are likely to reconsider the mainland as a production platform, in many cases diverting investment dollars elsewhere. ..."
"... In the financial markets, this process is termed "decoupling." The long, dense economic relationship between the U.S. and China, the reasoning runs, appears to have passed its peak. ..."
"... With bilateral trade talks stalled, both sides have begun to indicate -- directly or by inference -- that they are now prepared to draw blood. Once the long-term damage begins, as appears increasingly likely, it is difficult to see how there will be any turning back from it. ..."
"... The only known back door into Huawei systems was created by the National Security Agency, which hacked its servers at some point between 2010 and 2012; this was revealed in the documents Edward Snowden made public in mid -- 2013. In effect, the U.S. accuses China of doing what it has already done. ..."
"... "When it comes to policy caprice motivated by paranoia and Deep State lies, the attack on Huawei is in a class all by itself," David Stockman, the former White House budget director, wrote on his blog earlier this month. "The whole case has been confected by Washington-domiciled economic nationalists who think prosperity stems from the machinations of the state and that state-sponsored 'national champions' are essential to winning the race for global economic and technological dominance." ..."
"... Last week the president suggested that the Huawei dispute can be negotiated as part of a broader agreement on trade. At the same time, Dan Coats, the director of national intelligence, has been crisscrossing the country to warn U.S. companies, universities, and other institutions of the perils of doing business with China. Coats's focus is on the high-technology sector. ..."
"... There are two lessons to draw from this spectacle. Trump's position on Huawei gives the game away: If the company is truly a national security threat, it makes no sense to offer it as a chip to be bargained in trade talks with Beijing. Equally, Coats's barnstorming tour is a clear indication that the national security apparatus is actively seeking to cast China as a strategic threat to the U.S. -- as the Pentagon declared it to be in a defense review earlier this year. ..."
"... Turning off the supply of rare earths is not the "nuclear option" China may consider it, as there are alternative suppliers. At the same time, the mainland accounts for nearly three-quarters of world supplies. When it blocked sales to Japan during a diplomatic dispute in 2010, prices rose precipitously and there was mayhem among manufacturers dependent on Chinese supplies. ..."
"... Xi made a remark in Jiangxi that is not to be missed. "We are now embarking on a new Long March," he said, referencing the famous retreat Mao led after Chinese Nationalists defeated the Red Army in 1934. "And we must start all over again." ..."
"... Unless Washington opens to a more cooperative partnership with Beijing -- an unlikely prospect -- this could be the moment China begins to displace the U.S. as the preeminent power in the western Pacific. ..."
"... The US has to regain a real economy and stop the insane military spending. Regardless of China. ..."
"... ‘”Trump’s position on Huawei gives the game away: If the company is truly a national security threat, it makes no sense to offer it as a chip to be bargained in trade talks with Beijing.” Absolutely the case. Trump has been caught before in this same kind of contradictory stance, as with tariffs on steel and aluminum. ..."
"... Trump seems to think he can command the wind and the waves. He has an immense ego, and there is the fact that he is a good deal less clever than he thinks he is. ..."
"... Trump believes that by intimidation and threats, he can make something happen that cannot happen through the ordinary operations of the economies. In this we see him most like the thugs that came to run a number of European countries in the 1930s. ..."
"... Trump’s “MAGA” is nothing more than thinking you can make that heart-warming post-WWII slogan, “the American Dream,” come alive again, many decades later and in an entirely different set of circumstances. “The American Dream” was based in a world where almost every competitor was prostrate from war while America remained relatively unscathed. So, America supplied, for a while, a huge share of the world’s demands, but its share has been declining ever since. ..."
"... Naturally, many Americans want to believe otherwise. Trump’s base – the nation’s Wal-Mart shoppers and the residents of its huge gulag of trailer parks – certainly does, and its hopes comes tinged with everything from superstition to religiosity. ..."
"... America’s elites, the members of its power establishment, do not believe in the same way, but they are deeply concerned about America’s relative decline. ..."
"... They do believe that America’s still great remaining strength can be used to extract concessions from the world without sacrificing anything at home and without sacrificing its role as the center of world empire, a role that comes with many perks and privileges ..."
"... One thinks of the infamous German industrialists and bankers’ – as well as notable American ones – early support for Hitler, although I do not mean to say the situations are identical. ..."
"... You can try fighting by the methods Trump is using, but those methods risk, through acts like the blithe laying on of massive new tariffs and sanctions, not only reduced economic activity in the world, they risk ultimately real wars. ..."
"... The real pity is that Trump at his core is not that much different from the rest of the fools who have been leading this country for the past several decades. He’s just “old school” in his style: he doesn’t wear soft kid gloves whilst attempting to strangle his geopolitical competitors the way all his chums before him did, the sonorous Barack Obama included. ..."
"... Constant warfare is a big part of US consumption. ..."
"... It is becoming increasingly clear that the US is subject to an arms industry racket which is draining its resources and ruining its real potential. ..."
"... We are becoming a country of idle over-weight vets running around on motorcycles wearing red MAGA hats, supported by billionaires, while the rest toil. ..."
"... This will likely come to a head sooner rather than later, and the conflict can be understood in broader terms as between a hegemonic global model and a multi-polar global model ..."
"... While confidence that such measures can inflict enormous harm is justified, the corresponding confidence that America’s preeminent position atop the world’s economic structures is not subject to challenge or change is misguided. The challenge has been ongoing for over five years now, and the change will likely appear suddenly. The preference would be for the U.S. guided to a soft landing into a multi-polar world, but Washington’s policy hawks seem committed to rolling the dice. ..."
"... Washington’s policy setters are gangsters who operate largely through intimidation, extortion and racketeering. ..."
"... This trade war sounds dangerous – didn’t the Smoot Hawley tariffs precipitate the great depression? And the inevitable economic war (even if it is a faux war based on lies, driven by the neocons) could well lead to a real war if we let it….. ..."
"... But trade wars are easy to win! Our very smart cheeto-in-chief has told us. You wouldn’t doubt him would you? ..."
"... The US has abdicated their manufacturing and innovative technologies, shutting down heavy industry under Reagan and Bush I (replacing it with a “service economy”) while outsourcing high end technology and offshoring technical jobs, initially to China mostly under Clinton and Bush II. ..."
"... It’s tempting to conclude that tariffs and action against Huawei are part of the same strategy. I don’t think they are. The tariffs are playing to Trump’s voter gallery. ..."
"... So long as the Chinese can find a way to save face AND give face to Trump, compromise is possible. Huawei is about the Deep State being unable to access Huawei’s facilities. Its a double bluff. The NSA etc (via 5 Eyes) have great access to western controlled telecoms. ..."
Jun 01, 2019 | consortiumnews.com

May 28, 2019 • 32 Comments

The long, dense economic relationship appears to have passed its peak, writes Patrick Lawrence.

Special to Consortium News

P resident Donald Trump's trade war with China is swiftly taking a decisive turn for the worse.

Step by step, each measure prompting retaliation, a spat so far limited to tariff increases, now threatens to transform the bilateral relationship into one of managed hostility extending well beyond economic issues. Should Washington and Beijing define each other as adversaries, as they now appear poised to do, the consequences in terms of global stability and the balance of power in the Pacific are nearly incalculable.

The trade dispute continues to sharpen. Later this week Beijing is scheduled to raise tariffs already in place on $60 billion worth of American exports -- the latest in a running series of escalations Washington set in motion nearly a year ago. Two weeks later the U.S., having increased tariffs on $200 billion worth of Chinese products earlier this month, is to consider imposing levies on an additional $325 billion worth of imports from the mainland.

The fallout from these mutually imposed taxes on trade will be considerable all by itself. Global supply chains will inevitably be disrupted -- a potential threat to worldwide economic stability. U.S. importers are expected to start shifting purchases away from China in favor of alternative suppliers with lower cost structures. American investors are likely to reconsider the mainland as a production platform, in many cases diverting investment dollars elsewhere.

For its part, China is already rotating its gaze westward toward the Middle East and Europe. As if to underscore the point, the East Hope Group, a large Chinese manufacturer, announced late last week that it plans to invest $10 billion in Abu Dhabi's industrial sector. Beijing is already drawing Western Europe into its trillion-dollar Belt and Road Initiative . In time, Europe could begin to replace the U.S. as a source of the foreign investment capital China needs.

Decoupling

In the financial markets, this process is termed "decoupling." The long, dense economic relationship between the U.S. and China, the reasoning runs, appears to have passed its peak.

With bilateral trade talks stalled, both sides have begun to indicate -- directly or by inference -- that they are now prepared to draw blood. Once the long-term damage begins, as appears increasingly likely, it is difficult to see how there will be any turning back from it.

Two weeks ago, the White House issued an executive order barring purchases of telecommunications equipment from any foreign company deemed to pose a threat to U.S. national security. It also requires American companies to obtain licenses before exporting U.S. telecoms technology to such firms. While an administration official described the order as "company and country agnostic," it is all but explicitly intended to damage the global position of Huawei, the highly competitive Chinese company that is a leader in cellular telephone sales and 5G telecommunications networks.

Huawei has long been in Washington's sights. Chief among the allegations against it , the company is accused of providing China with a "back door" into its telecoms networks, so allowing Beijing to spy on any entity using Huawei equipment. The U.S. has never provided evidence of this, and both Huawei and Beijing vigorously deny any such arrangement. The only known back door into Huawei systems was created by the National Security Agency, which hacked its servers at some point between 2010 and 2012; this was revealed in the documents Edward Snowden made public in mid -- 2013. In effect, the U.S. accuses China of doing what it has already done.

"When it comes to policy caprice motivated by paranoia and Deep State lies, the attack on Huawei is in a class all by itself," David Stockman, the former White House budget director, wrote on his blog earlier this month. "The whole case has been confected by Washington-domiciled economic nationalists who think prosperity stems from the machinations of the state and that state-sponsored 'national champions' are essential to winning the race for global economic and technological dominance."

Contradictory Narrative

There is little question that freezing Huawei out of the U.S. market and depriving it of U.S. -- made components will do damage, in all likelihood lasting, to the company. The Eurasia Group terms the administration's executive order "a grave escalation with China that at a minimum plunges the prospect of continued trade negotiations into doubt." But as it has on other policy questions, the Trump administration is tripping over its own contradictory narratives at this point.

Last week the president suggested that the Huawei dispute can be negotiated as part of a broader agreement on trade. At the same time, Dan Coats, the director of national intelligence, has been crisscrossing the country to warn U.S. companies, universities, and other institutions of the perils of doing business with China. Coats's focus is on the high-technology sector.

There are two lessons to draw from this spectacle. Trump's position on Huawei gives the game away: If the company is truly a national security threat, it makes no sense to offer it as a chip to be bargained in trade talks with Beijing. Equally, Coats's barnstorming tour is a clear indication that the national security apparatus is actively seeking to cast China as a strategic threat to the U.S. -- as the Pentagon declared it to be in a defense review earlier this year.

Beijing has so far shown restraint in its responses, but there are signs it is stiffening its spine. On Friday it issued a draft of its own set of tighter regulations governing potential cyber-security breaches. Xi Jinping had earlier visited a rare-earth processing facility in Jiangxi Province -- a move read as the Chinese leader's subtle suggestion that Beijing may consider blocking exports of minerals that are essential components in a variety of high-tech devices.

Turning off the supply of rare earths is not the "nuclear option" China may consider it, as there are alternative suppliers. At the same time, the mainland accounts for nearly three-quarters of world supplies. When it blocked sales to Japan during a diplomatic dispute in 2010, prices rose precipitously and there was mayhem among manufacturers dependent on Chinese supplies.

Xi made a remark in Jiangxi that is not to be missed. "We are now embarking on a new Long March," he said, referencing the famous retreat Mao led after Chinese Nationalists defeated the Red Army in 1934. "And we must start all over again."

With formal talks lapsed for the time being, there is now no shortage of signaling from either Washington or Beijing. But Xi, China's most assertive leader since the Great Helmsman, appears to understand the moment as larger than mere gestures. U.S. -- China relations have entered a decisive phase. America cannot win in a long-term confrontation with China. Unless Washington opens to a more cooperative partnership with Beijing -- an unlikely prospect -- this could be the moment China begins to displace the U.S. as the preeminent power in the western Pacific.

Patrick Lawrence, a correspondent abroad for many years, chiefly for the International Herald Tribune , is a columnist, essayist, author, and lecturer. His most recent book is "Time No Longer: Americans After the American Century" (Yale). Follow him @thefloutist . His web site is www.patricklawrence.us. Support his work via www.patreon.com/thefloutist .

If you value this original article, please consider making a donation to Consortium News so we can bring you more stories like this one.


dean 1000 , May 31, 2019 at 11:12

The Empire the US built and acquired after WWII could not last no matter who is president. We have been advised of this coming reality for 30 or 40 years. Washington can’t adjust b/c it is controlled by a two party system that is owned by the 10%.

Since wall street bought a bunch of manufacturing companies and exported them to China the US hasen’t had a real economy. It has been one bubble economy after another. A stock bubble, tech bubble, dot com bubble, and a killer 8 trillion $ housing bubble, and a completely unnecessary bank bailout.

The US has to regain a real economy and stop the insane military spending. Regardless of China.

Zhu , May 31, 2019 at 06:14

Trump, in effect, is walling the US off from the rest of the world, as Ming-Qing dynasty China did until 1911.it turned out badly for Chinese people. It’s likely to turn out badly for the US.

Truth , May 29, 2019 at 17:27

One solution to rare minerals is to break the illegal clinton & bush era mining agreements around the Grand canyon and Nevada which has turned our resources into cash from russia and canada into the pockets of the deep state “elected” in D<C and these states. It would be nice if every now and then a real journalist who publishes a full story would get a complete story published. Consortium does better than most but still needs to step up their game.

An article that includes explaining why all NAFTA and trade agreements since Kennedy have been total sellouts of USA in exchange for party owned companies of the "elected"

JOHN CHUCKMAN , May 29, 2019 at 11:19

‘”Trump’s position on Huawei gives the game away: If the company is truly a national security threat, it makes no sense to offer it as a chip to be bargained in trade talks with Beijing.” Absolutely the case. Trump has been caught before in this same kind of contradictory stance, as with tariffs on steel and aluminum.

I think the truth is that he is a man ready to use any gimmick to get what he wants, regardless of logic or facts or principle. Another way to say that is to speak of a criminal mentality.

It is exactly what the mob has always done in making someone an offer they can’t refuse. “Don’t want to pay protection money? Well, don’t be surprised if your joint gets burned down.”

Trump essentially wants to transfer huge amounts of trade surplus from China to the United States, not by any change in the economic activity or policies of the two countries but by fiat.

But of course, the world doesn’t work that way.

The United States’ trade deficits are its own doing, not China’s. The United States doesn’t save, and it doesn’t tax adequately. It consumes, and a productive country like China is only too pleased to supply what it wants. That makes a flow of goods in one direction and a flow of money in the other. Economics 101.

Trump seems to think he can command the wind and the waves. He has an immense ego, and there is the fact that he is a good deal less clever than he thinks he is.

Trump believes that by intimidation and threats, he can make something happen that cannot happen through the ordinary operations of the economies. In this we see him most like the thugs that came to run a number of European countries in the 1930s.

He genuinely does not understand – or if he understands, he doesn’t care – what is behind the surpluses and deficits and just insists that they will be changed as a matter of his personal will. Does that not remind us of anyone from history?

At any rate, it comes down to his admiring “the strong man” and believing he, and he alone, can play that role for the United States. And there are more than a few Americans that believe him too. After all, the great American journalist and historian who documented the rise and fall of the Nazis, William L. Shirer, once said that he thought the United States might be the first country to go fascist voluntarily. He based that thought on his observation of many attitudes and beliefs and trends in the United States.

Trump’s “MAGA” is nothing more than thinking you can make that heart-warming post-WWII slogan, “the American Dream,” come alive again, many decades later and in an entirely different set of circumstances. “The American Dream” was based in a world where almost every competitor was prostrate from war while America remained relatively unscathed. So, America supplied, for a while, a huge share of the world’s demands, but its share has been declining ever since.

In today’s world, all the old competitors have not only come roaring back, but a lot of new ones have come into being, and that reality is the future.

Naturally, many Americans want to believe otherwise. Trump’s base – the nation’s Wal-Mart shoppers and the residents of its huge gulag of trailer parks – certainly does, and its hopes comes tinged with everything from superstition to religiosity.

America’s elites, the members of its power establishment, do not believe in the same way, but they are deeply concerned about America’s relative decline. They have been working away for years on the problem, as in their past bashing of Japan or China, but they are not ready to work for fundamental change in America, as, for example, in its tax and savings structures and its grotesque inequalities.

They do believe that America’s still great remaining strength can be used to extract concessions from the world without sacrificing anything at home and without sacrificing its role as the center of world empire, a role that comes with many perks and privileges. And while most of them do not like Trump’s style or background, I think for now they are willing to see whether he can get the ugly job done. One thinks of the infamous German industrialists and bankers’ – as well as notable American ones – early support for Hitler, although I do not mean to say the situations are identical.

You can try fighting by the methods Trump is using, but those methods risk, through acts like the blithe laying on of massive new tariffs and sanctions, not only reduced economic activity in the world, they risk ultimately real wars.

Even if they don’t go so far as war, they are shaking up some fundamental post-WWII arrangements that America is going to miss. Decades-old allies, like some of those in Europe, are beginning to re-think their relationship with such a hostile, single-minded America and to glance around in other directions, as towards the very China Trump attacks and towards Russia, a country whose openness to business would have resembled a miracle under the communists and whose wealth of natural resources offers altogether new opportunities.

Realist , May 30, 2019 at 01:32

The real pity is that Trump at his core is not that much different from the rest of the fools who have been leading this country for the past several decades. He’s just “old school” in his style: he doesn’t wear soft kid gloves whilst attempting to strangle his geopolitical competitors the way all his chums before him did, the sonorous Barack Obama included.

Zhu , May 31, 2019 at 06:25

Constant warfare is a big part of US consumption.

Daniel Good , May 29, 2019 at 04:36

The problem that bothers the US policy makers is real: what to do about the balance of payments deficit? The Trump team seems to be nit-picking areas where imports can be reduced, for instance by blocking Chinese tech exports.

All of these moves are nonsense because they miss the real problem: the US economy has a long standing structural quandary. It devotes so much of its resources to flashy, ornamental and useless defense high tech weapons and gismos that it is running itself into the ground.

It is becoming increasingly clear that the US is subject to an arms industry racket which is draining its resources and ruining its real potential. What needs to be done is to cut the military budget in half and redirect the resources to improving the infrastructure of the country and making investment once again profitable inside the USA. Where is the politician who dares make these proposals? Wake up America. We are becoming a country of idle over-weight vets running around on motorcycles wearing red MAGA hats, supported by billionaires, while the rest toil.

bardamu , May 29, 2019 at 00:07

It is strange to discuss confrontation with China only in terms of trade deals so soon after Obama’s “pivot to Asia,” Trump’s militarism with respect to North Korea, and the militarism of both the Obama and Trump regimes as regards Russia and also through western and central Asia, which are clearly areas in which China has no less natural interest than the United States.

Among these, surely tariffs are the least of most anyone’s worries.

jaycee , May 28, 2019 at 16:27

This will likely come to a head sooner rather than later, and the conflict can be understood in broader terms as between a hegemonic global model and a multi-polar global model.

The hegemonic global model has been an American project since the demise of the Soviet Union, usually presented in euphemism – “globalization”, the “exceptional” nation, the “rule-based international system”, etc. In recent years, US politicians have overstepped by a reckless use of the international financial system to deter designated adversaries.

Presently moving through Congress are bills designed to use sanctions (“maximum pressure”) to attack both Russia’s Nordstream natural gas pipeline to Europe and China’s claims in the South China Sea.

While confidence that such measures can inflict enormous harm is justified, the corresponding confidence that America’s preeminent position atop the world’s economic structures is not subject to challenge or change is misguided. The challenge has been ongoing for over five years now, and the change will likely appear suddenly. The preference would be for the U.S. guided to a soft landing into a multi-polar world, but Washington’s policy hawks seem committed to rolling the dice.

Realist , May 28, 2019 at 17:41

Washington’s policy setters are gangsters who operate largely through intimidation, extortion and racketeering. If you look up the definitions of those words you will see they describe to a tee what the American government does. Shutting down Nordstream (and all the other sanctions over transparently absurd claims) is meant entirely to damage the Russian economy and destabilise the country’s government, plus to steal away customers in the energy sector.

They are protecting nobody’s “rights of navigation” in the South China Sea, rather they are telegraphing to Bejing that Chinese trade with the world can be shut down on a moment’s notice by Uncle Sam, specifically they are trying to put the kibosh on the Chinese “Belt and Road Initiative.” The cusses in Washington have gone so far as to tell Canada that it does not have control over the Northwest Passage, long considered to be within its internal waters–you know, all those islands connected by ice for most of the year. Hence forth, Washington decreed that they are international waters and that it would control them. If that’s being a good neighbor to a country that has supported your every crazed demand for over 200 years, the “Great White North” needs to get a restraining order from the World Court against Uncle Sam, plus they need to find better friends elsewhere on the planet.

C Thomas Payne , May 28, 2019 at 19:37

I tend to substitute the euphemism “rogue nation” for those others.

Excellent comment.

Realist , May 28, 2019 at 16:22

India, Vietnam, and the Philippines will thank China for the opportunity to manufacture schlock for sale at Wal*Mart and for the major investments that new Chinese shareholders will have made in their companies. These countries will now have wares to trade along the Belt and Road linking all of Eurasia where everyone keeps getting richer by the day. Since people the world over, except for congenitally retarded neocons, know a good deal when they see one, all these countries will start telling Uncle Sam to cram it when he keeps demanding they sanction their new found friends and trading partners because freedom and democracy, Putin and the other names on Sam’s shit list. They’ll start deciding that all those American bases give them no clout, no influence, no pay-off and no security… nothing useful at all, unless prosecuting the crimes and repairing the damage caused by the garrison soldiers provides local entertainment. It will be time to relocate those rat-holes to the American side of Trump’s Wall.

Will the silver lining be new American self-sufficiency in manufacturing? The development of needed resources using new innovative technologies? A plethora of jobs at good pay for working American men and women? Will American oligarchs once again begin investing in America itself? If you can arrange that with American greenbacks now buying a tenth as many Yuans, Euros, Yen, Rupees, Rubles and even Pesos than they once did because Trump decided to “shake things up,” maybe you can sell all those treasuries needed to run the government in Washington to the Tooth Fairy.

It’s not true that “you can never go home again:” just watch the dollars come flooding back to North America when the whole rest of the world stops trading in them. This whole bit of history should be engaging to watch on some future television show similar to James Burke’s “Connections.”

If only Barack Obama had eased up on the extreme Trump bashing at that White House Correspondents’ Dinner.

Harpo Kondriak , May 28, 2019 at 20:13

“Watch those dollars come flooding back” – when the real fun starts. Those that don’t understand why there has been little inflation from the bank bailouts will get their answer. And they won’t like it.

Seamus Padraig , May 28, 2019 at 14:46

As a life-long protectionist, I always believed that our foolish dependence on imports would ultimately end in tears, and it is now clear how right I was. Just to think: we could have saved ourselves all this trouble and misery simply by voting down NAFTA and declining to extend Most-Favored Nation trade status (as it used to be called) to China 25 years ago. But now, putting our industry back on track is really gonna hurt. Pity …

Zhu , May 31, 2019 at 06:39

Any US reindustrialization is likely employ robots. The homeless will just keep on increasing.

Godfree Roberts , May 28, 2019 at 12:29

“Europe could begin to replace the U.S. as a source of the foreign investment capital China needs.”?
China is the leading recipient of FDI but its need for foreign capital is rapidly diminishing and it is the world leader in IP

Zhu , May 31, 2019 at 06:40

A fair amount of foreign investment is laundered bribe money from China.

evelync , May 28, 2019 at 11:28

This trade war sounds dangerous – didn’t the Smoot Hawley tariffs precipitate the great depression? And the inevitable economic war (even if it is a faux war based on lies, driven by the neocons) could well lead to a real war if we let it…..

I can’t help but secretly imagine that perhaps the retaliation that Patrick Lawrence writes about – namely China’s shift to other trade partners – happens smoothly and quickly enough to deprive our neocons of their super power resources to put an end to what Charles Misfeldt in his comments refers to as Crooks, liars, thieves, cowards and traitors running things…..errr ruining things. I know that’s not the answer because it could be devastating too.

It’s up to the electorate to shift away from the ideologues, both neoliberal and neocons. But will we demand better government?

Most politicians in power have been too afraid to challenge the idea of “exceptionalism” which is used to keep the primitive war machine going.

Thanks for the article and the interesting and informative comments….much appreciated…

Jeff Harrison , May 28, 2019 at 11:19

But trade wars are easy to win! Our very smart cheeto-in-chief has told us. You wouldn’t doubt him would you?

Actually, one wonders why anyone takes the US and its accusations seriously. Especially by the European vassal states. Yes, your equipment/software will have a backdoor if the US wants one there. That much is clear from the Snowden releases. And a Reuters report this morning gives a hint at how it’s done. Huawei apparently is continuing to make the mistake of sending things out via FedEx. Magically, two of the parcels wound up in the US without the benefit of Huawei changing their shipping request. Huawei would never have known if they hadn’t looked at the routing of the parcel after they got it. Hopefully, there wasn’t any sensitive information in the documents routed to the US because it’s a sure thing that the USG now has copies of them. Same for the European vassals. Angela Merkel’s phone hacked. Electronic interception equipment installed on undersea telephone cables. That’s before we get to the NSA office in all the telecoms spying on us. Most of the world’s telecommunications run through the US. So, not only do we get to listen in on a phone call from Paris to Des Moines, we get to listen in on one from Paris to Shanghai.

And the European vassals continue to toe the American line albeit a bit more reluctantly.

michael , May 28, 2019 at 11:15

The US has abdicated their manufacturing and innovative technologies, shutting down heavy industry under Reagan and Bush I (replacing it with a “service economy”) while outsourcing high end technology and offshoring technical jobs, initially to China mostly under Clinton and Bush II.

Short-term profits soared with the cheaper labor, but giving away high end technologies leading to innovations for China was resoundingly stupid. Chinagate was (is) much more dangerous than Russiagate to National Security.

Having given away America’s capabilities to China, no amount of negotiating will “level the playing field” . We can no longer compete with China not because of labor costs, but because of the improvements the Chinese have made in so many fields over twenty years, while America sat stagnant (except of course for overpriced weapons and surveillance tools to watch American citizens).

Zhu , May 31, 2019 at 06:47

The US has always imported its Einsteins and Teslas. We Americans are educated to be cannon fodder in wars of vanity. At best, we’re educated to be Trump – Romney style connivrrs and crooks.

peter mcloughlin , May 28, 2019 at 09:14

Historically, when two hegemonic powers clash the result is always war. What we are witnessing between Washington and Beijing today is no different. But Washington will not allow China to ‘displace the US as the preeminent power in the western Pacific.’ The trade war will become world war.
https://www.ghostsofhistory.wordpress.com/

Dave Henderson , May 28, 2019 at 10:18

I am afraid you are right.

T , May 29, 2019 at 15:50

Peter McLoughlin, your Web site

http://www.ghostsofhistory.wordpress.com/

does not have a valid certificate (Firefox warned me).

Charles Misfeldt , May 28, 2019 at 08:44

I look at this picture and see all the representative’s on America’s side of the table are conservative scumbags who have no intention of engaging in behavior that benefits myself or the majority in America. Crooks, liars, thieves, cowards and traitors…

MichaelWme , May 28, 2019 at 06:55

“a spat so far limited to tariff increases”

Not quite. The US has announced that any Chinese person travelling outside of China can be arrested, as it had Meng Wanzhou arrested in Canada for selling Huawei phones to Iranians. China threatened to execute 3 Canadians in retaliation, so Canada released Ms Meng from prison and put her under house arrest while the legal processes of extradition are now thought to require many years.

China hasn’t executed the 3 Canadians, and Ms Meng is in her C$20 million home, and is likely to remain there for the foreseeable future. What happened to Ms Meng can happen to any Chinese executive who travels outside China to the EU or the Americas or Japan.

E Wright , May 28, 2019 at 04:50

It’s tempting to conclude that tariffs and action against Huawei are part of the same strategy. I don’t think they are. The tariffs are playing to Trump’s voter gallery.

So long as the Chinese can find a way to save face AND give face to Trump, compromise is possible. Huawei is about the Deep State being unable to access Huawei’s facilities. Its a double bluff. The NSA etc (via 5 Eyes) have great access to western controlled telecoms.

They don’t want to lose that access by allowing an outside operator, so they accuse Huawei of what they are doing, on the assumption that Beijing does what they do.

[May 31, 2019] It is very unlikely that China can buy less US bonds because doing so would almost certainly be costly for Beijing. And even if China took this step, it would have either no impact or a positive impact on the U.S. economy.

May 31, 2019 | www.moonofalabama.org

John Smith , May 30, 2019 9:03:56 PM | 36

Why China Likely Won't Buy Fewer U.S. Treasury Bonds

A January 2018 Bloomberg article suggests that Chinese officials may reduce their purchases of U.S. government bonds. It is very unlikely that China can do so in any meaningful way because doing so would almost certainly be costly for Beijing. And even if China took this step, it would have either no impact or a positive impact on the U.S. economy.

China Cannot Weaponize Its U.S. Treasury Bonds

A number of recent articles suggest that Chinese officials may reduce their purchases of U.S. government bonds.

This is an updated version of a previously published January 2018 blog post.


John Smith , May 30, 2019 9:10:24 PM | 38

"Trade war" between the United States and China in pictures:

https://pbs.twimg.com/media/D7jk1cuVsAEG7dQ.jpg

https://pbs.twimg.com/media/D7jk1r5U8AAqcyh.jpg

psychohistorian , May 30, 2019 9:13:53 PM | 39
@ John Smith with speculations about what China can/can't do with its trove of US Treasuries...I admit not following your links

How about if China used them to "pay off" a bunch of countries IMF and World Bank debt?

Just a little beyond the think tank box rumination for you.....

BM , May 31, 2019 2:56:51 AM | 56

China reduced its holdings of U.S. debt in March by about $20.5 billion, bringing its overall ownership down to $1.12 trillion.

There was some more detailed coverage of this not long ago, probably on Strategic Culture. China has largely stopped buying US treasuries for a few years now, and more recently has been very slowly reducing its holdings. It has to recycle its US dollars from its exports to the US somehow - instead of buying US treasuries and thereby funding the US military encirclement of China, it is using them for infrastructure investments in Eurasia under BRI - much of that is denominated in US dollars.

So that Carnegie Endowment crap is nothing but mindless bullshit propaganda*. No wonder the US fails in everything it tries to do these days - these are the sort of idiots who "advise" the US government what to do!!

As to that troll - B's advice is always this: Don't feed the trolls

* Disclaimer - I haven't read the troll's links, nor do I intend to.

BM , May 31, 2019 3:06:23 AM | 57

Russia has largely eliminated its holdings of US treasuries. Many other countries have also reduced their holdings, including several US allies (eg Japan, if I recall correctly). Many countries in Eurasia now have huge gold reserves instead, which is a much better bet - not just Russia and China but also Kazakhstan, for example.

Leser , May 31, 2019 8:55:17 AM | 63

China reduced its holdings of U.S. debt in March by about $20.5 billion, bringing its overall ownership down to $1.12 trillion.

Those U.S. Treasuries fluctuations are very likely following trade movements rather than political intentions. As commented before, China's enormous exports require large-scale FX handling and USTs are the easiest way to do that.

It's not a credible political threat to sell those off, as the next wave of 'QE' money printing is imminent and it will specifically target USTs (per Bloomberg article two days ago, with projected Fed balance sheet to soon grow beyond the recent peak). In other words, anything China might sell will be absorbed by the Federal Reserve with freshly printed money. In the scheme of the money printing madness, another trillion USD is not a large amount.

Why has Russia then sold their USTs? Probably for fear of being disconnected from the SWIFT system and being stuck with worthless paper. In any case Russia's total divestment of their entire UST stock didn't register in the ebb and flow of the market.

[May 29, 2019] No, Mr. President- China didn't steal our jobs. Corporate America gave them away by Cody Cain

May 28, 2019 | www.informationclearinghouse.info

Trump's trade war points the finger in the wrong direction. China behaved normally; corporate CEOs betrayed us

" Information Clearing House " - China is not "stealing" American jobs.

President Trump loves to blame China for the job losses that have devastated American workers under globalization. But the truth is that Trump is blaming the wrong party. Trump's reckless trade war against China is misguided and amounts to a colossal charade that will not solve the actual problem.

Yes, it is true that numerous American manufacturing jobs have been shipped overseas to China, thereby leaving American workers jobless and suffering. But China did not steal these jobs.

No. These jobs were given to China. It was all legal and legitimate. China merely accepted the gift.

What would anyone expect China to do? Accepting these jobs was a perfectly rational course of action.

China was an underdeveloped nation with a large population of poor people willing to work for a fraction of the hourly wages of American workers. And then corporations came along and presented China with an attractive offer: We would like to build manufacturing plants in China and hire droves of your unemployed people to work there. What was China supposed to do? Naturally, China said yes.

This is hardly stealing.

Are You Tired Of The Lies And Non-Stop Propaganda?

Get Your FREE Daily Newsletter No Advertising - No Government Grants - This Is Independent Media

It is true that these new jobs in China were intended to displace American workers. But does that concern belong to China? Does China have the responsibility to care for the well-being of American workers? Is China supposed to prioritize American workers over its own workers?

Of course not.

China is supposed to look out for itself and for its own workers, not for American workers. Thus it was perfectly proper for China to allow the manufacturing plants to be built in China and employ Chinese workers. China did not steal these jobs.

So if China is not at fault, then who is to blame for the devastation caused to American workers?

The answer is plain to see, and it lies within our own shores. The fault belongs squarely with corporate America.

It was corporate America that made these decisions. Corporate America decided to close their American plants and open new plants in China. Corporate America decided to lay off multitudes of American workers and ruin entire American communities.

And who profited from the destruction to American workers? It was the wealthy executives and shareholders of American corporations. They earned millions of dollars for themselves by cutting the costs of their workforce.

This is part of the larger trend of economic inequality that is eroding the entire middle class in America. Wealth is being shifted away from the workers down below and transferred up into the hands of the wealthy executives and shareholders at the top.

Trump blaming China is nonsense. China is not at fault. To be sure, China is hardly an angel and indeed engages in improper trade practices. But even if China agreed to whatever bone-headed demands Trump is seeking, the problem still would not be solved. The truth is that America cannot possibly compete against China on labor costs. The standard of living is much lower in China and thus Chinese workers are willing to accept wages far below living wages in America. So corporate America will continue to transfer more and more jobs to China and elsewhere. If we do not address this fundamental economic reality, then we will never solve the problem.

Trump blaming China has an insidious aspect to it as well. Focusing all the ire upon China is a grand misdirection that conceals the true culprit, namely, the super-rich corporate executives and shareholders in America.

This is part of Trump's standard playbook. Trump falsely proclaims to be fighting for blue-collar workers, when in truth, Trump acts entirely in favor of the rich at the top.

Surprisingly, this seems to work. Some of the hard-working Americans who are being crushed by Trump's idiotic trade war and who should be denouncing Trump, nonetheless praise him for standing up to China, believing that Trump is fighting for blue-collar jobs. It is painful to witness such good people falling victim to Trump's despicable con job.

In order to actually save the middle class, we need to focus on the true cause of the problem. We must direct our great powers of reform where they belong -- upon the wealthy executives and shareholders of corporate America who caused this problem in the first place.

The nature of the problem is that corporate America has no incentive to protect American workers. In fact, corporate America has every incentive to harm American workers by shifting their jobs overseas.

So the financial incentives must be reconfigured. If corporate America is going to ship American jobs overseas, it must not be permitted to pocket all the profits themselves and leave their displaced workers with nothing. Instead, corporations that send jobs offshore must be required to sufficiently compensate their displaced American workers. Executives and shareholders must not be permitted to enrich themselves unless and until their workers are financially secure.

Our society must favor people over profits, not profits over people.

This article was originally published by " Salon " -

[May 29, 2019] Global Times China Holds Three Trump Cards In War Against US

In reality China best option is outwait Trump. With the recession caused by the current trade war Trump has very little chances to be reelected.
May 29, 2019 | www.zerohedge.com
Tyler Durden Tue, 05/28/2019 - 22:45 Via Oriental Review,

Amid the escalating economic war between the US and China, discussions have intensified on how Beijing might stand up to the economic power of America, especially given that the global economy is increasingly dependent on the US dollar as the main currency for international trade, and the closing of US markets could do some serious damage to China's export-oriented companies. China's main foreign-policy publication, the Global Times , points to three trump cards that Beijing could use to at least level the playing field in its fight with the Trump administration and cause appreciable harm to the US economy, possibly forcing its opponent to temporarily scale back its ambitions.

According to an article in the Global Times by a professor at the Renmin University of China, the three trump cards are:

1) banning the export of rare earths to the US;

2) blocking US companies' access to Chinese markets; and

3) using China's portfolio of US Treasury bonds to bring down the US government debt market.

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Each of these trump cards are worth looking at in detail, both in terms of their impact on the US economy and also in terms of any possible retaliation from the US and the repercussions for the global economy as a whole.

Banning the export of rare earths to the US would actually be a pretty serious blow for US electronics manufacturers and, indeed, US high-tech manufacturers generally. This is because rare earths are a key raw material for the production of smartphones, various chips, and other high-value-added products that are the biggest cash cows of US companies such as Apple and Boeing.

President Donald Trump during a meeting with Chinese Vice Premier Liu He over trade talks in the Oval Office, February 22, 2019

Reuters, an agency one could hardly accuse of sympathising with Beijing, reports : "The United States has again decided not to impose tariffs on rare earths and other critical minerals from China, underscoring its reliance on the Asian nation for a group of materials used in everything from consumer electronics to military equipment."

China does not exactly have a monopoly on such materials, but the market would definitely be in short supply without Chinese exports, with all the price implications that would bring. Moreover, it is likely that some deficit positions will be impossible to close no matter how much money is involved.

Not everything is that simple, however. Should such a ban be introduced, then Beijing will encounter certain technical difficulties. If sanctions are only imposed on US companies, then they will still be able to purchase the necessary materials through Japanese or European straw buyers, making the embargo pointless. But if China imposes a total export ban, then it won't just be US companies that suffer but European ones as well, leading to EU reprisals against Chinese exporters to Europe. This would be very painful for China, especially given the economic war with the US that is making access to European markets invaluable to the Chinese economy.

It appears that a ban on rare earth exports is a powerful weapon, but its use will require the utmost delicacy and serious diplomatic efforts to avoid any extremely unpleasant side effects.

The second trump card mentioned by the Global Times is blocking US companies' access to the fast-growing and extensive Chinese market. This should be looked at from a political, rather than economic, point of view (although the latter may seem logical). The aim of such restrictive measures is not to inflict unacceptable damage on the US economy, but to make the full might of America's corporate lobbying machine work against Donald Trump and support his political opponents.

According to the S&P Dow Jones Indices, Asia only accounts for around 14 per cent of the sales of S&P 500 companies. If we assume that China makes up the majority of this, then not even a complete closure of the Chinese markets would be a disaster. There are a few important details, however.

https://tpc.googlesyndication.com/safeframe/1-0-33/html/container.html

As a result, the profits of US companies and the future of the American stock market (which is a key political barometer given that many Americans have invested their savings in shares) would be at risk. It might be possible to offset these problems by transferring production to other Asian countries with cheap labour and favourable terms, but this couldn't be done quickly and it would be risky, given that Trump is waging trade wars with everyone from the European Union to loyal US allies such as Japan and India. In light of this, US companies will have a huge incentive to prevent Trump from being elected for a second term, and the lobbying and political capabilities of that part of the US corporate sector that will suffer the most from this trump card could really play a key role in the political victory of Trump's opponents.

The third trump card involves China dumping its portfolio of US Treasury bonds. The Global Times writes: "China holds more than $1 trillion of US Treasury bonds. China made a great contribution to stabilizing the US economy by buying US debt during the financial crisis in 2008. The US would be miserable if China hits it when it is down." One can conclude from this that Beijing will most probably save dumping its portfolio of US treasury bonds for dessert – in that it will have the biggest impact when the US stock market is experiencing its next crisis.

China's Vice Premier Liu He (left) speaks during a meeting with President Donald Trump (right) in the Oval Office of the White House on February 22, 2019

The move is not likely to cause catastrophic damage in and of itself (although the value of US bonds will definitely fall), but if it is done at the moment when America is most vulnerable, then China's portfolio may well end up being the straw that breaks the camel's back.

Beijing is not displaying a particularly cocksure attitude. As the Global Times ' editor-in-chief quite rightly notes on Twitter :

"Most Chinese agree that the US is more powerful than China and Washington holds initiative in the trade war. But we just don't want to cave in and we believe there is no way the US can crush China. We are willing to bear some pain to give the US a lesson."

As China lays its trump cards on the table, the world's globalised economy will creak and collapse. Globalisation is going backwards, and chances are we'll end up with a completely different economic system that has more protectionism. Instead of a global market, there will be several large regional markets with their own rules, dominant currencies, technical standards, and financial systems.


popeye , 51 minutes ago link

Just as the US attack on Huawei is shortsighted and will have serious consequences for USA, the same would apply to China if they were to reciprocate.

China wants to boost international trade, not harm it, so they will work around the bans to promote trade with others (long term strategic play), not go head to head. I suspect China may do something small just for domestic optics, but the smart play is to let the consequences of US actions play out on US businesses, whilst boosting import substitution and alternative supply chains.

I don't believe rare earth exports will be banned (they may be restricted a bit as part of a long term protection of domestic supply) and I don't expect US Treasuries to be dumped (buying at any scale had already ceased).

This isn't about backing one side over the other - I just think one party is going to play this smarter than the other.

yvhmer , 8 hours ago link

This is a copy paste article. Why are all these so called articles parrotting the same line: Rare earth monopoly, whereas in reality, they can' t even name the product of dependency and how much it would cost to find a different supplier.

freedommusic , 8 hours ago link

China has a 1.6 billion population and imports approx 30% food and 90% oil.

CDOGS , 8 hours ago link

If sanctions are only imposed on US companies, then they will still be able to purchase the necessary materials through Japanese or European straw buyers, making the embargo pointless. But if China imposes a total export ban, then it won't just be US companies that suffer but European ones as well, leading to EU reprisals against Chinese exporters to Europe. This would be very painful for China, especially given the economic war with the US that is making access to European markets invaluable to the Chinese economy.

And there is exactly why this won't happen.....

Let it Go , 9 hours ago link

If that is all the options they have, they got nothing!

China watchers, economists, and investors have been forming battle-lines for years as they debate the true strength and sustainability of China's economy and its role as a global player. Those of us that paint a picture of future collapse and a day of reckoning are often accused of spreading "doom-****" when we claim that the Chinese have masked over their dire situation by continually expanding credit.

In January, Beijing injected a staggering $685 billion in new credit into its financial system and the money continues to leak out causing assets to rise across the globe. Today China continues to prop up the unpropable, and yes, while no such word exists, when it comes to China's economy it should, for "unpropable" describes the financial collapse that can only be postponed but not stopped. The article below argues that this will have a major impact in currency markets going forward.

https://China Continues To Prop Up Its "Unpropable" Economy .html

sfcjoebob , 9 hours ago link

Big Bad Wolf, 5G can wait, it's a luxury not a necessity. Our networks run plenty fast and, like Europe, we can pay higher prices for a local workforce. China works due to slave labor, if the people there wake up they are done. That's why a complete security state is necessary. Nip that awareness in the bud. Now, go back to Germany and celebrate Islam.

sfcjoebob , 9 hours ago link

We'll just starve the rats out. China has zero hold over us, there is nothing that they make or export that cannot be replaced. Will prices of some goods rise, yes, but at the end of the day we don't need them as much as they need us.

GrosserBöserWolf , 9 hours ago link

3 dumb cards. Strategical US dumb thinking. US have a very short term strategy. That's easy to understand. US will have elections in 1.5 years and the campaign for election is knocking at the door. China has a long term strategy. China do not have elections. Those US guys simply do not understand this.

  1. rare earths (RE). Look at Russia. It provides US with rocket engines and take US cosmonauts to ISS. Why? To slower the research. If Ru will not sale, the US will accelerate the development of space ships. So will do China with RE. They will provide RE, maybe it will increase the price a bit.
  2. blocking US companies' access to Chinese markets. Why you should do this? China needs some US products which do not have replacements or are protected by IP laws. And to be clear. It is also easier to import legally a product and reverse engineer it, that to acquire it illegal or spying in other countries
  3. dumping US Treasury. Russia had far more less US Treasury. They gradually dump them not to interfere with the market price. They do not want to loose large amounts of money. But if China sells all of them together US dollar may crash and with it all China's financial assets. What if US will print trillions of dollars? US will loose, but also China.

US is still the larger economy. Those measures are affordable only if China is far ahead of US. All this dumb cards will backfire in less than 5 years. US sanctions just showed the week points in China's development. They will address them in order to neutralize the effects. What should they do? They have to look north and do what Russia did. They will invest in software, research, they will substitute the products. They should just develop themselves independent from US system. Also they will gradually sale dollars and US Treasury.

Wild E Coyote , 9 hours ago link

1) banning the export of rare earths to the US; (Hurts China exporters too)
2) blocking US companies' access to Chinese markets; (US companies pull back US dollar invested)
3) using China's portfolio of US Treasury bonds to bring down the US government debt market. (US buys back without a problem).

If China depends on this 3 matters, then it has no Trump Cards,

The Herdsman , 9 hours ago link

President Xi's trade war is a threat, no doubt. China's trade war against the United States has resulted in hollowed out cities where a once strong manufacturing sector supported communities across the nation. Have no illusions, this war that Xi is waging against America is something that has hurt us for thirty years and will likely continue to do so. Best to fight back now while we still can.

God bless America and God bless president Trump!

Josef Stalin , 10 hours ago link

China will do none of these -- neoliberalism is the reason. The key to imploding the amerikan rat regime is to STOP buying amerikan goods and especially services of ANY kind...... much of the stuff is junk anyway and can be replaced with far higher quality goods and services available from other states and nations.

beemasters , 10 hours ago link

Banning the export of rare earths to the US....Not everything is that simple, however. Should such a ban be introduced, then Beijing will encounter certain technical difficulties. If sanctions are only imposed on US companies, then they will still be able to purchase the necessary materials through Japanese or European straw buyers, making the embargo pointless. But if China imposes a total export ban, then it won't just be US companies that suffer but European ones as well, leading to EU reprisals against Chinese exporters to Europe. This would be very painful for China, especially given the economic war with the US that is making access to European markets invaluable to the Chinese economy.

Alternatively, China could impose quotas on its exports to Japan and Europe based on their current need of rare earth. It'll be their prerogative if they want to re-export to the US at (much higher) price. OR they could use the US trademarked brute, thuggish method of sanctioning those who dare to do business with the US.

The second trump card mentioned by the Global Times is blocking US companies' access to the fast-growing and extensive Chinese market. This should be looked at from a political, rather than economic, point of view (although the latter may seem logical). The aim of such restrictive measures is not to inflict unacceptable damage on the US economy, but to make the full might of America's corporate lobbying machine work against Donald Trump and support his political opponents.

It takes more than corporate sponsorship to get a presidential hopeful nominated. It's really up to Deep State - the very same Deep State that has allowed Trump launch and take the trade war as far as he has now. Trump's defeat in the poll would only indicate Deep State's defeat in the trade war with China. But the election of a new president will not change the game. The entire experience has left a bad taste in China's mouth. They know about the shadow government and no figure head will be able to tame the angry dragon now. They could demand the lasts of these corporations to move and invest in China if they want access to the 1.5 billion people's market. This will facilitate more technology transfers or the so-called "theft."


The third trump card involves China dumping its portfolio of US Treasury bonds. The Global Times writes: "China holds more than $1 trillion of US Treasury bonds. China made a great contribution to stabilizing the US economy by buying US debt during the financial crisis in 2008. The US would be miserable if China hits it when it is down." One can conclude from this that Beijing will most probably save dumping its portfolio of US treasury bonds for dessert – in that it will have the biggest impact when the US stock market is experiencing its next crisis.

Understanding that China may likely dump their holdings, other nations (Japan, the UK, Ireland, etc) might rush to dump theirs before China gets the chance to have their "dessert." Nobody wants to be left holding the bag (of worthless treasury notes). So it's not China's act of dumping that will trigger the avalanche. It's the fear that they might. So far, they are saying they won't and giving no indication they would for good reasons. They don't want to start the panic now.

He–Mene Mox Mox , 10 hours ago link

The Chinese have a fourth Trump card..........stop doing business with the U.S. all together. The U.S. does this with Venezuela and it works very well at collapsing the economy of the country.

The 5th option would be to get OPEC to stop trading oil in dollars. Just that alone would make the U.S. currency worthless, and bring America to its knees. 9 of the 14 OPEC nations are already toying with the idea of doing just that.

Pliskin , 9 hours ago link

China to Saudi Arabia 'we'll be paying in Yuan in future, or you can forget our business!"

America would collapse soon after!

Justin Case , 11 hours ago link

(Bloomberg) -- U.S. President Donald Trump's decision to blacklist Huawei Technologies Co. is making it more expensive to fatten up China's seafood.

Futures on rapeseed meal, which is used to feed China's massive aquaculture industry, posted their longest winning streak since October on expectations supplies will tighten. The world's top fish producer has stopped buying Canadian rapeseed, also known as canola, for the coming months -- a time when China usually boosts purchases.

"There have so far been no purchases of Canadian canola for arrival between April to August," said Hou Xueling, an analyst at Everbright Futures Co. That means "the bulls could drive up prices to an unimaginable level."

China, the largest buyer of Canadian canola, typically increases imports from April to August to make rapeseed meal. This period is the peak demand season for its fish farming sector, Hou said. The official China National Grain and Oils Information Center also confirmed that the Asian country hasn't bought any Canadian canola for the coming months.

The ongoing diplomatic spat after Canada's arrest of Huawei's Chief Financial Officer Meng Wanzhou late last year on a U.S.

[May 28, 2019] Huawei was maybe 3% of the global smartphone market in Q4 of 2011 but it is set to pass both Samsung and Apple in marketshare within the next five years

May 28, 2019 | www.unz.com

Anon [104] Disclaimer , says: May 17, 2019 at 6:37 pm GMT

"I have been making this point for some time, that immigration leading to lower average IQs, while bad, cannot logically lower scientific productivity because in absolute numbers the talented fraction remains unaffected. There are still the same numbers of smart people."

I wouldn't say that at all; or at least I would say the situation isn't quite what you may think of it. Changing demographics* can certainly change economic/scientific/national policy, perhaps disastrously so. Karlin's piece ends with an ominous reference to the Brazilian president, but it just as easily might have been someone like America's AOC and her very unwise 100% green energy in 10 years scheme. Changing demographics means more AOC's and more turns at the economic disaster roulette wheel. In a democracy (or a representative republic), it's easy for a lower IQ population to impose its disastrous ideas on the higher IQ former majority; hence, the election of Hugo Chavez in Venezuela and the resultant economic dysfunction.

In the future, not only will China produce quality scientific research, but efficiencies conferred by its cultural and ethnic homogeneity may allow its corporations to out compete American companies to a much greater degree than mere scientific discovery might otherwise suggest. Additionally, China's economy will be so large that its companies will be able to afford the massive R&D costs required for making ever more difficult discoveries. Their smaller global competition likely won't be able to match spending, so China's corporations could one day become far more dominant than you might anticipate. After all, it's really about who can best exploit new discoveries and not just about who makes them first. Otherwise, ancient China would have ruled the world; they invented paper, gunpowder, and the compass.

Huawei was maybe 3% of the global smartphone market in Q4 of 2011 but it is set to pass both Samsung and Apple in marketshare within the next five years. You see a bit of this cultural/linguistic/ethnic homogeneity = efficiency phenomenon with the video game industry, specifically in regards to competition between Sony and the much larger, but more multicultural and less efficient Microsoft. Japan's Sony corporation dominates Microsoft in sales just like their car companies dominate their American competition; GM was recently chased out of Europe because it couldn't compete and none of these companies can sell anything in Japan.

Also, notice that the EU core area has a white European population probably on par with the white European-American population, but the US still has the greater share of scientific discovery. I would posit this has much to do with the efficiency conferred by language homogeneity in the United States (English) -- among other things. China in the future will enjoy many of the same efficiencies the US has now, in terms of both language and culture. And this is why India isn't as dynamic as some have predicted. Despite having a "smart fraction", it is a low trust society deeply divided by color and class. Its leadership, imposed by the lower IQ fraction, is also somewhat inept. The same fate awaits the United States under current demographic trends.

*Has there been a single example of a global superpower in modern history that has lost its ethnic majority but still retained functional status and prosperity over the long term? Maybe Singapore (but they weren't a superpower), although I admittedly know little about that country. Austria-Hungary? In any case, I would suspect the sample size here is far too small to make any definitive prediction about the future of scientific discovery and resultant economic success for the United States of America.

[May 28, 2019] Chinese Military Ditching Microsoft Windows To Avoid CIA's 'Hefty Arsenal Of Hacking Tools'

May 28, 2019 | www.zerohedge.com

While the decision hasn't been made official, it was reported earlier this month by Canadian military magazine Kanwa Asian Defense , which noted that Beijing won't just jump over to Linux - and will instead develop their own over fears of US surveillance (and of course, in retaliation for Huawei's blacklisting).

Thanks to the Snowden, Shadow Brokers, and Vault7 leaks, Beijing officials are well aware of the US' hefty arsenal of hacking tools , available for anything from smart TVs to Linux servers, and from routers to common desktop operating systems, such as Windows and Mac.

Since these leaks have revealed that the US can hack into almost anything, the Chinese government's plan is to adopt a "security by obscurity" approach and run a custom operating system that will make it harder for foreign threat actors -- mainly the US -- to spy on Chinese military operations. - ZDnet

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The new OS will be developed by a newly established "Internet Security Information Leadership Group" as reported by the Epoch Times , citing Kanwa.

The group does not trust the "UNIX" multi-user, multi-stroke operating system either , which is used in some of the servers within the People's Liberation Army (PLA), Kanwa reported. Therefore, Chinese authorities ordered to develop an operating system dedicated to the Chinese military.

The group also believes that the German-developed programmable logic controller (PLC), used in 70 percent of China's industrial control system today, poses huge risks to China's national security . In its opinion, China is not a "network superpower," but merely a "network giant," Kanwa reported. Therefore, Chinese authorities have laid out plans to upgrade China's network -- to become more advanced in cyber technology. - Epoch Times

Huawei, meanwhile, is dropping Android OS for its own operating system, code-named HongMeng. It should be ready to launch in late 2019 domestically, and sometime in 2020 for international markets, according to TechRadar .

Google announced on May 20 that it would partially cut off Huawei devices from using the Android operating system, however the Mountain View - based company was given an extension until August 19 by the White House. Other tech companies which have blacklisted Huawei include Qualcomm, ARM, Micron and several tech industry standards organizations such as Bluetooth, SD and WiFi alliances.

"Huawei knew this was coming and was preparing. The OS was ready in January 2018 and this was our 'Plan B'. We did not want to bring the OS to the market as we had a strong relationship with Google and others and did not want to ruin the relationship. Now, we are rolling it out next month," said Huawei's Managing Director and VP of the Middle East Enterprise Business Group.

The OS, which could be called Ark OS when launched , is expected to be compatible with mobile phones, computers, tablets, TVs, connected cars, smartwatch, smart wearables and others.

All applications that work with Android are expected to work with this new OS without any need for further customization, Elshimy claims, adding that users will be able to download apps from the Huawei AppGallery. - TechRadar

It is unknown whether apps available via Google's Play Store will be carried in Huawei's store.


dunlin , 3 minutes ago link

The propagandists don't want us to do this kind of thing. So I'm doing it:

https://www.marketwatch.com/story/with-china-today-as-with-japan-in-1980s-the-us-is-in-denial-about-source-of-deficits-2019-05-28?mod=mw_latestnews

NEW HAVEN, Conn. (Project Syndicate) -- "When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade." So said President Ronald Reagan, commenting on Japan after the Plaza Accord was concluded in September 1985.

Today resembles, in many respects, a remake of this 1980s movie, but with a reality-television star replacing a Hollywood film star in the presidential leading role -- and with a new villain in place of Japan.

Back in the 1980s, Japan was portrayed as America's greatest economic threat -- not only because of allegations of intellectual-property theft, but also because of concerns about currency manipulation, state-sponsored industrial policy, a hollowing out of U.S. manufacturing, and an outsize bilateral trade deficit.

In its standoff with the U.S., Japan ultimately blinked, but it paid a steep price for doing so -- nearly three "lost" decades of economic stagnation and deflation. Today, the same plot features China.

Notwithstanding both countries' objectionable mercantilism, Japan and China had something else in common: They became victims of America's unfortunate habit of making others the scapegoat for its own economic problems.

Like Japan bashing in the 1980s, China bashing today is an outgrowth of America's increasingly insidious macroeconomic imbalances. In both cases, a dramatic shortfall in U.S. domestic saving spawned large current-account and trade deficits, setting the stage for battles, 30 years apart, with Asia's two economic giants.

Deficits made in America

When Reagan took office in January 1981, the net domestic saving rate stood at 7.8% of national income, and the current account was basically balanced. Within two and a half years, courtesy of Reagan's wildly popular tax cuts, the domestic saving rate had plunged to 3.7%, and the current account and the merchandise trade balances swung into perpetual deficit.

In this important respect, America's so-called trade problem was very much of its own making. Yet the Reagan administration was in denial. There was little or no appreciation of the link between saving and trade imbalances. Instead, the blame was pinned on Japan, which accounted for 42% of U.S. goods trade deficits in the first half of the 1980s.

Japan bashing then took on a life of its own with a wide range of grievances over unfair and illegal trade practices. Leading the charge back then was a young deputy U.S. trade representative named Robert Lighthizer. Fast-forward some 30 years and the similarities are painfully evident.

Predictable decline in savings

Unlike Reagan, President Donald Trump did not inherit a U.S. economy with an ample reservoir of saving. When Trump took office in January 2017, the net domestic saving rate was just 3%, well below half the rate at the onset of the Reagan era. But, like his predecessor, who waxed eloquently of a new "morning in America," Trump also opted for large tax cuts -- this time to "make America great again."

The U.S. national savings rate has fallen from 7.8% of GDP when Reagan took office to just 2.8% today. The result was a predictable widening of the federal budget deficit, which more than offset the cyclical surge in private saving that normally accompanies a maturing economic expansion. As a result, the net domestic saving rate actually edged down to 2.8% of national income by late 2018, keeping America's international balances deep in the red -- with the current-account deficit at 2.6% of gross domestic product and the merchandise trade gap at 4.5% in late 2018.

And that's where China assumes the role that Japan played in the 1980s. On the surface, the threat seems more dire.

After all, China accounted for 48% of the U.S. merchandise trade deficit in 2018, compared to Japan's 42% share in the first half of the 1980s. But the comparison is distorted by global supply chains, which basically didn't exist in the 1980s.

Data from the OECD and the World Trade Organization suggest that about 35%-40% of the bilateral U.S.-China trade deficit reflects inputs made outside of China but assembled and shipped to the U.S. from China. That means the made-in-China portion of today's U.S. trade deficit is actually smaller than Japan's share of the 1980s.

Like the Japan bashing of the 1980s, today's outbreak of China bashing has been conveniently excised from America's broader macroeconomic context. That is a serious mistake. Without raising national saving -- highly unlikely under the current U.S. budget trajectory -- trade will simply be shifted away from China to America's other trading partners.

With this trade diversion likely to migrate to higher-cost platforms around the world, American consumers will be hit with the functional equivalent of a tax hike.

Lighthizer as clueless today as he was then

Ironically, Trump has summoned the same Robert Lighthizer, veteran of the Japan trade battles of the 1980s, to lead the charge against China. Unfortunately, Lighthizer seems as clueless about the macro argument today as he was back then.

In both episodes, the U.S. was in denial, bordering on delusion.

Basking in the warm glow of untested supply-side economics -- especially the theory that tax cuts would be self-financing -- the Reagan administration failed to appreciate the links between mounting budget and trade deficits.

Today, the seductive power of low interest rates, coupled with the latest strain of voodoo economics -- Modern Monetary Theory -- is equally alluring for the Trump administration and a bipartisan consensus of China bashers in the Congress.

The tough macroeconomic constraints facing a saving-short U.S. economy are ignored for good reason: there is no U.S. political constituency for reducing trade deficits by cutting budget deficits and thereby boosting domestic saving.

America wants to have its cake and eat it, with a health-care system that swallows 18% of its GDP, defense spending that exceeds the combined sum of the world's next seven largest military budgets, and tax cuts that have reduced federal government revenue to 16.5% of GDP, well below the 17.4% average of the past 50 years.

This remake of an old movie is disconcerting, to say the least. Once again, the U.S. has found it far easier to bash others -- Japan then, China now -- than to live within its means. This time, however, the movie might have a very different ending.

motherjones , 5 minutes ago link

Why would anyone use Microsoft Windows for an operating system, when Linux is free and open source?

tonye , 2 minutes ago link

I use both. Up to Ubuntu with Mint. Plus Raspbian and Android.

But, for somethings, you can't beat Microsoft for ease of use and interoperability. I rip and transcode my DVDs in Windows 7. I use Microsoft Office '13. Browse using Firefox, Thor and Chrome. And I have some specific audio processing tools that only exist in Windows.

...

Son of Captain Nemo , 7 minutes ago link

Makes perfect sense to me.

And if you are a Chinese military or other intelligence professional with access to a "SIPR" class network it probably would be safe bet that US manufactured computer systems and networking gear has been appropriately "modified" not to use those chipsets since long before the "deal" of "deals" was made with the Yankee Dog ( http://www.911research.wtc7.net/wtc/groundzero/cleanup.html ) to send the remaining American technical manufacturing labor force out on the street!...

Rinse and repeat for India's government intel and military professionals as well!....

me or you , 7 minutes ago link

I'm FOSSY: How Huawei Fans Can Beat Google's Play Store Ban, US-China Trade War

RedBaron616 , 12 minutes ago link

If only the Chinese military runs it, who's going to search for bugs? Only the NSA. LOL

Building a unique operating system for their military isn't going to be a cakewalk, that's for certain.

silverer , 13 minutes ago link

Hooray! The Chinese will pick up the tab to refine Linux. Open source. No CIA in there without seeing it.

Winston Churchill , 8 minutes ago link

Doesn't deal with the hardware back doors, but its a start. I do believe they have their own o/s already waiting after Kaspersky got banned a few years ago for finding both the hardware and s/w backdoors.

That hard disk firmware that called home was a classic.

Kafir Goyim , 15 minutes ago link

Oh, yes. They're going to develop their own OS, just like Huawei. What ********. Huawei will use vanilla android and China will pull an Apple, and rebrand Linux. But it sounds good, to say you're going to crank out a brand new operating system, like it's a CRUD web app.

youshallnotkill , 11 minutes ago link

iOS runs the Mach kernel not Linux.

[May 28, 2019] Apple Braces For China's Wrath As Citi Slashes China iPhone Shipments, Cowen Warns Of Profit Plunge

Notable quotes:
"... Since Apple gets 20% of its revenue from China and manufactures its iPhones (which generated 60% of its total 2018 revenue) there, few companies are as exposed to Beijing's retaliation. Apple has already been suffering in the region, seeing sliding revenue as consumers buy more phones from Huawei and other local brands. ..."
"... Citi warns that independent due diligence reveals " a less favorable brand image desire for iPhone and this has very recently deteriorated." As a result, Citi is materially lowering its sales and EPS estimates below consensus as China represents 18% of Apple sales "which we believe could be cut in half. " ..."
May 28, 2019 | www.zerohedge.com

"Apple's iPhone, iPad, and Mac systems are at risk of experiencing demand destruction due to collateral damage from the sales ban to Huawei." U.S. companies such as Apple and Nike, which rely on China for a major part of their growth and which have targets painted on their backs as Beijing and Washington ratchet up trade-war tensions, are "bracing for China's retaliatory wrath" according to Bloomberg .

While Beijing has yet to formally retaliate after Trump blacklisted Huawei, Chinese state media last week said China is "well armed to deliver counterpunches," without giving specific details. And as companies await China's next move, there is rising, if unwelcome, suspense over what form retaliation might take. Companies might "just have to read the tea leaves on how their business operations are being treated,'' Erin Ennis, senior vice president of the U.S.-China Business Council, said in an interview with Bloomberg Television on Saturday.

As Bloomberg notes, one option China could use is from the 2017 "template" when relations with South Korea deteriorated over Seoul's decision to deploy a missile shield. The government curbed travel to South Korea, hurting cosmetics companies that rely on Chinese tourists, while local authorities shut most of Lotte Shopping's China stores, alleging fire safety violations. Consumers boycotted South Korean products, dealing a devastating blow to Hyundai Motor sales. A similar pattern of action took place during the 2013 trade feud with Japan which escalated over territorial disagreements in the East China Sea.

... ... ...

Since Apple gets 20% of its revenue from China and manufactures its iPhones (which generated 60% of its total 2018 revenue) there, few companies are as exposed to Beijing's retaliation. Apple has already been suffering in the region, seeing sliding revenue as consumers buy more phones from Huawei and other local brands. According to relatively optimistic research by Wedbush analyst Dan Ives, blowback from Trump's Huawei ban could cost Apple about 3% to 5% of its iPhone sales in China.

... ... ...

Citi warns that independent due diligence reveals " a less favorable brand image desire for iPhone and this has very recently deteriorated." As a result, Citi is materially lowering its sales and EPS estimates below consensus as China represents 18% of Apple sales "which we believe could be cut in half. "

[May 27, 2019] Hobbling Huawei- Inside the U.S. war on China's tech giant

The article is devoid any technical substance and operated with value threat notion. As such this attempt of to spread FUD. In this case the USA are fighting to preserve their technological edge by trying to destroy the leading China company which became a competitor to domestic firms.
Control of Wi-Fi network is damaging to the targeted nation security. The question is: who would allow such a control? All measures will be deployed against foreign powers exploitation.
But what about control of telecoms and putting NSA equipment directly in telecom data centers like the NSA practices domestically and in vassal countries, for example, in Ukraine. And they manages to spy of Angela Merkel phone in Germany. Please note that Germany is one of the most sophisticated technically nations in the world.
Notable quotes:
"... The anti-Huawei campaign intensified last week, when President Donald Trump signed an executive order that effectively banned the use of Huawei equipment in U.S. telecom networks on national security grounds and the Commerce Department put limits on the firm's purchasing of U.S. technology. Google's parent, Alphabet, suspended some of its business with Huawei , Reuters reported. ..."
"... The Americans are now campaigning aggressively to contain Huawei as part of a much broader effort to check Beijing's growing military might under President Xi Jinping. Strengthening cyber operations is a key element in the sweeping military overhaul that Xi launched soon after taking power in 2012, according to official U.S. and Chinese military documents. The United States has accused China of widespread, state-sponsored hacking for strategic and commercial gain. ..."
"... "Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger," the company said in a statement in response to questions from Reuters. Such moves, it said, would only limit "customers in the U.S. to inferior and more expensive alternatives." ..."
May 27, 2019 | www.reuters.com

n early 2018, in a complex of low-rise buildings in the Australian capital, a team of government hackers was engaging in a destructive digital war game.

The operatives – agents of the Australian Signals Directorate, the nation's top-secret eavesdropping agency – had been given a challenge. With all the offensive cyber tools at their disposal, what harm could they inflict if they had access to equipment installed in the 5G network, the next-generation mobile communications technology, of a target nation?

What the team found, say current and former government officials, was sobering for Australian security and political leaders: The offensive potential of 5G was so great that if Australia were on the receiving end of such attacks, the country could be seriously exposed. The understanding of how 5G could be exploited for spying and to sabotage critical infrastructure changed everything for the Australians, according to people familiar with the deliberations.

Mike Burgess, the head of the signals directorate, recently explained why the security of fifth generation, or 5G, technology was so important: It will be integral to the communications at the heart of a country's critical infrastructure - everything from electric power to water supplies to sewage, he said in a March speech at a Sydney research institute.

Washington is widely seen as having taken the initiative in the global campaign against Huawei Technologies Co Ltd, a tech juggernaut that in the three decades since its founding has become a pillar of Beijing's bid to expand its global influence. Yet Reuters interviews with more than two dozen current and former Western officials show it was the Australians who led the way in pressing for action on 5G; that the United States was initially slow to act; and that Britain and other European countries are caught between security concerns and the competitive prices offered by Huawei.

The Australians had long harbored misgivings about Huawei in existing networks, but the 5G war game was a turning point. About six months after the simulation began, the Australian government effectively banned Huawei, the world's largest maker of telecom networking gear, from any involvement in its 5G plans. An Australian government spokeswoman declined to comment on the war game.

After the Australians shared their findings with U.S. leaders, other countries, including the United States, moved to restrict Huawei.

The anti-Huawei campaign intensified last week, when President Donald Trump signed an executive order that effectively banned the use of Huawei equipment in U.S. telecom networks on national security grounds and the Commerce Department put limits on the firm's purchasing of U.S. technology. Google's parent, Alphabet, suspended some of its business with Huawei , Reuters reported.

Until the middle of last year, the U.S. government largely "wasn't paying attention," said retired U.S. Marine Corps General James Jones, who served as national security adviser to President Barack Obama. What spurred senior U.S. officials into action? A sudden dawning of what 5G will bring, according to Jones.

"This has been a very, very fast-moving realization" in terms of understanding the technology, he said. "I think most people were treating it as a kind of evolutionary step as opposed to a revolutionary step. And now that light has come on."

The Americans are now campaigning aggressively to contain Huawei as part of a much broader effort to check Beijing's growing military might under President Xi Jinping. Strengthening cyber operations is a key element in the sweeping military overhaul that Xi launched soon after taking power in 2012, according to official U.S. and Chinese military documents. The United States has accused China of widespread, state-sponsored hacking for strategic and commercial gain.

If Huawei gains a foothold in global 5G networks, Washington fears this will give Beijing an unprecedented opportunity to attack critical infrastructure and compromise intelligence sharing with key allies. Senior Western security officials say this could involve cyber attacks on public utilities, communication networks and key financial centers.

In any military clash, such attacks would amount to a dramatic change in the nature of war, inflicting economic harm and disrupting civilian life far from the conflict without bullets, bombs or blockades. To be sure, China would also be vulnerable to attacks from the U.S. and its allies. Beijing complained in a 2015 defense document, "China's Military Strategy," that it has already been a victim of cyber-espionage, without identifying suspects. Documents from the National Security Agency leaked by American whistleblower Edward Snowden showed that the United States hacked into Huawei's systems, according to media reports. Reuters couldn't independently verify that such intrusions took place.

However, blocking Huawei is a huge challenge for Washington and its closest allies, particularly the other members of the so-called Five Eyes intelligence-sharing group – Britain, Canada, Australia and New Zealand. From humble beginnings in the 1980s in the southern Chinese boom town of Shenzhen, Huawei has grown to become a technology giant that is deeply embedded in global communications networks and poised to dominate 5G infrastructure. There are few global alternatives to Huawei, which has financial muscle – the company reported revenue for 2018 jumped almost 20 percent to more than $100 billion – as well as competitive technology and the political backing of Beijing.

"Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger," the company said in a statement in response to questions from Reuters. Such moves, it said, would only limit "customers in the U.S. to inferior and more expensive alternatives."

For countries that exclude Huawei there is a risk of retaliation from Beijing. Since Australia banned the company from its 5G networks last year, it has experienced disruption to its coal exports to China, including customs delays on the Chinese side. In a statement, China's foreign ministry said it treated "all foreign coal equally" and that to assert "China has banned the import of Australian coal does not accord with the facts."

Tension over Huawei is also exposing divisions in the Five Eyes group, which has been a foundation of the post-Second World War Western security architecture. During a trip to London on May 8, U.S. Secretary of State Mike Pompeo issued a stark warning to Britain, which has not ruled out using Huawei in its 5G networks. "Insufficient security will impede the United States' ability to share certain information within trusted networks," he said. "This is exactly what China wants; they want to divide Western alliances through bits and bytes, not bullets and bombs."

Chinese President Xi Jinping (left) is shown around the offices of Huawei in London by company founder Ren Zhengfei in 2015. Ren has rejected allegations that Huawei would engage in espionage on behalf of the Chinese government. REUTERS/Matthew Lloyd/Pool
Employees work on a mobile phone production line at Huawei's factory campus in the southern Chinese city of Dongguan. Huawei has eclipsed telecom equipment giants Ericsson and Nokia in terms of market share. REUTERS/Tyrone Siu

Huawei's 74-year old founder, Ren Zhengfei, is a former officer in China's military, the People's Liberation Army. "Mr. Ren has always maintained the integrity and independence of Huawei," the company said. "We have never been asked to cooperate with spying and we would refuse to do so under any circumstance."

In an interview with Reuters at the company's headquarters in Shenzhen, Eric Xu, a deputy chairman, said Huawei had not allowed any government to install so-called backdoors in its equipment - illicit access that could enable espionage or sabotage - and would never do so. He said 5G was more secure than earlier systems.

"China has not and will not demand companies or individuals use methods that run counter to local laws or via installing 'backdoors' to collect or provide the Chinese government with data, information or intelligence from home or abroad," the Chinese foreign ministry said in a statement in response to questions from Reuters.

Washington argues that surreptitious backdoors aren't necessarily needed to wreak havoc in 5G systems. The systems will rely heavily on software updates pushed out by equipment suppliers - and that access to the 5G network, says the United States, potentially could be used to deploy malicious code.

So far, America hasn't publicly produced hard evidence that Huawei equipment has been used for spying.

Asked whether the United States was slow to react to potential threats posed by 5G, Robert Strayer, the State Department's lead cyber policy diplomat, told Reuters that America had long been concerned about Chinese telecom companies, but that over the past year, as 5G loomed closer, "we were starting to talk more and more with our allies." Banning Huawei from 5G networks remains "an end goal," he said.

[May 24, 2019] No Huawei out: Prez Trump s game of chicken with China has serious consequences -- Techno balkanization by Thomas Claburn

Notable quotes:
"... The sort of result that's to be expected from a Fire-Aim-Ready approach to policy making ..."
"... They're trying real hard to take a large company out of business without any evidence of said company doing anything wrong. Never even looked at them before but this definitely makes me want to get a Huawei phone next. And to stay well clear of everything from any US based company. ..."
"... Nothing here is really Huawei's fault - they're just the coincidental closest target to impact point of a greater trade war. All the posturing against Huawei specifically is just that - posturing. ..."
"... Basically it's because Mr. President is paranoid and somewhat crazy. A sane president would not be so childish, ..."
"... It's an empire in decline fighting the was for global supremacy, the democrats are just as crazy, not that I like Trump ..."
"... It's often said that wounded animals are the most dangerous. That's what this looks like to me. The US empire might be near dead, but one swipe of its huge tail can still break you if you get in the way. ..."
"... The US will never be as dominant as it was in the decades after WW II, but that was a one shot deal mainly because it had the only large industrial base that hadn't been blown to smithereens by the end of the war. ..."
"... Indeed. And how much have we heard about backdoors in Cisco and others here of late - it's a multiple, not a percentage. They all need a bit of pointing and laughing in a sense. IIRC, the telnet "backdoor" required one to be inside the LAN already...while the other baddies the Reg has reported on did not. ..."
May 24, 2019 | theregister.co.uk

No cybersecurity rules means networks are destined to be balkanized

... ... ...

One possible consequence, Steven Weber, professor of political science and international relations at UC Berkeley, told The Register , is a world where boundaries are shaped more by technology standards than geographic features.

That is to say, we may be headed toward nationalized technology stacks that don't interoperate and nationalized supply chains. This defeats the entire purpose of an open internet

... ... ...

Google has suspended Huawei's license to use its Android mobile operating system. The decision prevents the Chinese company from adding Google services like Gmail, Google Maps, Play Store and other Google apps to new devices, though existing ones will continue to function . It also complicates security updates and all but guarantees Huawei will forge ahead with its rumored fork of the Android Open Source Project.

Microsoft has pulled the Huawei MateBook X Pro from its online store; Huawei devices are no longer available at BestBuy.com. At Amazon.com, however, Huawei laptops, tablets and phones can still be had.


Huawei forward

Huawei could open up a branch company in the USA. Design, program, manufacture, and market those USA products as a USA company. Nothing left to target.

Of course, still sending the profits home.

Re: Huawei forward

Also Chinese investors could buy a significant number of shares of US companies, making them suspect of Chinese affiliation, and the US government will be faced with the dilemma of closing US companies. Re: Huawei forward

Trump conveniently forgets..

Anything that doesn't accord with his very, very limited world view. He also tends to forget which lies he told last time and will happily contradict himself.. Re: Huawei forward

Unless the Chinese govt rolls over and declares Trump the winner of his trade war, apparently. If that happens, all the security worries will blow away like a fart in the wind.

How does that work, exactly? Well, since Trump has never bothered to spell out what he wants the Chinese to do, he can declare victory at any moment, but he wants a statement of surrender to show the faithful.

3 , Collateral Damage

Sounds like there's going to be a lot of it in this war. I wonder if our leader has heard of it?

Re: Collateral Damage

The sort of result that's to be expected from a Fire-Aim-Ready approach to policy making

Anonymous Coward , 2 days
Disgusting

They're trying real hard to take a large company out of business without any evidence of said company doing anything wrong. Never even looked at them before but this definitely makes me want to get a Huawei phone next. And to stay well clear of everything from any US based company.

Anonymous Coward , 2 days Anonymous Coward , 2 days
Re: Disgusting

Nothing here is really Huawei's fault - they're just the coincidental closest target to impact point of a greater trade war. All the posturing against Huawei specifically is just that - posturing.

But that's not the same as saying the greater trade war is without merit. It absolutely makes a difference how overall trade between the US and China is structured, and a certain segment of our market has been saying for a long time that we had the short end of the stick here and needed to change things. Even the El Reg author acknowledged that.

Of course it's much more complex to ask whether this tactic is actually going to fix anything, or just make things worse. Your mileage may vary.

And I can imagine that if you are neither an American nor a Chinese citizen, then you don't really stand to gain anything from this fight no matter who wins, so it's understandable if you're more frustrated than anything else. I don't blame anyone for not wanting to jump into a fight that doesn't affect them - just remember that it does affect someone else.

Anonymous Coward ,

It will be interesting to see what the Chinese targets are going to be. Probably GM and farmers since that hits Trump's base - just as electioneering starts for 2020.

Then wait for Boeing to be really suffering from the 737Max before announcing a ban on Boeing in China (airbus manufacture there)

Anonymous Coward

Re: Airbus & China

There is a lot of 'good ole boy' stuff that goes into every Airbus plane no matter where it is made so Trump could easily stop Airbus from operating in China.

China could retaliate by treatening to start calling in all the US Debt that it carries. That will sink the DOW in a flash. The Trump bubble will burst and he'll be impeached (well that's what I hope)

The Yuan could easily replace the USD as the world's currency.

Trump had better watch out or this will end badly for him. His grasp of history relating to trade wars can probably be measured on a pinhead.

Doctor Syntax , 2 days
Re: Airbus & China

"His grasp of history relating to trade wars can probably be measured on a pinhead."

Just trade wars?

Doctor Syntax , 2 days
Nuts in May

Basically it's because Mr. President is paranoid and somewhat crazy. A sane president would not be so childish,

Doctor Syntax , 2 days Doctor Syntax , 2 days
Re: Nuts in May

It's an empire in decline fighting the was for global supremacy, the democrats are just as crazy, not that I like Trump

Doctor Syntax ,
Re: Nuts in May

It's often said that wounded animals are the most dangerous. That's what this looks like to me. The US empire might be near dead, but one swipe of its huge tail can still break you if you get in the way.

Doctor Syntax ,
Empire in decline?

I seem to remember the same being said in the 80s when it was Japan that had the huge trade advantage over the US. Now granted China is FAR larger and will easily overtake the US as world's largest economy without its per capita GDP needing to exceed 30% of the US's, but like Japan did with its aging population China has some demographic challenges awaiting it when the parents of the two "one child" generations reach retirement age, which is just beginning.

The US will never be as dominant as it was in the decades after WW II, but that was a one shot deal mainly because it had the only large industrial base that hadn't been blown to smithereens by the end of the war.

Doctor Syntax ,
Re: Excellent article El Reg

Indeed. And how much have we heard about backdoors in Cisco and others here of late - it's a multiple, not a percentage. They all need a bit of pointing and laughing in a sense. IIRC, the telnet "backdoor" required one to be inside the LAN already...while the other baddies the Reg has reported on did not.

Doctor Syntax ,
Re: Excellent article El Reg

What makes the Huawei router telnet backdoor (now patched) unusual is that for 8 long years GCHQ has been code-reviewing Huawei products in a dedicated department. Didn't that include routers?

Doctor Syntax , 2 days
Japanese CPU designer Arm has a facility in Austin, Texas, USA, that validates Arm-compatible and licensed chip designs for customers around the world, including those in China, and thus is restricted by the White House's latest crackdown.

Moral of this story. Don't do business with the US, they will turn on you whenever it's financially beneficial for them and unilaterally break deals, without any means for recourse.

An unreliable partner. Like any other bully, best to let them play in the sandbox by themselves.

el kabong
Having a presence in the US has become a liability

ARM would be wise to shut their operations in Texas.

el kabong
5G patents....

What is interesting is that Huawei got some fundamental patents in connection to 5G, without licensing these patents there will be no 5G role out, and Nokia and Ericsson are at least 1 year behind Huawei in development of 5G ...

This is political, and is being used by Trump to get China to move on the Trade agreement, which he want to "fix", but it might end up causing the rollout of 5G to be delayed by years.

, el kabong , veti
Re: 5G patents....

Hmm. Delay 5G by five years? Not a bad idea.

, veti , Lars
Re: 5G patents....

"Trade agreement, which he want to "fix"".

The problem is that he has no idea of what to fix and how, and he still claims China is paying for his import tariffs, or is he just lying.

Lock him up...

, Lars , Lars , Doctor Syntax
Re: 5G patents....

"What are the Chinese going to do - sue them in Federal court ?"

What could happen is that Huawei starts to sue every competitor, in every market the competitor sells in, whose competing products use the components they're not allowed to use on the basis of unfair competition, illegal government subsidy or whatever fits in the jurisdiction. There are a lot more courts around the world than Federal courts.

, Doctor Syntax , Kabukiwookie
Re: 5G patents....

As if the US is goi g to honour those patents when it's no longer convenient.

International law is for everyone else, just look at the US' violations of the the Venezuan embassy in Washington and railroading the UN's investigation into US war crimes.

We have a US govt that thinks that 'might makes right'. Literally the definition of a rogue state.

little while back on El Reg , Anonymous Coward where it was quoted in the article as saying:

"The 'backdoor' that Bloomberg refers to is Telnet, which is a protocol that is commonly used by many vendors in the industry for performing diagnostic functions. It would not have been accessible from the internet," said the telco in a statement to The Register, adding: "Bloomberg is incorrect in saying that this 'could have given Huawei unauthorized access to the carrier's fixed-line network in Italy'.

"This was nothing more than a failure to remove a diagnostic function after development." little while back on El Reg , Anonymous Coward little while back on El Reg , Anonymous Coward , Steve Davies 3

re: Bloomberg Journalism

Remember it was Bloomberg that published the article about motherboards that were made in China having an extra chip that 'leaked' stuff back to china.

Apple and Supermicro were the main targets (amongst others).

Both companies undertook extensive investigations and found no evidence of these chips.

Despite repeated appeals Bloomberg refused to relase their evidence to the world.

To me this implies that it was a bit of fiction designed to make certain stocks go down so that shorters could make a killing.

Who would you rather believe eh?

, Steve Davies 3
Techno-balkanisation

People may take it for granted that their 'phones work everywhere but it was not ever thus. I used to have to borrow a tri-band 'phone for visits to the US. My normal mobile worked everywhere except the US. Later on I had the same problem with South Korea.

There was a time (back in the analogue TV days) when a TV bought in one European country wouldn't work in many of the others. Digital TV is based on common underlying compression standards. (Although, even here there is scope for creating artificial incompatibilities.) Unfortunately there is no common transmission standard, although DVB satellite transmission schemes are fairly widely adopted.

People can now move almost anywhere in the world reasonably cheaply. Some of their gadgets are useless outside their home country.

Many of these problems are caused by "special interest groups", manufacturer inspired protectionism and plain political stupidity.

, Steve Davies 3 , Steve Davies 3
Re: Techno-balkanisation

People can now move almost anywhere in the world reasonably cheaply. Some of their gadgets are useless outside their home country.

Many outside electrical gadgets have problems in the USA. They use a different voltage and AC frequency from that used by developed countries. Happily, that means that their stuff doesn't work outside the "land of the fee".

, Steve Davies 3
Difficult to back out

The Trump administration has started a trade war with China, which has responded in kind. Trade wars eventually come to an end even if it takes a long time. The "Cold War" with the Soviet Union was carried out as both an arms race, and a trade war and while that took 45 years to conclude, it did end.

Masking the US/China trade war as a security issue doesn't work very well. Threatening to stop the sale of mobile phones using a US designed open source operating system because of concerns about security holes in a yet to be rolled out 5g core network is a weak argument. If there are 5G issues, why not 4G?. Where is the evidence, given that Huawei have set up a joint venture with GCHQ to examine the core network software.? Is this another "Weapons of Mass Destruction" report where we are asked to believe without evidence. We all ended up with egg on our collective faces then. Tony Blair's reputation was, and still is, trashed. May's reputation could similarly ............ (Ok, I concede that would be a stretch!)

The weakest part of the argument is that it denies itself a way out when the trade war ends (or is suspended). Donald and Xi could come to a truce tomorrow (a beautiful victory?) but that would leave the declared security issues unresolved. If the US removes the trade ban on Huawei surely they will be letting Chinese spying tools into strategic national networks. What about the mobile phones?. They are said to be a security risk now because the US (parroted by 5 eyes) says so. That won't magically disappear because the US and China come to an agreement on steel imports. Will the UK and other countries who have followed the lead of the US similarly change track when the US and China make up. ?

We are following our special relationship partners down a deep rabbit hole based on the assertions of some highly suspect political operators.

, Steve Davies 3 Reg Reader 1 , 2 days
Re: Difficult to back out

Well said. Much of this problem is due to the deregulation of Corporate financials. I'm not a finance person so am not sure that's the correct term. What I'm talking about is at the time of globalization/free trade when RRSPs were allowed to participate in corporate stock outside of national scope. Such was the case in Canada at the time. Since then, these corporations outsource as much work as possible to developing economies to reduce cost and most no longer have any R&D worth mentioning, all in the name of increasing profit for the Ponzi/Pyramid scheme that is the deregulated stock market and that is effect of changing the corporate tax burden. Since the late 1970s corporations have been able to increasingly buy their own taxation system, it seems. The more regulated, or in authoritarian regimes financially controlled, corporations still seem to have effective R&D.

The above boils down to the populace having been duped by bad faith politicians. As much I don't like Trump and his crazy train this all started a long time before him.

DCFusor , 1 day
Re: Difficult to back out

Actually, the politicians themselves were duped by the bad faith bankers and in general people who got compensated in options. It can even look like good intentions.

The deregulation that allowed for evil things like CDS (being able to buy fire insurance on your neighbor's house...without his knowledge, and even get a can of gasoline in the deal) - was sold as a way to make getting loans easier for minorities so they could buy homes and have a stake in society - a good thing that would result in less crime and violence and more self-policing.

What it actually was is more interesting - in the insurance biz it's illegal to sell insurance to other than the entity directly involved, and there are also regulations that the insurance company has to keep the buck to pay claims in hand - this was all missing from the Frank-Clinton removal of Glass Steagall.

The road to hell is indeed paved with good intentions, or at least can be sold as such.

In hindsight, we know that some of the financialization tech new instruments invented as a result by Blythe Masters of JP Morgan and some others developed in the City of London turned out to be "weapons of financial mass destruction".

There was plenty of blame to go around (in this case the left side of the aisle started the ball rolling, but...no one was at all innocent). From the banks making loans that were obviously never going to be paid off - no need to care as now Goldman Sachs, AIG, JP Morgan, and of course Deutsche bank were standing there buying the loans to sell tranches at a profit - to the people taking those loans, to the people buying the tranches of them....

cjrcl , 2 days
Re: Difficult to back out

It seems that China will be the latest name on the list including Iran, Syria, North Korea ecetera.

If so I think it is time for China to take Taiwan back.

Kabukiwookie , 1 day
Re: Difficult to back out

If so I think it is time for China to take Taiwan back.

That wouldn't the US modus operandus. There'd need to be a false flag operation like the USS Liberty (but done without exposing it's actually a false flag.

BebopWeBop , 1 day
Re: Difficult to back out

USS Liberty a false flag operation - ahh setting up a US intelligence vessel to be shot up by the Israelis. How did rhapsody work or were they hit by US aircraft in disguise?

Werepaws , 2 days
America's mental illness

Wow. The Americans have certainly let their paranoia show immensely

But this move of what they have done is bassically similar to what the USA were claiming Huawei and China could do shutting off 5G services because of their kit

America certainty have a paranoid schizophrenia mental illness building

Steve Davies 3 , 2 days
Re: America's mental illness

If you of a certain age you can remember the

"Are you now or were you ever a member of the Communist party" questions of the 1950's. The reds under every bed paranoia of that age is alive and kicking.

WonkoTheSane , 1 day
Re: America's mental illness

"Are you now or were you ever a member of the Communist party?"

That question was STILL on the forms they used to hand out on flights into the USA in 2001 (pre-9/11).

DCFusor , 1 day
Re: America's mental illness

Yeah, I had to answer that one for a security clearance in the '70's myself. One wonders how Brennan, Chief of CIA for the previous admin, was an avowed communist yet still managed to get that job?

His role in the current thrashing is interesting to say the least.

JohnFen , 1 day
Re: America's mental illness

Brennan is not an "avowed communist". That lie came about based on the fact that he voted for Gus Hall, the Communist Party presidential candidate in 1976. There is no evidence that Brennan himself was ever a member of the Communist Party or even that his political viewpoint is communist generally.

But that his political enemies consider calling him a communist to be an effective attack says a lot about American paranoia.

Yet Another Anonymous coward , 1 day
Re: America's mental illness

>That question was STILL on the forms they used to hand out on flights into the USA in 2001

Do they still ask 3 year olds if they were involved in Nazi war crimes?

Milton , 2 days
Right ... but perhaps for the wrong reasons

Ok: Trump is a nasty, corrupt, ignorant child and his motivations in this are probably as petty and wrong as is ever the case. And you can't ignore the fact that this is happening in the context of a wider trade war, which, while it may have some logical underpinnings (China does steal and cheat on a an epic scale) is also contaminated by the Orange Idiot's floundeing incompetence and wayward spite.

So I am no apologist for Trump or his toxically incompetent administration: it may actually be almost as vile as the Chinese regime at this point in time.

But the fact that the attack on Huawei is being mounted by people who are stupid, ignorant and explicitly odious doesn't mean it is the wrong thing to do.

I've said before that it is irrelevant whether Huawei has been caught producing dodgy hard- or software and I have framed my point in terms of capabilities and intentions: emphasising that capabilities are what count here.

It's simply this: China has an authoritarian, undemocratic, repressive, ofttimes murderous regime; it ruthlessly oppresses minorities among its citizens; practises draconian censorship; has shown every sign of territorial aggressiveness and growing military adventurism; is building up its armed forces at a worrying rate; is becoming ever wealthier and more powerful; and has the ability both in technological know-how and in industrial capacity to supply a sizeable fraction of the free world's communications and computing infrastructure. With no checks or balances or transparency, the Chinese state could compel any of its companies to do whatever it wishes ("Make this happen for us, and keep your mouths shut about it, or next month you will be executed for corruption"), and every aspect of its behaviour in the last 20 years proves that it will use technology -- a wonderful equaliser in the world of asymmetric warfare -- for its own ends, lying, stealing and cheating at every turn. I don't see how this is even a controversial statement by this point.

So the question is not what China intends, but what it can do, and this ought to worry us very badly. Given everything we know of China's government, it would be suicidally stupid to gift it with power, influence or any kind of entry into our just-about-free societies.

As the west wakes up to the threat of China, actual conflict becomes ever more likely (I would personally suggest, inevitable, unless regime change occurs, which seems most improbable). China will become ever more strongly motivated to resort to technological sabotage and espionage. Right now we don't want China stealing data on our (for example) nuclear submarine fleet. If it comes to conflict, we don't want them bricking those boats while they're still dockside.

So Huawei is just the start. China certainly could use its companies for malign ends: so we must act protectively, as if it is doing so, and will do so in the future.

jmch , 2 days
Re: Right ... but perhaps for the wrong reasons

"So the question is not what China intends, but what it can do"

This goes against pretty much every standard the Western world stands for. China COULD compel Huawei to put in backdoors. But then again Huawei kit is probably the most closely-studied kit in the world, and it is trivially easy to compare firmware releases to make sure that the kit you have is running the same version as a trusted reference version. It might be more difficult to check that the hardware you get isn't a one-off specially modified version instead of the standard one, but the organisations likely to be targeted in this way are either big enough to have the resources for deep checks or would not be buying Huawei kit anyway.

For the vast majority of commercial customers and 100% of retail customers, having eg GCHQ check out the kit is a perfectly acceptable safeguard, indeed one which they do not even get from other vendors' kit (eg Cisco) which might be backdoored with other countries' spying malware.

jmch , 2 days jmch , 2 days jmch , 2 days
Re: Right ... but perhaps for the wrong reasons

> China COULD compel Huawei to put in backdoors.

Which is exactly why you should use them.

Which is better security?

A, buy kit from china and check it for backdoors, weaknesses, vulnerabilities.

C, buy kit from a company HQ in Finland (but with chips made all over the world) and don't bother checking for any flaws, vulnerabilities etc but trust it implicitly cos Finns are really nice people.

jmch , 2 days jmch , 2 days
Re: Huawei equipment can't be trusted?

And therein is the problem. It is not pres Trump, he is only supporting the US 3 letter agencies and they are the ones with the big problem. Their problem is that they want to put backdoors in Huawei networking equipment but if they do that it means that the Chinese government will have samples of the US spying software and there is the big problem. The 3 letter agencies can only see one way out of that and it is banning Huawei equipment, in their eyes that makes the problem go away and leaves their spying on the population as normal using the so called American equipment.;

jmch , 2 days
"deal with longstanding issues like government favoritism toward local companies"

How is it that that can be a point of contention ? Name me one country in this world that doesn't favor local companies.

These people company representatives who are complaining about local favoritism would be howling like wolves if Huawei was given favor in the US over any one of them.

I'm not saying that there are no reasons to be unhappy about business with China, but that is not one of them.

[May 24, 2019] Lets say the sake of argument Huawei is not guilty of putting spyware in their 5G stuff. How would US prove it? Huawei basically given out there source code, and apart from such slack security features nothing was found, but that was apparently no enough.

May 24, 2019 | theregister.co.uk

Here's the problem. Lets say the sake of argument Huawei is not guilty of putting spyware in their 5G stuff. How would they prove it? They basically given out there source code, and apart from such slack security features nothing was found, but that was apparently no enough.

Apart from proving a negative there is nothing they can do. I'm not saying that China is not a repressive regime, but to be honest I don't think they have the resources to filter out the juicy bits of the 5G traffic, and have enough on their hands just monitoring their internal massive population without having to take on the US as well. And why should they, since the NSA is already doing such a great job of it already.

The problem is that the great Orange one and is motley collection of right wing hawks are thinking that is what i would do in China's place and getting themselves lathered up in a right wing frenzy where they see reds under every bed.

If China was smart (and they are), what they should do is announce that all Apple phones are banned in China and all Chinese companies are not allowed to do business with Apple, until Apple can prove they do not provide back doors for the US government in their equipment. I wonder what effect a 10% drop in apple share price and all those pension funds that depend on them will have

[May 24, 2019] This is going to get ugly

May 24, 2019 | theregister.co.uk

..and we're all going to be poorer for it. Americans, Chinese and bystanders.

I was recently watching the WW1 channel on youtube (awesome thing, go Indy and team!) - the delusion, lack of situational understanding and short sightedness underscoring the actions of the main actors that started the Great War can certainly be paralleled to the situation here.

The very idea that you can manage to send China 40 years back in time with no harm on your side is bonkers.

[May 24, 2019] Currently everybody else is losing. Forcing other countries (supposedly friends and allies) to abandon equipment of one manufacturer for that of your own company is not very nice and for us quite expensive

Dumping Google is actually not so bad idea ;-)
Notable quotes:
"... The ban might actually provide a bit of a boost to other software developers, if it prompts users to look beyond the Google offerings that came with their phone and seek out some alternatives. In most cases, the alternatives are far better. ..."
May 24, 2019 | theregister.co.uk
Michael H.F. Wilkinson
Re: Disgusting

Currently everybody else is losing. Forcing other countries (supposedly friends and allies) to abandon equipment of one manufacturer for that of your own company is not very nice and for us quite expensive. And that is not even factoring in the known fact that some of these manufacturers had backdoors in their equipment - for which actual proof exists. So considering our own national security we should forbid companies to do business with e.g. Cisco...

Michael H.F. Wilkinson
Powerful vs Lawful

Powerful is not the same as lawful, no matter what those in positions of power might claim or like to imagine.

Is this a distinction worth making? Yes, because otherwise law enforcement officers come to think that their word is law, and that they are themselves above the law. The result of that is a police state.

Michael H.F. Wilkinson
Re: Disgusting

Nothing here is really Huawei's fault

Probably true. Huawei are probably just collateral damage in the inevitable socio-economic conflict between the US and China. The US is used to running the world (not especially well if you ask me). China with four times the population and an economy about the same size as the US that is growing much faster doesn't actually seem to have that much interest in running the world. But since the US is run by folks with no principles, poor memories, few useful skills,and no planning ability whatsoever, I have to guess that the Chinese will "win" in the long run.

Welcome to the Chinese Century folks.

Michael H.F. Wilkinson , 1 day Michael H.F. Wilkinson , 1 day
Re: Disgusting

Pretty irritating that Huawei is simply leverage while the US and China thrash out a trade deal.

I have a Mate 10 Pro and the best phone I've had, was planning to go for the Mate 30 Pro when it comes out.

Reckon I still will, I've already been reducing dependence on Google before this happened anyway. I'll have to shift my business email over to ProtonMail like I already do with my personal accounts. I'm trying out OSM instead of gmaps. I've already ditched gplay music. Just need Proton calendar which is in development and that's another service binned off.

Not sure what's going to happen with apps I've bought through Google and have active subs though...

Michael H.F. Wilkinson , 1 day Michael H.F. Wilkinson , 1 day Michael H.F. Wilkinson , 1 day
Re: Disgusting

The problem isn't the apps you use, there certainly are equivalents of the Google ones. But they still mostly rely on the Google Play API to interface with your phones devices and storage mechanisms. OSM is a pretty good replacement for gmaps, but will be of little use without Google Location Services.

Michael H.F. Wilkinson , 1 day Michael H.F. Wilkinson , 1 day Michael H.F. Wilkinson , 1 day
Re: Disgusting

Will the ban actually prevent anyone using a Huawei device from accessing a Google service (eg. Gmail) or just prevent them from downloading the official Google apps to do so? I suspect the latter as the first would seem impossible to police. In which case there are better alternatives out there.

The ban might actually provide a bit of a boost to other software developers, if it prompts users to look beyond the Google offerings that came with their phone and seek out some alternatives. In most cases, the alternatives are far better.

For email, try AquaMail. Easily handles my many email addresses split across Gmail, own domains using Google's mailservers, Yandex and own domains using Yandex's mailservers.

OSMAnd+ provides as good mapping as Google Maps (better in remote and off-road areas), is much more customiseable and you can download entire country maps to your phone, without pissing about with Google Maps's silly area selection download. And its navigation is pretty decent, lthough it lacks the Googley stuff like weather and nearest junk food shop listings.

Wire is an encrypted messaging/video-calling/VOIP app, offering everything Hangouts (or whatever Google's offering is called this week) does.

Yandex browser or Kiwi browser are Chrome but with added support for extensions

PulseSMS is text messaging with built in backup and the ability to send and receive SMS through your phone from your laptop.

etc. etc.

[May 24, 2019] Networks are usually highly segmented and protected via firewalls and proxy. so access to routers from Internet is impossible

You can put backdoor in the router. The problem is that you will never be able to access it. also for improtant deployment countires inpect the source code of firmware. USA is playing dirty games here., no matter whether Chinese are right or wrong.
May 24, 2019 | theregister.co.uk
Re: Technological silos

They're not necessarily silos. If you design a network as a flat space with all interactions peer to peer then you have set yourself the problem of ensuring all nodes on that network are secure and enforcing traffic rules equally on each node. This is impractical -- its not that if couldn't be done but its a huge waste of resources. A more practical strategy is to layer the network, providing choke points where traffic can be monitored and managed. We currently do this with firewalls and demilitarized zones, the goal being normally to prevent unwanted traffic coming in (although it can be used to monitor and control traffic going out). This has nothing to do with incompatible standards.

I'm not sure about the rest of the FUD in this article. Yes, its all very complicated. But just as we have to know how to layer our networks we also know how to manage our information. For example, anyone who as a smartphone that they co-mingle sensitive data and public access on, relying on the integrity of its software to keep everything separate, is just plain asking for trouble. Quite apart from the risk of data leakage between applications its a portable device that can get lost, stolen or confiscated (and duplicated.....). Use common sense. Manage your data.

[May 24, 2019] Internet and phones aren't the issue. Its the chips

Notable quotes:
"... The real issue is the semiconductors - the actual silicon. ..."
"... China has some fabs now, but far too few to handle even just their internal demand - and tech export restrictions have long kept their leading edge capabilities significantly behind the cutting edge. ..."
"... On the flip side: Foxconn, Huawei et al are so ubiquitous in the electronics global supply chain that US retail tech companies - specifically Apple - are going to be severely affected, or at least extremely vulnerable to being pushed forward as a hostage. ..."
May 24, 2019 | theregister.co.uk

Duncan Macdonald

Internet, phones, Android aren't the issue - except if the US is able to push China out of GSM/ITU.

The real issue is the semiconductors - the actual silicon.

The majority of raw silicon wafers as well as the finished chips are created in the US or its most aligned allies: Japan, Taiwan. The dominant manufacturers of semiconductor equipment are also largely US with some Japanese and EU suppliers.

If Fabs can't sell to China, regardless of who actually paid to manufacture the chips, because Applied Materials has been banned from any business related to China, this is pretty severe for 5-10 years until the Chinese can ramp up their capacity.

China has some fabs now, but far too few to handle even just their internal demand - and tech export restrictions have long kept their leading edge capabilities significantly behind the cutting edge.

On the flip side: Foxconn, Huawei et al are so ubiquitous in the electronics global supply chain that US retail tech companies - specifically Apple - are going to be severely affected, or at least extremely vulnerable to being pushed forward as a hostage.

Interesting times...

[May 24, 2019] We shared and the Americans shafted us. And now *they* are bleating about people not respecting Intellectual Property Rights?

Notable quotes:
"... The British aerospace sector (not to be confused with the company of a similar name but more Capital Letters) developed, amongst other things, the all-flying tailplane, successful jet-powered VTOL flight, noise-and drag-reducing rotor blades and the no-tailrotor systems and were promised all sorts of crunchy goodness if we shared it with our wonderful friends across the Atlantic. ..."
"... We shared and the Americans shafted us. Again. And again. And now *they* are bleating about people not respecting Intellectual Property Rights? ..."
May 24, 2019 | theregister.co.uk

Anonymous Coward

Sic semper tyrannis

"Without saying so publicly, they're glad there's finally some effort to deal with longstanding issues like government favoritism toward local companies, intellectual property theft, and forced technology transfers."

The British aerospace sector (not to be confused with the company of a similar name but more Capital Letters) developed, amongst other things, the all-flying tailplane, successful jet-powered VTOL flight, noise-and drag-reducing rotor blades and the no-tailrotor systems and were promised all sorts of crunchy goodness if we shared it with our wonderful friends across the Atlantic.

We shared and the Americans shafted us. Again. And again. And now *they* are bleating about people not respecting Intellectual Property Rights?

And as for moaning about backdoors in Chinese kit, who do Cisco et al report to again? Oh yeah, those nice Three Letter Acronym people loitering in Washington and Langley...

[May 24, 2019] Oh dear. Secret Huawei enterprise router snoop 'backdoor' was Telnet service, sighs Vodafone The Register

May 24, 2019 | theregister.co.uk

A claimed deliberate spying "backdoor" in Huawei routers used in the core of Vodafone Italy's 3G network was, in fact, a Telnet -based remote debug interface.

The Bloomberg financial newswire reported this morning that Vodafone had found "vulnerabilities going back years with equipment supplied by Shenzhen-based Huawei for the carrier's Italian business".

"Europe's biggest phone company identified hidden backdoors in the software that could have given Huawei unauthorized access to the carrier's fixed-line network in Italy," wailed the newswire.

Unfortunately for Bloomberg, Vodafone had a far less alarming explanation for the deliberate secret "backdoor" – a run-of-the-mill LAN-facing diagnostic service, albeit a hardcoded undocumented one.

"The 'backdoor' that Bloomberg refers to is Telnet, which is a protocol that is commonly used by many vendors in the industry for performing diagnostic functions. It would not have been accessible from the internet," said the telco in a statement to The Register , adding: "Bloomberg is incorrect in saying that this 'could have given Huawei unauthorized access to the carrier's fixed-line network in Italy'.

"This was nothing more than a failure to remove a diagnostic function after development."

It added the Telnet service was found during an audit, which means it can't have been that secret or hidden: "The issues were identified by independent security testing, initiated by Vodafone as part of our routine security measures, and fixed at the time by Huawei."

Huawei itself told us: "We were made aware of historical vulnerabilities in 2011 and 2012 and they were addressed at the time. Software vulnerabilities are an industry-wide challenge. Like every ICT vendor we have a well-established public notification and patching process, and when a vulnerability is identified we work closely with our partners to take the appropriate corrective action."

Prior to removing the Telnet server, Huawei was said to have insisted in 2011 on using the diagnostic service to configure and test the network devices. Bloomberg reported, citing a leaked internal memo from then-Vodafone CISO Bryan Littlefair, that the Chinese manufacturer thus refused to completely disable the service at first:

Vodafone said Huawei then refused to fully remove the backdoor, citing a manufacturing requirement. Huawei said it needed the Telnet service to configure device information and conduct tests including on Wi-Fi, and offered to disable the service after taking those steps, according to the document.

El Reg understands that while Huawei indeed resisted removing the Telnet functionality from the affected items – broadband network gateways in the core of Vodafone Italy's 3G network – this was done to the satisfaction of all involved parties by the end of 2011, with another network-level product de-Telnet-ised in 2012.

Broadband network gateways in 3G UMTS mobile networks are described in technical detail in this Cisco (sorry) PDF . The devices are also known as Broadband Remote Access Servers and sit at the edge of a network operator's core.

The issue is separate from Huawei's failure to fully patch consumer-grade routers , as exclusively revealed by The Register in March.

Plenty of other things (cough, cough, Cisco) to panic about

Characterising this sort of Telnet service as a covert backdoor for government spies is a bit like describing your catflap as an access portal that allows multiple species to pass unhindered through a critical home security layer. In other words, massively over-egging the pudding.

Many Reg readers won't need it explaining, but Telnet is a routinely used method of connecting to remote devices for management purposes. When deployed with appropriate security and authentication controls in place, it can be very useful. In Huawei's case, the Telnet service wasn't facing the public internet, and was used to set up and test devices.

Look, it's not great that this was hardcoded into the equipment and undocumented – it was, after all, declared a security risk – and had to be removed after some pressure. However, it's not quite the hidden deliberate espionage backdoor for Beijing that some fear.

Twitter-enabled infoseccer Kevin Beaumont also shared his thoughts on the story, highlighting the number of vulns in equipment from Huawei competitor Cisco, a US firm:

me title=

For example, a pretty bad remote access hole was discovered in some Cisco gear , which the mainstream press didn't seem too fussed about. Ditto hardcoded root logins in Cisco video surveillance boxes. Lots of things unfortunately ship with insecure remote access that ought to be removed; it's not evidence of a secret backdoor for state spies.

Given Bloomberg's previous history of trying to break tech news, when it claimed that tiny spy chips were being secretly planted on Supermicro server motherboards – something that left the rest of the tech world scratching its collective head once the initial dust had settled – it may be best to take this latest revelation with a pinch of salt. Telnet wasn't even mentioned in the latest report from the UK's Huawei Cyber Security Evaluation Centre, which savaged Huawei's pisspoor software development practices.

While there is ample evidence in the public domain that Huawei is doing badly on the basics of secure software development, so far there has been little that tends to show it deliberately implements hidden espionage backdoors. Rhetoric from the US alleging Huawei is a threat to national security seems to be having the opposite effect around the world.

With Bloomberg, an American company, characterising Vodafone's use of Huawei equipment as "defiance" showing "that countries across Europe are willing to risk rankling the US in the name of 5G preparedness," it appears that the US-Euro-China divide on 5G technology suppliers isn't closing up any time soon. ®

Bootnote

This isn't shaping up to be a good week for Bloomberg. Only yesterday High Court judge Mr Justice Nicklin ordered the company to pay up £25k for the way it reported a live and ongoing criminal investigation.

[May 24, 2019] The advantages of China going after Boeing, as opposed to making life miserable for US technology companies, would be considerable

Notable quotes:
"... The US Department of Commerce said it would put Huawei on its so-called Entity List, meaning that the American companies will have to obtain a licence from the US government to sell technology to Huawei. At the same time, US president Donald Trump signed an executive order declaring the US telecoms sector faced a "national emergency" -- giving the commerce department the power to "prohibit transactions posing an unacceptable risk" to national security . ..."
"... "The US has basically openly declared it is willing to engage in a full-fledged technology war with China," he said. ..."
"... Huawei has few alternatives for critical semiconductors to Qualcomm, which would likely be denied an export license if the US follows through on its threat of putting Huawei on the "Entity List" (the second most stringent category, but still sufficient for the US to bar licensing). One is Murata, but Japan has joined the US ban on Huawei 5G products, and would presumably fall in line if the US were to ask Japan to tell Murata not to sell semiconductors to Huawei. ..."
"... On top of that, Ethiopian Air's forceful criticism of the 737 Max gives China air cover. Unlike Lion Air, which is widely seen as a questionable operator, readers who fly emerging economy carriers give Ethiopian Air high marks for competence and safety. One even wrote, "I have flown Ethiopian Air. It's certainly far better than Irish-owned and operated Ryan Airlines (even though the latter has white pilots with nice Irish accents)." ..."
"... Chinese interests have made large investments many countries in Africa, so it's conceivable it could get other countries on the continent to follow its lead. Admittedly, China plus those countries collectively may not be large enough to do considerable damage to Boeing. But this action would break the hegemony of the FAA as certifier for US manufacturers, and that could prove crippling in the long run. ..."
May 17, 2019 | www.ft.com

Gregory Travis and Marshall Auerback Anatomy of a Disaster – Why Boeing Should Never Make Another Airplane, Again naked capi

The White House and US Department of Commerce took steps on Wednesday night that would in effect ban Huawei from selling technology into the American market, and could also prevent it from buying semiconductors from suppliers including Qualcomm in the US that are crucial for its production .

The US Department of Commerce said it would put Huawei on its so-called Entity List, meaning that the American companies will have to obtain a licence from the US government to sell technology to Huawei. At the same time, US president Donald Trump signed an executive order declaring the US telecoms sector faced a "national emergency" -- giving the commerce department the power to "prohibit transactions posing an unacceptable risk" to national security .

Paul Triolo, a technology policy expert at Eurasia Group, a risk consultancy, said it was a "huge development" that would not only hurt the Chinese company but also have an impact on global supply chains involving US companies such as Intel, Microsoft and Oracle.

"The US has basically openly declared it is willing to engage in a full-fledged technology war with China," he said.

Huawei has few alternatives for critical semiconductors to Qualcomm, which would likely be denied an export license if the US follows through on its threat of putting Huawei on the "Entity List" (the second most stringent category, but still sufficient for the US to bar licensing). One is Murata, but Japan has joined the US ban on Huawei 5G products, and would presumably fall in line if the US were to ask Japan to tell Murata not to sell semiconductors to Huawei.

The advantages of China going after Boeing, as opposed to making life miserable for US technology companies, would be considerable. Targeting, say, Microsoft would be an obvious tit for tat. By contrast, China was the first country to ground the 737 Max, and its judgment was confirmed by other airline regulators and eventually the FAA. China does not have a credible competitor to Boeing, so it could wrap continued denial of certification of the 737 Max in the mantle of being pro-safety, even if independent parties suspected this was a secondary motive.

On top of that, Ethiopian Air's forceful criticism of the 737 Max gives China air cover. Unlike Lion Air, which is widely seen as a questionable operator, readers who fly emerging economy carriers give Ethiopian Air high marks for competence and safety. One even wrote, "I have flown Ethiopian Air. It's certainly far better than Irish-owned and operated Ryan Airlines (even though the latter has white pilots with nice Irish accents)."

Chinese interests have made large investments many countries in Africa, so it's conceivable it could get other countries on the continent to follow its lead. Admittedly, China plus those countries collectively may not be large enough to do considerable damage to Boeing. But this action would break the hegemony of the FAA as certifier for US manufacturers, and that could prove crippling in the long run.

Another issue that hasn't gotten the attention it warrants is that Boeing appears to lack the stringent software development protocols necessary for "fly by wire" operations. Boeing historically has relied on pilots being able to reassert control over automated functions'; Airbus has "fly by wire" systems as far more prominent and accordingly the expectation and ability of pilots to override these systems is lower.

However, many articles noted that MCAS took the 737 further into a fly-by-wire philosophy than it had been before. Yet Boeing was astonishingly lax, having only two angle of attack sensors, of which only one would be providing input to MCAS, and then on an arbitrary-seeming basis.

By contrast, the Airbus philosophy stresses redundancy, not only in hardware -- they use not three but four angle of attack sensors -- but in software, and even software development. "Two or more independent flight control computing systems are installed using different types of microprocessors and software written in different languages by different development teams" and verified using formal methods (" Approaches to Assure Safety in Fly-By-Wire Systems: Airbus Vs. Boeing ").

[May 24, 2019] Microsoft Cuts Ties With Huawei

Notable quotes:
"... Win 10 is invasive garbage. I don't want anything managing my computer "automatically". ..."
"... Huawei is a real wakeup call for the world... the US is an unreliable trader. They can never be trusted. ..."
May 24, 2019 | www.zerohedge.com

Microsoft will reportedly become the latest tech giant to 'suspend' its relationship with Huawei, according to the South China Morning Post .

One week after Washington first imposed strict limits on Huawei and its affiliates that will make it almost impossible for American firms buy Huawei products or sell American-made components to the company, a handful of chipmakers, telecoms companies and tech firms (Alphabet) have reportedly scaled back or severed their relationship with Huawe.

Though Microsoft said yesterday that it hadn't made a decision, the SCMP reported Friday morning that Microsoft had decided to stop accepting new orders from Huawei for operating systems and other content-related services: Windows operating systems for laptops and other content-related services. The US software giant has already removed Huawei laptops from its online stores.


CatInTheHat , 1 minute ago link

Yeah but Microsoft and Google aren't part of the military security apparatus and have nothing to do with foreign policy.

Funny Google and Microsoft have operations out of China .

Cant wait til China retaliated bigly on these assholes.

me or you , 11 minutes ago link

Just follow India steps.:

Indian State Saves Over $400 Million by Choosing Linux

CheapBastard , 29 minutes ago link

Feinstein and Biden are not going to like this.

GrosserBöserWolf , 38 minutes ago link

Good by US monopoly on software. This will only accelerate new developments.

CashMcCall , 38 minutes ago link

Just one more prime example why no companies should use Microsoft software.

The issue is clear as a bell. Become dependent on a US supplier and the Gov of the USSA could cut off your contracts with impunity. That risk is too high for any manufacturing entity.

I am not a fan of Linux. I do not like the way it manages memory. Also while it has gotten better, it remains something of an unmade bed in that much of the software doesn't work particularly well. But the same cold be said for Microsoft. How many times does Windows OFFICE have to lock up before you comprehend the nightmarish patch system which has become Windows?

GNU meaning not Unix never developed into a GUI. Ghost BSD looks interesting, BSD PC has limited compatibility but UNIX is flatly superior in how it handles memory. Unix is brilliant. I also love Open Office, it is better than Microsoft Office and you can save all your files to the Microsoft format if you want. Open Office is perfect transitional software and FREE! Why are school districts paying microsoft instead of using Open Office.

Win 10 is invasive garbage. I don't want anything managing my computer "automatically".

Huawei is a real wakeup call for the world... the US is an unreliable trader. They can never be trusted. This is not just about that lunatic Turmp. If AOC ever got to the White House she could do the same under the New Green Deal NATIONAL SECURITY EMERGENCY.

The Constitution gave Congress the exclusive power over Commerce but over time, the Congress delegated more and more power to the Exec with this kind of dreadful outcome. Founding Fathers wanted checks and balances. But here you have one person, interrupting commerce and contracts with the stroke of a pen that has never been approved by Congress. That is simply too much risk.

The Chinese like anyone else make mistakes. BUT CHINA does not repeat the same mistake twice unlike the USSA that seems to be caught in the revolving door of mistakes.

Better that this happens early in the life of Huawei than much later. China could actually lead the world into the adaptation of open source destroying both Microsoft, Google and Apple at the same time. Remember Apple took BSD and then made proprietary changes. That is the APPLE OS which is much more stable than anything Windows ever made.

While people knock apple Iphone for cost, the Apple laptops are very stable and essentially virus and worm immune. For a novice users that's why Apples are great.

I have had Unix based machines run for years with never being turned off, always rock stable. It is head and shoulders above everything. FreeBSD

https://www.ghostbsd.org/

Here is a UNIX GUI. I know nothing about these guys but will check it out. A non power user only needs a solid browser, and a good word processor, Open Office works with BSD.

Personally I don't think Apple should be grouped with Google and microsoft. I don't see as Apple has done anything wrong other than selling their products at a premium to the novices. That's not a crime and novices benefit. So quit packaging Apple in with Google and Microsoft.

BTW, Blackberry OS is Unix based. It is a canadian company so likely a US poodle.

john.b , 12 minutes ago link

Canada is a US puppet, but treated like a **** by US.

SMD , 45 minutes ago link

Huawei were attacked because they are a threat to Apple, not to "our national security." The only thing Trump cares about are the profits of big companies.

Wild Bill Steamcock , 43 minutes ago link

BuyDash cut ties with Microsoft years ago.

Yes, but the real question is did you cut ties with the NBA, Nike, grape Kool-Aid, McDonald's, Popeye's, your parole officer, KFC, crotch-grabbing, your six illegitimate children and the local welfare office?

JailBanksters , 1 hour ago link

WHoAreWe made Microsoft's Phones, and Microsoft killed the Phone without any help from anyone.

silverer , 40 minutes ago link

I knew Nokia was doomed when it partnered with Microsoft. They should have instead partnered with and help fund the Open Source Software community. By now, we'd have spectacular phones, free of logjams of spyware, bloatware, and ads.

JailBanksters , 23 minutes ago link

Now you have Windoze PC's with logjams of spyware, bloatware, and ads. Well, unless you hack it to make it a Workable PC. It's weird having to Hack your own PC to make it sane.

dark fiber , 1 hour ago link

EU take note. You are not even building or developing the damn things. But you want to dictate policy to the US. Asshats.

Cassandra.Hermes , 1 hour ago link

Why shouldn't Corning glass or Micron flash memory be sold to Huawei for use in phones bound for Europe? Huawei sells 30 times more phone in Europe than USA. I bought Huawei phone in Norway and I think is my best phone ever, I use Samsung Galaxy Note 9 in USA, but I carry the Huawei for photos and for WiFi calls from Norway. Try to do wifi calls from the Galaxy using Starbucks wifi and then using the same wifi try Huawei, you would see the difference right away.

Coin Techs , 1 hour ago link

They were up to dirty tricks with the dirty dems and DT is shutting them down.

Reality_checkers , 1 hour ago link

The US is going to sanction itself into economic irrelevance as the rest of the world says F you. We only have two friends now, Israel and KSA. Nice work, Donnie.

[May 23, 2019] Why Trump s Huawei Ban Is Unlikely To Persist

Notable quotes:
"... However, nothing in the actual piece talks about security concerns. (I point this out because I perceive a trend towards such misleading summaries and headlines which contradict what the actual reporting says.) ..."
"... These companies do not have security concerns over Huawei. But the casual reader, who does not dive down into the actual piece, is left with a false impression that such concerns are valid and shared. ..."
"... South China Morning Post ..."
"... This move by Google-USG is mostly a propaganda warfare move. Huawei doesn't depend on smartphone sales to survive. It's American market was already small, while China's domestic market is huge. China is not Japan. ..."
"... Trump's heavy handed move against Huawei will backfire. The optic is unsettling; the US looks to be destroying a foreign competitor because it is winning. ..."
"... Until the reserve currency issue favoring the "exceptional" nation changes, the economic terrorism will continue.. ..."
"... What is funny in all these stories, is that there is little to no Huawei equipment (not the end-user smart phone, home router and stuff, but backbone routers, access equipment,..) anywhere in the US -- they are forbidden to compete. Most telcos are quite happy to sell in the US, as the absence of these Chinese competitors allows for healthy margins, which is no longer true in other markets. ..."
"... The US is trying desperately to quash tech success / innovation introduced by others who are not controlled by (or in partnership with) the US, via economic war, for now just politely called a trade war - China no 1 adversary. ..."
"... Attacking / dissing / scotching trade between one Co. (e.g. Huawei) and the world is disruptive of the usual, conventional, accepted, exchange functioning, and throws a pesky spanner in the works of the system. Revanchard motives, petty targetting, random pot-shots, lead to what? ..."
"... The war against Huawei is only one small aspect within the overall Trade War, which is based on the false premise of US economic strength. Most of the world wants to purchase material things, not financial services which is the Outlaw US Empire's forte and most of the world can easily forego. Trump's Trade War isn't going as planned which will cause him to double-down in a move that will destroy his 2020 hopes. ..."
May 23, 2019 | www.moonofalabama.org

However, nothing in the actual piece talks about security concerns. (I point this out because I perceive a trend towards such misleading summaries and headlines which contradict what the actual reporting says.)

The British processor company ARM, which licenses its design to Huawei, cites U.S. export controls as the reason to stop cooperation with Huawei:

The conflict is putting companies and governments around the world in a tough spot, forcing them to choose between alienating the United States or China .

Arm Holdings issued its statement after the BBC reported the firm had told staff to suspend dealings with Huawei.

An Arm spokesman said some of the company's intellectual property is designed in the United States and is therefore " subject to U.S. export controls ."

Additionally two British telecom providers quote U.S. restrictions as reason for no longer buying Huawei smartphones:

BT Group's EE division, which is preparing to launch 5G service in six British cities later this month, said Wednesday it would no longer offer a new Huawei smartphone as part of that service. Vodafone also said it would drop a Huawei smartphone from its lineup. Both companies appeared to tie that decision to Google's move to withhold licenses for its Android operating software from future Huawei phones.

These companies do not have security concerns over Huawei. But the casual reader, who does not dive down into the actual piece, is left with a false impression that such concerns are valid and shared.

That the Trump administration says it has security reasons for its Huawei ban does not mean that the claim is true. Huawei equipment is as good or bad as any other telecommunication equipment, be it from Cisco or Apple. The National Security Agency and other secret services will try to infiltrate all types of such equipment.

After the sudden ban on U.S. entities to export to Huawei, chipmakers like Qualcomm temporarily stopped their relations with Huawei. Google said that it would no longer allow access to the Google Play store for new Huawei smartphones. That will diminish their utility for many users.

The public reaction in China to this move was quite negative. There were many calls for counter boycotts of Apple's i-phones on social media and a general anti-American sentiment.

The founder and CEO of Huawei, Ren Zhengfei, tried to counter that. He gave a two hour interview (vid, 3 min excerpt with subtitles) directed at the Chinese public. Ren sounds very conciliatory and relaxed. The Global Times and the South China Morning Post only have short excerpts of what he said. They empathize that Huawei is well prepared and can master the challenge:


Andreas , May 23, 2019 10:00:52 AM | 1

It's really huge, that Huawei may no longer use ARM processors.

Huawei is thus forced to develop it's own processor design and push it into the market.

p , May 23, 2019 10:04:34 AM | 2

@1

I do not believe this is precisely what will happen. Huawei already has its licenses purchased. In addition they could decide to disrespect the IP if this was the case.

Arioch , May 23, 2019 10:05:39 AM | 3
Huaweis's suppliers in Japan, South Korea, Taiwan (ROC), and Britain are examining if they can continue to make business with Huawei, while some have already declared a suspension in cooperation.

The issue is that these non-American companies nonetheless use some American components of technology, and if they proceed they will be sanctioned by the US themselves.

It is the same reason why Russia's Sukhoi did not in the end sell its SSJ-100 airliners to Iran -- East Asian tech companies can hardly be expected to be more gung-ho on defying the US than Russia's leading defense plant......

http://www.checkpointasia.net/big-blow-for-huawei-as-japanese-korean-british-firms-reconsider-or-suspend-cooperation-as-well/

Arioch , May 23, 2019 10:10:32 AM | 4
> the Trump administration has created discord where unity is urgently needed

IOW Trump keeps sabotaging USA global integration and keeps steering it into isolation as he long said it should be

Arioch , May 23, 2019 10:14:28 AM | 5
@p #2 - Huawei surely has their processors *as of now*.

That - if USA would not ban Huawei (HiSilicon) processors, because of using that ARM technology. Thing is, Huawei would be isolated from next-generation ARM processors. They are locked now in their current generation.

Even Qualcomm today, for what I know, bases their processors on ARM's "default" schemes, instead of doing their development "from scratch", in a totally independent way. It would push for slow but steady decline as "top" smartphone vendor into "el cheapo" niche.

Arioch , May 23, 2019 10:16:54 AM | 6
At the same time Qualcomm would probably be forced to slash prices down for their non-Huawei customers. https://www.zdnet.com/article/qualcomms-licensing-practices-violated-us-antitrust-laws-judge-rules/
Red Ryder , May 23, 2019 10:17:21 AM | 7
Boeing is the counter-part in the contest to destroy Huawei. China has great leverage over Boeing's future. It is the nation with the biggest market now and downstream for 10-20 years. China need planes, thousands of them.

As for Huawei's chief doubting the prowess of the Chinese students, he only needs to look at the rapidity of the conversion of his nations' economy to a 98% digital economy. All that conversion was done by local, entrepreneurial innovators in the software and hardware tech sector. It happened only in China and completely by Chinese young people who had phones and saw the future and made it happen.

It has been Chinese minds building Chinese AI on Chinese Big Data.

Yes, they need Russian technologists and scientists. Those Russian minds in Russia, in Israel, in South Korea are proven difference makers.

The need China now has will meet the solution rapidly. For five years, the Double Helix of Russia-China has been coming closer in education and R&D institutes in both nations. China investors and Chinese sci-tech personnel are in the sci-tech parks of Russia, and Russians are in similar facilities in China. More will happen now that the Economic War against China threatens.

Huawei will have solutions to replace all US components by the end of the year. It will lose some markets. but it will gain hugely in the BRI markets yet to be developed.

In the long run, the US makers will rue the day Trump and his gang of Sinophobes and hegemonists took aim at Huawei and China's tech sector.

oglalla , May 23, 2019 10:40:03 AM | 8
Let's all boycott Most Violent, Biggest Brother tech. Don't buy shit.
vk , May 23, 2019 10:46:37 AM | 9
This move by Google-USG is mostly a propaganda warfare move. Huawei doesn't depend on smartphone sales to survive. It's American market was already small, while China's domestic market is huge. China is not Japan.

Besides, it's not like Europe is prospering either. Those post-war days are long gone.

And there's no contradiction between what the CEO said and the Government line: both are approaching the same problem from different points of view, attacking it from different fronts at the same time. "Patriotism" is needed insofar as the Chinese people must be prepared to suffer some hardships without giving up long term prosperity. "Nationalism" ("politics") is toxic insofar as, as a teleological tool, it is a dead end (see Bannon's insane antics): the Chinese, after all, are communists, and communists, by nature, are internationalists and think beyond the artificial division of humanity in Nation-States.

Ptb , May 23, 2019 11:09:35 AM | 0

Ren Zhengfei's attitude is remarkable, considering his daughter ia currently held hostage.
ken , May 23, 2019 11:15:25 AM | 1
Talking Digital and security in the same sentence is laughable.... NOTHING Digital is 'secure',,, never has,,, never will.

Digital destroys everything it touches. At present, excepting for now the low wage States, it is destroying economies ever so slowly one sector at a time. This has nothing to do with security and everything to do with the dying West, especially the USA which is trying desperately to save what's left of its production whether it be 5G, Steel plants or Nord Stream. The West created China when it happily allowed and assisted Western corporations to move the production there in order to hide the inflation that was being created for wars and welfare and now has to deal with the fallout which eventually will be their undoing.

Jackrabbit , May 23, 2019 11:22:20 AM | 2
A full-blown trade war was probably inevitable, driven by geopolitical concerns as much or more than economics.

One wonders what each of China and US has been doing to prepare. It seems like the answer is "very little" but since it's USA that is driving this bus, I would think that USA would've done more to prepare (than China has).

PS It's not just Boeing. China also supplies the vast majority of rare earth minerals.

Red Ryder , May 23, 2019 11:24:39 AM | 3
@10,

Her captivity and probable imprisonment in the US explain his attitude. She is a high profile pawn. The US must convict her in order to justify what they have done to her so far. She may not serve time, in the US prisons, but she will be branded a guilty person, guilty of violating the Empire's rules (laws).

Imagine Ivanka in the same situation. Her daughter singing in Mandarin would be little help. The Trump Family will be a number one target for equal treatment long after "45" leaves office.

The US Empire is wild with Power. All of that Power is destructive. And all the globe is the battlefield, except USA. But History teaches that this in-equilibrium will not last long.

Jackrabbit , May 23, 2019 11:26:33 AM | 4
We've seen how Europe caved to US pressure to stop trading with Iran. Now Japan and others are caving to pressure to stop trading with China. There is already pressure and negotiation to stop Nordstream. And all of the above leads to questions about Erdogan's resolve.
alaric , May 23, 2019 11:38:11 AM | 5
Trump's heavy handed move against Huawei will backfire. The optic is unsettling; the US looks to be destroying a foreign competitor because it is winning.

The ramifications of trade war with China (where the supply and manufacturing chain of most consumer electronics is these days) is disruptive. Trump has created uncertainty for many manufacturers since there is Chinese part content is just about everything these days. Some manufacturers might relocate production to the US but most will try to simply decouple from the US entirely.

Exposure to the US is really the problem not exposure to China.

Jackrabbit , May 23, 2019 11:53:44 AM | 8
b: Why Trump's Huawei Ban Is Unlikely To Persist

The trade war with Iran was also unlikely to persist. But it has persisted, and deepened as European poodles pretended to resist and then pretended not to notice that they didn't.

A new Bloomberg opinion piece agrees with that view

No, it doesn't b. You say USA trade war will fail because it lacks international support. Bloomberg says USA should get international support to make it more effective. The difference is that it is highly likely that USA will get international support. It already has support from Japan.

USA has proven that it can effectively manipulate it's poodle allies. Another example is Venezuela where more than two dozen countries recognized Guido only because USA wanted them to.

<> <> <> <> <> <> <>

It's not Trump but the US Deep State that causes US allies to fall in line. Any analysis that relies on Trump as President is bound to fail as his public persona is manipulated to keep Deep State adversaries (including the US public) off-balance.

Like President's before him, Trump will take the blame (and the credit) until another team member is chosen to replace him in what we call "free and fair elections".

ben , May 23, 2019 11:54:24 AM | 9
Until the reserve currency issue favoring the "exceptional" nation changes, the economic terrorism will continue..
Jeff , May 23, 2019 12:00:34 PM | 0
What is funny in all these stories, is that there is little to no Huawei equipment (not the end-user smart phone, home router and stuff, but backbone routers, access equipment,..) anywhere in the US -- they are forbidden to compete. Most telcos are quite happy to sell in the US, as the absence of these Chinese competitors allows for healthy margins, which is no longer true in other markets.

So the Huawei ban hits first and foremost the US' partners.

bjd , May 23, 2019 12:00:38 PM | 1
@ben (19)

China can only undo the US-exceptionalsim if and when it can visibly project military power. The only way to achieve that is tt has to make great haste in building a few fleets of aircraft carriers, fregats and destroyers, etc. It must build a grand, visibly magnificent Chinese Navy.

ben , May 23, 2019 12:02:59 PM | 2
big time OT alert;

Modi wins in India, another victory for the world oligarchs. Exactly mimicking conditions in the U$A. Media and governmental capture by the uber wealthy...

Noirette , May 23, 2019 12:04:16 PM | 3
(Ignorant of tech aspects.)

The US is trying desperately to quash tech success / innovation introduced by others who are not controlled by (or in partnership with) the US, via economic war, for now just politely called a trade war - China no 1 adversary.

Afaik, the entire smart-phone industry is 'integrated' and 'regulated' by FTAs, the WTO, the patent circuit, the Corps. and Gvmts. who collaborate amongst themselves.

Corps. can't afford to compete viciously because infrastructure, aka more encompassing systems or networks (sic) are a pre-requisite for biz, thus, Gvmts. cooperate with the Corps, and sign various 'partnerships,' etc.

sidebar. Not to mention the essential metals / components provenance, other topic. see

https://bit.ly/2K1pj3d - PDF about minerals in smarphones

Attacking / dissing / scotching trade between one Co. (e.g. Huawei) and the world is disruptive of the usual, conventional, accepted, exchange functioning, and throws a pesky spanner in the works of the system. Revanchard motives, petty targetting, random pot-shots, lead to what?

karlof1 , May 23, 2019 12:05:01 PM | 4
As I wrote in the Venezuela thread, major US corps are already belt tightening by permanently laying off managers, not already cut-to-the-bone production staff, and another major clothing retailer is closing its 650+ stores. And the full impact of Trump's Trade War has yet to be felt by consumers. As Wolff, Hudson and other like-minded economists note, there never was a genuine recovery from 2008, while statistical manipulation hides the real state of the US economy. One thing that cannot be hidden is the waning of revenues collected via taxes which drives the budget deficit--and the shortfall isn't just due to the GOP Congress's tax cuts.

The war against Huawei is only one small aspect within the overall Trade War, which is based on the false premise of US economic strength. Most of the world wants to purchase material things, not financial services which is the Outlaw US Empire's forte and most of the world can easily forego. Trump's Trade War isn't going as planned which will cause him to double-down in a move that will destroy his 2020 hopes.

Arioch , May 23, 2019 12:05:34 PM | 5
@vk #9

> Huawei's phones American market was already small, while China's domestic market is huge

Here is that data, for 2017, outside the paywall: https://imgur.com/a/8bvvX9B

Data for 2019 is probably slightly different, but the trends should keep on. That data also does not separate Android-based phones from non-Android phones. So, segmenting Android into Google and China infrastructures would mean

1) Huawei retains a $152B market - China
2) Huawei retains an unknown share in $87B market - APAC
3) Huawei loses a $163,9B market - all non-China world.

At best Huawei looses 40,7% of world market. That if all APAC population would voluntarily and uniformly drop out of Google services into Huawei/China services (which they would not). At worst Huawei retains 37,7% of the marker (if APAC population would uniformly follow Google, which they would not either).

[May 22, 2019] Averting World Conflict with China

Notable quotes:
"... Since the end of the Cold War, the American government has become increasingly delusional, regarding itself as the Supreme World Hegemon. As a result, local American courts have begun enforcing gigantic financial penalties against foreign countries and their leading corporations, and I suspect that the rest of the world is tiring of this misbehavior. Perhaps such actions can still be taken against the subservient vassal states of Europe, but by most objective measures, the size of China's real economy surpassed that of the US several years ago and is now substantially larger , while also still having a far higher rate of growth. Our totally dishonest mainstream media regularly obscures this reality, but it remains true nonetheless. ..."
"... Provoking a disastrous worldwide confrontation with mighty China by seizing and imprisoning one of its leading technology executives reminds me of a comment I made several years ago about America's behavior under the rule of its current political elites: ..."
"... Normal countries like China naturally assume that other countries like the US will also behave in normal ways, and their dumbfounded shock at Ms. Meng's seizure has surely delayed their effective response. In 1959, Vice President Richard Nixon visited Moscow and famously engaged in a heated "kitchen debate" with Premier Nikita Khrushchev over the relative merits of Communism and Capitalism. What would have been the American reaction if Nixon had been immediately arrested and given a ten year Gulag sentence for "anti-Soviet agitation"? ..."
"... But Bolton's apparent involvement underscores the central role of his longtime patron, multi-billionaire casino-magnate Sheldon Adelson, whose enormous financial influence within Republican political circles has been overwhelmingly focused on pro-Israel policy and hostility towards Iran, Israel's regional rival. ..."
"... Although it is far from clear whether the very elderly Adelson played any direct personal role in Ms. Meng's arrest, he surely must be viewed as the central figure in fostering the political climate that produced the current situation. Perhaps he should not be described as the ultimate puppet-master behind our current clash with China, but any such political puppet-masters who do exist are certainly operating at his immediate beck and call. In very literal terms, I suspect that if Adelson placed a single phone call to the White House, the Trump Administration would order Canada to release Ms. Meng that same day. ..."
May 22, 2019 | www.unz.com

See also: The PRC Should Retaliate by Targeting Sheldon Adelson's Chinese Casinos Ron Unz December 13, 2018 1,800 Words 944 Comments Reply Huawei CFO Meng Wanzhou

As most readers know, I'm not a casual political blogger and I prefer producing lengthy research articles rather than chasing the headlines of current events. But there are exceptions to every rule, and the looming danger of a direct worldwide clash with China is one of them.

Consider the arrest last week of Meng Wanzhou, the CFO of Huawei, the world's largest telecom equipment manufacturer. While flying from Hong Kong to Mexico, Ms. Meng was changing planes in the Vancouver International Airport when she was suddenly detained by the Canadian government on an August US warrant. Although now released on $10 million bail, she still faces extradition to a New York City courtroom, where she could receive up to thirty years in federal prison for allegedly having conspired in 2010 to violate America's unilateral economic trade sanctions against Iran.

Although our mainstream media outlets have certainly covered this important story, including front page articles in the New York Times and the Wall Street Journal , I doubt most American readers fully recognize the extraordinary gravity of this international incident and its potential for altering the course of world history. As one scholar noted, no event since America's deliberate 1999 bombing of China's embassy in Belgrade , which killed several Chinese diplomats, has so outraged both the Chinese government and its population. Columbia's Jeffrey Sachs correctly described it as "almost a US declaration of war on China's business community."

Such a reaction is hardly surprising. With annual revenue of $100 billion, Huawei ranks as the world's largest and most advanced telecommunications equipment manufacturer as well as China's most internationally successful and prestigious company. Ms. Meng is not only a longtime top executive there, but also the daughter of the company's founder, Ren Zhengfei, whose enormous entrepreneurial success has established him as a Chinese national hero.

Her seizure on obscure American sanction violation charges while changing planes in a Canadian airport almost amounts to a kidnapping. One journalist asked how Americans would react if China had seized Sheryl Sandberg of Facebook for violating Chinese law especially if Sandberg were also the daughter of Steve Jobs.

Indeed, the closest analogy that comes to my mind is when Prince Mohammed bin Salman of Saudi Arabia kidnapped the Prime Minister of Lebanon earlier this year and held him hostage. Later he more successfully did the same with hundreds of his wealthiest Saudi subjects, extorting something like $100 billion in ransom from their families before finally releasing them. Then he may have finally over-reached himself when Washington Post columnist Jamal Khashoggi, a Saudi dissident, was killed and dismembered by a bone-saw at the Saudi embassy in Turkey.

We should actually be a bit grateful to Prince Mohammed since without him America would clearly have the most insane government anywhere in the world. As it stands, we're merely tied for first.

Since the end of the Cold War, the American government has become increasingly delusional, regarding itself as the Supreme World Hegemon. As a result, local American courts have begun enforcing gigantic financial penalties against foreign countries and their leading corporations, and I suspect that the rest of the world is tiring of this misbehavior. Perhaps such actions can still be taken against the subservient vassal states of Europe, but by most objective measures, the size of China's real economy surpassed that of the US several years ago and is now substantially larger , while also still having a far higher rate of growth. Our totally dishonest mainstream media regularly obscures this reality, but it remains true nonetheless.

Provoking a disastrous worldwide confrontation with mighty China by seizing and imprisoning one of its leading technology executives reminds me of a comment I made several years ago about America's behavior under the rule of its current political elites:

Or to apply a far harsher biological metaphor, consider a poor canine infected with the rabies virus. The virus may have no brain and its body-weight is probably less than one-millionth that of the host, but once it has seized control of the central nervous system, the animal, big brain and all, becomes a helpless puppet.

Once friendly Fido runs around foaming at the mouth, barking at the sky, and trying to bite all the other animals it can reach. Its friends and relatives are saddened by its plight but stay well clear, hoping to avoid infection before the inevitable happens, and poor Fido finally collapses dead in a heap.

Normal countries like China naturally assume that other countries like the US will also behave in normal ways, and their dumbfounded shock at Ms. Meng's seizure has surely delayed their effective response. In 1959, Vice President Richard Nixon visited Moscow and famously engaged in a heated "kitchen debate" with Premier Nikita Khrushchev over the relative merits of Communism and Capitalism. What would have been the American reaction if Nixon had been immediately arrested and given a ten year Gulag sentence for "anti-Soviet agitation"?

Since a natural reaction to international hostage-taking is retaliatory international hostage-taking, the newspapers have reported that top American executives have decided to forego visits to China until the crisis is resolved. These days, General Motors sells more cars in China than in the US, and China is also the manufacturing source of nearly all our iPhones, but Tim Cook, Mary Barra, and their higher-ranking subordinates are unlikely to visit that country in the immediate future, nor would the top executives of Google, Facebook, Goldman Sachs, and the leading Hollywood studios be willing to risk indefinite imprisonment.

Canada had arrested Ms. Meng on American orders, and this morning's newspapers reported that a former Canadian diplomat had suddenly been detained in China , presumably as a small bargaining-chip to encourage Ms. Meng's release. But I very much doubt such measures will have much effect. Once we forgo traditional international practices and adopt the Law of the Jungle, it becomes very important to recognize the true lines of power and control, and Canada is merely acting as an American political puppet in this matter. Would threatening the puppet rather than the puppet-master be likely to have much effect?

Similarly, nearly all of America's leading technology executives are already quite hostile to the Trump Administration, and even if it were possible, seizing one of them would hardly be likely to sway our political leadership. To a lesser extent, the same thing is true about the overwhelming majority of America's top corporate leaders. They are not the individuals who call the shots in the current White House.

Indeed, is President Trump himself anything more than a higher-level puppet in this very dangerous affair? World peace and American national security interests are being sacrificed in order to harshly enforce the Israel Lobby's international sanctions campaign against Iran, and we should hardly be surprised that the National Security Adviser John Bolton, one of America's most extreme pro-Israel zealots, had personally given the green light to the arrest. Meanwhile, there are credible reports that Trump himself remained entirely unaware of these plans, and Ms. Meng was seized on the same day that he was personally meeting on trade issues with Chinese President Xi. Some have even suggested that the incident was a deliberate slap in Trump's face.

But Bolton's apparent involvement underscores the central role of his longtime patron, multi-billionaire casino-magnate Sheldon Adelson, whose enormous financial influence within Republican political circles has been overwhelmingly focused on pro-Israel policy and hostility towards Iran, Israel's regional rival.

Although it is far from clear whether the very elderly Adelson played any direct personal role in Ms. Meng's arrest, he surely must be viewed as the central figure in fostering the political climate that produced the current situation. Perhaps he should not be described as the ultimate puppet-master behind our current clash with China, but any such political puppet-masters who do exist are certainly operating at his immediate beck and call. In very literal terms, I suspect that if Adelson placed a single phone call to the White House, the Trump Administration would order Canada to release Ms. Meng that same day.

Adelson's fortune of $33 billion ranks him as the 15th wealthiest man in America, and the bulk of his fortune is based on his ownership of extremely lucrative gambling casinos in Macau, China . In effect, the Chinese government currently has its hands around the financial windpipe of the man ultimately responsible for Ms. Meng's arrest and whose pro-Israel minions largely control American foreign policy. I very much doubt that they are fully aware of this enormous, untapped source of political leverage.

Over the years, Adelson's Chinese Macau casinos have been involved in all sorts of political bribery scandals , and I suspect it would be very easy for the Chinese government to find reasonable grounds for immediately shutting them down, at least on a temporary basis, with such an action having almost no negative repercussions to Chinese society or the bulk of the Chinese population. How could the international community possibly complain about the Chinese government shutting down some of their own local gambling casinos with a long public record of official bribery and other criminal activity? At worst, other gambling casino magnates would become reluctant to invest future sums in establishing additional Chinese casinos, hardly a desperate threat to President Xi's anti-corruption government.

I don't have a background in finance and I haven't bothered trying to guess the precise impact of a temporary shutdown of Adelson's Chinese casinos, but it wouldn't surprise me if the resulting drop in the stock price of Las Vegas Sands Corp would reduce Adelson's personal net worth were by $5-10 billion within 24 hours, surely enough to get his immediate personal attention. Meanwhile, threats of a permanent shutdown, perhaps extending to Chinese-influenced Singapore, might lead to the near-total destruction of Adelson's personal fortune, and similar measures could also be applied as well to the casinos of all the other fanatically pro-Israel American billionaires, who dominate the remainder of gambling in Chinese Macau.

The chain of political puppets responsible for Ms. Meng's sudden detention is certainly a complex and murky one. But the Chinese government already possesses the absolute power of financial life-or-death over Sheldon Adelson, the man located at the very top of that chain. If the Chinese leadership recognizes that power and takes effective steps, Ms. Meng will immediately be put on a plane back home, carrying the deepest sort of international political apology. And future attacks against Huawei, ZTE, and other Chinese technology companies would not be repeated.

China actually holds a Royal Flush in this international political poker game. The only question is whether they will recognize the value of their hand. I hope they do for the sake of America and the entire world.

[May 22, 2019] Commentary Politicized ban on Huawei shows U.S. losing spirit of openness - Xinhua English.news.cn

Notable quotes:
"... Launching a tech war or a trade war against any country is not appropriate, nor is it the best way to defend national security, Macron said. ..."
"... Out of the total of 70 billion U.S. dollars Huawei spent on buying components in 2018, some 11 billion dollars went to U.S. companies, the Reuters reported Friday. ..."
"... The spirit of openness is what helped the United States develop. However, Washington's restrictions on Huawei, based on unfounded allegations and political speculations, fall foul of the golden rules it once embraced ..."
May 22, 2019 | www.xinhuanet.com

javascript:void(0)

WASHINGTON, May 22 (Xinhua) -- Washington last week declared a national emergency over what it claimed are technological threats, and announced restrictions on sale and transfer of American technologies to China's Huawei.

The telecom company has long been accused by the United States of being able to use its network equipment to spy on foreign nations for the Chinese government. However, "no intelligence service has published clear evidence that Huawei inserted 'backdoors' for Chinese authorities to access the data that passes through its networks," according to a December 2018 article by U.S. media Politico.

Given the lack of proof that Huawei threatens U.S. security, last week's twin moves by Washington -- the use of state apparatus to oppress a company -- are a reflection of nothing but bullying.

The smearing campaign against Huawei aside, the United States has also been trying to rally Europe to abandon Huawei products, citing security threats. It was not welcome.

"Europe must not be dragged into the trade dispute between China and the United States," Germany's powerful BDI industrial lobby group was quoted by media reports as saying in a statement on Thursday.

France too refused to take orders from the United States. "Our perspective is not to block Huawei or any company," President Emmanuel Macron told the VivaTech conference in Paris on Thursday.

Launching a tech war or a trade war against any country is not appropriate, nor is it the best way to defend national security, Macron said.

The ban on the supply of U.S.-made chips to Huawei is a lose-lose in any sense, as it poses a threat to Huawei's viability and U.S. companies also pay the price.

Out of the total of 70 billion U.S. dollars Huawei spent on buying components in 2018, some 11 billion dollars went to U.S. companies, the Reuters reported Friday.

"The ban will financially harm the thousands of Americans employed by the U.S. companies that do business with Huawei," said Catherine Chen, a Director of the Board at Huawei, in a The New York Times article on Friday. "A total ban on Huawei equipment could eliminate tens of thousands of American jobs."

Although Huawei does not do much business in the United States, the company is the sole provider of networking equipment to many rural American internet providers, according to a CNN article on Tuesday.

"Those companies have said it will take time -- or may be impossible -- to replace their Huawei technology with a rival's," it added.

As a move to ease the repercussion of the ban, the U.S. Department of Commerce on Monday issued a 90-day temporary license loosening restrictions on business deals with Huawei.

Huawei doesn't intend to isolate itself from others, but wants to make as many friends as possible, its founder Ren Zhengfei told Chinese media on Tuesday when asked why Huawei didn't use substitutes before the United States took the latest aggressive measures.

"We don't want to do harm to friends," he said. "We want to help them achieve good balance sheets. Even if we make adjustments, we still ought to render help."

The spirit of openness is what helped the United States develop. However, Washington's restrictions on Huawei, based on unfounded allegations and political speculations, fall foul of the golden rules it once embraced

.

For Washington to win in an era of cooperation and inter-dependence, it would be better to revive the spirit of openness.

[May 22, 2019] Japan, UK Join US Blockade Of China: ARM Tells Staff To Stop Working With Huawei

That's real hardball...
Notable quotes:
"... In a company-wide memo, ARM told employees that their designs contain "US origin technology," which would be affected by the Trump administration's May 15 Executive Order to "protect our country against critical national security threats." ..."
"... Also cunning thing would be to change brand name a bit like change/remove 1 letter. ..."
"... Yet, they find out they are buying from another vendor that complies with China's demands and poof there goes another company ..."
"... Xi should have listen to Deng Xiaoping. Keep your head down, go about your business and shut the **** up. But Xi the chest pounding panda declared Made in China 2025 and spooked everyone. China should de-robe him then hang him high! ..."
"... There has been a suspiciously sudden rise in China hawkishness among American citizens (e.g., commentators on these boards) coincident with what to outside observers has been a very obvious post-Russia tsunami of political and MSM anti-China propaganda (it's often easier to see propaganda from the outside than from the inside). ..."
"... Yes, but not all of China is restricted from using ARM. Only Huawei. Other phone manufacturers will be unaffected. ..."
May 22, 2019 | www.zerohedge.com

Japanese-owned chip designer ARM Holdings has notified its staff to halt " all active contracts, support entitlements, and any pending engagements " with Huawei and its subsidiaries in order to comply with the recent US clampdown, according to the BBC . Based in the UK and owned by Japan's Softbank, ARM designs and licenses processors used in all types of electronic devices, including smart phones, tablets, laptops, televisions, automotive systems and more.

" ARM is the foundation of Huawei's smartphone chip designs, so this is an insurmountable obstacle for Huawei ," said Geoff Blaber of CCS Insight, adding: "That said, with an abundance of companies in Huawei's supply chain already having taken action to comply with the US order, Huawei's ability to operate was already severely affected ."

In a company-wide memo, ARM told employees that their designs contain "US origin technology," which would be affected by the Trump administration's May 15 Executive Order to "protect our country against critical national security threats."

The US has argued that the Chinese government could force companies such as Huawei to install backdoors on their devices to allow for spying on US networks - an accusation Huawei has repeatedly denied.

Softbank - which is also one of Japan's largest mobile carriers - has joined with Japan's largest carriers DoCoMo and KDDI in announcing that they will stop taking orders for Huawei handsets.


wadalt , 14 minutes ago link

ARM does not manufacture computer processors itself,

but rather licenses its semiconductor technologies to others.

This option gives chip-makers greater freedom to customise their own designs.

China can

a) buy from other suppliers

b) continue using the already-paid-for blueprints and say F@#@ U

... ... ...

brokebackbuck , 1 minute ago link

Seriously, like china isnt just going to stop sending money to ARM

saldulilem , 21 minutes ago link

Huawei purchased licenses for ARM chip architecture (Cortex CPU and Mali GPU). If ARM is rescinding the licenses, it will mean a lawsuit.

hooligan2009 , 20 minutes ago link

good luck with that. which court? the court of "oh ****" in the hague?

wadalt , 13 minutes ago link

They'll just keep using it. They already paid for it.

Pft!

Ruler , 15 minutes ago link

You need to read their licensing scheme. ARM reserves the right to cut you off at any point in time.

1033eruth , 23 minutes ago link

Blockade is inappropriate. Boycott is appropriate. Damn 25 year old journalists.

medium giraffe , 26 minutes ago link

Let's have our 18 year olds line up in front of their 18 year olds and watch them all kill each other while we cheer them on.

What a ******* great plan that would be. Consider my consent manufactured. Let's do this!

Where the hell is my TV remote?

free corn , 22 minutes ago link

also China could be stimulated put effort in their own IP house and win long term.

free corn , 29 minutes ago link

Would not work, as chines still can access required ARM component via other companies like i. e. NXP.

Also cunning thing would be to change brand name a bit like change/remove 1 letter.

Ruler , 22 minutes ago link

Nope, cross licensing is strictly forbidden under the licensing ARM uses. If uou want to use ARM based designs, you have two choices. Buy the chips already made, or license a core and fab the package yourself.

If you fab it yourself, you have to market the cores and chips as being nased on theirs.

That's it. I learned this when looking to have some Asics made up for compute decices and decided to review all of my options. I decided two things looking into that.

1 I wouldn't have anything made until I could have them made here in the US. Still waiting for a FAB with older equipment to for such things to pop up. I simply don't trust China.

2 I would start from scratch using a RISC design with MIT license to avoid the decades of no development by actually having a real open licensing scheme. The GPL crap sucks.

free corn , 6 minutes ago link

Licenses to independent third parties do not matter yet. "ARM Holdings has notified its staff to halt " all active contracts, support entitlements, and any pending engagements " with Huawei and its subsidiaries"

Ruler , 3 minutes ago link

Yet, they find out they are buying from another vendor that complies with China's demands and poof there goes another company.

I am 100% with Arm and TI on all of this.

johnny two shoes , 29 minutes ago link

KASHGAR, China -- A God's-eye view of Kashgar, an ancient city in western China, flashed onto a wall-size screen, with colorful icons marking police stations, checkpoints and the locations of recent security incidents. At the click of a mouse, a technician explained, the police can pull up live video from any surveillance camera or take a closer look at anyone passing through one of the thousands of checkpoints in the city...

https://www.nytimes.com/2019/05/22/world/asia/china-surveillance-xinjiang.html

TotalMachineFail , 30 minutes ago link

There's no such things a national security. This is U.S. corporate security protecting the corporate interests of the other telecom corporations that license to operate through the U.S. corporation. Comprendo?

The way this gloal fraud operates really is a laughable pathetic joke with what's hidden because is criminal. That includes everything globally that alleged to be classified or some level of so called top secret but none of it is. The sedtion and treason of the government saw to those eliminations along with the cancellation of all NDA's, or other similar docments to attempt to use threat, coercion, murder as a consequence.

When is there going to be a fully functional so called smart phone that is not hackable, trackable, fully compliant with all unalienable rights, usable globally, with a degree of voice and data encryption to ensure no possibility of interception or monitoring? Oh and free phone w/ $25 unlimited voice and data monthly.

BT , 32 minutes ago link

Xi should have listen to Deng Xiaoping. Keep your head down, go about your business and shut the **** up. But Xi the chest pounding panda declared Made in China 2025 and spooked everyone. China should de-robe him then hang him high!

schroedingersrat , 32 minutes ago link

Thats a real stinger! Wonder how China retaliates

He–Mene Mox Mox , 26 minutes ago link

Simple! Send the Chinese navy to Venezuela at the time when the U.S. is sending its naval forces to Iran. That should rattle Washington greatly. That should up the ante greatly too. Then see who blinks first.

dunlin , 33 minutes ago link

There has been a suspiciously sudden rise in China hawkishness among American citizens (e.g., commentators on these boards) coincident with what to outside observers has been a very obvious post-Russia tsunami of political and MSM anti-China propaganda (it's often easier to see propaganda from the outside than from the inside).

A good discussion of the opposing point of view has just aired on RT, among the host, an American living in Russia, Fred Teng, President of the America China Public Affairs Institute, and James Bradley (American), author of The China Mirage. You may think this is just propaganda from the opposite direction, but if so you will at least have two poles to position yourself between rather than just one side of the story. If you have an open mind.........it is well worth watching. https://m.youtube.com/watch?v=6C1kYnrm1cA

schroedingersrat , 31 minutes ago link

Americans are inherently white supermacist nazis. They don't need a lot of propaganda to rage against anyone the governments wants them to :)

johnny two shoes , 22 minutes ago link

Actually, the Chinese are contemptuous and xenophobic to the degree of paranoia, both towards "foreigners" and their own populace.

hoytmonger , 33 minutes ago link

Being that most electronic components are manufactured in China, I don't believe they're sweating at all.

aberfoyle_crumplehausen , 33 minutes ago link

All I see here is insouciance.

All you ignorant fuckers need to take a one month vacation to China. Come back and lets talk then. Your world outlook will have been greatly humbled and you would be more willing to be of the cooperative model of world politics rather than this senseless belligerence I see here.

hooligan2009 , 31 minutes ago link

no sane person would want to go to the Chinese equivalent of Disneyland

https://www.amnesty.org/en/latest/news/2018/09/china-up-to-one-million-detained/

EHM , 10 minutes ago link

I remember being photographed at every highway underpass. I remember not being able to view You Tube or any video on Facebook because it was blocked...

Tachyon5321 , 35 minutes ago link

This is an major O'sh2t because all of China's cell phones use ARM! China is now like African no internet village because they don't have smart phones... LOL

Kafir Goyim , 26 minutes ago link

Yes, but not all of China is restricted from using ARM. Only Huawei. Other phone manufacturers will be unaffected.

[May 22, 2019] White House Planned To Use Huawei As Trade 'Bargaining Chip'

Notable quotes:
"... And once trade talks had broken down, there was a 'scramble' to implement the measures against Huawei. ..."
"... this report effectively confirms that the administration wasn't being entirely truthful when it said there was 'no link' between Huawei and the trade talks. Trump said back in December that he would go so far as to intervene in efforts to extradite Meng Wanzhou if it would help with the trade talks. And although that would be extreme, we should rule it out just yet. ..."
May 21, 2019 | www.zerohedge.com

If there was any lingering doubt that President Trump has treated Huawei like a 'bargaining chip' during trade talks with the Chinese, Bloomberg just put the issue to rest.

In a report sourced to administration insiders, BBG reported that the Trump administration waited to blacklist Huawei until talks with the Chinese had hit an impasse, because they were concerned that targeting Huawei would disrupt the talks. Plans to punish Huawei - including possible economic sanctions - had been kicking around for months. And prosecutors took their first tentative steps toward holding Huawei 'accountable' by convincing Canada to arrest Huawei CFO Meng Wanzhou.

And once trade talks had broken down, there was a 'scramble' to implement the measures against Huawei.

Though BBG doesn't offer a definitive answer on this, it reports that some are suspicious that Trump is pressuring Huawei to 'gain a negotiating edge' with Beijing (meanwhile, the Chinese leadership are furious about the decision).

Timing of the U.S. action raised questions about whether President Donald Trump is punishing the company in part to gain a negotiating edge with Beijing in a deepening clash over trade. Talks between Beijing and Washington deadlocked this month as Trump accused China of backing out of a deal that was taking shape with U.S. officials, saying China reneged on an agreement to enshrine a wide range of reforms in law.

Another take on what happened suggested that the decision to hold back on Huawei actually came from the bureaucracy, as administration officials were worried President Trump would just scrap the measures as a favor to Xi, like he did last year with ZTE Corp. Those concerns haven't entirely abated.

Washington has offered Huawei some wiggle room by suspending the new restrictions for 90 days. The company has been stockpiling chips, and reportedly already has enough to keep its business running for three months.

But this report effectively confirms that the administration wasn't being entirely truthful when it said there was 'no link' between Huawei and the trade talks. Trump said back in December that he would go so far as to intervene in efforts to extradite Meng Wanzhou if it would help with the trade talks. And although that would be extreme, we should rule it out just yet.


AChinese , 22 minutes ago link

What the art of deal? When the talk hits an impasse, threat them!

B-Bond , 9 minutes ago link

"impasse"? Who's Your Friend─ChiCom 🤔 N. Korea 😆

EU and China struggle over key concerns ahead of summit😲

Yet the summit might not produce a joint statement - as previous Chinese pledges on speeding-up talks on an investment agreement, plus opening up its markets more to European companies, have failed to materialise.

"We can certainly agree on a joint statement, the question is how substantive this will be," a senior EU official said. The EU wants to see concrete steps from China.

Failing to agree on a joint statement, however, is a sign of the EU's unsuccessful bid to commit China to give greater access of its markets to European companies, and engage seriously in reforming global trade rules within the World Trade Organisation (WTO).

The EU hoped to make China address longstanding European complaints, and to commit to concluding an investment agreement that aims to secure better market access and fair treatment for European companies in China by 2020.

The EU also hopes to achieve an agreement on indications of geographical origins to protect European brands in China by the end of the year.

An EU official said that the recent foreign investment law adopted in China, does not address all the issues of concern for Europeans, for instance on prohibited sectors, dual regime for foreign and domestic operations, and on forced technological transfer.

"We agree there has been a lot of promises, it is time for action, not only words. […] We want to make sure we have a modern framework for investment protection in a binding agreement with mechanism to solve disputes," the EU official added.

https://euobserver.com/foreign/144609

Why China is cozying up to Europe🤔

“While the [European] Commission is getting tougher on China, at least for now it does not seem to be aiming for a confrontation with China,” he said.

But even if the EU doesn’t fully align itself with the increasingly hawkish Trump administration , a shift in China-EU relations seems inevitable.

“The EU has no interest in cooling its China relationship, but if it does not act now to protect its economy from unfair state-owned enterprise competition in the EU market, then the citizens of Europe might ask for more protection,” Wuttke said.

“[There is] growing realism in Europe and the end of naivety when it comes to China.”

https://www.inkstonenews.com/politics/beijing-seeks-friendship-eu-amid-us-china-trade-war/article/3002836

Exclusive: In China, the Party’s push for influence inside foreign firms stirs fears😲

BEIJING (Reuters) - Late last month, executives from more than a dozen top European companies in China met in Beijing to discuss their concerns about the growing role of the ruling Communist Party in the local operations of foreign firms, according to three people with knowledge of the discussions.

https://www.reuters.com/article/us-china-congress-companies/exclusive-in-china-the-partys-push-for-influence-inside-foreign-firms-stirs-fears-idUSKCN1B40JU

Teamtc321 , 47 minutes ago link

China got fucked the minute they agreed to invest trillions into US debt securities in exchange for being given unlimited access to sell into the US market. This terrible arrangement set them up to be crushed economically if the US were to close its doors to Chinese exports, and to lose much of what they made from their trade surplus with the US if they ever tried to unload their holdings.

Their main stock market now is down over 30% since the tariffs went into force last June, and they are closing factories so fast that the price of oil to heat and power those factories has fallen by the same 30+% as the Chinese stock market. And now, were the Chinese to start off loading their US Treasury holdings, they would drive the bond market down about 10-20%, which would be another several hundreds of billions of dollars lost. A clean sweep mop up operation would be done by the Fed and Anointed Banks in a afternoon. Answer this, why is a good soldier to the PLA, HSBC advertising like crazy for deposit's in $ when they have unlimited access to the Yuan? BOOM !!!

China's future access to U.S. dollars via their exports is the sword hanging above their Chicom heads.

The Chinese were advised for a long time that they were going to have to make changes in their trade policies if they were to avoid their present troubles. They were told not to hold the US Treasury securities they were forced to buy, and instead sell them off slowly and re-invest the capital into domestic infrastructure projects that would expand the size of the Chinese middle class. And they were told to diversify their export markets, so that they would not be so dependent on the US consumer to buy Chinese products, The Chinese did little on the first initiative, and little on the second as well, although the second is difficult to accomplish since there are not many consumer markets that can buy anywhere near what the US can buy.

Not a pretty picture. But many saw this day coming. Unfortunately for China, not nearly enough of the decision makers in the Forbidden City did. Xi Jinping played the card to walk away from agreed upon section of the trade deal, he played his hand. Confusis say, you made your bed now sleep in it...............

China would go from having the largest overall trade surplus in the world to having a trade surplus smaller than Ireland if you take away the U.S. Trade Surplus China Steals……….

Xi Jinping has now lost Face and the Entire Globe now knows it.

SickDollar , 1 hour ago link

I swear our politicians are so dumb, full of Hubris and excellent crooks

Aggression, Violence, and Threats never ever works

All you did is awaken the Dragon.

free corn , 1 hour ago link

Sure America is leader in Political Technology and has best politicians.

CashMcCall , 1 hour ago link

Well that should end the extradition case of Ms Weng. Clearly politically motivated. Her attorney's Steptoe in DC are top drawer. This also means that Huawei may sue Trump for damages.

CashMcCall , 1 hour ago link

That's because Steptoe never loses to the DOJ. There are three top firms in DC that are DOJ killers. Steptoe is one of them. Williams & Connolly another. The Ted Stevens Case was the greatest legal slaughter of the DOJ in history. 6 Gov attorney's sanctioned and threatened by the Judge for disbarment. That's the way to kick the Gov ***. All six counts dropped!

Meng is still in Canada so that is a Canadian Jurisdiction but the Canadian law is express that political motivation is insufficient grounds for extradition. This is evidence of precisely that.

All this over a charge of fraud... LOL. It doesn't get any weaker than that!

Savvy , 1 hour ago link

Canada isn't all that enamored of US trade policy atm. Like the rest of the planet. It's quite possible Canada's courts simply refuse the extradition.

CashMcCall , 46 minutes ago link

Trudeau is a wrist licking slime, hope your courts are apolitical.

scaleindependent , 1 hour ago link

what would happen to apple and alphabet stock prices if China did the same thing to them, that we did to Huawei?

CashMcCall , 1 hour ago link

China will never do that. They are about business and they are not going to harm a customer over politics. Trump does this routinely. He puts sanctions on Venezuela to harm the women and children to soften up the Gov. He has done it with Russia. It is always indirect attacks to get something unrelated. The cowardly conduct of a bully. Hitler did the same sort of things. The siege of Stalingrad for example.

The damage Trump is doing to Google is incomprehensible. Huawei is one of Google's largest customers. Can you even imaging the implications?

If you were a manufacturer of smartphones and were licensing an OS from Google and Trump then blocks the license.... How many makers of smartphone do you think will want to be dependent on this kind of lunatic gov? No country should want to deal with the US for anything. Look at Russia, they were buying jet engines for their MC 21 and Trump Gov cuts them off. Now they are making their own engines not buying US made engines. How does that help the US manufacturer? Russia will make their engines and compete with the US makers.

None of what Trump does makes any sense at all.

[May 21, 2019] Huawei 'Blacklist' Trump and Commerce Make a Serious Mistake by Editorial Board

The art of "no deal" in action.
Notable quotes:
"... China will only redouble its efforts to produce advanced technologies domestically. ..."
"... As a negotiating strategy, the decision makes even less sense. U.S. officials claim it had nothing to do with stalled trade talks, but it certainly looks like Trump wants to use Huawei as leverage, just as he did last year with ZTE Corp ..."
"... Worse, the decision undermines the implicit point of any U.S.-China trade deal: not just to increase commerce but to stabilize relations between the world's two most powerful nations. ..."
"... targeting Huawei so nakedly will only further marginalize the few moderates in the Chinese leadership and embolden hawks who see conflict as unavoidable ..."
"... Crushing Huawei, by contrast, simply looks like a strategic miscalculation -- and one with potentially disastrous consequences. ..."
www.zerohedge.com
Banning one of China's most high-profile companies from US networks makes sense. Putting it out of business does not.

In its struggle with China over trade and national security, the US has many legitimate grievances, and a variety of weapons for seeking redress. That doesn't mean it should use all of them.

The nuclear missile the U.S. just launched at Huawei Technologies Co. Ltd. is a case in point. Last week, the Commerce Department placed Huawei and nearly 70 of its affiliates on an " Entity List ," which means that U.S. suppliers may now need a license to do business with them. Both Huawei's mobile phones and its network equipment rely on American components, including advanced semiconductors. If the ban is applied stringently, it could drive one of China's most high-profile companies -- employing more than 180,000 people -- out of business.

That would be a serious mistake. The U.S. has long argued that Huawei poses a national-security threat. And there certainly are legitimate reasons to worry that incorporating Huawei gear into America's networks will leave them vulnerable both to spying and, in the event of a conflict, sabotage. But the U.S. is already taking other prudent steps to prevent Huawei equipment from being used domestically. Seeking to put the company out of business as well is both disproportionate and deeply unwise.

For one thing, it will impose collateral damage. Blameless companies around the world -- including Huawei's American suppliers -- could lose business, face disruptions and incur significant new costs. Allies that have resisted U.S. pressure to shun Huawei's equipment will resent being backed into a corner: Even if President Donald Trump loosens the noose a bit, they can hardly take the chance that restrictions won't be re-imposed later. China will only redouble its efforts to produce advanced technologies domestically.

As a negotiating strategy, the decision makes even less sense. U.S. officials claim it had nothing to do with stalled trade talks, but it certainly looks like Trump wants to use Huawei as leverage, just as he did last year with ZTE Corp. Trump has already invoked national security far too often in pursuing his scattered trade battles. Doing so here would set another terrible precedent while almost certainly backfiring: It will aggravate the current impasse and give Beijing little incentive to abide by any eventual agreement.

Worse, the decision undermines the implicit point of any U.S.-China trade deal: not just to increase commerce but to stabilize relations between the world's two most powerful nations. While tensions are inevitable, a healthy trading relationship should in theory restore ballance, reminding both sides of the benefits of cooperation and strengthening constituencies that have reason to prefer peace to war. By contrast, targeting Huawei so nakedly will only further marginalize the few moderates in the Chinese leadership and embolden hawks who see conflict as unavoidable. For ordinary Chinese, it will be hard to avoid the impression that the U.S. is simply trying to limit their economic possibilities.

Even on its own terms, finally, this gambit is likely to fail. To be effective, an assault on Huawei would need to be embedded in a larger strategy with a clearer endgame in mind. That's nowhere in evidence: Is the aim to cripple China's tech industry? Teach the country its place? Give a boost to non-Chinese suppliers? Provoke a conflict? End one? Without a more focused goal, Trump risks simply alienating U.S. allies, infuriating average Chinese and raising the chances of confrontation, all to no obvious end.

What the U.S. needs is a larger plan that seeks a healthier coexistence with China. That means building up America's defenses, leveraging its competitive strengths, working with allies to pressure China to conform to global norms, and taking the lead in writing new rules that can constrain its more disruptive behavior. Crushing Huawei, by contrast, simply looks like a strategic miscalculation -- and one with potentially disastrous consequences.

[May 21, 2019] Huawei banned from Google Android after Trump administration cracks down - The Washington Post

This looks liek a real trade war...
May 21, 2019 | www.washingtonpost.com

With $105 billion in global sales last year, Huawei has a vast web of customers and suppliers on nearly every continent. The company is the world's largest provider of equipment used in 5G telecom networks, and the second largest seller of cellphones. Last week, Huawei said that it spends more than $1 out of every $7 of its annual $70 billion procurement budget buying equipment from U.S. companies.

Google said it would restrict Huawei's access to future updates of its Android operating software, which powers many of Huawei's phones. Other U.S. manufacturers also began suspending business dealings with the Chinese firm.

The markets punished many of those suppliers Monday, including Intel, Broadcom and Qualcomm, as well as Micron and semiconductor manufacturer Cypress. Chip makers Qualcomm and Broadcom fell 6 percent. Intel declined nearly 3 percent, and Lumentum Holdings shares fell more than 4 percent after the company said it would stop selling to Huawei.

The United States said last week it was adding Huawei to a trade blacklist because the company "is engaged in activities that are contrary to U.S. national security or foreign policy interest." That punishment means U.S. firms aren't allowed to sell to Huawei unless they get special approval from the government.

[ How China's Huawei took the lead over U.S. companies in 5G technology ]

On Monday evening, the Commerce Department slightly eased the timing of the restrictions, saying it would allow some transactions to continue for 90 days, to facilitate "certain activities necessary to the continued operations of existing networks and to support existing mobile services." The temporary reprieve will allow Huawei to receive U.S. equipment to service existing Huawei mobile phone users and rural broadband networks.

Kevin Wolf, a former senior Commerce Department and current partner at Akin Gump, called the reprieve "very narrow." "It's not relief for exporters. It really is to prevent unintended operational problems with existing networks," Wolf said.

The United States views Huawei as a security risk because it believes the company has close ties to the Chinese government, which Huawei has denied. U.S. officials have said Huawei could potentially tap into and monitor sensitive U.S. communications through its network technology.

Ren Zhengfei, the founder of Huawei, said that the U.S had underestimated his company as he sought to dismiss the impact of the ban.

"The current practice of U.S. politicians underestimates our strength," Ren said in a group interview with Chinese media Tuesday morning. Huawei had a stockpile of chips and "can't be isolated" from the world, he said.

The 90-day extension "doesn't mean much" and Huawei is fully prepared for the American actions, Ren said, even appearing to brag about luring workers away from U.S. companies.

"We are very grateful to the U.S. companies. They have made a lot of contributions to us," he said in the comments, which were shared in real time by state media. "Many of our consultants are from American companies like IBM."

Earlier, Huawei reacted to Google's decision to stop allowing updates by saying the Chinese company had "made substantial contributions to the development and growth of Android around theworld."

"As one of Android's key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry," said spokesman Joe Kelly, adding that Huawei would continue to provide security updates and after-sales services to its existingsmartphone and tablet products.

Google's announcement came at an awkward time for Huawei, which on Tuesday is expected to unveil its Honor 20 series of smartphones in London, and security experts were divided on how quickly and severely the ban could hurt Huawei.

Some said Huawei is bigger and better prepared for the blockade than its Chinese competitor ZTE was last year when the Trump administration restricted ZTE from doing business with U.S. firms. The U.S. later eased ZTE's punishment.

[May 21, 2019] Google, Intel Others Cut Ties With Huawei As Trade War Heats Up

May 21, 2019 | www.zerohedge.com

Washington announced last week that it would impose new prohibitions on Huawei, including a ban on US companies selling components or services to the telecoms giant. The seriousness of these actions is difficult to understate, as Rosenblatt Securities analyst Ryan Koontz explained. If Huawei is pushed to the brink of collapse, Beijing might label this 'an act of war'.

"The extreme scenario of Huawei's telecom network unit failing would set China back many years and might even be viewed as an act of war by China," Koontz wrote. "Such a failure would have massive global telecom market implications."

But bringing a massive global Chinese firm to its knees is one way to demonstrate to Beijing, and the rest of the world, which ignored Washington's warnings about Huawei, the true reach of American economic power. And it's one way to put a timer on talks with Beijing, ensuring that the trade skirmish won't drag on until the height of campaign season.

American firms weren't the only ones to act. In Europe, German chipmaker Infineon Technologies said it would suspend deliveries to Huawei, at least until it has had a chance to determine the significance of Washington's executive order (though company sources later denied these reports and said shipments to Huawei would continue).

Since hostilities with the US began, Huawei has been stockpiling components. It now has enough of a buffer supply to keep its business running without interruption for at least three months. Nikkei reported late last week that Huawei had reportedly asked suppliers to help it build up enough stockpiles to last it a year, but it's unlikely that Huawei has accumulated enough buffer stock to last it anywhere near as long.

If Washington refuses to back down, this three-month window might become the next critical deadline for the trade talks.

If it wasn't clear before, we now know that President Trump wasn't kidding when he said late last year that Huawei could become 'a bargaining chip' in the trade skirmish. Whether the prosecution of Meng Wanzhou factors into it remains to be seen, but President Trump did tell Fox News over the weekend that he wouldn't allow China to surpass the US on his watch.

Huawei's odds of finding replacement suppliers are slim, as Koontz explained. Huawei "is heavily dependent on U.S. semiconductor products and would be seriously crippled without supply of key U.S. components."

It's clear where Beijing stands on this. We wouldn't be surprised to see a 'consumer movement' emerge in China where middle-class consumers ditch foreign phones and proudly proclaim their support for Huawei.

pic.twitter.com/iAdB3MCJK7

-- Hu Xijin 胡锡进 (@HuXijin_GT) May 20, 2019

On Sunday afternoon, President Trump threatened Iran with military intervention via tweet. Yet, analysts blamed the growing pressure on Huawei for the risk-averse trading atmosphere.

US stocks were on track to open lower. Meanwhile, Huawei's dollar-denominated corporate bonds tumbled again on Monday after one of their biggest declines in recent memory on Friday. The selloff comes as fears of a Huawei bankruptcy are beginning to intensify.

Beijing has maintained its aggressive posture, with its Ministry of Foreign Affairs warning in response to news of the Google ban that China would do what it needed to do to protect its companies' "legitimate rights", and also hinted at legal actions it might take. Over the weekend, Beijing compared the trade skirmish with its actions in the Korean War, about as clear a sign as any that we're in for a protracted conflict.

Whatever happens, it looks like the showdown over Huawei has eclipsed the broader trade-war narrative. So much for the Huawei crackdown being a 'separate issue' from the trade talks, like Trump officials had previously insisted.

Bottom line: If we don't get a deal by the end of June, this trade war is going to really heat up.


me or you , 2 minutes ago link

Imaging a phone without Google spyware or Intel backdoors...it's a win win for all of us.

frankthecrank , 5 minutes ago link

So, Huawei is dependent upon Western semiconductor manufacturers. But I thought the Chinese were the leaders in innovation? That's all I hear on here and elsewhere. Seems to me that they should have invented and created their own semiconductor industry back in the 1800's when Westerners began to mess with them. One would think that the great and powerful and super duper intelligent Chinese would have discovered and invented it first in the first place. Certainly the Chinese or their pals in the USSR could have done so sometime in the '50s, '60s, '70s, '80s or '90s? No?

Herdee , 6 minutes ago link

Christine Lagarde and the IMF team in China:

http://www.xinhuanet.com/english/2019-04/24/c_138005457.htm

giovanni_f , 13 minutes ago link

The US might win this battle but it has already lost the war. It is in a position similar to Ukraine which was the richest and most developed Sovjet republic after the breakup - but which is now one of the biggest shitholes in the entire Galaxy, feasted upon by a bunch of Zionazi oligarchs. Think of the US as an Ukraine on steroids.

Trump and his diverse actions will hurt Huawei. Maybe even badly. Long term, maybe even short term, the US won't gain anything from it. It is in a position where it can only lose. Not because the potential of the US isn't "terrific" (actually it coud be the most promising country) - but because the US is designed to fail as it is basically a failed state already.

admin user , 14 minutes ago link

Alphabet has announced that it will cut off Huawei Mobile's access to most of its Android operating system offerings

android is open source, anyone can download and modify it

you just wont get Google Play Store

What good is a phone call if you're unable to speak?

cledus , 17 minutes ago link

The real prob as I see it, Huawei can not be monitored or hacked into by the NSA, CIA and all the other US intelligence agencies.

They've been shut out and don't like it.

Spaced Out , 19 minutes ago link

Lol, there are already better alternatives to android, such as /e/. This dumb move will only hasten the demise of google, etc. Mugs!

Herdee , 27 minutes ago link

Chinese news:

http://www.xinhuanet.com/english/home.htm

HopefulJoe , 34 minutes ago link

Google is EVIL, no way they are walking away from an evil company, have they walked away from China also? No, they are giving them code daily...

To Hell In A Handbasket , 44 minutes ago link

The beginning of USSA mercantilism being played out. The USSA simply cannot compete and lagging behind in 5G is only the start.

CheapBastard , 33 minutes ago link

We have some of the best software engineers in the world...ask Sameer and Raja in our IT department.

Shockwave , 44 minutes ago link

Im confused, how would not choosing to do business with Huawei possibly be considered an act of war?

Especially when China largely keeps their markets closed to the west?

After speaking to some Chinese immigrrants... according to them, they'll never come to any kind of fair agreement with the west. They're not interested in a level playing field at all. All they care about is making sure the Chinese state gets all the benefits in order to further Chinas power and influence.

silverwolf888 , 53 minutes ago link

Great news. Huawei already has completed development of its own OS, no doubt an Android clone. This finally gives us a path off of the Goolag/ Android OS. In 19 months Rabbi Trump will be gone, which is good, but his destroying the Android monopoly may be his biggest achievement.

yerfej , 45 minutes ago link

An android clone? No way that would be stealing again. No they will make their own special sauce OS that will electrocute the citizen if they don't adhere to the state directives.

DelusionsCrowded , 39 minutes ago link

There are so many other better ways to run a phone interface , I wonder if these two systems have been kept as monopolies so that the Spooks at the NSA and CIA are able to find their way around easily

[May 20, 2019] Wang also reiterated the principled stand against the "long-arm jurisdiction" imposed by the United States

May 20, 2019 | www.moonofalabama.org

psychohistorian , May 19, 2019 10:55:01 PM | 6

Below is my final Xinhuanet link about China/US relations

Chinese FM urges US to avoid further damage of ties in phone call with Pompeo

The take away quote
"
Wang also reiterated the principled stand against the "long-arm jurisdiction" imposed by the United States.
"
Empire is having its hand slapped back in Venezuela, Iran, Syria, ???

Where are they going to get their war on?

I see empire as a war junkie and they are starting to twitch in withdrawals which is dangerous but a necessary stage. Trumps latest tweets show that level of energy.

The spinning plates of empire are not wowing the crowds like before.....what is plan Z?

[May 20, 2019] We must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role.

May 20, 2019 | www.moonofalabama.org

Nemesiscalling , May 19, 2019 5:18:09 PM | 6

Sasha , May 19, 2019 5:26:49 PM | 7

On the alleged Arendt´s banality of evil, well, some more evil than others, if not because o of their clearly over the top ambitions:

Interesting comment linking some sources and articles on US military strategy from decades ago , some of which I am not able to get to anymore, as the article at ICH numbered 3011:

"First published From Parameters, Summer 1997, pp. 4-14: US Army War College: "There will be no peace. At any given moment for the rest of our lifetimes, there will be multiple conflicts in mutating forms around the globe. Violent conflict will dominate the headlines, but cultural and economic struggles will be steadier and ultimately more decisive. The de facto role of the US armed forces will be to keep the world safe for our economy and open to our cultural assault. To those ends, we will do a fair amount of killing."

"Excerpts From Pentagon's Plan: 'Prevent the Re-Emergence of a New Rival':

"Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union.

This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power. These regions include Western Europe, East Asia, the territory of the former Soviet Union, and Southwest Asia.

There are three additional aspects to this objective: First, the U.S. must show the leadership necessary to establish and protect a new order that holds the promise of convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests.

Second, in the non-defense areas, we must account sufficiently for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order. Finally, we must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role. An effective reconstitution capability is important here, since it implies that a potential rival could not hope to quickly or easily gain a predominant military position in the world."

... access to vital raw materials, primarily Persian Gulf oil"


[May 20, 2019] China Has Already Lost the Trade War

May 20, 2019 | www.theamericanconservative.com

Indeed, the biggest cost may be imposed on investors, who for years have inflated the economic potential of communist China's state-directed economy. Major public companies in the United States, including Apple, Caterpillar, and Boeing, are among some of the leading exporters to China. Yet exports to China accounted for just 7.2 percent of overall American exports in 2018. According to the U.S. Trade Representative , the top export categories that year were: aircraft ($18 billion), machinery ($14 billion), electrical machinery ($13 billion), optical and medical instruments ($9.8 billion), and vehicles ($9.4 billion).


grumpy realist May 17, 2019 at 6:55 am

Hmmm. This sounds suspiciously like the arguments Brexiters have dragged out about the EU. Remember the "German car manufacturers will help us get everything we want because we're such a large market and they can't afford to lose us"?

People of a country can decide to put up with a heck of a lot of economic pain if they decide they're defending their country.

Dan Green , says: May 17, 2019 at 7:01 am
Base issue seems clear. Two large economies with very different models of governing. One a Totalitarian state run economy, and our economy based on greed and consumption, to support GDP. The theory that the world need be interconnected by trade, has run its course. We really don't even need a Nafta re done treaty. All 3 economies have exhausted what works for them, and can simply abandon what doesn't. If a cuntry has something to sell and the buyer country sees a price advantage the deal will go down.
Kent , says: May 17, 2019 at 7:10 am
Tariffs do not get passed along into higher consumer prices unless the product has a very high inelasticity in demand.

Here's a thought experiment: suppose I sell an imported product for $10. The government imposes a 25% tariff, so I decide to up the price to $12.50. Here's your issue: if I could charge $12.50 for the product, why wouldn't I just have charged that in the first place? Charity? No, I didn't charge that because every time I tried, sales collapsed.

And if you understand retail, especially imports, gross margins are enormous. Sales prices can be 10 times cost of goods. So that $10 product probably just cost $1. And a 25% tariff on $1 is only 25 cents. Top of the line iPhones cost about $180 to make but retail for close to $1000.

Tariff expenses come out of some combination of negotiated lower prices with vendors, lost jobs as importers seek to cut costs, and lower profits. Consumer prices are the last thing to consider.

Slugger , says: May 17, 2019 at 9:58 am
Please excuse my ignorance. We hear about a war on this and a war on that all the time. Now a trade war which we are winning (or not). How will we know that we won? After victory do we buy more stuff from China or less? Will their prices for stuff be higher or lower? I am a financially comfortable retired person who has plenty of stuff that I have accumulated over the years; a trade victory might have a different meaning to a young couple starting a life. Who gets the spoils of victory, me or the youngsters?
TheSnark , says: May 17, 2019 at 10:10 am
China has been running much the same economic model as Japan in the 1970's and 1980's, an export-led autarchy heavily dependent on debt financing. When Japan started to open its financial markets in the later 1980's, things started grinding to halt and by the early 1990's stagnation started.

China is on much the same track, though Xi has been careful not to liberalize the financial markets too much, and has otherwise done a good job of keep growth on track. But it can't last, and if a trade war does not tip China into stagnation, something else will in the not-too-distant future.

Any downturn will bring the legitimacy of the CCP into question, and the traditional response of dictatorships in that situation is to find a foreign conflict to distract the population. With mutual distrust, and even dislike, growing on both sides, things could get very messy.

Jon Thaler , says: May 17, 2019 at 11:01 am
In the 2017/2018 trade year, the US exported $12 billion of soy to China. That's. particularly important for two reasons:

* China accounts for the majority of US soy exports, so the trade war affects that sector more that the others you mention.

* The people affected are one of the cores of Trump's base.

The latter point is particularly significant, because the success or failure of the war will be determined by political stamina, not by economics directly. Who can hold out longer, Xi or Trump, as his political position erodes. One of the "weaknesses" of a democracy is the greater sensitivity to the broader political environment (ie, not just the Politburo). Are you so sure that the US will win this war of attrition?

Joshua Xanadu , says: May 17, 2019 at 11:20 am
@Kent – Thank you! Finally someone with actual understanding about retail and the ridiculous profit margins of imported goods, especially from Asia. As someone who worked first-hand at a shoe factory in China, managing the account, I was aghast at how low U.S. companies like Nike or even Wal-Mart drove down the production costs ($6-18 dollars landed), while selling the shoes for $30 – $120 dollars.

Theoretically all that juiced-up profits from outsourcing should have been reinvested to create new jobs for U.S. workers over the past 20 years. That's what economists and corporate lobbyists will argue. Empirically, however, those profits were reinvested to the stock market for fat quarterly bonuses.

Leroy Cabana , says: May 17, 2019 at 11:23 am
The underlying issue with China is their long standing demand to disclose all development info about any product doing trade in China. Take Apple, they butted heads with the FBI and refused to unlock an Iphone that belonged to a killer. Then they enter China and the government there demands all the tec info for phone development and Apple simply hands over their deepest secrets. Its the same for Ford, Cat or any others wanting to do business in China. I for one, can live without any China trade if these have to be the requirements. There is a long list of other cheap labor countries that would welcome our trade without being forced to provide trade secrets.
Kent , says: May 17, 2019 at 11:37 am
@FL Transplant

"So what happens in the next T-bill auction when China doesn't show up and instead sits on the sidelines–does the Treasury end up paying higher interest rates to sell the instruments necessary to finance our federal spending? And, if so, what does an increase in those interest rates do to our economy?"

Interest rates for treasuries are always set by the Federal Reserve. The secret sauce is the Primary Dealer banks. They are required, by law, to make the market for treasuries. Meaning they have to buy any treasuries that aren't sold. And they do so at the interest rate set by the Fed. And they always, always have all the money they need to do so. The Fed just prints it and adds it to their balances.

It's the beauty of a fiat currency. The USA cannot be held hostage to foreign financial agents.

Salt Lick , says: May 17, 2019 at 11:38 am
This trade war is about regime in change in China, as Bannon has said on many occasions. The Chinese are finally waking up to our true intentions. America can't allow a more successful economic model to exist anymore than they allow socialism in Venezuela.

The only surprising outcome of the clash will be that American corporations will experience massive collateral damage due to supply chain disruption and being shut out of the largest consumer market in the world in China.

The U.S. Empire has decided if U.S. corporation can't run ruff shod over the Chinese government like they do here and everywhere else, they cannot be allowed to submit to Chinese government rule in exchange for the benefits of the Chinese market place.

It's probably the only time in recent history that the defense of market forces resulted in a direct hit on the "free" market itself. Like all front line troops, U.S. corporations will suffer many casualties in the battle ahead. They didn't volunteer for this trade war and they had no idea that this would be a hill that many would die on.

The paradox of this situation is not lost on them and most are paralyzed by what lies ahead.

Archie1954 , says: May 17, 2019 at 12:49 pm
You are conveniently forgetting that much of the Chinese goods subject to the increased tariffs are goods manufactured by American corporations utilizing Chinese labour due to its much reduced costs. Those American companies are going to lose market share and profits because of these new tariffs. They will not be happy!
workingdad , says: May 17, 2019 at 2:41 pm
I wonder if they could by commodities? Buy surplus oil would be a logical choice. They could sell their treasuries, use dollars for oil, thereby drive up the price of oil for everyone, including the US.

Granted that could eventually help the US, but in the short term could be a pain.

EarlyBird , says: May 17, 2019 at 2:44 pm
Slugger , I don't think your question is ignorant at all. I think it's very wise. If only we asked the "Why?" and "What does a win look like?" of all these literal and figurative wars, we might get somewhere.

I do not, ultimately, believe Trump's trade war with China is going to make the US into a manufacturing powerhouse again. Those days have come and gone. It will definitely increase the cost of a lot of junk we buy from China.

The hope, however, is that it will force China into a position wherein we could demand more fairness in terms of patents and technology theft.

SteveK9 , says: May 17, 2019 at 3:07 pm
The time when it was beneficial for China to trade real goods for numbers in a computer was long since past. They keep doing it out of habit. Trump is doing both countries a big favor.
Liam , says: May 17, 2019 at 3:28 pm
Historically, it has not been wise to discount China's capacity to overcome disruptions that would vivisect virtually any other civilisational hegemon on this planet. China survived the Mongols, the English, and the Japanese. And itself many many times over.

We're barely a blink in the eye of China's history. I would not be as sanguine about who "needs" whom more over the long term.

(Just to be clear: I have more than my share of criticisms of American trade policy of the past couple of generations, including our posture vis-a-vis China.)

Dakarian , says: May 17, 2019 at 4:33 pm
"Slugger
May 17, 2019 at 9:58 am
Please excuse my ignorance. We hear about a war on this and a war on that all the time. Now a trade war which we are winning (or not). How will we know that we won? After victory do we buy more stuff from China or less? Will their prices for stuff be higher or lower? I am a financially comfortable retired person who has plenty of stuff that I have accumulated over the years; a trade victory might have a different meaning to a young couple starting a life. Who gets the spoils of victory, me or the youngsters?"

You. Definately you.

Youngsters need to be able find a job that pays for their basic needs and a path to be able to keep growing or stabilize that lifestyle.

This war bumps prices higher, but won't bring those jobs back. High skill jobs are already in high demand with few takers so more of those won't help the majority. The rest will either be automated, moved from China to other countries (which is already happening as China wants to move from sweatshops to a consumer middle class economy and places like India and Vietnam are taking up the slack), or abandoned due to a lack of profit margins.

I'm not saying we should or shouldn't do this with China. They haven't exactly been treating us or our companies well after all. But this is NOT going to benefit the regular American. Low skill, sustainable, reliable work is just Not going to be a thing.

What will help is encouraging the ability to gain high skills and mobility for those high skill jobs that are in desperate need of workers, aiding low skill workers so that they can afford the things they need and not be 100% exploited, and figure out what to do with the many many middle age and up folks who were trained to be middle class to transition them into one or the other and not hate life while doing so.

We can go fix or break our trading systems with other countries as we see fit, but we really need to stop thinking it's going to fix things. Same goes for immigration for that matter.

jack Meof , says: May 17, 2019 at 7:00 pm
The author shows his ignorance. The Bank of China is a commercial bank. Foreign reserves are held by the People's Bank of China. Different entities. I assume the rest of the article is full of inaccuracies.
IssacNewton , says: May 17, 2019 at 7:47 pm
It is hard to know if China has already lost. Their published economic numbers are not very accurate. A key point is that the standard economic models of International Trade are wrong. "Free Trade" can have benefits, but does mandate optimal outcomes. For example, lower cost players can transfer economic production to their soil. There are many equilibrium points (vs. the one of standard economics) in international trade when productivity changes or there are economies of scale. With many of these points it would be better a nation not Trade. The US Trade with China fits this bill. This non-standrd was demonstrated by Baumol and See: https://www.amazon.com/Conflicting to -National-Interests-Robbins-Lectures/dp/0262072092/ref=sr_1_5?s=books&ie=UTF8&qid=1473299717&sr=1-5&keywords=Baumol+Trade We need to follow the actual Terrain of economic results vs. the incorrect map of standard economics.

Organizational and Technological stage drives over 80% of economic growth (see Solow). The Chinese have latched on to US creativity to drive their economy (plus an investment rate of 45% vs. 20% for the US). In parallel the US went Crony Capitalist and its TFP went from 3% to .4%/year. Can a Crony capitalist US recover its productivity growth and can a State Capitalismt Chinese dictatorship be innovative without the West. The US under Trump is attempting to displace its currrent ruling elites. This will not happen in China. My guess is China has lost at trade and will lose at Economic productivity growth.

jk , says: May 17, 2019 at 8:43 pm
Sounds more like a pointless Pyrrhic victory. Tit-for-tat trade wars have many unintended consequences, can easily expand into other sectors, and ultimately consumers and employees will bear the burden.
david , says: May 17, 2019 at 8:51 pm
Americans' fear and hatred of China is so great that we are yearning for China's lost regardless of how it may harm Americans.

Take the latest "emergency order" to put Huawei in the "entity list" to ban it from purchasing American products. If implemented, it will cost American companies $11 billions of sales from Huawei, and lost of thousands of high tech and good quality jobs. If Huawei is destroyed, the 5G market will probably be picked up by Swedish and Finland companies, and the smart phones market by South Korean Samsung, not any US company. But who cares, as long as Huawei is destroyed, right?

Take a look of all opinion pages in the media and comments in the Internet, if the supply chain is moved from China to Vietnam, then it is a win for Americans, right? Who care whether Vietnamese can produce it as efficiently as Chinese or not, or whether Vietnam is also a communist country?

This *jihadic* style pursuit to destroy China is also blinding ordinary intelligent Americans of common sense about the relative strengths and weaknesses of both sides. This author, for example, ignores all the possible ways Chinese can hit back if they also decide to go the self-destructive ways or even "nuclear" (figuratively or literally) options. And yes, the options are not restricted to financial tool like US bonds only, e.g.

1. Stop selling rare earth to American companies – which means we can't even make F-35 fighters. The last congressional study finds that it will take at least 10 years for US to re-open our rare earth mine.

2. Start making the life of all American companies difficult in China – GM and Ford are selling more cars in China than in US, Apple has its 2nd largest market in China. The growth rate of China for these companies are higher than US.

3. Stop cooperating with US on geopolitical front, e.g. start helping North Korea to perfect their ICBM, or buying lots of oil from Iran, etc.

These are just random thoughts I come out from 2 minutes of brainstorming. I am very sure 1.4 billions people can think of many things much more deeply and creative than me. Have the author or any of the people in DC think through all the possibilities before shouting for war? Good luck if you think they do.

And rest assured when the dusk settles, ordinary Americans will NOT be any penny richer or our life any better.

This country has a long history of insecurity toward and racism against Asians. Sadly, the current fight proves that this ugly chapter has not close.

[May 20, 2019] Chinese concept of Face and the current trade dispute by walrus.

Right now Trump administration clearly wants to slow down China development and Chinese leadership understand that. The game is probably similar to the game the USA played with the USSR -- create economic difficulties to the point when disintegration, or the social upheaval is possible. China level of internal debt denominated in dollars probably dwarf their Treasury holdings (this also is true for Russia). This situation is considered by many commenters a huge weak point and that might be Trump team calculation: in their current situation Chinese's can't afford to lose such a large export market as the USA: many enterprises will simply be bankrupt.
The US consumers might still feel the pinch, but ultimately Beijing needs the trade surplus more than the USA needs their trade.
If this is wrong, Trump administration might make already bad situation worse, as if China can switch goods flows and survive more of less intact that might undermine dollar as the reserve currency. They also now will probably completely ignore sanctions against Iran, making them non-essential: a kick in the chin to the Trump and neocons who surround him in WH.
Looks like we are on the wedge of creation of two hostile to each other neoliberal systems instead of one: one with the center in Washington and the second with the center in Peking.
It is bad strategy to attack several countries simultaneously (the war on two forints) and that's what Trump is doing: Iran, Russia and China are three major battlefields now. There are also some tensions with EU too.
The concept of face while somewhat interesting is probably exaggerated and is redundant here. This comments really gats to the bottom of it: " It has always seemed to me that "Face" is the distant inferior cousin of Honor and a much closer sibling to Pride or even Hubris. That is, the Asian concept of Face has everything to do with how you are perceived and almost none with how you "are". Honor, meanwhile, demands a rigorous adherence to a code of conduct and force of will that places less emphasis on perception and more on "being". Westerners (myself included) tend to get those two confused. "
Notable quotes:
"... 6: It goes a pretty long way to be aware of some more imaginative things that especially state aligned business can do if you are in China. Things like precision weighing any electronic equipment you take there before and after are just best practice. ..."
May 20, 2019 | turcopolier.typepad.com
I don't think the Washington decision makers, as opposed to perhaps career Sinologists in the State Department, quite understand the dynamics of the Trump Administrations relationship with China and the risks America appears to be running. The bit that seems to be missing is a realistic appreciation of "Face".

A quick search of the internet reveals scholarly definitions of "Face" together with the description of it in socio - cultural terms that in my opinion do not do it justice. Couple that with Western insensitivity, NeoCon hubris and Trumps preference for believing everything is a negotiable transaction and we are set up for a monumental falling out with China that has lethal consequences for America.

I will give a few examples of Face, you can find plenty more on your own. Did you know it is an insult to request a Chinese to sign a written contract? If he has agreed to the terms and said as much in front of other Chinese then that is enough. "Face" does the rest. Did you know that in certain circumstances "Face" requires you to lie to, or ignore, authorities in support of family and friends? This last, in my opinion, is the reason for the current Chinese attempt at omnipresent surveillance; "we tremble at the power of the Emperor in Peking, but the mountains are high".

Col. Lang makes the point that the Japanese went to war to dispel the threatened perception that "they weren't the men they thought they were". Well with "Face' in China its more than that, you are your "Face". To damage someones "Face" is to create a lifelong mortal, implacable enemy. There is no way, short of death, to recover once you have given offense. Against that standard Trump, Bolton and Pompeo are playing with fire. "Just kidding" doesn't cut it.

It may surprise some of you to know that the West was trading with China right through the cold war - in US dollars only. Nixon didn't discover China either. It also may surprise some that China is perfectly capable of making very high quality reasonably priced sophisticated goods, and always has been. The reason that Walmart sells cheap Chinese schlock is because that's what they asked China to supply. As for "stealing intellectual property", don't make me laugh. We all do it and China has plenty of very smart people that create first rate IP of their own. I make the case that China is a sophisticated and capable economy, with its own amour propre, not some third world hole populated by leaders that can be bought or threatened, and Trump risks forgetting this at our peril.

To this end I note that the trade war is not going to Americas advantage, China has vast holdings of American debt, China buys Iranian oil, judging by reports of Sochi discussions, Russia AND China are likely to support Iran and both Korea and Taiwan are vulnerable. In my opinion President Trump has a very small window left in which to fire Bolton and perhaps Pompeo and embark on a more conciliatory line, before China becomes an irreversible, implacable enemy.

What says the Committee?


Procopius said in reply to Harlan Easley ... , 18 May 2019 at 10:43 AM

So unless we economically surrender to them expect war?
See, that's the attitude Trump and the Trade Representative display. It is impossible we could find a compromise that would be better for both sides. It is a purely binary zero-sum game. If we do not "win," then we "lose," which means surrendering to an implacable enemy who will destroy us. It's no wonder the majority of the world's people think America is the greatest danger to world peace. This is why Bolton is able to find support throughout the nomenklatura. Most Chinese still hold to Confucian concepts of honor, something the American elites abandoned decades ago as unprofitable.
jdledell , 18 May 2019 at 10:43 AM
My son, Jason, is fluent in both Mandarin and Cantonese was headquarered in Hong Kong for years but now works out of Tokyo but spends a great deal of time in China conducting business. He would probably argue that, if anything, Walrus is understating the importance of Face in China. There are numerous rituals associated with interacting with Chinese that must be observed in order for communication and agreement to flow properly.

I think many in America, maybe even Trump, have an image of China as a backward country full of uneducated dumb people. Nothing could be further from the truth as a large segment of the population is not only eductated but intellectually the equal of Americans.

As far as handling the trade war between China and the U.S., I think in some ways China has an advantage in it's government directed relationship with business. It allows China to react quickly to adverse conditions, faster and with more cohesiveness than our capitalist system. Watch for China to move it's manufactured products through numerous other countries to avoid some of the impact of tariffs.

China is also not as responsive to consumer complaints as the U.S. democracy. As soon as Trump's base starts complaining about the higher prices at Walmart etc. Congress and Trump's re-election campaign officials will start to make China tariffs seem intolerable.

EEngineer , 18 May 2019 at 10:43 AM
I would think the Chinese see Trump as something to be persevered for a few years regardless of who he surrounds himself with at this point. I wonder if they have a term for "face incapable" as a parallel concept to the Russian "agreement incapable"? As such they probably see his administration as a no more sophisticated than a hornets nest, to be avoided if possible and swatted if necessary.
ponderer , 16 May 2019 at 11:29 AM
It has always seemed to me that "Face" is the distant inferior cousin of Honor and a much closer sibling to Pride or even Hubris. That is, the Asian concept of Face has everything to do with how you are perceived and almost none with how you "are". Honor, meanwhile, demands a rigorous adherence to a code of conduct and force of will that places less emphasis on perception and more on "being". Westerners (myself included) tend to get those two confused.

If the Chinese were bound by the authors concept of Face, China must be a paradise without corruption. Instead of polluted water land and air, wizened elders concerned over their stewardship and the lose of face from an environmental catastrophe, would provide a harmonious balance between man and nature. Instead, its a paradise and a ghetto where passerby's walk nonchalantly around the dieing. Where companies reluctantly provide netting to slow the steady suicide of their workers. They do tend to plan for the long term, and they can certainly hold a grudge I would agree. How far are you willing to bend-knee for someone else's concept of pride though? Tariffs, which have been around since antiquity, seem like a small infraction for all this talk of life-long mortal, implacable enemies. Yesterday I saw a Chinese TV program that roughly translated said Donald Trump was literally in the White House crying over soybean prices. POTUS literally crying over the Chinese governments response to our rising tariffs after decades of unfair trade practices that benefited the Chinese (elites anyway). So you shouldn't think that saving Face is a two way street or will result in a mutually beneficial deal.

walrus -> ponderer... , 16 May 2019 at 06:13 PM
Face has nothing to do with Judeo Christian ethics. Corruption and pollution can earn you a bullet behind the ear in China.

The issue with Face is that duties don't extend much outside the family. That's why they can sell poisoned baby formula, etc.etc.

It also explains why the CCP is afraid of losing China's Face. They will be blamed.

blue peacock , 16 May 2019 at 06:13 PM
Walrus,

IMO, China has been "an irreversible, implacable enemy" for decades now. It just so happens that our own fifth column in the Party of Davos have aided and abetted this implacable enemy while making sure that we voluntarily disarmed and did not fight back a war that they are fully engaged in. The consequence has been that we are paying for our own destruction. China is more authoritarian & militaristic today than it was three decades ago and there are several people who believe they currently pose an existential threat to the US & the West in general.

https://www.washingtonpost.com/opinions/steve-bannon-were-in-an-economic-war-with-china-its-futile-to-compromise/2019/05/06/0055af36-7014-11e9-9eb4-0828f5389013_story.html

While tariffs may not be the best strategy, we have to admire Trump's courage and determination to finally fight back in the face of massive internal opposition from our fifth column. When you look at the sheer scale at which the Chinese are buying think-tanks, academics, media, K-Street lobbyists & political influence it is staggering and only the Israeli influence operation is bigger in depth & breadth. Ever since Bill Clinton gave China Most Favored Nation status and the Party of Davos furthering their own narrow short-term financial interests, we have directly financed and transferred technology to China and dismantled our industrial base. China joined the WTO but has thumbed their noses at every adverse WTO ruling that showed they play not by the rules but are predatory.

You dismiss the scale of IP theft, forced technology transfer, product dumping, state subsidies and industrial espionage as everyone does it. That's typical of the China apologists in the West.

I think you over-estimate China's financial strength. There are several macro analysts with excellent long-term analytical track records who believe that China is desperately short USD. This theme that you note that China can crash the UST market is already proven to be false. China in fact sold hundreds of billions of UST in 2014-2016 with no perturbation in the UST market.

https://www.bloomberg.com/news/articles/2016-06-15/china-dumping-more-than-treasuries-as-u-s-stocks-join-fire-sale

On the contrary the financial pressure on China is increasing as their debt-fueled malinvestments grow. I'm willing to bet you that we'll see this pressure manifest in a devaluation of the RMB.

https://www.valuewalk.com/2019/02/kyle-bass-china-paper-tiger/

I will leave you with a speech from your fellow countryman, John Garnaut. Chilling!!

https://sinocism.com/p/engineers-of-the-soul-ideology-in

walrus -> blue peacock... , 16 May 2019 at 06:16 PM
So the Chinese are playing us at our own game and winning? Boo Hoo. Throwing over the chess pieces is not a useful response.
blue peacock said in reply to walrus ... , 18 May 2019 at 02:36 AM
Sure, they've kicked our ass these past couple decades. Now they've got cocky and think they own us. Supply chains can re-orient.

As a red-blooded American I'd like my home team to seriously up their game and of course beat the Chinese at their own mercantilist game. A good start would be to put the squeeze on their massive USD short position. Eurodollar market is a perfect spot to begin. The Chinese have US$1.3 trillion debt maturing in 12 months. They've either got to redeem or rollover. Devalue & bleed reserves. Or else sell USD assets & lose collateral. Margin call time! Wake-up call time for BRI - if Trump chooses to squeeze at this immediate vulnerability. Trump can also take the next critical step - restrict their access to our capital markets. The SEC can also come down hard on all their fraudulent listings.

Maybe Australia is losing its best & brightest moving to China. Not here. In fact it is the opposite. Young Chinese techies whoever can get a visa are immigrating here. Wealthy Chinese including top CCP officials are using every mechanism that they can avail to get their capital out. Chinese capital controls are tightening. If they had an open capital account their trillion dollar reserve would vanish overnight as capital flees. You must know that China's domestic security budget is larger than their defense budget. The CCP fear their own people more than anyone else. Why do you think they're amping up their domestic surveillance expenditure?

I can also give you an anecdotal experience. Newly minted billionaire and founder of Zoom, Eric Yuan spoke to our tech analyst team a year ago. I happened to be in that meeting. He was categorical that if he had been in China and had half the success, CCP would effectively control his company. He said every Chinese techie dreams of moving to America.

https://www.cnbc.com/2019/04/18/zoom-ipo-bill-gates-speech-inspired-founder-to-move-to-us.html

Jack Ma, was banded out here in the west as the new breed Chinese tech entrepreneur. A billionaire on the Davos circuit. Did he really own Alibaba or was it the CCP? How come his shareholding was suddenly zeroed out?

https://www.scmp.com/tech/enterprises/article/2167002/alibabas-jack-ma-giving-ownership-chinese-entities-heres-what-means

Do you think any smart Chinese really trusts the CCP? Why would they? You talk about "face" & culture and the 3,000 year history of the Han people. What about the history & culture of the Tibetans? Or the culture & traditions of the Uyghurs with over 2 million of them currently undergoing brutal "re-education" in concentration camps in Xinjiang?

The authoritarian CCP have had a free ride on us for over two decades. It is time to suit up and give them a little taste of their own medicine. I hope Trump retains his resolve.

Harlan Easley , 16 May 2019 at 11:46 AM
I don't care one iota about their "Face". Not at the expense of deindustrializing large sections of the American Heartland. Which has already happened. Our trade relationship with China has been a disaster. The only people to benefit are large shareholders.

As for them holding our debt it's threat is non-existent. Let them sell all of the bonds. China currently owns $1.13 trillion in Treasurys, a fraction of the total $22 trillion in U.S. debt. The Federal Reserve if need be can buy them all up but even that won't be necessary due to insatiable demand for the bonds even at these ridiculous low interest rates.

In fact their obsession with "Face" indicates a psychopath. Defines as no sense of right and wrong and is generally bolder, more manipulative, and more self-centered than a sociopath. That sums up their dealings with us the last 25 years.

Only a fool continues to play this game of theirs. Stealing our technology at will, forced 50/50 partnerships, currency manipulation, dumping into our country to destroy industries, etc. etc. etc.

Plus they are expanding geographically now due to us making them rich. They are 1.3 million homogeneous Han for the most part. Especially compared to our country. I have to say their government has definitely improved the lives of their citizens as a whole and I respect that. But enough of our weak kneed leaders giving away the store.

I personally am being hurt by the tariffs due to many LVP flooring products I sell are sourced from China. I have no problem taking a hit for the greater good and have been working on sourcing from different locations.

ISL said in reply to Harlan Easley ... , 16 May 2019 at 11:19 PM
Harlan Easley,

Thanks for pointing the finger at China -looking out for their own interests - the bloody bas-ards.

I guess you believe that had China had remained insular, the US would not have de-industrialized to a different country? As if NAFTA wasn't a great sucking sound. Hmm. Me things the problem lies closer to home - but no finger pointing there.

Totally impressed with the TrumpTareef - Totally on top of everything.

Oh wait, the tax advantages that encourage de-industrialization remain. But I guess Trump doesn't understand taxes and how wealthy corporations and people use them to move production overseas and not pay taxes ....

Meanwhile, global de-dolarization accelerates. At some % the US loses its special status and there will be a reckoning.

I see a lot of hot air - not new policy: Manufacturing did not come back, US infrastructure is a joke and continues to crumble, workforce participation continues dropping, and hourly median wage remain stagnant. Why? Because it requires actual policies that lessen the profitability of some (very wealthy friends in the circle Trump wants to run).

Here's my prediction - Trump will fold by summer or sooner.

guidoamm said in reply to Harlan Easley ... , 18 May 2019 at 04:38 AM
Apologies for butting-in in an otherwise fascinating conversation... but....

There is considerable but misplaced talk of "capitalism" being thrown about in some threads, whilst Harlan worries about the deindustrialization of the West, ostensibly, due to China. China has little to do with deindustrialization. A centralized monetary system coupled with electoral politics, can only be sustained through the use of perpetual fiscal deficits.

In order for the political construct to be able to run perpetual fiscal deficits, national debt must necessarily expand. As debt conforms to the law of diminishing marginal utility however, this is a compounding strategy.

Thus, in order to compensate for the loss of purchasing power, government borrowing must progressively increase till eventually it goes parabolic. Hence the reason debt in the USA doubled between 2008 and 2016. This is the parabolic phase.

In order to sustain this strategy, fiscal revenue must ideally expand. In order to increase fiscal revenue however, legislation must be brought to bear. As legislation and fiscality become progressively more restrictive in one country, economic actors migrate to countries where they can achieve an economic advantage.

As a corollary, as legislation and fiscality become progressively more restrictive, barriers are raised in business and industry. As barriers rise, so does unemployment and/or under employment whilst business dynamism is proportionally stifled.

In this context therefore, artificially lowering interest rates to ostensibly kick start the economy, actually reinforces the offshoring dynamic to the detriment of SMEs and the benefit of large corporations.

If China can be blamed for anything therefore, it can only be blamed to have opened the doors wide open to Western corporations to allow them to shift their production technology out of Europe and the USA.

All the while, the finance industry is laughing all the way to the bank.... their own bank that is.. ..

g

Robert L Groves , 16 May 2019 at 01:14 PM
Excellent analysis by Chas Freeman on US/China relations.
https://chasfreeman.net/on-hostile-coexistence-with-china/
robt willmann said in reply to Robert L Groves... , 17 May 2019 at 12:05 PM
Robert Groves,

Chas Freeman was president Richard Nixon's senior interpreter for Nixon's visit to China. Here is an interesting description by Freeman of some of that trip--

https://adst.org/2013/05/the-interpreter-who-said-to-no-to-president-nixon/

Dave Schuler , 16 May 2019 at 01:31 PM
Something to which not enough consideration is given is that China has a considerable volume of foreign loans, those are increasing, they are denominated in dollars (particularly since the yuan is not convertible), and must be serviced in dollars. That means that China needs a lot of dollars which it obtains via selling goods to the United States.

Said another way, China cannot reduce the amount it sells to the U. S. or buy more from the U. S. without a convertible currency or reducing its level of foreign debt.

Jack said in reply to Dave Schuler ... , 16 May 2019 at 04:28 PM
Kyle Bass on why China has to sell its US Treasury holdings. Twin deficits.

https://twitter.com/Jkylebass/status/1129022386228146176

MP98 , 16 May 2019 at 02:23 PM
"Did you know it is an insult to request a Chinese to sign a written contract?"

So, assume that they are dishonest negotiators, as they just showed by walking away from 6 months of negotiations that they "agreed to?"

Stueeeee , 16 May 2019 at 02:58 PM
Your commentary exudes the naivety that the Chinese have preyed on for the past 50 years. Their meekish and subservient mannerisms hide a ruthless and immoral inner nature. They would still be a backward country if not for our elite's insatiable greed. What have they produced organically that wasn't ripped off from developed countries? What do they offer cultural other than a social credit system with improved state surveillance techniques? They treat their own people like dogs and they still have dog eating festivals. China offers a way of life that is an antithesis of the West, so it is inevitable that there will be a clash. The question isn't if but when. The longer we delude ourselves into thinking that economics will change China, the more blood will be shed when the reckoning occurs.
walrus -> Stueeeee... , 16 May 2019 at 06:22 PM
Denial is not a strategy. For the record, I don't like eating dogs either. but i'm willing to make an exception for pit bulls.
VietnamVet , 16 May 2019 at 03:33 PM
Chinese chauvinism puts American exceptionalism to shame. They've been the Celestial Empire thousands of years longer than the upstart Anglo-American Empire. In last 30 years the Western Elite dumped "noblesse oblige" for "get it while you can". China's entry into the WTO directly hallowed out manufacturing in the Mid-West ultimately resulting to Donald Trump's trade war.

This was a result of CEOs and Wall Street Raiders moving manufacturing to low wage, no environmental regulation, nations to make a quick buck. China was a willing partner in the con in order to modernize.

China's retail sales are now greater than America's. Since the US declared an economic war, GM will have to drop Buick and Cadillac brands and market their cars in China as Chinese. But "Face" likely will make that ploy unsuccessful.

Fred -> VietnamVet... , 16 May 2019 at 10:34 PM
VV,

" GM will have to drop Buick and Cadillac brands and market their cars in China as Chinese."

You seem to be misinformed. China has required building those vehicle lines in China for some time now. GM moved all that production there with the intent of exporting from China to other markets in addition to what small portion of the Chinese car market they already have.
https://www.forbes.com/sites/michaeldunne/2017/05/31/china-ramps-up-exports-via-volvo-buick-cadillac-and-now-bmw/#59830405459e
https://www.cnbc.com/2018/09/06/cars-made-in-china-at-risk-of-being-pulled-from-us-market-in-trade-war.html

Joanna said in reply to Fred ... , 17 May 2019 at 06:09 AM
Look Fred, I agree VV seems a bit confused where to side on the issue or whom to blame beyond Wall Street. Thus good you put him on the right track.

But China required or GM management found it convenient considering production conditions?

VietnamVet said in reply to Fred ... , 17 May 2019 at 08:45 PM
Fred,

GM sold over 4 million vehicles in China last year, even more than it sold in the North American market. The U.S. only exported 267,000 passenger vehicles to China. Apple sales declined 30% in China. In an economic war Chinese will avoid buying American branded products. They have alternatives. Americans don't have a choice at Walmart except to pay the higher prices due to the tariffs.

Fred -> VietnamVet... , 18 May 2019 at 09:28 AM
VV,

Those GM vehicles were built in China by a JV with majority Chinese ownership. The product line sold at Wal-Mart has plenty of things made in countries other than China. We have a twenty trillion dollar economy with Chinese imports making up 500 billion. We've got plenty of options.

Jack , 16 May 2019 at 04:01 PM
China has been emboldened as the west moved their manufacturing base there and transferred their technology. They've been taking the next steps directly influencing our politics.

https://www.nzherald.co.nz/nz/news/article.cfm

Huawei while it claims it is an employee owned company is controlled by the CCP as many "private" companies in China. The west would be foolish to not put an end to Chinese subterfuge that undermines their economy and national security.

https://uk.mobile.reuters.com/article/amp/idUKKCN1SM0VC

catherine , 16 May 2019 at 04:25 PM
I say if Face is important, respect their Face. After all written agreements are broken all the time so what difference does it really make.
Ryan , 16 May 2019 at 04:39 PM
I don't buy it at all. As others have pointed out China requires access to American markets to 1) make their dollar denominated loan payments and 2) keep foreign manufacturing located in the country. The cost of tariffs to the United States is finding alternative sources in supply chains and higher end cost to consumers. We're insanely rich, we can afford that without issue. The cost of tariffs to China, in the ultimate analysis, is foreign companies moving their manufacturing out of the country, which would utterly devastate them.

So far as I understand the Trump administration is demanding nothing more than China play by the rules of the game as written. If they're not willing to do so, **** 'em.

walrus -> Ryan... , 16 May 2019 at 07:10 PM
What rules? Who wrote them? Respect? Ask Iran. Poppycock.
Joanna said in reply to Ryan... , 17 May 2019 at 08:11 AM
We're insanely rich, we can afford that without issue

That's a curious statement. You too? Insanely, that is.

turcopolier , 16 May 2019 at 05:23 PM
Catherine

A well written contract contains enforceable penalties for non-performance with the money often held in escrow. That's the way I write them. Trump is using the balance of US/China trade to penalize the Chinese for reneging on the verbal and draft agreements they made with us.

catherine said in reply to turcopolier ... , 16 May 2019 at 09:45 PM
True. I am not familiar with the agreements so can't discuss it intelligently.
Just saying it seems hardly anyone lives up to agreements any more regardless of in writing or not.
And dealing with countries is dealing with the people who represent it ..I do believe you catch more flies with honey than vinegar. You can always swat them later if honey doesn't do the trick.
fredw , 16 May 2019 at 06:14 PM
This is a traditional problem deeply embedded in Chinese culture. Westerners in the 1800s concluded that it was impossible to write a binding contract in classical Chinese. There were hopes for Mandarin, but... I was reading about this as a college student studying Chinese in the 1970s and have never ceased running across complaints about it. Chinese contracts are only as good as the will of the contractors and the influence you can bring to bear. When you are dealing with government, a contract is good until the officials get replaced with new faces. Even big players like McDonald's are not exempt.

"...what was meant as the flagship of McDonald's planned expansion into the People's Republic of China (it already had outlets in Hong Kong and Taiwan) was destined for controversy. In 1994 -- only two years after opening -- a legal battle pitted the transnational corporation against Beijing's government in a land dispute symptomatic of China's no holds barred modernization.

"In question was McDonald's 20-year lease on the strategically located property at Wangfujing -- a busy central shopping district -- and the city's attempts to shutter the restaurant to make way for a new super sized shopping mall. McDonald's balked at the eminent domain order, which flattened the surrounding neighborhood. In the end the burger joint was the lone building standing amid acres of rubble. The dispute raised serious concerns among foreign investors over the efficacy of business contracts in China at a time when the Communist state was seen as the future of global markets.

"But in late 1996 McDonald's China president Marvin Whaley announced a reconciliation. "In a spirit of teamwork and partnership, we've developed a plan that will allow our strong expansion in the city to continue."

Note that it took two years for the "spirit of teamwork and cooperation' to kick in for a multi-billion dollar cooperation who could presumably have just been given another good spot for a hamburger stand. If the officials involved had been willing. Your mileage may vary, but you are unlikely to do better.

https://timeline.com/china-mcdonalds-food-history-95cd7e2d1fb9

walrus -> fredw... , 16 May 2019 at 07:07 PM
Thank you Fredw for an excellent example of how McDonalds came to grips with Face, to everyone's benefit.
walrus , 16 May 2019 at 06:30 PM
Chinese will respect a verbal contract - the difficulty is getting them to say the terms in front of other Chinese. Lieing to you is permissible.

Our business solved the problem by using irrevocable letters of credit. That way we could both blame the banks and not accuse each other of skulduggery. Hence Face was always kept intact.

walrus , 16 May 2019 at 07:37 PM
For the record and to preclude pointless ad hominem attacks, the Chinese are intelligent hard working people for whom sophisticated business and finance was a way of life while we were still living in mud huts. They revere education. They do not subscribe to Modern Judeo Christian ethics but a much older Confucian creed. For that reason pleas for China to 'play by the rules" just do not compute.

China is not some modern, fly by night, Westphalian creation. You are dealing with the Middle Kingdom - 3000 years old and the Chinese, after centuries of oppression now demand respect. The idea that once again the West can dictate to China is offensive to Chinese and, considering their economy, downright delusional.

China has its problems. Face as a concept does not extend beyond family and immediate friends, so the concept of higher loyalty to a Chinese nation (ie patriotism) is not strong. Neither is respect for national law, nor respect for institutions or companies. This is the source of all commercial crime (eg: fraud, adulterated products pollution).

The governments reaction to the tendencies of its population include draconian punishments and now attempts at nationwide surveillance.

The problem Trump fails to recognise is that the CCP and its leaders have Face. Threaten that and China will become an implacable and unbeatable enemy.

John Merryman -> walrus ... , 16 May 2019 at 10:07 PM
The underlaying philosophies are in some ways diametrically opposed. We in the West are object and goal oriented, with an ideals based culture, while the East has more of a feedback oriented view, ie. Yin and Yang.

Even the concept of time is different, as we think of ourselves as individuals, thus moving through our context, the future is in front and the past behind, traveling the events of our lives. While the Eastern view is the past is in front and the future behind, as they see themselves as part of their context and necessarily witness events after they occur, then the situation continues.

Both are valid in their own context. Though our presumption of moving toward some ideal is flawed. When some is good, more is not always better. Consider efficiency, which is to do more with less. Then the ideal of efficiency would be to do everything with nothing. Those most committed to this view see Armageddon as the door to their ideal state.

What should be kept in mind about the East is that with Communism and the Party system, then becoming China Inc, to global capitalism, they have adopted essentially Western ideas and tried framing them through their own lens. The reason would be that such an ideals, goal oriented paradigm is very effective in the short and medium term, but creates that much more blowback, in the long term. While China might seem a threat to the current American status quo, the real danger is our own social and economic breakdown. We have been living on the equivalent of a national home loan since Reagan, if not Roosevelt and if the holders of that debt try calling it due, say trading it for remaining public assets, we will be revisiting feudalism.

The Russian and the Chinese, as well as the Iranians, etc. are really just boogie men, being thrown up to distract us. This Iranian situation seems to have be a total disconnect with reality. Something is brewing, whether planned, or just the wheels really coming off the train.

Both we and the Chinese seem to be headed to our own versions of Brexit. The Russians went through it with the fall of the Soviet Union.

Fred -> walrus ... , 16 May 2019 at 11:15 PM
walrus,

"...the concept of higher loyalty..." Sounds like the Chinese exclusion act might have been a good idea afterall. How many generations in the US will it take for a Chinese national to actually assimiate and become "American"?

"...unbeatable enemy." The PRC is not the Middle Kingdom. President Xi is not the subject of Master Po's "Everlasting Wrong" and he is well aware that China is certainly not "unbeatable". These are trade negotiations and right now they need us one hell of a lot more than we need them. Convincing his fellows in the CCP of that is probably going to be harder for him than for Trump to do the same with Congress.

Keith Harbaugh , 16 May 2019 at 08:33 PM
Any opinions on this?:
"Former Trump Senior State Dept. Official Tells Beijing to Wait Until Trump is Removed " ,
by sundance at CTH , 2019-05-16
The Twisted Genius , 16 May 2019 at 09:14 PM
Walrus, I find the most illuminating thing about your informative post is the reaction you elicited. Comment after comment, in my opinion, illustrates some degree of unwillingness or inability to acknowledge and tolerate a culture clearly different from ours. I am reminded of a South Park episode called "Toleration" in which the whole town wrongly assumes toleration of the other requires wholehearted celebration of the other. Nothing could be further from the truth. There's plenty many of us don't like about today's Chinese culture and society, but it's their culture and society. They don't have to conform to our ways anymore than we have to conform to theirs, but we should acknowledge the difference and deal with it.
Jack said in reply to The Twisted Genius ... , 17 May 2019 at 11:42 AM
TTG,

In the name of tolerance of another culture are we going to surrender to their predatory behavior? Are we going to allow the Chinese to continue to "beat us at our own game" as Walrus alludes? Sure the Party of Davos have benefited from the current relationship but why should the US in it's national interest continue to allow an authoritarian state to steal our IP, subsidize their companies to dump products in our market and prevent our companies to sell into their market unless they transfer technology, only to have it stolen?

That type of predatory behavior is not about cultural difference but taking advantage of a situation that we allowed. Tariffs may not be the best strategy but at least Trump is saying the current arrangement no longer works. It makes no sense to say in order to protect Chinese "face" we should continue this arrangement where we have the short end of the deal. I hope that Trump doesn't back down in the face of Chinese influence operations in the US and his perception of what's best for his reelection. IMO, the Chinese threat is significantly larger than any threat from Russia or Iran, and saying we should walk on eggshells to not offend their cultural sensibilities is frankly ridiculous.

I believe Walrus over-estimates their strengths. There is a reason why their "best and brightest" continue to immigrate to Silicon Valley in droves. I know some of them personally as I have backed their entrepreneurial ventures. They will be the first to tell you that they have given up a lot in terms of familial connection to immigrate to the US as they don't share nor do they want their kid's futures to be subject to the capriciousness of Xi Jinping's authoritarian vision.

The Twisted Genius -> Jack... , 18 May 2019 at 11:21 AM
Jack, why surrender to their predatory behavior? Just stop dealing with them. Stop allowing American nationalists to buy Chinese made goods and stop selling China our goods. Why not make the stuff ourselves or learn to do without? Why are those American farmers growing soybeans for the Chinese. Let them grow stuff for Americans. Sure this approach is even more extreme that the current tariff war, but it will make us immune to Chinese predatory practices, won't it? The isolation of Sakoku as the purest form of American nationalism. As an added benefit of implementing a policy of Sakoku, there would be no more American foreign adventurism.

I say this tongue in cheek realizing it will never be implemented. But wouldn't this a better implementation of American nationalism than demanding that all other countries simply bend to our demands in all matters?

Jack said in reply to The Twisted Genius ... , 18 May 2019 at 09:47 PM
TTG,

I wholeheartedly agree with you that we should end our overseas interventionism. I've opposed it for a long time from Vietnam to Iraq & Syria. The costs in the trillions of dollars, the destabilization of fragile societies to the unnecessary sacrifices of our soldiers and their families have not provided any meaningful benefit to us.

As far as China is concerned I believe the situation is more complex. One thing I've noticed in general and exemplified by the comments on this thread is the conflation of the heritage and Confucian values of the Chinese people on the CCP. Let's not be under any illusion. The CCP is unabashedly totalitarian. I've no quarrel with the Chinese people. On the contrary they have my deepest sympathies for having to endure under the boot of the CCP.

Of course any change in their form of government is for them to effect just as our forefathers did here. The important point that I believe needs to be made is that we provided the finance, the technology and the markets to enable the economic development of an authoritarian regime. An argument can be made that those early decisions to bring in China into the global economic framework was in the belief it would enable them to reform. I was persuaded then by Sir James Goldsmith & Ross Perot and others that the GATT trade deal driven by Wall St would be a disaster for our working class. Neither Bill Clinton nor the Republicans asked the question then what if the CCP doesn't reform and instead intensifies their authoritarianism?

Of course the big transfer of our industrial base was completely our own doing as our political system is fully captured by the Party of Davos. In retrospect it should be clear that the CCP never intended to relinquish their monopoly on power and would become even more repressive to maintain it. The CCP is not our friend. They are an implacable enemy who are now using their growing economic and military strength to directly interfere and subvert our societies. The scale of their influence operations and the direct use of cash to purchase influence and espionage is something much larger than at the depth of the Cold War with the Soviet Union. It is high time we understand this threat and act. At least Trump in his own limited way gets that something needs to change even if in his mind it is purely transactional. I'd like to highlight a current example where the Trump administration is moving to ban Huawei from our market. Opeds are being furiously written and published in our national media in defense of Huawei, while the company hires the top cybersecurity official in the Obama administration with top secret clearance as their lobbyist. There are no Opeds here or in China that Google, Facebook, and other US companies are banned in China. Why is that? IMO, it's because we accept the authoritarianism of the CCP. The neocons made a lot of noise demonizing Sadam & Assad as brutal dictators, yet they're silent as Xi Jinping has millions of Uighurs in concentration camps. If we don't act to check the CCP now our grandchildren will regret it as they'll have to fight a war.

Johnb , 16 May 2019 at 11:05 PM
Quote -"The idea that once again the West can dictate to China is offensive to Chinese and, considering their economy, downright delusional."
I believe this is the underlying driver to the individual Chinese acceptance of the cost to any conflict, it also links directly to what they see as a Century of Humiliation where China wasn't powerful. The very use of the word Humiliation in any translation directly links into their concept of Face.
Quote- "China has its problems, Face as a concept does not extend beyond family and immediate friends"

I believe to extend and change this cultural concept of what constitutes Face is behind the national introduction of Social Credit scores for all citizens and available on line to all citizens. It is in fact intended as a national reputation system whereby an unrelated Chinese can lose Face when interacting with other citizens. China is the elephant in the room in any Western political, defence and economic policy debate.

Alves , 17 May 2019 at 02:10 AM
IMHO, the USA holds most of the cards in this negotiation:

1. The USA trade deficit with China is huge and China needs to sell to the USA, as it will not find other countries to make up for the lost market.

2. It is not uncommon for supply chains to change. Goods that today are manufactured in China will likely be made in other asian countries which have even lower wages if the trade war really goes for a significant amount of time.

3. The inflationary and GDP contraction risk of a trade war is not that high, as the imported chinese goods make up only 2,3% of the USA GDP.

4. The fact that China has lots of USA sovereign debt is not something that can not be solved by the FED. A few economists have already pointed that in the past 5 or 10 years.

5. China already is an enemy of the USA. Worst case, it will be more active in the hotspots in the World, instead of only spying and hacking the hell out of the USA.

So, do not panic. The ones that should be panicking are the chinese.

Anon , 17 May 2019 at 09:11 AM
China gets our middle class and the west gets cheap socks in return.As our middle class disappears overseas our cheap socks become unaffordable because there are no jobs for our young workers.The only way to get our middle class back is to stop buying cheap socks.or to put the price up on our middle class.any idiot can make cheap socks but middle class is priceless.the backbone of a stable society.Secondly any society that lives beyond its means through over population is doomed and under no circumstances must it be allowed to expand.China's growing affluence will increase competition for resources as it's middle class expands and this will lead to conflict.Cheap socks might end up causing WWIII
SRW , 17 May 2019 at 09:36 AM
Interesting article by David P. Goldman, Asia Times, about how to deal with China.

https://www.asiatimes.com/2019/04/opinion/the-chinese-tortoise-and-the-american-hare/

jdledell , 17 May 2019 at 06:36 PM
Just as a reminder - having run International businesses, I just want to clarify that U.S. Businesses are not saints. There is a certain amount of cheating, browbeating and stealing as long as we don't get caught and profits are increasing.

We might not like the Chinese using our methods but that is the way the cookie crumbles. At this point about two-thirds of Prudential's profits come from overseas subsidiaries and one of the reasons for that success is our ability to mimic what works in their domestic companies and to do it somewhat better and cheaper.

Since the profits were repatriated to the U.S., I had to deal with a lot of government flack about hurting their domestic companies and their employees.

Mightypeon , 17 May 2019 at 07:38 PM
From my own interactions with the Chinese:

1: Highly sophisticated Culture. They tend to react pretty well if one can show a more then basic degree of understanding of their history.

2: They greatly prefer nuance. Simple answers imply simple minds.

3: I have not been in the position to actually have to get formal contracts with them. I can certainly echo however that making a Chinese promise something in front of other Chinese about whose perception he cares is usually sufficient to have a pretty honorable commitment to something, it is often easier said then done.

4: I initially had some disdain for the Chinese way of not directly letting you know how annoyed they are at any given point (Russians are fairly straightforward in this), but essentially, their point of view is also that if you are incapable of assessing how annoyed they are you are not a valid negotiation partner.

5: Also, keeping annoyance beneath the radar does not create scenes, and if a scene is created reactions may have to be forced. Vengeance is a thing with the Chinese . My impression is that they can be mollified though, and generally regard vengeance as an expensive luxury item, I also got the impression that you need to go out of your way to seriously become a target of vengeance, just professional disagreements are not a cause for vengeance, especially not if you are a foreigner. They also have a pathway of not having to take vengeance to save their faces by asserting that the offender is insane/feebleminded/crazy and thus beneath vengeance. Its not a position you want to be in though.

6: It goes a pretty long way to be aware of some more imaginative things that especially state aligned business can do if you are in China. Things like precision weighing any electronic equipment you take there before and after are just best practice.

[May 20, 2019] On America's Hostile Coexistence with China

May 18, 2019 | www.zerohedge.com
Via ChasFreeman.net, Remarks to the Freeman Spogli Institute for International Studies China Program

Ambassador Chas W. Freeman, Jr. (USFS, Ret.)
Senior Fellow, Watson Institute for International and Public Affairs, Brown University
Stanford, California, 3 May 2019

President Trump's trade war with China has quickly metastasized into every other domain of Sino-American relations. Washington is now trying to dismantle China's interdependence with the American economy, curb its role in global governance, counter its foreign investments, cripple its companies, block its technological advance, punish its many deviations from liberal ideology, contest its borders, map its defenses, and sustain the ability to penetrate those defenses at will.

The message of hostility to China these efforts send is consistent and apparently comprehensive. Most Chinese believe it reflects an integrated U.S. view or strategy. It does not.

There is no longer an orderly policy process in Washington to coordinate, moderate, or control policy formulation or implementation. Instead, a populist president has effectively declared open season on China. This permits everyone in his administration to go after China as they wish. Every internationally engaged department and agency – the U.S. Special Trade Representative, the Departments of State, Treasury, Justice, Commerce, Defense, and Homeland Security – is doing its own thing about China. The president has unleashed an undisciplined onslaught. Evidently, he calculates that this will increase pressure on China to capitulate to his protectionist and mercantilist demands. That would give him something to boast about as he seeks reelection in 2020.

Trump's presidency has been built on lower middle-class fears of displacement by immigrants and outsourcing of jobs to foreigners. His campaign found a footing in the anger of ordinary Americans – especially religious Americans – at the apparent contempt for them and indifference to their welfare of the country's managerial and political elites. For many, the trade imbalance with China and Chinese rip-offs of U.S. technology became the explanations of choice for increasingly unfair income distribution, declining equality of opportunity, the deindustrialization of the job market, and the erosion of optimism in the United States.

In their views of China, many Americans now appear subconsciously to have combined images of the insidious Dr. Fu Manchu, Japan's unnerving 1980s challenge to U.S. industrial and financial primacy, and a sense of existential threat analogous to the Sinophobia that inspired the Anti-Coolie and Chinese Exclusion Acts.

Meanwhile, the ineptitude of the American elite revealed by the 2008 financial crisis, the regular eruptions of racial violence and gun massacres in the United States, the persistence of paralyzing political constipation in Washington, and the arrogant unilateralism of "America First" have greatly diminished the appeal of America to the Chinese elite.

As a result, Sino-American interaction is now long on mutual indignation and very short on empirically validated information to substantiate the passions it evokes. On each side, the other is presumed guilty of a litany of iniquities. There is no process by which either side can achieve exoneration from the other's accusations. Guesstimates, conjectures, a priori reasoning from dubious assumptions, and media-generated hallucinations are reiterated so often that they are taken as facts. The demagoguery of contemporary American populism ensures that in this country clamor about China needs no evidence at all to fuel it. Meanwhile, Chinese nationalism answers American rhetorical kicks in the teeth by swallowing the figurative blood in its mouth and refraining from responding in kind, while sullenly plotting revenge.

We are now entering not just a post-American but post-Western era. In many ways the contours of the emerging world order are unclear. But one aspect of them is certain: China will play a larger and the U.S. a lesser role than before in global and regional governance. The Trump administration's response to China's increasing wealth and power does not bode well for this future. The pattern of mutual resentment and hostility the two countries are now establishing may turn out to be indelible. If so, the consequences for both and for world prosperity and peace could be deeply unsettling.

For now, America's relationship with China appears to have become a vector compounded of many contradictory forces and factors, each with its own advocates and constituencies. The resentments of some counter the enthusiasms of others. No one now in government seems to be assessing the overall impact on American interests or wellbeing of an uncoordinated approach to relations with the world's greatest rising power. And few in the United States seem to be considering the possibility that antagonism to China's rise might end up harming the United States and its Asian security partners more than it does China. Or that, in extreme circumstances, it could even lead to a devastating trans-Pacific nuclear exchange.

Some of the complaints against China from the squirming mass of Sinophobes who have attached themselves to President Trump are entirely justified. The Chinese have been slow to accept the capitalist idea that knowledge is property that can be owned on an exclusive basis. This is, after all, contrary to a millennial Chinese tradition that regards copying as flattery, not a violation of genius. Chinese businessfolk have engaged in the theft of intellectual property rights not just from each other but from foreigners. Others may have done the same in the past, but they were nowhere near as big as China. China's mere size makes its offenses intolerable. Neither the market economy in China nor China's international trade and investment relationships can realize their potential until its disrespect for private property is corrected. The United States and the European Union (EU) are right to insist that the Chinese government fix this problem.

Many Chinese agree. Not a few quietly welcome foreign pressure to strengthen the enforcement of patents and trademarks, of which they are now large creators, in the Chinese domestic market. Even more hope the trade war will force their government to reinvigorate "reform and opening." Fairer treatment of foreign-invested Chinese companies is not just a reasonable demand but one that serves the interests of the economically dominant but politically disadvantaged private sector in China. Chinese protectionism is an unlatched door against which the United States and others should continue to push.

But other complaints against China range from the partially warranted to the patently bogus. Some recall Hermann Göring's cynical observation at Nuremberg that: "The people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country." There is a lot of this sort of manipulative reasoning at play in the deteriorating U.S. security relationship with the Chinese. Social and niche media, which make everything plausible and leave no truth unrefuted, facilitate this. In the Internet miasma of conspiracy theories, false narratives, fabricated reports, fictive "facts," and outright lies, baseless hypotheses about China rapidly become firm convictions and long-discredited myths and rumors find easy resurrection.

Consider the speed with which a snappy phrase invented by an Indian polemicist – "debt-trap diplomacy" – has become universally accepted as encapsulating an alleged Chinese policy of international politico-economic predation. Yet the only instance of a so-called a "debt trap" ever cited is the port of Hambantota, commissioned by the since-ousted autocratic president of Sri Lanka to glorify his hometown. His successor correctly judged that the port was a white elephant and decided to offload it on the Chinese company that had built it by demanding that the company exchange the debt to it for equity. To recover any portion of its investment, the Chinese company now has to build some sort of economic hinterland for the port. Hambantota is less an example of a "debt trap" than of a stranded asset.

Then too, China is now routinely accused of iniquities that better describe the present-day United States than the People's Middle Kingdom. Among the most ironic of such accusations is the charge that it is China, not a sociopathic "America First" assault on the international status quo , that is undermining both U.S. global leadership and the multilateral order remarkably wise American statesmen put in place some seven decades ago. But it is the United States, not China, that is ignoring the U.N. Charter, withdrawing from treaties and agreements, attempting to paralyze the World Trade Organization's dispute resolution mechanisms, and substituting bilateral protectionist schemes for multilateral facilitation of international trade based on comparative advantage.

The WTO was intended as an antidote to mercantilism, also known as "government-managed trade." China has come strongly to support globalization and free trade. These are the primary sources of its rise to prosperity. It is hardly surprising that China has become a strong defender of the trade and investment regime Americans designed and put in place.

By contrast, the Trump administration is all about mercantilism – boosting national power by minimizing imports and maximizing exports as part of a government effort to manage trade with unilateral tariffs and quotas, while exempting the United States from the rules it insists that others obey.

I will not go on except to note the absurdity of the thesis that "engagement" failed to transform China's political system and should therefore be abandoned. Those who most vociferously advance this canard are the very people who used to complain that changing China's political order was not the objective of engagement but that it should be. They now condemn engagement because it did not accomplish objectives that they wanted it to have but used to know that it didn't . It is telling that American engagement with other illiberal societies (like Egypt, the Israeli occupation in Palestine, or the Philippines under President Duterte) is not condemned for having failed to change them.

That said, we should not slight the tremendous impact of America's forty-year opening to China on its socioeconomic development. American engagement with China helped it develop policies that rapidly lifted at least 500 million people out of poverty. It transformed China from an angry, impoverished, and isolated power intent on overthrowing the capitalist world order to an active, increasingly wealthy, and very successful participant in that order. It midwifed the birth of a modernized economy that is now the largest single driver of the world's economic growth and that, until the trade war intervened, was America's fastest growing overseas market. American engagement with China helped reform its educational system to create a scientific, technological, engineering, and mathematical ("STEM") workforce that already accounts for one-fourth of such workers in the global economy. For a while, China was a drag on human progress. It is now an engine accelerating it. That transformation owes a great deal to the breadth and depth of American engagement with it.

Nor should we underestimate the potential impact of the economic decoupling, political animosity, and military antagonism that U.S. policy is now institutionalizing. Even if the two sides conclude the current trade war, Washington now seems determined to do everything it can to hold China down. It seems appropriate to ask: can the United States succeed in doing this? What are the probable costs and consequences of attempting to do it? If America disengages from China, what influence, if any, will the United States have on its future evolution? What is that evolution likely to look like under conditions of hostile coexistence between the two countries?

Some likely answers, issue by issue.

First : the consequences of cutting back Sino-American economic interdependence.

The supply chains now tying the two economies together were forged by market-regulated comparative advantage. The U.S. attempt to impose government-dictated targets for Chinese purchases of agricultural commodities, semiconductors, and the like represents a political preemption of market forces. By simultaneously walking away from the Paris climate accords, TPP, the Iran nuclear deal, and other treaties and agreements, Washington has shown that it can no longer be trusted to respect the sanctity of contracts. The U.S. government has also demonstrated that it can ignore the economic interests of its farmers and manufacturers and impose politically motivated embargoes on them. The basic lesson Chinese have taken from recent U.S. diplomacy is that no one should rely on either America's word or its industrial and agricultural exports.

For these reasons, the impending trade "deal" between China and the United States – if there is one – will be at most a truce that invites further struggle. It will be a short-term expedient, not a long-term reinvigoration of the Sino-American trade and investment relationship to American advantage. No future Chinese government will allow China to become substantially dependent on imports or supply chains involving a country as fickle and hostile as Trump's America has proven to be. China will instead develop non-American sources of foodstuffs, natural resources, and manufactures, while pursuing a greater degree of self-reliance. More limited access to the China market for U.S. factories and farmers will depress U.S. growth rates. By trying to reduce U.S. interdependence with China, the Trump administration has inadvertently made the United States the supplier of last resort to what is fast becoming the world's largest consumer market.

The consequences for American manufacturers of "losing" the China market are worsened by the issue of scale. China's non-service economy already dwarfs that of the United States. Size matters. Chinese companies, based in a domestic market of unparalleled size, have economies of scale that give them major advantages in international competition. American companies producing goods – for example, construction equipment or digital switching gear – have just been put at a serious tariff disadvantage in the China market as China retaliates against U.S. protectionism by reciprocating it. One side effect of the new handicaps U.S. companies now face in the China market is more effective competition from Chinese companies, not just in China but in third country markets too.

Second : the U.S. effort to block an expanded Chinese role in global governance .

This is no more likely to succeed than the earlier American campaign to persuade allies and trading partners to boycott the Chinese-sponsored Asian Infrastructure Investment Bank (AIIB). That has isolated the United States, not China. Carping at the Belt and Road initiative and related programs from outside them does nothing to shape them to American advantage. It just deprives American companies of the profits they might gain from participating in them.

The United States seems to be acting out of nostalgia for the simplicities of a bipolar world order, in which countries could be pressured to stand with either the United States or its then rival. But China is not hampered by a dysfunctional ideology and economic system, as America's Soviet adversary was. What's more, today's China is an integral member of international society, not a Soviet-style outcast. There is now, quite literally, no country willing to accept being forced to make a choice between Beijing and Washington. Instead, all seek to extract whatever benefits they can from relations with both and with other capitals as well, if they have something to offer. The binary choices, diplomatic group-think, and trench warfare of the Cold War have been succeeded by national identity politics and the opportunistic pursuit of political, economic, and military interests wherever they can be served. Past allegiances do not anywhere determine current behavior.

The sad reality is that the United States, which led the creation of the Bretton Woods institutions that have been at the core of the post-World War II rule-bound international system, now offers these institutions and their members neither funding nor reform. Both are necessary to promote development as balances of supply, demand, wealth, and power shift. The new organizations, like the AIIB and the New Development Bank, that China and others are creating are not predatory intrusions into the domain of American-dominated international finance. They are necessary responses to unmet financial and economic demand. Denouncing them does not alter that reality.

Other countries do not see these organizations as supplanting pre-existing lending institutions long led by the United States. The new institutions supplement the World Bank Group and regional development banks. They operate under slightly improved versions of the lending rules pioneered by the Bretton Woods legacy establishments. China is a major contributor to the new development banks, but it does not exercise a veto in them as the U.S. does in the IMF and World Bank. The AIIB's staff is multinational (and includes Americans in key positions). The New Development Bank's first president is Indian and its principal lending activity to date has been in South Africa.

Washington has chosen to boycott anything and everything sponsored by China. So far, the sad but entirely predictable result of this attempt to ostracize and reduce Chinese influence has not curbed China's international clout but magnified it. By absenting itself from the new institutions, the United States is making itself increasingly irrelevant to the overall governance of multilateral development finance.

Third : the U.S. campaign to block China's international investments, cripple its technology companies, and impede its scientific and technological advance.

The actions of the Committee on Foreign Investment in the United States (CFIUS) to prevent Chinese investment in American industry and agriculture are well publicized and are becoming ever more frequent. So are official American denunciations of Chinese telecommunications companies like Huawei and ZTE amidst intermittent efforts to shut them down. In an ominous echo of World War I's anti-German, World War II's anti-Japanese, and the Cold War's anti-communist xenophobia, the FBI has begun issuing loud warnings about the menace posed by the large Chinese student presence on American campuses. Washington is adjusting visa policies to discourage such dangerous people from matriculating here. It has also mounted a strident campaign to persuade other countries to reject Chinese investments under the "Belt and Road" initiative.

In the aggregate, these policies represent a decision by the U.S. political elite to try to hamstring China, rather than to invest in strengthening America's ability to compete with it. There is no reason whatsoever to believe this approach can succeed. China's foreign direct investments have more than doubled over the past three years. Third countries are openly declining to go along with U.S. opposition to intensified economic relations with China. They want the capital, technology, and market openings that Chinese investment provides. U.S. denunciations of their interest in doing business with China are seldom accompanied by credible offers by American companies to match what their Chinese competitors offer. You can't beat something with nothing.

It's also not clear which country is most likely to be hurt by U.S. government obstruction of collaboration between Chinese and American STEM workers. There is a good chance the greatest damage will be to the United States. A fair number of native-born Americans seem more interested in religious myths, magic, and superheroes than in science. U.S. achievements in STEM owe much to immigration and to the presence of Chinese and other foreign researchers in America's graduate schools. The Trump administration is trying to curtail both.

China already possesses one-fourth of the world's STEM workforce. It is currently graduating three times as many STEM students annually as the United States. (Ironically, a significant percentage of STEM graduates in the United States are Chinese or other Asian nationals. Around half of those studying computer sciences in the United States are such foreigners.) American loss of contact with scientists in China and a reduced Chinese presence in U.S. research institutions can only retard the further advance of science in the United States.

China is rapidly increasing its investments in education, basic science, research, and development even as the United States reduces funding for these activities, which are the foundation of technological advance. The pace of innovation in China is visibly accelerating. Cutting Americans off from interaction with their Chinese counterparts while other countries continue risks causing the United States to fall behind not just China but other foreign competitors.

Finally : the U.S. military is in China's face .

The U.S. Navy and Air Force patrol China's coasts and test its defenses on a daily basis. U.S. strategy in the event of war with China – for example, over Taiwan – depends on overcoming those defenses so as to be able to strike deep into the Chinese homeland. The United States has just withdrawn from the treaty on intermediate nuclear forces in part to be able to deploy nuclear weapons to the Chinese periphery. In the short term, there is increasing danger of a war by accident, triggered by a mishap in the South China Sea, the Senkaku Archipelago, or by efforts by Taiwanese politicians to push the envelope of mainland tolerance of their island's unsettled political status quo . These threats are driving growth in China's defense budget and its development of capabilities to deny the United States continued military primacy in its adjacent seas.

In the long term, U.S. efforts to dominate China's periphery invite a Chinese military response on America's periphery like that formerly mounted by the Soviet Union. Moscow actively patrolled both U.S. coasts, stationed missile-launching submarines just off them, supported anti-American regimes in the Western Hemisphere, and relied on its ability to devastate the American homeland with nuclear weapons to deter war with the United States. On what basis does Washington imagine that Beijing cannot and will not eventually reciprocate the threat the U.S. forces surrounding China appear to pose to it?

Throughout the forty-two years of the Cold War, Americans maintained substantive military-to-military dialogue with their Soviet enemies. Both sides explicitly recognized the need for strategic balance and developed mechanisms for crisis management that could limit the risk of a war and a nuclear exchange between them. But no such dialogue, understandings, or mechanisms to control escalation now exist between the U.S. armed forces and the PLA. In their absence Americans attribute to the PLA all sorts of intentions and plans that are based on mirror-imaging rather than evidence.

The possibility that mutual misunderstanding will intensify military confrontation and increase the dangers it presents is growing. The chances of this are all the greater because the internal security and counterintelligence apparatuses in China and the United States appear to be engaged in a contest to see which can most thoroughly alienate the citizens of the other country. China is a police state. For Chinese in America, the United States sometimes seems to be on the way to becoming one.

It's hard to avoid the conclusion that, if Washington stays on its current course, the United States will gain little, while ceding substantial ground to China and significantly increasing risks to its wellbeing, global leadership, and security.

Economically , China will become less welcoming to American exports. It will pursue import substitution or alternative sourcing for goods and services it has previously sourced in the United States. With impaired access to the world's largest middle class and consumer economy, the United States will be pushed down the value chain. China's ties to other major economies will grow faster than those with America, adversely affecting U.S. growth rates. Any reductions in the U.S. trade deficit with China will be offset by increases in trade deficits with the countries to which current production in China is relocated.

China's role in global governance will expand as it adds new institutions and funds to the existing array of international organizations and takes a larger part in their management. The Belt and Road initiative will expand China's economic reach to every corner of the Eurasian landmass and adjacent areas. The U.S. role in global rule-making and implementation will continue to recede. China will gradually displace the United States in setting global standards for trade, investment, transport, and the regulation of new technologies.

Chinese technological innovation will accelerate, but it will no longer advance in collaboration with American researchers and institutions. Instead it will do so indigenously and in cooperation with scientists outside the United States. U.S. universities will no longer attract the most brilliant students and researchers from China. The benefits of new technologies developed without American inputs may be withheld rather than shared with America, even as the leads the United States has long enjoyed in science and technology one-by-one erode and are eclipsed. As cordiality and connections between China and the United States wither, reasons for Chinese to respect the intellectual property of Americans will diminish rather than increase.

Given the forward deployment of U.S. forces, the Chinese military has the great advantage of a defensive posture and short lines of communication. The PLA is currently focused on countering U.S. power projection in the last tenth or so of the 6,000-mile span of the Pacific Ocean. In time, however, it is likely to seek to match American pressure on its borders with its own direct military pressure on the United States along the lines of what the Soviet armed forces once did.

The adversarial relationship that now exists between the U.S. armed forces and the PLA already fuels an arms race between them. This will likely expand and accelerate. The PLA is rapidly shrinking the gap between its capabilities and those of the U.S. armed forces. It is developing a nuclear triad to match that of the United States. The good news is that mutual deterrence seems possible. The bad news is that politicians in Taiwan and their fellow travelers in Washington are determinedly testing the policy frameworks and understandings that have, over the past forty years, tempered military confrontation in the Taiwan Strait with dialogue and rapprochement. Some in Taiwan seem to believe that they can count on the United States to intervene if they get themselves in trouble with Chinese across the Strait. The Chinese civil war, suspended but not ended by U.S. unilateral intervention in 1950, seems closer to a resumption than it has been for decades.

As a final note on politico-military aspects of Sino-American relations, in the United States, security clearances are now routinely withheld from anyone who has spent time in China. This guarantees that few intelligence analysts have the Fingerspitzengefühl – the feeling derived from direct experience – necessary to really understand China or the Chinese. Not to worry. The administration disbelieves the intelligence community. Policy is now made on the basis of ignorance overlaid with media-manufactured fantasies. In these circumstances, some enterprising Americans have taken to combing the dragon dung for nuggets of undigested Chinese malevolence, so they can preen before those in power now eager for such stuff. There is a Chinese expression that nicely describes such pretense: 屎壳螂戴花儿 -- 又臭又美 – "a dung beetle with flowers in its hair still stinks."

All said, this does not add up to a fruitful approach to dealing with the multiple challenges that arise from China's growing wealth and power. So, what is to be done? 该怎么办?

Here are a few suggestions .

First , accept the reality that China is both too big and too embedded in the international system to be dealt with bilaterally. The international system needs to adjust to and accommodate the seismic shifts in the regional and global balances of wealth and power that China's rise is causing. To have any hope of success at adapting to the changes now underway, the United States needs to be backed by a coalition of the reasonable and farsighted. This can't happen if the United States continues to act in contempt of alliances and partnerships. Washington needs to rediscover statecraft based on diplomacy and comity.

Second , forget government-managed trade and other forms of mercantilism. No one can hope to beat China at such a statist game. The world shouldn't try. Nor should it empower the Chinese government to manage trade at the expense of market forces or China's private sector. Governments can and – in my opinion – should set economic policy objectives, but everyone is better off when markets, not politicians, allocate capital and labor to achieve these.

Third , instead of pretending that China can be excluded from significant roles in regional and global governance, yield gracefully to its inclusion in both. Instead of attempting to ostracize China, leverage its wealth and power in support of the rule-bound order in which it rose to prosperity, including the WTO.

Fourth , accept that the United States has as much or more to gain than to lose by remaining open to science, technology, and educational exchanges with China. Be vigilant but moderate. Err on the side of openness and transnational collaboration in progress. Work on China to convince it that the costs of technology theft are ultimately too high for it to be worthwhile.

Fifth and finally, back away from provocative military actions on the China coast. Trade frequent "freedom of navigation operations" to protest Chinese interpretations of the U.N. Convention on the Law of the Sea for dialogue aimed at reaching common understandings of relevant interests and principles. Ratify the Convention on the Law of the Sea and make use of its dispute resolution mechanisms. As much as possible, call off military confrontation and look for activities, like the protection of commercial shipping, that are common interests. Seek common ground without prejudice to persisting differences.

In conclusion : both China and the United States need a peaceful international environment to be able to address long-neglected domestic problems. Doing more of what we're now doing threatens to preclude either of us from sustaining the levels of peace, prosperity, and domestic tranquility that a more cooperative relationship would afford. Hostile coexistence between two such great nations injures both and benefits neither. It carries unacceptable risks. Americans and Chinese need to turn from the path we are now on. We can – we must – find a route forward that is better for both of us.

Thank you.


MushroomCloud2020 , 7 hours ago link

The article presents itself as being forward thinking, yet no mention of the robot revolution and how destabilizing it will be for both sides. As it stands today, it seems the economic conflict is between the US and China-perhaps. But when these robots come on line the economic war is going to be between the laborer and the employee world wide.

The demise of the US economy and manufacturing base in the US is a direct result of cheap labor, so one has a clear picture of what cheap labor will do. Outside of stuff falling from the sky for free, there isn't anything that will be more devastating to the world labor market than a robot enhanced with AI. Sure, products may become cheaper due to reduced labor cost, but if people do not have a job to raise enough income, then how are they going to buy stuff? Clearly, the whole capitalistic system will collapse and then what? What will be our choices? Will we have to shun progress in order to save the current system that has brought us all this wonderful labor saving innovation? Will people choose the hard road over the easy road? It seems to me that things always take the path of least resistance.

MushroomCloud2020 , 7 hours ago link

The only advantage China has is cheap labor.The robot revolution will upset the apple cart for both sides. It will be interesting, to say the least, when both sides realize that innovation is both a blessing and a curse.

Smi1ey , 9 hours ago link

This is a pretty good article, I agree with a lot of it. The part I don't like is the author's extreme worship of property rights.

He ignores the commons, things held in common by the people, things like science and culture. For example, Disney's copyright on its films will never expire if Disney can help it. Even an American's personal data is now someone else's private property, probably including their genetic data since even genes can be patented.

LEEPERMAX , 9 hours ago link

Fmr Navy Intel Officer:

Chinese Spy Ministry Operates in Silicon Valley . . . Big Time.

https://youtu.be/6lLP5zYKr_Q

[May 19, 2019] Lawrence Wilkerson Warns The US Is Driving Down A Highway To War With China

Notable quotes:
"... More broadly, Wilkerson pegs the ramping up of confrontation with China as "all about keeping the [military-industrial] complex alive" that Wilkerson explains "the military was scared to death would disappear as we began to pay the American people back" a peace dividend at the end of the cold war. US government efforts against terrorism, explains Wilkerson, have also been used to ensure the money keeps flowing. ..."
May 19, 2019 | www.zerohedge.com

Authored by Adam Dick via The Ron Paul Institute for Peace & Prosperity,

Former Army Colonel Lawrence Wilkerson, who was chief of staff for Secretary of State Colin Powell in the George W. Bush administration, warns in a new The Real News interview with host Sharmini Peries that the United States government is driving down a "highway to war" with China -- a war for which Wilkerson sees no sound justification.

The drive toward war is not undertaken in response to a real threat posed by China to the people of America. Instead, argues Wilkerson, the US government is moving toward war for reasons related to money for both the military and the broader military-industrial complex, as well to advance President Donald Trump's domestic political goals.

Wilkerson, who is a member of the Ron Paul Institute for Peace and Prosperity's Academic Board, elaborates on the US military's money-seeking motivation to advance the new China scare, stating:

All of this right now, first and foremost, is a budget ploy. They want more money.

And that's largely because their personnel costs are just eating their lunch. And, second, it's an attempt to develop - and this has something to do with money too of course - another threat, another cold war, another feeding system .

The military just hooks up like it is hooking up to an intravenous, you know, an IV system and the money just pours out-slush fund money, appropriated money, everything else.

More broadly, Wilkerson pegs the ramping up of confrontation with China as "all about keeping the [military-industrial] complex alive" that Wilkerson explains "the military was scared to death would disappear as we began to pay the American people back" a peace dividend at the end of the cold war. US government efforts against terrorism, explains Wilkerson, have also been used to ensure the money keeps flowing.

Watch Wilkerson's complete interview here:

https://www.youtube.com/embed/42LauiK_rbY

* * *

Please donate to the Ron Paul Institute

[May 19, 2019] Google cuts ties with Huawei following trade blacklisting

May 19, 2019 | www.rt.com

Google has reportedly suspended its licences and product-sharing agreements with Chinese communications giant Huawei, as Washington accuses the company of spying for Beijing. The Silicon Valley tech giant has cut its business deals with Huawei that involve the transfer of hardware and software, Reuters and The Verge report. Following the move, Huawei will lose access to Android operating system updates, and its forthcoming smartphones will be shut out of some Google apps, including the Google Play Store and Gmail apps. The Chinese firm however will still have access to the open source version of the Android operating system.

We have confirmed this is genuine.

Huawei will only be able to use the public version of Android, and won't get access to proprietary apps and services from Google

Huawei will have to create their own update mechanism for security patches https://t.co/7eTi4JvWsE

-- Tom Warren (@tomwarren) May 19, 2019

Washington repeatedly accused Huawei of installing so-called 'backdoors' into its products on behalf of the Chinese government. The heads of six US intelligence agencies warned American citizens against using Huawei products last year, and the Chinese company's phones were banned from US military bases shortly afterwards.

[May 19, 2019] The US objective is to sustain US tech prominence by stifling Chinese plans to advance its economy.

May 19, 2019 | www.moonofalabama.org

Don Bacon , May 17, 2019 3:24:47 PM | link

The US objective is to sustain US tech prominence by stifling Chinese plans to advance its economy. Of course China will never agree to that.
from CFR..

The Chinese government has launched "Made in China 2025," a state-led industrial policy that seeks to make China dominant in global high-tech manufacturing. The program aims to use government subsidies, mobilize state-owned enterprises, and pursue intellectual property acquisition to catch up with -- and then surpass -- Western technological prowess in advanced industries.
For the United States and other major industrialized democracies, however, these tactics not only undermine Beijing's stated adherence to international trade rules but also pose a security risk. . . here

[May 19, 2019] China State Run Media Broadcasts Anti-American Movies To Millions Amid Deepening Trade War

Notable quotes:
"... All last week, anti-American propaganda flourished across the country, with the slogan "Wanna talk? Let's talk. Wanna fight? Let's do it. Wanna bully us? Dream on!" going viral on Chinese social media platforms. ..."
May 19, 2019 | www.zerohedge.com

With the trade war between the US and China suddenly erupting after a 5-month ceasefire, CCTV 6, the movie channel of China's leading state television broadcaster, aired three anti-American movies last week, reported What's On Weibo .

The three movies are Korean war films: Heroic Sons and Daughters (1964), Battle on Shangganling Mountain (1954), and Surprise Attack (1960), which aired about one week after President Trump raised an existing 10% tariff on $200 billion worth of Chinese goods to 25%.

All last week, anti-American propaganda flourished across the country, with the slogan "Wanna talk? Let's talk. Wanna fight? Let's do it. Wanna bully us? Dream on!" going viral on Chinese social media platforms.

... ... ...

China's government broadcasting anti-American movies to hundreds of millions of its people shows how officials are starting up the propaganda machines ahead of a potential armed conflict with the US...


Pioneer.Valley.Man , 24 minutes ago link

Sounds like the Chinese should just be watching MSNBC or CNN ...

schroedingersrat , 43 minutes ago link

The US citizens get fucked by their own establishment for decades instead blame chinese. Cant be dumber than that :)

gro_dfd , 42 minutes ago link

Chinese spokesperson Hu Xijin writes: "there's no equal negotiation without fighting." No need for negotiation (or fighting). Assuming Trump imposes the rest of the tariffs, US trade with China will recede to nothing. Inciting anti-American feelings in mainland China just makes the break in relations easier. Goodbye China!

johnny two shoes , 7 minutes ago link

+ 1

China has no intention of going to actual war over trade with the U.S. - they have plenty of other potential markets, as is repeatedly alluded to here and elsewhere. This televised propaganda is about manipulating the attitudes of their own disillusioned, controlled populace.

Smi1ey , 45 minutes ago link

China State Run Media Broadcasts Anti-American Movies To Millions Amid Deepening Trade War

Meanwhile, America's Mockingbird Media continues to lie about everything from 911 to Venezuela.

https://en.wikipedia.org/wiki/Operation_Mockingbird

Dr Anon , 45 minutes ago link

So they're broadcasting regular American television? Those shows do a great job demeaning and shitting on average American men while holding up minorities and freaks as capable people. They didn't need to invent any propaganda; just use the same **** *** producers have been feeding us dumb goyim for decades.

TheRapture , 53 minutes ago link

ZH is proof, if any more were needed, that all these crudely racist Americans are just not the sharpest tools in the shed.

Maybe the real cause of all anti-Chinese hate by Americans is rooted in IQ jealousy.

asadshah , 38 minutes ago link

Isage master of the The famous paper tiger threat of turning something into glass, empty fuckin threat from a country whose professional army has managed to lose every major conflict in the last 50 years to poorly equipped sometimes barefoot soldiers armed with nothing more that AK -47s.

please see Korean villagers, Vietnamese villagers, iraqi villagers, afghan villagers and Syrian Villagers.

and the vaunted Israelis who who only win against ancient armies with ancient gear, but faced with dedicated Hezbollah Lebanese villagers again .....lose.

Give it up, you are masters of snatching defeat from the jaws of victory... not much else.

NA X-15 , 47 minutes ago link

Just to rub it in the PLA trolls faces:

https://duckduckgo.com/?q=Chinese+factory+dorms+have+anti-suicide+nets&t=h_&ia=images&iax=images

Tachyon5321 , 57 minutes ago link

Trump should ban Weibo, Baidu and Sogou apps on Google and Apple phones because they are foreign controlled propaganda

malek , 54 minutes ago link

You prefer a diet of purely domestic controlled propaganda instead?

[May 19, 2019] The Real Risk Of The Trade War

Notable quotes:
"... Negotiating with countries is different from the wheeling and dealing world of New York real estate. This should be especially clear with a nation-first politician like Donald Trump. ..."
"... Where making maximum demands on other parties might work in New York, it's much less likely if one is dealing with proud, independent nations - that should have been the lesson from the North Korea fiasco. ..."
"... Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. ..."
May 16, 2019 | seekingalpha.com

by: Shareholders Unite Shareholders Unite Small-cap, macro, value, momentum Shareholdersunite (11,300 followers) Summary It is difficult to see the Chinese caving to the demands of the Trump government, which seem to involve a wholesale change of China's economic model.

Either some middle ground is found or we risk a serious escalation with multiple risks to the state of the world economy, with many known and unknown facilities.

The end state could be a wholesale decoupling of the American and Chinese economies, and while some would applaud such an outcome, it's unlikely to be better than what we've got.

The Trump administration seems to have the illusion that if you raise the stakes high enough, other countries will cave to US demands. There might also be an element of creating foreign adversary in order to unite the domestic front, we don't know.

Trade tensions have been taken way too far when the government slapped tariffs on Canadian steel exports because of national security concerns, but in the case of China, there are some legitimate concerns. Mind you, these concerns don't involve:

This doesn't look particularly mercantilist:

(Source: Trading Economics )

Negotiating with countries is different from the wheeling and dealing world of New York real estate. This should be especially clear with a nation-first politician like Donald Trump.

Where making maximum demands on other parties might work in New York, it's much less likely if one is dealing with proud, independent nations - that should have been the lesson from the North Korea fiasco.

Just as there is one thing worse than a severe economic recession, which is caving to US pressure for the Iranian ayatollas, the same holds for Chinese politicians in charge of policy.

It's true that the pain from the escalation in the trade war is probably significantly larger in China compared to the US, but that doesn't make them more likely to be the first to cave, especially considering that what the US administration seems to demand is a wholesale change of China's economic model . That's never going to happen. Since there are no free elections, they can endure the pain for longer, and much fewer people own stocks, so even while the sell-off in China might be worse, it's hitting much fewer people.

In fact, caving to US demands, or even being seen to be caving, might well be a one-way ticket to political oblivion. Which is why China's leaders called President Trump's bluff. Contrast this with the situation in the US.

Trade experts like Krugman argue that the short-term economic impact as such on the US economy is fairly moderate, and who are we to disagree? However, a further escalation isn't likely to go by unnoticed, and there is this ephemeral concept called "confidence", of which the stock market might be one of the best indicators:

The market is already reeling, and this could become uncomfortable pretty soon for a president who prides himself on the rally in the markets.

The real danger

The risk is that this becomes a protracted conflict with each party digging in, egged on by heated domestic rhetoric. The longer this lasts, the greater the following risks:

Sentiment is turning, and at a certain point, this can very well start to affect consumption, investment, and lending decisions in the real world. We're not there yet, but look how the sell-off at the end of last year cowered the Fed into one of the more spectacular retreats in policy. This wasn't because of the market sell-off itself but because of the increasing signs that sentiment could hit the real economy, even if much of the more immediate risks were abroad.

Moreover, in a highly leveraged financial system, you never know what you're going to find when the investor flows recede. Things can go very fast here. Look how Argentina was able to sell a 100-year bond in 2016, only to be hit by the receding flows pretty soon after.

Another real risk is a substantial yuan depreciation . It's the most effective way the Chinese can absorb the direct tariff cost on their competitiveness, but it runs the risk of becoming a self-fulfilling prophesy.

The markets have already twice succumbed to yuan depreciation scares, in 2015 and at the start of 2016, and the PBoC spent $1 trillion of its $4 trillion reserves plus draconian capital controls to stop the rot.

We're not talking hypotheticals here - guess when that gap-up happened? On the day of the Trump tweets announcing the 25% tariffs:

A substantial yuan depreciation will risk inserting a major deflationary blow to the world economy as it exports the effects of the US tariffs on China to the rest of the world.

Given the shaky state of the eurozone, we're not relishing this prospect at all. We have long argued that the eurozone is one downturn away from disintegration, with Italy as its focal point.

Italy is already in a recession and has a dysfunctional government consisting of a left-wing and right-wing populist party which are constantly bickering. What's more, it has unsustainable debt dynamics and a potential banking doom loop, should the debt dynamics trigger a market selloff, and has no lender of last resort.

With all the debt and leverage in the world economy, it's a bit like riding a bicycle - you have to keep cycling to stop falling over.

Decoupling

While the direct monetary impact of the tariffs is fairly moderate (it's a modest, albeit highly regressive, tax increase), another likely consequence is a further relocation of supply chains and decoupling of the US and Chinese economies.

We have already read numerous company CCs which described rerouting supplies from China, albeit not usually back to the US, and we're not imagining stuff. From Monday's issue of DigiTimes:

If 10% tariffs can do that, 25% of tariffs will accelerate this and the next round, where the US levies tariffs on all Chinese imports even more.

Some within the US administration seems to relish this, as it weakens China economically, but a hard Chinese landing won't pass the US unnoticed, and the end result could very well be two competing economic blocks and a new sort of cold war.

One of the very first economic measures the Trump government took was to get the US out of the TPP, which not only gave up a lot of leverage over China, but the mostly ASEAN countries who are part of the TPP (without the US) are now firmer in China's orbit as a result, and they will have unenviable choices to make in terms of their future alignment.

It's also unfortunate that Trump has been waging trade wars on multiple fronts (see here for an overview ), alienating many partners in the process.

Now might be as good a time as any to remind people of the unpopular thesis that trade isn't a zero-sum game and that both the US and China have greatly benefited from their economic integration the past couple of decades.

The US got increased exports as well - not as spectacular as the Chinese exports to the US, but this is in part an optical illusion. Much of China's exports to the US contain value added produced elsewhere, even from the US itself:

94377_BII_COTW_040218_v3_blog

(Source: BlackRock )

You see that less than half of the value added of Chinese electronics export to the US is actually produced in China itself. The iPhone is a classic example:

In the case of the Apple iPhone, this means that China's exports balance accounts for the full $500 iPhone value, when China adds only approximately $15 to $30 of the value to the phone. Most of the iPhone value accretes to Samsung in Korea ($150) and to Apple - the brand owner and engineer. This highlights how the normal accounting of trade flows is inherently distorted under the current trade-deficit estimates.

(Source: CNBC )

Yes, the US has lost manufacturing jobs as a result, but it failed to compensate those who lost from trade like other countries have (via massive active labor market policies, for instance in the Nordic countries, where there is little in the way of an industrial waste land as a result).

The US has also gained. It found willing buyers for its Treasuries, keeping interest rates low, cheap consumer goods, keeping inflation low - which allowed the Fed to keep low interest rates, and which in turn increased economic growth and employment.

It's not perfect, and we're not blind to China's IP theft and the conditions it places on American companies operating in the country. But China's rise has propelled half a billion people out of poverty and turned them into eager consumers of US agricultural, cultural and high-tech products.

Conclusion

While a number of American grievances are right, the Trump administration seems to want a wholesale sellout of China, abandoning its economic model. That's not going to happen, and even less so because they also antagonized potential allies, like ASEAN countries, the EU and Canada.

There are two choices here: either some middle ground is found or this could spiral out of control, with major economic risks involved and a wholesale decoupling of the Chinese and American economies. Economics 101 argues quite clearly that that world is unlikely to be better than the one we have, despite all the imperfections of the latter.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[May 19, 2019] Explaining the US China trade war

Essentially Trump is trying to replace neoliberals with "national neoliberalism"
Apr 29, 2019 | www.youtube.com

What if, instead of the U.S. and China battling it out on trade--it was two classes trading cards? We explain the trade war.

"Trade wars are good and easy to win," President Donald J. Trump famously tweeted. But how would one really impact everyday Americans?

[May 19, 2019] US pressure on Huawei

33 out 90 suppliers of Huawei are US companies. If Huawei do not buy from them who will buy them? It's two way street.
Trump is breaking neoliberalism createing two camps of neoliberal countries hostile to each other. Potential partners for China are Russia, Turkey, Syria, Iraq, Iran, Pakistan and North Korea so this would be a weaker, but still formidable in economic and military capacity block.
May 16, 2019 | www.youtube.com

On Wednesday, U.S. President Donald Trump issued an executive order barring U.S. firms from using telecom equipment made by companies accused of being a national security risk; this includes Chinese tech giant Huawei. The U.S. Commerce Department questioned whether Huawei will be able to continue purchasing components from its American suppliers. In response, the Chinese Commerce Ministry said on Thursday

Philip Yap , 1 day ago

Huawei will survive with supply chain alternatives and reengineering designs, it will make Huawei stronger with better products. American high tech products and parts suppliers can wait until American companies come up with design to utilise their products, hopefully not long enough to cripple all these high tech parts manufacturers.

Francoise Loffler , 8 hours ago

Huawei is an EXCELLENT PHONE MUCH BETTER THAN APLE...I have both and can compare them...

[May 18, 2019] Trade War US to Pay Heavy Price for Underestimating China Chinese Businessman

Notable quotes:
"... US Tariffs Have Nothing to Do With Competition, These are Steps to Contain China ..."
"... Or do they want to cut off all opportunities for China's future development? In my opinion, the relevant measures that the Americans have been initiating since the very beginning of the trade war to the present day are most likely real steps to contain China rather than some form of sanctions. This is a desire to hinder China's development in various spheres, specifically in trade, economic development, industrial development, science and technology, in the financial sphere and even in the area of human resources in China. They want to hamper our development on all sides. ..."
"... You might know that we used to have the popular concept of the so-called "hybrid war" but I would not describe the behaviour of Americans using this term. They just want to cut off all of China's development opportunities. They want to limit our ability to thrive as much as possible. ..."
"... Today I heard you talking about Russia, about the principles of preserving your development and sovereignty, I agree with that. The geopolitical situation is different for everyone, the history is different. There may be differences in how countries approach dealing with issues. ..."
"... The advantage of the United States is its hegemony in the global financial system. The second advantage is the strong alliance system that was formed after the Second World War and the Cold War. And another one is a still high level of weapons development in the world. ..."
"... Over the past decades, Americans have repeatedly initiated hostilities, and acute social inequality has flared up inside the country. Today, hegemony in the ideological system is being lost; and some countries and regions' confidence in the USA is being lost. ..."
May 16, 2019 | sputniknews.com

... ... ...

Dmitry Kiselyov, the general director of Rossiya Segodnya International Information Agency, discussed the recent escalation in the Sino-American trade war with Kong Dan, the former chairman of CITIC Group; Zhang Weiwei, a Chinese professor of international relations at Fudan University and a senior research fellow at the Chunqiu Institute; and Li Shimo, an investor and billionaire, founder and managing director of Chengwei Capital, owner of many US Silicon Valley companies.

US Tariffs Have Nothing to Do With Competition, These are Steps to Contain China

Dmitry Kiselyov: What resources does China have?

Kong Dan: Without a trade war, our view of the United States would be superficial; now we know the other side as well. I, as a representative of business circles, do not really understand the subtleties of what the Americans want. Do they just think that Chinese development is unacceptable for them?

Or do they want to cut off all opportunities for China's future development? In my opinion, the relevant measures that the Americans have been initiating since the very beginning of the trade war to the present day are most likely real steps to contain China rather than some form of sanctions. This is a desire to hinder China's development in various spheres, specifically in trade, economic development, industrial development, science and technology, in the financial sphere and even in the area of human resources in China. They want to hamper our development on all sides.

Dmitry Kiselyov: But is it hostile?

Kong Dan: I would call this approach competition. But competition can be different: hostile, non-hostile

READ MORE: Strategist: American Producers, Consumers to Pay for US-China Tariff Tit-for-Tat

China's Two Main Advantages in Trade War With US

Dmitry Kiselyov: Competition without rules is animosity

Kong Dan: You might know that we used to have the popular concept of the so-called "hybrid war" but I would not describe the behaviour of Americans using this term. They just want to cut off all of China's development opportunities. They want to limit our ability to thrive as much as possible.

China May Regulate Energy Imports from US Amid Trade Row Competition has various forms or different aspects. I also have a counter-question for you, how do Russians assess the nature of those sanctions measures that the Americans have implemented against Russia?

The United States considers us its adversaries. They previously included Russia, China, Iran, and North Korea on their blacklist, a list of terrorist forces. And China is first on the list. Are we hostile to them?

Today I heard you talking about Russia, about the principles of preserving your development and sovereignty, I agree with that. The geopolitical situation is different for everyone, the history is different. There may be differences in how countries approach dealing with issues.

I previously worked as the head of the largest state-owned company in China, so, of course, I understand what kind of mission one carries on his/her shoulders. I am willing to make efforts to stimulate the development of the Russian-Chinese partnership as a whole; I think there is still a lot to do in this direction. The US underestimates the potential of President Putin and Russia, China and President Xi Jinping. They will pay a heavy price for it.

I would like to name two advantages of the trade war for us.

Why China is Likely to Emerge Victorious in Trump-Driven Trade War

Dmitry Kiselyov: You said you have confidence that China will emerge victorious in this trade war, what does this victory mean? When will it come?

Kong Dan: Trump has said many times that he can hit our stock market to destroy it. As for us, we are doing everything well, we are successfully organising work, and we are looking for ways for rapid development in recent years. Our goal of a 100-year-old rebirth of the nation can be achieved -- and that is our victory Of course, we understand that the United States wants to impede our development. If they want to destroy us then I think they will fail. Only in their dreams!

Zhang Weiwei: I support Mr Kong's view that the Chinese consumer market is the largest in the world! Especially, in the field of innovation. And if one leads the battle with such colossal markets, then the initiators will surely fail .

READ MORE: US Treasury Chief to Plan for Trade Meeting in China Soon

'If US Continues to Maintain Hegemony, It Will Suffer Heavy Losses'

Dmitry Kiselyov: What will then become of the defeated United States?

Kong Dan: It is very hard to explain all this only in military terms. China neither wants to seize the United States nor does it want to take a dominant position like the United States. We simply do not want the United States to cut off all the opportunities for our country's development.

Li Shimo: I would like to note that in the course of a trade war, each of the parties has its own strengths and weaknesses. Our advantage is that we have a strong political system. The second one is social cohesion. The third one, as has already been stated, China has quite large domestic markets. The fourth one, China is the world's largest trading country and also the largest trading nation in the history of mankind.

China to Emerge Victorious From Trade War With US – Foreign Ministry Unlike ours, the American political system has fallen into disarray. American society is split ; the "social contract" has failed. The political and economic elite have gradually lost their credibility and reputation.

The advantage of the United States is its hegemony in the global financial system. The second advantage is the strong alliance system that was formed after the Second World War and the Cold War. And another one is a still high level of weapons development in the world.

However, the United States and China have different development goals. China is simply looking for suitable paths to future accelerated development. But the US has a dilemma. Previously, there was a different situation, there was hegemony -- a very important driving force, a very important pillar, the so-called "soft power", and particularly they had ideological dominance. Over the past decades, Americans have repeatedly initiated hostilities, and acute social inequality has flared up inside the country. Today, hegemony in the ideological system is being lost; and some countries and regions' confidence in the USA is being lost.

© Sputnik / Marina Lisceva Boeing Calls For Limits to US Tariffs Over EU Subsidies

Therefore, if they now wish to continue to maintain hegemony, they will suffer heavy losses. But if they back down from it -- for instance, Trump wants to abandon ideological dominance -- it will turn into a power struggle in its purest form. This will lead to a loss of ideological advantage in the international arena.

How to assess the outcome of the battle? I would suggest that you read the 19th National Congress of the Communist Party of China report delivered by President Xi Jinping. In it, he outlined two challenges: the first one -- 2035, the second one -- 2049. These two goals are quite clear and realistic If we can complete these tasks, then the victory will be ours.

China's Three Future Milestones: 2021, 2035, 2049

Dmitry Kiselyov: What are these challenges?

Kong Dan: China has two development goals for the current century. The first is that by 2021 when the CPC will celebrate its 100th anniversary, it will fully and comprehensively build a moderately prosperous society in China. Another goal by 2049, when it will be 100 years since the founding of the PRC, China should reach the level of the most advanced developed countries. Moreover, there is another intermediate task between these two goals of the current century -- by 2035 China has to move into the category of moderately developed countries.

Zhang Weiwei: China borrowed its methodology and planning practices from the USSR. However, over the past decades, we have brought a lot of innovation into this process. Now it is no longer the old decision-making but strategic and guiding planning. The Americans could see that over the past 40 years China has been fulfilling all its five-year plans ahead of schedule, and that frightened them. If we are talking about how the China-US trade war will end, then personally I would like to quote Americans who say: "if you can't beat them, join them".

READ MORE: China May Regulate Energy Imports from US Amid Trade Row

China Presents New Model of Development as Western & Soviet Models Failed

Dmitry Kiselyov: How many fingers are needed to describe the Chinese model, and what in fact is that, if we are talking about the alternative?

Zhang Weiwei: The Chinese Model of Development has several features. First, the leading ideology must be based on real facts. "Practice is the sole criterion of truth". As a result, we found that a developing country, such as China, needs to carry out modernisation. Looking at the rest of the world, it becomes clear that the Western model is not successful. The Soviet model also did not prevail. Therefore, Deng Xiaoping said that we need to follow our own path. We did not fall into the trap of "colour revolutions", we were looking for the path we needed based on reality. That is the key thing.

No US LNG Exports to China in Recent Months as Trade War Reaches Peak - Reports

I would like to add a little bit. If we talk about reforms in socialist countries, we can name two basic models.

Reforms according to the Chinese model are characterised by balance, prudence, and sustainability. We have carried out bold economic reforms, built a market economy, and joined the process of globalisation. However, we treat political reforms with caution and prudence; everything should serve economic reforms, and, ultimately, improve people's living standards.

The American model provides for the concept of political equality "One person, one vote", a multiparty system for governing a country. Strictly speaking, it only started working in 1965. The Chinese model began to take shape in 1978. Their starting points are more than ten years apart. Of course, they can compete with each other but I consider the Chinese model to be more successful and attractive; and I have already been talking about this for 20 years.

The views and opinions expressed by the speakers and the contributor do not necessarily reflect those of Sputnik.

[May 18, 2019] China Downplays Chances for Talks, Pledges Economic Defense

May 18, 2019 | www.bloomberg.com

China's state media signaled a lack of interest in resuming trade talks with the U.S. under the current threat of higher tariffs, while the government said stimulus will be stepped up to buttress the domestic economy.

Without new moves that show the U.S. is sincere, it is meaningless for its officials to come to China and have trade talks, according to a commentary by the blog Taoran Notes, which was carried by state-run Xinhua News Agency and the People's Daily, the Communist Party's mouthpiece. The Ministry of Commerce spokesman said Thursday he had no information about any U.S. officials coming to Beijing for further talks.

U.S. equities fell on concern that talks between the world's two largest economies have stalled. The Shanghai Composite Index also declined. "If the U.S. doesn't make concessions in key issues, there is little point for China to resume talks," said Zhou Xiaoming, a former commerce ministry official and diplomat. "China's stance has become more hard-line and it's in no rush for a deal" because the U.S. approach is extremely repellent and China has no illusions about U.S. sincerity, he said. No Rush for a Deal

According to Zhou, the commerce ministry spokesman on Thursday effectively ruled out talks in the near term. In comments to the media, ministry spokesman Gao Feng said that China's three major concerns need to be addressed before any deal can be reached, adding that the unilateral escalation of tensions in Washington recently had "seriously hurt" talks.

The U.S. has been talking about wanting to continue the negotiations, but in the meantime it has been playing "little tricks to disrupt the atmosphere," according to the Taoran commentary on Thursday night, citing Trump's steps this week to curb Chinese telecom giant Huawei Technologies Co.

"We can't see the U.S. has any substantial sincerity in pushing forward the talks. Rather, it is expanding extreme pressure," the blog wrote. "If the U.S. ignores the will of the Chinese people, then it probably won't get an effective response from the Chinese side," it added.

The blog reiterated China's three main concerns for a deal are tariff removal, achievable purchase plans and a balanced agreement text, as first revealed by Vice Premier Liu He. They mark the official stance as much as the will of the Chinese public, it wrote.
"If anyone thinks the Chinese side is just bluffing, that will be the most significant misjudgment" since the Korean War, it said.

Read: China Vows 'People's War' as Trade Fight Takes Nationalist Turn

In addition to putting the Taoran commentary on WeChat, the People's Daily newspaper had three defiant articles on the trade war in the physical newspaper Friday.

A front page commentary from the Communist Party's propaganda department headlined 'No Power Can Stop the Chinese People from Achieving Their Dream' said "the trade war will not cripple China, it will only strengthen us as we endure it," citing the hardships China has overcome from the Opium War to floods to the SARS epidemic in 2002-2003.

There were two editorials on page three, with one saying "China doesn't intend to change or replace the U.S., and the U.S. can't dictate to China or hold back our development." The other said claims from some officials in the U.S. that they have "rebuilt" China over the past 25 years are "outrageous" and shows their vanity, ignorance and distorted mentalities.

[May 18, 2019] 'US already spying on public, Huawei threat unproven' Swann

Trump is a bully and he does not have any methods of diplomacy other then bulling.
May 16, 2019 | www.youtube.com

US President Donald Trump declared a national emergency over Huawei, which he has deemed a national security threat. His new executive order makes it more difficult for US companies to do business with the Chinese tech giant. RT America's Manila Chan chats with investigative journalist Ben Swann, who says no evidence exists for the Trump administration's claim. #RTAmerica #InQuestionRT #QuestionMore


US Of Zion , 2 days ago

What US bans I will buy. Huawei has profited from Trump's tweets. 😂😂😂

riva2003 , 2 days ago

National emergency against one single company? What a promotion for HUAWEI! They must have paid US government a looooot of money! LOOOOOL

E Walker , 2 days ago (edited)

U.S. cannot spy via Chinese made technology products. That is the problem. When did competition against American technology get to be a national security threat? It is about creating a monopoly of only certain products in America. I hope American companies fight back. Prices in American stores have already started to rise. Monopolies mean high prices.

BTV-Channel , 2 days ago div

In the age of technology...any country who doesn't SPY on other countries or their own citizens is LYING thru their teeth! USA is NO DIFFERENT than CHINA.....they both are rogue nations, competing for the same thing, TECHNOLOGY LEADERSHIP! The problem is....HUAWEI just got the upper hand in 5G technology before the US can compete...so as such, the US threatens other countries with scare tactics until the US can develop and deploy 5G technology to compete with CHINA. It's all about MONEY and BUSINESS.

OGASI , 2 days ago

USA has dishonestly gathered more data on it's own civilians than it can access or understand in several lifetimes, they have the gaul to attack others without proof? UNREAL

[May 18, 2019] Are there any articles on how dependent Apple and Boeing are on Chinese components?

Boeing and Hollywood are two week stops that China can hit with impunity.
Notable quotes:
"... China has outspent the US on R&D since 2009 and now invests three times as much each year. ..."
"... The issue with these chips highlights just how ridiculous the American position is. The chips referred to are Intel processors they use in servers and qualcomm (arm core) processors in cell phones. Funny thing is, these processors are not even made in the US, and their replacement isn't that much of an issue, not for a company with the resources Huawei possesses. ..."
"... For government and other high security uses China has options like the MIPs based Loongson but that wouldn't work in the commercial environment so hopelessly devoted to x86 and windows. Probably the best solution would be to make an x86 analog like AMD markets, and it wouldn't take that long to do. ..."
"... The United States attacked China's largest telecom equipment maker Huawei. If China decides to retaliate, it could target chip giants like Qualcomm and Broadcom, which rely heavily on it for revenue, or tech giant Apple, which depends on them for iPhone manufacturing. ..."
"... Huawei's competitors Nokia and Ericsson would stand to win from the above ban as the United States and its allies would resort to them for 5G deployment. Nokia's and Ericsson's stocks rose more than 4% and 2% in early trading on May 16. . . here ..."
"... Chip fab is the only remaining significant technological lead that America retains anymore, but the raw engineering brainpower behind that industry in the US is mostly imported from China anyway. The Chinese have no shortage of brilliant engineers, they just have not really had the need to do without Intel and AMD before. Now they do. ..."
"... Within a year or so China will be producing chips as good as America's. Another year after that and America will be eclipsed in that industry. No longer will people be looking for "Intel Inside!" stickers on products but rather "Huawei Inside!" . ..."
"... What doesn't seem to be clear, or else ignored/excused here -- China is today just as globalist as the US and in fact the multinational corporations in control of both countries are inextricably linked, especially in the high tech sector currently under the intense MoA thread microscope. ..."
"... By our standards exploitation of workers in China is a grim picture , which compares with the grim blue collar conditions in the US, the equal and opposite result of the globalist equation wrt offshoring factory jobs endemic to capitalist production. ..."
"... MoA China "experts" should study the reality of globalization after removing the rose colored glasses if you wish to be considered analysts instead of merely wishful thinkers/cheerleaders of groupthink delusion. ..."
May 18, 2019 | www.moonofalabama.org

S , May 18, 2019 8:47:15 AM | link

@William Gruff #75: China is already producing world-class ARM chips. HiSilicon 's latest Kirin processors are on par with Qualcomm's Snapdragon and Samsung's Exynos processors. Apple's A-series is ahead of them all, but what does it matter if Apple's rising prices and falling quality are going to kill Apple anyway?

Schmoe , May 17, 2019 6:45:23 PM | link

Per Reuters, Huawei spends $11b on US components, and its ability to withstand this hit will vary by segment: "Huawei being unable to manufacture network servers, for example, because they can't get key U.S. components would mean they also stop buying parts from other countries altogether," said an executive at a Huawei chip supplier.

"They can relatively better manage component sourcing for mobile phones because they have their own component businesses for smartphones. But server and network, it's a different story," the executive said.

Are there any articles on how dependent Apple and Boeing are on Chinese components? This strategy seems incredibly short-sighted.

Godfree Roberts , May 17, 2019 7:30:34 PM | link
China has outspent the US on R&D since 2009 and now invests three times as much each year. That's why it's ahead technologically and scientifically.

By 2028, if current ratios hold, China will also outspend the US on defense. Won't that be interesting?

oglalla , May 17, 2019 7:34:09 PM | link
Remember the "Asian pivot"? Did Huawei and other critical tech companies start making independent chips back then? Or before? When were the tariffs planned? Speculation, anyone?
Indrid Cold , May 17, 2019 8:15:00 PM | link
The issue with these chips highlights just how ridiculous the American position is. The chips referred to are Intel processors they use in servers and qualcomm (arm core) processors in cell phones. Funny thing is, these processors are not even made in the US, and their replacement isn't that much of an issue, not for a company with the resources Huawei possesses.

Huawei already has its own arm based soc's it uses in it's high end phones and they can replace processors in it's low end phones with lesser versions of these.

The Intel processors will be tougher to do for the commercial market because of software compatibility issues.

For government and other high security uses China has options like the MIPs based Loongson but that wouldn't work in the commercial environment so hopelessly devoted to x86 and windows. Probably the best solution would be to make an x86 analog like AMD markets, and it wouldn't take that long to do.

Don Bacon , May 17, 2019 10:59:03 PM | link
from Market Realist. . .

The United States attacked China's largest telecom equipment maker Huawei. If China decides to retaliate, it could target chip giants like Qualcomm and Broadcom, which rely heavily on it for revenue, or tech giant Apple, which depends on them for iPhone manufacturing.

Huawei uses Qualcomm's modems in its high-end smartphones and has been in settlement talks with the chip supplier over a licensing dispute. Tensions between the United States and Huawei could delay this licensing settlement, sending Qualcomm's stock down 4.4% on May 16.

Huawei's competitors Nokia and Ericsson would stand to win from the above ban as the United States and its allies would resort to them for 5G deployment. Nokia's and Ericsson's stocks rose more than 4% and 2% in early trading on May 16. . . here

William Gruff , May 18, 2019 8:11:03 AM | link
"Soon U.S. chip companies will have lost all their sales to the second largest smartphone producer of the world. That loss will not be just temporarily, it will become permanent." --b

This is a crucial and important development. So long as China is just developing their domestic chip designs as an academic exercise they will forever trail behind the market leaders by at least one technological iteration. Why try so hard with chip designs that will only ever just be used in college degree theses papers and proof of concept models? Real innovation comes from scratching an itch; from fulfilling an actual need. Chip fab is the only remaining significant technological lead that America retains anymore, but the raw engineering brainpower behind that industry in the US is mostly imported from China anyway. The Chinese have no shortage of brilliant engineers, they just have not really had the need to do without Intel and AMD before. Now they do.

In the short term the transition will be painful for China. The first few iterations of their replacement chip designs will be buggy and not have the features of chips they could have bought for cheaper from the US. They will also have problems ramping up capacity to meet their needs. Typical growing pains, in other words. In the long term, though, this will be seen as the point at which the end started for America's chip tech dominance. Within a year or so China will be producing chips as good as America's. Another year after that and America will be eclipsed in that industry. No longer will people be looking for "Intel Inside!" stickers on products but rather "Huawei Inside!" .

donkeytale , May 18, 2019 9:57:42 AM | link
Isnt it clear the US is globalist? Uhhm, well, yes, it's only been clear for the prior 75 years at least. In fact Lenin laid it all out during WWI so one could say it's been clear for 100 years.

What doesn't seem to be clear, or else ignored/excused here -- China is today just as globalist as the US and in fact the multinational corporations in control of both countries are inextricably linked, especially in the high tech sector currently under the intense MoA thread microscope.

Why aren't Huawei making making more smartphone chips in production? Because so many Chinese component manufacturers are still heavily invested in churning out product for Apple. These companies employ millions in "relatively high paying" factory jobs and account for a large slice of Chinese export income and stock market capitalization. These corporate oligarchs supported by the Chinese government retain a vested interest in the status quo.

This is not to minimize Huawei or Chinese growing ability to compete at the design and innovation level as well as production, it is simply rightsizing the perspective to fit the reality. Huawei production is growing worldwide but this doesn't mean Apple or Samsung will evaporate or fall by the wayside and the Chinese need Apple and its markets too . In fact, Huawei is now willing for the first time to sell microchips to third party cell phone producers including Apple. Successful capitalist growth for China depends on increasing production into new products, technologies and markets not replacing current platforms with new. The product cycle will take care of itself in time anyway.

By our standards exploitation of workers in China is a grim picture , which compares with the grim blue collar conditions in the US, the equal and opposite result of the globalist equation wrt offshoring factory jobs endemic to capitalist production.

China is still in the industrial growth phase of its capitalist development, although beginning to transition to the higher phase for sure. Of course.

MoA China "experts" should study the reality of globalization after removing the rose colored glasses if you wish to be considered analysts instead of merely wishful thinkers/cheerleaders of groupthink delusion.

[May 18, 2019] Trump might get into deeper problem with China that he anticipated: if China assume that US is not desirable partner then can replicate many of key US technological areas and deprive US companies of revenue.

Trump calculation is probably that neoliberalism in China already corrupted Communist Party enough for US being able to destabilize the country buy depriving it of export revenue. And it is true that influence neoliberal Fifth column in china exists and can compete with Communist Party for power. If Trump timing is correct China will be crushed. If this in incorrect the USA might be crushed. This is a very high stake game as Trump burn bridges way too easily (being reckless and arrogant all his life). Bulling as a negotiating tactics might be OK for New York real estate market is not that good in negotiating with countries such as China.
Both countries are neoliberal countries but Chinese have more flexibility as remnants of Communist Party control remain in place. But the same remnants are also a bog danger, as China might find itself in the position of the USSR when the US crushed oil price and deprived it of much of its export revenue. In this case Communist Party will be blamed for social disruptions and might lose power due tot he power of Chine Fifth column of nouveau riche like happened in the USSR (opposition was supported by huge cash injections from the USA). I hope they study the USSR experience very carefully and will not repeat Gorbachov mistakes (although it is difficult, as it is very difficult to find a more stupid politician then Gorbachov, unless we assume that he was a traitor). Also the level of nationalism in China is much higher and that might help. In any case this uncharted territory for both China and the USA.
The Trump administration seems to have the illusion that if you raise the stakes high enough, other countries will cave to US demands. There might also be an element of creating foreign adversary in order to unite the domestic front. If Chinese will hold their position tight despite the pain, Trump might lose the election in 2020 as he will be unable to protect the economy for more then a year and the first signs of reception nullify his changes, as he will be blames for it.
Notable quotes:
"... This article titled 'Face' by Walrus over at SST is well worth a read alongside b's piece. https://turcopolier.typepad.com/sic_semper_tyrannis/2019/05/face-by-walrus.html ..."
"... Both these articles give a very clear picture of what the drunken louts 'Team Trump' are up against in their so called trade war. Very much like a drunken spectator climbing into the ring thinking he can take on a professional boxer. ..."
"... The US attack on China did not start with Trump. This is what Obama's military "Pivot to Asia" was about, as was the TPP, which explicitly was designed to develop an economic alliance that left China out. Capitalist trade wars are also not new, as are hot wars. They are part of capitalism. ..."
"... "Intellectual property" is a laughable assertion, an audacious attempt by the US to corner all human advances and claim them as the property of US capitalists, to be only used for their profits. As if! ..."
"... What an appalling ruling elite in the USA. Blamers and punishers. Never take any responsibility for their murderous acts ..."
"... The U.S. talks about pressuring China until they give in. China talks about a solution that respects the dignity of each party. ..."
"... I had the sudden realisation that US politics is essentially monarchist in its nature, for all the complicated legal and constitutional structures that have been built around it over the past 240+ years. US politics and culture are fixated on one individual with extreme powers; the superhero obsession in Hollywood is one symptom of that. ..."
"... In a way the US now resembles the Ottoman empire during that empire's Sultanate of Women period (late 1500s to mid-1700s) when sultans' power was dominated by their mothers, viziers and sometimes the janissaries who became a hereditary class during that period. ..."
"... Idolatry is universal. People always gravitate towards Alpha personalities. ..."
"... In looking into US culture and why it gives rise the type of leadership it has, I think it may be the belief in exceptionalism. Exceptionalism may also carry with it the belief that all other peoples want to be like them and all they (Americans) have to do is free those peoples from the nasty dictators ruling over them. ..."
"... Patrick Armstrong in one of his articles has said that in his dealings with US officials as Canadian ambassador or diplomat, is that American officials genuinely believed that all they had to do was overthrow the evil dictator and the people would welcome Americans or willingly join the US system. ..."
"... But, at the same time, on another level, Americans understand that the president is a puppet and must obey orders, or have his brains blown out in bright daylight, in the town square. ..."
"... We hold both these views simultaneously, hence, as Orwell called it, Doublethink. ..."
"... The British court said, no patent, no copyright and no monopoly can last longer than 7 years. that was 1787-89, and it explains the for a short time clause in the USA constitution. ..."
"... I don't think the US sees the world's nations as commanded by their senior politician. Far from it, but to keep the US public locked in a child's mentality, the govt and its MSM present every political event/action/reaction as between personalities. Can't have reason and logic breaking out among the minions can we? ..."
"... China's "competitive advantages" are too big for a confederation of micro-countries in the Pacific to overcome. ..."
"... b said;" the U.S. economic system is based on greed and not on the welfare of its citizens." Bingo! Jrabbit @ 52 said;"US foreign policy has been remarkably consistent for over 20 years." Maybe the last 100 yrs.? Demonize countries people and rulers, and take their stuff, but why not? We are, don't ya' know, the exceptional nation, doing gods work. Manifest Destiny, isn't it great? ..."
"... Smacking down China is a strategic priority for the Deep State. ..."
"... the neocons in the US believes it is now or never to defend the USA unique position as world power. They believe, that if they don't fight now, they will have lost. I say, they already have. ..."
"... Trust the UnitedSnake to blame the Chinese for reneging on an agreement ! Fact is, Trump's team Add in last minute conditions that are totally unacceptable to China. Chinese commentators are fuming at the audacity of the demands. 'WTF, Do they think we'r their gawd damned 51st state ?' ..."
"... Typical UnitedSnake's 'negotiation' tactics, designed to fail ! Thats how Clinton justity his bombing of ex Yugo, by blaming Belgrade for the breakdown of negotiation ,to justify its 78 days of aerial arsons against Yugo. ..."
May 18, 2019 | www.moonofalabama.org

jared , May 17, 2019 4:55:50 PM | link

This article titled 'Face' by Walrus over at SST is well worth a read alongside b's piece. https://turcopolier.typepad.com/sic_semper_tyrannis/2019/05/face-by-walrus.html

Also this Sputnik Article https://sputniknews.com/analysis/201905161075055767-china-us-trade-war/

Both these articles give a very clear picture of what the drunken louts 'Team Trump' are up against in their so called trade war. Very much like a drunken spectator climbing into the ring thinking he can take on a professional boxer.

@ Peter AU 1 | May 17, 2019 4:33:54 PM | 1 5 Trump

Trump wants improved trade conditions for improved economic climate in the U.S. But there are others in the admin who want something else.

But still: "backup chips it has independently developed" That's a good one Mr Moon.

wagelaborer , May 17, 2019 5:05:18 PM | link

The US attack on China did not start with Trump. This is what Obama's military "Pivot to Asia" was about, as was the TPP, which explicitly was designed to develop an economic alliance that left China out. Capitalist trade wars are also not new, as are hot wars. They are part of capitalism.

"Intellectual property" is a laughable assertion, an audacious attempt by the US to corner all human advances and claim them as the property of US capitalists, to be only used for their profits. As if!

https://wagelaborer.blogspot.com/2019/01/intellectual-property-and-war-on-china.html

uncle tungsten , May 17, 2019 5:12:28 PM | link
What an appalling ruling elite in the USA. Blamers and punishers. Never take any responsibility for their murderous acts. Rise up people, these are dangerous, stupid leaders and elites.
dh-mtl , May 17, 2019 5:13:10 PM | link
B says: Whatever face is at the top is only representing the layers below.

Yes, this is the case when complex governmental systems are functioning properly. In this case power is distributed throughout the system, based on the role each individual within the system. People must have a collaborative culture for complex systems to function properly.

People of an authoritarian nature hate complex systems and distributed power, as such systems limit the freedom of action of the authoritarian leader. The corollary to this is that systems must be kept simple to accommodate authoritarian leaders. And simple systems are much less powerful and effective than complex systems.

My observation is that, in the U.S., authoritarianism is the dominant culture, as opposed to a collaborative culture of the Chinese that is implied by B's comment.

Indeed we see many signs in these negotiations that the U.S. is operating based on a culture of authoritarianism, whereas China is operating based on a culture of collaboration. Among the signs:

  1. The tendency that B. noted of Americans to assign all power to the leader. (This is not the first time, and in fact it is a common mistake of the U.S. and one of the reasons that their regime change efforts almost never achieve a result that is favorable for the U.S.)
  2. The U.S. talks about winning and losing. China talks equity.
  3. The U.S. talks about pressuring China until they give in. China talks about a solution that respects the dignity of each party.

The principle behind negotiations for people of a collaborative culture is 'Win-Win or No-Deal'. For Authoritarians, Win-Win is a compromise, and compromise is the equivalent of a loss. My conclusion is that there is only a very low probability that the U.S. and China will successfully negotiate a trade deal. The cultures of the authoritarian Americans and the collaborative Chinese are too divergent. China will only accept Win-Win and the U.S. cannot accept Win-Win.

Winston2 , May 17, 2019 5:18:30 PM | link
Classic US empire strategy. Build up a supplier and when they start to be serious a competitor take them down. Asian Tiger crisis,forcing occupied Japan into the Plaza Accord etc. They left it too long with China, way too long. China has not recycled its trade dollars surplus into USTs since 2014. No replacement suppliers like Vietnam or Indonesia etc will do either, no more vendor finance for the US.

It will have to live within its means, no wonder the neocohens are going insane. We are watching the death of the $ as GRC first hand.

uncle tungsten , May 17, 2019 5:19:11 PM | link
@jared | May 17, 2019 4:55:50 PM | 18

NO jared, Trump is in charge, fully responsible and yet totally irresponsible. He hires and fires, he barks the orders, Trump is not captive. You may desperately wish to believe that but NO, Trump wants it like this and NO dissent.

This is Henry Kissinger's plan implemented by Trump. A war criminal implementing a sociopath war criminal's plan. Trump is a killer and an oligarchs stooge and he like the rewards.

See the fabulous Aaron Mate discussion previously linked in the last thread.

james , May 17, 2019 5:32:57 PM | link
thanks b... ditto peter au recommendation @16 on the article from walrus on face..
Jen , May 17, 2019 5:47:54 PM | link
I'd be curious to know what other MoA barflies think of the US tendency to personalize other countries' governments and political systems and reduce them all to monarchies of one sort or another, and what this says about the American psychology generally. So much of the US slather and accusations against Russia and China and what those nations are supposedly doing look like psychological projection of the US' own sins and malevolent behaviour.

I was in hospital nearly 20 years ago for a major operation and some of my recuperation there was spent watching a few old "Star Trek: Next Generation" episodes. Watching those shows, I was struck by how much "power" the Star Trek captain Jean-Luc Picard appeared to wield. Every one of his subordinates deferred to his decisions and very few challenged him.

I know this is an old TV show with scripts that emphasise individual action over collective action and delineating a whole culture on board the Starship fleet (this is a long time before "Game of Thrones") but I had the sudden realisation that US politics is essentially monarchist in its nature, for all the complicated legal and constitutional structures that have been built around it over the past 240+ years. US politics and culture are fixated on one individual with extreme powers; the superhero obsession in Hollywood is one symptom of that.

In a way the US now resembles the Ottoman empire during that empire's Sultanate of Women period (late 1500s to mid-1700s) when sultans' power was dominated by their mothers, viziers and sometimes the janissaries who became a hereditary class during that period.

Don Bacon , May 17, 2019 5:55:00 PM | link
@ dh-mtl 21
You provided an excellent analysis of two very different kinds of people, westerners and Asians (Chinese). Americans who believe that Chinese are pretty much like them, and respond to people, to pressures and and to situations in the same way, are badly mistaken.

I would add another: Westerners want instant results and quick profits whereas Chinese take the long view. Heck, they've been around for five thousand years so why not.

Lochearn , May 17, 2019 5:56:05 PM | link
I'm glad you raise the issue of increased prices for US consumers, b. I have been looking in vain for a mention of this even in alternative media. Nobody appears to be talking about it.

If I can go off track for a moment the events surrounding Boeing are highly significant and a parallel to what is happening generally in the US. Here is a something I wrote for naked capitalism but did not send - Yves is too fierce and I don't trust her. A bit like a feminine Colonel what's his name Laing...

Because of the prestige of Boeing Wall Street left its dimantling until quite late - 1997. GE and Ford had already produced their versions of the 737 Max in the 1960s with the Corvair and the Pinto respectively as finance people started to take over the running of US companies. There is something very sad in watching a once magnificent company reduced by bankers to a shadow of its former self.

dh , May 17, 2019 5:59:06 PM | link
There has been a trade imbalance for quite a while but it didn't seem to matter much. The Chinese raised their standard of living, Americans got cheap stuff, surplus dollars went into treasuries to fund the deficit. It all worked pretty well until Trump and MAGA. Somehow he thinks he'll bring the jobs back but no Americans are going to make sneakers and circuit boards for $2 an hour.
Ian , May 17, 2019 6:21:30 PM | link
@Jen | May 17, 2019 5:47:54 PM | 25:

Idolatry is universal. People always gravitate towards Alpha personalities.

dh | May 17, 2019 5:59:06 PM | 28:

Trump knows those manufacturing jobs aren't coming back and automation is the future. He's just parroting what his base wants to hear for votes.

Peter AU 1 , May 17, 2019 6:23:01 PM | link
Jen 25

I have just replied to Karlof1 in I think the previous thread and I link into this. In looking into US culture and why it gives rise the type of leadership it has, I think it may be the belief in exceptionalism. Exceptionalism may also carry with it the belief that all other peoples want to be like them and all they (Americans) have to do is free those peoples from the nasty dictators ruling over them.

Patrick Armstrong in one of his articles has said that in his dealings with US officials as Canadian ambassador or diplomat, is that American officials genuinely believed that all they had to do was overthrow the evil dictator and the people would welcome Americans or willingly join the US system.

OutOfThinAir , May 17, 2019 6:29:02 PM | link
All the economic momentum is in Eurasia, centering on China, India, and Russia. China is spearheading this drive and re-assuming its historical status as the richest land in the world. Instead of resisting, Washington should be working with projects like the BRI that help enrich everyone. (Indeed, why doesn't Washington announce a BRI for North/South America, perhaps a Yellow Brick Road? But that's an aside...)

And concerns about Chinese spying through their companies should be equaled with internal reflection about the practice in the United States. Perhaps it would be wise for both countries to develop and practice international standards that respect human rights in an Everything's Connected world.

Given how the US and China frequently treat "different" people with disdain, that's a lot to ask. But no country or people is spotless regarding abusing human rights and some wisdom with power would be welcome from both governments.

wagelaborer , May 17, 2019 6:33:45 PM | link
Jen @25. Americans are good at Doublethink.

You point out that our entertainment industry focuses its plots on strong leaders, and Good Guys vs Bad Guys, and we definitely internalize that, especially when our overlords want to demonize another country, and use our entertainment-induced perspective as a shortcut.

They tell us that the leader of the targeted country is a Bad Guy and we must kill the people in order to save them. And Americans nod and comply. Except for the 5% that prefers peace, and they argue that the leader is not a Bad Guy, so we shouldn't kill the people to save them.
No American ever thinks to argue international law or basic morality, we just argue about the plot lines.

But, at the same time, on another level, Americans understand that the president is a puppet and must obey orders, or have his brains blown out in bright daylight, in the town square.

We hold both these views simultaneously, hence, as Orwell called it, Doublethink.

snake , May 17, 2019 6:37:51 PM | link
China has succeeded because it does not honor copyright and patent monopolies. Western civilization is failing because it imposes the feudal monopoly by rule of law system.. The state will make sure a few fat cats are lords and the masses are their slaves.
---

The investment and salary classes have been screwing me since I was born. Now its time for all of us to feel the pain. And create a world that can benefit all of us. https://dedona.wordpress.com/2016/11/10/donald-trump-and-the-politics-of-resentment-john-michael-greer/ so @ 8 <== I agree..

---

It is almost asking the change of China's political system." <= no its not, the struggle today is freedom, human rights and the right to self determination not socialism vs capitalism.. it the struggle today is capitalism vs monopolism.. because monopolism aims to make every single human being alive its slave to a very few monopoly powered corporate giants.. China is a clear example of what can be if the masses are allowed to compete without the shackles of copyrights, patents and other thin air monopolies.

Some aspects of China's trade behavior can and should be criticized.

Why? Because of that "intellectual property" stuff? Japan basically built itself from the ground up in the post-war through allowed and unallowed intellectual property theft. Canon and Nikon, for example, essentially fac-similed Leica during that period; after the transition to digital, they erased their theft past, but it doesn't change the objective truth both wouldn't exist without stealing technology from a defeated country (Germany). It did the same with missile reentrance technology it stole from the USSR after the Cold War.

< Technology is a product of the human mind.. copyright and patents are thefts of the products of the human mind.. and human mind assets do not belong to anyone, to any country.. Instead, copyright and patents (intellectual property) are and should be in the public domain (but the scum that write the laws have created from thin air; rights which do not exist, and given the rights they fabricated to their feudal lords and the corporations owned by such lords. So the lawmaking scum have made it possible for a few (feudal lords) to establish and maintain a monopoly in the good life, over the masses in the world. .. Just as in the in England, France and Switzerland, where only the rich, corrupt politicians, and criminal few hung out and traded copyright and patent monopolies in the coffee houses, (much like stocks and bonds are traded today, monopoly trading was a game between fat cats (today's the fat cats are wall street barons), ..monopolies allow rich and wealth to support their royal life styles at the price of enslaving the masses to poverty. Luckily a court in England, threaten by an angry crowd of the masses, denied the wealthy their perpetual lifetime patents and copyright demands, no longer could the fat cats squeeze ownership of an intellectual creation from its creator, convert it to intangible property, and use the intellectual property to monopolize the world.

The British court said, no patent, no copyright and no monopoly can last longer than 7 years. that was 1787-89, and it explains the for a short time clause in the USA constitution.

frances , May 17, 2019 6:42:04 PM | link
I don't think the US sees the world's nations as commanded by their senior politician. Far from it, but to keep the US public locked in a child's mentality, the govt and its MSM present every political event/action/reaction as between personalities. Can't have reason and logic breaking out among the minions can we?

As for Trump being in charge, I rather doubt it, no US president has been "in charge" of any thing except possibly what is for lunch since Washington. Too many policies Trump began, such as negotiations with NK, have been trashed by his "teams" who I believe are actually his minders put in place by the Deep State.

Is Trump a great guy? A NY developer by their very nature is not a great guy. But I do think he wants to be seen as a great president. To do that he has to pull off some deals that will be remembered which is why he wanted the deal with NK, that Pompeo blew up.

I also think that the govt is preparing for the time when the dollar is no longer the reserve currency. And to do that you need to pull manufacturing back from abroad (from China), seize critical assets (from Venezuela),break any and all treaties that require you to spend money you won't have (making NATO (pay as you go).

All things the govt is doing, admittedly with the most horrific management team since Taft's. But they are moving on all fronts to circle the wagons of US commerce.

They know what is coming, some of them may see war as the way to bilk a few more trillions out of the treasury, but I don't think the military will let them. For they know that if they go up against a nation that Russia and China support and botch it, that R&C will go for the throat and that, more so than the currency crash would be the end of the US.

These moves we see are very serious because the end game is for the continued existence (or death)of the US. And many of these tactical moves are very high risk because they hasten the end of the dollar. I give the dollar five years more, tops. Then it will be just one in a basket of currencies until the yuan makes its way to the top.

And where that strange UN Agenda 21 fits in this I don't know, its plan for the US is for drastically reduced population (70% loss, from what?)the remaining population in mega cities and truly vast areas of no go set aside for the "environment." It reads like a National Parks program on crack with a side of Hunger Games.

The next five years are going to be really critical and I personally think the US will only make it by the skin of its teeth.

Peter AU 1 , May 17, 2019 6:54:13 PM | link
@ Jen. Another thought. The era in which the current state of America was conceived. British colonies in a war of separation or independence against the British. Europe and Britain at that time mostly ruled by hereditary monarchs nobles and lords ect.

Americans which I take it at that time would have been mostly British ancestry had done away with hereditary monarchs and so forth. It would have been somewhat exceptional at the time. In the targeting of the leader of a nation as the source of all evil, I wonder if that relates back to doing away with hereditary leadership especially monarch.

the grand chessboard. checkmate the king.

Don Bacon , May 17, 2019 6:55:25 PM | link
President Trump has declared a national emergency due a threat to the US from "the ability of foreign adversaries to create and exploit vulnerabilities in information and communications technology or services, with potentially catastrophic effects, and thereby constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States," so various actions and prohibitions have been stipulated here .
Lord H , May 17, 2019 7:07:00 PM | link
I particularly like this line: "where the propaganda weakens and journalism sneaks in"
jared , May 17, 2019 7:37:06 PM | link
UncleT

I dont mean to make excuses for Trump.
It all happens on his watch.

We will have other/better option soon - hopefully not too late.

Michael Droy , May 17, 2019 8:09:49 PM | link
I think war reporting rules are in place with China, and Trade war has started. Every month that passes without a crisis is a success for China right now as it over takes US in GDP, tech, and trade links.

Key issues are bringing Europe in - the Huawei ban extended to Europe is battlefield #1, Northstream (gas link to Russia) is #2.

First get Europe on board, the US can up things a lot further. If Trump gets this right, he can delay outright defeat by China under well beyond his 8 years are up. (Bush or Obama early on could have won, or could have found a peaceful solution).

lysias , May 17, 2019 8:15:14 PM | link
A president doesn't have to obey the orders of the powers that be just because they threaten to kill him otherwise. A brave president would defy them to do their worst. If they went ahead and killed him, he would still have accomplished something important. By exposing the nature of the system, he would have robbed it of its legitimacy and brought a revolution much closer.
Jackrabbit , May 17, 2019 8:32:10 PM | link
You've all been trained very well to ignore the class warfare. China's "peaceful rise" was convenient when it enriched the Western elite.

But when China makes a play for equal footing, the must be smacked down. In each case (rise, smack-down) ordinary people (like yourselves) get f*cked. Kissinger's NWO? It's for the children.... No, not YOUR children. Welcome to the rabbithole.

bevin , May 17, 2019 8:32:54 PM | link
vk@13

Best example of a country stealing foreign inventions and protecting its 'uneconomical' industries with tariffs is the USA. It was notorious that in the C19th American publishers pirated authors and musicians from Europe, particularly of course from Britain where the intellectual properties of Dickens and his contemporaries laid the basis for many an American publishing fortune.

Among the primary victims were American authors who couldn't compete against stolen imports.

dltravers , May 17, 2019 8:55:12 PM | link
I am not so sure the conclusions of the article are correct. Tariffs on Chinese factories will force production to other countries in the area like Vietnam where costs are not going to be much higher than China.

Granted, the US may be pissed off that Huawei is placing back doors in their systems but I suspect that they are only copying what the US has done for years with US companies like Microsoft.

My daughter managed 5 factories located in China of a clothing manufacture based in the US some years ago. She said there was constant chaos as the workers were continually on strike. Bad air, dangerous machines, poor wages. few bathrooms, bad water, childcare is chaining you child to a fence for the day, and the like. Her boss flew to China and asked for the cheapest costs possible. They showed him a factory full of little children cranking out production. He left crying his eyes out. He was a cold hearted bastard but even that was too much for him to see.

I viewed first hand the destruction trade agreements like NAFTA caused to good union wages and benefits in the US. Hell, that is what got Trump elected. It is tough to watch your children go into the same profession and make 50% less in wages and fringes 30 years later.

Intellectual property and patents? No so sure about that, the views here are new to me. I always supported them but I guess I need to dig deeper on that one.

In the net I think China is the loser, fewer jobs, higher food costs, their markets are down 30%, ours are peaking and are seen as a safe haven for money. Export numbers for China are dropping as is the trade balance.

At this point it is not a trade war but a re balancing of markets IMHO. If it was a real trade war things would be far worse. Middle supplier countries will be hurt, US farmers, some markets win some lose. If it was business as usual then it would be business as usual. Trump is stirring the pot and what the endgame is is anyone's guess. Did anyone really believe China would just bend over and accept any demands from the US?

All that being said China can easily wait it out and hope Trump loses and the policy is reversed which I am sure his policies will be reversed if anyone else gets elected.

Zachary Smith , May 17, 2019 9:19:41 PM | link
@ jared 4:47:32 PM #17

Your link about Boeing is a good one. Today at Naked Capitalism was a story about a possible 'payback' link between Huawei and Boeing. China has the option of causing a great deal of pain to both the US and Boeing in retaliation.

They could declare the recertified 737-MAX to be unsafe, so much so they're cancelling all orders and forbidding any landings in or overflights of China. If Canada hadn't screwed up so badly, the local Bombardier airplane might have been substituted for the 737. But Canada did goof in a major way.

Cyril , May 17, 2019 9:24:52 PM | link
@ponderer | May 17, 2019 4:27:02 PM | 15

There is no way that the US could subsidize the growth of a larger population base forever.

China sends vast amounts of manufactured goods to the United States; the US pays for all this with dollars it can effortlessly print. So who is subsidizing whom?

Cyril , May 17, 2019 9:26:38 PM | link
A minor thing compared to the trade war, but possibly of interest to sports fans.

The National Basketball Association (NBA) has been very popular in China, but its profitable Chinese operations may become a casualty of the trade war. Presumably it fears this: the NBA is looking to hire someone who can talk to the Chinese government :

The National Basketball Association Inc. is hiring its first head of government and public affairs in China as it seeks to protect its most important international market at a time of high tension in the U.S.-China relationship.
Jackrabbit , May 17, 2019 9:35:47 PM | link
What I don't like about Chas Freeman's article is his tone-deafness. He has been around government enough to know better. Smacking down China is a strategic priority for the Deep State. But Chas says:
There is no longer an orderly policy process in Washington to coordinate, moderate, or control policy formulation or implementation. Instead, a populist president has effectively declared open season on China.
It's a bit disturbing to see people here read Kissinger's 2014 Op-Ed (finally) but say nothing about Chas Freeman's assertion that it's all made up by a "populist" President.

<> <> <> <> <> <> <>

If the above hurt your feeling please feel free to retreat to your happy place. We'd all be better off.

Don Bacon , May 17, 2019 11:06:15 PM | link
Many trade war articles here
dltravers , May 17, 2019 11:13:06 PM | link
Jackrabbit at @ 58

Not happy, just learned to live with it. I think I get your point. The policy really means little, the underlying issues will never change.
Been in the rabbit hole for a really long time. If more people jump in maybe things will really start to change.

vk , May 18, 2019 12:01:02 AM | link
@ Posted by: dltravers | May 17, 2019 8:55:12 PM | 53
I am not so sure the conclusions of the article are correct. Tariffs on Chinese factories will force production to other countries in the area like Vietnam where costs are not going to be much higher than China.

First of all, this is not a new phenomenon: low wages, low technology industries are already being transferred to India and SE-Asia. The Chinese know this and there are innumerous articles on the internet you can find about it.

But even if this process accelerates, that won't solve the manufacturing problem of the USA: it will continue to be abroad. Besides, China's "competitive advantages" are too big for a confederation of micro-countries in the Pacific to overcome. It has a socialist economy (centrally planified economy, under the hegemony of the working class); it has 1.5 billion people that will only peak in 2030; it is decades ahead in built infrastructure; it has a huge scale economy advantage (e.g. infrastructure projects that are required to reach a certain desired productive level, which are profitable in China, may not be profitable in e.g. Malaysia simply because it is too small); its financial sector is not dominant over production. But then, I repeat: even if the USA nukes China, manufacturing still won't go back to American soil.

America's problem is a secular fall of its profit rates, not manufacturing capacity: it can import whatever and how much products it needs simply because it can print world money (Dollar system).

ben , May 18, 2019 12:18:53 AM | link
b said;" the U.S. economic system is based on greed and not on the welfare of its citizens." Bingo! Jrabbit @ 52 said;"US foreign policy has been remarkably consistent for over 20 years." Maybe the last 100 yrs.? Demonize countries people and rulers, and take their stuff, but why not? We are, don't ya' know, the exceptional nation, doing gods work. Manifest Destiny, isn't it great?
Zachary Smith , May 18, 2019 1:31:30 AM | link
I know next to nothing about the "Huawei" business, so a new article about it is something to grab at. Pretty cut and dried, huh? Hauwei is pure evil, and no 'ifs' or 'buts' about it.

But who is this guy. A couple of quick searches turned up some more of his output.

'It's now or never': The untold story of the dramatic, Canadian-led rescue of Syria's White Helmets

How Israel became a defender of the Syrian people

Just another neocon hack peddling BS, so I'm back to square one.

Ian , May 18, 2019 4:30:33 AM | link
dltravers | May 17, 2019 8:55:12 PM | 54:

China will wait it out until Trump is out of office. The Chinese leadership is pretty smart and had at least three years to prepare for the worst case scenario. Once Chinese industries as a whole follow Huawei's footsteps (i.e. Plan B), there will be no turning back. They'll set off Plan B once they see Trump winning 2020.

dh | May 18, 2019 12:06:33 AM | 67:

Ugh...I almost leap for joy until I read the URL.

padre , May 18, 2019 5:06:23 AM | link
Are we to asume from "Some aspects of China's trade behavior can and should be criticized" that the United States are shining example of trade (and all other) policies,all others to follow?
S , May 18, 2019 6:02:26 AM | link
@Indrid Cold #46:
For government and other high security uses China has options like the mips based Loongson but that wouldn't work in the commercial environment so hopelessly devoted to x86 and windows. Probably the best solution would be to make an x86 analog like amd markets, and it wouldn't take that long to do.

Chinese-Taiwanese joint venture Zhaoxin has been making x86 processors since 2013, based on VIA Technologies' x86 license. These processors are manufactured by Taiwanese TSMC, but may switch to Chinese SMIC once it launches its 14nm process later this year.

William Gruff , May 18, 2019 7:43:24 AM | link
"Whatever face is at the top is only representing the layers below." --b

The truth of this is also why so many in America hate Trump so much. He is too perfect a reflection of what America truly stands for. Trump accurately represents America, from America's bloated, over-inflated sense of self-importance and worth to America's pussy-grabbing foreign policy. Trump-hate is really self-hate.

Delusional American Russiagater Trump Derangement Syndrome victims will protest, but such people are incapable of taking a good hard look at themselves.

Hmm... "delusional" and "American" are redundant adjectives here. I should be more careful with my writing style.

snake , May 18, 2019 7:55:24 AM | link
Mr. Gruff you have it almost correct, Americans and the USA are not one in the same and they never have been.
I still don't think you guys get it.. The 7 article constitution of the USA apportions the power to rule between two branches and separates the masses from their personal political powers and their human rights. Its result is not a democracy, but a few people rule republic. 100% of the authority to rule (operate and make decisions) is vested in one person (Art. II, rule and decide: President w/VP backup), subject only to the powers distributed to the two bodied legislative structure ( Art. I, pass law and raise money: 450 house+100 senate persons). Critical to understand => one person makes all decisions, and directs the day to day government. Article III thru VII defines the judiciary and clarifies various situations. (525 popularly elected + 2 electoral college appointed <=paid governors) vs. 350,000,000 powerless governed persons entitled only to 3 votes/voter [Senator(1), House members(2)] and allowed one vote/voter for each President(1) and VP(1) <=but both Art. II persons are appointed by the electoral college).

The USA is about delivering to the ownership of a very few, all of the assets, all of the power, and all of the services once possessed by the many. The demand for all of the possessions of the many, to be delivered to the few, has expanded over time from 13 colony America to earth and now space. No one but the few are entitled to anything and the USA and other governments are there to be sure of it. But how is 'total possession vested in the few' to be maintained? By rule of law!

But what law would transfer everyone's possessions into the ownership of a few? Ah, the laws of monopoly.. so rule of law, from thin air , generates=> monopoly powers and rights of ownership.. Examples of laws that bear monopoly powers and that transfer ownership rights are copyright laws, patent laws, as they convert monopoly powers that once the many shared (via governments) now belong to the few. The transfer is called privatization. Oil is controlled for the benefit of the private few by ownership laws and right to produce contracts. All in all the function of t he USA has been to make a few very wealthy at the expense of the many.

The trade issues, sanctions, wars, tariffs, race wars, oil wars, religious wars etc. are about which people are going to be the few. Until the form and function of governments are determined by the masses from the bottom, instead of by the few from the top, nothing will ever change. The masses will suffer or prosper according to which government is the winner.

therevolutionwas , May 18, 2019 8:08:39 AM | link
US factories moved to China because the US economy is based on greed?!! US government greed for the company's money maybe. US factories moved to China because it was cheaper to produce products there and then pay the expense to ship them all the way back. The US has one of the highest federal tax rates on earth, and add in high state taxes for an unacceptable situation. US fiat paper money is the base problem.
Mark2 , May 18, 2019 8:24:01 AM | link
William Gruff @ 72 & snake 71
I was just about to say the very same thing ! Delusions of grandeur ! And now major self-harm systems ! But are these degenerates above the law ? They are after all genocidal mass murder's! String um up I say or shall we fry um ?
Right now the brain dead American public are like something out of -- - - 'The invasion of the body snatchers ' film
Joanna , May 18, 2019 9:30:24 AM | link
@58, JackRabitt, Smacking down China is a strategic priority for the Deep State.

the first time I got some type of glimpse of the average American Mind on China, as it filtered down from "the deep state" to the more fearfully ill-informed quarters of society no doubt, was in the post 9/11 universe. The person or persons pushing the meme, may have been a bit confused by all the conspiracy theories about 9/11 unfolding at the time.

Anyway, Chinese troops he/she/they asserted readers were close to the Mexican border approaching, advancing swiftly.

In hindsight, maybe accidentally, although I doubt, Trump combines the elements of that narrative perfectly. And it is not my intention to argue right or wrong here. But apparently down at the border there is this "invasion" on the other hand there's also the Yellow Peril.

DontBelieveEitherPropaganda , May 18, 2019 9:58:41 AM | link
Well, the chinese system of power has always been the thoughest to understand for any outsider. It has been this way, but in the last years it seems the so called age of information has lead to erode the curtains of this complex mechanism. At least for those who want to look behind those curtains, and not use them to project their propaganda.. ;)

And it is a good sign that while Xi tired to establish himself in such a unique position of power like Mao, and openly tried to put himself into the historic succession of the old emperors (like Mao did too), that the will of the people and party still tips the scale of power. It means the chinese confucian tradition and its consequences for a ruler even today still matter. Even though they are anyway lost on someone who is not of Asian origin.

What to westerners look like a dictator, is of a different nature as one can even imagine with western eyes. Every ruler has to strive for balance, for harmony, which in turns makes hearing of the peoples popular will be a necessity.

Even though many Chinese say, they like any other people only strive for what they need most ;) (like harmony and compromise). Though many also say, that the chinese will always choose stability and security over freedom. And i guess that is what many from the western world dont get about China, and also about the Putinists. I say let them and every one else have their choice. Just like i say let the US do theirs, and reap what they seeded.

For those able to read German check out the Books of Peter Scholl-Latour on China. The most telling and authorative books from a journalist who has reported first had for over 60 years, and has always defended and honored his own perspective; While the western so called reporters were trapt in their professional delusion of pro-NATO propaganda, and while the SDS praised the culture revolution as a democratic means, when whole china was terrorized and millions slaugtherd.

Hard to walk that middle ground, while being attacked from ideological drones from both sides i guess..

Anyway, the neocons in the US believes it is now or never to defend the USA unique position as world power. They believe, that if they don't fight now, they will have lost. I say, they already have.

Short of pulling a Hitler on China, meaning a total annihilation of the Chinese people, there is nothing they can do. And even Bolton will have a hard time trying to push through a clear cut genocide ;)

We will see China rise. Those who feared of this will see that china will not be half as bad as thought, and those who gloirfy china and put them into a good (vs bad US) black-wide scheme will learn of the faults of the Chinese power and its projection (Like its own believe of supremacy, of racism (a reason why china in the cold war was pretty unsuccessful in Africa, where most knew who deeply racist Chinese treated their fellows as workers, guest students,..).

All in all, what we need is a true and functional global community of nations and people, where goverments truely work together to balance out the stronger world powers. And with the pressure of Chinas rise and its strugle with the US, we may finally have a better chance for this to at least partially succed. I hope.. ;) Or of course it nuclear winter time. We will see.

daffyDuct , May 18, 2019 10:30:54 AM | link
vk @ 13

China now, Japan in the 1980s - it's "deja vu all over again!"

"AFTER ITS DEFEAT in World War II, Japan was content to take foreign inventions -- the transistor, the laser, the videotape player -- and convert them into products that it could market around the world. Japan acquired much of its base of Western technology, most of it American, perfectly legally through licensing, careful study of scientific papers and patents, and imitation. But when the U.S. wasn't willing to share, some Japanese companies simply copied with little regard for patents and other intellectual property rights that the courts have only recently begun to define in many areas of high technology.

The U.S., confident of its technical superiority, ''sold out to the Japanese,'' says G. Steven Burrill, head of the high-technology consulting group at Arthur Young, a Big Eight accounting firm. ''We let them share our brain.''

Now, belatedly awake to the recognition that Japan has been eating their breakfast, lunch, dinner, and bedtime snack, American companies are stirring. IBM vs. Fujitsu over computer software, Honeywell vs. Minolta over automatic focusing, Corning Glass vs. Sumitomo Electric over fiber optics -- these are only the latest, best-publicized complaints that Japan has stolen American technology.

Even as those legal battles are fought out, the copycat cliche is becoming obsolete. A series of studies financed by the U.S. government since 1984 warn that Japan has caught up with the U.S. or passed it in the development of integrated circuits, fiber optics, computer hardware engineering, and advanced materials like polymers. It is pressing hard in some areas of biotechnology, and lags primarily in computer software.

Already there are signs that the Japanese, buoyed by their new prowess, have assumed the arrogance of the U.S. along with its technology."

"A MEASURE of Japan's progress can be found in the number of patent filings in the U.S., Japan's most important export market. ..."

"THE FACT that Americans now worry about their access to Japanese technology is an acknowledgment of Japan's new scientific competence. When the Japanese were known primarily as copycats, the flow of technology was essentially in one direction. It was also cheap. Aaron Gellman, president of a consulting firm, says that for years U.S. firms licensed technology to the Japanese without asking for a grant-back, the right to use any improvements they made. Says Gellman: ''This was very arrogant and implied that no one could improve on our technology.''"

"U.S. scientists and companies have failed to take advantage of opportunities to tap Japanese academic research. ''What's wrong here is pure laziness,'' says Martin Anderson, an analyst with the MAC Group, a consulting firm in Cambridge, Massachusetts."

http://archive.fortune.com/magazines/fortune/fortune_archive/1987/12/21/69996/index.htm

denk , May 18, 2019 10:39:59 AM | link
Trust the UnitedSnake to blame the Chinese for reneging on an agreement ! Fact is, Trump's team Add in last minute conditions that are totally unacceptable to China. Chinese commentators are fuming at the audacity of the demands. 'WTF, Do they think we'r their gawd damned 51st state ?'

Typical UnitedSnake's 'negotiation' tactics, designed to fail ! Thats how Clinton justity his bombing of ex Yugo, by blaming Belgrade for the breakdown of negotiation ,to justify its 78 days of aerial arsons against Yugo.

denk , May 18, 2019 10:49:38 AM | link
How the UnitedSnake destroyed Toshiba and took over its crown jewel chip tech,... Toshiba was severely punished for breaking fukus sanction on USSR, by selling state of art milling machine to the Soviets. the unitedsnake slapped a heavy fine, demanded the resignation of Toshiba CEO, imposed a ten years ban on Toshiba products, FORCED the Japs to share their latest chip tech with Merikkans. Toshiba never recovered from that disaster.
vk , May 18, 2019 10:52:22 AM | link
Time to discard any illusions about the US ,source: Global Times Published: 2019/5/17 22:49:35
JOHN CHUCKMAN , May 18, 2019 10:59:52 AM | link
An excellent summary of many aspects of a serious and deteriorating situation. In the end, China has a lot of brainpower to apply to situations like this.They are used to speaking and writing one of the world's most difficult languages. They are used to playing Go, one of the world's most difficult board games. And their national endowment of analytical skills immensely surpasses that of the United States.

They are said to have eight times as many students in math and science and engineering in their universities. Xi himself is very bright, having earned degrees in difficult subjects at demanding universities, and he is calm and very forward-thinking. Just consider that magnificent long-term Silk Road Project. When I think of Trump with his constant mock-heroic poses and foot-high signatures on every silly memo and his gang of noisy, pompous thugs in top appointments, I can't help thinking I know how this will turn out in the end.

vk , May 18, 2019 11:11:09 AM | link
China's yuan slide risks trolling Trump It's good to remember that would not be the first time. After the first round of tariffs, China devalued the Renminbi and it basically wiped out the tariffs . In fact, it didn't even need to devalue that much: 1 Renminbi is now US$ 0.14 -- just a little over the Government max upwards band of 1:7.
denk , May 18, 2019 11:24:04 AM | link
In 2013, the CEO of French hi tech co Alstom was arrested by FBI, while changing flight at New York. His 'crime', breaking MERIKKAN anti corruption
law by bribing govn officials in INDONESIA ! Such is the LONG arm of merikkan extra territorial jurisdiction, rings a bell ... Ms meng ?

Just like Toshiba, the French paid a very heavy price. The CEO went to jail, Allstom, the crown jewel of French industry, was FORCED to sell off its core business to its main rival, GE. !

What did Ian Fleming's fundamental law of probability says.... ONCE IS HAPPENSTENCE, TWIC IS COINCIDENCE...

Noirette , May 18, 2019 11:39:25 AM | link
US MegaCos. outsourced and 'globalised' with the blessing, nay encouragement! of the Pol. Class. Cheaper labor and lax environmental rules, in comparison with 'home' (US, W countries, etc.) is a mantra. That is of course good enough, and one can track, say, sh*t-clothes factories transiting from Bangladesh, to China, to Malaysia, to Mexico, etc.

Other motives, the first is lack of responsibility and involvement which allows domineering and rapacious behavior. Foreign co. implant can just leave, relocate, if whatever. A random /racist term/ exploited worker in the 3rd world is not voting in US elections.

Deadly industrial pollution is outsourced, and energy use etc. at home while not curtailed or significantly diminished is not as high as one might see under condition of the industries returning home - a sort of 'greener' environment can be touted.

The PTB simply cannot grasp why some US citizens, who live high on the hog, house, 2 cars, 3 kids, endless dirt cheap consumer goods, etc. produced by 'slaves' abroad, complain. If the 'stuff' was produced at home, it would cost much more, the pay would be going to 'low-level' US labor -- in a more closed economic circuit there would be more 'equality' as things stand today in the US - *not* claiming it's a general rule.

Trump had some confused? thoughts about turning the present situation around, and relocating industrial - some extractive - manufacturing - jobs back home, say 1960s, with decent pay, to ppl who would then vote for him.

The stumbling block is that profits to shareholders, oligarchs, chief CEO's, asset trippers, usurers, Mafia types, Banks and other Fin, and Politicians who in the US are highly paid lackeys, etc. is set to diminish, as 'the pie' can no longer be grown much to accomodate all these grifters. Due to energy constraints, disruption of climate change, etc.

denk , May 18, 2019 11:56:20 AM | link
Brit and Dutch spooks now concur with Trump the charlatan's claim of Huawei security risk ! Trust the Brits to doublecross the Chinese, after they've been given the huawei source codes to examine and declared it free of bugs. As for the Dutch , they seems to be the goto guys these days, whenever the 5liars need some loyal poodles to corroborate their B.S., cue the M17 'investigation'.

hehehehe

[May 17, 2019] It s the clearest sign yet that the basic assumptions of globalization are collapsing

This is a good overview of Huawai crisis, but the reason for it is deeper. Huaway is just a skirmish in a much larger war for the supremacy in the neoliberal world. At the same time this is a crisis of neoliberlism as social system. Much like the crisis of Bolshevism.
After 2008 the neoliberal elite lost legitimacy. Nasty jokes about Trump and Obama are just a tip of the iceberg, they just show the level of distrust. In a way they are like anecdotes about Brezhnev during "Stagnation" ("Zastoy" in Russian ) period. Simplifying, Trump is some variation on the theme of of Gorbachov. and a counterrevolution against Trump was similar to the counterrevolution against Gorbachov ("putsch" with the main difference that putsch was instigated by Gorbachov himself and he lost power as the result). While most probably the dirt will be swiped under the carpet, some minor figures might go to jail in the USA as the result as this was clearly attempt of the palace coup by intelligence agencies with the support of Obama administration and Clinton wing of republican partty.
The level of lies in MSM and level of lies of politicians on the Capital Hill is a clear sign that the social crisis is reached the state "when the elite can't govern as usual, and prols can't live usual". People working in Wall-mart essentially live in a third world country.
The most telling sign that this stage has come is that the neoliberal elite no longer is able to tell the truth to the population. Russiagate was partially an attempt to cement the cracks in neoliberal facade (loss of the legitimacy of neoliberal elite) by redirecting the anger of population to the external enemy. In this sense neoliberal elite badly long for a war, which would solve their problems, but in the modern world this is too dangerous move. But new local wars (Iran, Venezuela ) are still a possibility, especially because Israel fifth column ( Adelson, Hassid mafia -- Kushner and Co, etc) partially controls Trump and were able to secure the appointments of Bolton and Pompeo.
BTW attitude to Jews here turned to be much worse (especially in NYC, there are a lot of Hassidic sects). Jews also are very convenient scapegoats and always were.
The Trump attempt to bully China is based on the understanding that China is a neoliberal state too and as such it should fold in the name of neoliberal globalization, as the USA is the dominant neoliberal power -- kind like the USSR was for Bolshevism. It is funny that China defection to neoliberalism doomed Bolshevism :-)
As neoliberalism is a flavor of Trotskyism (Trotskyism for the rich :-) it can't be decoupled from the neoliberal globalization ("Financial oligarchy of all countries unite") like Trotskyism can't be decoupled for the idea of the World revolution. If you decouple those two you will get Stalinism.
The question now is about the control of globalization. Where is the center? In the USA or in China (China is pushing its own version via Belt and Road Initiative -- a China-centered trading network)
As for China-USA trade war timing is everything. If it is too late the USA will come out of it with bloody nose with the continuation of the Great Recession in the cards. The root case was only patched, but never fixed -- secular stagnation continued past 2010: concentration of wealth at the top undermine consumption of the middle class (lower class does not matter much) and external expansion is limited as there will be no the second USSR collapse and no new markets. As Marxist taught us -- all imperialistic wars are the wars for the redistribution of the markets. I think this might be the case now. .
If timing for Trump attack is right, China will be crushed and pushed into economic depression.
I am incompetent in this area but it looks to me that Trump in his usually bulling style overdid it putting too much pressure, and as a result China revolted. Neither China not the USA understand the full consequences of this move, but that does not matter. Chinese reaction suggests that "the Rubicon was crossed" and the real trade war is in th cards. May be some compromise reached, but if the neoliberal world is stilt into two camps: USA-dominated and China-dominated (much weaker, but Russia and possibly India, Pakistan and Iran probably will gravitate to it). Replaying the Cold War on a new level and with much weaker cards in the USA hands.
Looks like Trump recently understood that he committed a blunder and is trying to back off, but that might be too little too late.
Notable quotes:
"... It's the clearest sign yet that the basic assumptions of globalization are collapsing. ..."
"... the story of the use of SWIFT against Iran, and increasingly it's the story of fights over tech/networks ..."
May 17, 2019 | threadreaderapp.com

1. A thread on why Trump decision to put Huawei on the entity list is a very big deal indeed, as @Dimi and others are arguing. ft.com/content/c8d6ca . This is a far bigger step than just excluding Huawei from the US market.

2. It requires any US company that wants to supply Huawei to first ask the US government for permission. This has obvious implications for Google's Android operating system, Qualcomm chips and a myriad of other suppliers

3. Dennis Wilder says that this is the "beginning of decoupling" in the telecommunications sector. It's the clearest sign yet that the basic assumptions of globalization are collapsing. As @ANewman_forward and I argue, interdependence is being weaponized Weaponized Interdependence - International Security final pre-edits.pdf Dropbox is a free service that lets you bring your photos, docs, and videos anywhere and share them easily. Never email yourself a file again! https://www.dropbox.com/s/27mnqcxrxwapkit/%20Weaponized%20Interdependence%20-%20International%20Security%20final%20pre-edits.pdf?dl=0 dropbox.com/s/27mnqcxrxwap

4. The globalization of the 1990s massively transformed the world economy. National economic systems that had previously been separate from each other became densely interpenetrated, and deeply dependent on financial, informational and trade networks that spanned borders.

5. These networks are structurally embedded. Supply chains have been globalized, in the pursuit of economic efficiencies. It's hard to imagine how the world economy could work without them. But the pursuit of efficiency created strategic vulnerabilities.

6. Some networks had hub structures meaning that states that could control the hub could control the network. Others relied on crucial components that were single sourced or sourced within an individual country.

7. The last decade has seen states move increasingly to exploit these vulnerabilities against others or to shore their own vulnerabilities up against outside attackers. That's the story of the use of SWIFT against Iran, and increasingly it's the story of fights over tech/networks

8. A world of networks built around the pursuit of economic efficiencies is becoming a world where these networks are being exploited (or at risk of being exploited) for strategic advantage. America's Misuse of Its Financial Infrastructure Delirium tilted over into imperial folly, as high officials began to think that they could use America's economic power to re-order the world better to their liking. https://nationalinterest.org/feature/america%E2%80%99s-misuse-its-financial-infrastructure-52707 nationalinterest.org/feature/americ

9. The Huawei move displays both US fears about vulnerabilities, and US efforts to exploit them. The US is worried that 5G networks could compromise US communications to surveillance.

10. US is not only moving to push Huawei out of existing markets - but to damage Huawei's core business by potentially preventing it from using core US components (such as Qualcomm chips or Android OS (it remains to be seen exactly which technologies will be listed). Chinese hawks are talking about retaliating through e.g. blocking sales of rare earths again.

11. This will also reinforce Chinese efforts to build "autonomous and controllable" technology and supply chains outside US control to decrease their vulnerability to future attack.

12. The old model of globalization is in serious trouble. The networks that tie the world economy together are being exploited for strategic gain. The US move is both a response to fears about its own vulnerabilities, and an effort to exploit China's vulnerabilities in return.

13. The result will likely be escalation - but we don't know for sure. We still don't have anything that approaches a strategic analysis of this new field of politics and how it works. Historical experience provides no good recent analogies.

14. During the Cold War, the US dominated parts of the global economy and Comecon were largely disconnected, with the exception of raw commodities such as grain. Now, the economies of US, Europe, China and Russia are deeply intertwined.

15. If you want to be pessimistic, you can resort to scorpions-in-bottles analogies. If you want to be optimistic, you can point to continued shared interests that states have in avoiding major economic disruptions. The willingness of the US to push this so far and so hard

16. suggests the skeptics may find their fears justified - but we'll be finding out. Interesting times for international political economy scholars, if frightening times for the international political economy. Finis.

[May 17, 2019] China Can t Boycott U.S. Movies and Travel by Adam Minter

Why not? Hollywood those days mostly produced utter junk. It's an easy and lucrative move
Notable quotes:
"... The most obvious is the simple fact that the U.S. is much less dependent on its services exports to China than South Korea is. While certain sectors might feel some pain, it's not likely to be strong enough to force the White House to back down. (Indeed, Trump might not mind if liberal Hollywood takes a hit.) ..."
"... Similarly, many Chinese industries rely fundamentally upon licensed American services. In 2018, foreign films accounted for 38% of China's box office; the most lucrative among them were American. That trend continues: Over the weekend, "Avengers: Endgame" became the third-highest grossing film in Chinese history. ..."
May 17, 2019 | www.bloomberg.com

Trying to boycott U.S. entertainment and travel, as Beijing did with South Korea, will only backfire on Chinese companies and consumers.

By Adam Minter , ‎May‎ ‎17‎, ‎2019‎ ‎8‎:‎00‎ ‎PM Adam Minter is a Bloomberg Opinion columnist. He is the author of "Junkyard Planet: Travels in the Billion-Dollar Trash Trade" and the forthcoming "Secondhand: Travels in the New Global Garage Sale.

China may want to stand tough against Donald Trump's trade threats. It's going to have a hard time retaliating, though, and not only because it doesn't import enough goods to match the U.S. president tariff-for-tariff.

One obvious target would be the $58.9 billion in services the U.S. exports to China. These include everything from Hollywood blockbusters to tourism and education. In theory, Beijing could easily enough cut off the flow of American entertainment into China and Chinese students and tourists out of the mainland. Indeed, the nationalist editor-in-chief of the Global Times newspaper has already suggested such a strategy.

China has some experience with this. After South Korea agreed to deploy a U.S. anti-missile system on its soil in 2016, Chinese television stations were informed that programs involving South Korean stars wouldn't be approved for broadcast, while Chinese venues began canceling appearances by K-pop bands and other South Korean celebrities. On top of restrictions on outbound tourism, the measures helped knock 0.4% off South Korea's expected growth rate in 2017.

On the other hand, the unofficial boycott didn't persuade Seoul to reverse its decision. And there are many reasons to think a similar strategy directed at the U.S. would be even less effective.

The most obvious is the simple fact that the U.S. is much less dependent on its services exports to China than South Korea is. While certain sectors might feel some pain, it's not likely to be strong enough to force the White House to back down. (Indeed, Trump might not mind if liberal Hollywood takes a hit.)

The second reason is more important. Chinese businesses are often as dependent upon U.S. services as American retailers are on their mainland-based supply chains. Restricting Chinese tourism to the U.S., for instance, would damage China's airlines, many of which have been handsomely subsidized in a battle for dominance over hyper-competitive trans-Pacific air routes.

Similarly, many Chinese industries rely fundamentally upon licensed American services. In 2018, foreign films accounted for 38% of China's box office; the most lucrative among them were American. That trend continues: Over the weekend, "Avengers: Endgame" became the third-highest grossing film in Chinese history.

Chinese regulators are already worried about slowing box-office revenue . In 2016, they even temporarily lifted quotas on foreign films to help cinema owners. It's unlikely they'd seek to add new burdens now to the struggling industry.

In recent years, the most high-profile buyers of U.S. entertainment content have been China's celebrated tech champions. In 2015, Tencent Holdings Ltd. agreed to pay the National Basketball Association $500 million (potentially rising to $700 million) for the rights to stream the league's games, highlights and other content in China. It was a smart investment: The NBA is the most popular professional sports league among Chinese viewers. During the 2017 finals, more than 170 million people in China streamed the games live.

And Tencent isn't the only Chinese tech company leaning upon the NBA to boost user counts. The league has signed more than a dozen media partnerships in China, including a March 2019 agreement with Alibaba Group Holding Ltd. under which the NBA agreed to create content for Alibaba users. (Alibaba Vice Chairman Joseph Tsai owns 49 percent of the Brooklyn Nets NBA franchise.)

Ultimately, the biggest impediment to any Chinese boycott of U.S. services may be the Chinese public. Though there's no question that Chinese popular opinion is behind Beijing, there's little evidence so far that the trade war has diminished consumer enthusiasm for American movies and vacations. During the key Chinese New Year travel period, the U.S. was the most popular long-haul travel destination for Chinese tourists. Los Angeles reported a 6.9% boost in Chinese visitors last year.

While some Chinese might just switch to illegal streaming services and pirated downloads if cut off from their favorite American TV shows and movies, trying to bar them from visiting the U.S., sending their kids to university there or seeking medical treatment could quickly provoke a backlash among middle-class citizens. Especially at a time when growth is slowing at home, that's a constituency the government can't afford to alienate.

Of course, none of this means the Trump Administration should think its services exports are entirely immune. As American culture becomes more globalized, it becomes easier to emulate. China's film industry is getting more polished in spite of censorship. Yao Ming is steadily improving Chinese basketball in spite of China's state meddling in sport. And low-cost airlines give Chinese access to a wide variety of destinations just as compelling as Los Angeles. For now at least, though, China will have a hard time restricting what it can't replace.

[May 16, 2019] https://www.zerohedge.com/news/2019-05-15/farage-gabbard-lions-great-realignment

May 16, 2019 | www.zerohedge.com

Uh, no, Tom, she won't be collecting a lot of voters, well, at least not near enough. Biden has already been "chosen" like Hillary was over Bernie last time. You should know by now Tom, we don't select our candidates, they're chosen for us for our own good. 2 hours ago

This is going to take a long time. You just can't turn this ship around overnight.

US Political System:

United States is neither a Republic and even less Socialistic. US, in the technical literature, is called a Polyarchy (state capitalism). Polyarchy (state capitalism) idea is old, it goes back to James Madison and the foundation of the US Constitution. A Polyarchy is a system in which power resides in the hands of those who Madison called the wealth of the nation. The educated and responsible class of men. The rest of the population is to be fragmented and distracted. They are allowed to participate every couple of years by voting. That's it. The population have little choice among the educated and responsible men they are voting for.

This is not an accident. America was founded on the principle, explained by the Founding Father that the primary goal of government is to protect the minority of the opulent against the majority. That is how the US Constitution was designed sort of ensuring that there will be a lot of struggle. US is not as the same as it were two centuries ago but that remains the elites ideal.

Polyarchy (state capitalism) it is a system where small group actually rules on behalf of capital, and majority's decision making is confined to choosing among selective number of elites within tightly controlled elective process. It is a form of consensual domination made possible by the structural domination of the global capital which allowed concentration of political powers.

A republic is SUBORDINATE to democracy. Polyarchy can't be subordinated to any form of Democracy. 2 hours ago Is the author, to use an English term, daft? Tulsi Gabbard won't get out of the primaries, much less defeat Sanders or Biden. Farage achieved his goal (Brexit), then found out (SHOCK!) that the will of the people doesn't mean anything anymore.

If Luongo had wanted to talk about the people's uprising, he should've mentioned the Tea Party. 3 hours ago Gabbard appears to have some moral fibre and half a backbone, at least for a politician, regardless of their views, Farage is a slimy charlatan opportunistic populist shill 3 hours ago (Edited) I like Tulsi Gabbard on MIC stuff (and as a surfer in my youth - still dream about that almost endless pipeline at Jeffreys Bay in August), but...

On everything else?

She votes along party lines no matter what bollocks legislation the Democrats put in front of Congress. And anyone standing full-square behind Saunders on his socialist/marxist agenda?

Do me a favour. 1 hour ago (Edited) Farage left because he saw what UKIP was becoming...a zionazi party.

Also Gabbard is a CFR member. 3 hours ago Gold, Goats and Guns? Certainly not guns under President Gabbard! Here's her idea of "common sense gun control:"

https://www.votetulsi.com/node/25028

I'm totally against warmongering, but I have to ask - what good is it to stop foreign warmongering, only to turn around and incite civil war here by further raping the 2nd Amendment? The CFR ties are disturbing as hell, too. And to compare Gabbard to Ron Paul? No, just...no! 3 hours ago Always been a fan of Bernie, but I hope Gabbard becomes president. The world would breathe a huge sigh of relief (before the assassination). 4 hours ago By this time in his 1st term, Obama had started the US Wars in Syria and Libya and has restarted the Iraq War.

Thus far Trump has ended the War in Syria, pledged not to get us dragged into Libya's civil wars and started a peace process with North Korea.

Venezuela and Iran look scary. We don't know what Gabbard would actually do when faced with the same events. Obama talked peace too.

[May 15, 2019] Softer tone in the US vs tougher tone in China

Plaza accord, Asian Tiger crisis, and now China trade war.
Notable quotes:
"... Submitted by Christopher Dembik of SaxoBank ..."
"... The tone is clearly different in China where the official media, such as CCTV and People's Daily, adopted a tougher stance. ..."
"... As of yesterday, all the articles and TV reports mention "trade war". This terminology change means a lot and confirms that the negotiations have entered a more dangerous phase. ..."
May 15, 2019 | www.zerohedge.com

Submitted by Christopher Dembik of SaxoBank

Softer tone in the US vs tougher tone in China

Yesterday evening, senior Trump administration officials tried to appease tensions. US secretary of the Treasury Mnuchin confirmed, without giving much detail, that the US-China trade talks are still ongoing. The tone is clearly different in China where the official media, such as CCTV and People's Daily, adopted a tougher stance. It is interesting to note that in the previous rounds of trade disputes that occurred since Autumn 2018, People's Daily articles mostly used the term "trade friction" instead of "trade war" until now As of yesterday, all the articles and TV reports mention "trade war". This terminology change means a lot and confirms that the negotiations have entered a more dangerous phase.

In addition, China has tightened its "national security" review for foreign investments, which can be considered as another step in the retaliation process.

... ... ...

Trump's approval rate is still high

On the US domestic front, President Trump is now seeking $15 billion to bail out farmers in order to mitigate the negative impact of the trade war. Interestingly, more and more Republican Congressmen that were interviewed yesterday on US TV were very vocal against the latest measures decided by the Trump administration. It is, however, unlikely to have any influence on the ongoing process or to push the administration to comprise with Beijing. Trump is looking at polls and the message they send is bright and clear: as of yesterday, 42% of US voters supported Trump's policy (FiveThirtyEight). His electoral base has remained stable, faithful and very broad since he was elected.

What's next?

TheRapture , 16 minutes ago link

"Trump just beat the Chinese massively"

By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest." -- Confucius

rubiconsolutions , 1 hour ago link

The US has been the biggest offender in trade wars for decades. The petrodollar conceived by Kissinger and Nixon forced countries to buy oil in USD. How is that not warlike? China and other countries are trying to unhitch themselves from the dollar and who can blame them? The problem is that when they are successful, and they will be, all those dollars will come home to mommy and inflation will run rampant.


WallHoo , 3 hours ago link

The country that prints the money will always have the upperhand against the country that works hard and dirty to acquire the said money.

China is one of the cheapest producers,but that doesnt mean that the US cannot either import or manufacture its own product.

Case in point im a salesman from greece. I know for a fact that the chinese sell a t-shirt for 2 euros a piece (wholesale) and greek producers for 4 euros a piece. All the t-shirts are sold (retail) for 12-70 euros. So its not about costs but about profit.

If greece decides tomorow to take back its production from the sick ***** and impose tariffs on them literaly nothing will change.

Hit the chinese hard with no mercy.

Deep Snorkeler , 4 hours ago link

What I Learned From Trump and G. W. Bush

  1. a rich father washes away stupidity, indolence and degenerate living
  2. an ivy league degree is not earned but purchased
  3. moronic speech is a sure sign of genius
  4. Caucasian genetics are in serious decline
  5. criminal behavior can be ethical if packaged correctly
He–Mene Mox Mox , 4 hours ago link

Despite all the rhetoric about buying from other places than China, the facts remain, manufacturing is not returning to America. Nor are the jobs coming here to America, nor is the wealth. Conditions in America doesn't favor it. Agriculture was always America's strong suite. But, with the trade wars causing farmers to go bankrupt, you can be assured of losing that too. The question is now, who will feed all you American fat asses, when all your farmers go broke?

Consumer economies are the economies of third world countries, and that is what America has got. China, with its manufacturing economy, will go on to make investments in other countries, and leave America in the dust.

CashMcCall , 4 hours ago link

You have had tariffs for over a year and not one company has returned from Overseas or left China. In fact more US companies have moved manufacturing to China.

In the USA you have unions, the epa, osha, IRS... and the most litigious tort system and most unreliable employees in the world. You have the most disability claims, the most lawsuits against employers etc. Most absenteeism. Most employee theft. Gender issues, bathroom issues, diversity issues. Your gov continue to pack on the minimum wages eliminating any potential to make products to compete with the world.

In short the US is dying on the vine. Trump has caused so much bad blood with Asia, that US global businesses will have difficulty penetrating Asian markets which are the only thing that matters for the next 100 years. You Trumptard RACISTS are losers.

LaugherNYC , 4 hours ago link

Wrong, wrong and wrong.

500,000 manufacturing jobs added in Us in last two years.

Where’d they come from.

US companies leaving China accelerating - relocating elsewhere in Asia, and bringing back workers to US. Increasing location in US of foreign owned manufacturing plants to avoid trade issues and tariffs.

The US is not only not dying on the vine, growth ACCELERATED in last several quarters. Can’t hire skilled workers — no one available to take them. My daughter was approached by 3 recruiters to lure her away from her job - she moved for a big pay increase - they upped their offer 20% - and goit the job of her dreams, with all benefits at a major company - and she is an ARTIST!! The huge increase in content production has created a golden age even for liberal arts professions.

The US ONLY issue is its debt, which it can start to solve by simply retiring debt held by the Fed, and continuing open market purchases and retirements. Monetize while inflation is low and dollar strong. This will likely come with next rate drop (if we get one).

Chiona living on a MASSIVE consumer/mortgage debt bubble like the US faced in 2007. The tide will wash over their financial industry, as it has begun, and the central government will burn its reserves bailing them out. What goes up...

China hitting the wall of wage growth where it has become more expensive than its competitors in SE Asia and India.

The next decade will be a lot more difficult for China. It’s totalitarian state will need to become even more militant and oppressive to survive.

CashMcCall , 3 hours ago link

Manufacturing in US under Trump down 6%..

Every auto made in the world, every mower, every computer, every modem, every LED TV, every telco switch, every smart phone, virtually any product you can think of has Chinese Components or is manufactured in China. China is the largest semiconductor maker in the world. LED lights... CHINA.

Let it Go , 4 hours ago link

As we view the global economy we should consider that much of the "free trade" movement is driven by mega companies desire for larger markets and greed. The desire of companies to both develop and control future rules has caused them to lobby individual governments into giving up control and becoming subservient to corporate “efficiency.”

This is probably not in the best interest of the average citizen as we can see by surging inequality. Those concerned that a trade agreement with low wage nations will not be a great job creator for America have history on their side. The piece below argues that fair trade trumps free trade!

https://Fair Trade Is Key To Global Economic Stability.html

RealRussianBot99 , 4 hours ago link

anybody pointing the finger at China because of IP theft and not doing the same to the USSA is either brainwashed beyond repair, stupid like a piece of wood, a paid troll or any combination of these.

"accuse the enemy of doing what you secretly do"

- plenty of people in powerful positions all across history

sheikurbootie , 4 hours ago link

Most aren't paying attention to what Trump says.... he said a year ago that China was wanting to make a deal. Trump said, "BUT,they're not ready yet" , meaning that they wanted a small change to the imbalance like Canada and Mexico received.

China's trade imbalance is seriously astronomical compared to any other country we do business.

Canada's trade imbalance is $20,000,000,000 per year with US.

China's trade imbalance is $420,000,000,000 per year with US.

We have almost the same trade with each $660 B with China and $620 B with Canada.

Canada is ripping us off. China is not ripping us off, they're ******* us.

Worst case is we STOP trading with China. Best case they reduce the trade imbalance 90%.

China is NOT ready yet.

besnook , 4 hours ago link

the other side of the coin is a chinese boycott of usa brands means a dollar devaluation in the form of a tanked market. the chinese market means not much. the usa equity/bond market is everything. a falling dollar takes a lot powder out of usa guns.

Scipio Africanuz , 4 hours ago link

If winning elections at the expense of the electorate is the main concern of politicians, might that suggest gross immorality amongst the political class?

On the other hand, if supporting politicians because they mouth soothing platitudes, while yet their policies and actions, defenestrate the quality of life of the electorate, suggests indoctrination, might that not be cause for serious concern?

Now, it's doubtless that leaders will be required to take unpopular stances sometimes, but ought not those stances be based on cogent analysis of reality, and the elimination or reduction of self contributory inputs?

All in all, leadership is about courage - to do what's right, and necessary, even if it requires declaring mea culpa. Humility, is often the true indicator of leadership abilities.

Which reminds us of Alexander, the Great that is, who had to turn back from his expedition in India, when his troops balked at going further. He could have razzmatazzed them no doubt, but he realized they were telling him that exhaustion was prevalent, pushing forward offered no additional gains, and better to return home to sex their wives, teach their sons horsemanship, give their daughters away in marriage, till their farms, chill out, smell the roses, party, and reminisce to their children and grandkids about their adventures..

Alexander, Great that he is, listened, and with a heavy heart, due to his adventurous nature, signaled the retreat, and homewards it was. That is why they called him Great, not because of his martial prowess which was indeed formidable, but because of his discerning prowess..

On the other hand, there was Marcus Crassus, who was so avaricious, he went East to war, and got as much gold as his heart desired..molten, and poured down his throat. He died rich, literally filled with gold, cheers...

Lazane , 4 hours ago link

Its real simple, if you don't like the cost of doing business in China along with being required by the twisted communist government to turn over your intellectual property as a requirement for doing your manufacturing there, then bring it home to America.

Not very long ago int he early 1990s I can still recall watching on the cable news programs Chinese rockets launching and blowing up just prior to achieving orbit. The Clintons then were at it full bore trading access to top secret rocket technologies from Loral Space and Technology (Bernie Schwartz) CEO for campaign cash. Clintons transferred Top Secret technologies from State Department to Commerce Department allowing them the access to Sell out America to the Communists. It is why they had to arrange for the liquidation of Commerce Secretary Ron Brown. Remember the video of Bill Clinton laughing and cajoling at the Ron Brown funeral, then when he sees the camera on him, he immediately turns on the bitter tears. These people are the phoniest crooks to ever come to power in America.

RealRussianBot99 , 4 hours ago link

lol. you have no idea what you're talking about.

ever been to China?

communism? in name only

lester1 , 5 hours ago link

Was at Wal Mart yesterday. Surprisingly there isn't any products made in China that I needed to buy. All the food, cleaning supplies, and toiletries are still made in the United States. The clothing section had made in Malaysia, Singapore, India, Mexico. So in reality, other countries can take market share from China. Some of the production will return to United States as well.

[May 15, 2019] Geopolitical primacy, not maximum prosperity for Americans, might be the president's true objective

Notable quotes:
"... The REAL REASON behind the TRADE WAR: Israhell: "I want Iran embargoed and starved to death." China: "I will buy Iran's oil." BAM! Trade War! ..."
May 15, 2019 | www.zerohedge.com

The 'play of the day' above comes against a backdrop of markets trying to accentuate the positive in the latest US-China trade war deterioration. Indeed, Moody's has declared a trade deal will still be done and a Bloomberg survey of US economists shows around two thirds think a deal will be signed by year-end, a fifth by 2020, and only 13% don't see a deal for at least five years. Field Marshall, please take these men and women out and have them shot, there's a good chap.

The rhetoric from China has turned starkly, aggressively nationalist. The Global Times is calling for a "People's War", a 1930's Mao reference to repelling Japanese imperialism; "trade war" now fills Chinese media, having been largely absent for months; and Tuesday's People's Daily mouthpiece posted an image of the Chinese flag with "Talk -- fine! Fight -- we'll be there! Bully us -- delusion!" superimposed on it. US President Trump is also not backing down in a further set of trade-related tweets, again stating tariff revenues will support 'patriot' farmers and adding: "China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing. If the Federal Reserve ever did a "match," it would be game over, we win! In any event, China wants a deal!"

A huge fiscal deficit; trade tariffs; a rapid increase in military expenditure; 'Patriot' farmers; and a political call for lower interest rates for a national struggle. It all sounds very Chinese, doesn't it? But that shouldn't be a surprise. Last year's ' The Rise and Fall and Rise of the Great Powers (and Great Currencies)' argued the historical lessons of the economics of past power struggles are that one must have low borrowing costs, spend a lot on a large military, and be mercantilist if your enemy is. True, one also needs to be economically vibrant, and that isn't assured with mercantilism, militarism and large fiscal deficits. Yet real free trade, pacifism, and austerity is *ruinous* for Great Power . Which is why the EU is not a Great Power but a Great Whinger.

Some in the markets are starting to get this.

Regular Bloomberg commentator Noah Smith yesterday published an article --'The Grim Logic Behind Trump's Trade War With China'-- that admits he was wrong to expect a trade deal, that Trump is doubling down, and concludes "There may be a grim sort of logic to this approach If Trump wants to slow China's ascent as a superpower, a trade war might be an effective way to do it. If the harm to the US is modest and the costs for China are severe and lasting, Trump might conclude that the former are acceptable losses. Geopolitical primacy, not maximum prosperity for Americans, might be the president's true objective . if weakening China really is the goal, then this could be just the opening rounds of a long and grinding trade war." That's' what I argued back in November 2017's 'On Your Marx' special reports, which stressed a New Cold War was likely ahead.

However, many in markets are still acting like a Treasury clerk telling Churchill that Badolf Hissler can offer him a great deal on cut-price bullets, ships, and planes .

On a related front, we see reports of an alleged Iranian drone attack on Saudi oil pipelines(!); also hear Iran's leader say there will be no war with the US; and Trump has stated reports of 120,000 US troops moving to the region are fake news -- because if he were to send troops it would " a hell of a lot more ." Mixed messages to put it mildly.


wadalt , 1 minute ago link

The REAL REASON behind the TRADE WAR: Israhell: "I want Iran embargoed and starved to death." China: "I will buy Iran's oil." BAM! Trade War!

Artist’s IMPRESSION of Satanyahoo Riding Trump

PGR88 , 2 minutes ago link

for 40 years, western liberals and capitalists have had a nebulous idea of China developing, opening and "liberalizing." It hasn't usually occurred in the ways they wanted, but China certainly has become a big market and has moved towards a more open economy and somewhat, more open society overall, while still maintaining a "fascist" structure.

But we can all agree - that process is done. China's economy, society and politics are what they are. The country is "grown-up." Do not ever expect the communist party to change the tight, top-down structure it has. Do not expect changes to politics, do not expect anyone in China to give up control, and certainly don't expect foreigners to have any say or influence within China. China will always do exactly what benefits China and the CCP.

Trump is merely being a realist. So accept that, and trade/invest/exchange accordingly.

SeanInNYC , 2 minutes ago link

Is it any surprise that a "Noah Smith" of Bloomberg would attribute all the wrong motives and strategy behind President Trump's and America's trade dispute with China's totalitarian regime?

That he sees the Chinese Communist Party as honest, good faith partners in this scenario?

There is nothing Trump could ever do to please the internationalist media.

arby63 , 4 minutes ago link

I seriously doubt if "weakening" China is Trump's primacy here. Perhaps a by-product but let's finally admit one thing: The US-China trade arrangement is egregious at best. What no one is willing to discuss yet is the fact that this "philosophy" of evening out trade with China will soon take on a life of its own: With the US consumer. We need to bring back a lot of jobs back to the US economy and that's not rocket science. It won't happen overnight but it will indeed happen.

LaugherNYC , 4 minutes ago link

What is the point of this piece? To demonstrate the author’s wit and historical knowledge (was that entire little playlet not invented)?

To maximize American prosperity long term, should the US simply allow China to cheat, manipulate and intimidate its way to the top? China has proven that, unlike the US, its growth is a zero sum game. It adds nothing to the equation of global growth except cheap labor, which subtracts wealth from other nations by taking away their well-paid manufacturing jobs. It contributes almost no raw materials, imports its food and energy, and has stolen most of its technology at enormous cost to Western innovators.

The US has always provided net inputs to the system of global growth. Natural resources, renewable materials (crops, renewable energy), and the relentless innovation and productivity increases of its workforce. China is an extractor. Thus it needs to expand its borders through exploitative economic imperialist initiatives under their One Belt One Road scam, and their militaristic imperialism in the South China Sea. The US is a machine that puts out far more than it takes in. China is the opposite. If the US directs its economic output away from China’s vast and relentless maw, China’s machine will slow and sputter.

The real point of the trade war is to end the vacuum of Western and Asian prosperity by China’s greedy and imperialist machine of economic destruction. China knows and implements that its economic growth by definition comes at the cost of others’ prosperity. That the US took 20 years to wake the **** up is astonishing.

MalteseFalcon , 6 minutes ago link

You mean all this time the Chinese were nationalists?

medium giraffe , 6 minutes ago link

Mutual suicide. Outstanding.

B-Bond , 7 minutes ago link

From doves to hawks: why the US’ moderate China watchers are growing skeptical about Beijing😲

https://www.scmp.com/news/china/diplomacy/article/2177506/doves-hawks-why-moderate-us-china-watchers-are-growing

from_the_ashes , 8 minutes ago link

Most news is somewhat depressing these days... But there are moments when the light shines through...

https://www.thewrap.com/members/2019/05/15/salon-media-announces-5-million-sale-bankruptcy-and-liquidation-threatened-if-deal-fails/

Learn to code Salon staffers...

Charlie_Martel , 12 minutes ago link

The Internationalists are losing. Nationalism is the future.

[May 15, 2019] Tariffs won't bring back manufacturing jobs...

The key factor here is that the USA is a neoliberal state which means profits before people and outsourcing to area with lower labor cost. Like leopard can't change its spots, neoliberalism can't change it "free movement of goods and labor" principles, or it stop being neoliberalism.
No jobs will come back to the USA as financial oligarchy is transnational body that uses the USA military as an enforcer for their gang. It does not care one bit about the common people in the USA.
May 15, 2019 | www.zerohedge.com

Originally from: Pepe Escobar Warns Over US-China Tensions The Hardcore Is Yet To Come

... ... ...

Where are our jobs?

Pause on the sound and fury for necessary precision. Even if the Trump administration slaps 25% tariffs on all Chinese exports to the US, the IMF has projected that would trim just a meager slither – 0.55% – off China's GDP. And America is unlikely to profit, because the extra tariffs won't bring back manufacturing jobs to the US – something that Steve Jobs told Barack Obama eons ago.

What happens is that global supply chains will be redirected to economies that offer comparative advantages in relation to China, such as Vietnam, Indonesia, Bangladesh, Cambodia and Laos. And this redirection is already happening anyway – including by Chinese companies.

BRI represents a massive geopolitical and financial investment by China, as well as its partners; over 130 states and territories have signed on. Beijing is using its immense pool of capital to make its own transition towards a consumer-based economy while advancing the necessary pan-Eurasian infrastructure development – with all those ports, high-speed rail, fiber optics, electrical grids expanding to most Global South latitudes.

The end result, up to 2049 – BRI's time span – will be the advent of an integrated market of no less than 4.5 billion people, by that time with access to a Chinese supply chain of high-tech exports as well as more prosaic consumer goods.

Anyone who has followed the nuts and bolts of the Chinese miracle launched by Little Helmsman Deng Xiaoping in 1978 knows that Beijing is essentially exporting the mechanism that led China's own 800 million citizens to, in a flash, become members of a global middle class.

As much as the Trump administration may bet on "maximum pressure" to restrict or even block Chinese access to whole sectors of the US market, what really matters is BRI's advance will be able to generate multiple, extra US markets over the next two decades.

We don't do 'win-win'

There are no illusions in the Zhongnanhai, as there are no illusions in Tehran or in the Kremlin. These three top actors of Eurasian integration have exhaustively studied how Washington, in the 1990s, devastated Russia's post-USSR economy (until Putin engineered a recovery) and how Washington has been trying to utterly destroy Iran for four decades.

Beijing, as well as Moscow and Tehran, know everything there is to know about Hybrid War, which is an American intel concept. They know the ultimate strategic target of Hybrid War, whatever the tactics, is social chaos and regime change.

The case of Brazil – a BRICS member like China and Russia – was even more sophisticated: a Hybrid War initially crafted by NSA spying evolved into lawfare and regime change via the ballot box. But it ended with mission accomplished – Brazil has been reduced to the lowly status of an American neo-colony.

Let's remember an ancient mariner, the legendary Chinese Muslim Admiral Zheng He, who for three decades, from 1405 to 1433, led seven expeditions across the seas all the way to Arabia and Eastern Africa, reaching Champa, Borneo, Java, Malacca, Sumatra, Ceylon, Calicut, Hormuz, Aden, Jeddah, Mogadiscio, Mombasa, bringing tons of goods to trade (silk, porcelain, silver, cotton, iron tools, leather utensils).

That was the original Maritime Silk Road, progressing in parallel to Emperor Yong Le establishing a Pax Sinica in Asia – with no need for colonies and religious proselytism. But then the Ming dynasty retreated – and China was back to its agricultural vocation of looking at itself.

They won't make the same mistake again. Even knowing that the current hegemon does not do "win-win". Get ready for the real hardcore yet to come.


Tachyon5321 , 35 minutes ago link

The Swine fever is sweeping china hog farms and since the start of 2019 200+ millions hogs have been culled. Chinese hog production is down from 2016 high of 700 million to below 420 million by the end of the year. The fever is not under control.

Soybeans from Ukraine are unloaded at the port in Nantong, in eastern China. Imports of soy used to come from the US, but have slumped since the trade war began. Should point out that the Ukraine soy production matures at a different time of the year than the US soybean. The USA planting season starts in Late april, may and june. Because of the harvest time differences worldwide the USA supplies 80% of the late maturing soybeans needed by October/Nov and December.

A propaganda story by the Asian Times

BT , 46 minutes ago link

Orange Jesus just wants to be re-elected in 2020 and MIGA.

Son of Captain Nemo , 52 minutes ago link

Perhaps this is one of the "casualties" ( https://www.rt.com/news/459355-us-austria-embassy-mcdonalds/ ) of economic war given the significance of China and just how important it is to the U.S. in it's purchases of $USD to maintain the illusion of it's reserve currency status and "vigor"...

Surprised this didn't happen first at the U.S. Embassies in Russia and China?... Obviously Ronald McDonald has turned into a charity of sorts helping out Uncle $am in his ailing "health" these dayz!...

SUPER SIZE ME!... Cause I'm not lovin it anymore!... I'm needin it!!!!

joego1 , 52 minutes ago link

If Americans want to wear shoes they can make them or have a robot make them. Manufacturing can happen in the U.S. **** what Steve Jobs told Oblamy .

ElBarto , 1 hour ago link

I've never understood this "jobs aren't coming back" argument. Do you really think that it will stop tariffs? They're happening. Better start preparing.

ZakuKommander , 1 hour ago link

Oh, right, tariffs WILL bring back American jobs! Then why didn't the Administration impose them fully in 2017? Why negotiate at all; just impose all the tariffs!?! lol

Haboob , 1 hour ago link

Pepe is correct as usual. Even if America tariffs the world the jobs aren't coming back as corporations will be unable to turn profits in such a highly taxed country like America would be. What could happen however is America can form an internal free market again going isolationist with new home grown manufacturing.

Gonzogal , 41 minutes ago link

You VERY obviously have ZERO knowledge of Chinas history and its discoveries/inventions etc USED BY THE WEST.

I suggest that you keep your eyes open for "History Erased-China" on Y Tube. The series shows what would happen in todays world if countries and their contributions to the world did not happen.

here is a preview: https://youtu.be/b6PJxuheWfk

[May 14, 2019] Trump desperately needs a trade deal with China as he gears up for his re-election bid in 2020.

Highly recommended!
It has become a cliché to quote William Butler Yeats’s poem “The Second Coming,” written almost 100 years ago in the aftermath of World War I. But no one has said it better: “Things fall apart; the centre cannot hold; / Mere anarchy is loosed upon the world . . . And what rough beast, its hour come round at last, / Slouches toward Bethlehem to be born?”
Donald Trump's decision to raise duties on Chinese goods from ten to 25 percent of additional $200 billion of China exports came into force. It is unclear how this will work and how much the US consumers will pay. Probably half of this raise so from 5% to 10% which might be not very noticeable outside such items as shoes and clothing. The cost of Chinese's shoes already is quite high -- plastic regular $60-30 with discounts on holiday. Leather -- $100-$50 and almost no discounts.
Trump uses his favorite "bully in the schoolyard" style, a typical the American foreign policy tactic to direct, lawless pressure. First, they accuse partners of violations, to introduce restrictions on this basis (and at the same time to plunge world markets into panic), and then to agree on the resumption of negotiations. But the previous decisions about tariffs were left, of course, in force.
May 14, 2019 | www.asiatimes.com
His gambit to conclude a deal with North Korea collapsed in failure in Hanoi in February, and it is a huge blow to his self-styled image of a master dealmaker. Trump also faces a flurry of congressional subpoenas at home from Democrats who now control the House of Representatives. Hence with mounting legal and political troubles, Trump is cornered and desperately needs a conclusion to the prolonged trade war with China, which has netted zero benefits for him.

The prospect of a trade deal with China remains as elusive as ever, despite Trump's increased tariffs to pressure China to come to the negotiating table with the list of concession that he wants. It is highly unlikely that China will grant Trump the concessions he wants. China remembers clearly the deal that Tokyo concluded with Washington in the 1990s that caused Japan to slip into economic stagnation for many years. That period has now been dubbed Japan's "lost decade."

China is not dumb and it will not concede to Trump.

Worse still, the move to increase tariffs took place while Chinese Vice-Premier Liu He was in Washington to negotiate with the Trump administration.

It is a blunder by Trump and will be perceived by the Chinese as a cheap shot against President Xi Jinping. The tariffs hike came despite Xi's "beautiful letter" to Trump, and it is a massive loss of face for the Chinese leader to see his group of officials return home from Washington with no deal to conclude the trade war.

Xi could not afford to look weak in front of his people and he knows that millions of Chinese netizens access information about the outside world by using virtual private networks (VPNs) to circumvent the Great Firewall. Many ordinary Chinese know about the trade war's latest developments and should any deal with Trump infringe on China's core interests, it will be political suicide for Xi.

One of the main reasons the US-China trade talks broke down was that Washington's demands were unpalatable to China. Some of the demands from the US, such as an end to government support for state companies in specific industries and a streamlined approval process for genetically engineered US crops, are a direct challenge to the Communist Party of China's control of the economy.

Since Xi took office, he has extended the party's reach into every corner of Chinese society, and every businessman in China who aspires to reach the top of the hierarchy knows that they must receive the blessing of the party. It is not surprising that even Jack Ma, who is one of China's most internationally recognizable figures, has been revealed to be a member of the CPC after years of denial.

Hence in the face of renewed pressure from Trump, Xi and the Chinese government have reached the conclusion that it is better to bear the consequences of increased tariffs than to concede to US demands.

Xi is in for the long haul and can well afford to ride out the storm. And based on Trump's past negotiations such as his failed bid to pressure House Democrats to fund his wall on the Mexican border, which led to the longest government shutdown in US history, Xi knows that the chances are good that Trump will blink first.

[May 14, 2019] China tariff dispute threatens to cause economic damage for both countries

Trump uses his regular bulling style, but for him there are no mechanism out or this deadlock. China can't retaliate dollar to dollar but they can encourage boycott of US goods that are replaceable with Chinese models such as Apple phones
In any cases there will additional unemployment in China and an additional stress on Chinese economy, which probably two factors the Trump is counted on.
Notable quotes:
"... China should ban Boeing products for its compromise on aviation safety. Hit where it hurts with consumer power. ..."
"... When the 25 percent hits 345 billion dollars of additional untaxed imports Americans will just buy less. After this next round of taxes we will be on the road to bankrupting China and Iran. Europe's turn comes next. ..."
May 14, 2019 | www.youtube.com

V Philip , 9 hours ago

China should ban Boeing products for its compromise on aviation safety. Hit where it hurts with consumer power.

Luke Li , 1 day ago div

> 13:41

"the Chinese won't do us the courtesy of saying hey this is because of your detention of madam Meng" actually this is poorly understood by this professor. it's not a discourtesy, it is the opposite. it is a courtesy to give Canada an opportunity to save face. that is, Canada frees madam Meng and can claim they did so for OTHER reasons than bowing to Chinese pressure. It is a face-saving measure for Canada's benefit. Come on, more cultural understanding is needed.

hoonsiew yeo , 21 minutes ago

Western fools have learned one lesson : the CHINESE are NOT SOFT or like the JAPANESE in the 80's.

The CHINESE have their mightiest WILL to stand against the demonic tyranny of the US - the whole world know US is descending as US itself is struggling like one mad dog for its prestigious status of world domination - refusing to acknowledge the country the nation "in the last days of Rome".

Mark Fischer , 1 hour ago

When the 25 percent hits 345 billion dollars of additional untaxed imports Americans will just buy less. After this next round of taxes we will be on the road to bankrupting China and Iran. Europe's turn comes next.

[May 14, 2019] China Calls For People's War Against The US, Vows To Fight For A New World

Notable quotes:
"... "The most important thing is that in the China-US trade war, the US side fights for greed and arrogance ... and morale will break at any point. The Chinese side is fighting back to protect its legitimate interests," the nationalist, state-owned Global Times tabloid wrote . ..."
"... The Global Times also accused the Trump administration of misleading Americans about the victims of US tariffs. It singled out Larry Kudlow's interview on "Fox News Sunday" in which Trump's top economic advisor said that US consumers would also suffer from the trade war, contradicting Trump's claim that China would foot the bill. ..."
"... More than just a retaliation to "unprovoked" US aggression, China now sees its response as a crusade against the western style of life. During a prime time broadcast on Monday, CNN reported that the state broadcaster CCTV also aired a statement saying that China would " fight for a new world." ..."
"... The editorial also hinted that more retaliations are coming, saying that "China has plenty of countermeasures" and telling its readers that "the US tariff moves are very much like spraying bullets. They will cause a lot of self-inflicted harm and are hard to sustain in the long term. China, on the other hand, is going to aim with precision, trying to avoid hurting itself." ..."
"... The conclusion: "the Chinese side is obviously more realistic while the US is falsifying. This will, to a large extent, influence how the two countries digest the trade war impacts." ..."
May 14, 2019 | www.zerohedge.com

China Calls For "People's War" Against The US, Vows To "Fight For A New World"

by Tyler Durden Tue, 05/14/2019 - 15:50 Twitter Facebook Reddit Email Print While market mood has shifted diametrically from yesterday, with stocks sharply higher on Tuesday following what has widely been interpreted as conciliatory comments from both president Trump and various members of China's ruling elite, one would be hard pressed to find any de-escalation amid the Chinese press commentaries written in the aftermath of the latest escalation in trade war between the US and China.

In a series of editorials and op-ed articles published Monday and Tuesday, Chinese state media slammed what it labeled the Trump administration's " greed and arrogance ", called for a " people's war " targeting the US " with precision " as China begins a " fight for a new world ."

"The most important thing is that in the China-US trade war, the US side fights for greed and arrogance ... and morale will break at any point. The Chinese side is fighting back to protect its legitimate interests," the nationalist, state-owned Global Times tabloid wrote .

Urging indirect boycott of US goods and services, the editorial slammed Trump and suggested a nation-wide uprising against the US aggression: "The trade war in the US is the creation of one person and one administration, but it affects that country's entire population. In China, the entire country and all its people are being threatened. For us, this is a real 'people's war.'" Whether this means a renewed collapse in Chinese iPhone sales remains to be seen - for confirmation, watch for a new guidance cut from Apple in the coming days.

The Global Times also accused the Trump administration of misleading Americans about the victims of US tariffs. It singled out Larry Kudlow's interview on "Fox News Sunday" in which Trump's top economic advisor said that US consumers would also suffer from the trade war, contradicting Trump's claim that China would foot the bill.

More than just a retaliation to "unprovoked" US aggression, China now sees its response as a crusade against the western style of life. During a prime time broadcast on Monday, CNN reported that the state broadcaster CCTV also aired a statement saying that China would " fight for a new world."

"As President Xi Jinping pointed out, the Chinese economy is a sea, not a small pond," anchor Kang Hui said on his 7 p.m. news show. "A rainstorm can destroy a small pond, but it cannot harm the sea. After numerous storms, the sea is still there." Hui concluded echoing a popular refrain, that "China doesn't want to fight, but it is not afraid to fight."

The Global Times also mocked Trump's suggestion that the tariff hike would "force companies to leave China", stating that "the consumption capabilities and market consumption potential driven by demand are what foreign companies value most when they come to China." As a result, "the White House might as well try to call on American companies such as General Motors, Ford, Apple, McDonald's and Coca-Cola to leave China. Will any of them follow? "

The editorial also hinted that more retaliations are coming, saying that "China has plenty of countermeasures" and telling its readers that "the US tariff moves are very much like spraying bullets. They will cause a lot of self-inflicted harm and are hard to sustain in the long term. China, on the other hand, is going to aim with precision, trying to avoid hurting itself."

In an amusing twist, China then accused Trump of spinning and "seeking to beautify the trade war", while Beijing has been "blunt about the difficulties and losses that the trade war will bring to the Chinese economy."

The conclusion: "the Chinese side is obviously more realistic while the US is falsifying. This will, to a large extent, influence how the two countries digest the trade war impacts."

Whatever side of the ideological divide one finds themselves, this is hardly the rhetorica that will allow China to reach a quick and painless compromise.



Agent P , 36 seconds ago link

But wouldn't boycotting US products lead to a massive drop in Chinese manufacturing? I'm so confused...

Airstrip1 , 2 minutes ago link

Right or wrong, the Chinese will fight as one for China. As well, they have allies and resources, but the main thing is they are homogenous and patriotic.

America is controlled from Jerusalem, who will exit at the first sign of the gravy-train slowing, not to mention *****-hat American snowflakes, a treacherous media and politics. Etc. Beware, Americans, about what you are getting into. You have turned trade negotiations into a war and you will not win this long-term. Just like all the others.

EHM , 5 minutes ago link

The communists always know what's best for the "people".

Powder , 7 minutes ago link

"Confucius say, he who fishes in other man's well, often catch crabs." - Redd Foxx

mailll , 7 minutes ago link

The Giant has awoken. Good job Trump. I guess it was all fake news when you were telling us gullible Americans we were winning. Any other wars you would like to start? Oh yea, Iran and perhaps Venezuela first. Must stick with the Israel First agenda.

thepsalmon , 8 minutes ago link

The real issue is intellectual property. If the Chinese can't steal our IP, they got nothing and they know it. Also we should send home all their undergrad and graduate students. Let them learn all this sh## on their own.

ken , 7 minutes ago link

Yeah, that's what you said about the Japanese.

sickofthepunx , 11 minutes ago link

Trump: "Let's see, what's the absolute stupidest thing I could say in response?"

I have a feeling we won't be let down.

Wahooo , 11 minutes ago link

Send tRump to China.

lester1 , 11 minutes ago link

Chicoms tariff food imports from the US? What a bunch of dummies.

Pernicious Gold Phallusy , 2 minutes ago link

Who exactly pays tariffs?

Texman , 13 minutes ago link

This will not be a good summer to be a westerner in China.

MoreFreedom , 2 minutes ago link

China is calling for a war, they've been engaged in for decades via their technology, patent, forced technology transfers, and copyright theft. And we should probably include their subsidies of politically connected firms exporting products, but at least in that case, the Chinese taxpayers are paying for the subsidies.

GlassHouse101 , 16 minutes ago link

If China wants a 'new world', they need to put on their big boy pants and DEDOLLARIZE. You can't beat an opponent when you play by the opponent's rigged rules!

[May 14, 2019] The Grim Logic of Trump s Trade War With China

The USA can't abolish neoliberalism. And the logic of neoliberalism is to use low cost labor oversees. Which means china.
Notable quotes:
"... If Trump wants to slow China's ascent as a superpower, a trade war might be an effective way to do it. If the harm to the U.S. is modest and the costs for China are severe and lasting, Trump might conclude that the former are acceptable losses. Geopolitical primacy, not maximum prosperity for Americans, might be the president's true objective. ..."
May 14, 2019 | www.bloomberg.com

Trump is doubling down. He's raising tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent, and imposing new tariffs on almost all of the remaining $325 billion or so. China today said it would retaliate and starting next month would impose tariffs on $60 billion of U.S. goods. This is the biggest trade war in modern American history.

... ... ...

If Trump wants to slow China's ascent as a superpower, a trade war might be an effective way to do it. If the harm to the U.S. is modest and the costs for China are severe and lasting, Trump might conclude that the former are acceptable losses. Geopolitical primacy, not maximum prosperity for Americans, might be the president's true objective.


mountaintravelera day ago ,

Unusually shallow take from Noah. The real reason for the trade war is China's subsidizing SOEs. They subsidize them until the SOEs outcompete all other manufacturers so much that competition dies, and then take over the market. See Moly Corp and rare earths as an example.

Such dumping is pretty easy to catch, and pretty easy to stop. Perhaps a more focused but more severe tariff structure on things like steel, tires etc would make more sense as an enforcement mechanism.

Note that the Chinese are willing to give lip service to things that they supposedly agree to, but cannot actually put the mechanisms in place without "losing face". Gimme a break. If Xi hadn't crowed about China's intent for dominance by means of mercantilism, we would still be bending over. Now the only face being lost is his.

The Chinese will never give up their use of administrative barriers to impede trade internally. But at least they could have said they would. But they couldn't even do that. So again, tariffs are about the only thing they will listen to.

Epstein's Mother mountaintravelera day ago ,

The flaw there is that the SOEs may generate a lot of employment in China, but they don't actually generate as much economic growth. And the govt knows this. The support for the SOEs isn't about giving them market share, but to keep them from collapsing precipitously, with all the resulting unemployment. It's China's version of the auto bailout, just on an extended basis. They make up only 25% of China's economy today, down from 50% in 2000.

Jasper_in_Boston20 hours ago ,

If Trump wants to slow China's ascent as a superpower, a trade war might be an effective way to do it. If the harm to the U.S. is modest and the costs for China are severe and lasting, Trump might conclude that the former are acceptable losses. Geopolitical primacy, not maximum prosperity for Americans, might be the president's true objective.

Are we living on the same planet? Coherent, long-term strategic thinking and geopolitical calculus are about as foreign to Trump as marital fidelity.

mountaintraveler IComment4Fun20 hours ago ,

Except the Chinese have fewer cards to play. They are in the mother of all bubbles that they desperately want to deflate with a soft landing. And they were well on their way to doing it. Until Xi crowed about it, and basically rubbed the world's nose in his a​ss with the SCS and OBOR, on top of the trade issues.

That soft landing is now in serious jeopardy. And we all will pay, so I take no satisfaction from China's troubles, now and imminent. But don't blame trump for it happening. It was all those thousand vauted people whose hubris you worship.

Public opinion is cracking in China as well.

IComment4Fun mountaintraveler18 hours ago ,

Whatever China's economic problems are, and why wouldn't a country with such enviable rapid growth into the (soon to be) world's largest economy with the worlds' most internet connected population, have some problems, but they at least seem to study and plan for their future in an intelligent and rational way.

I don't blame Trump for being a pathological liar and a narcissist, but the spineless Republican Party and "conservatives" who have done nothing to thwart his idiotic behavior. The Chinese have a word for those without a backbone, it translates as "folding chair". My sources tell me a different story about Public Opinion in China.. fwit.. No, they've seen this Trump in action long enough to know he's unreliable as a trading pardner and unbelievable as a leader... He'll fold and the OBOR will proceed more or less as envisioned... Too bad America (trump) has "poisoned" many allies in Asia.

Tanner Wadea day ago ,

The sky is falling and it's all Donald Trumps fault!

The problem is not tariffs or Donald Trump (specifically with China)
The problems are state sanctioned intellectual property theft and cheating on international trade agreements by the Chinese dictatorship.

Producers can shift their supply chains away from China to countries that do not view/treat the USA as an adversary and those products will not have tariffs on them. Problem solved. A few years of extra prices from supply-chain resourcing is a very small price to pay to address a dictatorship that seeks to undermine democratic values and human rights.

DVDemond Tanner Wadea day ago ,

Your shallow logic is twisted, twinkerbelle.

Ransomexx Tanner Wadea day ago ,

If you are looking for cheap labor, the labor you find will be unskilled and without technical resources. It means they must be brought up to today's standards, technically, with your IP. It is the US CEO's that gave away the farm, looking for cheap labor. Apple taught them how to make iPhones, guess what happened? Regardless where they go, US CEO's must give up IP for technical competence.

profwatson Ransomexxa day ago ,

The PRC is too expensive. Firms are going to Vietnam and elsewhere.

Anon2012_201411 hours ago ,

This time the United States has all the cards. We buy $500 billion per year from them. They only buy $100 billion a year from us. We have 5x leverage. All we have to do is play the hand according to economic game theory.

If our long run goal is to have a larger economy (and with it all the benefits of being the largest economy, including military security by being able to afford capital ships and planes), we must stop paying China $400 billion extra more than they take from us.

If China wants to trade, its trade -- $500 billion for $500 billion. If they simply want to use our consumers to build more factory capital we should not allow it. And because of the asymmetry in the balance of trade, we hold all the cards.

This is Trump's hand to lose by caving in. The optimal move in this game is to raise tariffs and hold until China increases its purchases.

(And -- tariffs might actually raise S&P 500 earnings long run as additional manufacturing is diverted to old and new U.S. factories -- no one knows and the prognosticator "economists" here have as much empirical evidence as the Austrian School, i.e. they really have no idea other than how they think tariffs ought to cause a recession.)

clubchampion17 hours ago ,

There were much better ways to do this. Trump only knows his unilateral tariff way. But it is an improvement over "lead from behind" Obama, who did nothing.

IComment4Fun clubchampion9 hours ago ,

Obama's TPP would have organized the largest trade group in history, in asia, to counter China.... Why are you so misinformed?

Pierre_Rasputin19 hours ago ,

So it could be this, or it could be that?
I was wrong before, but now I know....something.
And you get paid for this?

mountaintraveler Pierre_Rasputin19 hours ago ,

The less blind leading us even more blind?

Brueskiea day ago ,

The West normalizing relations with China is apt to go down as the biggest blunder in all of human history. China needs to be isolated and cut off at the knees.

Weather30147 hours ago ,

Chinese trade policies have always been predatory to the US across Republican and Democrat administrations since Reagan was President. The cost of labor in China is cheap at about $4/hour. Add to that there are few environmental or OSHA-like standards and the pollution is so obvious that at the 2008 Beijing Olympics industry was shut down so that the smog might clear. No US manufacturer without tariff protection can compete with that for unskilled labor. That is a fact. If the US wants to keep some semblance of manufacturing in this country, then tariffs are necessary. And that goes for the countries in the New Nafta and the proposed TPP. The hypocrisy on tariffs is maddening because California's agricultural and Maine and Massachusetts' shoe industry for just a few examples survive only because of the tariffs. Getting tough with China is long overdue, and the political outrage over trying to protect US interests is just Trump Derangement from educated people who should know better.

sandrala9 hours ago ,

Buying "made in China" was far too easy, although quality usually suffered (and sometimes dangerously so). Tariffs will force our purchasing agents to look around for better deals...Not a bad idea.

Alum10 hours ago ,

We need to stop allowing Chinese Nationals into our STEM programs!

Look at any graduate program at a top US University's comp sci program, physics, math or any engineering department and you will see that it is heavily filled -- if not dominated -- by Chinese Nationals.

China has a well organized program to send students to IS STEM programs and US jobs at tech firms and steal the technology.

emno311 hours ago ,

I mean...same plan forever?
That plan is to soak the middle class to make life better for the working class. The theory is mfg will return to the US, because we'll have 9-billion percent tariffs on all imports.

The net middle-class life goes downhill, the net working-class life goes up.
then next software and robots will be outlawed.

The wealthy, of course, stay wealthy.

robertjberger16 hours ago ,

Trump is executing Putin's plan to destroy the West from within.

billsimpson16 hours ago ,

Washington & Wall Street want to stay top dog as long as possible. If that means most Americans are poorer than they might be, their attitude is, too bad for them. The power base only looks out for itself. That isn't too surprising, since most people are selfish.
The rise of China would be no big deal if it wasn't a totalitarian state. That makes it extremely dangerous, depending on the wishes of the man at the top. Fortunately, the US is protected from invasion by large oceans, and democratic neighbors with close trade and cultural ties. And then there are all the nukes. No sane person would risk using them first.

Bobby17 hours ago ,

I am amazed at the people here commenting on Trump's evil schemes. CHINA IS EVIL, not America. Geesh!

peacenik18 hours ago ,

very nice, very nice, how much, how much.

Historybuff20 hours ago ,

Good article.

Mr. Smith writes about the 'why' of trumpy's trade war:

"It's also possible, of course, that the trade war is a purely populist endeavor, and that maintaining tariffs is simply a way for Trump to look tough. "

Reality TV show for trumpy... that will hurt millions of Americans... and trumpy and his cronies will never feel it. Just like his business partners that he cheated.

Nice job, 'trumpy republicans'.
HB

Arwa620821 hours ago ,

You hit the nail right on the head! Good report. Pres Trump main goal is to cripple and contain the rise of China. The trade war is his strategy. As to whether it will succeed or not, only time will tell....The rest of the reasons are just "red herrings" and surprisingly, most Americans felled for it hook line and sinker. But the rest of the world knows all along because US is a hegemonic nation and there are abundant examples of countries that were destroyed by the US for challenging her dominance all over the world. That's why US keep changing the "goal post" from trade deficits to stealing of intellectual property and force technology transfers and now state subsidies. Just as China agrees to US demands, the latter now up the ante and is now insisting that China has to change her laws so that the US can enforce them. Very soon it will be regime change. It will be interesting to see what happen next because to me war is never easy to win. Both sides will suffer and so will the rest of the world. To even think that the US economy is immune to it because it is strong and the numbers are good and it will be able withstand the perfect storm is hubris. Maybe Pres Trump and his neocons can prove history and the Smoot Haley Tariff Act wrong...?

msdds1a day ago ,

If you know anything about Narcissists, this is most likely Trumps way of getting you to focus on something other than his deplorable Mueller report, his son DonJr, his huge losses as a business man and his impending Tax returns exposed.

[May 13, 2019] Markets Tumble As China Unveils Retaliatory Tariffs, May Dump Some Treasuries

May 13, 2019 | www.zerohedge.com

After vowing over the weekend to "never surrender to external pressure", Beijing has defied President Trump's demands that it not resort to retaliatory tariffs and announced plans to slap new levies on $60 billion in US goods.

China's announcement comes after the White House raised tariffs on some $200 billion in Chinese goods to 25% from 10% on Friday (however, the new rates will only apply to goods leaving Chinese ports on or after the date where the new tariffs took effect).

Here's a breakdown of how China will impose tariffs on 2,493 US goods. The new rates will take effect at the beginning of next month.

In further bad news for American farmers, China might stop purchasing agricultural products from the US, reduce its orders for Boeing planes and restrict service trade.

There has also been talk that the PBOC could start dumping Treasurys (which would, in addition to pushing US rates higher, could also have the effect of strengthening the yuan). Though if China is going to dump Treasuries, will they also be dumping US stocks and real estate?

Hu Xijin 胡锡进 @HuXijin_GT

China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China. Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically.

[May 12, 2019] Trump We Are Right Where We Want To Be With China

May 12, 2019 | www.zerohedge.com

"It's not China that pays tariffs. It's the American importers, the American companies that pay what in effect is a tax increase and oftentimes passes it on to U.S. consumers," Wallace said.

As we noted earlier , on Saturday, President Donald Trump said in tweets that it would be wise for China to "act now" to finish a trade deal with the U.S., warning that "far worse" terms would be offered after what he predicted would be his certain re-election in 2020.

* * *

And so, as attention turns to China's "countermeasures", Bloomberg notes that while the Communist Party hasn't yet announced what steps it would take, "the commentaries are probably the first part of its response, since state media in China is tightly controlled and the government dictates what can be covered."

"If they weren't being seriously provoked, the Chinese people would not favor any trade war. However, once the country is strategically coerced, nothing is unbearable for China in order to safeguard its sovereignty and dignity," the Global Times said in the editorial. If the U.S. is to play a roller-coaster-style thriller game, it will bear the consequences."

In an earlier editorial, the Global Times said the U.S. has made a fundamental misjudgment, that is, believing China is unilaterally benefiting from China-U.S. economic and trade relations."

"The U.S. has misunderstood the interests of both sides, and seriously underestimated China's endurance," the Global Times warned.

So to summarize the current state of the talks that on Friday were described as "constructive" helping send the Dow soaring by over 500 points intraday, here is a quick recap courtesy of Mish Shedlock :

  1. Trump demands China put commitments into law.
  2. China replied that "no one should expect China to swallow bitter fruit that harms its core interests".
  3. Trump ordered Lighthizer to begin the process of imposing tariffs on all remaining imports from China This would impact an additional $300 billion worth of goods.
  4. China said it would retaliate.
  5. On Saturday, Trump warned China not to retaliate or it would face worse terms. Trump Tweeted "Love collecting BIG TARIFFS!"
  6. Kudlow said on Sunday he expected retaliatory tariffs to kick in but that it had not happened yet.
  7. China warned Trump on Sunday not to underestimate China's endurance and that China is not afraid to fight.
  8. China posted its own set of demands for further talks including the removal of all extra tariffs.

As Mish concludes, "This dialog is what's known as "constructive". It's so constructive that further talks between Trump and have been pushed back until the end of June, subject to change of course."

Meanwhile, as the market's hope for quick resolution fades, keep an eye on Apple and other Chinese consumer-reliant companies, for the market's snap reaction - if Beijing plans to engage in "soft retaliation", it is those corporations that derive much of their revenue from China that will be hit first and hardest. And if there is indeed a shift in sentiment, it will first appear in US equity futures and Chinese stocks, both of which open for trading in just a few hours.


beemasters , 2 hours ago link

The idea behind imposing tariffs is to discourage buying, but 10-25% doesn't really make an impact on that front. It only proves that the gubbermint wants to squeeze more out of the little people. Unfortunately, it will backfire (if not already) as shortsighted policies (especially ones that are carried out over Twitter) usually do.

CashMcCall , 2 hours ago link

The verdict is not in on that yet. A corporation like Cummins can pay the tariff and deduct it as a business expense same with a importer that is a corporation. LCC now have been destroyed by RINOTAX so they must pass that on to consumers or change to corporations. Bottom line the consumer and or Taxpayer will eat the Tariffs.

Large multinationals are livid at Trump for this. The GOP is comatose, It has the feeling of a George Bush Subprime moment. The GOP is going to take a big hit for this. Trump is mentally ill and out of control. Congress will have to rescind the section 232 delegation and remove that power from Trump.

CashMcCall , 2 hours ago link

The us trades with 102 nations and China has factories and banks in virtually all Asian countries. So there is a logistical fix for this too. And as I have said before HONG KONG has its own treaty with the USA so it is immune to Trump Tariffs. All tariffs are based on shipping origins and destinations so that's a pretty easy fix. Attacking 1 country out of 102, just makes the other 101 countries nervous about the arbitrary and capricious conduct of Trump.

China as you yourself stated is a heavyweight not some small outfit that can be pushed around by Trump. China is the largest manufacturer in the world. 1000 metric tons of steel etc. Trump is harming US multinationals in China so Trump's days are numbered. Corporations will be hamming republicans tomorrow. Trump is not smart, he's mentally ill and very sick. He had a breakdown when he closed the gov and this is similar in that his mental illness responses are the same paranoia. The threats are similar etc. Same disease different circumstance. And China knows this. They put the hammer down with their three demands. They will not budge.

China gets a bad rap because they were once very poor. But Gen MacArthur said that if the Chinese Army had not held off the Japanese and fought to the death, the US Marines could not have taken the Japanese islands.

One other point. Part of the Asian culture is restraint. If China wanted to bust TRUMP hard they would cancel all Boeing Aircraft orders. Mao would have done that. China is now very focused on business and trade and will only retaliate in small measured ways.

Haboob , 2 hours ago link

Well said.

China is not interested in causing conflict as they are too busy winning hearts and minds like America did when it was a fledgling superpower.

CashMcCall , 1 hour ago link

America's character went to **** in Vietnam. Then Bush family war criminals got into power. The only thing good about Obama was he distanced America from the Jooz. But along came Trump and his joo daughter and son of a crook in law Kushner and then Trump was antagonizing Iran, Jerusalem with the US embassy and put a US military base in Israel. So Trump is Bibi's houseboy. Then to enforce this Trump appoints bolton, pompeo and Abrams, arms Saudi and signs on for year 17 in Afghanistan. Yet all this is just fine with the TRUMPTARDS as long as they can chant built the wall. Absolutely astonishing how this Orange Tyrant is never held accountable by his Trumptards.

beemasters , 2 hours ago link

'Fierce' and 'irrational' pretty much sum up the POTUS' personality. They are spot on.

CashMcCall , 2 hours ago link

Trump sounds terrified. His 60 tweets a day are indicative of someone suffering from fear. I have seen this in battle and thats why everyone else gets clear of the yapper. His number is up.

ElBarto , 3 hours ago link

I wonder if the Chinese media will show all the factories owned by the communist party cadres chugging along with free money from the government, while millions of workers in privately owned factories are losing their jobs. All Trump wanted was for these government run industries to go private, but the communist party needs to give jobs to friends and relatives. Because if you're not a friend or relative of the communist party, you don't really matter in China.

HoyeruNew , 2 hours ago link

what about the factories of Lockheed martin, Boeing, rayteon, churning along along with free money from the US government, while millions of workers in privately owned companeis such as SEARs, Toys R US are losing their jobs?

there I fixed it for you.

Haboob , 2 hours ago link

HAHA well said. America is a fascist country same as China is without the whole stigma of gommunism.

Haboob , 2 hours ago link

Correction, Trump wants China to open up their markets to western exploitation which is not happening. If you understand history about China it is mired in exploitation from European powers in the region. I don't blame China for its protectionism and their ambitions to become an independent country.

ludwigvmises , 3 hours ago link

The Orange Swine cut taxes for big corporations and multi millionaires and now lets middle class consumers pay the trade war with China. And then orders the Fed to cut rates by 1% to destroy the Dollar. What's next? Value added tax anyone?

CashMcCall , 3 hours ago link

China trade and USA small potatoes..


1 Asia 2,094.4

2 Europe 696.3

3 North America 613.1

4 Latin America 235.9

5 Africa 178.8

6 Oceanic and Pacific Islands 133.4

North American includes the USA and Canada. China exports 438 Billion and imports 180 billion from North America.

So if you look at it intelligently, US Tariffs have very little leverage but do harm the US supply chain enormously. When China applies retaliatory tariffs to the US and Canada, they can hurt you badly. The US farmer is the prime example.

But the most important thing to look at is not your silly protectionism but the size of the ASIAN markets. China has been consolidating all of Asia. They have companies and banks in all of those countries and their Asia Trade alone is over 2 trillion annually. Trump screams about applying tariffs to 380 Billion in goods with no comprehension of how much he loses in access to Asia.

So as Bill O'Neil said, the only thing that matters for the next 100 years is the Asian Consumer. Nothing else matters. Asian growth is exploding.

The chief export of the USA is aircraft 130 Billion a year. That will change drastically with Boeing. China is building its own narrow body aircraft. Russia is also getting into the narrowbody aircraft space. The US doesn't want to be cultivating enemies in Asia.

[May 12, 2019] The US-China trade war just got a lot worse. And there's no quick fix for relations by Robyn Dixon and Don Lee

Many go directly to Washington coffers. But maney will be taken mostly from the US consumers of Chinese goods. Also it is unclear what sanctions China will introduce in return, if any.
Notable quotes:
"... But the prolonged trade war — and Friday’s tariff hike — serves as ammunition for hawks on both sides, who see a more confrontational struggle for global dominance unfolding. ..."
"... In China, there is a growing belief that the U.S. motive in the talks is not to balance trade relations, but to undermine China, slow its rise and hamper its ability to best America in strategic high-tech fields. ..."
"... Hu Xijin , editor of the Communist Party-owned Global Times , has tweeted in English that China was “fully prepared for an escalated trade war.” He argued there is increased popular support in Beijing for a confrontational approach to the U.S. ..."
"... “The real intention of the U.S. is to squeeze China’s space in new technologies,” the editorial said. ..."
"... “Things will continue to slide downward into deeper competitive tensions,” Gill predicted, “including on the economic front because trade is not the problem. The deeper problem … is the question of economic and technological competition. ..."
"... Chinese President “Xi Jinping is not a forgiving man, so I think we can see that Xi Jinping will take a more robust stance against the U.S. if and when he feels that the Chinese government is able to do so successfully,” Tsang said. ..."
"... The United States faces a possibility that in decades, China could overtake it as the world’s largest economy. China’s economy is already ranked No. 1 in terms of purchasing parity power, a measure that adjusts GDP to account for price differences in countries. ..."
May 10, 2019 | www.latimes.com

... ... ...

Even if the two sides can break through the stalemate and strike a deal on trade, the larger message of the week is that U.S.-China relations have changed fundamentally, and there is probably no going back.

Although their business relations are deeply entwined, the White House and China view themselves as aggressive rivals jostling for global influence and geopolitical power.

The trade war launched by Trump is just one manifestation of this. Military friction in the South China Sea, a string of espionage scandals, China’s rising military strength and the Trump administration’s battle against Chinese tech giant Huawei are all signs of an ominous chill in relations.

Although a trade deal seemed at hand in recent weeks, Trump administration officials have accused China of reneging on agreements that had been made over months of negotiations. To pressure Beijing to return to its previous commitments, Washington ratcheted up tariffs on $200 billion in products from China from 10% to 25%. China announced immediately that it would retaliate.

Some experts said last-minute revisions from China are typical of its negotiating strategy, as with Trump’s mercurial bargaining style.

If trade negotiators do not reach a deal in coming weeks, the U.S., Chinese and global economies will be hurt, say analysts, who assume both sides will find a way to end the impasse.

“My baseline scenario is that both leaders still need a deal for political reasons, so we are likely to get one in the next few weeks, but it won't be this week,” said Arthur Kroeber of Gavekal Dragonomics , a financial research firm headquartered in Hong Kong. “The maneuvering right now is mainly end-of-negotiation stuff. But both sides are playing brinkmanship pretty hard so there is material risk (say 20 to 25%) that we don’t get a deal.”

But the prolonged trade war — and Friday’s tariff hike — serves as ammunition for hawks on both sides, who see a more confrontational struggle for global dominance unfolding.

In China, there is a growing belief that the U.S. motive in the talks is not to balance trade relations, but to undermine China, slow its rise and hamper its ability to best America in strategic high-tech fields.

Tariffs already have prompted some U.S. firms in China to shift their supply chains elsewhere. China hawks in the Trump administration believe that applying heavy taxes on imports can be one way to “decouple” from China.

U.S. legal charges against Huawei executive Meng Wanzhou, and Secretary of State Michael R. Pompeo’s blunt efforts to dissuade European nations from using Huawei in 5G telecom networks by threatening not to share intelligence, have hardened suspicions in China, as have harsh criticisms and rhetoric from other senior officials in the Trump administration.

“None of the news of the past year or two has been very positive in terms of the geopolitical direction of this relationship. It’s gone from tense to worse, and while the trade relationship seems to get a lot of the headlines, a lot more problematic, even dangerous elements are unfolding in other areas of the relationship particularly around security and military affairs,” said Bates Gill, China expert and professor at Macquarie University in Sydney, Australia.

“A so-called resolution of the current trade war is not going to remove or resolve the fundamental structural problems in the economic relationship,” he said.

U.S. business has long favored engagement with China, arguing that external pressure from the United States and others has pushed China to open its economy. More recently, however, that assumption has been called into question by many in the West, giving Trump more political space to go after China on trade and other areas.

Still, Jacob Parker , vice president of China Operations at the U.S.-China Business Council , warned that if the Trump administration confronts China too aggressively, it could backfire. He said that instead of persuading China to open up more to American companies and ending its insistence that they share their technology in return for market access, aggressive new tariffs could have the opposite effect.

Parker also warned that Friday’s tariff hike on $200 billion of Chinese imports — and Trump’s threats to slap tariffs on an additional $325 billion in Chinese goods in the near future — has undermined economic reformers in the Chinese system and strengthened the voices of hard-liners.

“That hardens those voices domestically and reinforces the perspective that the U.S. is trying to contain China,” he said. “If we push the Chinese too far, I think there’s a concern in the business community that we may go beyond what China can accept and that things could start to fall apart. If that happens, I think we can at the least expect that the Chinese economic reform process would come to an end.”

And in Washington, the lack of a deal would result in “increased tensions between the national security wing of the U.S. administration, who will be happy with this result, and the business-tech community, who are anxious to expand their participation in China and will be pretty mad,” said Kroeber, of the Hong Kong financial research firm.

Stephen K. Bannon , former chief strategist to Trump, is among a group of hawks who formed the Committee on the Present Danger: China, an organization that sees its role as warning Americans and political and business leaders of the “existential threats” to America posed by China.

Meanwhile, Hu Xijin , editor of the Communist Party-owned Global Times , has tweeted in English that China was “fully prepared for an escalated trade war.” He argued there is increased popular support in Beijing for a confrontational approach to the U.S.

“More and more Chinese now tend to believe the current US government is obsessed with comprehensively containing China,” he tweeted Thursday.

A Global Times editorial Thursday said trade was “only a sideshow” in the confrontation between the U.S. and China and the real issue was the U.S. fear that China would catch up to it in high-tech fields.

“The real intention of the U.S. is to squeeze China’s space in new technologies,” the editorial said.

Many analysts, including Australian professor Gill, share the view that relations are in long-term decline.

“Things will continue to slide downward into deeper competitive tensions,” Gill predicted, “including on the economic front because trade is not the problem. The deeper problem … is the question of economic and technological competition.

“Ultimately at the bottom of all of this, the problem abides that the two countries don’t trust each other and see each other as long-term strategic competitors.”

Steve Tsang , director of the SOAS China Institute at the University of London, said regardless of who is president, the U.S. and China will become increasingly competitive in the next two decades.

Chinese President “Xi Jinping is not a forgiving man, so I think we can see that Xi Jinping will take a more robust stance against the U.S. if and when he feels that the Chinese government is able to do so successfully,” Tsang said.

As relations decline, both Washington and Beijing are likely to compete to draw countries into their orbit, he predicted.

He said European countries and the U.K. would drift toward the U.S. “because ultimately this is what we believe in more. You will have a whole bunch of other countries that will drift towards the Chinese because they remain fundamentally authoritarian states.”

China’s global Belt and Road Initiative — in which it projects its international power through soft loans for infrastructure — would also draw some nations to China, he added.

Underscoring frictions are U.S. fears that China may overtake it in a range of high-tech fields including space exploration, artificial intelligence, surveillance technology, driverless cars and even military hardware.

Huawei’s emergence as the global leader in 5G technology — with no American rival — was a shock to U.S. policymakers.

Parker, of the U.S.-China Business Council, said that although the U.S. and China face a challenging security relationship, it is important to ensure that trade is not affected.

“I think there’s definitely a competitive dynamic between the U.S. and China, and that will continue into the future. The twist is to ensure that the national security issues don’t get entwined with the businesses’ side.”

The United States faces a possibility that in decades, China could overtake it as the world’s largest economy. China’s economy is already ranked No. 1 in terms of purchasing parity power, a measure that adjusts GDP to account for price differences in countries.

“It would be a major milestone. It would send a lot of shock waves and shivers certainly in the United States and much of the rest of the world and I think would be seen as a major turning point, not unlike the United States overtaking the United Kingdom as the world’s largest economy back in the late 19th century,” Gill said. “It would certainly be the end of an era and the beginning of a new one.”

Trump’s tariff hike on Chinese goods takes effect as the two sides keep talking »


markmcintyre726 in reply to jim000659

Trump's misguided tariff/trade war policies are straight out of the 19th century. They are tearing apart relations with our allies and playing straight into Putin's hands. They will cost U.S. consumers and businesses billions in tariff fees and higher prices on goods. They are squeezing American farmers to the breaking point. Nobody wins a trade war.

[May 12, 2019] Odds Point To A Worst-Case Scenario Shocked Traders Respond To Latest Trade War Twist

Trump bravado is probably unwarranted. Here the train already left the station: the USA can do a damage to Chine economy only by talking considerable damage to the empire and probably to the status of the dollar as well.
Notable quotes:
"... Commenting on this list, the Editor in Chief of the Global Times, Hu Xijin, who has become a real-time translator for Chinese unspoken intentions on twitter, explained that "from perspective of China's politics, there is little room for compromises. They will insist. This political logic won't be changed no matter how much additional tariffs the US will impose." ..."
"... Trump responded immediately on Twitter when he made it clear on Saturday that the US would not relent, stating that the Chinese may have felt they were "being beaten so badly" in the recent talks that it was better to drag their feet in hopes he would lose the 2020 election and get a better deal from the Democrats. Trump then said that "the only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!" ..."
May 12, 2019 | www.zerohedge.com

Following some soothing words from both the US and Chinese sides on Friday that while talks to avert a tariff hikes had failed, they were "constructive" and there was grounds for "cautious optimism" for the future, the standoff between the U.S. and China abruptly escalated over the weekend when China's vice premier Liu He said that China is planning how to retaliate and listed three core concerns that must be addressed, and on which it wouldn't make concessions, ahead of any deal including:

Commenting on this list, the Editor in Chief of the Global Times, Hu Xijin, who has become a real-time translator for Chinese unspoken intentions on twitter, explained that "from perspective of China's politics, there is little room for compromises. They will insist. This political logic won't be changed no matter how much additional tariffs the US will impose."

Trump responded immediately on Twitter when he made it clear on Saturday that the US would not relent, stating that the Chinese may have felt they were "being beaten so badly" in the recent talks that it was better to drag their feet in hopes he would lose the 2020 election and get a better deal from the Democrats. Trump then said that "the only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!"

[May 12, 2019] Why Further U.S.-China Economic War Seems Certain by Alan Tonelson

May 12, 2019 | nationalinterest.org

Trade, however, doesn't represent the only U.S.-China economic activity whose profile has lowered recently. For example, since 2016, two-way foreign direct investment (purchases of so-called hard assets, like factories and real estate, as opposed to financial assets, like government bonds) has cratered by fully 70 percent. Most of the drop is due to an 80 percent decrease in Chinese investment in the United States, and the bulk of that decline came in 2018. But American direct investment in China peaked back in 2008, as the recession struck, hasn't come close to recovering since, and is also down slightly since 2012.

U.S.-China economic flows are still so great that they won't dry up completely. Nor should anyone expect the current unwinding to continue at its current pace. After all, China still boasts advantages in many manufacturing industries (which dominate bilateral trade) sure to sustain sales to American households and businesses. Chief among them are the scale of existing production complexes in China and the efficiencies that result, along with the wide range of cost-reducing subsidies these sectors receive from Beijing. Further, China can't expect to find foreign markets capable of replacing its sales to the United States, and therefore supporting its own ability to grow and maintain the employment levels vital for political stability. Nor will American businesses be able to totally blow off the enormous Chinese market and its own still-impressive growth.

.... ... ...

Nonetheless, the days are over when the United States -- or at least its political and business leaders -- saw mushrooming commerce with China as an expressway to greater national prosperity and higher profits, not to mention a powerful contributor to global well-being, security, and stability, and a means of democratizing China itself. With all these hopes dashed, Washington and the American business community will find ample reasons to keep looking for exits.

Alan Tonelson is the founder of RealityChek, a public policy blog focusing on economics and national security, and the author of The Race to the Bottom.

R. Arandas an hour ago ,

I do not necessarily support his course of action...but I feel that sometimes, doing the unexpected and unconventional thing can lead to new doors and new possibilities.

BigMike 17 hours ago ,

China's internal debt situation is so precarious that it can ill-afford a trade war with US. China has a trade surplus of $325 billion with the US. This kind of skewed number is totally unacceptable. By reneging on the provisional agreements over IP and other hurdles, China is playing with fire.

I am not a Trump supporter but I think his policy on China is right on the money. No other US president had the courage to address this issue.

[May 12, 2019] The U.S.-China trade war just got a lot worse. And there's no quick fix for relations - Los Angeles Times

May 12, 2019 | www.latimes.com

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Even if the two sides can break through the stalemate and strike a deal on trade, the larger message of the week is that U.S.-China relations have changed fundamentally, and there is probably no going back. Although their business relations are deeply entwined, the White House and China view themselves as aggressive rivals jostling for global influence and geopolitical power. The trade war launched by Trump is just one manifestation of this. Military friction in the South China Sea, a string of espionage scandals, China's rising military strength and the Trump administration's battle against Chinese tech giant Huawei are all signs of an ominous chill in relations. Although a trade deal seemed at hand in recent weeks, Trump administration officials have accused China of reneging on agreements that had been made over months of negotiations. To pressure Beijing to return to its previous commitments, Washington ratcheted up tariffs on $200 billion in products from China from 10% to 25%. China announced immediately that it would retaliate. Some experts said last-minute revisions from China are typical of its negotiating strategy, as with Trump's mercurial bargaining style. If trade negotiators do not reach a deal in coming weeks, the U.S., Chinese and global economies will be hurt, say analysts, who assume both sides will find a way to end the impasse. "My baseline scenario is that both leaders still need a deal for political reasons, so we are likely to get one in the next few weeks, but it won't be this week," said Arthur Kroeber of Gavekal Dragonomics , a financial research firm headquartered in Hong Kong. "The maneuvering right now is mainly end-of-negotiation stuff. But both sides are playing brinkmanship pretty hard so there is material risk (say 20 to 25%) that we don't get a deal." But the prolonged trade war -- and Friday's tariff hike -- serves as ammunition for hawks on both sides, who see a more confrontational struggle for global dominance unfolding. In China, there is a growing belief that the U.S. motive in the talks is not to balance trade relations, but to undermine China, slow its rise and hamper its ability to best America in strategic high-tech fields. Tariffs already have prompted some U.S. firms in China to shift their supply chains elsewhere. China hawks in the Trump administration believe that applying heavy taxes on imports can be one way to "decouple" from China. U.S. legal charges against Huawei executive Meng Wanzhou, and Secretary of State Michael R. Pompeo's blunt efforts to dissuade European nations from using Huawei in 5G telecom networks by threatening not to share intelligence, have hardened suspicions in China, as have harsh criticisms and rhetoric from other senior officials in the Trump administration. "None of the news of the past year or two has been very positive in terms of the geopolitical direction of this relationship. It's gone from tense to worse, and while the trade relationship seems to get a lot of the headlines, a lot more problematic, even dangerous elements are unfolding in other areas of the relationship particularly around security and military affairs," said Bates Gill, China expert and professor at Macquarie University in Sydney, Australia. Advertisement "A so-called resolution of the current trade war is not going to remove or resolve the fundamental structural problems in the economic relationship," he said. U.S. business has long favored engagement with China, arguing that external pressure from the United States and others has pushed China to open its economy. More recently, however, that assumption has been called into question by many in the West, giving Trump more political space to go after China on trade and other areas. Still, Jacob Parker , vice president of China Operations at the U.S.-China Business Council , warned that if the Trump administration confronts China too aggressively, it could backfire. He said that instead of persuading China to open up more to American companies and ending its insistence that they share their technology in return for market access, aggressive new tariffs could have the opposite effect. Parker also warned that Friday's tariff hike on $200 billion of Chinese imports -- and Trump's threats to slap tariffs on an additional $325 billion in Chinese goods in the near future -- has undermined economic reformers in the Chinese system and strengthened the voices of hard-liners. "That hardens those voices domestically and reinforces the perspective that the U.S. is trying to contain China," he said. "If we push the Chinese too far, I think there's a concern in the business community that we may go beyond what China can accept and that things could start to fall apart. If that happens, I think we can at the least expect that the Chinese economic reform process would come to an end." And in Washington, the lack of a deal would result in "increased tensions between the national security wing of the U.S. administration, who will be happy with this result, and the business-tech community, who are anxious to expand their participation in China and will be pretty mad," said Kroeber, of the Hong Kong financial research firm. Advertisement

Stephen K. Bannon , former chief strategist to Trump, is among a group of hawks who formed the Committee on the Present Danger: China, an organization that sees its role as warning Americans and political and business leaders of the "existential threats" to America posed by China. Meanwhile, Hu Xijin , editor of the Communist Party-owned Global Times , has tweeted in English that China was "fully prepared for an escalated trade war." He argued there is increased popular support in Beijing for a confrontational approach to the U.S. "More and more Chinese now tend to believe the current US government is obsessed with comprehensively containing China," he tweeted Thursday. A Global Times editorial Thursday said trade was "only a sideshow" in the confrontation between the U.S. and China and the real issue was the U.S. fear that China would catch up to it in high-tech fields. "The real intention of the U.S. is to squeeze China's space in new technologies," the editorial said. Many analysts, including Australian professor Gill, share the view that relations are in long-term decline. "Things will continue to slide downward into deeper competitive tensions," Gill predicted, "including on the economic front because trade is not the problem. The deeper problem is the question of economic and technological competition. "Ultimately at the bottom of all of this, the problem abides that the two countries don't trust each other and see each other as long-term strategic competitors." Steve Tsang , director of the SOAS China Institute at the University of London, said regardless of who is president, the U.S. and China will become increasingly competitive in the next two decades. Chinese President "Xi Jinping is not a forgiving man, so I think we can see that Xi Jinping will take a more robust stance against the U.S. if and when he feels that the Chinese government is able to do so successfully," Tsang said. As relations decline, both Washington and Beijing are likely to compete to draw countries into their orbit, he predicted. He said European countries and the U.K. would drift toward the U.S. "because ultimately this is what we believe in more. You will have a whole bunch of other countries that will drift towards the Chinese because they remain fundamentally authoritarian states." China's global Belt and Road Initiative -- in which it projects its international power through soft loans for infrastructure -- would also draw some nations to China, he added. Underscoring frictions are U.S. fears that China may overtake it in a range of high-tech fields including space exploration, artificial intelligence, surveillance technology, driverless cars and even military hardware. Huawei's emergence as the global leader in 5G technology -- with no American rival -- was a shock to U.S. policymakers. Parker, of the U.S.-China Business Council, said that although the U.S. and China face a challenging security relationship, it is important to ensure that trade is not affected. "I think there's definitely a competitive dynamic between the U.S. and China, and that will continue into the future. The twist is to ensure that the national security issues don't get entwined with the businesses' side." The United States faces a possibility that in decades, China could overtake it as the world's largest economy. China's economy is already ranked No. 1 in terms of purchasing parity power, a measure that adjusts GDP to account for price differences in countries. "It would be a major milestone. It would send a lot of shock waves and shivers certainly in the United States and much of the rest of the world and I think would be seen as a major turning point, not unlike the United States overtaking the United Kingdom as the world's largest economy back in the late 19th century," Gill said. "It would certainly be the end of an era and the beginning of a new one." Trump's tariff hike on Chinese goods takes effect as the two sides keep talking "

[May 11, 2019] China tariffs could add $2,500 to average car price, says expert

[Video]
Notable quotes:
"... And if we don't protect manufacturing jobs in the US the whole damned car will be made in China and there won't be decent paying jobs here manufacturing them. ..."
"... I have worked with Chinese auto parts suppliers. They run from OK to horrible. ..."
"... In reality, the tariffs are 'cash in the bank' for the U.S. Treasury. If nothing else, tariffs will allow our politicians to spend more each year - perhaps we might even get to the point that our nation avoids 'deficit spending' for at least one year. ..."
May 11, 2019 | finance.yahoo.com

John Murphy of Bank of America joins CNBC's "Closing Bell" to discuss the impact of new tariffs on the auto industry.


William 23 hours ago

And if we don't protect manufacturing jobs in the US the whole damned car will be made in China and there won't be decent paying jobs here manufacturing them.

c craig f 21 hours ago

Cars that do not use Chinese parts will sell better and the world it will keep turning

P Park Slope 23 hours ago

Great. I'll keep my old one. Thanks for the savings.

BobBob, yesterday

I have worked with Chinese auto parts suppliers. They run from OK to horrible. I'd never buy from them - maybe as a LAST option to avoid going belly up. The problem then becomes losing repeat customers due to quality and reliability problems....

GeorgeGeorge, 10 hours ago

Do not understand how the anti-Trump politicians and the media can be against these tariffs. In reality, the tariffs are 'cash in the bank' for the U.S. Treasury. If nothing else, tariffs will allow our politicians to spend more each year - perhaps we might even get to the point that our nation avoids 'deficit spending' for at least one year.

[May 11, 2019] China Lists The Three Conditions To Agree To Trade Deal

May 11, 2019 | www.zerohedge.com

In an unusual move, the Chinese delegation has come clean to the domestic press about Beijing's remaining trade-deal related demands, exposing steep divides that could make it a final deal impossible for Trump, who has repeatedly said he will only accept a "great" deal.

Unsurprisingly, Liu He, the leading Chinese trade negotiator, confirmed what Beijing has intimated time and time again :

That without the complete removal of all trade-war related tariffs, Beijing will not remorse a deal.

The other two demands were related to American commitments to buy Chinese goods , something that could also pose a problem.

In a wide-ranging interview with Chinese media after talks in Washington ended Friday, Vice Premier Liu He said that in order to reach an agreement the U.S. must remove all extra tariffs, set targets for Chinese purchases of goods in line with real demand and ensure that the text of the deal is "balanced" to ensure the "dignity" of both nations.

[May 11, 2019] China Names Its Trade-Deal Price as Trump Sets New Deadline

May 11, 2019 | www.bloomberg.com

China for the first time made clear what it wants to see from the U.S. in talks to end their trade war, laying bare the deep differences that still exist between the two sides.

In a wide-ranging interview with Chinese media after talks in Washington ended Friday, Vice Premier Liu He said that in order to reach an agreement the U.S. must remove all extra tariffs, set targets for Chinese purchases of goods in line with real demand and ensure that the text of the deal is "balanced" to ensure the "dignity" of both nations.

Liu's three conditions underscore the work still to be done if an accord is to be reached between the world's two largest economies. President Donald Trump's own negotiators told China it has a month to seal a deal or face tariffs on all its exports to the U.S.

That threat was made during talks Friday in Washington, hours after Trump upped the ante by imposing a second round of punitive duties on $200 billion in Chinese goods. China vowed retaliation, but hadn't announced any details as of Saturday evening in Beijing.

U.S. Trade Representative Robert Lighthizer said the administration would on Monday release details of its plans for tariffs on an additional $300 billion in imports from China, setting the process in motion for Trump to deliver on the threat to hammer all Chinese trade.

U.S. officials insist they have been working on a deal that would bring an end to what they portray as China's rampant theft of American intellectual property and rein in the industrial subsidies that have fueled the rapid ascent of Chinese corporate giants.

Trump's move to raise tariffs on Friday came after China backed away from prior commitments to enshrine changes promised at the negotiating table in Chinese law, according to U.S. officials. During his meetings in Washington this week Liu said China was ready to commit to pushing reforms via State Council directives but again balked at changing any laws, according to one person familiar with the discussions.

In his interview Liu said both sides agreed to keep talking despite what he called "some temporary resistance and distractions,'' and to hold future meetings in Beijing. He dismissed the idea that talks had broken down. "It's normal to have hiccups during the negotiations. It's inevitable."

Liu also struck a note of defiance. "For the interest of the people of China, the people of U.S. and the the people of the whole world, we will deal with this rationally," the vice premier said. "But China is not afraid, nor are the Chinese people," adding that "China needs a cooperative agreement with equality and dignity."

'Candid and Constructive'

In a series of tweets that cheered markets, Trump declared Friday that the talks with China had been candid and constructive. "The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue," he said. Further talks are possible, but there's no immediate plan for the next round, according to a person familiar with the negotiations.

Liu's comments, however, revealed yet another new fault line: a U.S. push for bigger Chinese purchases to level the trade imbalance than had originally been agreed.

To Be Tariffed...Maybe

Top 10 U.S. imports from China which haven't been tariffed in current dispute

https://www.bloomberg.com/toaster/v2/charts/a4cbca7583de4d4b8f0a03d81cca277e.html?brand=politics&webTheme=politics&web=true&hideTitles=true

Source: U.S. International Trade Commission

<style> .chart-js { display: none; } </style> <img src="https://assets.bwbx.io/images/users/iqjWHBFdfxIU/ia8Px00T7e.8/v0/-1x-1.png">

According to Liu, Trump and Chinese President Xi Jinping agreed "on a number" when they met in Argentina last December to hammer out the truce that set off months of negotiations. That "is a very serious issue and can't be changed easily."

Read more about China's offer to end the imbalance in trade with U.S.

The amount of purchases by China should be "in line with reality," according to a commentary by state news agency Xinhua on Saturday. China also sees the removal of all the extra tariffs that have been imposed since last year as a precondition to a deal, whereas U.S. negotiators see retention of some duties as a key mechanism to enforce a deal.

The lack of progress left major question-marks hanging over the search for a deal on trade -- just one source of tensions in a growing geopolitical rivalry that's already shifting supply chains and testing established economic and security alliances.

Trump, who is seeking re-election on the back of a booming U.S. economy, on Friday sought to justify his decision to hike tariffs as well as to convince businesses and financial markets that he wasn't walking away from a deal.

No Rush "There is absolutely no need to rush," the U.S. president said. In another tweet, Trump proposed a vast new plan to use income from tariffs to buy up the crops of American farmers who've watched their exports to China collapse, and send them to poor countries as aid.

The presidential good humor hid what people familiar with the discussions say has been an increasingly gloomy mood around the negotiations in recent days.

Before a rebound late Friday, U.S. equity markets had posted their worst week of the year, as the trade truce that had been in place for months was shattered by the new U.S. tariffs. The S&P 500 recovered from earlier losses Friday, ending the day 0.4% higher.

Election Year

This week's tariff move is likely to have significant short-term consequences for retailers and other U.S. businesses reliant on imports from China. But extending it to all trade would increase the economic and political stakes even further for Trump and American businesses.

Such a step would see price increases on smartphones, laptops and other consumer goods -- the kind that Trump's advisers have been eager to avoid, out of concern for the domestic fallout. It would likely provoke further retaliation , and some economists are predicting it could even tip the U.S. economy into recession just as Trump faces re-election in 2020.

'Gets Harder'

This week's talks have also amplified the differences that remain between the two governments as they navigate their own domestic politics as well as a growing international rivalry.

Liu's interview underlined the need for any agreement not to be seen as undermining Chinese sovereignty -- as the U.S. demand to change domestic laws surely would be.

The text "must be balanced" for the dignity of a country, Liu said, repeating China and the U.S. are "trying to meet halfway" despite different views on some crucial issues.

Securing a trade deal is likely to get harder from here unless outside factors, such as an economic downturn , force a compromise, according to Ely Ratner, a China expert who served in the administration of President Barack Obama and is now director of studies at the Center for a New American Security think-tank.

"The question is can the Chinese come back and offer enough such that Trump can sell it?'' he said. "It is going to be hard for them to do that in the face of Trump escalating. I think it gets harder as this thing goes on, and it gets harder politically for Trump.''

-- With assistance by Jennifer Jacobs, Ye Xie, Andrew Mayeda, Jim Jia, Natalie Lung, Saleha Mohsin, and Jenny Leonard

[May 07, 2019] Bannon We're In An Economic War With China. It's Futile To Compromise by Stephen K. Bannon

Bannon is really weak. this is the logic of neoliberal that raised China: cheap labor attracts multinationals like honey attracts flies.
May 06, 2019 | www.zerohedge.com
Written by Stephen K. Bannon via the Washington Post

Stephen K. Bannon served as chief strategist for President Trump from January 2017 to August 2017.

Getting tough with China to bring manufacturing jobs back to the United States was the linchpin of President Trump's electoral march through the Rust Belt during his 2016 victory. Today, the goal of the radical cadre running China -- the Chinese Communist Party (CCP) -- is to be the global hegemonic power. The president's threatened tariffs on Sunday demonstrate the severity of this threat. But as Washington and Beijing wrap up months of negotiations on a trade deal this month, whatever emerges won't be a trade deal. It will be a temporary truce in a years-long economic and strategic war with China.

These are six "understandings" that highlight why it is futile to compromise with this regime.

The first understanding : The CCP has been waging economic war against industrial democracies ever since China joined the World Trade Organization (WTO) in 2001, and now China has emerged as the greatest economic and national security threat the United States has ever faced.

As a framework for the current trade talks, China must agree to end forced technology transfers; intellectual property theft; cyberintrusions into business networks; currency manipulation; high tariff and nontariff barriers; and unfair subsidies to state-owned enterprises. However, if the CCP agrees to the United States' demands in an enforceable manner, it would amount to a legal and regulatory dismantling of Chinese state capitalism.

The second understanding : The trade deal under negotiation this month is not a deal between two similar systems seeking closer ties, as its cheerleaders on Wall Street and in the media and academia argue. Rather, this is a fundamental clash between two radically different economic models.

The best U.S. result is a detailed document in which China renounces its predatory, confiscatory and mercantilist practices while providing ample means to monitor and promptly enforce the agreement.

The best CCP result is to get the tariffs lifted by filing reams of paper with false, unenforceable promises that will allow it to run out the clock on the Trump administration and hope for a less antagonistic Democratic alternative.

The third understanding : Chinese state capitalism is highly profitable for its owners -- the members of the CCP. Stagnant state-owned enterprises gain a competitive edge through massive government subsidies and the cost savings won by stealing the intellectual property, technology and innovations of foreigners.

If China halted such grand theft, its enterprises would be rapidly outcompeted by the Germans, South Koreans, Japanese and especially the United States.

This fact explains much about internal Chinese politics today. President Xi Jinping faces a palace sharply divided between reformers led by chief trade negotiator Liu He and a swarm of hawks who have profited and gained power from the status quo. Within China itself, it is both gallows humor and even money as to whether Liu He will be celebrated as the next Deng Xiaoping or end up in a Chinese gulag.

The fourth understanding : Trump advisers inside and outside the White House are playing on the president's well-earned pride in a rising stock market and a fear he might lose the Farm Belt to try to box him into a weak deal. But it is a decidedly false narrative that any failure to reach a deal will lead to a market meltdown and economic implosion.

In fact, there is no better argument for Trump keeping his bold tariffs on China than the latest report that the U.S. economy grew at an annualized rate of 3.2 percent in the first quarter .

Anything less than a great deal will subject the president to relentless criticism from the Charles E. Schumer and Bernie Sanders wings of the Democratic Party. In addition, Sens. Marco Rubio (R-Fla.) and Ted Cruz (R-Tex.) might use it to get to the right of Trump on China -- potentially setting up a later primary challenge. For these reasons, the president's best political option is not to surrender, but rather, to double down on the tariffs -- they have been highly effective in pressuring the Chinese without harming the U.S. economy.

The fifth understanding : Even the toughest agreement needs effective monitoring, which is difficult even with accommodating partners and perhaps impossible with China. The danger is for the president to sign what appears to be a reasonable deal and find out several years later that the United States was hoodwinked.

The United States failed to adequately monitor China's entry into the WTO in 2001. Instead of access to a billion Chinese consumers, the United States lost more than 5 million manufacturing jobs since 2000.

The sixth understanding : The world now bears witness to a rapidly militarizing totalitarian state imprisoning millions in work camps; persecuting Uighurs, Christians and Buddhists; and spying on, and enslaving, its own population.

This is history in real time; and the world is a house divided -- half slave, half free. Trump and Xi are facing off to tip the scales in one direction or the other. One way leads to the benefits of freedom, democracy and free-market capitalism. The other leads to a totalitarian and mercantilist power run on state capitalism with Chinese characteristics.

The United States' fight is not with the Chinese people but with the CCP. The Chinese people are the first and continuous victims of this barbarous regime.

The central issues that must be faced are China's intentions on the world stage and what those ambitions mean for U.S. prosperity. With our country at a crossroads, it is more important than ever that Trump follow his instincts and not soften his stance against the greatest existential threat ever faced by the United States.


TheRapture , 7 minutes ago link

I expected better from Bannon . . .

1. China must agree to end forced technology transfers; intellectual property theft; cyberintrusions into business networks; currency manipulation; high tariff and nontariff barriers; and unfair subsidies to state-owned enterprises.

In the good 'ol USA, we refer to this as "corporate welfare", direct federal subsidies (eg farm subsidies), MIC and government 'no-bid defense' contract, oil depletion allowance, tax credits and other tax incentives such as accelerated depreciation, dividend tax, Advanced Technology Program, federal land giveways, local & state land & tax "incentive" giveways, carried interest, welfare and food stamp costs paid to employees of companies like Walmart and McDonalds (because employee wages for full time employment fall below poverty level), the clunker auto subsidy program to bail out US auto companies, the mortgage interest deduction, and more. The cherry on top is, of course, the trillions of dollars in TARP and QE given to giant banks to bail out Wall Street.

For all the hot air, it appears that reciprocity is not really what Steve has in mind.

2. The best U.S. result is a detailed document in which China renounces its predatory, confiscatory and mercantilist practices while providing ample means to monitor and promptly enforce the agreement.

Steve? Steve?? Are you aware that the U.S. is currently trying to economically strangle countries all over the world with economic sanctions? Venezuela. Cuba. Syria. Iran. Russia.North Korea. Lebanon. Yemen. And if economic sanctions don't work, we bomb them. Iraq. Afghanistan. Libya. Syria.

3. by stealing the intellectual property, technology and innovations of foreigners.

Libya's gold "disappeared". As did much of Iraq's gold. And the Bank of England, citing U.S. sanctions as its legal fig leaf, confiscated $1.2 billion of Venezuelan gold. As to stealing technology, no one does it better than Uncle Same: Vault 7 and Stuxnet are prime examples of US spying on foreign technology companies.

4. But it is a decidedly false narrative that any failure to reach a deal will lead to a market meltdown and economic implosion.

I dunno. I'm hearing a lot of very unhappy muttering in the rural Midwest, where I live. I think we're facing the very real possibility of a large-scale Trumpian economic disaster, due to his trade war, negative trending macoeconomic indicators, the unbelievable Trumpian debt (the biggest debt in the history of the galaxy, putting Obama and Bush Jr., and even WWII debt to shame), and the looming loss of the dollar's world reserve currency status. Toss in a global recession, to boot. This feels like "implosion" to me.

5. Instead of access to a billion Chinese consumers, the United States lost more than 5 million manufacturing jobs since 2000.

Typical capitalist hypocrisy. We demand free markets for other people. Never for ourselves. Many American companies have been doing fine selling to "a billion Chinese consumers". The problem is, Americans participating in the free market often choose Chinese goods.

Not only are you full of hot air, Steve-- you and Bolton and the rest of Trump's Israel-first neocon apologists are effectively destroying our economy and our country. When the very likely "implosion" does occur, watch the rats (hate to use that metaphor, since the lowest mangy flea-bitten rat is better than any neocon) scurry for the exits, blaming everyone but themselves.

Who is Steve Bannon going to blame? Ocasio-Cortez, who else?

Let it Go , 7 minutes ago link

Understanding the core nature of China is important to comprehend the lack of flexibility ingrained in their system. This comes in the ideology that directs its actions. China is still very much a communist country, and the Chinese Communist Party (CCP) controls everything. While it may appear both State-owned and private firms operate within China's economic system. This is mostly an illusion following economic reforms in the 1980s.

In reality, the communist system does not allow for true private ownership and views all "tech innovation" as essential to its national interests. Thus, private and state-owned Chinese firms act in the interest of the Chinese regime when it comes to foreign investments in the high-tech sectors. Below is the second part of a part-two series which explores why China is on a one-track path and blind to other options going forward. This is a recipe for conflict.

http://China's Unflexible Path Forward.html

flashmansbroker , 24 minutes ago link

What pisses me off is the fact that pretty much every western company has decided to manufacture in China.

My Mrs bought me a coat today. A nice snazzy Italian brand. Then looking at the label it says made in China. So it's not an Italian coat at all. It's a Chinese coat with Italian branding.

Burberry do the same thing. They can basically charge whatever they want for coats, and as a consumer you buy into that British heritage . Low and behold their stuff is made in China.

Perhaps we should slap the tariffs (I'm not a fan of tariffs BTW,) on the western companies that continue to outsource to China .

Really ***** me off.

Giant Meteor , 4 minutes ago link

The ceding of national interests, without the wilful, knowing consent of both political parties, and citizens believing they could simply vote their way out of this or that brand of swamp, could never have been accomplished ..

The story of the scorpion, and the frog, crossing the river ..

After much pleading by the scorpion, the frog did give the scorpion a lift to safely cross the river, and after being bitten during the crossing, frog crys out "but you promised you would not bite me!!"

Scorpion replys, " you knew what i was when you picked me up .. "

The story of the American body politic, on steroids the last 40 -50 years ..

Justin Case , 2 minutes ago link

That is exactly what happened. The murican and other corporations moved to the larger consumer markets for their products, Asia. China has moar than 3 times the population of murica. Labour is plenty, wages are low, no benefits or overtime. 12 hour days or moar is the norm there. It's not China that people should be blaming for the transition to manufacture there. The corporations are all about profits. They care less about you and yoar family or jobs for you. The corporations are making money like never before. GM sells 3 times as many cars in China than in murica. It costs money to ship over seas, cheaper to move manufacturing to where the demand is.

China also has a growing middle class that will be big consumers of goods, whereas murica has a decling middle class and retiring baby boomers. Murica is in decay. Neglected infrastructure, dying cities, NY, Baltimore, Seattle, Detroit, Chicago, SanFran, farms are over producing and need social welfare from tax payers, high consumer debts, low consumption of goods. Car manufacturers will be back at the Fed window for free tax payers money to avert total bankruptcy. We've seen this play before and here we are again.

Murica is bankrupt. This is why the banks around the world are buying gold reserves. All currencies eventually become worthless paper for fire starting or heating in winter. There is no currency that ever exceeded 100 yrs. as money. Gold has been money for thousands of years.

Economies work best when currencies are stable in value. Once we know what the goal is, we then look for a way to achieve it and the best way has always been to base a currency on gold. Nobody has found a better way, even in the form of a proposal and nobody has ever needed to find a better way, because gold has always worked very well.

Herdee , 43 minutes ago link

The fight is actually with America's own politicians and corporations. They sold out America long ago. The Chinese trade differently. They don't have to bomb. It's really too bad what American democracy stands for today around the world. Nobody wants anything to do with it and gradually they're dumping it.

Justin Case , 24 minutes ago link

British and Roman empires were not much different towards the end of their rein. They become complacent and arrogant towards other countries. Eventually they run out of friends, then start woars to rape and pillage gold, silver and resources. An attempt to sustain the costs of maintaining their exuberant life style and military around the globe. Rome at first started debasing their gold and silver money. Once trading partners realized their coins were not pure, they called the empire a fraud and didn't want to trade with the crooks. Woar ensued.

besnook , 53 minutes ago link

what a dumbass. bannon represents the wacko christian wing of the zionazi party.

usa oligarchy greed did this to the american people. the chinese happily cooperated likely wondering how they were being screwed because the usa policy was so stupid. the usa made the mistake of thinking the chinese would roll over like the japanese and koreans did, once the spice started flowing.

the chinese don't have to give anything because the usa screwed itself so badly they need china to keep producing crap for the usa because there is no competitive alternative either by other countries to fill the gap and certainly not with a built from scratch usa manufacturing sector. the usa is so stupid it has foreign countries make critical military tech parts to maximize profit for mic.

does bannon really think the chinese people won't riot if they are unhappy with .gov? does he remember tianemen square? it's american people who won't do anything about .gov and the oligarchs screwing them.

according to bannon it is okay for the usa to kill millions of muslims and christians in the mid east for jewland and the zionazis but wrong for china to control their influence in china?

bannon's calling is a homeless alchy. he fits the part with lunatic rants and his appearance.

dcmbuffy , 52 minutes ago link

"a corporation masuerading as a country."

Baron von Bud , 1 hour ago link

The problem here isn't the WTO, it's the WTC. Bannon says China entered the WTO in 2001 and have been criminals ever since. Also in 2001 the Neocons started their insane wars after blowing up the WTC and have been criminals ever since. Eighteen years of pissing away cash and not minding the store - and these lunatics are back in the White House. Anybody hoping for a happy ending with China is just as nuts.

jutah , 1 hour ago link

You fat ******* zio-slob/slut troll. It may have been a good idea if it were just about trade and you are willing to actually seek a mutually beneficial compromise, but when you are also poking them militarily it changes the dynamics of the successful negotiations and cooperation. Who wants to do a deal with someone who continually sends warships up and down your coastline in engaging in provactive actions

52821740 , 1 hour ago link

Its not their coastline. It's the Phillipines and International waters. Don't believe the Chinese lies. Btw I'm no fan of Bannon.

He–Mene Mox Mox , 1 hour ago link

Bannon has got some screws loose in the head. Getting tough with China isn't going to bring manufacturing jobs back to the United States for ten reasons:

1. Those jobs have nowhere in the U.S. to come home to. Most of the factories have been shut down and demolished years ago.

2. American workers have been out of the loop for so long, that they are basically unskilled and untrained at this point...... all 95.5 million of them!

3. The fight isn't against China, as it is against corporate America. Corporate America doesn't want to pay the higher wages or benefits here. That is why they went hunting for the cheap labor in China in the first place. It's not China's fault!

4. America's entire tax system stinks and its predatory. There is nothing that is going to make those businesses in China go to America , particularly when China is offering those same companies tax incentives to stay.

5. China's transportation infrastructure is far better than America's. America's road system is now a full 40 years behind China's, and America's rail system is 75 years behind China's. Air transportation is about the same as the U.S., but China has the better airports for handling large number of passengers and freight. Maritime shipping is first rate all the way, the U.S. can't hardly touch them in moving freight overseas.

6. The United States routinely blocks the World Trade Organization's appointments of judges who could rule on tariffs, because the U.S. wants to load the dice in their favor at the WTO. Companies are often used as captive hostages by the U.S.,. Not the case with China.

7. The U.S. has a notoriety for not honoring any treaty it signs. The WTO has cited the U.S. as undisciplined, and the decision of whether to comply with international legal obligations varies depending on which domestic political actors are engaged in the policy process. Some American institutions are more likely to supply compliance than others. Why would any company want to come to America without any assurances in governing trade rules or a hostile political environment that turns on a dime?

8. China is the ideal place for emerging markets. It has access to lots of different manufacturing for emerging businesses, something the U.S. lacks these days.

9. China has economic free zones, like Shanghai, Hong Kong, Macau, etc.,. The U.S. has nothing to compare.

10. China's main priority has been shifted from expansion to stability. By stability, what is implied is demand that is internal, rather than external, and that requires a focus on the consumer. This could represent an opportunity for businesses that invest in the opportunity to sell goods in the country. As it stands now, there is really no reason for a company in China to come to the U.S., because every American is maxed out on credit and doesn't have the money to buy anything. Why set up a business in the U.S. when the U.S. economy is in imminent danger of collapsing over night, and becoming a casualty???

B-Bond , 1 hour ago link

All Things Being Equal Come Friday? 🤔

Tariff rate, applied, weighted mean, all products (%)

China 3.8 MCGA🧢 🖕 😜 🖕

United States 1.7 MA-- 😲

https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS?locations=US

-- ALIEN -- , 1 hour ago link

"...two radically different economic models..."

Untrue.

China and the USA both are Command Economies being controlled by a group of Oligarchs.

TotalMachineFail , 1 hour ago link

This is another false (fraudulent non-existent choice) being presented by the global so called but no longer existent elite. U.S. vs China. It doesn't make any difference whether it is the corporations presenting the false choice or the so called deep state. Either way it has no truth and therefore no value.

As I've provided extensive facts and evidence as details on both sides all governments are full of traitors. Traitors both foreign, domestic and international. Any future global attempt at government will never consist of any of these two places or any other since all others continue to fail in their own right to take the appropriate actions in their own governments or against those that are attempting to implement wholly criminal operations internationally.

not dead yet , 1 hour ago link

Very little of the Chinese technology was stolen by them. It was freely given by US universities getting big bucks to fill seats and US corporations looking to boost executives pay and perks, plus offloading the headaches they were getting paid big bucks to solve, by offshoring to China. As evidenced by the recent tax cut for corporations and the funds they brought back from overseas bringing back or creating jobs in the US is a pipe dream. Your CEO's thought it was more important to feather their nests, and in many cases putting their company into hock, to buy back their stock. Raises or funds for R&D? Fuggeddaboutit. With China in the cross hairs the captains of industry are sailing to other shitholes for their stuff rather than the US. Don't blame the Chinese for the "best and brightest" selling the US down the drain to enrich themselves. One of the many reasons the US is circling drain due to self inflicted hurt is the whole country from top to bottom wants **** and they want it now no matter what it takes whether it be power, riches, or both.

JBL , 1 hour ago link

"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

-Thomas Jefferson

B-Bond , 1 hour ago link

MD Anderson ousts 3 scientists over concerns about Chinese conflicts of interest😲

MD Anderson Cancer Center is ousting three scientists in connection with concerns China is trying to steal U.S. scientific research

https://www.houstonchronicle.com/news/houston-texas/houston/article/MD-Anderson-fires-3-scientists-over-concerns-13780570.php#photo-17253782

[May 06, 2019] US Tariffs on China Trump Threat Leaves Beijing Stalling

May 06, 2019 | www.bloomberg.com

Trump continued tweeting on the trade situation Monday. "The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we're not going to be doing that anymore!" he wrote.

"Risks of a full blown trade war are escalating," Chua Hak Bin, a senior economist at Maybank Kim Eng Research Pte. in Singapore, said before the ministry's announcement. "Trump's threat may backfire as China will not want to negotiate with a gun pointing at their heads."

... ... ...

China was considering delaying a U.S. trip this week by a trade delegation led by Vice Premier Liu He after Trump's tariff threat, according to people familiar with the matter. Liu and about 100 other officials had been scheduled to arrive Wednesday for what was shaping up to be the final round of negotiations.

The two sides have been locked in intense negotiations since last year for an agreement to address U.S. concerns over China's trade surplus, alleged theft of intellectual property and forced technology transfers. Trump and Xi agreed to a tariff truce on Dec. 1 to allow senior officials time to negotiate.

... ... ...

White House economic adviser Larry Kudlow said on Fox News that the president was "issuing a warning." While "great progress" has been made in the talks, structural and enforcement issues remained, he said.

... ... ...

Trump imposed duties of 25 percent on an initial $50 billion of Chinese goods last year and then 10 percent on an additional $200 billion in products in September. Those duties were set to rise to 25 percent on Jan. 1 and then again on March 1, but Trump delayed that as talks continued. China has imposed tariffs on $110 billion of U.S. exports in retaliation and repeatedly warned it would counter tariffs with actions of its own.

That means there's a risk China would counter any extension of U.S. levies, though the smaller size of its imports may constrain its ability to do so.

"China isn't likely to make concessions that the U.S. want with a big stick hanging over its head," said Zhou Xiaoming, a former Ministry of Commerce official and diplomat. "If the tariffs that Trump threatens are implemented on Friday, China has to respond."

[May 06, 2019] Trade Deal Dead Trump Says 10% China Tariff Rising To 25% On Friday, Another $325BN In Goods To Be Taxed

May 06, 2019 | www.zerohedge.com

So much for months and months of constant leaks, headlines, tweets, and press reports that US-China trade talks are going great, and are imminent amid an ocean of "optimism" (meant solely to sucker in amateurs into the most obvious bull headfake since 1987).

Just after noon on Sunday, President Trump tweeted that 10% tariffs paid by China on $200 billion in goods will rise to 25% on Friday, and that - contrary to what he himself and his chief economist, Larry Kudlow has said for months, talks on a trade deal have been going too slowly.

And, just to underscore his point, Trump also threatened to impose 25% tariffs on an additional $325 billion of Chinese goods "shortly."

With the tariff rate on numerous goods originally set at 10% and set to more than double in 2019, Trump postponed that decision after China and the US agreed to sit down for trade talks; following Trump's tweet it is now confirmed that trade talks have hit an impasse and that escalation will be needed to break the stalemate.

It was as recently as Friday that Vice President Mike Pence told CNBC that Trump remained hopeful that he could strike a deal with China (at the same time as he was urging for a rate cut from the Fed).

Curiously, on Wednesday, the White House - clearly hoping to sucker in even more naive bulls to buy stocks at all time highs - said the latest round of talks had moved Beijing and Washington closer to an agreement. Press secretary Sarah Sanders said, "Discussions remain focused toward making substantial progress on important structural issues and re-balancing the US-China trade relationship."

In recent weeks there were multiple reports that China and U.S. were close to a trade deal, and an agreement could come as soon as Friday. Major sticking points the U.S. and China have been intellectual property theft and forced technology transfers. There has also been disagreement as to whether tariffs be removed or remain in place as an enforcement mechanism.

While it was not clear why Trump has decided to escalate his tariff policy, the most obvious explanation is that for a White House, which has been obsessed with pushing the S&P to record levels, this was the last lever it had at its disposal. And now that the S&P is back at all time highs, the lies can end, if only for the time being.


smacker , 1 minute ago link

The article is misleading. My understanding is that the importer country pays import tariffs, not the exporter country.

So these 10% tariffs, soon to be 25% will jack up US end-user prices and are inflationary.

SeaMonkeys , 3 minutes ago link

An article Zero Hedge ran yesterday is my best guess at understanding Trump vs. China. Keeping the hegemony of the dollar is paramount to U.S. empire.

https://www.zerohedge.com/news/2019-05-03/americas-global-financial-war-strategy-escalating

slyder wood , 7 minutes ago link

Meanwhile, crickets about the border/invasion situation, even here on ZH articles. From an off-duty, decompressing senior border patrol guy I happened to meet - El Paso alone has had over half a million "migrants" come thru seeking "asylum". They are releasing about 2000 a week into the US, leasing buildings, including a Las Cruces high school for the weekend to stage them. he said unusual number of Cubans, maybe from VZ. Lots of sickness/disease, he personally saw flesh-eating infections, dying AIDS patients, children accompanied by unknown males. Already 90% who had court hearings were no-shows. They've found cutoff ankle monitors at airports.Their hands are tied by archaic laws and a (((congress))) unwilling to do **** about it. The **** governor of NM, Lujan-Grisham ****-blocking any effort to stem the tide. But articles about giant meteors, James Woods, Russia-gate, China, etc, etc ad nauseum.

Sorry for the hi-jack. The globalists have mobilized their armies. Chinese **** I can live without, except SKS in a pinch. Might need it when the in country migrant hordes are given the sign and LE and mil stand down.

BTW< he said two more caravans are forming, one of about 30000.

mailll , 7 minutes ago link

Interesting to see how the stock market futures will react. If they dive, we can just blame someone else. If it does good, we can give all the credit to Trump. And if we don't, Trump will surely give himself credit for it and gloat.

me or you , 6 minutes ago link

remember US market runs on fake news and rumors...all fake economies are like that.

Neochrome , 7 minutes ago link

Let's see how much will yuan depreciate come tomorrow, making whatever the **** US exports to China even more expensive.

https://www.bloomberg.com/opinion/articles/2018-12-04/trump-s-embrace-of-tariffs-hurts-u-s-consumers-more-than-china

When the U.S. taxes another country's goods, it puts downward pressure on that country's currency. When China's yuan falls against the U.S. dollar, it makes Chinese goods cheaper, canceling out some of the effect of the tariff. The yuan was at about 16 cents to the dollar earlier this year, but as Trump imposed tariffs on Chinese goods and ramped up his trade-war rhetoric, it fell to roughly 14 cents -- a decline of more than 12 percent:

iSage , 4 minutes ago link

what, no mention of the tariffs and taxes other countries post on us? imagine that...

VWAndy , 13 minutes ago link

Steel tariffs would be a good move for the USA. Its a national security issue.

mailll , 17 minutes ago link

Trump tweeted that 10% tariffs paid by China on $200 billion in goods will rise to 25% on Friday

Paid for by China? More ********. Paid for by the American consumer who buys from China.

Cyrus the Great lost yet another battle. Oh wait, Cyrus was only good for Israel, that's right.

[Apr 30, 2019] Boeing Kept Mum to Customers, FAA About Disabling of 737 Max Warning System

Apr 30, 2019 | www.nakedcapitalism.com

... ... ...

This basic fact pattern has been revealed to be worse than it first appeared by virtue of Boeing not having been explicit that the angle of attack sensor alerts had been disabled on the 737 Max. Why should Boeing have cleared its throat and said something? Recall that the sales pitch for the 737 Max was that it was so much like existing 737s that it didn't require FAA recertification or pilot simulator training. But the angle of attack sensor alert had been a standard feature in all previous 737s, meaning buyers would assume it was part of the plane unless they were told otherwise. And on top of that, the non-upgraded 737 Max did have lights in the pilots' controls for this alert. But they didn't work unless the buyer had purchased the package of safety extras.

And the proof that Boeing was playing way too cute with its pointed silence about its deactivation of what had been a standard feature? The biggest customer for the 737 Max, Southwest Airlines, had inaccurate information in its pilots' manual because the airline had mistakenly assumed the angle of attack sensor alerts worked as they had on earlier 737s.

From the Wall Street Journal:

Boeing Co. didn't tell Southwest Airlines Co. and other carriers when they began flying its 737 MAX jets that a safety feature found on earlier models that warns pilots about malfunctioning sensors had been deactivated, according to government and industry officials.

Federal Aviation Administration safety inspectors and supervisors responsible for monitoring Southwest, the largest 737 MAX customer, also were unaware of the change, the officials said.

The alerts inform pilots whether a sensor known as an "angle-of-attack vane" is transmitting errant data about the pitch of a plane's nose .

Southwest's management and cockpit crews didn't know about the lack of the warning system for more than a year after the planes went into service in 2017, industry and government officials said. They and most other airlines operating the MAX learned about it only after the Lion Air crash in October led to scrutiny of the plane's revised design.

"Southwest's own manuals were wrong" about the availability of the alerts, said the Southwest pilots union president, Jon Weaks.

https://eus.rubiconproject.com/usync.html

https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F04%2Fboeing-kept-mum-to-customers-faa-about-disabling-of-737-max-warning-system.html

https://acdn.adnxs.com/ib/static/usersync/v3/async_usersync.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" />


allan , April 29, 2019 at 10:16 am

C-suite still in denial:

Boeing suppliers ramp up schedule for MAX: 52/mo by July, 57/mo by August [Leeham News]

Boeing reduced the production rate on the 737 line in mid-April from 52/mo to 42/mo in response to the grounding of the airplane by regulators worldwide.

The company and others said they didn't know how long the airplane would be grounded.

But Boeing told suppliers to keep producing parts, components and the fuselage at rate 52.

Boeing already had a ramp-up plan in place;

According to the information LNA learned at the, this is the schedule for ramping back up:

• Rate 42/mo, April and May;
• Rate 47, June;
• Rate 51.5, July and August; and
• Rate 57, September.

Boeing originally planned to go to 57/mo in June or July.

Good luck with that. The upside is that this corporate controlled flight into terrain
will someday make a great B-school case study.

Edit: If you Captcha-train an autonomous vehicle not to run into bicycles, and it gets into an accident,
are you legally liable? Asking for a friend.

The Rev Kev , April 29, 2019 at 10:55 am

Oh man, this is bad. Really bad. This story just gets worse and worse over time. It's like one of those Russian Matryoshka dolls – just when you think that you have a handle on what happened, you find that there is a whole new layer of ugliness underneath. When the hell did safety become an optional extra on Boeing aircraft? After reading this, I think that it was a minor miracle that there were no 737 MAX crashes in the continental United States. By the sounds of this article, it would have likely been a Southwest airliner if it had happened. I am wondering what else will come out of this saga that we don't know about yet.

flora , April 29, 2019 at 12:33 pm

+1.

Self-regulation/certification is a sham.
and
Boeing is toast, imo.

Arizona Slim , April 29, 2019 at 1:21 pm

I agree, flora. I also think that the Max is about to become the Chevy Corvair of airliners. As in, unsafe at any speed.

Wyoming , April 29, 2019 at 1:47 pm

I would say that Boeing easily falls into the 'Too big to fail.' category.

So no matter what happened they will be either made whole (more defense contracts, taxpayer bailout if necessary, whatever is needed) or protected in some way tbd. They are a 100 billion a year company with 150,000+ employees and untold numbers of other contractors and jobs depending on their existence. Going away is just not going to happen.

ex-PFC Chuck , April 29, 2019 at 4:02 pm

Never underestimate the MICC's* capability & inclination to look after its own.

*Military Industrial Congressional Complex

737 Pilot , April 29, 2019 at 10:55 am

Okay, Boeing screwed the pooch again, and they should have been more clear in their communications to the airlines. However, let me add some perspective as a 737 operator.

Given the AOA malfunction in either the Lion Air or Ethiopian accidents, an "AOA Disagree" warning annunciation would have possibly been helpful, but not really crucial to the safe recovery of the aircraft. There were plenty of other indications that the AOA's were disagreeing – namely that only one of the stick shakers was activated. Once you get over the initial surprise, it shouldn't have been that hard to determine this fact. The lack of the AOA display and disagree annunciator is not what doomed these crews.

vlade , April 29, 2019 at 11:04 am

I sort of agree and disagree.

I've never had a flight emergency as a pilot, but had a few as a diver. I suspect that for both of those, when they hit, you need to resolve things quickly and efficiently, with panic being the worst enemy.

Panic in my experience stems from a number of things here, but two crucial ones are:
– input overload
– not knowing what to do, or learned actions not having any effect

Both of them can be, to a very large extent, overcome with training, training, and more training (of actually practising the emergency situation, not just reading about it and filling questionairres).

So, if the crews were expecting to see AoA disagree but it wasn't there, they could have easily be misled and confused. The crews weren't (from what I've seen) hugely experienced. So any confusion would have made a bad situation even worse. How big an impact it made is hard to judge w/o any other materials.

marku52 , April 29, 2019 at 3:42 pm

Well it is rarely just one thing that causes an "accident". There are multiple contributors here. But the one basic overarching cause was Boeing's insistence that there-will-not-be-any-additional-training.

Without that management decree, the Max could be flown without the hack of MCAS, just that the pilots be trained on the new pitchup characteristics.

And releasing MCAS into the wild without even alerting pilots to its existence, well, that is manslaughter, if not outright murder.

CraaaaaaaaaazyChris , April 29, 2019 at 4:02 pm

My takeaway from the IEEE article was that the AOA sensor is almost a red herring. The dog that didn't bark was a pitch sensor, and the cardinal sin (from a software perspective) was that the MCAS algo did not consider pitch sensor values when deciding whether or not to angle the plane towards ground.

Synoia , April 29, 2019 at 11:09 am

Blame the pilots then? Is that your point?

Alex V , April 29, 2019 at 1:50 pm

I suggest reading some of the other pieces on the 737 debacle on NC. There's been extensive discussion of the details, and yes the pilots may be partially to blame, but are the least culpable out of all parties involved.

GooGooGaJoob , April 29, 2019 at 12:03 pm

Given that story states that Boeing was more or less silent on the disabling of the sensor alerts, it's is reasonable to posit that any 737 pilot stepping into a 737 MAX would expect the sensor to be active.

I can understand the position that a pilot still needs to be skilled enough to not be 100% reliant on sensors, warning lights etc. to fly the plane. However, if I already assume that a sensor is active and it's not providing a signal that I would be potentially anticipating, it's going to seed doubt in my mind in a scenario where you don't have much time at all to think things through.

flora , April 29, 2019 at 12:44 pm

On the other hand: a safety light that is deactivated without telling the airlines and pilots gives false negatives to pilots at a critical juncture. They assume it's active, check it, and see a false negative they don't realize is false.

Imagine having a 'check engine' or 'oil' light on your car's dashboard that's been deactivated. They never come on. But they're still there. The driver assumes they'll light if there's engine trouble that needs attention.

Boeing's actions don't pass the 'reasonable man' test.

Jim A. , April 29, 2019 at 1:23 pm

Yeah, normally if a mechanical gauge "knows" that it isn't working there will be a little flag that pops up across the display. Leaving the light there but inoperative instead of either removing the light or covering it up with an "inoperative" cover is a really bad idea. It is EVEN WORSE than making safety features optional, and that is bad enough.

John k , April 29, 2019 at 1:30 pm

Let's see
First, they didn't know MCAS existed, so had no idea or training in what to do when it was erroneously engaged by system.
Then, they think both Aos sensors are working properly.
And, Boeing tells everybody plane is just like previous versions, no need for simulations.
I'm glad I'm not one of the dead pilots you're blaming.
By the way, it's apparently just chance that the bad sensors affected foreign and not domestic flights, no public reports that superior domestic pilots had no problem when it hit the fan on their watch although some domestic airlines were told (warned) that bad sensor light was optional extra so possibly a domestic plane cancelled flight on account of bad sensor.
But imagine a really experienced pilot would have saved the day so Boeing should say only really experienced pilots should fly the plane? Maybe simulators help you get really experienced, especially with unexpected emergencies?
Personally, I'll avoid the plane for a few years if simulators aren't required hate to have a pilot not experienced with what we now know is not such a rare event.

Old Jake , April 29, 2019 at 3:22 pm

We seem to be forgetting that, in the Lion Air case, a really experienced pilot did save the day the previous day on the same aircraft . The issue was reported, the airline neglected to repair the issue and nobody seems to have told the new aircrew about the issue. This seems to support 737 Pilot's position. It is also another egregious failure, this time on the part of the airline.

dcrane , April 29, 2019 at 3:42 pm

That pilot was a third set of eyes. Since he didn't have to fly the plane, he was free to observe and fortunately his attention eventually focused on the repeating trim wheel movements. A standard two-person crew doesn't have this luxury. Worth keeping in mind.

That lion crew also seems to have written up the problem incompletely. They didn't mention, for example, that they had the stick shaker going for the entire flight.

JerryDenim , April 29, 2019 at 4:51 pm

Your point is legitimate but without the benefit of a CVR recording I think you may be affording too much credit to the jumpseating pilot who is rumored to have provided the flight crew with the excellent advice of disabling the electric stabilizer trim motor. Even if the story is entirely true it's not like turning off the Stab trim motor was esoteric knowledge, maybe 737 pilot can correct me on this but I thought that procedure was a memory item for trim runaway emergencies, meaning the pilots were supposed to have that bit of knowledge firmly committed to memory and they were supposed to execute that procedure without any checklists or undue delay as soon as the condition was recognized. If not a memory item it was in the 737 QRC or QRH emergency procedures guide that is always present for immediate reference on the flight deck. The most important thing the crew of Lion Air 43(?) did (the flight previous to 610 that managed not to crash) was to simply not let themselves become so frazzled they forgot to pull the thrust levers out of the take-off detent after they reached a safe altitude, and not overspeeding an out of trim airplane making a bad situation worse. Maybe the jumpseating pilot had to scream at the crew to reduce thrust and maybe he had to slap the Captain and reduce the thrust levers himself, but absent a CVR recording to verify this slightly far-fetched scenario I would say the previous crew deserves the Lion's share (sorry couldn't resist) of the credit for landing safely.

You are absolutely 100% correct when you point out the non-crashing Captain was far from exemplary. He laid an absolutely vicious trap for the ill-fated crew of flight 610 by failing to mention a great number of things he experienced, especially the uncommanded and unwanted nose down trimming that necessitated turning off the stab trim motor which he also failed to communicate. Not a shining moment for Lion Air pilots, mechanics or Boeing. Despite the obvious and multiple shortcomings and blunders of the Captain/crew of Lion Air 43, I believe that flight proves what the airline pilot commenters here have been saying all along, which is the 737 Max flaws were serious but survivable with a competent crew. That's not the same thing as calling the airplane safe or airworthy and it's certainly not excusing Boeing. They delivered a death trap. Perhaps a bad analogy, but a professional body guard should be able to easily disarm a five year with a knife, but that doesn't mean a murderous five year with a knife isn't dangerous or isn't capable of killing you. Airplanes are machines which inevitably fail and mechanics are humans who make mistakes which is why pilots need to know how to hand fly airplanes absent automation. Reducing thrust during an emergency to avoid overspeeding your airplane really isn't a tall ask for a professional pilot. Pilots get this, non-pilots don't, and it's a point I've grown quite weary of making.

shtove , April 29, 2019 at 1:32 pm

There's been interesting points made back and forth on NC – what do you make of this from Karl Denninger: basically, "You can't fix the problems the 737Max has with software alone"?
https://market-ticker.org/akcs-www?post=235578

JerryDenim , April 29, 2019 at 2:27 pm

I made the exact same argument here a couple of days ago, but I will say IF the system was engineered in a way it could have given the Ethiopians a warning prior to eighty knots or V1 (depending on training and pilot judgement) on takeoff, maybe they could have aborted and kept the plane on the ground avoiding the disaster. Having that disagree light or indication immediately after rotation on climbout could have soothed the nerves of the pilots and made them feel more confident trusting the perfectly normal instrumentation on the FO's side of the airplane. But if the high speed clacker, the airspeed tape and the thrust settings aren't enough information to convince a overwhelmed, elevator control fixated pilot that he/she has more than adequate speed to avoid stalling, and they should slow down, then it stands to reason a secondary warning indication would also not break through the mental logjam of two very overwhelmed pilots bombarded by warnings and data. In the case of Lion Air 610 the malfunctioning AOA vane had already caused multiple instrument malfunctions and improper nose down MCAS trimming on three other flights, so it seems like those guys were hellbent on flying that plane no matter what. Even if Lion Air would have had the optional warning system onboard the mechanics most likely would have deferred the warning system as broken. "Ops checks good". They probably would have removed the bulb or stuck a placard on top of it.

And before anyone feels the need to point it out, yes, I'm engaging in speculation, but so is everyone claiming this optional safety system would have made a difference in the two aforementioned tragedies. I'm engaging in speculation as a guy who has reviewed thousands of logbooks and had hundreds, possibly thousands of interactions with airline maintenance technicians. Some of those interactions include contentious debates over what is safe to defer or what can actually legally be deferred so I do have a bit of experience in this department.

Boeing screwed up. They were hasty, they were greedy, they were cavalier, the MCAS trim system with a single point of failure was a terrible design that was most likely criminal. I'm just weighing in on 737 pilot's contention. With a system as poorly designed as the MCAS stall protection trimming, every safety feature available should have come standard from Boeing, but sadly additional fault indications don't always matter in emergency situations. Proper fault diagnosis is only part of any successful emergency outcome. Pilots still have to possess the knowledge and skill required to follow procedures and fly the airplane.

vlade , April 29, 2019 at 10:56 am

The only planes I ever flew you'd fly w/o pretty much any instrumentation (WW2 trainers, hoping to fly a Spitfire or Mustang one day.. ).

But in a modern plane, I'd think that _any_ instrument that is doubled or more (which implies some sort of criticality) should have an automatic "inputs disagree" indicator, which would not be possible to turn off.

Not that you'll have to buy it as a special feature.

JBird4049 , April 29, 2019 at 1:16 pm

I have been thinking about the modern 737. My completely uninformed guess is that the original model, while less "safe" was more informative in a real way than the current one.

In modern cars, especially something like a hybrid, there is not much "feel" to it. In an older old fashion gasoline engine car, there is. I could use the Volkswagen as an example, because it only had some colored lights and the speedometer, and none of the safety features of a modern car. However, I could sense, smell, see just about everything, often subconsciously, even before something went kablowie because there was nothing isolating me from the vehicle and the road. Today, I have to depend on my car's sensors because it has been designed to be quiet and isolating as possible.

John , April 29, 2019 at 11:06 am

The downward slide of corrupt predatory capitalism is not a pretty picture. These cases will continue as long as the responsible executives know they have nothing to lose.

campbeln , April 29, 2019 at 12:30 pm

Just more proof that self regulation works, just look to our favorite sporting events!
There's no need to have refs on the field because everyone involved is a professional and would never cheat, disrespect the sport or do something against the rules because the fans would punish them!
If our sports don't need refs, then surely our markets don't need regulators! Checkmate, big government stooges!

Synoia , April 29, 2019 at 1:20 pm

Absolutely correct. Throw away the huge NFL rule-book, and revert to the rules the of the Roman arena.

It would save the NFL team owners huge amounts of money.

StarryGordon , April 29, 2019 at 12:20 pm

I suppose I am naive, but I am shocked that the behavior of Boeing's management and the FAA are not being treated as a criminal matter. What happened was not a business mistake, it was a crime in which a number of persons deliberately and knowingly decided to risk other people's lives in order to increase profits, as a result of which hundreds of people were killed. I believe the term is 'negligent homicide', upon conviction of which lesser beings than high management and bureaucrats go to jail. In some countries their next of kin would already have received a bill for bullets and services rendered.

Synoia , April 29, 2019 at 1:15 pm

It would be interesting in Ethiopia issues a criminal arrest warrant on these grounds for the Executives of Boeing.

That being the country with jurisdiction for this second crash.

Is there an extradition treaty between Ethiopia and the US?

John k , April 29, 2019 at 1:36 pm

The term used to be criminally negligent homicide, but this no longer applies to those wearing white collars.
Otherwise we would see charges against bankers, opioid pushers, and others.

JBird4049 , April 29, 2019 at 1:30 pm

But Boeing, as part of a duopoly, recognizes that its customers have nowhere to go .at least for the next few years, which might as well be eternity as far as MBAs are concerned.

Even if it meant drastically reducing flights why would any airline buy airplanes that are not guaranteed to be safe? Losing money through fewer paying customers because you are choosing to have fewer flights is better than being boycotted or bankrupted by lawsuits, or arrested and criminally charged.

EoH , April 29, 2019 at 2:00 pm

It is inexplicable that Boeing shut off an indicator system for the Max that had been standard on earlier versions of the 737, when that AoA sensor disagreement indicator was even more important for safe flight.

Turning it on in the Max version was possible but was made part of an extra-cost safety package. How would a purchaser know to buy it when Boeing downplayed its importance so as not to suggest how different the Max was from supposedly similar earlier versions of the 737?

The more that comes out about the conduct of Boeing and its senior management's decisions, the more they look criminally reckless.

WestcoastDeplorable , April 29, 2019 at 4:02 pm

The FAA is mostly responsible for this fiasco because they have a misguided mission. Safety should be their only concern, but over the years that's eroded into a "sort of safety" attitude but mostly being a cheerleader for the aviation industry.
And you can't trust bastards like Boeing to "self-certify" anything, apparently!

Carey , April 29, 2019 at 4:06 pm

Scott Hamilton at Leeham News on Boeing's CEO:

"..It took months before Boeing CEO Dennis Muilenburg issued a video in which, among other things, he said, "We own it." He was referring to safety of the MAX.

This was widely interpreted as Boeing stepping up and taking responsibility for at least some of the causes of the Lion Air and Ethiopian Airlines crashes.

Last Wednesday, he took it all back.

On the first quarter earnings call, Muilenburg denied there was any "technical slip or gap" in designing the now famous MCAS system. He said "actions not taken" contributed to the crash, a thinly veiled reference once again to pilot error.."

https://leehamnews.com/2019/04/29/pontifications-we-own-it-but/

VietnamVet , April 29, 2019 at 7:03 pm

Boeing and FAA are criminally negligent especially for the Ethiopian Airline crash. The recovered horizontal stabilizer screw jack from the Lion Air crash was found in the full nose down position that forced the plane to dive into the sea. It should have never be in this is flight critical position. Grounding the fleet should have been immediate until the cause and fix were found. On top of all this, it is simply criminal for Boeing to charge Southwest Airlines for additional safety features and then turn them off not telling the airline.

It is tragic that it appears that Americans will have to rely on China to force Boeing to actually fix MCAS and along with Canada to shame the FAA into requiring pilot training on Flight Simulators before flying passengers on the Max.

A Boeing C-Suite executive has to go to jail. If not, there is no chance for the United States of America to survive. With government run by and for profiteers, long term planning is dead. Profit over people. A plague, an economic crash, a world war, a middle-class revolt, flooded coasts, or an autocratic Caesar become inevitable.

[Apr 29, 2019] Ralph Nader Calls Out Boeing for 737 MAX Lack of Airworthiness, Stock Buybacks, and Demands Muilenburg Resign by Lambert Strether

Apr 28, 2019 | www.nakedcapitalism.com
By Lambert Strether of Corrente.

Ralph Nader has published an open letter to Dennis A. Muilenburg, current CEO of Boeing, which is worth reading in full . There's a personal connection :

[Nader's] niece, 24-year-old Samya Stumo, was among the 157 victims of an Ethiopian Airlines flight crash last month, less than six months after a flight on the same aircraft, the Boeing 737 Max 8, crashed in Indonesia.

Nader comments, in Stumo's obituary in the Berkshire Eagle :

"She was compassionate from the get-go. She'd be 8 years old and she'd get a pail of hot water and go to her great-grandmother and soak her feet and rub her feet and dry them. She was always that way."

Clifford Law has brought suit on behalf of the Stumo family in the United States District Court for the Northern District of Illinois. From the complaint :

Blinded by its greed, BOEING haphazardly rushed the 737 MAX 8 to market, with the knowledge and tacit approval of the United States Federal Aviation Administration ("FAA"), while BOEING actively concealed the nature of the automated system defects. Numerous decisions by BOEING's leadership substantially contributed to the subject crash and demonstrate BOEING's conscious disregard for the lives of others, including but not limited to BOEING's role in: designing an aircraft with a powerful automated flight control system [the MCAS] susceptible to catastrophic failure in the event a single defective sensor; failing to properly inform pilots of the existence of the new flight control system and educate and train them in all aspects of its operation; failing to properly address the new system in the aircraft's flight manual; refusing to include key safety features as standard in the aircraft rather than optional upgrades; delivering 737 MAX aircraft with a version of the flight control system that was materially different from the version presented to the FAA during certification; and failing to take appropriate action after BOEING learned that the 737 MAX aircraft was not performing as intended or safety, as was made tragically clear with the crash of Lion Air Flight JT 610.

BOEING's decision to put profits over safety is further evident in BOEING's repeated claims that the 737 MAX 8 is so similar to its earlier models that it does not require significant retraining for those pilots familiar with the older generation of 737s.

All pretty much conventional wisdom at this point! The suit also calls for exemplary (punitive) damages ; I've embedded the complaint at the end of the post, in case any readers care to dig into it. I'm not going to examine the case in this post; rather, I'm going to focus on three items from Naders letter that I think advance the story: His framing for 737 MAX airworthiness; his highlighting of Boeing's stock buybacks; and his call for Boeing CEO Muilenburg's defenestration.

Nader on 737 MAX Airworthiness

From Nader's letter :

Aircraft should be stall-proof, not stall-prone.

(Stalling, in Nader's telling, being the condition the defective MCAS system was meant to correct.) Because aircraft that are aerodynamicallly unstable, llke fighter jets, have ejection seats! Now, a pedant would point out that Nader means commercial aircraft , but as readers know, I eschew pedantry in all contexts. That said, Nader manages to encapsulate the problem in a single sentence (using antithesis , isocolon , and anaphora ). Now, we have pilots in the commentariat who will surely say whether Nader's formulation is correct, but to this layperson it seems to be. From 737 MAX, a fan/geek site, on the business and technical logic of the MCAS system :

The LEAP engine nacelles are larger and had to be mounted slightly higher and further forward from the previous NG CFM56-7 engines to give the necessary ground clearance. This new location and larger size of nacelle cause the vortex flow off the nacelle body to produce lift at high AoA [Angle of Attack]. As the nacelle is ahead of the C of G, this lift causes a slight pitch-up effect (ie a reducing stick force) which could lead the pilot to inadvertently pull the yoke further aft than intended bringing the aircraft closer towards the stall. This abnormal nose-up pitching is not allowable under 14CFR §25.203(a) "Stall characteristics". Several aerodynamic solutions were introduced such as revising the leading edge stall strip and modifying the leading edge vortilons but they were insufficient to pass regulation. MCAS was therefore introduced to give an automatic nose down stabilizer input during elevated AoA when flaps are up.

Nader on Stock Buybacks

From Nader's letter , where he is addressing Muilenberg ("you") directly:

Boeing management's behavior must be seen in the context of Boeing's use of its earned capital. Did you use the $30 billion surplus from 2009 to 2017 to reinvest in R&D, in new narrow-body passenger aircraft? Or did you, instead, essentially burn this surplus with self-serving stock buybacks of $30 billion in that period? Boeing is one of the companies that MarketWatch labelled as "Five companies that spent lavishly on stock buybacks while pension funding lagged."

Incredibly, your buybacks of $9.24 billion in 2017 comprised 109% of annual earnings . As you well know, stock buybacks do not create any jobs. They improve the metrics for the executive compensation packages of top Boeing bosses [ka-ching]. Undeterred, in 2018, buybacks of $9 billion constituted 86% of annual earnings .

To make your management recklessly worse, in December 2018, you arranged for your rubberstamp Board of Directors to approve $20 billion more in buybacks. Apparently, you had amortized the cost of the Indonesian Lion Air crash victims as not providing any significant impact on your future guidance to the investor world.

Holy moley, that's real money! Nader's detail on the stock buybacks (see NC here , here , and here ) interested me, because it bears on Boeing's 2011 decision not to build a new narrow-body aircraft in 2011. I summarized the decision-making back in March:

(2) Choice of Airframe : The Air Current describes the competitive environment that led Boeing to upgrade the 737 to the 737 MAX, instead of building a new plane:

Boeing wanted to replace the 737. The plan had even earned the endorsement of its now-retired chief executive. "We're gonna do a new airplane," Jim McNerney said in February of that same year. "We're not done evaluating this whole situation yet, but our current bias is to not re-engine, is to move to an all-new airplane at the end of the decade." History went in a different direction. Airbus, riding its same decades-long incremental strategy and chipping away at Boeing's market supremacy, had made no secret of its plans to put new engines on the A320. But its own re-engined jet somehow managed to take Boeing by surprise. Airbus and American forced Boeing's hand. It had to put new engines on the 737 to stay even with its rival .

Why? The earlier butchered launch of the 787:

Boeing justified the decision thusly: There were huge and excruciatingly painful near-term obstacles on its way to a new single-aisle airplane. In the summer of 2011, the 787 Dreamliner wasn't yet done after billions invested and years of delays. More than 800 airplanes later here in 2019, each 787 costs less to build than sell, but it's still running a $23 billion production cost deficit. . The 737 Max was Boeing's ticket to holding the line on its position -- both market and financial -- in the near term. Abandoning the 737 would've meant walking away from its golden goose that helped finance the astronomical costs of the 787 and the development of the 777X.

So, we might think of Boeing as a runner who's tripped and fallen: The initial stumble, followed by loss of balance, was the 787; with the 737 MAX, Boeing hit the surface of the track.

So, Dennis. How's that workin' out for ya? How does the decision not to build a new plane look in retrospect? Ygeslias writes in Vox, in April:

Looking back, Boeing probably wishes it had just stuck with the "build a new plane" plan and toughed out a few years of rough sales, rather than ending up in the current situation. Right now the company is, in effect, trying to patch things up piecemeal -- a software update here, a new warning light there, etc. -- in hopes of persuading global regulatory agencies to let its planes fly again.

What Nader's focus on stock buybacks shows, is that Boeing had the capital to invest in developing a new plane . From Bloomberg in 2019 :

For Boeing and Airbus, committing to an all-new aircraft is a once-in-a-decade event. Costs are prohibitive, delays are the norm and payoff can take years to materialize. Boeing could easily spend more than $15 billion on the NMA, according to Ken Herbert, analyst with Canaccord Genuity, and Airbus may be forced into a clean-sheet design if sales take off.

The sales force has been fine-tuning the design with airlines for at least five years, creating a "will it or won't it?" drama around the decision on whether to make the plane, known internally at Boeing as the NMA, for new, middle-of-market airplane.

Now, it is true that the "huge and excruciatingly painful near-term obstacles" referred to by the Air Current are sales losses that Boeing would incur from putting a bullet into it's cash cow, the 737, before it turned into a dog (like now?). Nevertheless, Beoing was clearly capable, as Yglesias points put, of "tough[ing]out a few years of rough sales." So what else was "excruciatingly painful"? Losing the stock buybacks (and that sweet, sweet executive compensation). Readers, I wasn't cynical enough. I should have given consideration to the possibility that Muilenburg and his merry men were looting the company!

Nader on Muilenburg

Finally, from Nader's letter :

Consider, in addition, the statement of two Harvard scholars -- Leonard J. Marcus and Eric J. McNulty, authors of the forthcoming book, You're It: Crisis, Change, and How to Lead When it Matters Most. These gentlemen did not achieve their positions by using strong language. That is why, the concluding statement in their CNN article on March 27, 2019, merits your closer attention:

"Of course, if Boeing did not act in good faith in deploying the 737 Max and the Justice Department's investigation discovers Boeing cut corners or attempted to avoid proper regulatory reviews of the modifications to the aircraft, Muilenburg and any other executives involved should resign immediately. Too many families, indeed communities, depend on the continued viability of Boeing."

These preconditions have already been disclosed and are evidentially based. Your mismanagement is replete with documentation, including your obsession with shareholder value and executive compensation. There is no need to wait for some long-drawn out, redundant inquiry. Management was criminally negligent, 346 lives of passengers and crew were lost. You and your team should forfeit your compensation and should resign forthwith.

All concerned with aviation safety should have your public response.

I can't find anything to disagree with here. However, I'll quote from commenter Guido at Leeham News, March 29, 2019 :

What I don't understand: Muilenburg was the CEO when the MCAS code was implemented. Muilenburg was the CEO when Boeing "tweaked" the certification of the B737Max. It was the Boeing management that decided, that the B737Max must under no circumstances trigger simulator training for pilots.

Muilenburg has for sure not written the code for MCAS by himself, but as the CEO he is responsible for the mess. He is responsible, that the first version of MCAS was cheap and fast to implement, but not safe. It was basically Muilenburg, who allowed a strategy, that was basically: Profits and Quickness before safety. Muilenburg has the responsibility for 346 dead people. You can't kill 346 people with your new product and still be the highly paid CEO of the company. There have to be consequences.

Why are there no calls, that Muilenburg must step down?

Nader has now issued such a call. As [lambert preens modestly] did Naked Capitalism on March 19 .

Conclusion

Wrapping up, Muilenberg has plenty of other lawsuits to worry about :

However, a search of court documents and news reports shows the company is facing at least 34 claims from victims' families and one claim seeking class certification on behalf of shareholders. The claims allege Boeing is responsible for losses after installing an unsafe anti-stall system, called "MCAS" (Maneuvering Characteristics Augmentation System), on its 737 Max 8 planes, suspected to have played a role in both crashes. Boeing CEO Dennis Muilenburg said it was "apparent" the system had been activated in both crashes.

Added to the uncertainty of potential expenses for Boeing are pending regulator probes. The U.S. Justice Department initiated a criminal investigation into Boeing's Federal Aviation Administration certification, as well as how it marketed its 737 Max 8 planes. The U.S. Department of Transportation's Office of Inspector General is also conducting an inquiry.

On April 9, the lawsuit seeking class certification was brought on behalf of shareholders who purchased Boeing stock between January 8, 2019 and March 21, 2019. The proposed class period covers a time frame beginning after the Lion Air crash, and extending beyond the Ethiopian Airlines crash, when Boeing's stock experienced a steep decline.

But then again, Muilenberg may know -- or think -- that Boeing, as a national champion, is too big to fail. So, if Boeing gracefully exits from the commercial aviation business, it may find the warm embrace of government contracting more comfortable. Perhaps that's why propaganda like this suddenly started showing up in my Twitter feed:

me title=

I suppose it's too much to ask that the CEO of a too-big-to-fail company be asked to resign, even if he did kill a lot of people. But if Nader can do with the 737 MAX, at the end of his career, what he did with the Corvair ("a one-car accident") , when he was coming up, everybody except for a cabal of looters and liars in Boeing's Chicago C-suite will be a lot better off. So we can hope.

APPENDIX 1: The Rosy Scenario

From Ask the Pilot :

I keep going back to the DC-10 fiasco in the 1970s.

In 1974, in one of the most horrific air disasters of all time, a THY (Turkish Airlines) DC-10 crashed after takeoff from Orly Airport outside Paris, killing 346 people. The accident was traced to a faulty cargo door design. (The same door had nearly caused the crash of an American Airlines DC-10 two years earlier.) McDonnell Douglas had hurriedly designed a plane with a door that it knew was defective, then, in the aftermath of Paris, tried to cover the whole thing up. It was reckless, even criminal. Then, in 1979, American flight 191, also a DC-10, went down at Chicago-O'Hare, killing 273 -- to this day the deadliest air crash ever on U.S. soil -- after an engine detached on takeoff. Investigators blamed improper maintenance procedures (including use of a forklift to raise the engine and its pylon), and then found pylon cracks in at least six other DC-10s, causing the entire fleet to be grounded for 37 days. The NTSB cited "deficiencies in the surveillance and reporting procedures of the FAA," as well as production and quality control problems at McDonnell Douglas.

That's two of history's ten deadliest air crashes, complete with design defects, a cover-up, and 619 dead people. And don't forget the 737 itself has a checkered past, going back to the rudder problems that caused the crash of USAir flight 427 in 1994 (and likely the crash of United flight 585 in 1991). Yet the DC-10, the 737, and America's aviation prestige along with them, have persevered. If we survived the those scandals we can probably manage this. I have a feeling that a year from now this saga will be mostly forgotten. Boeing and its stock price will recover, the MAX will be up and flying again, and on and on we go.

This is how it happens.

Maybe. But in 1974, the United States was commercial aviation. Airbus had launched its first plane, the A300 , only in 1972. We were also an imperial hegemon in a way we are not now. For myself, I can't help noticing that it was Boeing's takeover of a wretched, corrupt McDonnell Douglas -- the famous reverse takeover -- that ultimately turned Boeing from an engineering company into a company driven by finance. With resulits that we see.

APPENDIX 2: The Stumo Complaint

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ChristopherJ , April 28, 2019 at 4:20 pm

The fact that the CEO and the Board have not resigned just shows everyone that they lack all the essential characteristics of human beings.
Stock buybacks should be illegal. Profits should only be distributed via dividends or reinvested. The fact that companies can do this shows how corrupted our governments are.
The rest of the world may forget this one. I won't and there are millions like me who will never step aboard a boeing plane again.
The only thing that will save this company now is the US govt, which is likely.

JBird4049 , April 28, 2019 at 5:00 pm

Boeing's management is not going to jail and likely will keep their jobs. The deaths of over three hundred people means nothing. They are not even American and probably only middle class so they don't have connections to use. The "American" company Boeing has both money and connections.

Money gives you rights and if you don't have it, you are not even a human being.

Just look at 2008. The Vampiric Octopus called Wall Street was saved by the Feds with almost no one going to jail, or even criminally prosecuted. The exceptions of an innocent small community bank in NYC and some low level employees of a very few loan companies. The entire planetary economy came to with in hours of freezing and then collapsing. Millions of Americans lost homes, often through questionably legal foreclosures, with many millions more losing their jobs.

Nothing going to change and I wish I could believe otherwise.

DHG , April 28, 2019 at 5:33 pm

So I should just fire up my own money press then as should everyone else Money was invented as a limiter by the ancient church then adopted by governments.. Money isnt necessary to live and it will b thrown overboard soon enough.

Plenue , April 28, 2019 at 9:03 pm

"Money was invented as a limiter by the ancient church then adopted by governments"

Er, what?

JBird4049 , April 28, 2019 at 11:42 pm

I think money as a concept arose in Sumer about 6-7 thousand years ago with the clay receipts given by the temple of the local city's patron god for livestock and grain stored there.

But my knowledge of money's history is limited. If anyone wants to correct or clarify, please do.

animalogic , April 29, 2019 at 5:34 am

Might be wrong but think (if my memory of Gerber serves) you refer to credit/debt. Actual money (coin) I think arose along side the use of large scale Armies (armies are both highly mobile & inherently amorphous -- ie people come & go, die, are wounded, loot must be traded etc, all of which is difficult in the absence of currency)

The Rev Kev , April 28, 2019 at 8:37 pm

Stock buybacks were once illegal because they are a type of stock market manipulation. But then Reagan got in and wanted to do his banker buddies a favour-

https://mavenroundtable.io/theintellectualist/news/stock-buybacks-were-once-illegal-why-are-they-legal-now-sHh6HZjtyk2styG-qLgnQg/

To think that Boeing has Ralph Nader of all people on their case. With apologies to Liam Neeson, Nader might be saying to Muilenberg right now: "If you are looking for (forgiveness), I can tell you I don't have (forgiveness). But what I do have are a very particular set of skills, skills I have acquired over a very long career. Skills that make me a nightmare for people like you. If you go now, that'll be the end of it."
That sounds like good advice that.

drumlin woodchuckles , April 28, 2019 at 9:03 pm

Re-outlawing the "Stock Buyback" would be one useful reNew The Deal reform. Outlawing compensation in stocks, options, or etc. of any kind except money would be another useful Newer Deal reform. Both together would force-multiply each other's effect.

I hope the four Old Real Democrats have people reading these threads and taking any possibly-good ideas back to headquarters. I hope the New Catfood Democrats and their people aren't spying or eavesdropping on these threads.

JerryDenim , April 28, 2019 at 4:52 pm

Wow. Great post Lambert and nice job Mr Nader!

I love how Nader brings stock buy-backs into his letter and basically connects the dots from a recklessly designed aircraft system full circle to an indictment of our current shareholder value system of capitalism and its perverse incentive structure which includes safety shortcuts and runaway executive compensation. Such a perfect case study for this site!

I think Nader really should beat the drum heavily on the perverse incentive structure at Boeing and how executives shortchanged safety to grab more money for themselves because that's an easy story for a jury to understand. I see where Nader is going with the inherently "stall prone" aerodynamic design stuff, and he's not wrong, but I think he may be treading on dangerous ground. Automatic stabilizer trimming systems designed to overcome the negative aerodynamic attributes of the new 737 Max wing/engine design is a confusing rabbit hole for the lay person. Boeing attorneys and expert witnesses may be able to twist the jury's head into a pretzel on this issue. The debate and discussion here concerning process, decision making, design philosophy etc at Boeing has generally been of very high quality, but has a tendency to go off the rails when the discussion dives too deeply into the subject matter of aerodynamics and aircraft systems. I could see the same dynamic playing out in the courtroom. Nader is the master class-action consumer advocacy attorney not me, but I think he should go heavy buybacks and whistle blower warnings while avoiding unforced errors arguing over the not-so-important point of whether or not the 737 Max crashed because it was stall prone or because it was too stall adverse. Two brand new Boeings crashed, people died, Boeing was greedy, Boeing was hasty, the MCAS trim system was garbage and probably criminal. He's got a slam dunk case arguing the MCAS trim system with a single point of failure was poorly designed and recklessly conceived, I think he should just stick to that and the greed angle and avoid the stall prone vs. stall adverse debate. I wish him luck.

Darius , April 28, 2019 at 10:19 pm

They screwed up the plane design then thought an extra layer of software would ameliorate the problem enough. It sucks but it's probably just good enough. Seems pretty simple.

Darius , April 28, 2019 at 10:40 pm

They effed up the hardware and thought they could paper it over with more software. But at least the shareholders and executives did well.

Alex V , April 29, 2019 at 1:15 am

As JerryDenim touched on, a good defense lawyer would probably be able to defeat this argument in front of a jury. There are too many examples of successful and safe commercial aircraft with aerodynamic compromises (the hardware, as you call it) that use software fixes to overcome these limitations. The focus in this case would need to be on the implementation of that software and how criminal neglect occurred there.

JerryDenim , April 29, 2019 at 3:31 am

Boeing's attorneys are going to try and make any lawsuits a question of why the airplanes ultimately crashed. I hate to spoil it for anyone, but I can tell you Boeing's attorneys are going to blame it all on the pilots. Airlines and airplane manufactures always do. Nothing new. Dead pilots can't defend themselves, their families don't have millions in the bank and they aren't going to be placing any billion dollar aircraft orders in the future. If anyone has read my frequently maligned comments, you already know the line of attack. Not following the runaway trim procedures and overspeeding the aircraft with takeoff thrust set. That's why Nader or anyone else pursuing Boeing would do well to sidestep the "why did two Boeing 737 Max Jets crash" question and stick to the details surrounding the horribly flawed MCAS trim system and the Boeing corporate greed story. Steer clear of the pilots' actions and the potentially confusing aerodynamics of modern jetliners, keep the focus squarely on the MCAS trim system design process and executive greed.

animalogic , April 29, 2019 at 5:55 am

Anyone prosecuting Boeing will have to deal with Boeing's defence, which as noted, will play up the commoness of such technical compromises. I do wonder whether Boeing will go after the pilots, though.
Any pilots argument naturally raises Boeing's negligence re : training, flight manuals & communication. The prosecution case will naturally play up the greed aspect as cause/motivation/
context for the crashes & Boeing's direct responsibility /negligence.

Alex V , April 29, 2019 at 7:49 am

The defense would likely also pull in the airlines and FAA as targets for liability, as both have some responsibility for these matters. Attacking the FAA would be fodder for the de-regulators (Privatize it! Government is incompetent!). The airlines would complain that competition forces them to cut costs, and that they meet all of the (gutted) legal requirements.

Alex V , April 29, 2019 at 1:44 am

I agree with focusing on the greed aspect. Nader's letter has some technical errors such as stating the engines were tilted (they were moved horizontally and vertically, not rotated) that show he hasn't fully understood the details. It doesn't help that many of the changes made to the 737 MAX from previous generations are actually quite subtle, and can't really be discussed individually for this context. It is the sum of these changes that made it an extremely deadly aircraft.

Norb , April 29, 2019 at 8:55 am

The other failure/business feature is the concept of modularity. The software designed to fix the aerodynamic complexities is broken down into modular components, and then sold off as "options". Once again greed sabotages the system. Modularity is a great way to gouge customers and lock in higher profits. The level of technical competence needed to properly evaluate what modules are essential complicates the outcome. But then again, this can be rationalized as a feature not a bug. Blame for failure can be passed around- the customer should have purchased the entire package.

The runaway externalities emanating from the current form of capitalism as practiced in the US must be reigned in. Voluntary compliance to some sort of moral code is useless- worse than useless in that corrupt operators can hide behind lame excuses for failure.

The bigger problem is that Government regulations could solve these problems quickly, as in throwing people in jail and confiscating their property. A strong argument can be made for ill-gotten gains. I surely would vote for that if given the chance. Deal drugs and you can loose your home. What about conscious business decisions
leading to harm?

You need a strong force external to these business concerns for this to happen. The separation of government and business. Business should operate at the will of the government. When the government is run with the wellbeing of the people foremost, then issues like crashing planes can be rectified.

When the interests of business and government merge, then what you have is fascism. American fascism will have a happy face. These unfortunate problems of crashing planes and polluted environments will trundle along into the future. Billionaires will continue to accumulate their billions while the rest of us will trundle along.

But one day, trundling along won't be an option. Maybe only outsiders to the US system can see this clearly.

Ray Duray , April 28, 2019 at 7:07 pm

You ask: "So when the original 737 was designed, did the engineers have the option of using these larger engines? Did they decline to do so because it was a flawed design?"

The larger engines currently in use on the 737 Max 8 were not designed until recently. They did not decline because the current engine wasn't even invented.

Here's an abbreviated design history: https://en.wikipedia.org/wiki/Boeing_737#Engines

Edward , April 28, 2019 at 7:31 pm

I guess what I am wondering is if the original designers of the 737 had the option of designing a more powerful engine similar to that used in the 737 MAX but declined to do so. No doubt engine technology has advanced during the 50 years since the first 737's were built. Could the engineers 50 years ago have designed engines like those on the 737 MAX? If so, what were there reasons for not doing so?

I also have a second question. I have been told that stalling can be prevented by placing small wings at the front of an airplane. Would such a design have resolved the problems with the 737 MAX?

Plenue , April 28, 2019 at 9:14 pm

Fifty years of technological improvement, yes. The new engines aren't more powerful, they're more fuel efficient. Airbus had put more fuel efficient engines on its planes, so Boeing rushed new engines of its own into service to compete.

But they're really too large to be mounted on the 737; they mess up the center of gravity. MCAS was a janky software fix to solve a fundamental hardware problem, because Boeing didn't want to design a new plane.

And it didn't want to lose money by requiring airlines to retrain pilots, it sold the plane with the new engines as being exactly the same as the old, a painless upgrade.

Alex V , April 29, 2019 at 4:48 am

Canards, as the small wings at the front of aircraft are sometimes called, would likely not have been a fix in this case. There are some light aircraft that use these for stall prevention by utilizing the aerodynamic properties of the wing. Since a stall (absence of lift) is often caused by the nose of aircraft being too high, you can design the canard so that it stalls before the main wing. Thus it's difficult for the whole plane to stall, since the nose will sink when the canard loses lift first and returns the plane to a more appropriate attitude. An example here:

https://en.wikipedia.org/wiki/Rutan_VariEze

And explanation of canards here:

https://en.wikipedia.org/wiki/Canard_(aeronautics)

In high performance aircraft canards are used to increase maneuverability by providing another control surface.

We generally don't see them in commercial aircraft for a few reasons:

These are of course all very coarse generalizations – engineering is all about making technical and economic trade-offs.

A radical example of what can be accomplished by a combination of aerodynamics and software is the B-2 bomber – only one main wing, no tail or canards. I know, it has ejection seats but I sincerely doubt any aeronautical engineer has ever sat down and thought, "Hm, well, that's a sketchy design, but screw it, they can just eject if I messed up".

Edward , April 29, 2019 at 9:56 am

Thanks for this clear explanation. Would it make sense to locate the canards on the cockpit roof?

Alex V , April 29, 2019 at 10:44 am

Possibly, here's an example, although these fold as well:

https://en.wikipedia.org/wiki/Tupolev_Tu-144

There have been many concept aircraft that also had them mounted high.

Edward , April 29, 2019 at 1:58 pm

So would Boeing have to design a new plane to use canards? It would probably require the 737 MAX pilots to have new training. Boeing also seemed to want to hide the instability problem and the canards would be visual evidence for the problem.

Synoia , April 28, 2019 at 7:14 pm

The 737 Was designed in the '60. High bypass turbo fan engines had yet to be developed then. Upgrading the 737 is like adding a plug in hybrid engine to a Ford F100.

Alex V , April 29, 2019 at 4:19 am

The original 737 was designed to be quite low to the ground, to allow for easier boarding in an era before widespread jetway use (models have even been offered with integrated pull out boarding stairs), and to allow for more accessible servicing.

This worked well with the engines of the time, which were often low bypass turbofans, and thus smaller in diameter. This combination of height and engines made sense for the market it was designed.

Most modern commercial engines are high bypass turbofans, and therefore larger in diameter. The move to larger fan diameters has been enabled by advances in materials, manufacturing technology, and simulation software, with the goal of increasing engine power and efficiency.

Another factor influencing the engine size that can be used without extensive redesign is the landing gear operation. Because it folds towards the centerline of the plane, and into pockets in the bottom of the fuselage, there is a limit on how long it can be before it becomes too long and each side would collide with the other. And one would need to redesign the wing box structure to accommodate the moved wheels.

VietnamVet , April 28, 2019 at 6:24 pm

Exactly. This is a textbook case of the looting of America.

The $30 billion dollars made by cutting costs including quality inspection, using an existing airframe, tax cuts and ignoring safety went directly to stock buybacks that benefited stockholders and C-suite compensation.

Just like 2008 Boeing is "too big to fail and jailing the executives would cause it to collapse". Unless Americans demand an end to the corruption and the restoration of the rule of law; the plundering will continue until there is nothing left to live on. Boeing could have designed two brand new safe airliners with that cash that would have provided jobs and efficient transportation into the future but instead the money went into the pockets of the connected rich and killed 346 people.

JBird4049 , April 28, 2019 at 8:39 pm

What really gets me is that ultimately that would have given the fools more money because the orders would have kept on coming and probably increase, which would mean more profit and more compensation for everyone. Of course that would have taken a few years instead of immediately. So now the compensation is going to crash. Oh wait! They will just sell again to themselves, strip the company, and sell the nameplate still affixed to some ruin.

I am starting to understand why the Goths had no resistance when in Italy and during the sack the city of Rome. Centuries earlier the Republic and then the Empire routinely raised multiple armies and dealt with catastrophes both natural and man made. At the end, not only could they not readily create an another army, they could not repair the aqueducts. Like we are becoming, Rome became a hollow shell.

drumlin woodchuckles , April 28, 2019 at 9:09 pm

And probably the only stockholders who even benefited would be the individual or family-dynasty rich stockholders who own many thousands to millions of shares of a particular stock at a time. It takes ownership of that many shares for a tiny benefit-per-share to add up to thousands or millions of tiny little benefits-per-share.

People with pensions or 401ks or whatever may well involuntarily "own" 2 or 3 or maybe 10 shares "apiece" of Boeing. But they derived no benefit from the tiny little benefit per share this maneuver gained for the shares.

ChrisPacific , April 28, 2019 at 7:13 pm

Re: appendix 3, over-steer is counter-intuitive as hell. Once it's underway you have to steer left during a right turn and vice versa. I have watched race drivers do it (very skillfully) at the track, but there is no way I would want to be in a car that did that in a pressure or potential accident situation without a lot of training beforehand.

dearieme , April 28, 2019 at 7:19 pm

"your obsession with shareholder value": shareholder value is not being attended to if the company is driven into the ground by virtue of its planes being driven into the ground.

Clearly the definition of "shareholder value" that these bozos use is as defective as their engineering decision-making.

Hang a few of them pour encourager les autres . And hang a few of the regulators who thought it would be a dandy idea to let the firm regulate itself.

drumlin woodchuckles , April 28, 2019 at 9:11 pm

And hang a few of the lawmakers and lawbuyers who legislatively de-budgeted and money-starved FAA into this " turn it over to the plane-makers" corner as well.

Late Introvert , April 28, 2019 at 9:19 pm

I noticed that Boeing is incorporated in the great state of Delaware. Ah-hem.

dearieme , April 29, 2019 at 11:46 am

Oh well, change their name to BidenAir.

oaf , April 28, 2019 at 9:15 pm

There is another case of air disaster often referred to in what is known as *Human Factors* training a L-1011 which *descended* into the glades; while the crew tried to sort out a problem with a light bulb. I suggest familiarizing with it for perspective. (not to exonerate Boeing; just to encourage keeping an open mind)

JerryDenim , April 29, 2019 at 3:09 am

Ahhh, the infamous Captain Buddy. Immortal tyrant of early CRM training fame

Lambert's mention of the DC-10 and it's fatally flawed, explosive decompressing cargo door sent me down a hole of DC-10 disasters and accident reports. Some of those DC-10 incidents like America Airlines flight 96 could have been major tragedies but were saved by level heads and airmanship that by today's standards would be considered exceptional. The AA 96 crew landed safely with no fatalities after an explosive decompression, a partially collapsed floor and severely compromised flight controls. The crew had to work together and use non-standard asymmetrical thrust and control inputs to overcome the effects of a stuck, fully deflected rudder and a crippled elevator. The pilots of the ill fated United flight 232, another DC-10, are celebrated exemplars of the early CRM case studies, both crew members and a United DC-10 instructor pilot who happened to be occupying the jumpseat all worked together to heroically crash land their horribly stricken craft in Sioux City Iowa with only partial aileron control and assymetrical thrust to control the airplane. No elevator, no rudder control. A good number of passengers perished but most lived. Those pilots in the two instances I mentioned were exceptional, and they had to resort to exceptional means to control their aircraft, but in light of airmanship of that caliber from just a few decades ago, it blows my mind that in 2019 the mere suggestion that professional airline pilots should probably still be capable of moving the thrust levers during a trim emergency is somehow controversial enough to expose oneself to charges of racism and bias?! Different times indeed.

Boeing 737 Max aside, airplanes seem to be a lot safer these days than they were in the 1970's and 80's. Widespread acceptance and adoption of CRM/TEM has made personalities like Captain Buddy and many bad cockpit automation practices relics from the past, but automation itself still looks to be increasingly guilty of deskilling professional pilot ranks. In light of that trend, it's a really good thing passenger jets in 2019 are more reliable than the DC-10 and easier to land than the MD-11.

The Rev Kev , April 29, 2019 at 12:53 am

Two more links on the saga of the 737 MAX-

"The Boeing 737 Max crashes show that 'deteriorating pilot skills' may push airlines to favor Airbus" at https://www.businessinsider.com/boeing-737-max-crashes-deteriorating-pilot-skills-airbus-2019-4/?r=AU&IR=T

"Southwest and FAA officials never knew Boeing turned off a safety feature on its 737 Max jets, and dismissed ideas about grounding them" at https://www.businessinsider.com.au/boeing-737-max-safety-features-disable-southwest-grounding-discussions-2019-4

JerryDenim , April 29, 2019 at 3:55 am

Deteriorating pilot skills. Yep. Now you're getting it. Problem is, more automation equals more pilot skill degradation. Everything is just peachy with highly automated "idiot proof" airplanes until something breaks, then who is supposed to fly the plane if the pilots can't? The flight attendants? Whoever is sitting in 1A? Airbus airplanes malfunction too, as documented in a number of well publicized disasters and not-so-well publicized near disasters, so while this may be an effective marketing pitch to an airline executive not able or not willing to pay for highly skilled, experienced pilots, it's not a solution to a pilot skill crisis. Long term, it makes the situation worse.

The Rev Kev , April 29, 2019 at 10:05 am

Personally I believe in training the hell out of pilots because if I get into a plane, I want a pilot at the controls and not an airplane-driver. I would bet that even I could be trained to fly an aircraft where most of the functions are automated but when things go south, that is when you want a pilot in control. Training is expensive but having an ill-trained pilot in the cockpit is even more expensive.

Alex V , April 29, 2019 at 1:09 am

A thought . A completely fresh plane design is not necessarily safer. There is aways a trade off between innovation and proven reliability. It is surprisingly rare for an entirely new aircraft family to be introduced without at least one problem that threatens (but does not always take) lives.

tim , April 29, 2019 at 3:28 am

787 and 737 MAX are not the only problems Boeing have had.

The 737 NG (Next Generation) airplane using composite materials for the aircraft body, was also outsourced, The idea was that the Body parts would be built to exacting specifications, so they could be connected at the stage of final assembly. However, the sub-contractor couldn't live up to the specifications, so Boeing had to manually re-drill holes to connect the fuselage parts.

Not long after we had a series of crashes, where the fuselage broke up into its parts, something almost never seen before in airplanes.

youtube documentary from Australian SBS News:

Alex V , April 29, 2019 at 6:29 am

For clarity, the 737 NG does not have a composite fuselage.

http://www.b737.org.uk/production.htm

skippy , April 29, 2019 at 5:37 am

Umm the investors and market demanded the executive suite too engage in such behavior or suffer the consequences aka hyper reporting et al.

oaf , April 29, 2019 at 9:18 am

There are other Human Factors at play; regarding pilot ability Measuring ability by simply looking at *hours flown* (often referred to as *experience*) is misleading. Relevant details might include just what types of experience. It is possible to get airline positions *ab initio*, or in-house, if you will (with 500 hours, (IIRC) OR:
Prospective pilots from private sector, or military, may be more likely to have diverse backgrounds; including Flight Instructor background, Upset Recovery training; Aerobatic flying; and Glider or sailplane background. These are not necessarily prerequisites for airline hires. Do they make a difference? in emergencies???

The change in Part 135 minimums for non ab-initio applicants has done little or nothing to improve safety. It did financially squeeze some very competent and capable career minded pilots out of the pipeline to the left front seat. (thanks chuck.)(f.u.) His feel-good legislation:*We're doing something about it!*

James McRitchie , April 29, 2019 at 9:22 am

It isn't just Boeing that is using share buybacks to goose CEO pay. Shareholders of American Express have an opportunity to vote to Deduct Impact of BuyBacks on Pay. See American Express 2019 Proxy Vote Recommendations

DJG , April 29, 2019 at 9:25 am

And lest we forget what a good corporate citizen Boeing is now that it has moved to Chicago to take advantage of the many, errrrr, advantages:

https://chicagoist.com/2017/04/28/boeing_pays_just_01_of_its_profits.php

Carolinian , April 29, 2019 at 10:03 am

But, but Nader made Al Gore lose in 2000. Good to see him out of the shadows (he has a podcst BTW).

While Boeing deserves every form of condemnation and Muilenberg should resign I do think the facts that were all laid out in that should-be-Pulitzer-winning Seattle Times series are being stretched a bit. The problem seems to be, not that the plane is prone to fall out of the sky, but that its handling characteristics differ from the earlier, ubiquitous, 737 models. MCAS is the defective part, and Boeing will pay plenty

tempar555510 , April 29, 2019 at 10:22 am

' But, but Nader made Al Gore lose in 2000. ' Please elucidate .

Tom , April 29, 2019 at 12:23 pm

Florida's presidential election in 2000 was expected to be close and likely to be decisive in the electoral college vote. Nader was a fairly popular third-party candidate for president in that election. Many supporters of Gore over Bush pleaded for Nader to exit that race and ask his supporters to vote for Gore. He did neither. In the end the margin of Bush's win in Florida was tiny, if it existed at all, so there was reason to be angry at Nader, as I was at the time, since if he had quit the race in that state, Gore would very likely have become president instead of Bush.

If you're into counterfactual teleology then you might say Nader's stubborn vanity therefore led to the Iraq and Afghan wars. I don't but it's worth being aware that some people do.

GF , April 29, 2019 at 1:52 pm

I can't find the link right now; but, it stated that after close study, most of the voters who voted for Nadar would not have voted for Gore and would have just sat out the election resulting in an even more pronounced victory for Bush. Gore's defeat came from his inability to win his home state of TN.

Carolinian , April 29, 2019 at 12:25 pm

Should have included the /sarc tag.

EoH , April 29, 2019 at 12:24 pm

Concurrence and causation are not the same.

The claim ignores other factors. Gore's lackadaisical campaign, for one, and its poor response to the BushCheney campaign's misuse of the legal system to stop the Florida recount.

It's not Gore's fault the Supreme Court's conservative majority chose to not let the FL supreme court determine what FL law means, and chose to decide the election itself. But his response to the Florida debacle was weak, like his campaign. That might be one reason so many people voted for Nader. That's on Al and on BushCheney.

Nels Nelson , April 29, 2019 at 11:42 am

Some additional information and clarification about the Corvair.

The Corvair had a rear mounted engine and rear wheel drive. This is a poor design from a handling perspective as the rear weight bias produces a pendulum effect making the Corvair prone to oversteer. This tendency was exacerbated by the Corvair's swing axle independent rear suspension with its inherent camber changes as the wheel moved up and down. These characteristics of the Corvair were deadly in that while cornering if you let off the accelerator, the engine brakes the rear wheels creating a condition called "throttle lift oversteer". Under this situation the counterintutive reaction should be to put your foot on the accelerator and not the brakes. Some of you may recall that comedian Ernie Kovacs was killed when his Corvair spun off the road in wet weather and hit a utility pole.

A paradox here is that the Porsche 911 has a design very similar to the Corvair, rear wheel drive, rear mounted engine and rear weight bias and is praised for its handling. The Corvair was sometimes referred to as a poor man's 911. It too was prone to severe and violent oversteer if the throttle was lifted while cornering but in the case of the 911 it was expected that the driver know that while cornering your foot stayed on the accelerator. As the horsepower of 911s increased over the years the tendency to oversteer was tamed by fitting larger tires on the rear wheels. With the advent of technologies like antilock braking systems ,traction control and advanced computers employing torque vectoring to control vehicle stablity, cars today do have their versions of MCAS and the Porsche can be referred to as a triumph of engineering over design.

marku52 , April 29, 2019 at 3:27 pm

The 911 had pivots at both ends of the stub axles. It would lift throttle oversteer (boy would it lift throttle oversteer -lots of fun if you knew what you were doing), but it would not do the jacking rear-end lift that the corvair (pivots only at the differential end of the half shaft) would do.

Oddly, the VW bug had the exact same layout but Ralph never went after it.

EoH , April 29, 2019 at 12:15 pm

Nader is right to point out the design flaws, which seem to have the potential to cascade into failure.

The new engine nacelles create unusual lift. Being placed forward of the center of lift, that causes the nose of the aircraft to rotate vertically upward. If uncorrected, that would cause the aircraft inappropriately to rise in altitude and/or to approach a stall.

The nacelle-induced lift increases with an increase in engine thrust. That increases speed and/or reduces the time the pilot has to react and to correct an inappropriate nose-up attitude.

Boeing seemed unable to correct that design problem through changes in the aircraft's shape or control surfaces. It corrected it, instead, by having the computer step in to fly the aircraft back into the appropriate attitude. Works when it works.

But Boeing seems to have forgotten a CompSci 101 problem: shit in, shit out. If the sensors feeding the computer report bad data, the computer will generate a bad solution. Boeing also seems to have designed the s/w to reset after manual attitude correction by the pilot, forcing a correction loop the pilots would not always win.

Boeing elected not to inform aircraft purchasers or their flight crews of their automated fix to their new aircraft's inherent instability problem. Murphy's Law being what it is – if something can go wrong, it will – the pilots should have been made aware of the recommended fix so that when something went wrong it, they would have a chance of fixing it with a routine response.

Boeing elected not to do that. In the short run, it avoided the need for expensive additional pilot training. In the long run, Boeing would have hoped to increase sales. When hoping for the best, it is normal practice to plan for the worst. Boeing seems not to have done that either.

The Heretic , April 29, 2019 at 4:41 pm

All this talk of CEO and top managment resignation . honestly they probably don't care. They have made millions, if not tens of millions of dollars on bonuses; they can retire once they walk out the door. To change the behaviour of the C-suite you must affect the C-suite directly, charge convict them with at least criminal negligence or worse.. A drunk driver who causes the accident will most likley go to jail if someone dies in the accident, how come a CEO and his mgmt team, can wilfully go against decades of engineering and aviation best practices that are codified, and still only have to resign??

Pat , April 29, 2019 at 7:07 pm

Reality check. Even with all this news . BA closed at:

$379.05 29 April 2019
$342.79 31 August 2018

Yeap the stock price is up from before the crashes. There are good reasons for the Boeing board to be indifferent – there is no punishment.

[Apr 28, 2019] If China does not cut Iran oil purchases to zero, the Trump administration may have to make a decision on blocking Chinese banks from the U.S. financial system

Apr 28, 2019 | www.moonofalabama.org

jayc , Apr 28, 2019 5:20:22 PM | link

In a few days we may be witnessing a massive game of "chicken" between the world's two largest economies:

"If China does not cut Iran oil purchases to zero, the Trump administration may have to make a decision on blocking Chinese banks from the U.S. financial system. That could have unintended consequences for finance and business between the world's two biggest economies, already in negotiations over trade disagreements.

"It could," one official conceded about the potential for unintended consequences, "but that's why China's decision is easy, it's not a difficult decision for them mathematically. They do business with the U.S. which is critical, they do business with Iran which is not critical."
https://www.reuters.com/article/us-usa-iran-sanctions/no-wind-down-for-china-on-stopping-its-iran-oil-buys-trump-officials-idUSKCN1S2238

The unnamed "senior official" consulted for this article is remarkably confident the Chinese will blink on this matter, based on a what seems a limited understanding of what constitutes their base interest. In previous times, foreign policy initiatives always featured internal deliberation with advocates from all sides of an issue, so a complete range of option and consequence could be anticipated. Such process seems to have been abandoned.

[Apr 28, 2019] Boeing Didn't Tell Southwest Or FAA That It Had Disabled Critical Safety Alerts On 737 MAX

Notable quotes:
"... The article also discusses how some frontline FAA safety inspectors wanted to ground the MAXes until the "AoA Disagree" indicators were re-enabled, but were overridden by higher-ups who insisted that it was not a primary safety feature. ..."
Apr 28, 2019 | www.moonofalabama.org

Zachary Smith , Apr 28, 2019 3:58:25 PM | link

Here is a headline from a couple of days ago:

FAA could clear Boeing 737 MAX to fly again within weeks

Yes, the very last country to pull the 737-MAX out of use is going to be the first to put it back. There is some serious money being lost by Boeing and the Airlines, and they want to put a stop to it. This is all about millions and millions of Benjamins, for "they" are taking a shortct to save even more money.

A draft report by an FAA-appointed board of pilots, engineers and other experts concluded that pilots only need additional computer-based training to understand MCAS, rather than simulator time.

Simulators are EXPENSIVE, so the plan is to give the pilots a joystick and a computer, and maybe throw in some lectures and videos of other pilots using a real flight simulator. Are you ready to rush to reserve a flight?

This isn't a bad deal just for the flight crews and passengers, but the pure stench of it is contaminating other arenas. A Denier site I'm not going to link has managed to leverage the lack of regulator oversight by the FAA to lots of other places.

Planes, Automobiles, Bicycles, Homes, Hospitals, Schools, and Sidewalks Can All Be Made Unsafe by Mad Science, Rush to Market, and Corrupt Regulators

They don't include "vaccines" in that list because their readers understand perfectly well that if the FAA is a crap agency, why not the FDA as well? Much as I hate to admit it, the Deniers didn't have to break a sweat to score these perfectly valid points.

Does anyone imagine Volkswagen could have gotten away with all those years of cheating on their emissions if the regulators had been doing their jobs?

How did China get away with shipping that cancer-causing blood pressure medicine to the US for so many years? It's safe to assume some bored "regulator" was just waving the stuff on past without doing a single test.

This is going to cost us. I'm out of links, but here is a headline to consider.

Russia's Irkut aircraft manufacturer has posted the first video of a direct flight by its MS-21-300 airliner from Irkutsk to Ulyanovsk-Vostochny Airfield.

The brand-new Russian passenger craft is designed to transport up to 211 people over a distance of 6,400 kilometres.

There are competitors out there, and they can't be fended off by "sanctions" forever. Allowing unwatched & unregulated companies to run amok is going to hurt us all in the long term.

S , Apr 28, 2019 5:21:07 PM | link

There is a brand new Boeing piece at Naked Capitalism.

Ralph Nader Calls Out Boeing for 737 MAX Lack of Airworthiness, Stock Buybacks, and Demands Muilenburg Resign

Boeing management's behavior must be seen in the context of Boeing's use of its earned capital. Did you use the $30 billion surplus from 2009 to 2017 to reinvest in R&D, in new narrow-body passenger aircraft? Or did you, instead, essentially burn this surplus with self-serving stock buybacks of $30 billion in that period? Boeing is one of the companies that MarketWatch labelled as "Five companies that spent lavishly on stock buybacks while pension funding lagged. "

Feathering the Corporate Nest while stiffing the workers. Just what Wall Street loves. "Ugly" at Boeing isn't a 'skin deep' issue - it's that way clear to the bone!

Zachary Smith | Apr 28, 2019 4:28:00 PM

Boeing Didn't Tell Southwest Or FAA That It Had Disabled Critical Safety Alerts On 737 MAX

The article also discusses how some frontline FAA safety inspectors wanted to ground the MAXes until the "AoA Disagree" indicators were re-enabled, but were overridden by higher-ups who insisted that it was not a primary safety feature.

[Apr 25, 2019] Mish Boeing 737 Max Unsafe To Fly, New Scathing Report By Pilot, Software Designer

Apr 25, 2019 | www.zerohedge.com

Authored by Mike Shedlock via MishTalk,

A pilot with 30 years of flying experience and 40 years of design experience rips decisions made by Boeing and the FAA.

Gregory Travis, a software developer and pilot for 30 years wrote a scathing report on the limitations of the 737, and the arrogance of software developers unfit to write airplane code.

Travis provides easy to understand explanations including a test you can do by sticking your hand out the window of a car to demonstrate stall speed.

Design shortcuts meant to make a new plane seem like an old, familiar one are to blame.

This was all about saving money. Boeing and the FAA pretend the 737-Max is the same aircraft as the original 737 that flew in 1967, over 50 years ago.

Travis was 3 years old at the time. Back then, the 737 was a smallish aircraft with smallish engines and relatively simple systems. The new 737 is large and complicated.

Boeing cut corners to save money. Cutting corners works until it fails spectacularly.

Aerodynamic and Software Malpractice

Please consider How the Boeing 737 Max Disaster Looks to a Software Developer . Emphasis is mine.

The original 737 had (by today's standards) tiny little engines, which easily cleared the ground beneath the wings. As the 737 grew and was fitted with bigger engines, the clearance between the engines and the ground started to get a little um, tight.

With the 737 Max, the situation became critical. The engines on the original 737 had a fan diameter (that of the intake blades on the engine) of just 100 centimeters (40 inches); those planned for the 737 Max have 176 cm. That's a centerline difference of well over 30 cm (a foot), and you couldn't "ovalize" the intake enough to hang the new engines beneath the wing without scraping the ground.

The solution was to extend the engine up and well in front of the wing. However, doing so also meant that the centerline of the engine's thrust changed. Now, when the pilots applied power to the engine, the aircraft would have a significant propensity to "pitch up," or raise its nose. This propensity to pitch up with power application thereby increased the risk that the airplane could stall when the pilots "punched it"

Worse still, because the engine nacelles were so far in front of the wing and so large, a power increase will cause them to actually produce lift, particularly at high angles of attack. So the nacelles make a bad problem worse.

I'll say it again: In the 737 Max, the engine nacelles themselves can, at high angles of attack, work as a wing and produce lift. And the lift they produce is well ahead of the wing's center of lift, meaning the nacelles will cause the 737 Max at a high angle of attack to go to a higher angle of attack. This is aerodynamic malpractice of the worst kind.

It violated that most ancient of aviation canons and probably violated the certification criteria of the U.S. Federal Aviation Administration. But instead of going back to the drawing board and getting the airframe hardware right, Boeing relied on something called the "Maneuvering Characteristics Augmentation System," or MCAS.

It all comes down to money , and in this case, MCAS was the way for both Boeing and its customers to keep the money flowing in the right direction. The necessity to insist that the 737 Max was no different in flying characteristics, no different in systems, from any other 737 was the key to the 737 Max's fleet fungibility. That's probably also the reason why the documentation about the MCAS system was kept on the down-low.

Put in a change with too much visibility, particularly a change to the aircraft's operating handbook or to pilot training, and someone -- probably a pilot -- would have piped up and said, "Hey. This doesn't look like a 737 anymore." And then the money would flow the wrong way.

When the flight computer trims the airplane to descend, because the MCAS system thinks it's about to stall, a set of motors and jacks push the pilot's control columns forward. It turns out that the Elevator Feel Computer can put a lot of force into that column -- indeed, so much force that a human pilot can quickly become exhausted trying to pull the column back, trying to tell the computer that this really, really should not be happening .

MCAS is implemented in the flight management computer, even at times when the autopilot is turned off, when the pilots think they are flying the plane. I n a fight between the flight management computer and human pilots over who is in charge, the computer will bite humans until they give up and (literally) die . Finally, there's the need to keep the very existence of the MCAS system on the hush-hush lest someone say, "Hey, this isn't your father's 737," and bank accounts start to suffer.

Those lines of code were no doubt created by people at the direction of managers.

In a pinch, a human pilot could just look out the windshield to confirm visually and directly that, no, the aircraft is not pitched up dangerously. That's the ultimate check and should go directly to the pilot's ultimate sovereignty. Unfortunately, the current implementation of MCAS denies that sovereignty. It denies the pilots the ability to respond to what's before their own eyes.

In the MCAS system, the flight management computer is blind to any other evidence that it is wrong, including what the pilot sees with his own eyes and what he does when he desperately tries to pull back on the robotic control columns that are biting him, and his passengers, to death.

The people who wrote the code for the original MCAS system were obviously terribly far out of their league and did not know it. How can they can implement a software fix, much less give us any comfort that the rest of the flight management software is reliable?

So Boeing produced a dynamically unstable airframe, the 737 Max. That is big strike No. 1. Boeing then tried to mask the 737's dynamic instability with a software system. Big strike No. 2. Finally, the software relied on systems known for their propensity to fail (angle-of-attack indicators) and did not appear to include even rudimentary provisions to cross-check the outputs of the angle-of-attack sensor against other sensors, or even the other angle-of-attack sensor. Big strike No. 3.

None of the above should have passed muster. It is likely that MCAS, originally added in the spirit of increasing safety, has now killed more people than it could have ever saved. It doesn't need to be "fixed" with more complexity, more software. It needs to be removed altogether .

Numerous Bad Decisions at Every Stage

Ultimately 346 people are dead because of really bad decisions, software engineer arrogance, and Boeing's pretense that the 737 Max is the same aircraft as 50 years ago.

It is incredible that the plane has two sensors but the system only uses one. A look out the window was enough to confirm the sensor was wrong.

Boeing also offered "cheap" versions of the aircraft without some controls. The two crashed flights were with the cheaper aircraft.

An experienced pilot with adequate training could have disengaged MACS but in one of the crashed flights, the pilot was desperately reading a manual trying to figure out how to do that.

Flight Stall Test

If you stick you hand out the window of a car and your hand is level to the ground. You have a low angle of attack. There is no lift. Tilt your hand a bit and you have lift. Your arm will rise.

When the angle of attack on the wing of an aircraft is too great the aircraft enters aerodynamic stall. The same thing happens with your hand out a car window.

At a steep enough angle your arm wants to flop down on the car door.

The MACS software overrides what a pilot can see by looking out the window.

Useless Manuals

If you need a manual to stop a plane from crashing mid-flight, the manual is useless. It's already too late. The pilot had seconds in which to react. Yet, instead of requiring additional training, and alerting pilots of the dangers, Boeing put this stuff in a manual.

This was necessary as part of the pretense that a 737 is a 737 is a 737.


Swamidon , 2 minutes ago link

In my day Pilot's were repeatedly cautioned not to fly the aircraft to the scene of an accident since nobody survives a high speed crash or a stall. Non-pilots can vote me down but the proper action at the second the pilot lost control of his aircraft that close to the ground should have been to pull power, drop flaps, and make a soft field landing that some passengers would have survived.

wide angle tree , 2 minutes ago link

Sure it's a flying turd, but it will be back in the air soon. The CEO can spew buzzwords at the speed of sound. The FAA will approve any fix Boeing pukes forth cause nobody has the moral courage to stand in the way of making the big money.

I Write Code , 8 minutes ago link

I saw that article in Spectrum and while it makes some points about software development he mixes it up with generic claims way beyond his expertise. Editors at Spectrum should be fired.

Hope Copy , 10 minutes ago link

Cirrus Jet got grounded due to this MACS problem.. This CODE is all over the place and probably in AIRBUS also [(.. I'm betting that it was stolen from AIRBUS] Computer controlled fly by wire is death-in-a-box as it can always be hacked.

arby63 , 17 minutes ago link

Scary stuff there.

paul20854 , 18 minutes ago link

Boeing thinks it will fix the problem with its "MCAS" software. While it may do so on paper, there remains the problem of the weight distribution of engines, cargo and fuel which is placing the center of gravity behind the center of pressure for this modified aircraft during flight near the stall point. That problem is faulty aerodynamics. Any aircraft that is inherently aerodynamically unstable should never be flown in a commercial setting. Ground them all. Fire the stupid fools who allowed this beast to fly, including those at the FAA. And finally, sell your Boeing stock.

N3M3S1S , 12 minutes ago link

Sell your Boeing Stock FIRST

Born2Bwired , 19 minutes ago link

Recommend reading entire missive which was sent to me by a retired Aircraft Captain this morning.

ZH link didn't work for me.

https://spectrum.ieee.org/aerospace/aviation/how-the-boeing-737-max-disaster-looks-to-a-software-developer.amp.html

The guy is a very clear writer and explains things quite well.

edit: looks like there is now a sign in wall that wasn't there from my tablet.

Scaliger , 20 minutes ago link

Wing fences (see: wikipedia, for photos) are the only solution to the Leading Edge Extension,

that the upwards and wider jet engine cowling imposes.

This extension causes the wing stall problem.

Wing fences improve the longitudinal flow, on the expense of lateral flow,

thus delay border layer separation, thus curb wing stall.

robertocarlos , 38 minutes ago link

There's a picture of a man who jet skied over Niagara Falls. He wore a parachute but it failed to open in time. I think he needed more height.

jewish_master , 42 minutes ago link

Glorified Tesla.

oobilly , 43 minutes ago link

Single point failure designed into the plane isnt much of a business plan.

piavpn , 46 minutes ago link

Just remember to fart well.

Have a nice farty day.

robertocarlos , 49 minutes ago link

It's a POS and they are going to ram it down our throats in July. If you have to fly then you have to take this plane.

Ohanzee , 40 minutes ago link

Not really. Don't fly with Boeing.

Aubiekong , 52 minutes ago link

Hiring engineers for diversity and not for ability has consequences...

bluskyes , 39 minutes ago link

.gov gravy requires diversity

arby63 , 10 minutes ago link

Can you say EEO. That's causing all sorts of issues throughout the economy--especially in manufacturing.

[Apr 24, 2019] We've Endured Years of Bragging From Trump -- What Would an American Trade 'Victory' Look Like

Apr 24, 2019 | www.nakedcapitalism.com

The granting of a "permanent normal trading relationship" (PNTR) and then the subsequent accession to the World Trade Organization (WTO) in 2001 have been a boon for China, but the persistence of ongoing American trade deficits have led many, including the current president, to judge the United States a loser in ongoing trade negotiations with Beijing. It's not a totally irrational judgment: China's WTO accession hasn't been great for U.S. manufacturers .

Part of the problem stems from the extraordinary fact that Washington has seldom deployed a negotiator who is actually well-versed in trade issues. Since the days of the Clinton administration, it has been the U.S. Treasury Secretary, as opposed to the country's chief trade representative, who has consistently directed trade negotiations, with the resultant (and eminently predictable) impact that financial interests have superseded those of any other economic sector. That pattern was briefly disrupted when President George W. Bush appointed Alcoa's CEO, Paul O'Neill, to head the Treasury, and then CSX president John W. Snow, but ultimately the " Wall Street uber alles " mentality again prevailed with the appointment of Hank Paulson (to be followed by Tim Geithner, Jack Lew, and now Steve Mnuchin -- all of whom have finance-centric backgrounds).

For all of the supposed financial sophistication of America's Wall Street-based Treasury Secretaries, it is indeed ironic that China has consistently been able to play them for fools with the implied threat of its so-called "nuclear option," a highly flawed narrative that alleges that as a final resort, Beijing would dump its huge stockpile of U.S. Treasuries, thereby driving up U.S. rates, and creating a catastrophic depression for the U.S. economy. That so-called threat to the bond market is the traditional reason why successive Treasury Secretaries have been hesitant to resort to the blunt trauma force of trade sanctions or tariffs when it came to negotiating with Beijing. They were also comforted by the idea that as it modernized, China would increasingly abide by traditional norms of free trade doctrine against all available evidence that shows that it has not played by the same rules.

Let's leave aside the internal incoherence of the nuclear option: China exiting dollar-denominated assets could well create downward pressure on the external value of the free-floating currency. But that would enhance U.S. export competitiveness, assuming, of course, that America has anything left to export, an unfortunate legacy of the Treasury's malign neglect of U.S. manufacturing. It's also operationally wrong (see here for further detail), and mistakenly assumes (against all historical evidence to the contrary) that Beijing would pursue an economic policy that is the functional equivalent of cutting its own nose to spite its face, as Paul Krugman, among others, notes.

Even if Paulson, Geithner, Lew, Mnuchin, etc., didn't truly believe in the "nuclear option," they have been happy to tamp down the possibility of a trade war in order to keep the capital markets stable. Each trade "deal" has therefore largely sustained the status quo, the price for which sees Beijing usually offering up a few well-timed purchases of soybeans or Boeing aircraft (although the latter will be more problematic in light of the 737 fiasco). But China's policy makers have never been forced to deal with the economic consequences of their country's mercantilism, which has resulted in the steady erosion of America's Rust Belt, as the U.S. economy gave back the considerable employment gains it achieved during the 1990s, via a historic contraction in manufacturing employment .

Things have changed markedly since Trump seized the "China trade" portfolio from the Treasury's Steve Mnuchin, and placed it under the control of Robert Lighthizer, the current trade representative. Unusually for a member of the Trump administration, Lighthizer actually knows his brief. He has had literally decades of experience in trade issues, dating from his days as a deputy U.S. trade representative in 1983 (when Japan was widely perceived as the main trade threat), to his current role as America's chief trade negotiator. As Trump's U.S. Trade Representative (USTR), he has provided policy flesh and bones to the president's robustly unilateral approach in trade.

If anything, Lighthizer's trade hawkishness has become even more pronounced over the years, as he has shifted his attention away from Japan to China. In his 2010 congressional testimony , he argued that U.S. policy makers gravely underestimated the threat posed to American manufacturing by virtue of China's entry into the WTO, marshaling an array of evidence to cast doubt on the idea that its entry had brought any significant economic benefits to U.S. workers and businesses. He also highlighted the mercantilist nature of Beijing's state capitalism and noted that the country's administrative complexity likely precluded it embracing WTO rules, even if wanted to do so (which he doubted):

"As part of China's system, specific large companies receive government patronage in the form of credit, contracts, and subsidies. The Chinese government, in turn, sees these 'national champions' as a means of competing with foreign rivals and encourages their dominant role in the domestic economy and in export markets

{[S]cholars have questioned whether -- given its lack of institutional capacity and the complexity of its constitutional, administrative, and legal system -- China is even capable of complying with its WTO obligations.

No doubt in thrall to the prevailing free-trade ideology, Washington's "policy passivity" made it loath to use available tools such as the WTO's "421" special safeguards to counter the resultant trade shock. In that same testimony, Lighthizer also signaled that he was uninterested in the niceties of WTO style multilateralism, more inclined to the use of " aggressive unilateralism " via executive orders, diplomatic pressure, and most importantly, the use of Section 232 of the 1962 Trade Expansion Act to levy tariffs on various products, premised on the notion that the targeted country (in today's case, China) represented a national security threat.

Most significant from the Lighthizer perspective is an explicit rejection of the idea that China needs to do more than just buy more U.S. goods before the two countries strike a permanent trade deal, which in any case is highly problematic if the end objective is to bring the bilateral trade balance between the two countries to zero.

You can understand why. For one thing, the math doesn't add up: even if China were to raise its agricultural purchases by $30 billion, as it has reportedly pledged to do , this is pretty small beer in the context of a $300 billion bilateral trade deficit. As the economist Brad Setser highlights :

"The scope for explosive growth in soybeans is actually fairly limited, as the pre-tariff base for soybeans [the number one or two largest U.S. export to China] was quite high -- the United States was supplying $12 billion of China's almost $40 billion in oil seed imports. A huge tilt away from Brazil might cause U.S. beans exports to double, but getting much more than that would be difficult (there is a natural seasonality to soybean trade that favors alternating supply from the Southern and Northern Hemispheres).

"The real growth would need to come in sectors where China doesn't buy much now. Corn. Rice. Perhaps pork and beef Getting really big numbers there though would risk pushing up U.S. prices, and getting China to abandon its goal of self-sufficiency in basic grains."

So U.S. farm prices would be pushed up, which would hurt U.S. domestic consumers, even as it cosmetically dresses up America's trade position vis a vis China.

Setser adds:

"China has signaled it is willing to let foreign firms take majority stakes in a few more sectors, and has reiterated its belief that technology transfer isn't a legal requirement for entry into the Chinese market. There are likely to be settlements on some long-standing disputes as well -- the rating agencies have gotten approval to enter the Chinese market; Visa, American Express and Mastercard likely will finally get approval too ( Mastercard through a joint venture not everything changes); and some tariffs introduced as retaliation in the past may get dropped."

But how does the entry into China of consumer credit card companies or the ratings agencies help Americans? Ironically, this looks precisely like the kind of sop to finance that Trump said he would eschew. However, because of corporate/Wall Street pressure, the Trump agenda pivoted a few months ago from selective decoupling and protection of American strategic industries to opening up China for U.S. investment and pushing China to treat American companies doing business in China more equally. That is why leading U.S. companies have become friendlier and increasingly less critical of the president's trade policy, even as the economic commentariat has continued to blast him.

Trump himself needs to understand that a third to a half of 'trade' is really transnational production with inputs from suppliers coordinated by mostly third-party manufacturers in Asia (notably in semiconductors). The purpose of modern mercantilism (particularly as it is practiced in China today) is not just to sell more finished goods but to try to monopolize the high value added rungs of supply chains. It is unclear that targeting China's bilateral trade surplus with the United States will ultimately disrupt these entrenched supply chains. It almost certainly won't bring semiconductor manufacturing back to America's shores.

In the end, therefore, pushing China's leadership to make structural changes to open up China to American companies is probably an illusion. Beijing is unlikely to rip up the model that has seen it create national champions that can now compete successfully with America's biggest corporations. It may make token promises to curtail cybertheft, or the subsidies that the administration complains create an uneven playing field for American companies. But, as noted above, even Lighthizer himself has cast doubt that Beijing could enforce those promises, given the administrative complexity of its system of governance. In his eagerness to claim a win, therefore, Trump ironically might end up settling for the usual Faustian bargain: more large Chinese purchases, selective decoupling of supply chains (as American companies rethink their reliance on China ), and increased domestic protection for certain sectors (such as 5G) on national security grounds, Lighthizer's considerable efforts notwithstanding. We may have reached the peak as far as this particular tariff war goes, but the longer-term trade tensions will almost certainly persist well beyond this hollow 'victory,' which Mr. "Art of the Deal" will no doubt claim for himself when the negotiations do officially end.

The Rev Kev , April 23, 2019 at 4:18 am

Excellent assessment of the situation here. I suppose another factor for Trump is the fact that as the US 2020 elections drew ever nearer, he will want some sort of win – any sort of win – to take to the American people to show that he was tough on China and got a better deal. His opponents will disagree with the deal. Hell, probably most economists will disagree but Trump will only care what his supporters think as they are the ones that will re-elect him.
But of course the interests of people like Robert Lighthizer may come into play here as he may not care what Trump wants. He is the sort of person that might just blow up negotiations in order to be tough on China to get it to buckle. I have seen this movie before. Let me quote from a Salon article here-

"In the summer of 1941, before leaving for Placentia Bay, U.S. President Franklin D. Roosevelt had ordered a freeze on Japanese assets. That measure required the Japanese to seek and obtain licenses to export and pay for each shipment of goods from the United States, including oil. This move was most distressing to the Japanese because they were dependent on the United States for most of their crude oil and refined petroleum products. However, Roosevelt did not want to trigger a war with Japan. His intention was to keep the oil flowing by continuing to grant licenses. Roosevelt had a noose around Japan's neck, but he chose not to tighten it. He was not ready to cut off its oil lifeline for fear that such a move would be regarded as tantamount to an act of war.
That summer, while Roosevelt, his trusted adviser Harry Hopkins and U.S. Undersecretary of State Sumner Welles were attending the shipboard conference off Newfoundland and Secretary of State Cordell Hull was on vacation at the Greenbrier in West Virginia, the authority to grant licenses to export and pay for oil and other goods was in the hands of a three-person interagency committee. It was dominated by Assistant Secretary of State Dean Acheson, whom one historian described as the "quintessential opportunist of U.S. foreign policy in 1941."
Acheson favored a "bullet-proof freeze" on oil shipments to Japan, claiming it would not provoke war because "no rational Japanese could believe that an attack on us could result in anything but disaster for his country." With breathtaking confidence in his own judgment, and ignoring the objections of others in the State Department, Acheson refused to grant licenses to Japan to pay for goods in dollars. That effectively ended Japan's ability to ship oil and all other goods from the United States.
Acheson's actions cut off all American trade with Japan. When Roosevelt returned, he decided not to overturn the "state of affairs" initiated by Acheson, apparently because he feared he would otherwise be regarded as an appeaser. Once Roosevelt perpetuated Acheson's trade embargo, the planners in Japan's imperial military headquarters knew that oil to fuel their fleet, as well as rubber, rice and other vital reserves, would soon run out."

And we all know what happened next. So I would not be surprised if Robert Lighthizer could very well be the re-encarnation of Dean Acheson and given half a chance, would seek to put China under the gun if he thought that he would get away with it.

Marshall Auerback , April 23, 2019 at 4:45 pm

Rev Kev
I hope you are right. LIghthizer is actually one of the few beacons of hope in the Trump Administration. But I fear he'll drink the Trump Kool-Aid and basically settle for less than half a loaf. That's a fascinating historical precedent you have cited. Thank you for bringing it to my attention.

Albert , April 24, 2019 at 12:03 pm

Very interesting article. In the mean time Japans aim was land conquest. They raped, murdered, and pillaged their neighbors so WWII USA/Japan was not avoidable to say the least. They worshipped an emperor and thought they were superior ideologically and militarily. One could argue that they should have addressed the Japan issue years earlier.
Trump has taken on 20+ years of terrible trade deals and is now stepping up to change it. He should be applauded! Instead, everyone in the peanut gallery (news media) takes pot shots at him. We are dealing with a "COMMUNIST" country here which says it all. We now have a business man running the USA thank God. To make changes will take time!

skippy , April 23, 2019 at 5:23 am

Everything Donald Trump Is an Expert In, According to Him

Summation: https://www.youtube.com/watch?v=5GqJna9hpTE

Sound of the Suburbs , April 23, 2019 at 7:52 am

The US dreamed of an open, globalised world.

China became a superpower and the US went into decline.

Whoops!

What do we do now?

Sound of the Suburbs , April 23, 2019 at 7:55 am

Why not just blow your economy up like the US and UK in 2008?

They have seen their Minsky Moment coming unlike the clueless Americans and British.

The PBoC know where to look to see these things unlike the FED and BoE.

The private debt-to-GDP ratio.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

The West's "black swan" is a Chinese Minsky Moment.

John B , April 23, 2019 at 8:11 am

Darn. When I read the headline, I hoped the article would explain what a victory in U.S. trade policy with China would look like -- that is, what kind of trade relationship would "rectify lingering structural problems that have devastated U.S. manufacturing (with genuine enforcement provisions)." That's a tough question to answer! But all this article describes is why Trump's policy won't achieve that result. Every policy tried so far has not achieved that result, so it's not really surprising that this one won't either. In fact, the article seems to suggest that China cannot play by reasonable trade rules. So what is victory? Seriously, we need an answer to that one.

Monty , April 23, 2019 at 9:43 am

How can State Capitalism have caused that 'quantum leap' for China when everyone told us Central Planning does not work?

If it does work, maybe the US should try it in a way other than the PPT, Fed bailouts, ag subsidies, military industrial complex, mortgage subsidies, sanctions on rivals, military action on rivals, etc they already do.

d , April 23, 2019 at 1:10 pm

And how do the free marketers square that with their support of globalization?

JEHR , April 23, 2019 at 10:32 am

As I understand it, US manufacturing left the US for other countries because of the lower cost of labour and the lower cost of doing business in foreign countries. What would bring manufacturing back from foreign countries? Maybe when the cost of doing business in the US (i.e., wages and salaries of the working class) are lower than those in foreign countries. Maybe a labour contigent made up entirely of robots would bring back manufacturing to the US.

d , April 23, 2019 at 1:08 pm

While lower wage costs helped drive it, now they the ever rising cost of shipping their wares. Course they have seen the Chinese boycotts work so well, they may think they will have a US version to deal with, as so many dislike ok, hate globalization, that any that smacks of it has a PR problem. Course its likely we will see a repeat of NKoroea too

d , April 23, 2019 at 1:15 pm

While labor cost was a driver, it didn't go down cause executive labor cost went up.plus there was a lot more travel costs too

Irrational , April 23, 2019 at 2:21 pm

different budget line probably, so can still be presented as cost-saving also factor in the use of consultants before/during/after off-shoring – but again different budget line!

jonst , April 23, 2019 at 10:47 am

I'm not sure at all what others think a "victory' would look like, but to me it would be anything that finally raises the profile our (Western Nations) reliance (addiction?) on supply chains emanating from CHina that impact, negatively, our National Security. If we could even BEGIN to discuss this dilema I'd be satisfied. And it appears we are beginning to question the dependence.

rc , April 23, 2019 at 1:33 pm

China has been at war with the United States for decades. It is an all domain, unrestricted war. The Chinese do not play by any rules but their own. They have used the West's strengths of an open political and market system against North American and European industrialized democracies.

A win against China means re-industrializing the United States across all manufacturing industries. Tariffs and regulations are the most efficient means to effect this result.

Negotiating is a fool's errand. China will not live up to its obligations under the agreement anyway.

Perhaps, readers should ask themselves if China is beginning to resemble the Third Reich. Dictatorship, concentration camps, military buildup, territorial expansion, religious persecution, military aggression, economic warfare, racist ideology If so, then we should determine what steps the West and its allies in the East should take to ensure its survival and prosperity.

John k , April 23, 2019 at 3:23 pm

Probably we need tariffs to protect against the wage race to the bottom. Not at all clear trumps 25% threat is high enough.
But spending big on overdue infra would employ lots of blue collars, some at union wages not in competition w foreign labor, and focusing on higher unemployment regions first avoids inflation.
Regarding changes in Chinese gov us has been warmonger for decades, assassinates foreign leaders etc China so far not nearly as aggressive.

Susan the other` , April 23, 2019 at 3:31 pm

Our corporations which benefit from unlimited credit via our very own Military Industrial Capitalism are no different from China's SOEs. China is protecting essential industries, so are we. We have tried to force austerity on the rest of our economy – but China does not. Why is that? And because we have succeeded in establishing the world's most unequal society, we should be proud of our success. Mindless and shameful as it has been. China doesn't think it would be politically beneficial to do that to 1.5 billion Chinese. They will find their own way. Why should they now shoot themselves in the foot just because we did? For them to bend to our demand that they stop being so mercantilist means they would have to impose austerity on their people to some degree. It's an appropriate point for a showdown. And I can't imagine we will win unless we are willing to continue our own ridiculous social "structure" which is undemocratic and tyrannical. We're looking at a political revolution because everyone is fed up. China is not. Who's right? We can only brag that we have the "liberal" high ground because we haven't faced facts yet.

ptb , April 23, 2019 at 9:37 pm

The latest Iran sanctions salvo, the claim that "waivers" for China and others will be eliminated, is another complication. It will be perceived, with good reason, as deliberately interfering with world trade under false pretenses. An aggressive follow-up and this could be an effective way for team Trump to get out of whatever agreements they made in negotiations so far. More drama

Lynne , April 24, 2019 at 8:56 am

The potential increases in pork shipped to China mentioned will not mean much. China owns a huge US pork producer

[Apr 24, 2019] To me if feels like the US and China are two pilots locked in a kamikaze plane together

Apr 24, 2019 | www.moonofalabama.org

Schmoe , Apr 24, 2019 9:41:07 PM | link

@71 karlof1

I would not say advantage US; for example China needs US semiconductors. To me if feels like the US and China are two pilots locked in a kamikaze plane together; both nations are floating on a sea of debt and IMO prone to massive downside risk during a recession (eg, US corporate balance sheets are in very poor shape due to debt used to fund stock buybacks). The US has the reserve currency, but China has sane leadership and doesn't have to carry around other countries. Interesting times.

@ William Gruff
"Planned economies cannot have overproduction problems like market economies do" I don't agree with that; look at China's empty cities (overproduction of everything in that city). The recent book China's Great Wall of Debt went through China's massive overproduction of certain items (do they really need that much cement?). The book's thesis is that China builds what it knows how to build, whether it needs it or not.

[Apr 22, 2019] Data Tells: China's BRI promotes global trade

Apr 22, 2019 | economistsview.typepad.com

anne , April 19, 2019 at 04:12 PM

https://news.cgtn.com/news/3d3d774e7949544d34457a6333566d54/index.html

April 19, 2019

Data Tells: China's BRI promotes global trade
By Zhang Xinyuan

As a development strategy proposed by China that focuses on connectivity and cooperation on a trans‐continental scale, the Belt and Road Initiative (BRI) has significantly boosted global trade and investment in recent years.

With a wave of trade protectionism sweeping across the world in recent years, causing global economic turmoil, China still adheres to economic openness, actively pushing toward economic globalization, and striving to build a more convenient and liberal environment for international trade and investment.

BRI is one of the most important tools for China to achieve that goal. About 125 countries and 29 international organizations have signed cooperation agreements with China on jointly building the Belt and Road, according to data published in March on China's official Belt and Road website.

The total trade volume of goods between China and countries along the Belt and Road exceeded six trillion U.S. dollars from 2013 to 2018, according to a Ministry of Commerce (MOFCOM) statement on Thursday.

The average annual growth rate of trade between China and countries along the Belt and Road hit four percent during the 2013-2018 period, higher than the growth rate of China's foreign trade during the same period, accounting for 27.4 percent of China's total trade in goods, according to MOFCOM.

According to the Belt and Road Big Data Annual Report of 2018 from the State Information Center, BRI in 2017 connected 71 countries around the world, spanning across Asia, Europe, and Eastern Africa, and in total the BRI countries' foreign trade reached 9.3 trillion U.S. dollars in 2017, 27.8 percent of the total world trade volume.

Among the BRI countries, South Korea ranks first in terms of foreign trade volume, reaching over one trillion U.S. dollars in 2017, Singapore and India follows with 697 billion U.S. dollars and 617 billion U.S. dollars, respectively, the report showed.

In terms of trade commodities, the top import and export commodities among BRI economies fall in the same categories, including electronic machinery, sound recorder and reproducers, and televisions, followed by nuclear reactors, boilers, and other heavy machinery, based on the report.

Private enterprises in China have played a major role in trade with BRI economies. In 2017, China's private enterprises trade with BRI countries reached 619 billion U.S. dollars, representing 43 percent of the total trade volume between China and BRI countries. Foreign companies grabbed 36.6 percent of the trade pie, while state-owned enterprises got 19.4 percent of the market share.

BRI has greatly prompted the development of private economies in China and further opened its market to foreign companies.

ilsm -> anne... , April 19, 2019 at 04:33 PM
As Jimmy Carter observed....the US spread death and destruction investing in war and spending on war to the tune of trillions, China is investing in the future.
anne -> ilsm... , April 19, 2019 at 05:58 PM
https://twitter.com/christineahn/status/1118125703008940034

Christine Ahn‏ @christineahn

Carter to Trump: While China has some 18k miles of high-speed rail, the US has wasted $3 trillion on military spending. "It's more than you can imagine. China has not wasted a single penny on war, and that's why they're ahead of us. In almost every way."

5:15 AM - 16 Apr 2019 from Honolulu, HI

Fred C. Dobbs said in reply to anne... , April 20, 2019 at 05:58 AM
(That may depend on how one defines 'waste'.)

China Defense Spending
Set to Rise 7.5% as Xi Builds Up Military
https://www.bloomberg.com/news/articles/2019-03-05/china-s-military-spending-slows-as-economy-cools via @Bloomberg - March 4

China set a defense budget growth target of 7.5 percent in 2019, slower than last year but still enough to fulfill President Xi Jinping's plans to build a world-class military.

Authorities made the announcement on Tuesday in a statement released ahead of the National People's Congress, the annual gathering of China's legislature in Beijing. In 2018, before the trade war started to affect China's economy, officials predicted an increase of 8.1 percent to 1.11 trillion yuan ($164 billion). ...


[Apr 22, 2019] The starting point is a collapse in US China trade, which falls by 25 30 percent in the short term and somewhere between 30 percent and 70 percent over the long term, depending on the model and the direction of trade.

Apr 22, 2019 | economistsview.typepad.com

anne , April 19, 2019 at 12:38 PM

https://conversableeconomist.blogspot.com/2019/04/when-us-market-access-is-no-longer.html

April 18, 2019

When US Market Access is No Longer a Trump Card

When the US economy was a larger share of the world economy, then access to the US market meant more. For example, World Bank statistics say that the US economy was 40% of the entire world economy in 1960, but is now about 24%. The main source of growth in the world economy for the foreseeable future will be in emerging markets.

For a sense of the shift, consider this figure from the most recent World Economic Outlook report, published by the IMF (April 2019). The lines in the figure show the trade flows between countries that are at least 1% of total world GDP. The size of the dots for each country is proportionate to the country's GDP.

In 1995, you can see international trade revolving around the United States, with another hub of trade happening in Europe and a third hub focused around Japan. Trade between the US and China shows up on the figure, but China did not have trade flows greater than 1% of world GDP with any country other than the US.

The picture is rather different in 2015. The US remains an international hub for trade. Germany remains a hub as well, although fewer of its trade flows now exceed 1% of world GDP. And China has clearly become a hub of central importance in Asia.

[Graph]

The patterns of trade have also shifted toward greater use of global value chains--that is, intermediate products that are shipped across national borders at least once, and often multiple times, before they become final products. Here's the overall pattern since 1995 of falling tariffs and rising participation in global value chains for the world economy as a whole.

[Graph]

Several decades ago, emerging markets around the world worried about having access to selling in US and European markets, and this market access could be used by the US and European nations as a bargaining chip in economic treaties and more broadly in international relations. Looking ahead, US production is now more tied into global value chains, and the long-term growth of US manufacturing is going to rely more heavily on sales to markets outside the United States.

For example, if one is concerned about the future of the US car industry, the US now produces about 7% of the world's cars in 2015, and about 22% of the world's trucks. The future growth of car consumption is going to be primarily outside the US economy. For the health and long-term growth of the US car business, the possibility of unfair imports into the US economy matters a lot less than the access of US car producers to selling in the rest of the world economy.

The interconnectedness of global value chains means that General Motors already produces more cars in China than it does in the United States. In fact, sales of US multinationals now producing in China are already twice as high as exports from the US to China. Again, the long-term health of many US manufacturers is going to be based on their ability to participate in international value chains and in overseas production.

Although what caught my eye in this World Economic Outlook report was the shifting patterns of world trade, the main emphases of the chapter are on other themes that will come as no surprise to faithful readers of this blog. One main theme is that shifts in bilateral and overall trade deficits are the result of macroeconomic factors, not the outcome of trade negotiations, a theme I've harped on here.

The IMF report also offers calculations that higher tariffs between the US and China will cause economic losses for both sides. From the IMF report:

"The starting point is a collapse in US–China trade, which falls by 25–30 percent in the short term and somewhere between 30 percent and 70 percent over the long term, depending on the model and the direction of trade. The decrease in external demand leads to a decline in total exports and in GDP in both countries. Annual real GDP losses range from –0.3 percent to –0.6 percent for the United States and from –0.5 percent to –1.5 percent for China ... Finally, although the US–China bilateral trade deficit is reduced, there is no economically significant change in each country's multilateral trade balance."

Some advocates of higher tariffs take comfort in noting that the estimated losses to China's economy are bigger than the losses to the US economy. Yes, but it's losses all around! As the 21st century economy evolves, the most important issues for US producers are going to involve their ability to compete in unfettered ways in the increasingly important markets outside the US.

-- Timothy Taylor

[Apr 22, 2019] Boeing s 737 Max Debacle The Result of a Dangerously Pro-Automation Design Philosophy

Notable quotes:
"... "One of the problems we have with the system is, why put a system like that on an airplane in the first place?" said Slack, who doesn't represent any survivors of either the Lion Air or Ethiopia Airlines crashes. "I think what we're going to find is that because of changes from the (Boeing 737) 800 series to the MAX series, there are dramatic changes in which they put in controls without native pitch stability. It goes to the basic DNA of the airplane. It may not be fixable." ..."
"... But it's also important that the pilots get physical feedback about what is going on. In the old days, when cables connected the pilot's controls to the flying surfaces, you had to pull up, hard, if the airplane was trimmed to descend. You had to push, hard, if the airplane was trimmed to ascend. With computer oversight there is a loss of natural sense in the controls. There is only an artificial feel, a feeling that the computer wants the pilots to feel. And sometimes, it doesn't feel so great. ..."
"... An airplane approaching an aerodynamic stall cannot, under any circumstances, have a tendency to go further into the stall. This is called "dynamic instability," and the only airplanes that exhibit that characteristic -- fighter jets -- are also fitted with ejection seats. ..."
"... The airframe, the hardware, should get it right the first time and not need a lot of added bells and whistles to fly predictably. This has been an aviation canon from the day the Wright brothers first flew at Kitty Hawk. ..."
"... When the flight computer trims the airplane to descend, because the MCAS system thinks it's about to stall, a set of motors and jacks push the pilot's control columns forward. It turns out that the flight management computer can put a lot of force into that column -- indeed, so much force that a human pilot can quickly become exhausted trying to pull the column back, trying to tell the computer that this really, really should not be happening. ..."
"... MCAS is implemented in the flight management computer, even at times when the autopilot is turned off, when the pilots think they are flying the plane. In a fight between the flight management computer and human pilots over who is in charge, the computer will bite humans until they give up and (literally) die ..."
"... Like someone with narcissistic personality disorder, MCAS gaslights the pilots. And it turns out badly for everyone. "Raise the nose, HAL." "I'm sorry, Dave, I'm afraid I can't do that." ..."
"... Travis also describes the bad business incentives that led Boeing to conceptualize and present the 737 Max as just a tweak of an existing design, as opposed to being so areodynamically different as to be a new plane .and require time-consuming and costly recertification. To succeed in that obfuscation, Boeing had to underplay the existence and role of the MCAS system: ..."
"... Travis also explains why the FAA allows for what amounts to self-certification. This practice didn't result from the usual deregulation pressures, but from the FAA being unable to keep technical experts from being bid away by private sector players. Moreover, the industry has such a strong safety culture (airplanes falling out of the sky are bad for business) that the accommodation didn't seem risky. ..."
"... The 737 Max saga teaches us not only about the limits of technology and the risks of complexity, it teaches us about our real priorities. Today, safety doesn't come first -- money comes first, and safety's only utility in that regard is in helping to keep the money coming. The problem is getting worse because our devices are increasingly dominated by something that's all too easy to manipulate: software ..."
Apr 22, 2019 | www.nakedcapitalism.com

Even though Boeing is scrambling to fix the software meant to counter the 737 Max's increased propensity to stall as a result of the placement of larger, more fuel=efficient engines in a way that reduced the stability of the plane in flight, it's not clear that this will be adequate in terms of flight safety or the public perception of the plane. And even though the FAA is almost certain to sign off on Boeing's patch, foreign regulators may not be so forgiving. The divergence we've seen between the FAA and other national authorities is likely to intensify. Recall that China grounded the 737 Max before the FAA. In another vote of no confidence, even as Boeing was touting that its changes to its now infamous MCAS software, designed to compensate for safety risks introduced by the placement of the engines on the 737 Max, the Canadian air regulator said he wanted 737 Max pilots to have flight simulator training, contrary to the manufacturer's assertion that it isn't necessary. Last week, the Wall Street Journal reported that American Airlines is developing 737 Max flight simulator training .

But a fundamental question remains: can improved software compensate for hardware shortcomings? Some experts harbor doubts. For instance, from the Spokane Spokesman-Review :

"One of the problems we have with the system is, why put a system like that on an airplane in the first place?" said Slack, who doesn't represent any survivors of either the Lion Air or Ethiopia Airlines crashes. "I think what we're going to find is that because of changes from the (Boeing 737) 800 series to the MAX series, there are dramatic changes in which they put in controls without native pitch stability. It goes to the basic DNA of the airplane. It may not be fixable."

"It is within the realm of possibility that, if much of the basic pitch stability performance of the plane cannot be addressed by a software fix, a redesign may be required and the MAX might not ever fly," [aviation attorney and former NASA aerospace engineer Mike] Slack said.

An even more damming take comes in How the Boeing 737 Max Disaster Looks to a Software Developer in IEEE Spectrum (hat tip Marshall Auerback). Author Greg Travis has been a software developer for 40 years and a pilot. He does a terrific job of explaining the engineering and business considerations that drove the 737 Max design. He describes why the plane's design is unsound and why the software patch in the form of MCAS was inadequate, and an improved version is unlikely to be able to compensate for the plane's deficiencies.

Even for those who have been following the 737 Max story, this article has background that is likely to be new. For instance, to a large degree, pilots do not fly commercial aircraft. Pilots send instructions to computer systems that fly these planes. Travis explains early on that the As Travis explains:

In the 737 Max, like most modern airliners and most modern cars, everything is monitored by computer, if not directly controlled by computer. In many cases, there are no actual mechanical connections (cables, push tubes, hydraulic lines) between the pilot's controls and the things on the wings, rudder, and so forth that actually make the plane move ..

But it's also important that the pilots get physical feedback about what is going on. In the old days, when cables connected the pilot's controls to the flying surfaces, you had to pull up, hard, if the airplane was trimmed to descend. You had to push, hard, if the airplane was trimmed to ascend. With computer oversight there is a loss of natural sense in the controls. There is only an artificial feel, a feeling that the computer wants the pilots to feel. And sometimes, it doesn't feel so great.

Travis also explains why the 737 Max's engine location made the plane dangerously unstable:

Pitch changes with power changes are common in aircraft. Even my little Cessna pitches up a bit when power is applied. Pilots train for this problem and are used to it. Nevertheless, there are limits to what safety regulators will allow and to what pilots will put up with.

Pitch changes with increasing angle of attack, however, are quite another thing. An airplane approaching an aerodynamic stall cannot, under any circumstances, have a tendency to go further into the stall. This is called "dynamic instability," and the only airplanes that exhibit that characteristic -- fighter jets -- are also fitted with ejection seats.

Everyone in the aviation community wants an airplane that flies as simply and as naturally as possible. That means that conditions should not change markedly, there should be no significant roll, no significant pitch change, no nothing when the pilot is adding power, lowering the flaps, or extending the landing gear.

The airframe, the hardware, should get it right the first time and not need a lot of added bells and whistles to fly predictably. This has been an aviation canon from the day the Wright brothers first flew at Kitty Hawk.

Travis explains in detail why the MCAS approach to monitoring the angle of attack was greatly inferior to older methods .including having the pilots look out the window. And here's what happens when MCAS goes wrong:

When the flight computer trims the airplane to descend, because the MCAS system thinks it's about to stall, a set of motors and jacks push the pilot's control columns forward. It turns out that the flight management computer can put a lot of force into that column -- indeed, so much force that a human pilot can quickly become exhausted trying to pull the column back, trying to tell the computer that this really, really should not be happening.

Indeed, not letting the pilot regain control by pulling back on the column was an explicit design decision. Because if the pilots could pull up the nose when MCAS said it should go down, why have MCAS at all?

MCAS is implemented in the flight management computer, even at times when the autopilot is turned off, when the pilots think they are flying the plane. In a fight between the flight management computer and human pilots over who is in charge, the computer will bite humans until they give up and (literally) die

Like someone with narcissistic personality disorder, MCAS gaslights the pilots. And it turns out badly for everyone. "Raise the nose, HAL." "I'm sorry, Dave, I'm afraid I can't do that."

Travis also describes the bad business incentives that led Boeing to conceptualize and present the 737 Max as just a tweak of an existing design, as opposed to being so areodynamically different as to be a new plane .and require time-consuming and costly recertification. To succeed in that obfuscation, Boeing had to underplay the existence and role of the MCAS system:

The necessity to insist that the 737 Max was no different in flying characteristics, no different in systems, from any other 737 was the key to the 737 Max's fleet fungibility. That's probably also the reason why the documentation about the MCAS system was kept on the down-low.

Put in a change with too much visibility, particularly a change to the aircraft's operating handbook or to pilot training, and someone -- probably a pilot -- would have piped up and said, "Hey. This doesn't look like a 737 anymore."

To drive the point home, Travis contrasts the documentation related to MCAS with documentation Cessna provided with an upgrade to its digital autopilot, particularly warnings. The difference is dramatic and it shouldn't be. He concludes:

In my Cessna, humans still win a battle of the wills every time. That used to be a design philosophy of every Boeing aircraft, as well, and one they used against their archrival Airbus, which had a different philosophy. But it seems that with the 737 Max, Boeing has changed philosophies about human/machine interaction as quietly as they've changed their aircraft operating manuals.

Travis also explains why the FAA allows for what amounts to self-certification. This practice didn't result from the usual deregulation pressures, but from the FAA being unable to keep technical experts from being bid away by private sector players. Moreover, the industry has such a strong safety culture (airplanes falling out of the sky are bad for business) that the accommodation didn't seem risky. But it is now:

So Boeing produced a dynamically unstable airframe, the 737 Max. That is big strike No. 1. Boeing then tried to mask the 737's dynamic instability with a software system. Big strike No. 2. Finally, the software relied on systems known for their propensity to fail (angle-of-attack indicators) and did not appear to include even rudimentary provisions to cross-check the outputs of the angle-of-attack sensor against other sensors, or even the other angle-of-attack sensor. Big strike No. 3.

None of the above should have passed muster. None of the above should have passed the "OK" pencil of the most junior engineering staff, much less a DER [FAA Designated Engineering Representative].

That's not a big strike. That's a political, social, economic, and technical sin .

The 737 Max saga teaches us not only about the limits of technology and the risks of complexity, it teaches us about our real priorities. Today, safety doesn't come first -- money comes first, and safety's only utility in that regard is in helping to keep the money coming. The problem is getting worse because our devices are increasingly dominated by something that's all too easy to manipulate: software

I believe the relative ease -- not to mention the lack of tangible cost -- of software updates has created a cultural laziness within the software engineering community. Moreover, because more and more of the hardware that we create is monitored and controlled by software, that cultural laziness is now creeping into hardware engineering -- like building airliners. Less thought is now given to getting a design correct and simple up front because it's so easy to fix what you didn't get right later .

It is likely that MCAS, originally added in the spirit of increasing safety, has now killed more people than it could have ever saved. It doesn't need to be "fixed" with more complexity, more software. It needs to be removed altogether.

There's a lot more in this meaty piece . Be sure to read it in full.

And if crapification by software has undermined the once-vanuted airline safety culture, why should we hold out hope for any better with self-driving cars?


Fazal Majid , April 22, 2019 at 2:11 am

Automation is not the issue. Boeing cutting corners and putting only one or two angle of attack sensors is. Just like a man with two clocks can't tell the time, if one of the sensors malfunctions, the computer has no way of knowing which one is wrong. That's why Airbus puts three sensors in its aircraft, and why Boeing's Dreamliner has three computers with CPUs from three different manufacturers to get the necessary triple redundancy.

Thus this is really about Boeing's shocking negligence in putting profits above safety, and the FAA's total capture to the point Boeing employees did most of the certification work. I would add the corrosion of Boeing's ethical standards was completely predictable once it acquired McDonnell-Douglas and became a major defense contractor.

Yves Smith Post author , April 22, 2019 at 8:08 am

I beg to differ since it looks like you didn't read the article in full, as a strongly recommended. The article has a section on the cost of fixing hardware problems versus software problems. Hardware problems are enormously costly to fix.

The plane has a hardware problem resulting from Boeing not being willing to risk having to recertify a fuel efficient 737. So rather than making the plane higher off the ground (new landing gear, which other articles indicate was a non-starter since it would lead to enough other changes so as to necessitate recertification) and trying to fix a hardware problem with software. That has two knock-on problems: it's not clear this will ever be adequate (not just Travis' opinion) and second, it's risky given the software industry's propensity to ship and patch later. Boeing created an additional problem, as Travis stresses, by greatly underplaying the existence of MCAS (it was mentioned after page 700 in the documentation!) and maintaining the fiction that pilots didn't need simulator training, which some regulators expect will be the case even after the patch.

You also miss the point the article makes: the author argues (unlike in banking), the FAA coming to rely on the airlines for certification wasn't a decision they made, but an adaptation to the fact that they could no longer hire and retain the engineers they needed to do the work at the FAA on government pay scales. By contrast, at (say) the SEC, you see a revolving door of lawyers from plenty fancy firms. You have plenty of "talent" willing to work at the SEC, but with bad incentives.

Susan the other` , April 22, 2019 at 10:57 am

Thank you for reviewing this. 700+ pages! I thought it was paywalled bec. so slow to download. The resistance to achieving fuel efficiency is front and center these days. One thing I relate it to is the Macron attitude of punishing the fuel consumer to change the market. Cart before horse. When the FAA sent down fuel efficiency requirements it might have been similarly preemptive, now in hindsight. There should have been legislation and regulation which adjusted the profitability of the airline industry via better tax breaks or regulations against aggressive competition. The safety of airlines would have been upheld if the viability of the company were protected. So even domestic protectionism when it comes to safety. And in so doing, the FAA/congress could also have controlled and limited airline use which tries to make up in volume for all the new costs it incurs. It's a serious problem when you are so carefree as a legislator that you let the free market do it. What a mess. Quality is the first thing to go.

foppe , April 22, 2019 at 11:41 am

reminds me of what was said about risk departments inside banks -- deliberately lowly paid, so that anyone with skills would move on or easily be hired away. Was it you? Bill Black? Luyendijk? I don't remember. Either way..

Marley's dad , April 22, 2019 at 11:45 am

I did read the article completely and I was an aircraft commander of a C-141A during the Viet Nam war and I am a degreed electrical engineer.

Having flown the C-141A for several thousand hours I am very familiar with the aircraft pitching up almost uncontrollably. A favorite trick that C -141 flight instructors pulled on pilots new to aircraft was to tell the student pilot to "go around" (for the first time during his training) on an approach. The student pilot followed the flight manual procedure and started to raise the nose while advancing the throttles to full power. However, what wasn't covered in the flight manual was the fact that a HUGE trim change occurred when the engines went from near idle to full power. To regain control, it took both hands (arms) to move the yoke away from your chest while running nose down trim. While you were doing this the airplane was trying to stand on its tail. On the other hand none of us ever forgot the lesson.

The C-141 was not fly by wire; however all control surfaces were equipped with hydraulic assist and "feel springs" to mimic control feel without the hydraulics. The feel springs for the elevators must have been selected using a human subject like Arnold Schwarzenegger because (in my opinion) they were much stronger than necessary. The intent was to prevent the pilots from getting into excessive angles of pitch, which absolutely would occur if you weren't prepared for it on a "go around".

What Fazal & V have said is basically correct. The max has four angle of attack vanes. The MAIN problem was that Boeing decided to go cheap and only connect one of the vanes to the MCAS. If they had connected two, the MCAS would be able to determine that one of them was wrong and disconnect itself. That would have eliminated the pitch down problem that caused the two crashes.

Connecting that second AOA vane would not have created any certification issues and would have made Boeing's claim about the "Max" being the "same" as previous versions much closer to the truth. Had they done that we wouldn't be talking about this.

Another solution would have been to disable the MCAS if there was significant counter force on the yoke applied by the pilot. This has been used on autopilot systems since the 1960's. But not consistently. The proper programming protocol for the MCAS exists and should have been used.

I agree that using only one AOA vane and the programming weren't the only really stupid things that Boeing did in this matter. Insufficient information and training given to the pilots was another.

flora , April 22, 2019 at 12:05 pm

Yes.
second, it's risky given the software industry's propensity to ship and patch later.
-this is one of the main themes in the Dilbert cartoon strip.

the author argues (unlike in banking), the FAA coming to rely on the airlines for certification wasn't a decision they made, but an adaptation to the fact that they could no longer hire and retain the engineers they needed to do the work at the FAA on government pay scales.

-That's what happens when you make 'government small enough to drown in a bathtub' , i.e. starve of the funds necessary to do a good job.

My 2¢ . Boeing's decision to cut manufacturing corners AND give the autopilot MCAS system absolute control might have been done (just a guess here, based on the all current the 'self-driving' fantasies in technology ) to push more AI 'self-drivingness' into the airplane. (The 'We don't need expensive pilots, we can use inexpensive pilots, and one day we won't need pilots at all' fantasy.) Imo, this makes the MCAS system, along with the auto AI self-driving systems now on the road no better than beta test platforms And early beta test platforms, at that.

It's one thing when MS or Apple push out a not quite ready for prime time OS "upgrade", then wait for all the user feedback to know where it the OS needs more patches. No one dies in those situations (hopefully). But putting not-ready for prime time airplanes and cars on the road in beta test condition to get feedback? yikes . my opinion.

Anarcissie , April 22, 2019 at 3:31 pm

It is interesting that a software bug that appears in the field costs very roughly ten times as much as one caught in QA before being released, yet most managements continue to slight QA in favor of glitzy features. I suppose that preference follows supposed customer demand.

WestcoastDeplorable , April 22, 2019 at 2:14 pm

It's not only the 737 Max that endangers Boeing's survival; it's this:

https://www.aljazeera.com/investigations/boeing787/

15 workers at their N. Charleston SC assembly plant were asked if they would fly on the plane they build there; 10 said NO WAY!

Alex V , April 22, 2019 at 3:23 am

Boeing, the FAA, and the airlines seriously screwed up the introduction of this aircraft so badly it cost lives. The article by Travis is however written by someone out of his depth, even though he has more familiarity with aircraft and software than the average person. There are numerous factual errors and misrepresentations, which many commenters (with more detailed knowledge of the subjects) on the article point out. One of the principles of aviation safety is to identify and fix failures without finger pointing, in order to encourage a culture of openness and cooperation. The tone of the article takes the opposite approach while trying to argue from (undeserved) authority. I agree with his critique that these incidents are a result capitalism run amok – that should, in my opinion, be separate from a discussion of the technical problems and how to fix them.

Thuto , April 22, 2019 at 4:51 am

If Boeing had adhered to that cardinal principle of openness, there might be no failure to fix via "a culture of openness and cooperation". These catastrophic failures were a result of Boeing not being open with its customers about the safety implications of its redesign of the 737 Max and instead choosing the path of obfuscation to sell the idea of seamless fleet fungibility to airlines.

Knifecatcher , April 22, 2019 at 5:00 am

Looking through the comments the complaints about the article seemed to be in one of three areas-

– Questioning the author's credentials (you're just a Cessna pilot!)
– Parroting the Boeing line that this was all really pilot error
– Focusing on some narrow technical element to discredit the article

The majority of comments were in agreement with the general tenor of the piece, and the author engaged politely and constructively with some of the points that were brought up. I thought the article was very insightful, and sometimes it does take an outsider to point out that the emperor has no clothes.

I'd like to see a reference for your assertion that the "principles of aviation safety" preclude finger pointing. Unless I'm very much mistaken the whole purpose of an FAA accident investigation is to determine the root cause, identify the responsible party, and, yes, point fingers if necessary.

Alex V , April 22, 2019 at 5:57 am

This is one example:

https://en.m.wikipedia.org/wiki/Crew_resource_management

The general point I was trying to make, perhaps poorly worded, is that the only goal is to identify the problem and fix it, and not to focus primarily on assigning blame as vigorously as possible. Mistakes occur for many reasons – some of them nefarious, some not. Excessive finger pointing, especially before a full picture of what went wrong has been developed, fosters a tendency to coverups and fear, in my opinion.

Regarding your other points, the technical details are vital to understand clearly in almost any aviation incident, as there is never one cause, and the chain of events is always incredibly complex. Travis' analysis makes the answers too easy.

skippy , April 22, 2019 at 6:23 am

From what I understand the light touch approach was more about getting people to honestly divulge information during the investigation period, of which, assisted in determining cause.

I think you overstate your case.

Alex V , April 22, 2019 at 6:58 am

This "light touch" approach is used throughout the aviation industry, all the way from initial design to aircraft maintenance, as the purpose is to make sure that anyone, no matter the rank or experience, can bring up safety concerns before incidents occur without fear of repercussions for challenging authority. It's likely that this cornerstone of aviation culture was ignored at too many points along the way here.

I am not defending Boeing, the FAA, or the airlines. Serious, likely criminal, mistakes were made by all.

I however take issue with Travis' approach of assigning blame this early and vigorously while making errors in explaining what happened. He especially attacks the the development process at Boeing, since software is his speciality, although he makes no claims as to having worked with real time or avionics software, aside from using products incorporating it. These are quite different types of software from normal code running a website or a bank. He does not, and can not, know what occurred when the code was written, yet makes significant declarations as to the incompetence of the engineers and coders involved.

If he were leading the investigation, I believe the most likely outcome would be pushback and coverup by those involved.

flora , April 22, 2019 at 12:19 pm

It's likely that this cornerstone of aviation culture was ignored at too many points along the way here.

I am not defending Boeing, the FAA, or the airlines. Serious, likely criminal, mistakes were made by all.

I however take issue with Travis' approach of assigning blame this early

I don't disagree with your description of how it used to be. However, since the FAA has reduced its regulatory role, and by extension given aircraft manufactures more leash to run with ideas that shouldn't be followed, we're left with the situation that large, potentially crippling tort lawsuits are one of the only checks left on manufacturer stupidity or malfeasance. Think of the Ford Pinto bolt-too-long-causing-gas-tank-explosions case. If the FCC won't make manufacturers think twice when internal engineers say 'this isn't a good idea, isn't a good design', maybe the potential of a massive lawsuit will make them think twice.

And this is where we get into pointing the finger, assigning blame, etc. I'm assuming there are good engineers at Boeing who warned against these multiple design failure and were ignored, the FCC was see-no-evil here-no-evil, and the MCAS went forward. Now come the law suits. It's the only thing left to 'get Boeing's attention'. I don't know if Travis' is too early. It's likely there's been plenty of chatter among the Boeing and industry engineers already. imo.

charles 2 , April 22, 2019 at 3:35 am

Training a pilot is building a very complicated automation system : what kind of thought process do you expect within the short timeframe (few minutes) of a crisis in a cockpit ? Kant's critique of pure reason ?Somehow people seem more comfortable from death coming from human error (I.e. a bad human automation system) that death coming from a design fault, but a death is a death

The problem is not automation vs no automation, it is bad corner-cutting automation vs good systematic and expensive automation. It is also bad integration between pilot brain based automation and system automation, which also boils out to corner cutting, because sharing too much information about the real behaviour of the system (if only it is known accurately ) increases the complexity and the cost of pilot training.

Real safety comes from proven design (as in mathematical proof). It is only achievable on simple systems because proofing is conceptually very hard. A human is inevitably a very complex system that is impossible to proof, therefore, beyond a certain standard of reliability, getting the human factor out of the equation is the only way to improve things further. we are probably close to that threshold with civil aviation.

Also, I don't see anywhere in aircraft safety statistics any suggestion of "crapification" of safety see https://aviation-safety.net/graphics/infographics/Fatal-Accidents-Per-Mln-Flights-1977-2017.jpg Saying that the improvement is due only the better pilot training and not to more intrinsically reliable airplanes is a stretch IMHO.

Similarly, regarding cars, the considerable improvement in death per km travelled in the last 30 years cannot be attributed only to better drivers, a large part comes from ESP and ABS becoming standard (see https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/811182 ). If this is not automation, what is ?

Yves Smith Post author , April 22, 2019 at 7:57 am

It looks as if you didn't read the piece. The problem, which the author makes explicit, is the "ship now, patch later" philosophy that is endemic in software design.

And it would be better to look at flight safety stats within markets. You have great swathes of the emerging world starting to fly on airplanes during this period. I'm not saying the general trend isn't correct, but I would anticipate it's to a significant degree attributable to the maturation of emerging economy air systems. For instance, I flew on Indonesia's Garuda in the early 1990s and was told I was taking a safety risk; I'm now informed that it's a good airline. Similarly, in the early 1980s I was doing business in Mexico, and the McKinsey partner I was traveling with (who as a hobby read black box transcripts from plane crashes) was very edgy on the legs of our travels when we had to use AeroMexico (as in he'd natter on in a way that was very out of character for a typical older WASP-y guy, he was close to white knuckle nervous).

Marley's dad , April 22, 2019 at 10:28 am

Garuda's transition from "safety risk" to "good airline" was an actual occurrence. At one point Garuda and all other Indonesian air lines were prohibited from flying in the EU because of numerous crashes that were the result of management issues, that forced the airline(s) to change their ways.

Darius , April 22, 2019 at 10:11 am

ABS is an enhancement. MCAS is a kludge to patch up massive weaknesses introduced into the hardware by a chain of bad decisions going back almost 20 years.

Boeing should have started designing a new narrow-body when they cancelled the 757 in 2004. Instead, they chose to keep relying on the 737. The end result is MCAS and 300+ deaths.

Harrold , April 22, 2019 at 11:16 am

I'm not sure Boeing can design a fresh aircraft any more.

Olga , April 22, 2019 at 4:17 am

"There are numerous factual errors and misrepresentations, which many commenters (with more detailed knowledge of the subjects) on the article point out."
Not sure why anyone would mis-characterise comments. The first comment points out a deficiency, and explains it. There was only one other commenter, who alleged errors – but without explaining what those could be. He was later identified by another person as a troll. Almost all other comments were complimentary of the article. So why make the above assertion?

Yves Smith Post author , April 22, 2019 at 7:43 am

We have a noteworthy number of newbie comments making poorly-substantiated digs at the Spectrum IEEE piece. We've also seen this sort of non-organic-looking response when we've put up pro-union pieces when political fights were in play, like Wisconsin's Scott Walker going after unions.

AEL , April 22, 2019 at 9:29 am

Travis does indeed play fast and loose with a number of things. For example, his 0-360 engine does *not* have pistons the size of dinner plates (at a 130mm bore it isn't even the diameter of a particularly large saucer). MCAS is a stability augmentation system not stall prevention system and the 737 MAX wasn't "unstable" it was insufficiently stable. The 737 trim system acts on the stabilizer not the elevator (which is a completely different control surface). etc.

For the most part, it doesn't affect the thrust of his arguments which are at a higher level. However it does get distracting.

Harrold , April 22, 2019 at 11:19 am

"the 737 MAX wasn't "unstable" it was insufficiently stable"

The passengers are not "dead", they are insufficiently alive.

Olga , April 22, 2019 at 12:00 pm

Thank you – I was beginning to wonder what the difference was between unstable and insufficiently stable. Not that this is a subject to make jokes about.

JBird4049 , April 22, 2019 at 1:50 pm

Not that this is a subject to make jokes about.

Yeah, but sometimes the choice is to laugh or cry, and after constantly going WTF!?! every time I read about this horror, even mordantly grim humor is nice.

Walt , April 22, 2019 at 2:30 pm

Yes, stabilizer trim on the 737 acts on the horizontal stabilizer, not the elevator or "pilots' control columns."

As a former "73" pilot, I too find the author's imprecision distracting.

ChristopherJ , April 22, 2019 at 5:21 am

Investigators pipe up, but my understanding of a proper investigation is: a. find out what happened; b. find out why the incident occurred; c. what can be done to prevent.

The public opinion has already sailed I think, against the company. If negligent, adverse-safety decisions were made, the head people should be prosecuted accordingly.

Yet, I feel this isn't going to happen despite the reality that billions of humans never want to fly a boeing jet again. Why would you risk it? Toast and deservedly imho

Ape , April 22, 2019 at 5:35 am

"Agile" "use-case driven" software development: very dangerous, takes the disruptive, crappification approach (under some hands) of trying to identify the minimum investment to hit the minimal requirements, particularly focusing on an 80/20 Pareto rule distribution of efforts.

Which may be good enough for video delivery or cell-phone function, but not for life-critical or scientifically-critical equipment

JeffC , April 22, 2019 at 12:59 pm

Many people here are assuming Boeing uses modern software-development methodology in spite of flaws that make such an approach iffy in this field. Why assume that?

When I worked, many years ago now, as a Boeing software engineer, their software-development practices were 15 years behind the rest of the world. Part of that was sheer caution and conservatism re new things, precisely because of the safety culture, and part of it was because they did not have many of the best software people. They could rarely hire the best in part because cautious, super-conservative code is boring. Their management approach was optimized to get solid systems out of ordinary engineers with a near incomprehensible number of review and testing steps.

Anyone in this audience worked there in software recently? If not, fewer words about how they develop code might be called for. Yes, the MCAS system was seriously flawed. But we do not have the information to actually know why.

False Solace , April 22, 2019 at 1:40 pm

> Anyone in this audience worked there in software recently? If not, fewer words about how they develop code might be called for.

4/16 Links included a lengthy spiel from Reddit via Hacker News by a software engineer who worked at Boeing 10 years ago (far more recently than you) which detailed the horrors of Boeing's dysfunctional corporate culture at length. This is in addition to many other posts covering the story from multiple angles.

NC has covered this topic extensively. Maybe try familiarizing yourself with their content before telling others to shut up.

JeffC , April 22, 2019 at 2:32 pm

Excuse me? Are ad hominem attacks fine now? I didn't tell anyone to "shut up" or contradict the great amount of good reporting on Boeing's management dysfunction.

I just pointed out that at one time, yes way back there, there was a logic to it and that the current criticism here of its software-development culture in particular seems founded on a combination of speculation and general disgust with the software industry.

Whatever else I am or however wrong I may sometimes be, I am an engineer, and real engineers look for evidence.

NN , April 22, 2019 at 5:50 am

Moving the engines in itself didn't introduce safety risks, this tendency to nose up was always there. The primary problem is Boeing wanted to pretend MAX is the same plane as NG (the previous version) for certification and pilot training purposes. Which is why the MCAS is black box deeply hardwired into the control systems and they didn't tell pilots about it. It was supposed to be invisible, just sort of translating layer between the new airframe and pilots commanding it as the old one.

And this yearning for pre-automation age, for directly controlling the surfaces by cables and all, is misguided. People didn't evolve for flying, it's all learned the hard way, there is no natural way to feel the plane. In fact in school they will drill into you to trust the instruments and not your pedestrian instincts. Instruments and computers may fail, but your instincts will fail far more often.

After all 737 actually is old design, not fly by wire. And one theory of what happened in the Ethiopian case is that when they disengaged the automatic thing, they were not able to physically overcome the aerodynamic forces pushing on the plane. So there you have your cables & strings operated machine.

Yves Smith Post author , April 22, 2019 at 7:40 am

I don't see basis for your assertion about safety risks given the counter-evidence in the form of the very existence of the MCAS software. Every article written on it points out it was to prevent the possibility of the plane stalling out when "punching up". And as the article describes, there were two design factors, the placement of the engines and the nacelles, which led to it generating too much lift in certain scenarios.

And your argument regarding what happened when the pilot turned off the autopilot is yet another indictment of Boeing's design. This is not "Oh bad pilots," this is "OMG, evidence of another Boeing fuckup." This is what occurred when the pilots disabled MCAS per instructions.

Have you not heard of purely mechanical systems that allow for the multiplication of force? It's another Boeing design defect that the pilots couldn't operate the flight stabilizer when the plane was under takeoff stresses. That's a typical use case! And it was what Boeing told pilots to do and it didn't work! From Reuters (apparently written before the black box detail revealed that the pilots could not control the stabilizers):

Boeing pointed to long-established procedures that pilots could have used to handle a malfunction of the anti-stall system, regardless of whether the pilots knew MCAS existed.

That checklist tells pilots to switch off the two stabilizer trim cutout switches on the central console, and then to adjust the aircraft's stabilizers manually using trim wheels.

And that's one of they should worry about most, since that's one of highest risk times for flight, and the plane should have been engineered with that scenario in mind. This raises the possibility that the inability of the pilots to handle the plane manually in takeoff also somehow resulted from the changes to the aerodynamics resulting from the placement of the bigger engines.

This is his argument about how the reliance on software has led to undue relaxation of good hardware design principles:

The original FAA Eisenhower-era certification requirement was a testament to simplicity: Planes should not exhibit significant pitch changes with changes in engine power. That requirement was written when there was a direct connection between the controls in the pilot's hands and the flying surfaces on the airplane. Because of that, the requirement -- when written -- rightly imposed a discipline of simplicity on the design of the airframe itself. Now software stands between man and machine, and no one seems to know exactly what is going on. Things have become too complex to understand.

NN , April 22, 2019 at 9:08 am

I'll cite the original article:

Pitch changes with power changes are common in aircraft. Even my little Cessna pitches up a bit when power is applied. Pilots train for this problem and are used to it.

Again, the plane already had the habit of picthing up and the changes didn't add that. The question isn't if, but how much and what to do about it. Nowhere did I read MAX exceeds some safety limits in this regard. If Boeing made the plane to physically break regulations and tried to fix it with software then indeed that would be bad. However, I'm not aware of that.

As for the Ethiopian scenario, I was talking about this article . It says when they tried manual, it very well could be beyond their physical ability to turn the wheels and so they were forced to switch electrical motors back on, but that also turned up MCAS again. In fact it also says this seizing up thing was present in the old 737 design and pilots were trained to deal with it, but somehow the plane become more reliable and training for this failure mode was dropped. This to me doesn't look like good old days of aviation design ruined by computers.

JerryDenim , April 22, 2019 at 5:57 pm

You should read the Ethiopian Government's crash preliminary crash report. Very short and easy to read. Contains a wealth of information. Regarding the pilot's attempt to use the manual trim wheel, according to the crash report, the aircraft was already traveling at 340 knots indicated airspeed, well past Vmo or the aircraft's certified airspeed when they first attempted to manually trim the nose up. It didn't work because of the excessive control forces generated by high airspeeds well beyond the aircraft's certification. I'm not excusing Boeing, the automated MCAS nose down trim system was an engineering abomination, but the pilots could have made their lives much easier by setting a more normal thrust setting for straight and level flight, slowing their aircraft to a speed within the normal operating envelope, then working their runaway nose-down pitch emergency.

none , April 22, 2019 at 6:21 am

I didn't like the IEEE Spectrum piece very much since the author seemed to miss or exaggerate some issues, and also seemed to confuse flying a Cessna with being expert about large airliners or aerospace engineering. The title says "software engineer" but at the end he says "software executive". Executive doesn't always mean non-engineer but it does mean someone who is full of themselves, and that shows through the whole article. The stuff I'm seeing from actual engineers (mostly on Hacker News) is a little more careful. I'm still getting the sense that the 737 MAX is fundamentally a reasonable plane though Boeing fucked up badly presenting it as a no-retraining-needed tweak to the older 737's.

There's some conventional wisdom that Boeing's crapification stems from the McDonnell merger in 1997. Boeing, then successful, took over the failing and badly managed McDonnell. The crappy McDonnell managers then spent the next years pushing out the Boeing managers, and subsequently have been running Boeing into the ground. I don't know how accurate that is, but it's a narrative that rings true.

Yves Smith Post author , April 22, 2019 at 7:20 am

You are misrepresenting the Hacker News criticisms, and IMHO they misrepresent the piece. They don't question his software chops. And if you really knew the software biz, "software executive" often = developer who built a company (and that includes smallish ones). The guy OWNS a Cessna, which means he's spent as much on a plane as a lot of people spend on a house. If he was a senior manager as you posit, that means at large company, and no large company would let an employee write something like this. He's either between gigs or one of the top guys in a smallish private company where mouthing off like this won't hurt the business. Notice also his contempt for managers in the article).

He's also done flight simulator time on a 757, and one commentor pointed out that depending on the simulator, it could be tantamount to serious training, as in count towards qualifying hours to be certified to fly a 757.

They do argue, straw manning his piece, that he claims the big failure is with the software. That in fact is not what the article says. It says that the design changes in the 737 Max made it dynamically unstable, which is an unacceptable characteristic in any plane, no matter what size. He also describes at length the problem of relying on only one sensor as an input to the MCAS and how that undermined having the pilots be able to act as a backup .by looking at each other's instrumentation results.

The idea that he's generalizing from a Cessna is absurd. He describes how Cessnas have the pilot having greater mechanical control than jets like the 737. He describes how the pilots read the instrument results from each side of the plane, something which cannot occur in a Cessna, a single pilot plane. He refers to the Cessna documentation to make the point that the norm is to over-inform pilots as to how changes in the software affect how they operate the plane, not radically under-inform them as Boeing did with the 737 Max.

As to the reasonableness of Travis' concerns, did you miss that a former NASA engineer has the same reservations? Are you trying to say he doesn't understand how aircraft hardware works?

Alex V , April 22, 2019 at 8:02 am

A few points:

He owns a 1978 Cessna 172 , goes for about $70K, so not quite house prices, more like a nice Tesla, whose drive by wire systems he seems to trust far more for some reason.

In regard to "dynamic instability" being unacceptable, this is a red herring. Most modern airliners rely on flight characteristic augmentation systems in normal operation, trim systems being the most common. Additionally, there are aircraft designed to be unstable (fighters) but rely on computers to fly them stably, to greatly increase manoeuvrability.

In regard to Cessnas being single pilot planes, the presence of flight controls on both sides of the cockpit would somewhat bring into question this assertion .? Most 172s do however have only one set of instrumentation. When operating with two pilots (as with let's say a student pilot and instructor) you would still have the issue of two pilots trying to agree on possibly faulty readings from one set of non-redundant instruments.

Yves Smith Post author , April 22, 2019 at 8:27 am

No, it's a 1979 Cessna, and you don't know when he bought it and how much use it had, since price is significantly dependent on flight hours. The listings I show it costs over $100K. A quick Google search says a plane with a new feel is closer to $300K. Even $100K in equity is more than most people put down when buying a house

He also glides, and gliders often own or co-own their gliders.

The author acknowledges your point re fighters. Did you miss that he also says they are the only planes where pilots can eject themselves from the aircraft? Arguing from what is acceptable for a fighter, where you compromise a lot on other factors to get maneuverability, to a commercial jet is dodgy.

Alex V , April 22, 2019 at 9:39 am

According to the registration it became airworthy in 1978, so perhaps that is the model year.

https://uk.flightaware.com/resources/registration/N5457E

Regarding fighters and instability, I'm not the one that stated it's "an unacceptable characteristic in any plane, no matter the size".

I am completely on Travis' side when it comes to the issues with culture and business that brought on these incidents. Seeing however that these affected and overrode good engineering, I believe it's vitally important that the engineering is discussed as accurately as possible. Hence my criticism of the piece.

Yves Smith Post author , April 22, 2019 at 1:08 pm

Had you looked at prices as you claimed to, Cessnsa 172s specify the year in the headline description. 1977 v. 1978 v 1979 on a page I got Googling for 1979.

You are now well into the terrain of continuing to argue for argument sake.

PlutoniumKun , April 22, 2019 at 8:34 am

I agree with you that the article is good and the criticisms I've read seem largely unmerited (quite a few of those btl on that article are clearly bad faith arguments), but just to clarify:

That in fact is not what the article says. It says that the design changes in the 737 Max made it dynamically unstable, which is an unacceptable characteristic in any plane, no matter what size.

My understanding (non-engineer, but long time aviation nerd) is that many aircraft, including all Airbus's are dynamically unstable and use software to maintain stability. The key point I think that the article makes is that there is a fundamental difference between designing hardware and software in synchronicity to make a safe aircraft (i.e Airbus), and using software as a fudge to avoid making hard decisions when the hardware engineers find they can't overcome a problem without spending a fortune in redesigns.

Hard engineering 'fudges' are actually really common in aircraft design – little bumps or features added to address stability problems encountered during testing – an example being the little fore planes on the Tupolev 144 supersonic airliner. But it seems Boeing took a short cut with its approach and a lot of people paid for this with their lives. Only time will tell if it was a deep institutional failure within Boeing or just a flaw caused by a rushed roll-out.

I've personal experience of a catastrophic design flaw (not one that could kill people, just one that could cost hundreds of millions to fix) which was entirely down to the personal hang-ups of one particular project manager who was in a position to silence internal misgivings. Of course, in aircraft design this is not supposed to happen.

Thuto , April 22, 2019 at 6:21 am

I'm reminded of the famous "software is eating the world" quote by uber VC Marc Andreessen. He posits that in an era where Silicon valley style, software led disruption stalks every established industry, even companies that "make things" (hardware) need a radical rethink in terms of how they see themselves. A company like Boeing, under this worldview, needs to think of itself as a software company with a hardware arm attached, otherwise it might have its lunch eaten by a plucky upstart (to say nothing of Apple or Google) punching above its weight.

It's not farfetched to imagine an army of consultants selling this "inoculate yourself from disruption" thinking to companies like Boeing and being taken seriously. With Silicon valley's obsession with taking humans out of the loop (think driverless cars/trucks, operator-less forklifts etc) one wonders whether these accidents will highlight the limitations of technology and halt the seemingly inexorable march towards complex automation reducing pilots to cockpit observers coming along for the ride.

jonst , April 22, 2019 at 6:41 am

so perhaps Trump lurched blindly into the truth?

https://www.cnbc.com/2019/03/12/trump-says-planes-too-complex-after-crash-of-boeing-jet-in-ethiopia.html

WobblyTelomeres , April 22, 2019 at 7:30 am

"native pitch stability"

Let me guess. The author prolly flies a Cessna 172. [checks article]. Yep.

The 172 is one of the most docile and forgiving private planes ever. Ignore that my Mom flew hers into a stand of trees.

Yves Smith Post author , April 22, 2019 at 8:32 am

Ad homimem and therefore logically invalid. Plus reading comprehension problem. The "native pitch stability" comment was from Mike Slack, a former NASA engineer, and not Travis, the Cessna owner.

Mel , April 22, 2019 at 9:39 am

I think that the point is that there are aircraft that don't take over the controls and dive into the ground. It's possible to have these kinds of aircraft. These kinds of aircraft are good to have. It's like an existence proof.

Octopii , April 22, 2019 at 8:28 am

No, not dangerously pro-automation. More like dangerously stuck in the past, putting bandaids on a dinosaur to keep false profits rolling in. AF447 could be argued against excessive automation, but not the Max.

tegnost , April 22, 2019 at 9:13 am

i think they are real profits. And the automation that crashed two planes over a short time span and it wasn't excessive? Band aids on what was one of the safest planes ever made (how many 737's crashed pre 737 max? the hardware problem was higher landing gear along with engines that were larger and added lift to the plane. MCAS was intended to fix that. It made it worse. I won't be flying on a MAX.

Carolinian , April 22, 2019 at 8:29 am

Thanks for the article but re the above comments–perhaps that 737 pilot commenter should weigh in because some expert commentary on this article is badly needed. My impression from the Seattle Times coverage is that the MCAS was not implemented to keep the plane from falling out of the sky but rather to finesse the retraining issue. In other words a competent pilot could handle the pitch up tendency with no MCAS assist at all if trained or even informed that such a tendency existed. And if that's the case then the notion that the plane will be grounded forever is dubious indeed.

Yves Smith Post author , April 22, 2019 at 8:44 am

This isn't quite correct, and I suggest you read the article in full.

The issue isn't MCAS. It is that MCAS was to compensate for changes in the planes aerodynamics that were so significant that it should arguably have been recerttified as being a different plane. That was what Boeing was trying to avoid above all Former NASA engineer Mike Slack makes that point as well. Travis argues that burying the existence of MCAS in the documentation was to keep pilots from questioning whether this was a different plane:

It all comes down to money, and in this case, MCAS was the way for both Boeing and its customers to keep the money flowing in the right direction. The necessity to insist that the 737 Max was no different in flying characteristics, no different in systems, from any other 737 was the key to the 737 Max's fleet fungibility. That's probably also the reason why the documentation about the MCAS system was kept on the down-low.

Put in a change with too much visibility, particularly a change to the aircraft's operating handbook or to pilot training, and someone -- probably a pilot -- would have piped up and said, "Hey. This doesn't look like a 737 anymore." And then the money would flow the wrong way.

Carolinian , April 22, 2019 at 9:30 am

I think you just said what I said. My contention is that the only reason the plane could ever be withdrawn is that the design is so inherently unstable that this extra gizmo–the MCAS–was necessary for it to fly. Whereas it appears the MCAS was for marketing purposes and if it had never been added to the plane the two accidents quite likely may never have happened–even if Boeing didn't tell pilots about the pitch up tendency.

But I'm no expert obviously. This is just my understanding of the issue.

Darius , April 22, 2019 at 11:48 am

From what I've read at related links in the last week, a significant element is common type rating. Manufacturers don't have to go through expensive recertification if their modifications are minor enough, earning a common type rating. Thus, the successive incarnations of the 737 over the decades.

I'm only a layman, but a citizen who tries to stay informed and devours material on this topic. The common type rating merry go round needs to stop. It seems at least that a new engine with a different position that alters the basic physics of the plane shouldn't qualify for common type rating, which should be reserved only for the most minor of modifications.

barrisj , April 22, 2019 at 12:30 pm

As one who has followed the entirety of the MAX stories as detailed by the Seattle Times aviation reporters, it all comes back to "first principles": a substantive change in aerodynamics by introduction of an entirely new pair of engines should have required complete re-engineering of the airframe. We know that Boeing eschewed that approach, largely for competitive and cost considerations, and subsequently tried to mate the LEAP engines to the existing 737 airframe by installing the MCAS, amongst other design "tweaks", i.e., "kludging" a fix. Boeing management recognized that this wouldn't be the "perfect" aircraft, but with the help of a compliant FAA and a huge amount of "self-assessment", got the beast certified and airborne -- -- until the two crashes, that is. Whether the airlines and/or the flying public will ever accept the redo of MCAS and other ancillary fixes is highly problematic, as the entire concept was flawed from the kick-off.
Also, it should be mentioned in passing that even the LEAP engines are having some material-wear issues:
https://www.flightglobal.com/news/articles/cfm-reviews-fleet-after-finding-leap-1a-durability-i-442669/

b , April 22, 2019 at 8:46 am

Th IEEE Spectrum piece is somewhat reasonable but the author obvious lacks technical knowledge of the 737. He also does not understand why MCAS was installed in the first place.

For example:
– "However, doing so also meant that the centerline of the engine's thrust changed. Now, when the pilots applied power to the engine, the aircraft would have a significant propensity to "pitch up," or raise its nose.
– The MAX nose up tendency is a purely aerodynamic effect. The centerline of the thrust did not change much.

– "MCAS is implemented in the flight management computer, "
– No. It is implemented in the Flight Control Computer of which there are two. (There is only on FMC unit.)

-" It turns out that the Elevator Feel Computer can put a lot of force into that column -- "
– The Elevator Feel unit is not a computer but a deterministic hydraulic-mechanical system.

– "Neither such [software] coders nor their managers are as in touch with the particular culture and mores of the aviation world as much as the people who are down on the factory floor, "
– The coders who make the Boeing and Airbus systems work are specialized in such coding. Software development for aircrafts It is a rigid formularized process which requires a deep understanding of the aviation world. The coders appropriately implement what the design engineers require after the design review confirmed it. Nothing less, nothing more.

and more than a dozen other technical misunderstandings and mistakes.

If the author would have read some of the PPRUNE threads on the issue or asked an 737 pilot he would have known all this.

Senator-Elect , April 22, 2019 at 10:35 am

This.

Harrold , April 22, 2019 at 11:28 am

And yet the fact remains that the 737MAX is grounded world wide and costing Boeing and airlines millions every day.

Yves Smith Post author , April 22, 2019 at 1:11 pm

Given what has happened with Boeing manufacture (787s being delivered with tools and bottles rattling around in them), you have no basis for asserting how Boeing does software in practice these days.

And you have incontrovertible evidence of a coding fail: relying on only one sensor input when the plane had more than one sensor. I'm sorry, I don't see how you can blather on about safety and coders supposedly understanding airplanes with that coded in.

JeffC who actually worked at Boeing years ago and said the coding was conservative (lots of people checked it) because they were safety oriented but also didn't get very good software engineers, since writing software at Boeing was boring.

johnf , April 22, 2019 at 9:05 am

I still have some trouble blaming the 737 losses, ipso facto, on using automation to extend an old design. There are considerably more complex aircraft systems than MCAS that have been reliably automated, and building on a thoroughly proven framework usually causes less trouble than suffering the teething problems of an all new design.

At the risk of repeating the obvious, a basic principle of critical systems, systems which must be reliable, is that they can not suffer from single point failures. You want to require at least two independent failures to disturb a system, whose combined probability is so low that other, unavoidable failure sources predominate, for example, weather or overwhelming, human error.

This principle extends to the system's development. The design and programming of a (reliable) critical system can not suffer from single point failures. This requires a good many, skilled people, paying careful attention to different, specific stages of the process. Consider a little thing I once worked on: the indicator that confirms a cargo door is closed, or arguably, that is neither open nor unlatched. I count at least five levels of engineers and programmers, between Boeing and the FAA, that used to validate, implement and verify the work of their colleagues, one or more levels above and/or below: to insure the result was safe.

I bet what will ultimately come out is that multiple levels of the validation and verification chain have been grievously degraded ("crapified") to cut costs and increase profits. The first and last levels for a start. I am curious and will ask around.

Darius , April 22, 2019 at 11:58 am

The MAX isn't a proven framework. Boeing fundamentally altered the 737 design by shifting the position of the engines. The MCAS fudge doesn't fix that.

The Rev Kev , April 22, 2019 at 9:10 am

My own impression is that there seems to be a clash between three separate philosophies at work here. The first is the business culture of Boeing which had supplanted Boeing's historical aviation-centric ways of doing things in aircraft design. The bean-counters & marketing droids took over, outsourced aircraft construction to such places as non-union workshops & other countries, and thought that cutting corners in aircraft manufacture would have no long-term ill effects. The second philosophy is that of software design that failed to understand that the software had to be good to go as it was shipped and had little understanding of what happens when you ship beta-standard software to an operational aircraft in service. This was to have fatal consequences. The third culture is that of the pilots themselves which seek to keep their skills going in an aviation world that wants to turn them into airplane-drivers. If there is any move afoot to have self flying aircraft introduced down the track, I hope that this helps kill it.
Boeing is going to take a massive financial hit and so it should. Heads should literally roll over this debacle and it did not help their case when they went to Trump to keep this plane flying in the US without thought as to what could have happened if a US or Canadian 737 MAX had augured in. The biggest loser I believe is going to be the US's reputation with aviation. The rest of the aviation world will no longer trust what the FAA says or advise without checking it themselves. The trust of decades of work has just been thrown out the door needlessly. Even in the critical field of aircraft crash investigation, the US took a hit as Ethiopia refused the demands that the black boxes be sent to the US but sent them instead to France. That is something that has flown under the radar. This is going to have knock-on effects for decades to come.

Susan the other` , April 22, 2019 at 11:56 am

Beginning to look like a trade war with the EU. airbus, boeing, vw, US cars; but haven't seen Japan drawn into this yet. Mercedes Benz is saying EV cars are nonsense, they actually create more pollution than diesel engines and they are recommending methane gasoline (that sounds totally suicidal), and hydrogen power. Hydrogen has always sounded like a good choice, so why no acclaim? It can only be the resistance of vested interests. The auto industry, like the airline industry, is frantically trying to externalize its costs. Maybe we should all just settle down and do a big financial mutual insurance company that covers catastrophic loss by paying the cost of switching over to responsible manufacturing and fuel efficiency. Those corporations cooperate with shared subsidiaries that manufacture software to patch their bad engineering – why not a truce while they look for solutions?

voislav , April 22, 2019 at 9:34 am

The whole 737 development reminds me of a story a GM engineer told me. Similarly to the aviation industry, when GM makes modifications to an existing part on a vehicle, if the change is small enough the part does not need to be recertified for mechanical strength, etc. One of the vehicles he was working on had a part failure in testing, so they looked at the design history of the part. It turns out that, similarly to 737, this was a legacy part carried over numerous generations of the vehicle.

Each redesign of the vehicle introduced some changes, they needed to reroute some cabling, so they would punch a new hole through the part. But because the change was small enough the engineering team had the option of just signing off on the change without additional testing. So this went on for years, where additional holes or slits were made in the original part and each change was deemed to be small enough that no recertification was necessary. The cumulative change from the original certification was that this was now a completely different part and, not surprisingly, eventually it failed.

The interesting part of the story was the institutional inertia. As all these incremental changes were applied to the part, nobody bothered to check when was the last time part was actually tested and what was the part design as that time. Every step of the way everybody assumed their change is small enough not to cause any issue and did not do any diligence until a failure occured.

Which brings me back to the 737, if I am not mistaken, 737 MAX is, for certification purposes, considered an iteration of the original 737. The aircraft though is very different than the original, increased wingspan (117′ vs 93′), length (140′ vs. 100′). 737 NG is similarly different.

So for me the big issue with the MAX is the institutional question that allowed a plane so different from the original 737 certification to be allowed as a variant of the original, without additional pilot training or plane certification. Upcoming 777X has the same issue, it's a materially different aircraft (larger wingspan, etc.) that has a kludge (folding wingtips) to allow it to pass as a variant of the original 777. It will be interesting to see, in the wake of the MAX fiasco, what treatment does the 777X get when it comes to certification.

Susan the other` , April 22, 2019 at 12:35 pm

The FAA needs to be able to follow these tweaks. Maybe we citizens need a literal social contract that itemizes what we expect our government to actually do.

Matthew G. Saroff , April 22, 2019 at 9:35 am

There are also allegations of shoddy manufacturing on the 787 at Boeing's South Carolina (union busting) facility .

BTW, I do not believe that the problems are insoluble, or as a result of a design philosophy, but rather it is a result of placing sales over engineering.

There are a number of aerodynamic tweaks that could have dealt with this issue (larger horizontal tail comes to mind, but my background is manufacturing not aerodynamics), but this would require that pilots requalify for a transition between the NG and the MAX, which would likely mean that many airlines would take a second look at Airbus.

Carolinian , April 22, 2019 at 10:37 am

Your link was fully discussed in yesterday's Links.

cm , April 22, 2019 at 10:41 am

Yeah, that was a fascinating (and scary) article. Worth reading!

vomkammer , April 22, 2019 at 9:41 am

We should avoid blaming "software" or "automation" for this accident. The B737 MAX seems to be a case of "Money first, safety second" culture, combined with insufficent regulatory control.

The root of the B737 MAX accidents was an erroneous safety hazard assessment: The safety asessment (and the FAA) believed the MCAS had a 0.6 authority limit. This 0.6 limit meant that an erroneous MCAS function would only have limited consequences. In the safety jargon, its severity was classifed as "Major", instead of "Catastrophic".

After the "Major" classification was assigned, the subsequente design decions (like using a single sensor, or perhaps insufficient testing) are acceptable and in line with the civil aviation standards.

The problem is that the safety engineer(s) failed to understand that the 0.6 limit was self-imposed by the MCAS software, not enforced by any external aircraft element. Therefore, the MCAS software could fail in such a way that it ignored the limit. In consequence, MCAS should have been classifed "Catastrophic".

Everybody can make mistakes. We know this. That is why these safety assessments should be reviewed and challenged inside the company and by the FAA. The need to launch the MAX fast and the lack of FAA oversight resources surely played a greater role than the usage of software and automation.

oaf , April 22, 2019 at 9:46 am

Yves: Thanks for this post; it has (IMO) a level-headed perspective. It is not about assigning *blame*, it is about *What, Why, and How to Prevent* what happened from re-occurring. Blame is for courts and juries. Good luck finding jurors who are not predisposed; due to relentless bombardment with parroted misinformation and factoids.

YY , April 22, 2019 at 10:13 am

I wonder how often MCAS kicked in on a typical 737MAX flight, in situation where the weather vane advising of angle attack was working as per normal. Since we are excluding the time when auto-pilot is working and also the time when the flaps are down, there is only a very small time window immediately after take off. I would venture to guess that the MCAS would almost always adjust the plane at least once. This is once too many, if one is to believe that the notion of design improvement includes improvement in aerodynamic behavior. The fact that MCAS could only be overridden by disabling the entire motor control of the trim suggests that the MCAS feature is absolutely necessary for the thing to fly without surprise stalls. There is no excuse in a series of a product for handling associated with basic safety becoming worse with a new model. Fuel efficiency is laudable and a marketable thing, but not when packaged together with the bad compromise of bad flight behavior. If the fix is only by lines of code, they really have not fixed it completely. We know they are not going to be able to move the engines or the thrust line or increase the ground clearance of the plane so the software fix will be sold as the solution. While it probably does not mean that there will be more planes being trimmed to crash into the ground, it does make for some anxiety for future passengers. Loss of sales would not be a surprise but more of a surprise will be the deliveries that will be completed regardless.

Alex V , April 22, 2019 at 10:34 am

MCAS was intended to rarely if ever activate. It is supposed to nudge the aircraft to a lower angle of attack if AoA is getting high to cause instability in certain parts of the flight envelope. An overly aggressive takeoff climb would be an example. Part of the problem is that a faulty AoA sensor resulted in the system thinking it was at this extreme case, repeatedly, and in a way that was difficult for the pilots to identify since they had not been properly trained and the UX was badly implemented.

YY , April 22, 2019 at 10:52 am

Yes I've heard that. But do not believe it, given how it is implemented. So I really would like to know how it behaves in non-catastrophic situations. If so benign, why not allow it to turn off without turning off trim controls? Did not the earlier 737's not need this feature?

Alex V , April 22, 2019 at 2:19 pm

In a non-catastrophic situation, and if functioning correctly, it's my understanding it would felt by the flight crew as mild lowering of the nose by the system. This is is to keep the plane from increasing angle of attack, which could lead to a stall or other instability.

It's my understanding MCAS should be treated as a separate system from the trim controls, although they both control the pitch of the stabilator. Trim controls are generally not "highly dynamic", in that the system (or pilot) sets the trim value only occasionally based primarily on things like the aircraft weight distribution (this could however change during a flight as fuel is burned, for example). MCAS on the other hand, while monitoring AoA continuously in flight modes where it is activated only kicks in to correct excessive inputs from the pilots, or as a result of atmospheric disturbances (wind shear would be one possible cause of excessive AoA readings).

Neither trim nor MCAS are required to manually fly the plane safely if under direct pilot control and the the pilot is fully situationally aware.

Earlier 737s did not need this feature due to different aerodynamic properties of the plane. They however still have assistive features such as stick shakers to help prevent leaving the normal flight envelope.

Some technical details here:

http://www.b737.org.uk/mcas.htm

Alex V , April 22, 2019 at 2:47 pm

I've read a bit more in regard to allowing MCAS to turn off without turning off trim, I have no idea why it was implemented as it was, since previous 737s allow separate control of trim and MCAS. More here:

https://feitoffake.wordpress.com/2019/04/06/overview-of-many-failures-by-boeing-in-designing-the-boeing-737-max/

This however still doesn't change the fact that neither is required to fly the plane, given proper training and communication, both of which were criminally lacking.

John , April 22, 2019 at 10:13 am

IBG, YBG corporate decisions by people who will probably never fly in these planes, complete regulatory capture and distract with the little people squabbling over technical details. In China there would probably already have been a short trial, a trip to the river bank, a bullet through the head, organ harvesting for the corporate jocks responsible. Team Amrika on the way down.

Synoia , April 22, 2019 at 10:27 am

On the subject of software, the underlying issue of ship and patch later is because the process of software is full of bad practice.

Two examples, "if" and "new".

If is a poor use of a stronger mechanism, FSMs, or Finite State Machines.
'new' is a mechanism that leads to memory leaks, and crashes.

I developed some middleware to bridge data between maineframs and Unix systems that ran 7×24 for 7 years continuously without a failure, because of FSMs and static memory use.

Anarcissie , April 22, 2019 at 5:14 pm

The problem of poor quality in software, like poor quality in almost anything else, is not technological.

BillC , April 22, 2019 at 10:50 am

In an email to me (and presumably to all AAdvantage program members) transmitted at 03:00 April 17 UTC ( i.e. , 11 PM April 16 US EDT), American Airlines states that it is canceling 737 MAX flights through August 19 (instead of June 5 as stated by the earlier newspaper story cited in this post).

Eliminating introductory and concluding paragraphs that are marketing eyewash (re. passenger safety and convenience), the two payload paragraphs state in their entirety:

To avoid last-minute changes and to accommodate customers on other flights with as much notice as possible before their travel date, we have made the decision to extend our cancellations for the Boeing 737 MAX aircraft through August 19, 2019, while we await recertification of the MAX.

While these changes impact only a small portion of our more than 7,000 departures each day this summer, we can plan more reliably for the peak travel season by adjusting our schedule now. Customers whose upcoming travel has been impacted as a result of the schedule change are being contacted by our teams.

I'm surprised this has not already appeared in earlier comments. Anybody else get this?

Yves Smith Post author , April 22, 2019 at 1:13 pm

Will update, thanks!

Peak BS , April 22, 2019 at 11:24 am

Now do Tesla & their bs Tesla Autonomy Investor Day please.

It appears to have it all from beta testing several ton vehicles on public roads, (like BA's beta testing of the MAX) to regulatory capture( of NTSB, & NTHSA as examples) and a currently powerful PR team.

Apparently they're going to show off their "plan" how one will be able to use their Tesla in full autonomous mode while every other OEM sez it can't be done by the end of this year let alone within a couple decades as the average person perceives autonomous driving.

Watch it live here at 11am PCT: https://livestream.tesla.com

737 Pilot , April 22, 2019 at 2:05 pm

First of all, I didn't read the article, so I'm not going to critique it. There were some comments in the excerpt that Yves provided that I think require some clarification and/or correction.

The 737 is not a fly-by-wire (FBW) aircraft. There are multiple twisted steel control cables that connect the flight control in the cockpit to the various control surfaces. The flight controls are hydraulically assisted, but in case of hydraulic (or electric) failure, the cable system is sufficient to control the aircraft.

In both the 737NG and the MAX, there are automation functions that can put in control inputs under various conditions. Every one of these inputs can be overridden by the pilot.

In the case of the recent MAX accidents, the MCAS system put in an unexpected and large input by moving the stabilizer. The crews attempted to oppose this input, but they did so mostly by using elevator input (pulling back on the control column). This required a great deal of arm strength which they eventually could not overcome. However, if either pilot had merely used the strength of their thumb to depress the stabilizer trim switch on the yoke, they could have easily opposed and cancelled out whatever input MCAS was trying to put in. Why neither pilot took this fairly basic measure should be one of the key areas of investigation.

These comments are not intended in any way to exonerate Boeing, the FAA, and the compromises that went into the MAX design. There is a lot there to be concerned about. However, we are not dealing with a case of an automation system that was so powerful and autonomous that pilots could not override what it was trying to do.

marku52 , April 22, 2019 at 5:13 pm

Bjorn over at Leeham had this analysis:
"the Flight Crew followed the procedures prescribed by FAA and Boeing in AD 2018-23-51. And as predicted the Flight Crew could not trim manually, the trim wheel can't be moved at the speeds ET302 flew."

In other words, the pilots followed the Boeing recommended procedure to turn off the automatic trim, but at the speeds they were flying and the large angle that MCAS has moved the stabilizer to, the trim wheels were bound up and could not be moved by human effort.

https://leehamnews.com/2019/04/05/bjorns-corner-et302-crash-report-the-first-analysis/

They then turned electric trim on to try to help their effort, and MCAS put the nose down again.

Also: Did no one ever test the humans factors of this in a simulator? At HP, when we put out a new printer, we had human factors bring in average users to see if using our documentation, they could install the printer.

It is mind-blowing to me that Boeing and the FAA can release an Air Worthiness Directive (The fix after the Lion crash) that was apparently never simulator tested to see if actual humans could do it.

stevelaudig , April 22, 2019 at 2:50 pm

The bureaucratic decision-making model is the same as that which gifted us with the Challenger 'accident' which was no accident.

ChrisPacific , April 22, 2019 at 4:13 pm

None of the above should have passed muster. None of the above should have passed the "OK" pencil of the most junior engineering staff, much less a DER [FAA Designated Engineering Representative].

That's not a big strike. That's a political, social, economic, and technical sin .

This is the thing that has been nagging me all along about this story. The "most junior engineering staff" thing is not an exaggeration – engineers get this drilled into them until it's part of their DNA. I read this and immediately thought that it points to a problem of culture and values (a point I was pleased to see the author make in the next paragraph). Bluntly, it tells us that the engineers are not the ones running the show at Boeing, and that extends even to safety critical situations where their assessment should trump everything.

One of two things needs to happen as a result of this. Either Boeing needs to return to the old safety first culture, or it needs to go out of business. If neither happens, we are going to see a lot more planes falling out of the sky.

VietnamVet , April 22, 2019 at 7:15 pm

I want to reemphasize that all airplane crashes are a chain of events; if one event does not occur there are no causalities. Lion Air flight should never have flow with a faulty sensor. But afterwards when the elevator jackscrew was found in the full nose down position that forced the plane to dive into the Java Sea, Boeing and FAA should have grounded the fleet until a fix was found. The deaths in Ethiopia are on them. The November 2018 737-8 and -9 Airworthiness Directive was criminally negligent. Without adequate training the Ethiopian Airline pilots were overwhelmed and not could trim the elevator after turning off the jackscrew electric motor with the manual trim control due to going too fast with takeoff thrust from start to finish. With deregulation and the end of government oversight, the terrible design of the 737 Max is solely on Boeing and politicians who deregulated certification. Profit clearly drove corporate decisions with no consideration of the consequences. This is popping up consistently now from VW to Quantitative Easing, or the restart of the Cold War. Unless the FAA requires pilot and copilot simulator training on how to manually trim the 737 Max with all hell breaking loose in the cockpit, the only recourse for customers is to boycott flying Boeing. Ultimately the current economic system that puts profit above all else must end if humans are to survive.

[Apr 22, 2019] Claims of Shoddy Production Draw Scrutiny to a Second Boeing Jet

Apr 22, 2019 | economistsview.typepad.com

anne , April 21, 2019 at 01:21 AM

https://www.nytimes.com/2019/04/20/business/boeing-dreamliner-production-problems.html

April 20, 2019

Claims of Shoddy Production Draw Scrutiny to a Second Boeing Jet
By Natalie Kitroeff and David Gelles

Workers at a 787 Dreamliner plant in South Carolina have complained of safety lapses, echoing broader concerns about the company.

Boeing is facing questions about rushed production on another jet, the 737 Max, which was involved in two deadly crashes.

ilsm -> anne... , April 21, 2019 at 04:02 AM
The Air Force has delayed delivery of new KC 46's, a B767 rigged to refuel other airplanes for "quality" issues.

[Apr 16, 2019] Boeing has called its 737 Max 8 'not suitable' for certain airports

Apr 16, 2019 | www.latimes.com

Before last month's crash of a flight that began in Ethiopia, Boeing Co. said in a legal document that large, upgraded 737s "cannot be used at what are referred to as 'high/hot' airports."

At an elevation of 7,657 feet -- or more than a mile high -- Addis Ababa's Bole International Airport falls into that category. High elevations require longer runways and faster speeds for takeoff.

[Apr 15, 2019] Trump Says You cannot break the laws of physics and then fix them with software.

Apr 15, 2019 | www.zerohedge.com

remove Share link Copy Trump would have been better off Tweeting something like...

"The safety of the flying public worldwide is of the utmost importance to all of us. I have been in constant contact with Boeings CEO and have complete confidence that the improvements they are making will make the 737MAX one of the safest planes ever built. No 737 MAX will take to the skies that I would not put my own family member on".

Not everything is about BRANDING

play_arrow 4 play_arrow 3 Reply Report

DrBrown314 , 22 minutes ago link

See the problem with the max is it will never be safe. What boeing did was try and put a square peg in a round hole. To save costs both in certification and pilot training boeing decided to just take the 737 airframe and put bigger more fuel efficient engines on it so they wouldn't loose market share to airbus. That was a stupid mistake. The bigger engines hung so low they had to mount them higher and more forward thus creating aerodynamic issues. The new engine mounting causes air flow disruption over the inner wing during climb out. That is why they messed with the mcas. You cannot break the laws of physics and then fix them with software. Sorry that will never work.

Cobra Commander , 40 minutes ago link

Boeing is still delivering the 73NG and should make an offer to the airlines to replace each MAX order 1 for 1 with a 737-800 or -900 at cost. The traveling public will have immediate confidence, the airlines can fill schedules, and Boeing can clean house on the MAX "leadership" team.

Cobra!

[Apr 10, 2019] Boeing Sued For Defrauding Shareholders After Fatal Crashes

Notable quotes:
"... Boeing "effectively put profitability and growth ahead of airplane safety and honesty" by rushing the 737 MAX to market without "extra" or "optional" safety features - a practice that has outraged the company's critics - as it feared ceding market share to Airbus SE. Moreover, Boeing failed to disclose a conflict of interest surrounding its 'regulatory capture' of the FAA, which was revealed to have outsourced much of the approval process for the 737 MAX to Boeing itself. ..."
"... Of course, this shareholder lawsuit is only the tip of the legal iceberg for Boeing. The company will likely face a blizzard of lawsuits filed by family members of those killed during the Lion Air and Ethiopian Airlines crashes, the first of which has already been filed. ..."
Apr 10, 2019 | www.zerohedge.com

Boeing shareholders who lost money selling their stock after the Ethiopian Airlines crash are suing the company for concealing unflattering material information from the public, defrauding shareholders in the process, Reuters reports.

The class-action lawsuit, filed in Chicago, is seeking damages after the March 10 crash of Ethiopian Airlines flight ET302 wiped $34 billion off Boeing's market cap within two weeks. But if true, the crux of the lawsuit might have broader repercussions for the company as it tries to convince regulators to lift a grounding order that has kept the Boeing 737 MAX 8 grounded since mid-March.

In essence, the suit alleges that the company concealed safety concerns about the 737 MAX and its anti-stall software following the Lion Air crash in October that killed 189 people, but did nothing to alert the public or correct the issue.

Boeing "effectively put profitability and growth ahead of airplane safety and honesty" by rushing the 737 MAX to market without "extra" or "optional" safety features - a practice that has outraged the company's critics - as it feared ceding market share to Airbus SE. Moreover, Boeing failed to disclose a conflict of interest surrounding its 'regulatory capture' of the FAA, which was revealed to have outsourced much of the approval process for the 737 MAX to Boeing itself.

Lead plaintiff Richard Seeks bought 300 Boeing shares in early March and sold them at a loss after the shares dumped more than 12% in the weeks after the second crash, which would have left him with a loss between $15,000 and $20,000. The lawsuit seeks damages for Boeing investors who bought the company's shares from Jan. 8 to March 21. Boeing CEO Dennis Muilenburg and CFO Gregory Smith have also been named as defendants.

Of course, this shareholder lawsuit is only the tip of the legal iceberg for Boeing. The company will likely face a blizzard of lawsuits filed by family members of those killed during the Lion Air and Ethiopian Airlines crashes, the first of which has already been filed.

Though its shares have recovered from their post-grounding lows, they have hit another bout of turbulence this week after the company announced that it would slash production of the 737 MAX by 20%, before announcing that its aircraft orders in Q1 fell to 95 from 180 a year earlier.


Know thy enemy , 2 hours ago link

Having grown up in Seattle within 15 miles of Plant 2 on Boeing Field, I know a lot about The Boeing Company. I went to private high school with Bill Boeing III and during college had a great summer job at Troy Laundry delivering shop towels and uniforms to all of the Boeing plants in the region.

I used to laugh because, when I drove the laundries 20ft UPS style box van through those enormous sliding doors into Everett's 747 Plant to deliver fresh laundry and pickup soiled's, I would spend the next 4-hours driving around 'inside' the building. I got to know dozens of workers by name, who 'worked the line'.

After college, more than 20% of my graduating class went to work at 'the lazy B' as it was commonly known. Not me. I went into sales and started selling computers.....to Boeing and the FAA.

As the size my computer sales territory was increased to include the entire West Coast I began to fly Boeing aircraft almost everyday for 10-years. and on-board those aircraft I met and flew with many Boeing executives.

One day I happened to sit next the 'current' Boeing HR director, and after getting to know him confided that I frequently smoked marijuana after work. To which he replied, "I would gladly have the 15% of our work force that are alcoholics, or into hard drugs smoke pot because it's effects are short-term but when people come to work 'hung-over or jacked-up' that is when bad **** happens and mistakes are made".

Even though, I had been 'on the line' and met many Boeing employees I had not realized until that moment the seriousness of what he was saying. The HR guy went on to say, that they 'had to have redundancy at every step in the construction process to ensure bad workmanship didn't make it into the final product'.

Fast forward 20-years; and Boeing airplanes are falling from the sky......and it's not a surprise to me.

IronForge , 3 hours ago link

BA are better off ending the 737MAX; and replacing Orders with another Model Line.

Shockwave , 2 hours ago link

The legacy 737 "NG" is a solid aircraft, and its still being produced down the same build lines as the MAX. Just the previous generation. That plane drove the vast majority of Boeings sales. It woulndt be hard to scale down MAX production and just go back to producing the NG, but they wont do that.

They'll fix the MAX and move on, and as long as no more crashes occur, eventually the public will forget.

JustPastPeacefield , 56 minutes ago link

Thats a hard sell to airlines when the competing plane has a 15% lower operating cost.

silverer , 3 hours ago link

The FED can't let the stock price fall on a company of that size, so the FED trading desk will lend assistance. There is a certain evil in this, because the stock deserves to fall, and when it doesn't, it has the effect of vindicating the company for the events that occurred. This is why free markets should never be meddled with. It's actually immoral.

CatInTheHat , 3 hours ago link

This is utterly predictable and something I've already said repeatedly: Boeing did not tell pilots or its customers about the mechanism. Boeing is criminally liable for the MURDER of 300+ people. Families will sue and cancellations will follow.

Then this:

"In essence, the suit alleges that the company concealed safety concerns about the 737 MAX and its anti-stall software following the Lion Air crash in October that killed 189 people, but did nothing to alert the public or correct the issue.

Boeing "effectively put profitability and growth ahead of airplane safety and honesty"

Pilots complained about the problem and were IGNORED.

This is good to see. Boeing needs to be held accountable for MURDER. But instead Trump slaps tariffs on the competitor, AIRBUS, to pay for Boeing's criminality.

This will not stop companies choosing AIRBUS and its good safety record over a bunch of psychopathic murderers. If Boeing had put safety first, it's competitor would not be picking up business..ironic...

3-fingered_chemist , 3 hours ago link

I still don't understand the point of the MCAS. Clearly it causes the plane to do a face plant into the ground. However, like in that one situation where the jump seat pilot knew to turn it off, the plane flew fine. Boeing says the MCAS is to prevent the plane from stalling at steep angles of attack, but the plane seems to stay in the air better without it. So which is it? The fact is the Boeing neglected to put it in the manual suggests it was done on purpose. The fact that they sold a version with no redundancy to the AOC sensor seems to be have done on purpose. Since Boeing is basically an arm of the DOD, the question should be who was on the flights that crashed? That's the missing link in this debacle.

ArtOfIgnorance , 3 hours ago link

Check out " moonofalabama.org ", very good explanation, plus some further links to pilot forums.

From what I understand, the pilots get into some sort of "catch 22"....even if they switch of the MACS, they are doomed.

I'm not I anyway in the flying biz, but work in power generating control systems, and funny enough, use quite a lot of Rosemount sensors in ex areas. They are good sensors, but always use two in mission critical operations.

Why Boeing opted for just one, really blows my mind.

What would an extra sensor cost, 10.000USD?, altogether with new software..bla-bla.

Now look what this is costing them.

Well, this is what happens when MBA bean counters take over a former proud engineering company.

Tragic.

Urban Roman , 3 hours ago link

From what I understand, the pilots get into some sort of "catch 22"....even if they switch of the MACS, they are doomed.

Sort of like that. The flight surface is controlled by a big screw. Normally an electric motor spins the nut that drives the screw up and down. The switch cuts out the motor, and they have hand cranks to move the screw. But in this last crash, the too-clever-by-half software system had already run the screw all the way to the 'nose down' end, and it would have taken them several minutes of hand cranking to get it back to the center position. They didn't have several minutes, and the motor is capable of driving the screw the other way. Since the problem was intermittent (software kicks in on a time interval), they were hoping it would behave for a few seconds, and switched the motor back on. It didn't.

On a side note, the Airbus does not have these hand-crank controls. Everything is run by the computer -- so if anything goes wrong, the pilot must 'reason' with the computer to correct it. . . "Sorry Dave, I can't do that".

Well, this is what happens when MBA bean counters take over a former proud engineering company.

This reminds me of Feynman's analysis of what went wrong with the Space Shuttle Challenger. The engineers said the O-rings would be too stiff and brittle, and the launch should wait until it warmed up a bit. But a delay was costing the shuttle program a million dollars a minute, or whatever.

Feynman explained that the early space program was run by the pocket-protector guys with slide rules. And it worked. But over time the management had been replaced by people whose careers depended on influencing other people and not on matter, energy, and materials.

Shockwave , 2 hours ago link

Another thing, the pilots had commanded full throttle and never throttled back during the whole ordeal. So when they killed the trim motor, they couldn't overcome the aerodynamic force on the stab to move the trim screw back into position.

Apparently they could have got the trim corrected ENOUGH to make a difference if they could have moved it more easily, but at the speeds they were going, the airspeed over the stab was too high to manually move the screw fast enough to make a difference.

jerry-jeff , 1 hour ago link

another interesting point is that the system is deactivated when flaps are selected...only works when aircraft is in 'clean' config.

Shockwave , 1 hour ago link

Interesting. Did not know that.

Shockwave , 2 hours ago link

Sort of. When you kill the electric trim motor, you have to use a manual wheel to adjust trim. The issue came that their airspeed was so high that the load on the stab made it nearly impossible to move without the electric motor.

They had been at full throttle from rotation until they hit the dirt. The pilot had told the copilot to throttle back but it got lost in the chaos somewhere and never happened.

So when they killed the trim motor and tried to move it manually, they had to overcome all the aerodynamic force on the stab, and they just couldnt do it at those airspeeds without the electric motor to overcome the force.

MilwaukeeMark , 3 hours ago link

The bigger the fuselage the bigger the engines needed. The bigger the engines needed the more forward on the wing they go to keep from scraping on the ground. The more forward on the wing the more unbalanced then plane became. They've stretch a frame which was developed in the 60's beyond its original design.

MilwaukeeMark , 4 hours ago link

The executives who oversaw the fiasco that is now Boeing, long ago parachuted out with multi million dollar pensions and stock options while their Seattle workers had their pensions slashed. They're now assembling Dreamliners in NC with off the street non unionized labor, former TacoBell and Subway workers. They moved their Corp headquarters to Chicago away from where the actual work was being performed to pursue the "work" of stock buy backs and cozying up to the FAA. All the above a recipe for disaster. A perfect mirror of how the 1/10th of 1% operate in the Oligarchy we call America.

thunderchief , 4 hours ago link

Boeing is in full on crisis mode because of the 737 Max fiasco.

Anything else they say or do is pure show and fraud.

The are not to far from losing the entire narrowbody airline market, pretty much the meat and bones of Airline production.

Today Airbus still has the A-320 neo, and Russia and China are chomping at the bit with the MC21 and C919, all far more advanced and superior than a 1960's designed stretched pulled and too late 737 .

If Boeing loses market share and the narrow body airline market, shame on the USA.

This will become a text book expample of the fall of a nation and empire.

How can a Company like Boeing have technology like the B2 and everything the DOD gives them and lose the international market for narrowbody airliners..

To call this a national disgrace is a compliment to Boeing and the US aerospace industies complete disregard and hubris in such an important component of worldwide aviation.

This in not a sad chapter for Boeing, its sad for the USA

south40_dreams , 4 hours ago link

Boeing is headquartered in Shitcago, how fitting

wally_12 , 3 hours ago link

Don't forget K-Cars, Vega, Pinto, Aztec etc. Auto industry has the type of idiots as Boeing.

Government bailout on the horizon.

south40_dreams , 3 hours ago link

Not bailout, coverup and lots and lots of lipstick will be applied to this pig

IronForge , 2 hours ago link

BeanCounters, Parasitoids, and Bells-WhistlesMktg Types Running an Aerospace/Aviation Engineering and Defense Tech Conglomerate into the Ground - Literally.

Civil Aviation Div "Jumped the Shark" the moment they passed on a redesigned Successor to the 737 Base Model in the mid 2000s and decided to strap on Larger Engines and GunDeck the Revision and Certifications.

So Sad Too Bad. No Sympathies for BA.

Catullus , 4 hours ago link

Failure to disclose regulatory capture is a tough one. Do you issue an 8K on that one? Maybe bury it in the 10K in risk statements

"We maintain several regulatory relationships that will rubber stamp approvals for our aircraft. In the event of a major safety violation, those cozy relationships could be exposed and we be found to not only be negligent, but also nefariously so through regulatory capture."

You bought an airline manufacturer that had a malfunction. There's plenty of people to blame, but it's part of the business you own.

boooyaaaah , 4 hours ago link

Question?
Are the millennials too dishonest for freedom

Free markets, free exchange of ideas and information

The truth shall set you free

Arrow4Truth , 2 hours ago link

They have no comprehension of freedom, which translates to, they are incapable of seeing the truth. The indoctrination has worked swimmingly.

haley's_vomit , 4 hours ago link

Nikki 'luvsNetanyahu' Haley is Boeing's 'rabidjew' answer to their "look! up in the sky! it's Silverstein's Air Force"

[Apr 10, 2019] Boeing's 737 Max 1960s Design, 1990s Computing Power and Paper Manuals

Apr 10, 2019 | www.nytimes.com

The 737 Max is a legacy of its past, built on decades-old systems, many that date back to the original version. The strategy, to keep updating the plane rather than starting from scratch, offered competitive advantages. Pilots were comfortable flying it, while airlines didn't have to invest in costly new training for their pilots and mechanics. For Boeing, it was also faster and cheaper to redesign and recertify than starting anew.

But the strategy has now left the company in crisis, following two deadly crashes in less than five months. The Max stretched the 737 design, creating a patchwork plane that left pilots without some safety features that could be important in a crisis -- ones that have been offered for years on other planes. It is the only modern Boeing jet without an electronic alert system that explains what is malfunctioning and how to resolve it. Instead pilots have to check a manual.

The Max also required makeshift solutions to keep the plane flying like its ancestors, workarounds that may have compromised safety. While the findings aren't final, investigators suspect that one workaround, an anti-stall system designed to compensate for the larger engines, was central to the crash last month in Ethiopia and an earlier one in Indonesia.

"They wanted to A, save money and B, to minimize the certification and flight-test costs," said Mike Renzelmann, an engineer who worked on the Max's flight controls. "Any changes are going to require recertification." Mr. Renzelmann was not involved in discussions about the sensors.

... ... ...

On 737s, a light typically indicates the problem and pilots have to flip through their paper manuals to find next steps. In the doomed Indonesia flight, as the Lion Air pilots struggled with MCAS for control, the pilots consulted the manual moments before the jet plummeted into the Java Sea, killing all 189 people aboard.

"Meanwhile, I'm flying the jet," said Mr. Tajer, the American Airlines 737 captain. "Versus, pop, it's on your screen. It tells you, This is the problem and here's the checklist that's recommended."

Boeing decided against adding it to the Max because it could have prompted regulators to require new pilot training, according to two former Boeing employees involved in the decision.

The Max also runs on a complex web of cables and pulleys that, when pilots pull back on the controls, transfer that movement to the tail. By comparison, Airbus jets and Boeing's more modern aircraft, such as the 777 and 787, are "fly-by-wire," meaning pilots' movement of the flight controls is fed to a computer that directs the plane. The design allows for far more automation, including systems that prevent the jet from entering dangerous situations, such as flying too fast or too low. Some 737 pilots said they preferred the cable-and-pulley system to fly-by-wire because they believed it gave them more control.

In the recent crashes, investigators believe the MCAS malfunctioned and moved a tail flap called the stabilizer, tilting the plane toward the ground. On the doomed Ethiopian Airlines flight, the pilots tried to combat the system by cutting power to the stabilizer's motor, according to the preliminary crash report.

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Once the power was cut, the pilots tried to regain control manually by turning a wheel next to their seat. The 737 is the last modern Boeing jet that uses a manual wheel as its backup system. But Boeing has long known that turning the wheel is difficult at high speeds, and may have required two pilots to work together.

In the final moments of the Ethiopian Airlines flight, the first officer said the method wasn't working, according to the preliminary crash report. About 1 minute and 49 seconds later, the plane crashed, killing 157 people.

Steve Lovelien Waukesha,WI 25m ago

The Seattle Times published what I consider a devastating article a few Sundays ago. It highlighted the depth to which Boeing and the FAA cut corners on the certification of the Max, more specifically the characterization of the impact of a failure of the new MCAS system. This allowed them to utilize the cheaper single sensor AOA vane instead of 2 or 3. The aircraft also got delivered with the MCAS system applying many more nose down units of trim than what was published in the certification process. Topping it off was the failure of Boeing to disclose to its customers that the MCAS system was installed or what abnormal or emergency procedures would accompany the system.


Catalin Iasi 2h ago

True, there are two kinds of pilots, and some are better. BUT no pilot should be put in a critical situation by bad and rushed design. What was Boeing thinking? `Yes, there is slight chance that things can go wrong... but if the pilot is experienced, if the weather is fine, if the FO is focused (and so on...) they will surely make it.' Why taking that risk? They should design a plane that even a drunk pilot can handle.
AeroEngineer Toronto 2h ago
The MCAS moves the entire horizontal tail (aka horizontal stabilizer) not just "a tail flap called the stabilizer". Normal stabilizer trim also moves the whole horizontal stabilizer. Presumably the "flap" being referred to here, incorrectly, is the elevator, a flight control surface on the trailing edge of the horizontal tail, which is control by pulling and pushing the flight control column. Both horizontal stabilizer trim and elevator affect the pitch (nose up, nose down) of the aircraft. Typically, horizontal stabilizer trim is used to maintain a particular attitude (e.g. level flight in cruise) without requiring the pilot to continously apply significant forces to the control column, which is tiring. When MCAS engages it effectively is attempting to "cancel out" the pilot's elevator command (pulling back on the control column to bring the nose up by ) by moving the horizontal stabilizer to counteract the pilots action (rotating the the horizontal stabilizer so that it's leading edge points down).
Tony Boston 2h ago
Boeing should have gone with a clean sheet of paper design. Look at the Airbus A220, previously known as Bombardier C Series. It has nearly similar seating, yet it carries less fuel, but has a longer range than the MAX8. Modern wing design. Heck, Boeing should have just bought Bombardier 10 years ago. Now they are in the arms of Airbus.
Ed N Southbury,CT 2h ago
Why doesn't BA just trash the entire max8 program and become a subcontractor for A320s instead? After all there is a demand for 5000 aircraft that now will not be fulfilled. Boeing management should be put on trial for criminal negligence.
Jim Mooney Apache Junction, AZ 2h ago
Finally, a comprehensive report that doesn't go on and on about software. The problem was a mechanical and training one, and instead of fixing the problems, the Bean Counters took over and went on the cheap.

[Apr 09, 2019] Boeing's 737 Max 1960s Design, 1990s Computing Power and Paper Manuals - The New York Times

Apr 09, 2019 | www.nytimes.com

Pilots start some new Boeing planes by turning a knob and flipping two switches.

The Boeing 737 Max, the newest passenger jet on the market, works differently. Pilots follow roughly the same seven steps used on the first 737 nearly 52 years ago: Shut off the cabin's air-conditioning, redirect the air flow, switch on the engine, start the flow of fuel, revert the air flow, turn back on the air conditioning, and turn on a generator.

The 737 Max is a legacy of its past, built on decades-old systems, many that date back to the original version. The strategy, to keep updating the plane rather than starting from scratch, offered competitive advantages. Pilots were comfortable flying it, while airlines didn't have to invest in costly new training for their pilots and mechanics. For Boeing, it was also faster and cheaper to redesign and recertify than starting anew.

But the strategy has now left the company in crisis, following two deadly crashes in less than five months . The Max stretched the 737 design, creating a patchwork plane that left pilots without some safety features that could be important in a crisis -- ones that have been offered for years on other planes. It is the only modern Boeing jet without an electronic alert system that explains what is malfunctioning and how to resolve it. Instead pilots have to check a manual.

The Max also required makeshift solutions to keep the plane flying like its ancestors, workarounds that may have compromised safety. While the findings aren't final, investigators suspect that one workaround, an anti-stall system designed to compensate for the larger engines, was central to the crash last month in Ethiopia and an earlier one in Indonesia.

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The Max "ain't your father's Buick," said Dennis Tajer, a spokesman for the American Airlines pilots' union who has flown the 737 for a decade. He added that "it's not lost on us that the foundation of this aircraft is from the '60s."

Dean Thornton, the president of Boeing, with an engine on the first 737-400 in 1988 in Seattle. The larger engines for Boeing's new Max line of jets prompted a number of design issues. Credit Benjamin Benschneider/The Seattle Times, via Associated Press
Image
Dean Thornton, the president of Boeing, with an engine on the first 737-400 in 1988 in Seattle. The larger engines for Boeing's new Max line of jets prompted a number of design issues. Credit Benjamin Benschneider/The Seattle Times, via Associated Press

[Boeing was "go, go, go " to beat Airbus with the 737 Max.]

The Max, Boeing's best-selling model, with more than 5,000 orders, is suddenly a reputational hazard. It could be weeks or months before regulators around the world lift their ban on the plane, after Boeing's expected software fix was delayed . Southwest Airlines and American Airlines have canceled some flights through May because of the Max grounding.

The company has slowed production of the plane, putting pressure on its profits, and some buyers are reconsidering their orders. Shares of the company fell over 4 percent on Monday, and are down 11 percent since the Ethiopia crash.

"It was state of the art at the time, but that was 50 years ago," said Rick Ludtke, a former Boeing engineer who helped design the Max's cockpit. "It's not a good airplane for the current environment."

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The 737 has long been a reliable aircraft, flying for decades with relatively few issues. Gordon Johndroe, a Boeing spokesman, defended the development of the Max, saying that airlines wanted an updated 737 over a new single-aisle plane and that pilots were involved in its design.

"Listening to pilots is an important aspect of our work. Their experienced input is front-and-center in our mind when we develop airplanes," he said in a statement. "We share a common priority -- safety -- and we listen carefully to their feedback." He added that American regulators approved the plane under the same standards they used with previous aircraft.

Video

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Boeing introduced the 737 Max as a reliable fuel- and cost-efficient solution to air travel in the 21st century. After two fatal Max crashes, all of the Max aircraft in the world are believed to have been grounded. Credit Credit Chang W. Lee/The New York Times

[ Boeing announced that it was going to cut production of the 737 Max. ]

Boeing's chief executive, Dennis Muilenburg, said in a statement on Friday that the crashes in Indonesia and Ethiopia appeared to have been caused by the Max's new anti-stall system. "We have the responsibility to eliminate this risk, and we know how to do it," he said.

At a factory near Seattle on Jan. 17, 1967, flight attendants christened the first Boeing 737, smashing champagne bottles over its wing. Boeing pitched the plane as a smaller alternative to its larger jets, earning it the nickname the "Baby Boeing."

Early on, sales lagged Boeing's biggest competitor, McDonnell Douglas. In 1972, Boeing had delivered just 14 of the jets, and it considered selling the program to a Japanese manufacturer, said Peter Morton, the 737 marketing manager in the early 1970s. "We had to decide if we were going to end it, or invest in it," Mr. Morton said.

Ultimately, Boeing invested. The 737 eventually began to sell, bolstered by airline deregulation in 1978. Six years later, Boeing updated the 737 with its "classic" series, followed by the "next generation" in 1997, and the Max in 2017. Now nearly one in every three domestic flights in the United States is on a 737, more than any other line of aircraft.

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Each of the three redesigns came with a new engine, updates to the cabin and other changes. But Boeing avoided overhauling the jet in order to appease airlines, according to current and former Boeing executives, pilots and engineers, some of whom spoke on the condition of anonymity because of the open investigations. Airlines wanted new 737s to match their predecessors so pilots could skip expensive training in flight simulators and easily transition to new jets.

Boeing 737 Max: What's Happened After Ethiopian Airlines and Lion Air Crashes

Boeing has come under intense scrutiny after its best-selling 737 Max jet was involved in two deadly crashes in five months.

Boeing's strategy worked. The Federal Aviation Administration never required simulator training for pilots switching from one 737 to the next.

"Airlines don't want Boeing to give them a fancy new product if it requires them to retrain their pilots," said Matthew Menza, a former 737 Max test pilot for Boeing. "So you iterate off a design that's 50 years old. The old adage is: If it's not broke, don't fix it."

It did require engineering ingenuity, to ensure a decades-old jet handled mostly the same. In doing so, some of the jet's one-time selling points became challenges.

For instance, in the early years of the 737, jet travel was rapidly expanding across the world. The plane's low-slung frame was a benefit for airlines and airports in developing countries. Workers there could load bags by hand without a conveyor belt and maintain the engines without a lift, Mr. Morton said. In the decades that followed, the low frame repeatedly complicated efforts to fit bigger engines under the wing.

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By 2011, Boeing executives were starting to question whether the 737 design had run its course. The company wanted to create an entirely new single-aisle jet. Then Boeing's rival Airbus added a new fuel-efficient engine to its line of single-aisle planes, the A320, and Boeing quickly decided to update the jet again.

The 737 Max 8 at Boeing's plant in Renton, Wash. Nearly one in every three domestic flights in the United States is on a 737, more than any other line of aircraft. Credit Ruth Fremson/The New York Times
Image
The 737 Max 8 at Boeing's plant in Renton, Wash. Nearly one in every three domestic flights in the United States is on a 737, more than any other line of aircraft. Credit Ruth Fremson/The New York Times

"We all rolled our eyes. The idea that, 'Here we go. The 737 again,'" said Mr. Ludtke, the former 737 Max cockpit designer who spent 19 years at Boeing.

"Nobody was quite perhaps willing to say it was unsafe, but we really felt like the limits were being bumped up against," he added.

Some engineers were frustrated they would have to again spend years updating the same jet, taking care to limit any changes, instead of starting fresh and incorporating significant technological advances, the current and former engineers and pilots said. The Max still has roughly the original layout of the cockpit and the hydraulic system of cables and pulleys to control the plane, which aren't used in modern designs. The flight-control computers have roughly the processing power of 1990s home computers. A Boeing spokesman said the aircraft was designed with an appropriate level of technology to ensure safety.

When engineers did make changes, it sometimes created knock-on effects for how the plane handled, forcing Boeing to get creative. The company added a new system that moves plates on the wing in part to reduce stress on the plane from its added weight. Boeing recreated the decades-old physical gauges on digital screens.

As Boeing pushed its engineers to figure out how to accommodate bigger, more fuel-efficient engines, height was again an issue. Simply lengthening the landing gear to make the plane taller could have violated rules for exiting the plane in an emergency.

Boeing 737 engines at the company's factory in 2012. By 2011, Boeing executives were starting to question whether the 737 design had run its course. Credit Stephen Brashear/Associated Press
Image
Boeing 737 engines at the company's factory in 2012. By 2011, Boeing executives were starting to question whether the 737 design had run its course. Credit Stephen Brashear/Associated Press
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Instead, engineers were able to add just a few inches to the front landing gear and shift the engines farther forward on the wing. The engines fit, but the Max sat at a slightly uneven angle when parked.

While that design solved one problem, it created another. The larger size and new location of the engines gave the Max the tendency to tilt up during certain flight maneuvers, potentially to a dangerous angle.

To compensate, Boeing engineers created the automated anti-stall system, called MCAS, that pushed the jet's nose down if it was lifting too high. The software was intended to operate in the background so that the Max flew just like its predecessor. Boeing didn't mention the system in its training materials for the Max.

Boeing also designed the system to rely on a single sensor -- a rarity in aviation, where redundancy is common. Several former Boeing engineers who were not directly involved in the system's design said their colleagues most likely opted for such an approach since relying on two sensors could still create issues. If one of two sensors malfunctioned, the system could struggle to know which was right.

Airbus addressed this potential problem on some of its planes by installing three or more such sensors. Former Max engineers, including one who worked on the sensors, said adding a third sensor to the Max was a nonstarter. Previous 737s, they said, had used two and managers wanted to limit changes.

The angle of attack sensor, bottom, on a Boeing 737 Max 8. Credit Ruth Fremson/The New York Times
Image
The angle of attack sensor, bottom, on a Boeing 737 Max 8. Credit Ruth Fremson/The New York Times

"They wanted to A, save money and B, to minimize the certification and flight-test costs," said Mike Renzelmann, an engineer who worked on the Max's flight controls. "Any changes are going to require recertification." Mr. Renzelmann was not involved in discussions about the sensors.

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The Max also lacked more modern safety features.

Most new Boeing jets have electronic systems that take pilots through their preflight checklists, ensuring they don't skip a step and potentially miss a malfunctioning part. On the Max, pilots still complete those checklists manually in a book.

A second electronic system found on other Boeing jets also alerts pilots to unusual or hazardous situations during flight and lays out recommended steps to resolve them.

On 737s, a light typically indicates the problem and pilots have to flip through their paper manuals to find next steps. In the doomed Indonesia flight, as the Lion Air pilots struggled with MCAS for control, the pilots consulted the manual moments before the jet plummeted into the Java Sea, killing all 189 people aboard.

"Meanwhile, I'm flying the jet," said Mr. Tajer, the American Airlines 737 captain. "Versus, pop, it's on your screen. It tells you, This is the problem and here's the checklist that's recommended."

Boeing decided against adding it to the Max because it could have prompted regulators to require new pilot training, according to two former Boeing employees involved in the decision.

The Max also runs on a complex web of cables and pulleys that, when pilots pull back on the controls, transfer that movement to the tail. By comparison, Airbus jets and Boeing's more modern aircraft, such as the 777 and 787, are "fly-by-wire," meaning pilots' movement of the flight controls is fed to a computer that directs the plane. The design allows for far more automation, including systems that prevent the jet from entering dangerous situations, such as flying too fast or too low. Some 737 pilots said they preferred the cable-and-pulley system to fly-by-wire because they believed it gave them more control.

In the recent crashes, investigators believe the MCAS malfunctioned and moved a tail flap called the stabilizer, tilting the plane toward the ground. On the doomed Ethiopian Airlines flight, the pilots tried to combat the system by cutting power to the stabilizer's motor, according to the preliminary crash report.

Advertisement

Once the power was cut, the pilots tried to regain control manually by turning a wheel next to their seat. The 737 is the last modern Boeing jet that uses a manual wheel as its backup system. But Boeing has long known that turning the wheel is difficult at high speeds, and may have required two pilots to work together.

In the final moments of the Ethiopian Airlines flight, the first officer said the method wasn't working, according to the preliminary crash report. About 1 minute and 49 seconds later, the plane crashed, killing 157 people.

Correction : April 8, 2019

An earlier version of this article transposed the death tolls in two crashes involving Boeing's 737 Max jets. In the Lion Air crash in Indonesia last year, 189 people died, not 157; 157 people were killed in the Ethiopian Airlines crash last month, not 189. Rebecca R. Ruiz and Stephen Grocer contributed reporting. Kitty Bennett contributed research. A version of this article appears in print on April 9, 2019 , on Page A 1 of the New York edition with the headline: Boeing's 737 Max: '60s Design Meets '90s Computing Power. Order Reprints | Today's Paper | Subscribe

[Apr 08, 2019] Trump deadly deregulation

Apr 04, 2019 | economistsview.typepad.com

anne , April 05, 2019 at 01:50 PM

https://www.nytimes.com/2019/04/04/opinion/trump-deadly-deregulation.html

April 4, 2019

Donald Trump Is Trying to Kill You: Trust the pork producers; fear the wind turbines. By Paul Krugman

There's a lot we don't know about the legacy Donald Trump will leave behind. And it is, of course, hugely important what happens in the 2020 election. But one thing seems sure: Even if he's a one-term president, Trump will have caused, directly or indirectly, the premature deaths of a large number of Americans.

Some of those deaths will come at the hands of right-wing, white nationalist extremists, who are a rapidly growing threat, partly because they feel empowered by a president who calls them "very fine people."

Some will come from failures of governance, like the inadequate response to Hurricane Maria, which surely contributed to the high death toll in Puerto Rico. (Reminder: Puerto Ricans are U.S. citizens.)

Some will come from the administration's continuing efforts to sabotage Obamacare, which have failed to kill health reform but have stalled the decline in the number of uninsured, meaning that many people still aren't getting the health care they need. Of course, if Trump gets his way and eliminates Obamacare altogether, things on this front will get much, much worse.

But the biggest death toll is likely to come from Trump's agenda of deregulation -- or maybe we should call it "deregulation," because his administration is curiously selective about which industries it wants to leave alone.

Consider two recent events that help capture the deadly strangeness of what's going on.

One is the administration's plan for hog plants to take over much of the federal responsibility for food safety inspections. And why not? It's not as if we've seen safety problems arise from self-regulation in, say, the aircraft industry, have we? Or as if we ever experience major outbreaks of food-borne illness? Or as if there was a reason the U.S. government stepped in to regulate meatpacking in the first place?

Now, you could see the Trump administration's willingness to trust the meat industry to keep our meat safe as part of an overall attack on government regulation, a willingness to trust profit-making businesses to do the right thing and let the market rule. And there's something to that, but it's not the whole story, as illustrated by another event: Trump's declaration the other day that wind turbines cause cancer.

Now, you could put this down to personal derangement: Trump has had an irrational hatred for wind power ever since he failed to prevent construction of a wind farm near his Scottish golf course. And Trump seems deranged and irrational on so many issues that one more bizarre claim hardly seems to matter.

But there's more to this than just another Trumpism. After all, we normally think of Republicans in general, and Trump in particular, as people who minimize or deny the "negative externalities" imposed by some business activities -- the uncompensated costs they impose on other people or businesses.

For example, the Trump administration wants to roll back rules that limit emissions of mercury from power plants. And in pursuit of that goal, it wants to prevent the Environmental Protection Agency from taking account of many of the benefits from reduced mercury emissions, such as an associated reduction in nitrogen oxide.

But when it comes to renewable energy, Trump and company are suddenly very worried about supposed negative side effects, which generally exist only in their imagination. Last year the administration floated a proposal that would have forced the operators of electricity grids to subsidize coal and nuclear energy. The supposed rationale was that new sources were threatening to destabilize those grids -- but the grid operators themselves denied that this was the case.

So it's deregulation for some, but dire warnings about imaginary threats for others. What's going on?

Part of the answer is, follow the money. Political contributions from the meat-processing industry overwhelmingly favor Republicans. Coal mining supports the G.O.P. almost exclusively. Alternative energy, on the other hand, generally favors Democrats.

There are probably other things, too. If you're a party that wishes we could go back to the 1950s (but without the 91 percent top tax rate), you're going to have a hard time accepting the reality that hippie-dippy, unmanly things like wind and solar power are becoming ever more cost-competitive.

Whatever the drivers of Trump policy, the fact, as I said, is that it will kill people. Wind turbines don't cause cancer, but coal-burning power plants do -- along with many other ailments. The Trump administration's own estimates indicate that its relaxation of coal pollution rules will kill more than 1,000 Americans every year. If the administration gets to implement its full agenda -- not just deregulation of many industries, but discrimination against industries it doesn't like, such as renewable energy -- the toll will be much higher.

So if you eat meat -- or, for that matter, drink water or breathe air -- there's a real sense in which Donald Trump is trying to kill you. And even if he's turned out of office next year, for many Americans it will be too late.

ilsm -> anne... , April 05, 2019 at 03:56 PM
"uninsured" in the for profit system is a terrible measure!

US health outcomes in relation to OEDC remains sad.

point -> anne... , April 05, 2019 at 07:19 PM
One wonders how when expected deaths are 1/x and activity is x, then the product does not mean 1 expected death, and then ordinary legal consequences.
mulp -> anne... , April 06, 2019 at 03:25 AM
Trump does not want to go back to the 50s when government policy was to greatly increase costs by paying more workers more, while driving down prices, and elinimating rents and scarcity profits.

Trump wants to kill jobs that are paid, but force work that is unpaid.

Well, if you means 1850, by the 50s, that's when Trump would have excelled by raping his slaves to create more workers he would force to work, probably Brazil style, worked to death to cut costs, based on continued enslavement of slaves, ie, no ban on slave imports after 1808.

JohnH -> anne... , April 06, 2019 at 03:39 PM
Trump may be trying to kill us...but do Democrats have a plan to save us? So far, I can discern no coherent message or plan from corrupt, comatose Democrats other than 'Trump is guilty [of something or other.]
mulp -> JohnH... , April 07, 2019 at 03:11 PM
You are simply rejecting Democrats calls to reverse policies since 1970 to MAGA as failed liberal policies because its not new, never tried before, and not free.

The growth of the 50s and 60s was too costly, requiring people to work, save, and pay ever rising prices, taxes, and living costs.

You want economics where you can buy a million dollar home for $50,000 and have schools funded by modest property taxes on million dollar homes, but with low tax rates on houses assessed at $40,000.

TANSTAAFL

The only way working class families get better off is by paying higher costs.

Zero sum.

Christopher H. said in reply to anne... , April 07, 2019 at 11:00 AM
The Jungle was written about Chicago and Chicago just elected 5 (possibly 6) socialists to the City Council (which is made up of 50 total alderman).

Chicago also elected a black lesbian mayor but she's not that progressive.

I guess Krugman would dismiss this all as "purity" politics.

https://chicago.suntimes.com/news/andre-vasquex-democratic-socialist-pat-oconnor-40th-ward-aldermanic-election/

04/05/2019, 05:37pm

Meet the democratic socialist who sent Rahm's floor leader packing

By Mark Brown

There's never been a Chicago politician who quite fits the profile of Andre Vasquez, the former battle rapper and current democratic socialist who just took down veteran 40th Ward Ald. Patrick O'Connor, Mayor Rahm Emanuel's city council floor leader.

That probably scares some people.

But those folks might want to nod to the wisdom of the 54 percent of voters in the North Side ward who waded through an onslaught of attack ads and concluded they have nothing to fear from the 39-year-old AT&T account manager, his music or his politics.

I stopped by Vasquez's campaign office to satisfy my own curiosity about this new breed of aldermen. Vasquez will be part of a Chicago City Council bloc of at least five, probably six democratic socialists who, if nothing else, will alter the debate on a range of issues.

Vazquez said he understands democratic socialism as "just injecting a healthy dose of democracy in a system we already have.

"Where we see the influence of big money and corporations in our government, where we see the corruption in the council, where we see elected officials as bought and paid for, to me, democratic socialism is providing a counterbalance," he said.

Vasquez also reminded me that generalizing about democratic socialists is as foolish as generalizing about Democrats.

"I think even within democratic socialism there's such a spectrum of different folks, right? I tend to be a counterbalance to some of the louder stuff, the louder hardcore, what some would view as extreme," said Vasquez, noting that he sometimes takes flak within democratic socialist circles because he's never read Marx and doesn't "bleed rose red."

"Everyone's got their part to play," he said. "Somebody's going to be the loud one in the room because you need that kind of impetus to move things forward. And someone's got to be the one who's making deals on legislation. You can't have ideological fights and think you're going to come up with solutions."

Though Vasquez prefers the dealmaker role, his background suggests he also could get loud if the occasion demanded.

Until he decided it was time to do something else with his life around 2010, Vasquez was a battle rapper who performed under the stage name Prime. He had enough success to pay the bills for a while, touring nationally and appearing on MTV's "Direct Effect" and HBO's "Blaze Battle."

For old people like me who are unclear on the concept (begging the pardon of the rest of you), battle rapping involves performers trading insults in rhyme put to music.

"Then, imagine you have a crowd around you," Vasquez explained. "And now people are cheering you on, and the insults are getting more vicious and intricate, and it becomes a sporting match. Right? So, in that arena, you're getting heralded for how well you can insult the person in front of you while rhyming and improvising all as this stream of consciousness is coming out."

I suggested a battle rap might occasionally be just the antidote to the drudgery of a council meeting, but Vasquez wasn't amused.

The problem with battle rapping, as 40th Ward voters were reminded ad nauseam during the runoff campaign, is that the genre relies heavily on crude insults invoking disrespectful terms for women and LGBTQ individuals.

"The issue is toxic masculinity plagues everything," said Vasquez, who obliquely fronted an apology for his past verbal misdeeds early in the campaign -- and more directly when hit with a barrage of negative mailers detailing a greatest hits of his transgressions.

A lesser candidate would have been toast at that point, but Vasquez had girded himself in advance through his door-to-door organizing.

By then, enough 40th Ward residents knew who Vasquez really was -- the son of Guatemalan immigrants, a city kid from the neighborhoods who had become a family guy with two young kids and a late-discovered talent for politics -- that they couldn't be scared off.

Vasquez, who lives in Edgewater, was introduced to politics when he felt the Bern in 2014 and volunteered for Bernie Sanders presidential campaign. A left-leaning community group, Reclaim Chicago, then recruited Vasquez to expand upon his organizing talents -- and taught him how to build a classic grassroots campaign.

The result is a new Latino alderman in a ward where fewer than one-fifth of the voters are Latino. And a Democratic Socialist representing a ward previously ruled by Emanuel's floor leader.

"I'm not trying to plant a flag," Vasquez said. "I'm trying to make sure that people can live here and not be forced out."

Christopher H. said in reply to Christopher H.... , April 07, 2019 at 11:02 AM
"Vasquez, who lives in Edgewater, was introduced to politics when he felt the Bern in 2014 and volunteered for Bernie Sanders presidential campaign. A left-leaning community group, Reclaim Chicago, then recruited Vasquez to expand upon his organizing talents -- and taught him how to build a classic grassroots campaign."

I like the centrists like Krugman and liberals here like EMike who dismiss Bernie as a cult of personality. No he's spurring local organizing which doesn't revolve around him.

mulp -> Christopher H.... , April 07, 2019 at 03:34 PM
Will Bernie as president build walls around big cities like Chicago, build iron Curtains, to keep the rich inside these cities where all their wealth is taxed away every year, and they are prevented from moving to the towns outside Chicago city limits?

[Apr 08, 2019] A320 series vs B737 Max 8

Notable quotes:
"... In fact Airbus 320 series never had the same issue as it was properly designed from scratch and not like Max 8 retrofitted to carry bigger engines by that changing distribution of balance of the Aircraft and hence requiring steeper ascending angle and faster speed (for the same wing design) and hence by design more prone to stalling while in takeoff phase. ..."
"... So what is the same in B737 Max and A320 was response of AI software to sensor failures and specific external conditions of flight. In both cases such scenarios were never trained in simulators. ..."
Apr 08, 2019 | www.wsws.org

Kalen4 days ago

Thanks for the report but I may add that AI auto pilot systems on Airbus are not same or similar to MCAS as they are all integrated in autopilot on A320 series while on B737 Max 8 they are completely separate from one another not communicating at all.

In fact Airbus 320 series never had the same issue as it was properly designed from scratch and not like Max 8 retrofitted to carry bigger engines by that changing distribution of balance of the Aircraft and hence requiring steeper ascending angle and faster speed (for the same wing design) and hence by design more prone to stalling while in takeoff phase.

The problem with A320 crash over Atlantic was failure of one or two of two sensors and while in cruise phase of flight autopilot AI software response was just inappropriate in fact detrimental as pilots were blinded disoriented during night over the ocean trying to figure out where they are as conflicting data was coming in.

It seems by some accounts they trusted autopilot decisions and suggestions and simply descended, hit into ocean almost horizontally.

So what is the same in B737 Max and A320 was response of AI software to sensor failures and specific external conditions of flight. In both cases such scenarios were never trained in simulators.

[Apr 08, 2019] Why aren't Boeing executives being prosecuted for the 737 Max 8 crashes

Highly recommended!
Notable quotes:
"... Evidence has mounted implicating in both crashes an automated anti-stall system, the Maneuvering Characteristics Augmentation System (MCAS), which was installed by Boeing in response to the new plane's tendency to pitch upward and go into a potentially fatal stall. On a whole number of fronts -- design, marketing, certification and pilot training -- information from the black boxes of the two planes points to a lack of concern for the safety of passengers and crew on the part of both Boeing and the Federal Aviation Administration, reaching the level of criminality. ..."
"... Despite the presence on the plane of two angle-of-attack sensors, which signal a potential stall and trigger the automated downward pitch of the plane's nose, MCAS relied on data from only one of the sensors. This means the standard redundancy feature built into commercial jets to avert disasters resulting from a faulty sensor was lacking. Boeing's main rival to the 737 Max, the European-built Airbus A320neo, for example, uses data from three sensors to manage a system similar to MCAS. ..."
"... Pilot certification for a commercial plane typically requires hundreds of hours of training, both in simulators and in actual flights. Boeing itself is now mandating at least 21 days of training on new Max planes. ..."
"... There is no innocent explanation for these obvious safety issues. They point to reckless and arguably criminally negligent behavior on the part of Boeing executives, who rushed the new plane into service and marketed it against the Airbus A320neo on the basis of its cost-saving features. ..."
"... This is highlighted by a press release the day of the Ethiopian Airlines crash in which Boeing stated that "for the past several months and in aftermath of Lion Air Flight 610," the company "has been developing a flight control software enhancement for the 737 MAX." ..."
"... In other words, both Boeing and the FAA were aware, possibly even before the October 2018 Lion Air crash and certainly afterward, that a system critical to the safe operation of the aircraft needed to be fixed, and still allowed the plane to continue flying. The wording also suggests that the plane shouldn't have been certified for flight in the first place. ..."
"... This was aided and abetted by the Trump administration, which shielded Boeing as long as it could by not ordering the FAA to ground the plane immediately after the Ethiopian Airlines crash. There were no doubt immense concerns that such a move would cut into Boeing's multibillion-dollar profits and affect its stock price, which has nearly tripled since the election of Trump in November 2016, accounting for more than 30 percent of the increase in the Dow Jones index since then. ..."
"... The relationship between Trump and Muilenburg is only a symptom of the much broader collusion between the airline industry and the US government. Starting in 2005 and expanded during the Obama administration, the FAA introduced the Organization Designation Authorization (ODA) program, which allows the agency to appoint as "designees" airplane manufacturers' employees to certify their own company's aircraft on behalf of the government. ..."
"... This is the logical end of the deregulation of the airline industry as a whole that was spearheaded by the Democratic Carter administration, which passed the Airline Deregulation Act in 1978. With the help of liberal icon Edward Kennedy, the legislation disbanded the Civil Aeronautics Board, which up to that point treated interstate airlines as a regulated public utility, setting routes, schedules and fares. ..."
Apr 04, 2019 | www.wsws.org

It is nearly a month since the crash of Ethiopian Airlines Flight 302, which slammed into the ground only six minutes after takeoff from Addis Ababa airport, killing all 157 people on board. That disaster came less than five months after the fatal crash of Lion Air Flight 610 only 13 minutes after takeoff from Jakarta airport, killing all 189 passengers and crew members.

Both crashes involved the same airplane, the Boeing 737 Max 8, and both followed wild up-and-down oscillations which the pilots were unable to control.

In the weeks since these disasters, there have been no calls within the media or political establishment for Boeing executives to be criminally prosecuted for what were evidently entirely avoidable tragedies that killed a total of 346 people. This speaks to the corrupt relationship between the US government and the aerospace giant -- the biggest US exporter and second-largest defense contractor -- as well as the company's critical role in the stock market surge and the ever-expanding fortunes of major Wall Street investors.

Black box recordings and simulations show that in the 60 seconds the pilots had to respond to the emergency, faulty software forced the Lion Air flight into a nose dive 24 separate times, as the pilots fought to regain control of the aircraft before plunging into the ocean at more than 500 miles per hour.

Evidence has mounted implicating in both crashes an automated anti-stall system, the Maneuvering Characteristics Augmentation System (MCAS), which was installed by Boeing in response to the new plane's tendency to pitch upward and go into a potentially fatal stall. On a whole number of fronts -- design, marketing, certification and pilot training -- information from the black boxes of the two planes points to a lack of concern for the safety of passengers and crew on the part of both Boeing and the Federal Aviation Administration, reaching the level of criminality.

The most recent revelations concerning the March 10 Ethiopian Airlines crash, based on preliminary findings from the official investigation, show that the pilots correctly followed the emergency procedures outlined by Boeing and disengaged the automated flight control system. Nevertheless, the nose of the plane continued to point downward. This strongly suggests a fundamental and perhaps fatal flaw in the design of the aircraft. Numerous questions have been raised about the design and certification process of the 737 Max 8 and MCAS, including:

Despite the presence on the plane of two angle-of-attack sensors, which signal a potential stall and trigger the automated downward pitch of the plane's nose, MCAS relied on data from only one of the sensors. This means the standard redundancy feature built into commercial jets to avert disasters resulting from a faulty sensor was lacking. Boeing's main rival to the 737 Max, the European-built Airbus A320neo, for example, uses data from three sensors to manage a system similar to MCAS.

Boeing Vice President Mike Sinnett admitted last November that cockpit warning lights alerting pilots of a faulty angle-of-attack sensor were only optional features on the Max 8. The MCAS system was absent from pilot manuals and flight simulators, including for the well-known flight training program X-Plane 11, which came out in 2018, one year after the first commercial flight of the 737 Max 8. Pilot training for the 737 Max 8, which has different hardware and software than earlier 737s, was a single one-hour computer course.

Pilot certification for a commercial plane typically requires hundreds of hours of training, both in simulators and in actual flights. Boeing itself is now mandating at least 21 days of training on new Max planes.

There is no innocent explanation for these obvious safety issues. They point to reckless and arguably criminally negligent behavior on the part of Boeing executives, who rushed the new plane into service and marketed it against the Airbus A320neo on the basis of its cost-saving features.

Threatened with a loss of market share and profits to its chief competitor, Boeing reduced costs by claiming that no significant training on the new Max 8 model, with the money and time that entails, was necessary for pilots with previous 737 experience.

Such imperatives of the capitalist market inevitably downgrade safety considerations. This is highlighted by a press release the day of the Ethiopian Airlines crash in which Boeing stated that "for the past several months and in aftermath of Lion Air Flight 610," the company "has been developing a flight control software enhancement for the 737 MAX."

In other words, both Boeing and the FAA were aware, possibly even before the October 2018 Lion Air crash and certainly afterward, that a system critical to the safe operation of the aircraft needed to be fixed, and still allowed the plane to continue flying. The wording also suggests that the plane shouldn't have been certified for flight in the first place.

This was aided and abetted by the Trump administration, which shielded Boeing as long as it could by not ordering the FAA to ground the plane immediately after the Ethiopian Airlines crash. There were no doubt immense concerns that such a move would cut into Boeing's multibillion-dollar profits and affect its stock price, which has nearly tripled since the election of Trump in November 2016, accounting for more than 30 percent of the increase in the Dow Jones index since then.

Trump himself received a call from Boeing CEO Dennis Muilenburg two days after the Ethiopian Airlines crash, during which Muilenburg reportedly continued to uphold the Max 8's safety. The FAA finally grounded the plane on March 13, after every other country in the world had done so.

The relationship between Trump and Muilenburg is only a symptom of the much broader collusion between the airline industry and the US government. Starting in 2005 and expanded during the Obama administration, the FAA introduced the Organization Designation Authorization (ODA) program, which allows the agency to appoint as "designees" airplane manufacturers' employees to certify their own company's aircraft on behalf of the government.

As a result, there was virtually no federal oversight on the development of the 737 Max 8. FAA Acting Administrator Dan Elwell told Congress, "As a result of regular meetings between the FAA and Boeing teams, the FAA determined in February 2012 that the [Max 8] project qualified [a] project eligible for management by the Boeing ODA." This extended to the MCAS system as well.

This is the logical end of the deregulation of the airline industry as a whole that was spearheaded by the Democratic Carter administration, which passed the Airline Deregulation Act in 1978. With the help of liberal icon Edward Kennedy, the legislation disbanded the Civil Aeronautics Board, which up to that point treated interstate airlines as a regulated public utility, setting routes, schedules and fares.

In a rational world, the ongoing Senate hearings and Department of Justice investigations would have already brought criminal charges against Muilenburg, Sinnett, Elwell and all those involved in overseeing the production, certification and sale of the 737 Max 8. This would include the executives at Boeing and all those who have helped to deregulate the industry at the expense of human lives.

Under capitalism, however, Boeing will get little more than a slap on the wrist. Experts estimate the company will likely be fined at most $800 million, less than one percent of the $90 billion Boeing expects in sales from the Max 8 in the coming years. As in Hurricane Katrina, the Wall Street crash in 2008, the Deepwater Horizon oil spill in 2010 and Hurricanes Harvey and Maria in 2017, the brunt of this disaster will be borne by the working class.

The Boeing 737 Max 8 disasters point to the inherent incompatibility between safe, comfortable and affordable air transport and private ownership of the airline industry, as well as the division of the world economy between rival nation-states. These catastrophes were driven by both the greed of Boeing executives and big investors and the intensifying trade conflict between the United States and Europe.

The technological advances that make it possible for travelers to move between any two points in the world in a single day must be freed from the constraints of giant corporations and the capitalist system as a whole. Major airlines and aerospace companies must be expropriated on an international scale and transformed into publicly owned and democratically controlled utilities, as part of the establishment of a planned economy based on social need, not private profit.

Bryan Dyne

[Apr 07, 2019] The rejection of the USSA version of neoliberalism with its rampant deregulation and corruption has already started

Apr 07, 2019 | www.zerohedge.com

To Hell In A Handbasket , 2 hours ago link

Too many hooray, we are the USSA, America is the best cheerleaders, have no idea of the gravity of the situation they will face, when the dollar and by extension the Petrodollar implodes.

The rejection of the USSA has already started, but the average Yank hasn't noticed. When Ethiopia, can reject a direct request from Uncle Scam and send the Black-Boxes to Europe, because the USSA cannot be trusted, says it all. It is the little things we miss, things that seem small and insignificant, that actually reveals a lot and the Ethiopian rejection was one.

The world has simply had enough of USSA diktats and subsidising them. The USSA is merely 4% of the worlds population, that consumes 24.8% of the worlds resources and this situation is totally untenable. A nation of exceptionalists. 5%? Yes. The rest? lol

[Apr 06, 2019] MAXimized danger Are 200+ new Boeing 737s plagued with glitch that led to crash in Indonesia -- RT World News

Apr 06, 2019 | www.rt.com

A technical issue that Boeing flagged in a safety warning after the deadly 737 MAX 8 crash in Indonesia could happen to any other aircraft, and it's "not unlikely" that the manufacturer knew about it, aviation experts told RT. Earlier this week, Boeing issued a safety update to pilots flying its newest 737 MAX airliner, warning of a possible fault in a sensor that could send the aircraft into a violent nosedive.

That sensor measures air flow over a plane's wings, but its failure can lead to an aerodynamic stall.

Boeing's new 737 MAX may 'abruptly dive' due to errors – media Boeing's new 737 MAX may 'abruptly dive' due to errors – media

International aviation experts told RT that a problem of this kind could doom aircraft of any type. The tragedy that happened to Lion Air's Boeing 737 MAX is not the first of its kind to involve a faulty

"Pitot tube" – a critical air-speed sensor that measures the flow velocity – explained Elmar Giemulla, a leading German expert in air and traffic law.

"This is not unusual in the way it happened before," he noted, mentioning incidents similar to the Lion Air crash. Back in 1996, a Boeing 757 operated by Turkey's Birgenair stalled and crashed in the Caribbean because of a blocked pitot tube. Likewise, erroneous air-speed indications, coupled with pilot errors, led to the crash of an Air France Airbus A330 over the Atlantic in 2009.

While the problem is not entirely new, it is unclear how Boeing had tackled it, according to Giemulla. "It is not very unlikely" that Boeing knew about the problem, he said, warning that "more than 200 planes are concerned and this could happen tomorrow again."

There is so much experience with [using Pitot tubes] that it surprises me very much that this could happen to a newly developed plane.

However, the expert doubted that there has been any cover-up of the issue, instead suggesting that "obviously gross negligence" had been involved.

A 737 MAX 8 servicing Lion Air flight 610 last week ploughed into the waters of the Java Sea shortly after take-off from Jakarta, killing all 189 people on board. Investigators say there is a possibility that inaccurate readings fed into the MAX's computer could have sent the plane into a sudden descent.

#FAA statement on the Emergency Airworthiness Directive (AD) for all @Boeing 737 MAX aircraft. The AD can be found at https://t.co/FoRI5vOeby . pic.twitter.com/JDGdPfos6g

-- The FAA (@FAANews) November 7, 2018

[Apr 06, 2019] The MC-21 will safely handle passengers in the 140 to 160 passengers and is a mid range plane that can go as far as 4,000 miles.

Apr 06, 2019 | peakoilbarrel.com

Hightrekker x Ignored says: 04/06/2019 at 9:27 am

If markets were truly free and there was real capitalism then airlines would be looking at the new and excellent Russian MC-21 which does what Boeing was trying to do with the 737 Max. The MC-21 will safely handle passengers in the 140 to 160 passengers and is a mid range plane that can go as far as 4,000 miles.

Instead – Boeing lobbies the corrupt U.S. AIPAC Congress to keep a Boeing monopoly of death traps like the 737 Max allowing some Airbus sales. They also blocked a nice Bombardier mid range jet from Canada.

I've flown in the Bombardier in South America– it is a fine aircraft.

[Apr 06, 2019] 'Blinded by its greed' Boeing sued by family of passenger in Ethiopian Air 737 crash

Notable quotes:
"... "Sadly, these two entirely preventable airline crashes demonstrate that the FAA is ill-equipped to oversee the aerospace industry and will downplay serious hazards and safety risks to the public rather than sound the alarm about safety concerns, problems, issues and hazards that pose substantial, probable, and/or foreseeable risks to human life," attorneys for Stumo said in the lawsuit. ..."
"... "Boeing, and the regulators that enabled it, must be held accountable for their reckless actions." The chairman of the Senate Commerce Committee said this week that whistleblowers have come forward to report that FAA safety inspectors, including those involved with approvals for the 737 Max, lacked proper training and certifications. ..."
"... But legal experts have said the second disaster could prove even more damaging for the company. That's because plaintiffs will argue the manufacturer was put on notice by the earlier tragedy that there was something dangerously wrong with its planes that should have been fixed. ..."
Apr 06, 2019 | smh.com.au

The parents of Samya Stumo, 24, alleged Boeing was "blinded by its greed" and rushed the 737 Max 8 to market with the "knowledge and tacit approval" of the FAA, while hiding defects in its automated flight-control system. The suit also cites a similar flaw in the Lion Air flight of a 737 Max 8 jet that crashed into the Java Sea on October 29 , killing 189.

Earlier on Thursday, the Ethiopian transport minister called on Boeing to review the 737 Max flight-control system before allowing planes to be used, after a preliminary government report showing the doomed jetliner couldn't recover from an uncommanded and persistent nose dive shortly after takeoff.

The complaint alleges that decisions by Boeing leaders contributed to the crash and "demonstrate Boeing's conscious disregard for the lives of others," including designing an aircraft with a flight-control system that is "susceptible to catastrophic failure" in the event of a single defective sensor made by Rosemount Aerospace.

'Ill-equipped'

"Sadly, these two entirely preventable airline crashes demonstrate that the FAA is ill-equipped to oversee the aerospace industry and will downplay serious hazards and safety risks to the public rather than sound the alarm about safety concerns, problems, issues and hazards that pose substantial, probable, and/or foreseeable risks to human life," attorneys for Stumo said in the lawsuit.

"Boeing, and the regulators that enabled it, must be held accountable for their reckless actions." The chairman of the Senate Commerce Committee said this week that whistleblowers have come forward to report that FAA safety inspectors, including those involved with approvals for the 737 Max, lacked proper training and certifications.

Senator Roger Wicker, a Mississippi Republican, said those claims prompted him to investigate potential connections between training and certification shortcomings and the FAA's evaluation of the airliner.

The Senate panel's probe is the latest in a string of investigations by US officials and lawmakers into how the FAA cleared the 737 Max as safe to fly. The Transportation Department's inspector general is reviewing the FAA's process for approving the airworthiness of new jets and aiding a Justice Department criminal probe.

Criminal probe

A grand jury convened by US prosecutors last month subpoenaed a former Boeing engineer demanding he provide testimony and documents related to the 737 Max.

FAA Acting Administrator Dan Elwell has said the agency "welcomes external review of our systems, processes and recommendations." Boeing faces the prospect of substantial payouts to the families of passengers if it's found responsible for both the Ethiopia Air and Lion Air crashes.

But legal experts have said the second disaster could prove even more damaging for the company. That's because plaintiffs will argue the manufacturer was put on notice by the earlier tragedy that there was something dangerously wrong with its planes that should have been fixed.

[Apr 06, 2019] Ethiopian Airlines Abandons Boeing Orders Due To Stigma From 737 Max Crash

Apr 06, 2019 | www.zerohedge.com

Posa , 2 hours ago link

The company failed itself by replacing engineers with Wall Street accountants.... typical US corporation destroyed from withing by asset strippers, chiselers, deregulators... the complete gamut of "free enterprise" vampires leaving the US economy in shambles.

Shockwave , 5 minutes ago link

Agree with that, theres been a serious drive to focus on bean-counting and bringing in "mainstream" business leadership from companies like GE/Toyota/3m (think outsourcing/stock buybacks/automate/layoff type)

Its one of the few companies that has a real hard time getting rid of skilled labor, because building an aircraft is an incredibly huge undertaking, with lots of hand fitting and a wide array of technical skills, so getting rid of the labor hasnt worked to this point.

But they're trying hard to get inline with the typical "modern" business model, and it hasnt been great for morale.

[Apr 06, 2019] When Will The Boeing 737 MAX Fly Again - Simple Flying

Apr 06, 2019 | simpleflying.com

Boeing has been working on a fix to the anti-stall software for some time now. However, Reuters today reported that regulators including EASA knew that the MAX's trim control was confusing.

[Apr 06, 2019] Boeing Will Face A Skeptical Flying Public When It Fixes the 737 Max Jets OvationMR

Apr 06, 2019 | www.ovationmr.com
How much do you trust each of the following to determine whether the fixes to the Boeing 737 Max make it safe to fly? The pilot's union The National Transportation Safety Board (NTSB) The Federal Aviation Administration (FAA) Airlines (e.g. American, United, Southwest) The Trump Administration Boeing Congress
Completely trust 33% 32% 30% 29% 25% 22% 21%
Mostly trust 34% 33% 30% 36% 22% 30% 23%
Somewhat trust 22% 26% 29% 26% 16% 28% 28%
Do not trust 11% 9% 10% 9% 37% 20% 28%

[Apr 06, 2019] Would you fly Boeing 737 Max 8 ever again - Quora

Notable quotes:
"... No. Possibly Boeing & the FAA will solve the immediate issue, but they have destroyed Trust. ..."
"... It has emerged on the 737MAX that larger LEAP-1B engines were unsuited to the airframe and there is no way now to alter the airframe to balance the aircraft. ..."
"... Boeing failed to provide training or training material to pilots or even advise them the existence of MCAS. There was a complex two step process required of pilots in ET302 and JT610 crashes and their QRH handbook did not explain this: ..."
Apr 06, 2019 | www.quora.com

Would you fly Boeing 737 Max 8 ever again? Update Cancel

Simon Gunson , PPL aviation enthusiast Answered Mar 25, 2019 · Author has 141 answers and 981.7k answer views

No. Possibly Boeing & the FAA will solve the immediate issue, but they have destroyed Trust.

Other brands of aircraft like Airbus with AF447 established trust after their A330 aircraft plunged into the Atlantic in a mysterious accident.

With Airbus everyone saw transparency & integrity in how their accidents were investigated. How Boeing & FAA approached accident investigation destroyed public Trust.

By direct contrast in the mysterious disappearance of MH370, Boeing contributed nothing to the search effort and tried to blame the pilot or hijackers.

With the 737MAX in Lion Air and Ethiopian crashes Boeing again tried to blame pilots, poor training, poor maintenance and then when mechanical defect was proven, Boeing tried to downplay how serious the issue was and gave false assurances after Lion Air that the plane was still safe. ET302 proved otherwise.

It is no longer possible to trust the aircraft's certification. It is no longer possible to trust that safety was the overriding principle in design of the Boeing 737 MAX nor several other Boeing designs for that matter.

The Public have yet to realize that the Boeing 777 is an all electric design where in certain scenarios like electrical fire in the avionics bay, an MEC override vent opens allowing cabin air pressure to push out smoke. This silences the cabin depressurization alarms.

As an electrical failure worsens, in that scenario another system called ELMS turns off electrical power to the Air Cycle Machine which pumps pressurized air into the cabin. The result of ELMS cutting power means the override vent fails to close again and no new pressurized air maintains pressure in the cabin. Pilots get no warning.

An incident in 2007 is cited as AD 2007–07–05 by the FAA in which part but not all of this scenario played out in a B777 at altitude.

MH370 may have been the incident in which the full scenario played out, but of course Boeing is not keen for MH370 to be found and unlike Airbus which funded the search for AF447, Boeing contributed nothing to finding MH370.

It has emerged on the 737MAX that larger LEAP-1B engines were unsuited to the airframe and there is no way now to alter the airframe to balance the aircraft.

It also emerged that the choice to fit engines to this airframe have origins in a commercial decision to please Southwest Airlines and cancel the Boeing 757.

Boeing failed to provide training or training material to pilots or even advise them the existence of MCAS. There was a complex two step process required of pilots in ET302 and JT610 crashes and their QRH handbook did not explain this:

Boeing pilots had less than 40 SECONDS to over-ride automated system

The MAX is an aerodynamically unbalanced aircraft vulnerable to any sort of disruption, ranging from electrical failure, out of phase generator, faulty AOA sensor, faulty PCU failure alert, digital encoding error in the DFDAU.

Jason Eaton Former Service Manager Studied at University of Life Lives in Sydney, Australia 564k answer views 50.7k this month Answered Mar 24, 2019 ·

No I wouldn't. I'm not a pilot or an aerospace technician but I am a mechanical engineer, so I know a little bit about physics and stuff.

The 737–8 is carrying engines it was never designed for, that cause it to become inherently unstable. So unstable in fact, that it can't be controlled by humans and instead relies on computer aided control to maintain the correct attitude, particularly during ascent and descent.

The MCAS system is, effectively, a band aid to fix a problem brought about by poor design philosophy. Boeing should have designed a new airframe that complements the new engines, instead of ruining a perfectly good aircraft by bolting on power units it's not designed to carry, and then trying to solve the resulting instability with software. And if that isn't bad enough, the system relies on data from just the one sensor which if it doesn't agree with, it'll force the aircraft nose down regardless of the pilots' better judgement.

That might be ok for the Eurofighter Typhoon but it's definitely not ok for fare paying passengers on a commercial jetliner.

So, no. I won't be flying on a 737–8 until it's been redesigned to fly safely. You know, like a properly designed aeroplane should. 4.8k Views · View 36 Upvoters

[Apr 06, 2019] Boeing's effort to get the 737 Max approved to fly again, explained - 3420634 Promediapost

Notable quotes:
"... Under the circumstances, Boeing's best option was to just take the hit for a few years and accept that it was going to have to start selling 737s at a discount price while it designed a whole new airplane. That would, of course, be time-consuming and expensive, and during the interim, it would probably lose a bunch of narrow-body sales to Airbus. ..."
"... As late as February 2011, Boeing chair and CEO James McNerney was sticking to the plan to design a totally new aircraft. ..."
"... Committing to putting a new engine that didn't fit on the plane was the corporate version of the Fyre Festival's "let's just do it and be legends, man" moment, and it unsurprisingly wound up leading to a slew of engineering and regulatory problems. ..."
"... The problem is that an airplane is a big, complicated network of interconnected parts. To get the engine under the 737 wing, engineers had to mount the engine nacelle higher and more forward on the plane. But moving the engine nacelle (and a related change to the nose of the plane) changed the aerodynamics of the plane, such that the plane did not handle properly at a high angle of attack ..."
"... But note that the underlying problem isn't really software; it's with the effort to use software to get around a whole host of other problems. ..."
"... Looking back, Boeing probably wishes it had just stuck with the "build a new plane" plan and toughed out a few years of rough sales, rather than ending up in the current situation. Right now the company is, in effect, trying to patch things up piecemeal -- a software update here, a new warning light there, etc. -- in hopes of persuading global regulatory agencies to let its planes fly again. ..."
"... That said, on March 27, FAA officials faced the Senate Commerce Committee's Subcommittee on Aviation and Space at a hearing called by subcommittee Chair Ted Cruz (R-TX). Regulators committed at the hearing to revamp the way they certify new planes , in light of the flaws that were revealed in the previous certification process. ..."
"... a central element of this story is the credibility of the FAA's process ..."
Apr 06, 2019 | www.promediapost.com

Claiming responsibility was part of an attempt to get the planes approved to fly again. Boeing was trying to say that it now understands why the planes crashes -- flawed software -- and has a plan in place to replace it with new software that will eliminate the problem and persuade regulators to get the planes off the ground. But then Friday morning, the company announced that it had found a second, unrelated software flaw that it also needs to fix and will somewhat delay the process of getting the planes cleared to fly again.

All of which, of course, raises the question of why such flawed systems were allowed to fly in the first place.

And that story begins nine years ago when Boeing was faced with a major threat to its bottom line, spurring the airline to rush a series of kludges through the certification process -- with an underresourced Federal Aviation Administration (FAA) seemingly all too eager to help an American company threatened by a foreign competitor, rather than to ask tough questions about the project.

The specifics of what happened in the regulatory system are still emerging (and despite executives' assurances, we don't even really know what happened on the flights yet). But the big picture is coming into view: A major employer faced a major financial threat, and short-term politics and greed won out over the integrity of the regulatory system. It's a scandal. The A320neo was trouble for Boeing

Jet fuel is a major cost for airlines. With labor costs largely driven by collective bargaining agreements and regulations that require minimum ratios of flight attendants per passenger, fuel is the cost center airlines have the most capacity to do something about. Consequently, improving fuel efficiency has emerged as one of the major bases of competition between airline manufacturers.

If you roll back to 2010, it began to look like Boeing had a real problem in this regard.

Airbus was coming out with an updated version of the A320 family that it called the A320neo , with "neo" meaning "new engine option." The new engines were going to be more fuel-efficient, with a larger diameter than previous A320 engines, that could nonetheless be mounted on what was basically the same airframe. This was a nontrivial engineering undertaking both in designing the new engines and in figuring out how to make them work with the old airframe, but even though it cost a bunch of money, it basically worked. And it raised the question of whether Boeing would respond.

Initial word was that it wouldn't. As CBS Moneywatch's Brett Snyder wrote in December 2010 , the basic problem was that you couldn't slap the new generation of more efficient, larger-diameter engines onto the 737:

One of the issues for Boeing is that it takes more work to put new engines on the 737 than on the A320. The 737 is lower to the ground than the A320, and the new engines have a larger diameter . So while both manufacturers would have to do work, the Boeing guys would have more work to do to jack the airplane up. That will cost more while reducing commonality with the current fleet. As we know from last week, reduced commonality means higher costs for the airlines as well.

Under the circumstances, Boeing's best option was to just take the hit for a few years and accept that it was going to have to start selling 737s at a discount price while it designed a whole new airplane. That would, of course, be time-consuming and expensive, and during the interim, it would probably lose a bunch of narrow-body sales to Airbus.

The original version of the 737 first flew in 1967, and a decades-old decision about how much height to leave between the wing and the runway left them boxed out of 21st-century engine technology -- and there was simply nothing to be done about it.

Unless there was.

Boeing decided to put on the too-big engines anyway

As late as February 2011, Boeing chair and CEO James McNerney was sticking to the plan to design a totally new aircraft.

"We're not done evaluating this whole situation yet," he said on an analyst call , "but our current bias is to move to a newer airplane, an all-new airplane, at the end of the decade, beginning of the next decade. It's our judgment that our customers will wait for us."

But in August 2011, Boeing announced that it had lined up orders for 496 re-engined Boeing 737 aircraft from five airlines .

It's not entirely clear what happened, but, reading between the lines, it seems that in talking to its customers Boeing reached the conclusion that airlines would not wait for them. Some critical mass of carriers (American Airlines seems to have been particularly influential) was credible enough in its threat to switch to Airbus equipment that Boeing decided it needed to offer 737 buyers a Boeing solution sooner rather than later.

Committing to putting a new engine that didn't fit on the plane was the corporate version of the Fyre Festival's "let's just do it and be legends, man" moment, and it unsurprisingly wound up leading to a slew of engineering and regulatory problems.

New engines on an old plane

As the industry trade publication Leeham News and Analysis explained earlier in March, Boeing engineers had been working on the concept that became the 737 Max even back when the company's plan was still not to build it. In a March 2011 interview with Aircraft Technology, Mike Bair, then the head of 737 product development, said that reengineering was possible. "There's been fairly extensive engineering work on it," he said. "We figured out a way to get a big enough engine under the wing."

The problem is that an airplane is a big, complicated network of interconnected parts. To get the engine under the 737 wing, engineers had to mount the engine nacelle higher and more forward on the plane. But moving the engine nacelle (and a related change to the nose of the plane) changed the aerodynamics of the plane, such that the plane did not handle properly at a high angle of attack . That, in turn, led to the creation of the Maneuvering Characteristics Augmentation System (MCAS). It fixed the angle-of-attack problem in most situations, but it created new problems in other situations when it made it difficult for pilots to directly control the plane without being overridden by the MCAS.

On Wednesday, Boeing rolled out a software patch that it says corrects the problem, and it hopes to persuade the FAA to agree.

But note that the underlying problem isn't really software; it's with the effort to use software to get around a whole host of other problems.

1of x: BEST analysis of what really is happening on the #Boeing737Max issue from my brother in law @davekammeyer , who's a pilot, software engineer & deep thinker. Bottom line don't blame software that's the band aid for many other engineering and economic forces in effect.

-- Trevor Sumner (@trevorsumner) March 16, 2019

https://platform.twitter.com/widgets.js

Recall, after all, that the whole point of the 737 Max project was to be able to say that the new plane was the same as the old plane. From an engineering perspective, the preferred solution was to actually build a new plane. But for business reasons, Boeing didn't want a "new plane" that would require a lengthy certification process and extensive (and expensive) new pilot training for its customers. The demand was for a plane that was simultaneously new and not new.

But because the new engines wouldn't fit under the old wings, the new plane wound up having different aerodynamic properties than the old plane. And because the aerodynamics were different, the flight control systems were also different. But treating the whole thing as a fundamentally different plane would have undermined the whole point. So the FAA and Boeing agreed to sort of fudge it.

The new planes are pretty different

As far as we can tell, the 737 Max is a perfectly airworthy plane in the sense that error-free piloting allows it to be operated safely.

But pilots of planes that didn't crash kept noticing the same basic pattern of behavior that is suspected to have been behind the two crashes, according to a Dallas Morning News review of voluntary aircraft incident reports to a NASA database:

The disclosures found by the News reference problems with an autopilot system, and they all occurred during the ascent after takeoff. Many mentioned the plane suddenly nosing down. While records show these flights occurred in October and November, the airlines the pilots were flying for is redacted from the database.

These pilots all safely disabled the MCAS and kept their planes in the air. But one of the pilots reported to the database that it was "unconscionable that a manufacturer, the FAA, and the airlines would have pilots flying an airplane without adequately training, or even providing available resources and sufficient documentation to understand the highly complex systems that differentiate this aircraft from prior models."

The training piece is important because a key selling feature of the 737 Max was the idea that since it wasn't really a new plane, pilots didn't really need to be retrained for the new equipment. As the New York Times reported, "For many new airplane models, pilots train for hours on giant, multimillion-dollar machines, on-the-ground versions of cockpits that mimic the flying experience and teach them new features" while the experienced 737 Max pilots were allowed light refresher courses that you could do on an iPad.

That let Boeing get the planes into customers' hands quickly and cheaply, but evidently at the cost of increasing the possibility of pilots not really knowing how to handle the planes, with dire consequences for everyone involved.

The FAA put a lot of faith in Boeing

In a blockbuster March 17 report for the Seattle Times, the newspaper's aerospace reporter Dominic Gates details the extent to which the FAA delegated crucial evaluations of the 737's safety to Boeing itself . The delegation, Gates explains, is in part a story of a years-long process during which the FAA, "citing lack of funding and resources, has over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes."

But there are indications of failures that were specific to the 737 Max timeline. In particular, Gates reports that "as certification proceeded, managers prodded them to speed the process" and that "when time was too short for FAA technical staff to complete a review, sometimes managers either signed off on the documents themselves or delegated their review back to Boeing."

Most of all, decisions about what could and could not be delegated were being made by managers concerned about the timeline, rather than by the agency's technical experts.

It's not entirely clear at this point why the FAA was so determined to get the 737 cleared quickly (there will be more investigations), but if you recall the political circumstances of this period in Barack Obama's presidency, you can quickly get a general sense of the issue.

Boeing is not just a big company with a significant lobbying presence in Washington; it's a major manufacturing company with a strong global export presence and a source of many good-paying union jobs. In short, it was exactly the kind of company the powers that be were eager to promote -- with the Obama White House, for example, proudly going to bat for the Export-Import Bank as a key way to sustain America's aerospace industry.

A story about overweening regulators delaying an iconic American company's product launch and costing good jobs compared to the European competition would have looked very bad. And the fact that the whole purpose of the plane was to be more fuel-efficient only made getting it off the ground a bigger priority. But the incentives really were reasonably aligned, and Boeing has only caused problems for itself by cutting corners.

Boeing is now in a bad situation

One emblem of the whole situation is that as the 737 Max engineering team piled kludge on top of kludge, they came up with a cockpit warning light that would alert the pilots if the plane's two angle-of-attack sensors disagreed.

But then, as Jon Ostrower reported for the Air Current , Boeing's team decided to make the warning light an optional add-on, like how car companies will upcharge you for a moon roof.

The light cost $80,000 extra per plane and neither Lion Air nor Ethiopian chose to buy it, perhaps figuring that Boeing would not sell a plane (nor would the FAA allow it to) that was not basically safe to fly. In the wake of the crashes, Boeing has decided to revisit this decision and make the light standard on all aircraft.

Now, to be clear, Boeing has lost about $40 billion in stock market valuation since the crash, so it's not like cheating out on the warning light turned out to have been a brilliant business decision or anything.

This, fundamentally, is one reason the FAA has become comfortable working so closely with Boeing on safety regulations: The nature of the airline industry is such that there's no real money to be made selling airplanes that have a poor safety track record. One could even imagine sketching out a utopian libertarian argument to the effect that there's no real need for a government role in certifying new airplanes at all, precisely because there's no reason to think it's profitable to make unsafe ones.

The real world, of course, is quite a bit different from that, and different individuals and institutions face particular pressures that can lead them to take actions that don't collectively make sense. Looking back, Boeing probably wishes it had just stuck with the "build a new plane" plan and toughed out a few years of rough sales, rather than ending up in the current situation. Right now the company is, in effect, trying to patch things up piecemeal -- a software update here, a new warning light there, etc. -- in hopes of persuading global regulatory agencies to let its planes fly again.

But even once that's done, Boeing faces the task of convincing airlines to actually buy its planes. An informative David Ljunggren article for Reuters reminds us that a somewhat comparable situation arose in 1965 when three then-new Boeing 727 jetliners crashed.

There wasn't really anything unsound about the 727 planes, but many pilots didn't fully understand how to operate the new flaps -- arguably a parallel to the MCAS situation with the 737 Max -- which spurred some additional training and changes to the operation manual. Passengers avoided the planes for months, but eventually came back as there were no more crashes, and the 727 went on to fly safely for decades. Boeing hopes to have a similar happy ending to this saga, but so far it seems to be a long way from that point. And the immediate future likely involves more tough questions.

A political scandal on slow burn

The 737 Max was briefly a topic of political controversy in the United States as foreign regulators grounded the planes, but President Donald Trump -- after speaking personally to Boeing's CEO -- declined to follow. Many members of Congress (from both parties) called on him to reconsider, which he rather quickly did, pushing the whole topic off Washington's front burner.

But Trump is generally friendly to Boeing (he even has a former Boeing executive, Patrick Shanahan, serving as acting defense secretary, despite an ongoing ethics inquiry into charges that Shanahan unfairly favors his former employer), and Republicans are generally averse to harsh regulatory crackdowns. The most important decisions in the mix appear to have been made back during the Obama administration, so it's also difficult for Democrats to go after this issue. Meanwhile, Washington has been embroiled in wrangling over special counsel Robert Mueller's investigation, and a new health care battlefield opened up as well.

That said, on March 27, FAA officials faced the Senate Commerce Committee's Subcommittee on Aviation and Space at a hearing called by subcommittee Chair Ted Cruz (R-TX). Regulators committed at the hearing to revamp the way they certify new planes , in light of the flaws that were revealed in the previous certification process.

The questions at stake, however, are now much bigger than one subcommittee. Billions of dollars are on the line for Boeing, the airlines that fly 737s, and the workers who build the planes. And since a central element of this story is the credibility of the FAA's process -- in the eyes of the American people and of foreign regulatory agencies -- it almost certainly won't get sorted out without more involvement from the actual decision-makers in the US government.

This article was originally published by Vox. Read the original article here .

[Apr 06, 2019] Ralph Nader Boeing 737 Max 'should never fly again' - Chicago Tribune

Apr 06, 2019 | www.chicagotribune.com

Ralph Nader, the noted consumer rights advocate, called for a recall and consumer boycott of the Boeing jet grounded by regulators across the globe after two deadly crashes.

His niece, 24-year-old Samya Stumo, was among the 157 victims of an Ethiopian Airlines flight crash last month, less than six months after a flight on the same aircraft, the Boeing 737 Max 8, crashed in Indonesia.

"Those planes should never fly again," said Nader, speaking by phone at a news conference after Stumo's family filed a lawsuit against Chicago-based Boeing, one of its suppliers and Ethiopian Airlines. The family also filed a claim against the Federal Aviation Administration .

Stumo's family's lawsuit is one of several filed by relatives of passengers killed in the Ethiopian Airlines and Lion Air crashes. All those families have "such huge holes" because of the aircraft's problems, said Nadia Milleron, Stumo's mother, who said she had met others who lost loved ones in Ethiopia.

"As someone who's lost the dearest person in my life, I want her death not to be in vain. I don't want anybody else to die," she said at the news conference in Chicago.

"Those in charge of creating and selling this plane did not treat Samya as they would their own daughters," said Milleron, who was visibly emotional as she spoke about her daughter.

"This could have been prevented, and that's what makes me cry," she said.

Nader's book "Unsafe at Any Speed" helped bring about a series of auto safety laws , including the creation the federal agency that became the National Highway Traffic Safety Administration, which oversees the auto industry. He later turned his attention to various consumer protection efforts related to food, drug and workplace safety and clean air and water.

On Thursday, he took aim at Boeing, blaming the crashes on design problems that he argued were the result of the company's focus on getting the plane on the market quickly to compete with its rival manufacturer Airbus.

He also criticized the relationship between Boeing and the federal agency tasked with overseeing aviation industry safety.

"If we don't end the cozy relationship between the patsy FAA and the Boeing company, 5,000 of these fatally flawed planes will be in the air all over the world with millions of passengers," Nader said.

Boeing said Thursday it is reviewing a preliminary report on last month's crash from Ethiopian authorities that said the same anti-stall system that came under scrutiny in the Lion Air crash was activated on the Ethiopian Airlines flight.

Most accidents are the result of a chain of events, but when that system is activated in error, it adds to "what is already a high-workload environment," Boeing CEO Dennis Muilenburg said in a video released by the company on Thursday.

"It's our responsibility to eliminate this risk. We own it, and we know how to do it," he said.

Boeing said it is still working with the FAA and regulatory agencies to develop and certify a software update designed to keep the system from being activated unintentionally, along with additional training for pilots.

Nader said he doesn't think the software fix is enough to make the plane safe since it can't predict all potential problems with a plane that is "prone to stall."

While Boeing has worked to show it is taking steps to address safety concerns, the FAA is planning changes to its oversight of airplane development, which delegates some authority for certifying new aircraft to their manufacturers, the Associated Press reported .

[email protected]

Twitter @laurenzumbach

Copyright © 2019, Chicago Tribune

[Apr 06, 2019] Ethiopian Airline Crash - Boeing Advice To 737 MAX Pilots Was Flawed

Notable quotes:
"... [We] can now reveal how it's possible the aircraft can crash despite using the Cut-Out switches. To verify, we ran it all in a simulator together with MentourPilot Youtube channel over the last days. ..."
"... Nowhere is it described the trim could be impossible to move if the Cut-Out switches were cut at the slightest miss-trim at the speeds flown. And there is no warning on when to move the Cut-Out switches, the checklist says "Cut, then trim manually." This is not the whole truth . ..."
"... The high speed of 340kts indicated airspeed and the trim at 2.3 units causes the Stabilator manual trim to jam, one can't move it by hand. The crew is busy trying to hand trim the next two minutes but no trim change is achieved. ..."
"... It's easy to say "Why didn't they trim then?". Because they are going down at 20 degrees nose down (which is a lot, a normal landing approach is 3°) and at 400kts. Then you just pull for all you have. And the aircraft is not reacting to the largest Control Column displacement since takeoff. This makes them pull even harder, the aircraft is unresponsive and they are fighting for theirs and all the passenger lives. ..."
"... Moreover their description of the MCAS was incomplete . It is only now known that the MCAS trims the stabilizer at a speeed of 0.27 units (degrees) per second while the pilots electric trim moves the stabilizer at only 0.18 units per second: ..."
"... If MCAS keeps tripping, and if pilots do not shut off electric trim entirely, the result is what Tajer describes as a two-steps-back, one-step-forward scenario, with MCAS maintaining an edge. ..."
"... "The MCAS knows but one speed, which is 0.27, which is the most-aggressive speed," Tajer says. "If you look at the balance sheet on it, MCAS is winning, and you are losing." ..."
"... That additional problem pertains to software affecting flaps and other flight-control hardware and is therefore classified as critical to flight safety, said two officials with knowledge of the investigation. ..."
"... This is not about sensor failure. It is about the profit of cheap parts and greed. The insiders at Boeing tipped off the Big Boys that they needed more than the gizmos installed on export versions if they were going to survive. ..."
"... Engineering Manufacturing company with a sales division works alright. But a Sales Company with a manufacturing subsidiary does not, as we see. Boeing is typical for end-stage Imperial Corporations - all show, no go, and get the money quick... ..."
"... A mistake is one or two errors. This was one horrible string of deliberate corner cutting, about 7-8 totally disastrous decisions by the management, that could have only led to deaths of people uninformed enough to purchase the travel risk from this plane supplier. ..."
Apr 06, 2019 | www.moonofalabama.org
< to include the new system into training material for the pilots which Boeing, for commercial reasons, did not do.>

After the Lion Air crash the Federal Aviation Administration issued an Airworthiness Directive 2018-23-51 which adviced 737 MAX pilots how to handle an MCAS failure.


full picture

The FAA told 737 MAX pilots to use the Stabilizer Trim Cutoff switches to interupt the power supply for the system's actuator, a motor driven jackscrew in the back of the airplane. The pilots should then use the manual trim wheels in the cockpit, which move the jackscrew and stabilizer via steel cables, to righten the aircraft.

On March 10 a 737 MAX flown by Ethiopian Airline crashed shortly after take off. 157 people died. Radar data and debris found showed that the cause was likely a similar MCAS failure as had happened on the Indonesian Lion Air flight.

All 737 MAX planes were grounded with the U.S. being the last country to order it.

Some U.S. pilots, as well as some commentators here, publicly blamed the darker skin pilots for not using the simple procedure the FAA had put out: "Why didn't they just flip the switches? Stupid undertrained third-world dudes."

It now turns out that the well trained and experienced pilots on the Ethiopian Airline flight did exactly what Boeing and the FAA told them to do. From the Ethiopean Airlines press release (pdf):

The preliminary report clearly showed that the Ethiopian Airlines pilots who were commanding Flight ET 302/10 March have followed the Boeing recommended and FAA approved emergency procedures to handle the most difficult emergency situation created on the airplane. Despite their hard work and full compliance with the emergency procedures, it was very unfortunate that they could not recover the airplane from the persistence of nose diving.

The procedure Boeing and the FAA advised to use was insufficient to bring the aircraft back under control. It was in fact impossible to recover the plane. The possibility of this to happen was discussed in pilot fora and on specialized websites for some time.

The MCAS system moves the front of the stablizer up to turn the nose of the airplane down. The plane then decends very fast. The aerodynamic forces (the "wind") pushing against the stabilizer gets so strong that a manual counter-trim becomes impossible.

Avionics engineer Peter Lemme details the physics involved in this.


via Seattle Times - full picture

Lemme concludes:

With the 737MAX cutout switches, MCAS runaway is stopped by throwing both switches, losing electric trim altogether. In this case, the flight crew must rely on manual trim via turning the trim wheel/crank. As discussed above, the manual crank can bind up , making flying much more difficult.

Bjorn Fehrm, a senior engineeer and pilot now writing at Leeham News , came to a similar conclusion :

[We] can now reveal how it's possible the aircraft can crash despite using the Cut-Out switches. To verify, we ran it all in a simulator together with MentourPilot Youtube channel over the last days.
...
At a miss-trimmed Stabilator, you either have to re-engage Electric trim or off-load the Stabilator jackscrew by stick forward, creating a nose-down bunt maneuver, followed by trim.

Stick forward to trim was not an option for ET302, they were at 1,000ft above ground. According to The Wall Street Journal, the ET302 crew re-engaged electrical trim to save the situation, to get the nose up. It was their only chance. But too late. The aggressive MCAS kicked in and worsened the situation before they could counter it.

On the FAA's Airworthiness Directive Fehrm writes:

Nowhere is it described the trim could be impossible to move if the Cut-Out switches were cut at the slightest miss-trim at the speeds flown. And there is no warning on when to move the Cut-Out switches, the checklist says "Cut, then trim manually." This is not the whole truth .

An detailed analysis of the flight recorder data as documented in the preliminary crash report confirms the conclusions :

The high speed of 340kts indicated airspeed and the trim at 2.3 units causes the Stabilator manual trim to jam, one can't move it by hand. The crew is busy trying to hand trim the next two minutes but no trim change is achieved.

via Leeham News - bigger

The pilots then do the only thing possible. They reengage the electric stabilizer trim to righten the aircraft.

But the aggressive MCAS, trimming with a speed 50% higher than the pilot and for a full nine seconds, kicks in at 8 with a force they didn't expect. Speed is now at 375kts and MCAS was never designed to trim at these Speed/Altitude combinations. Dynamic pressures, which governs how the aircraft reacts to control surface movements, is now almost double it was when last MCAS trimmed (Dynamic pressure increases with Speed squared).

The Pilots are thrown off their seats, hitting the cockpit roof. Look at the Pitch Attitude Disp trace and the Accel Vert trace. These are on the way to Zero G and we can see how PF loses stick pull in the process (Ctrl Column Pos L). He can barely hold on to the Yoke, let alone pull or trim against.

His reduced pull increases the pitch down further, which increases the speed even more. At 05.45.30 the Pilots have hit the seats again (Accel Vert trace and Ctrl Columns force trace) and can start pulling in a desperate last move. But it's too late. Despite them creating the largest Control Column movement ever, pitch down attitude is only marginally affected.

The pilots and their passengers lose the fight:

It's easy to say "Why didn't they trim then?". Because they are going down at 20 degrees nose down (which is a lot, a normal landing approach is 3°) and at 400kts. Then you just pull for all you have. And the aircraft is not reacting to the largest Control Column displacement since takeoff. This makes them pull even harder, the aircraft is unresponsive and they are fighting for theirs and all the passenger lives.

A diligent safety anlysis would have predicted this outcome. Neither Boeing nor the FAA seems to have done such after the first 737 MAX crashed. They provided an Airworthiness Directive with procedures that were insufficiant to correct the system induce misbehavior.

Moreover their description of the MCAS was incomplete . It is only now known that the MCAS trims the stabilizer at a speeed of 0.27 units (degrees) per second while the pilots electric trim moves the stabilizer at only 0.18 units per second:

"It's like a Tasmanian devil in there," says Dennis Tajer, a 737 pilot and communications chair for Allied Pilots Association, which represents American Airlines' pilots.
...
If MCAS keeps tripping, and if pilots do not shut off electric trim entirely, the result is what Tajer describes as a two-steps-back, one-step-forward scenario, with MCAS maintaining an edge.

"The MCAS knows but one speed, which is 0.27, which is the most-aggressive speed," Tajer says. "If you look at the balance sheet on it, MCAS is winning, and you are losing."

The insufficient advice to pilots given after the first crash only adds to the long list of criminal mistakes Boeing made and which the FAA allowed to pass.

Today the Washington Post reports of another software defect which the FAA demands to have fixed:

Boeing confirmed to The Washington Post that it had found a second software problem that the Federal Aviation Administration has ordered fixed -- separate from the anti-stall system that is under investigation in the two crashes and is involved in the worldwide grounding of the aircraft.

That additional problem pertains to software affecting flaps and other flight-control hardware and is therefore classified as critical to flight safety, said two officials with knowledge of the investigation.

The criminals at Boeing again offer no explanation and play down the issue:

In a statement, Boeing called the additional problem "relatively minor" but did not offer details of how it affects the plane's flight-control system. "We are taking steps to thoroughly address this relatively minor issue and already have the solution in work to do that," it said.

What other 'features' were secretly implemented into the 737 MAX without sufficiant analysis about their side effects and consequences?

---
Previous Moon of Alabama posts on the 737 MAX crashes:

Posted by b on April 5, 2019 at 05:53 AM | Permalink

Jen , Apr 5, 2019 6:27:26 AM | link

"... The Pilots are thrown off their seats, hitting the cockpit roof ..."

I should think that at that point in the narrative, one of the flight crew must either have fallen unconscious or ended up too injured to be able to do anything, let alone fight a rogue MCAS system.

I presume the pilots would still have their seatbelts on, unless the forces generated by the constant battle to stabilise the aircraft while fighting the MCAS system were too strong and broke the seatbelts or dislocated the seats themselves.

As for other "features" that were secretly placed into the 737 MAX jets that Boeing "neglected" to tell FAA or its clients about, what about the "features" that should have been made compulsory but which Boeing decided were optional at the clients' own expense?


jared , Apr 5, 2019 6:42:51 AM | link

I imagine Boing would be worried if they were not prime military contractor. They will be protected.
Tom Welsh , Apr 5, 2019 6:57:06 AM | link
As a layman, my main question at this stage is: "Who is going to prison and for how long?" Everyone involved in the decision to sell those flying death traps should be tried for manslaughter at the least. The guilty ones should serve prison sentences appropriate for criminals who caused hundreds of people to die for their own profit.

How long a sentence does a poor man get, who kills a well-off tourist for the money in his wallet - or even for his shoes?

Now multiply that by several hundred - adding on, of course, extra years to allow for the Boeing executives' privileged lives, top-flight education, and (above all) the generous sufficiency they already enjoy.

In China such people are routinely shot, which seems the right course. In the USA, while poor people are executed all the time, apparently the wealthy and privileged get a free pass.

b , Apr 5, 2019 6:59:17 AM | link
@Jen - I don't read that "hitting the cokpit roof" as literal description.

@all - I have added a new Washington Post report of an additional software defect at the end of the above piece.

jared , Apr 5, 2019 7:01:57 AM | link
Is a direct result of Boing monopoly - they are division of the military. And why did european agency roll-over? Will this warrant cancellation of orders?
Tom Welsh , Apr 5, 2019 7:09:05 AM | link
Oh, and the people at the FAA need to be tried in a criminal court too. Not only were they criminally negligent - they did it while being generously remunerated by the taxpayer. Perhaps a few years as galley slaves would be appropriate punishment - to teach them not to be lazy.
Ger , Apr 5, 2019 7:34:32 AM | link
This cheap seat Boeing export death trap was doomed from the beginning. Once these planes nose 'up' it is heading to a crash. Any engineer with a basic understanding of aero dynamic/physics knows this. This is not about sensor failure. It is about the profit of cheap parts and greed. The insiders at Boeing tipped off the Big Boys that they needed more than the gizmos installed on export versions if they were going to survive.

Tom @3 makes note the Chinese have a great quality control program. Boeing execs will up their kickback slop to US politicians and the final report will say, 'well accidents will happen'.

Taffyboy , Apr 5, 2019 7:59:26 AM | link
You can be sure that if this was Airbus, and two were crashed in the USA, that there would be hearings, threats, congressional investigations, lawsuits, calls for criminal investigations, Wall Street shorting the company, ...and on and on until the company would be disbanded.

Criminal, well yes but so what! Peons do not matter, right.

Walter , Apr 5, 2019 8:14:29 AM | link
Engineering Manufacturing company with a sales division works alright. But a Sales Company with a manufacturing subsidiary does not, as we see. Boeing is typical for end-stage Imperial Corporations - all show, no go, and get the money quick...

Sorta like GE's BWR's and Fukushima, fake it on the cheap and run with the money to retirement.

b , Apr 5, 2019 8:36:24 AM | link
The full 33 pages Aircraft Accident Investigation Bureau Preliminary Report from the Ethiopian Aircraft Accident Investigation Bureau.
donkeytale , Apr 5, 2019 8:59:32 AM | link
Now we learn (from Krugman, but still) the American meat industrial complex is also now self-regulating thanks to the Donald.

"Donald Trump Is Trying to Kill You
Trust the pork producers; fear the wind turbines."

I'm reaching for the broccoli...oh wait....the organic broccoli

Hoarsewhisperer , Apr 5, 2019 9:01:05 AM | link
The Pilots are thrown off their seats, hitting the cockpit roof ..."
Posted by: Jen | Apr 5, 2019 6:27:26 AM | 1

My interpretation is the same as yours. It's an incident report which is supposed to be bland statements of fact - neither overstated nor understated. If the report says the pilots hit the roof then that's what happened (airliner cockpits don't have cathedral ceilings so only inches clearance when standing erect).

OTOH I find it hard to believe that the pilots would unbuckle before they had achieved cruise status and given passengers the OK to do the same.

Seat belts can break but not under the relatively mild stresses generated by violent flight maneuvers of an intact aircraft.

Kiza , Apr 5, 2019 9:14:57 AM | link
When I purchase an airline ticket I purchase the risk profile of the airline and the risk profile of the plane manufacturer, because either can kill me.

A mistake is one or two errors. This was one horrible string of deliberate corner cutting, about 7-8 totally disastrous decisions by the management, that could have only led to deaths of people uninformed enough to purchase the travel risk from this plane supplier.

Uninformed just like I was before I recently saw some old investigative footage about Boeing's disregard for elementary quality in the earlier 737 hull manufacturing and the company's treatment of the whistleblowers trying to help the company by exposing such wrong doing: "Just put a coat of paint on it".

Intentionally (spin) or unintentionally, there is too much talk about detail such as software, pilot capability and decisions, training and the lack of it and so on. This only hides the big picture of an utter disregard for the value of human life, traded off for management bonuses and stock holder dividends. It is a complete reversal of the original engineering-focused Boeing which made Boeing an icon that it used to be. Perhaps, somewhere in the Washington lobbying swamp the dividing line between the engineering for killing people and the engineering for transporting people became too blurred. As the profit strategy, on MIC business overcharge, on airliner business underdeliver, and ruthlessly so on both: rip-off money from the tax-payers and lives from the travellers.

Please convince me that this is not a symptom of the rot of the whole society, when an icon such as Boeing sinks deep into nastiest morally debased profiteering. I posit that the society which so easily kills people using bombs, rockets and drones cannot make good quality products any more. This is because killing and destroying is just too easy compared with creating something good . Without the good will of the people in a society to morally rebalance, the societal endeavours for creation can never compete against the endeavours for destruction. In other words, US had become too much about destruction to be still capable of creation.

Finally, there would be one way to get back on the right track - life-in-jail for both Boeing and FAA involved. It is ultimately ironic that in the highly criticised China the shitbags would probably be put in front of a firing squad for corruption. In US, they will receive bonuses and continue on to the next killing enterprise. Until they finally launch nuclear tipped missiles against the creation oriented foreign competitors. Do they still know of any other way to win?

Avid Lurker , Apr 5, 2019 9:33:24 AM | link
Touching and informative press conference with the Stumo family (Ralph Nader's grandniece, Samyo Stumo, was killed on the 737 MAX crash in Ethiopia) and two law firms that filed a lawsuit against Boeing and others. At @ 28 min one lawyer displays an anonymous email from a 737 MAX pilot detailing how the MCAS system can thwart a pilot's ability to recover control of the jet. This email was posted to a pilots' forum/aviation network after the Lion Air crash in Indonesia last October.

Attorneys file suit for family of woman killed in Ethiopian plane crash

Ric G , Apr 5, 2019 9:34:15 AM | link
Boeing has solved all their problems with the 737 Maxxx.

They are opening a fast food franchise and bolting the planes to concrete blocks. No problemo!

https://www.dailymail.co.uk/news/peoplesdaily/article-3781574/Not-usual-plane-meal-look-inside-China-s-4-million-fine-dining-restaurant-converted-retired-Boeing-737.html

Walter , Apr 5, 2019 9:45:44 AM | link
@Steve...if you say it, then it's true. Of course, if you knew more about it, then you would say something else.

But real expert Gundersen says differently. I worked with some of the GE engineers, and I know what they said.

You are 100% incorrect about the diesels, the problem included primary, ultimate heat sink loss due to the elevation of the pumps, and the pressure vessels we know to be unsafe.

GE BWR's designed in the US by US GE engineers, some of whom quit rather than sign off on the design..."fuze was lit for Fukushima in 1965" >see fairewinds, amigo.

b4real , Apr 5, 2019 9:52:06 AM | link
They're in for it now... Remember when GM CEO Maria Barra went to jail for those faulty ignition cylinders ?

/sarc

This is a feature of capitalism. If left unfettered, it will consume itself.

In a just world, Syria would shoot down an F35 with an S300.

b4real

Kiza , Apr 5, 2019 9:57:26 AM | link
@SteveK9 12
As far as I understand, the main Fukushima problem was the concrete reactor encasing design which did not cater for the possibility of excessive hydrogen release from the reactor. It worked well when not in trouble, but in an accident situation (who would have expected an accident) the concrete encasing without a release valve became a pressure cooker filled with flammable hydrogen. What a surprise that it went boom!?

What you write here about the water cooling system generators you probably believe in but it resembles the pilot blaming spin of Boeing. The truth has a nasty tendency to end up owned by those with most money.

I always remember how our old friend pharaoh Ramses paid hundreds of stone masons to go around Egypt and chisel out the achievements of all the previous pharaohs and chisel in his. Then even several thousands of years later, when the archeologists finally learned to read hieroglyphs, they only had propaganda and spin left to read. Thus nothing less than the son of the supreme Egyptian deity the sun god Ra, the propaganda paying Ramses became the greatest pharaoh of all time.

bevin , Apr 5, 2019 9:58:50 AM | link
"As a layman, my main question at this stage is: 'Who is going to prison and for how long?'"
The first to go should obviously be the individuals in charge of the FAA. These people, I imagine, were appointed by Obama. When we look at the regulatory system in the US bear in mind that the current irresponsibility arose in a long descent-since the days of Nixon I suspect-into neo-liberal corporate capture.
Just recently the deceits practised in the fake science which allowed the licensing of Round Up were revealed. The entire system is rotten and nowhere is it more corrupt than in the United States.
Pft , Apr 5, 2019 10:04:18 AM | link
" They reengage the electric stabilizer trim to righten the aircraft"

That's the problem. While the plane may have remained unstable due to the lack of rapid response of the manual trim control and difficulties turning.the wheel at high speed low altitude flight,the planes altitude was still increasing. They should have either returned to the airport or continued ascent in the hope they could restore trim at high altitude and low air pressure.

Altitude immediately plummeted when they rengaged the MCAS and the plane was not recoverable at that point.

Such mistakes should be made in flight simulators . Hence it's lack of training at fault here, and the blame for that is still on Boeing.

Not sure even the flight simulator training will solve this mess
TBH

J Swift , Apr 5, 2019 10:22:12 AM | link
This whole business is sickening and infuriating. What is especially infuriating is that the FAA is extremely onerous in enforcement of ancient regulations with respect to general aviation. The owner of a small plane is actually prohibited from casually upgrading any of the antiquated instruments, even radios, on his Made in 1975 private plane, and must stick with what was originally certified by the manufacturer as originally constructed--unless he is willing to expend huge amounts of money to find an updated, certified (e.g., "safe") upgraded component from someone willing to go the lengthy and expensive process of having the FAA certify that product, then have a certified mechanic install the certified part and certify it was done according to the precise procedures established. In effect, the FAA actively discourages safety improvements of the general aviation fleet by unthinking resistance to technological change.

Unless you're Boeing.

Having experience with the "other" FAA, this is what's especially dumbfounding to me. While there may be some justification in permitting a trusted manufacturer to establish and certify as safe minor details, anything involving the actual flight characteristics of the plane should NEVER be delegated, and doubly so with respect to commercial airliners. And how could any regulator be anything but incredulous if a manufacturer says "Well, we've decided to make this commercial airliner INHERENTLY UNSTABLE, but we have a whole box of bandaids which should do a bang-up job of keeping it in the air!" WTF!! "Fail-safe" isn't actually a fix or a mechanism, the term is supposed to describe a design philosophy, in which if there is a failure, the resulting condition is still safe (well, at least not less safe). Ditto redundancy, which is why it is unheard-of that such an apparently vital bandaid relied on only one sensor.

It's one thing to build a fighter that is inherently unstable (although even that is perhaps questionable), but an airliner filled with passengers? Ludicrous. And the FAA and Boeing both know it, and knew it from the start. In a just world heads would literally roll, but sadly, nothing real is likely to happen.

Piotr Berman , Apr 5, 2019 10:31:04 AM | link
I already thought that the whole setup had faulty logic. If the plane could be adequately controlled by pilots, "manually", then extra training would be cheaper than introducing an automatic system. If the plane could not be adequately controlled by the pilots, "switching to manual" is futile.

I have a minor experience with "automatic control" when the chip of my car went wrong. In old, old times one has to add a bit of extra gas to start the car engine, and as a result one could flood the engine, then wait a few minutes for the gasoline to evaporate and try again. In contemporary cars you do not press gas at all when you start, and the chip regulates how much gasoline should be injected to the engine based on its temperature. Then after 10 years of happy use the chip "noticed" that the engine is cold when it is actually hot. So I am driving on a windy narrow road and the car accelerates going 40 mph without pressing the gas (65 kmh), 15 mhp above the legal speed limit, and did I mention that the road had curves? Frankly, it happened few times before that, but on a straight road you just get the feel of cruise control. Anyway, brakes remedied the situation, luckily, they could overcome the engine and the chip was replaced for mere 800 dollars.

Here it seems that Boeing designers entered the kludge road and kept compensating for this or that and lost the total picture. Isn't it suspicious that the automatic trim was so aggressive? I also do not understand at all what "manual" means, seem impossible that actual muscle force of the pilot was applied to the tail? Should there be an emergence procedure in which a cabin steward under voice control of the captain adjusts the tail with a crank, or perhaps something like a capstan that could be moved by the entire cabin crew? That would be a true manual system.

My conclusion is that once you rely on automatic solutions because the crew cannot do it in some situations, you must crank up the reliability to something "average million years without failure or more". It is not a ship that can drop anchors, giving a few days to figure out the problem etc. (although this is something that should be avoided too). Boeing setup was something that should flunk students in Industrial Engineering (they have courses on control systems). For example, an internal device with a gyroscope could track the speed and its three-dimensional angle, so if one of external sensors malfunction the system can automatically decide which reading makes more sense. External sensor measure speed in respect to air which is important too, but if the plane approaches the ground, that should be noted to,. With few gismos you could get sufficient redundancy with some "voting scheme" or a "decision tree".

J Swift , Apr 5, 2019 10:41:56 AM | link
Just use logic for a moment. Boeing: We're presenting this new (redesigned) plane for certification, and it comes with it's very own MCRASH system. FAA: MCRASH system...what's that? Boeing: Well, the plane has a pronounced tendency to go into stalls and fall out of the sky. FAA: That's an interesting feature. Are pilots going to be able to handle these aggravated power-on stalls (the worst kind, incidentally)? Boeing: Oh, no. There's no way pilots would be able to detect the condition and react quickly enough to save the plane, so we've devised an automated system that is faster than a human can react to save the day. We present MCRASH.

I mean, seriously!

Piotr Berman , Apr 5, 2019 10:43:43 AM | link
From annals of idiocy in design. Some time in the 1st decade of this century the Polish state rail road decided to embrace modernity and introduced automatic ticketing system. It would fabulously till the end of that year when it shut down. Apparently, there was a "sanity check" disallowing tickets to have arrival before the departure, someone forgot about the pesky case of arrival after New Year following departure in December, and the system could not cope with a wave of "illegal requests". Luckily, because the system did not operate that long prior to collapse, there were still people who could manually write the tickets until the bug was removed.
Piotr Berman , Apr 5, 2019 10:46:06 AM | link
would -> work, I must say that the setup not allowing to correct the post after it is made is also an example of a "suboptimal" design, many sites give you 10-15 minutes with a permission to edit or delete.
Uncoy , Apr 5, 2019 10:57:41 AM | link
Berman, you wrote:
would -> work, I must say that the setup not allowing to correct the post after it is made is also an example of a "suboptimal" design, many sites give you 10-15 minutes with a permission to edit or delete.

B hosts Moon of Alabama on Typepad. Typepad costs $15/month, including hosting and support (best value in web hosting for a busy weblog). Typepad apparently doesn't have a post-comment grace period editing option or B would have added it.

I used to be an advocate of MoA moving over to WordPress (I'm a full time software architect/designer who builds WordPress driven web application and a pro video player). There's lots of nice bells and whistles which could be added including comment editing and a much more attractive and innovative design.

Having seen the endless security issues and silly site breaking updates which Matt Mullenweg and Automattic have pushed out over the last four years, B would be wise to stay put on Typepad. Typepad is clunky, it's a bit ugly but it works reliably and is inexpensive. Maintaining and updating a WordPress site costs either lots of man hours or lots of money (good IT help is not cheap).

terrorist lieberal , Apr 5, 2019 11:37:47 AM | link
Tom @ 5,

Obviously you know no one will ever be prosecuted or lose anything. This country is in the hands of the rich and powerful, just note how the great Obama couldn't jail one crooked banker and they all got to keep everything they stole at the expense of millions and millions of people, lives ruined, and they live the high life as some exceptional people, yeah right, God Bless America, home of the biggest terrorist organization the world has known.

terrorist lieberal , Apr 5, 2019 11:39:09 AM | link
Sorry, meant for Tom at comment 3
james , Apr 5, 2019 11:54:53 AM | link
thank you b! who is going to be held accountable? i say no one...

@13 donkeytale.. that sounds about right... i imagine it's happening in any industry where money is involved in the usa - which is basically every industry.. get rid of the mechanisms for protecting people and just make sure to protect the moneyed interests..

capitalism devoid of morals and ethics is just peachy..

Pnyx , Apr 5, 2019 12:02:42 PM | link
Thanks for the comprehensive account of what happened. I really hope this will result in a hefty judicial price tag for the cynicals and greedies at Boeing.
b , Apr 5, 2019 12:33:03 PM | link
@taffyboy

You can be sure that if this was Airbus, and two were crashed in the USA, that there would be hearings, threats, congressional investigations, lawsuits, calls for criminal investigations, Wall Street shorting the company, ...and on and on until the company would be disbanded.

There were two Boeing MAX crashes outside of the U.S. and there ARE now hearings, threats, congressional investigations, lawsuits and even a criminal investigation. Boeing's stock price fell by some 10% since the second crash.
-
@Hoarsewhisperer @14

It's an incident report which is supposed to be bland statements of fact - neither overstated nor understated. If the report says the pilots hit the roof then that's what happened (airliner cockpits don't have cathedral ceilings so only inches clearance when standing erect).

The phrase "the Pilots are thrown off their seats, hitting the cockpit roof" is not from the incident report but from an interpretation at the Leeham News site. It is not meant literally.

It is based on a suddden change on g-force in the plane which goes from around 1g to 0g when MCAS again kicks in. This has the effect that the pilots are suddenly weightless and no longer have power to pull the yoke back.

Source and effect of this are visible in the diagram.
-

Peter AU 1 , Apr 5, 2019 1:14:13 PM | link
Do airline pilots wear seatbelts on take off. I take it there would be some rules and regulations on this. I have always taken it for granted the pilots would be wearing seatbelt on take off and landing, also if expecting turbulence during a flight.
Impossible to control anything if you're getting tossed around.
ritzl , Apr 5, 2019 1:26:26 PM | link
Unless the EU and other governing bodies divorce themselves from our seemingly privatized FAA, expect more of this. Unless, of course, ALL flight safety orgs, globally, are equally corrupted.

I have no idea if global corruption is the case/or worse, but there is now pretty strong evidence that the US FAA is not the unassailable leader in certification protocols that the whole planet has depended upon - up to now.

karlof1 , Apr 5, 2019 1:29:56 PM | link
Hmmm.... Proper retribution. Load Boeing's Board of Directors, senior engineers that signed off on the entire MAX project, senior accountants, any others tied to the entire boondoggle, all FAA "regulators" who approved boondoggle, and all others who helped cause the fatalities into several MAX airplanes designed to fail just as the ill-fated jets did manned by the Boeing pilots who approved the faulty design and force them to takeoff with flight paths over water. Yes, proper retribution for the crime. Cruel and unusual objections? No. Proper retribution.

The entire Neoliberal philosophy must suffer a similar fate along with its promoters and their Neocon allies. The Class War has always been deadly. It's high time elites began taking casualties. Too radical? Take a good look at the world and the circumstances of those besieged by Neoliberals and Neocons and try to argue against.

ritzl , Apr 5, 2019 1:31:55 PM | link
And, Jeez, if you want to get into the whole "death of empire" thingy, this FAA failure would be among the top tier of exhibits.

Thanks b, and all posters here. This is a truly GREAT site. I recommend it whenever I talk politics in personL

Meshpal , Apr 5, 2019 1:41:34 PM | link
Zerohedge has an article that says the pilots should have reduced engine power.

https://www.zerohedge.com/news/2019-04-05/experts-say-ethiopian-air-pilots-failed-do-one-thing-could-have-prevented-deadly

That is a true statement, but with so many things going wrong – you need to understand that it is a basic instinct of pilots to keep engine power up so you can climb and get out of trouble.

Very basic: Power = Good and No-Power = Bad.

So they should have reduced power and done a slight nose down to unload the jack screw and re-trimmed manually. The problem was they had no altitude to work with, just 1000 ft or so.

So the end story is that not only did the pilot do well, but the low-hour co-pilot was also surprising competent. It was team work all the way.

So the bottom line is that our Western system has become so corrupt that it is no longer even safe to fly. And this is just the beginning. It is all downhill from now on. More gender studies and who needs engineers anyway?

deal with it , Apr 5, 2019 2:41:14 PM | link
Boeing Max 8 was a flying design mistake.
Boeing, You Ain't no Airbus!
You can' t just slap some heavier bulkiet engines on a tinny single body crap that barely flew straight at the first time and expect everything to be right, slapping some hiden software autocorrections on just in case.. and sell this crap all over the world. Enjoy the torrent of lawsuits now!
You ain't no European aircraft maker. They tend to think 2 to 3 design steps ahead in to the future.
You guys at the US cant even barrely ellect a pres. who is right in the head.
SteveK9 , Apr 5, 2019 3:26:36 PM | link
Apologies to everyone for the thread hijack, but nuclear power nonsense annoys me.
@Walter 18

Gundersen is a very well-known anti-nuke fanatic and a liar. His qualifications are BS. At this point I think you and I can leave it and either of us can read more if we are so inclined.

@Kiza 20

Hydrogen release was an effect from the overheating and meltdown, caused by the lack of emergency cooling. There were no hydrogen recombiners present in these reactors, although they had been installed in every BWR in the US long before.

As I mentioned the reactor nearest the quake suffered no damage, because its emergency generators continued to operate, as they were not flooded. I forgot the plant name ... you could look it up ... it actually served as a shelter during the flood. As a consequence there was no release of hydrogen there (this happens when the zirconium cladding on the fuel reacts with water at high temperature to release hydrogen).

I'm not an expert in reactor design (although I have a PhD in Chemical Physics). I reached my own conclusions a very long time ago, and am not really interested in digging up evidence or providing explanations. There is a mountain of information out there if one wants to look ... and I don't mean Greenpeace (although the founder, Patrick Moore is currently a supporter of nuclear power).

deal with it , Apr 5, 2019 3:34:13 PM | link
Oh and btw, about United States aviation related products leading the race in global aviation...

Struggling to produce an effective design for an airframe for the Martian atmosphere (planet Mars) back in the earlier decade, using the top of the line comercial aviation simulation products with aircraft design options bundled in, as a way of researching a NASA info web campaign about flying vehicles on Mars, managed after much trying to produce a somehow reliable generic airframe for that very thin atmosphere and low gravity environments, which it would generaly resemble a mix of U2's and Predator drones frames (twice large than a U2 wing span) but with major tail wings modifications and you would get adequate performance if you flew it inside the enormous Martian cannyons which have a higher atmosphere pessure than rest of Martian surface. Mil air force drones were generally non existant as information back then. The software was the only product FAA approved a license for actual comercial aviation simulation training hours for training of real pilots...End of story, this design came third ...and the actual algorithms in the software decided that an actual UFO shaped craft would be behaving much better in Martian wind/atmosphere... We incorporated the solution of small rockets for generating initial lift for take off and emergency altitude.
FAA and the leading edge researchers decided that the ALIENS WOULD WIN!
I was almost sure that even Nasa people (which names was on the program approval credits) used same software without noticing anything strange before the Aliens stole the win...

Bart Hansen , Apr 5, 2019 3:51:35 PM | link
So the jack screw that manually controls the stabilizer did not work due to high speed. Isn't that what hydraulics are for?

After all, Slim Pickens managed to kick that bombay door open in Strangelove

Hoarse, I also was confused by the reasoning in the Seattle paper. But then again, I learned all I know about the affect of air flowing over a surface in flight by sticking my hand out the car window as a kid.

تابلو چلنیوم , Apr 5, 2019 4:32:53 PM | link
To avoid such crashes, training is needed more professionally and, in addition, the worn-out parts of the planes should be removed and replaced with new ones. In the vast majority of aircraft, due to high costs, little importance is given to worn parts, which causes people to fall and get dead.
Scotch Bingeington , Apr 5, 2019 4:44:34 PM | link
@ Meshpal | 38
More gender studies and who needs engineers anyway?

I think you're barking up the wrong tree there. I wholeheartedly agree with the second (sarcastic) bit, no doubt about that. But the guy who had overall responsibility for the 737 MAX desaster holds a "degree" in "Business Administration". James McNerney, B.A. from Yale, MBA from Harvard, member of Delta Kappa Epsilon - Chairman, President and CEO of The Boeing Company 2005-2016. I have a strong feeling that gender studies wouldn't exactly be his cup of tea. Just an ordinary, boring, utterly predictable, Pavlovian, run-of-the-mill business tosser. He thought he could do it all, and so off he went, again and again. From British United Provident Association (healthcare) to G.D. Searle (pharmaceuticals) to Procter & Gamble to McKinsey to General Electric to 3M. And what the heck, let's add Boeing into the mix with a pay of 30 million USD in 2014 alone. What a spec-taaaa-cular career!

jayc , Apr 5, 2019 5:29:21 PM | link
Easy to anticipate a consumer boycott of this plane. I wouldn't buy a ticket on a Max 8 flight, and began double-checking the airliner after the crash last October.
bbbar , Apr 5, 2019 6:04:28 PM | link
Horsewhisperer @ 7

In horizontal flight the stabilizer exerts a moderate amount of downward force to keep the tail level (so as to balance the torques on the airplane). When the infographic says "a small downward force pushes the nose down" it is merely saying the downward force on the tail was now less than that required to keep the plane level, so the tail rose and the nose fell.

S , Apr 5, 2019 6:33:36 PM | link
@تابلو چلنیوم : I suggest you read the article first, then comment.
Kiza , Apr 5, 2019 6:41:32 PM | link
@SteveK9 40

With respect for your PhD in Chemistry Physics, you are obviously not an engineer. In most societies, it is around the third year of study that engineers learn about redundancy and contingency planning. Therefore, not thinking trough all the possible disaster scenarios when designing life-critical contraptions is simply criminal: Fukushima nuclear power plants.

Perhaps Boeing should have hired a couple of engineering interns to tell them that they must not:
1) slap unsuitable new engines on an obsolete old air frame,
2) try to fix a serious hardware problem using software,
3) override pilots with their lives on the line by the decisions of some software cretin paid by the hour with no skin in the game,
4) hang lives of 180 people on a single sensor unavailable for replacement on an airport in Timbuktu,
5) play the no-training-needed tune when the structure of the product was substantially changed and operator training was essential and so on.

The engineers are blue collar workers, the more so the closer they are to the assembly floor. They have no decision power, they do what they are told. Yet, it is a society in deep moral crisis when the engineers keep silent whilst virtually all basic tenants of the proper design are broken by the profiteers managing them. Doing all the wrong things and expecting the right result? No, not really, just grab the money and run. Après nous le déluge.

BTW, I heard from a Lockheed lobbyist that Lockheed would never do something like this. They only rip off the US tax payers for godzillion of dollars whilst making the best killing machines that money can buy.

ken , Apr 5, 2019 6:50:29 PM | link
God,,, What humans will do to save little pieces of paper loosely called money. This is criminal. The entire board should be charged with murder or at least manslaughter. But it won't happen. Corpgov will step in to save them as they're to big to jail.
S , Apr 5, 2019 7:01:44 PM | link
Absolutely heartbreaking.

It is my understanding, and please correct me if I'm wrong, that the only thing the pilots could have done was to realize -- by a pure miracle -- that the captain's AoA sensor has failed and switch to the first officer's flight computer, which was connected to another, working AoA sensor. Of course, if Boeing had installed their "mismatching AoA data" indicator as a standard feature, the pilots wouldn't really need a miracle.

VietnamVet , Apr 5, 2019 7:38:26 PM | link
Boeing is slowing the production rate of 737 Max by 20%. Another chicken has come home to roost. To safely fly the aircraft with passengers, a new flight control system is required with multiple sensors including gyroscopes plus triple redundant electronics. Not just two position sensors as proposed by Boeing which is the pilot flipping a coin in the chaotic 40 seconds to do the right thing while the plane is trying to kill you. Pilot and co-pilot training on flight simulators is also required. If the FAA approves anything less, sooner or later, another 737 Max will crash. Similarly, the Trump Administration is turning over pork inspection to the slaughter houses. A million Chinese pigs were culled to attempt to stop the spread of African Swine Fever but the deadly pig disease continues to spread through Asia. One day soon the contagion will be fatal to humans. Climate change is here. The forever wars continue. The bottom line is that public safety which is the basic function of government is collapsing. Oligarchs are getting rich on the bodies of the dead.
Yeah, Right , Apr 5, 2019 8:00:58 PM | link
@38 Meshpal "Zerohedge has an article that says the pilots should have reduced engine power."

From the report: "At 05:39:42, Level Change mode was engaged. The selected altitude was 32000 ft. Shortly after the mode change, the selected airspeed was set to 238 kt."

Then a minute later: "From 05:40:42 to 05:43:11 (about two and a half minutes), the stabilizer position gradually moved in the AND direction from 2.3 units to 2.1 units. During this time, aft force was applied to the control columns which remained aft of neutral position. The left indicated airspeed increased from approximately 305 kt to approximately 340 kt (VMO). The right indicated airspeed was approximately 20-25 kt higher than the left."

Note that the pilots were getting conflicting airspeed readings (the difference would eventually grow to around 50 kt).

There is nothing in the report that suggests that either of the pilots opened the throttles, and by the time the "overspeed clacker" started its warning the pilots had rather more pressing problems to deal with.

I don't quite understand why this isn't addressed in the report: the pilots set the speed to 238 kt, and if they then opened the throttles the report should have said so (it doesn't). But if they didn't touch the throttle then what accounts for the speed being at 305 kt (rather than 238 kt) when the plane started its first dive?

Ghost Ship , Apr 5, 2019 8:07:11 PM | link
>>>> SteveK9 | Apr 5, 2019 3:26:36 PM | 40
There is a mountain of information out there if one wants to look ... and I don't mean Greenpeace (although the founder, Patrick Moore is currently a supporter of nuclear power).

No, Patrick Moore was not the founder of Greenpeace :

Patrick Moore Did Not Found Greenpeace
Patrick Moore frequently portrays himself as a founder or co-founder of Greenpeace, and many news outlets have repeated this characterization. Although Mr. Moore played a significant role in Greenpeace Canada for several years, he did not found Greenpeace. Phil Cote, Irving Stowe, and Jim Bohlen founded Greenpeace in 1970. Patrick Moore applied for a berth on the Phyllis Cormack in March, 1971 after the organization had already been in existence for a year.
karlof1 , Apr 5, 2019 8:07:43 PM | link
Vietnam Vet #@51--

Thanks for confirming that the retribution I prescribe @36 is right and proper as is what must follow. Only one quibble with your comment, the death trap MAXs should never, ever again be certified as airworthy as they clearly are not .

UnionHorse , Apr 5, 2019 8:12:05 PM | link
Meme Change, consider speaking of the

Pentagon Complex.

MIC is unknown. Link to Ike's Farewell early and often.

Speak the names of every contractor, not just Lockheed, etc... Get the list out of them...

Cheers to naming the Pentagon Complex

My very best regards to all,

Arioch , Apr 5, 2019 8:27:33 PM | link
> I forgot the plant name ... you could look it up

@SteveK9 | Apr 5, 2019 3:26:36 PM | 40

It was all the same. Fukushima Dai-Ichi (Number One) was the Nuclear Power Plant consisting of 6 "Reactor Buildings"

#1 was relatively small, US-designed US-built one. It had passive residual cooling - gravity-powered water flow from the tank.

#2 was larger reactor in the same Mark-1 containment, US-designed and US-buit. The residual cooling though could not be gravity-driven. It required the pump (or maybe there was a way to set temperature-driven convection, if valves could be put right - i heard it but did not dig into it)

Obviously, USA does not care about tsunami-driven floods: USA has enough soil to build NPPs away from sea shores.

#3 and #4 were those larger reactors in more modern containment, US-designed but build by Japanese companies. Japanese did know what tsunami is, but they dared not to deviate from USA designs until they make succesfulyl working verbatim coopies.

#5 and #6 were Japanese-built after they got experience with #3 and #4 and proived they can do verbatim copies. Those latter blocks were altered: for #1 to #4 shore ground was removed to almost ocean sea levelm as close to the shorelines earth was considered wet and unreliable, but #5 and #6 were instead moved away from the sea enough to earth be stable even on elevation.

When the wave came, blocks #1 to $4 were flooded (with their electric circuits probably located in basements a la Americana, thus immediately got short-circuited with salted sea water), and diesels were located immediately at water edge with all the consequences for the communications. Blocks #5 and #6, located away from the sea shopre and on elevated grounds, and their diesels located near them, were not reached by the tsunami.

P.S. but people still repeat old propaganda about Chernobyl being sabotaged by suicidal operating crew, what do you want... When people read MSM they do not care much what exactly happened, so they just swallow it without labour of critical acclaim. If much later they suddenly grow interested in some issues - their "point of view" is already long internalized, so they do search relentlessly now - but for ideas supporting their pre-formed cognitive bias.

P.P.S. I agree though that hi-jacking Boeing-related thread for in-depth discussion of NP issues would be not proper to do.

Arioch , Apr 5, 2019 8:33:40 PM | link
> it is merely saying the downward force on the tail was now less than that required

Posted by: bbbar | Apr 5, 2019 6:04:28 PM | 46

That was what i settled upon too, in the end.
But the way infographics worded it was baflfing at least.

They probably simplified words to keep the mdigestible for laymen? But well, they overdid, greatly.

karlof1 , Apr 5, 2019 8:39:49 PM | link
Ralph Nader on "Boeing's Homicides . Why is it that only he and I seem to understand:

"THE BOEING 737 MAX MUST NOT BE ALLOWED TO FLY AGAIN." {Emphasis original]

The discussion here resembles that being conducted by Boeing to exonerate itself. The MAX was purposely designed to be unsafe. Nader puts it thusly:

" The overriding problem is the basic unstable design of the 737 Max. An aircraft has to be stall proof not stall prone . An aircraft manufacturer like Boeing, notwithstanding its past safety record, is not entitled to more aircraft disasters that are preventable by following long-established aeronautical engineering practices and standards." [My Emphasis]

Trying to fix something so fundamentally broken that people with priceless lives are jeopardized if the fix(es) fail is so utterly immoral words fail to detail just how deep that immorality is. It's not just Righteous Indignation or even Righteous Indignation on Steroids--it goes well beyond that to the utterly dysfunctional immorality of placing profit over the safety of something money cannot buy or replace-- PEOPLE'S LIVES .

james , Apr 5, 2019 8:55:15 PM | link
i agree with nader.... thanks karlof1..
psychohistorian , Apr 5, 2019 9:15:44 PM | link
@ karlof1 with the Nader quote

You know that I and others agree as well with your strong sentiments.

It will be interesting to see how this plays out as a telltale of empire's demise or resilience.

It is not just the 737 Max that I would stay off. Think about the profit mentality that built/allowed the Max to go forward and extrapolate that to the replacement parts for all the other Boeing planes. Do people not understand that the same mentality of profit over safety that brought down the 737 Max is putting other, considered more reliable, Boeing planes at risk....for a few pennies more

Americans are brainwashed into believing that profit belongs between them and good health care so it could be described as a slippery slope to write of 99% of humans not valuing their lives very highly......because brainwashed by TV is my observation

So , Apr 5, 2019 9:26:33 PM | link
There are people in Boeing that need to see the inside of a prison cell forever.
I remember in 2008 during the recession depression seeing an idiot at the beach wearing a Goldman Sachs t shirt. I looked at the idiot in disbelief saying nothing. The next time I see an idiot in SC/Georgia I will not be holding my tongue. "Relentlessly focused on safety" my ass. The crapification continues.
So , Apr 5, 2019 9:31:35 PM | link
Their money and profits are more important than our lives. That's where we are and its all we need to know
S , Apr 5, 2019 9:31:37 PM | link
And the "AoA Disagree" indicator is not even a physical light indicator, as I initially thought, but a purely software feature for the primary flight display ! Unbelievable! 346 people had to die because someone decided to charge an exorbitant fee for a few lines of code that basically consist of two conditionals, a timer variable, and a bitmap blit call.
dh-mtl , Apr 5, 2019 9:35:14 PM | link
On March 12, in a comment posted on MOA, I wrote:

'It looks like the 55 year old 737 air-frame design, which is very low to the ground when compared to more modern designs, is incompatible with the bigger engines required for fuel efficiency.

Being very low to the ground, Boeing was forced to put the engines out in front, which upset the airplane's balance, making the plane essentially unstable. To counter the instability they added the 'MCAS?' control system.

This solution violates a fundamental tenant of design for safety-critical systems. The tenant of 'fail-safe'. If something goes wrong the system is supposed to fail in a manner that preserves safety. For the 737 Max, when the this stability control system fails, the plane is fundamentally unstable. For this system it is not 'fail-safe'. It is 'fail-crash'.'

This is pretty much in agreement with (Posted by: karlof1 | Apr 5, 2019 8:39:49 PM | 58).

I fully agree with the sentiment that this plane should never fly again. I can't imagine any thinking person volunteering to get on to such a fundamentally flawed aircraft.

Zachary Smith , Apr 5, 2019 9:57:18 PM | link
@ Meshpal #38
That is a true statement, but with so many things going wrong – you need to understand that it is a basic instinct of pilots to keep engine power up so you can climb and get out of trouble.

Very basic: Power = Good and No-Power = Bad.

This is what I've heard for as long as I've been reading about airplanes. A search turned up some "sayings" popular with pilots.

It's best to keep the pointed end going forward as much as possible.

The only time you have too much fuel is when you're on fire.

Speed is life, altitude is life insurance. No one has ever collided with the sky.

If you're gonna fly low, do not fly slow! ASW pilots know this only too well.

I've just visited a West Australian newspaper - the one where the brand spanking new Aviation Editor spoke of stupid pilots and unbearably wonderful Boeing. They have a new essay about the Report, but 1) the jackass troll for Boeing has been given a minder in the form of a co-author, and 2) the article plays it straight this time.

Boeing admits 737 software was factor in crashes

The Ethiopian crew performed all of the procedures provided by Boeing but was unable to control the aircraft.

ben , Apr 5, 2019 10:02:06 PM | link
Just more death by deregulation. What's a few hundred deaths compared to Trillions in profits?

This equation extends through most of the U$A's corporate mindset...

Bob , Apr 5, 2019 11:03:17 PM | link
Now with Ralph Nader aboard lets hope that Boeing will have to pay a very high fine https://www.cbc.ca/radio/asithappens/as-it-happens-thursday-edition-1.5084648/ralph-nader-lost-his-grandniece-in-the-ethiopian-airlines-crash-now-he-s-taking-on-boeing-1.5084655

In case nobody came up with this information up to now, also the US Military doesn't let their pilots fly the new delivered KC-46 tankers https://www.stripes.com/news/loose-tools-and-debris-left-during-manufacturing-led-to-grounding-of-kc-46-tankers-1.570889

The problems of the B737 Max are not a disaster for Boeing, but for the over 300 fatalities.
They lost no shareholder value or return, they lost their lives.
They are also certainly not represented by expensive top lawyers like Boeing itself, who can then mitigate, delay or even completely avert the consequences of Boeing's decisions.
They, the people (who had confidence in American technology/products), crashed on the ground, burned or plunged into the sea without ever having had the slightest chance of averting the disaster.

Grieved , Apr 6, 2019 12:01:45 AM | link
@66 ben

"death by deregulation"

Perfect description.

~~

@67 Bob

Interesting story you linked on the Boeing KC-46. The Air Force pilots won't fly it because the loose tools and debris they found in the planes raised doubts about the planes manufacturing integrity. The crisis was/is one degree (of four graduated degrees of seriousness) away from shutting down the production line completely.

What's key is how Boeing proceeded to address the problem: by taking employee time away from production in order to perform final inspection, i.e. quality control. Which makes it clear where the original quality control was lost, by being absorbed into production, to make more product per employee hour.

And this is just one, visible part of the process, where we can observe concrete examples of inadequate QC.

Commenters here who point to these plane crashes as a failure in the integrity of Boeing itself are exactly correct. The flawed plane built by the flawed company was an inevitable fruit of the poisoned tree.

And I agree that one would be mad to trust anything bearing Boeing's name ever again. One would be wise also to look for similar poisoned trees in all fields, and thread one's way cautiously though this perilous, neoliberalized world.

stuart dodd , Apr 6, 2019 12:25:48 AM | link
Posted by: Bart Hansen | Apr 5, 2019 3:51:35 PM | 42

So the jack screw that manually controls the stabilizer did not work due to high speed. Isn't that what hydraulics are for?

By design.

The screw is designed to work within certain criteria.
1.Load,caused by thick or thin air pressure depending on altitude, on the moving part.
2. Speed, which again increases the load depending on the planes speed through the air, on the moving part.

The speed and altitude are known from the panes onboard sensors.

Great load will possibly damage or break away the moving part, leading to an uncontrollable crash.

Hence use of the jack screw adjustment, by the hydraulic system, will only be available within its design envelope of load and speed.

james , Apr 6, 2019 12:53:13 AM | link
yeah ben... perfect description as grieved notes...

"@66 ben

"death by deregulation"

Perfect description."

no one will be held accountable...

[Apr 05, 2019] Ilargi Meijer Boeing's Problem Is Not Software

Apr 05, 2019 | www.zerohedge.com

Ilargi Meijer: Boeing's Problem Is Not Software

by Tyler Durden Thu, 04/04/2019 - 20:45 65 SHARES Authored by Raul Ilargi Meijer via The Automatic Earth blog,

We had already been told that in the Ethiopian Airlines flight ET302 crash which killed all 157 people on board, the 4-month old 737 MAX 8's anti-stall software reengaged itself four times in 6 minutes as the pilots struggled to straighten the plane post-takeoff. In the end, the anti-stall software won and pushed the plane nose-down towards the earth. Now, Ethiopia -finally?!- released its report in the March 10 crash:

Minister of Transport Dagmawit Moges said that the crew of the Ethiopian Airlines flight from Addis Ababa to Nairobi on 10 March "performed all the procedures repeatedly provided by the manufacturer but were not able to control the aircraft." As result, investigations have concluded that Boeing should be required to review the so-called manoeuvring characteristics augmentation system on its 737 Max aircraft before the jets are permitted to fly again, she said.

The results of the preliminary investigation led by Ethiopia's Accident Investigation Bureau and supported by European investigators were presented by Ms Moges at a press conference in Addis Ababa on Thursday morning.

Ethiopia is being kind to Boeing. However, though the anti-stall software played a big role in what happened, Boeing's assertion (hope?!) that a software fix is all that is needed to get the 737MAX's back in the air around the globe rests on very shaky ground (no pun intended whatsoever).

737 MAX 8. The angle-of- attack (AOA) sensor is the lower device below the cockpit windshield on both sides of the fuselage. (Mike Siegel/The Seattle Times)

The Seattle Times did an article on March 26 that explains a lot more than all other articles on the topic combined. The paper of course resides in Boeing's backyard, but can that be the reason we haven't seen the article quoted all over?

If the assertions in the article are correct, it would appear that a software fix is the least of Boeing's problems. For one thing, it needs to address serious hardware, not software, issues with its planes. For another, the company better hire a thousand of the world's best lawyers for all the lawsuits that will be filed against it.

Its cost-cutting endeavors may well be responsible for killing a combined 346 people in the October 29 Lion Air crash and the Ethiopian Airlines one. Get a class-action suit filed in the US and Boeing could be fighting for survival.

Here's what the Seattle Times wrote 9 days ago:

Lack Of Redundancies On Boeing 737 MAX System Baffles Some Involved In Developing The Jet

Boeing has long embraced the power of redundancy to protect its jets and their passengers from a range of potential disruptions, from electrical faults to lightning strikes. The company typically uses two or even three separate components as fail-safes for crucial tasks to reduce the possibility of a disastrous failure. Its most advanced planes, for instance, have three flight computers that function independently, with each computer containing three different processors manufactured by different companies . So even some of the people who have worked on Boeing's new 737 MAX airplane were baffled to learn that the company had designed an automated safety system that abandoned the principles of component redundancy, ultimately entrusting the automated decision-making to just one sensor -- a type of sensor that was known to fail.

That one paragraph alone is so potentially damaging it's hard to fathom why everyone's still discussing a software glitch.

Boeing's rival, Airbus, has typically depended on three such sensors. "A single point of failure is an absolute no-no," said one former Boeing engineer who worked on the MAX, who requested anonymity to speak frankly about the program in an interview with The Seattle Times. "That is just a huge system engineering oversight. To just have missed it, I can't imagine how." Boeing's design made the flight crew the fail-safe backup to the safety system known as the Maneuvering Characteristics Augmentation System, or MCAS. The Times has interviewed eight people in recent days who were involved in developing the MAX, which remains grounded around the globe in the wake of two crashes that killed a total of 346 people.

The Maneuvering Characteristics Augmentation System (MCAS) was already a late addition that Boeing had not planned for initially. They wanted a plane that was so like older ones that no training would be needed, but did put a much heavier engine in it, which was why MCAS was needed. As I wrote earlier today, they cut corners until there was no corner left. On hardware, on software, on pilot training (simulator), everything was done to be cheaper than Airbus.

The angle-of-attack (AOA) sensor of the 737 MAX is the bottom piece of equipment below just below the cockpit windshield. (Mike Siegel / The Seattle Times)

A faulty reading from an angle-of-attack sensor (AOA) -- used to assess whether the plane is angled up so much that it is at risk of stalling -- is now suspected in the October crash of a 737 MAX in Indonesia, with data suggesting that MCAS pushed the aircraft's nose toward Earth to avoid a stall that wasn't happening. Investigators have said another crash in Ethiopia this month has parallels to the first.

Boeing has been working to rejigger its MAX software in recent months, and that includes a plan to have MCAS consider input from both of the plane's angle-of-attack sensors, according to officials familiar with the new design. "Our proposed software update incorporates additional limits and safeguards to the system and reduces crew workload," Boeing said in a statement. But one problem with two-point redundancies is that if one sensor goes haywire, the plane may not be able to automatically determine which of the two readings is correct , so Boeing has indicated that the MCAS safety system will not function when the sensors record substantial disagreement.

The underlying idea is so basic and simple it hurts: safety come in groups of three: three flight computers that function independently, with each computer containing three different processors manufactured by different companies , and three sensors. The logic behind this is so overwhelming it's hard to see how anyone but a sociopathic accountant can even ponder ditching it.

And then here come the clinchers:

Some observers, including the former Boeing engineer, think the safest option would be for Boeing to have a third sensor to help ferret out an erroneous reading, much like the three-sensor systems on the airplanes at rival Airbus. Adding that option, however, could require a physical retrofit of the MAX.

See? It's not a software issue. It's hardware, and in all likelihood not just computer hardware either.

Clincher no. 2:

Andrew Kornecki, a former professor at Embry-Riddle Aeronautical University who has studied redundancy systems in Airbus and Boeing planes, said operating the automated system with one or two sensors would be fine if all the pilots were sufficiently trained in how to assess and handle the plane in the event of a problem. But, he said, if he were designing the system from scratch, he would emphasize the training while also building the plane with three sensors.

The professor is not 100% honest, I would think. There is zero reason to opt for a two-sensor system, and 1001 reasons not to. It's all just about cost being more important than people. That last bit explains why Boeing went there against better judgment:

[..] Boeing had been exploring the construction of an all-new airplane earlier this decade. But after American Airlines began discussing orders for a new plane from Airbus in 2011, Boeing abruptly changed course , settling on the faster alternative of modifying its popular 737 into a new MAX model. Rick Ludtke, a former Boeing engineer who worked on designing the interfaces on the MAX's flight deck, said managers mandated that any differences from the previous 737 had to be small enough that they wouldn't trigger the need for pilots to undergo new simulator training.

That left the team working on an old architecture and layers of different design philosophies that had piled on over the years, all to serve an international pilot community that was increasingly expecting automation. "It's become such a kludge, that we started to speculate and wonder whether it was safe to do the MAX," Ludtke said. Ludtke didn't work directly on the MCAS, but he worked with those who did. He said that if the group had built the MCAS in a way that would depend on two sensors, and would shut the system off if one fails, he thinks the company would have needed to install an alert in the cockpit to make the pilots aware that the safety system was off.

There you go: A two-sensor system is fundamentally unsound, and it's therefore bonkers to even discuss, let alone contemplate it.

And if that happens, Ludtke said, the pilots would potentially need training on the new alert and the underlying system. That could mean simulator time, which was off the table. "The decision path they made with MCAS is probably the wrong one," Ludtke said. "It shows how the airplane is a bridge too far."

Kudos to the Seattle Times for their research. And yeah, we get it, at over 5000 orders for the plane, which costs $121 million each, there's big money involved. Here's hoping that Boeing will find out in the courts just how much.

[Apr 05, 2019] Additional Software Issue Discovered In Boeing 737 MAX

Apr 05, 2019 | www.zerohedge.com

The preliminary report contains flight data recorder information indicating the airplane had an erroneous angle of attack sensor input that activated the Maneuvering Characteristics Augmentation System (MCAS) function during the flight, as it had during the Lion Air 610 flight.

To ensure unintended MCAS activation will not occur again, Boeing has developed and is planning to release a software update to MCAS and an associated comprehensive pilot training and supplementary education program for the 737 MAX.

As previously announced, the update adds additional layers of protection and will prevent erroneous data from causing MCAS activation. Flight crews will always have the ability to override MCAS and manually control the airplane.

Boeing continues to work with the U.S. Federal Aviation Administration and other regulatory agencies worldwide on the development and certification of the software update and training program.

Boeing also is continuing to work closely with the U.S. National Transportation Safety Board (NTSB) as technical advisors in support of the AIB investigation. As a party providing technical assistance under the direction of investigating authorities, Boeing is prevented by international protocol and NTSB regulations from disclosing any information relating to the investigation. In accordance with international protocol, information about the investigation is provided only by investigating authorities in charge.

* * *

Update (1100ET) : Ethiopian investigators have called on Boeing to carry out a full review of the anti-stall system on its 737 Max aircraft after finding pilots of a plane that crashed near Addis Ababa last month had followed the stipulated emergency procedures but were unable to save the aircraft.

Key highlights from the report make it very clear this is Boeing's problem...

As The FT reports, Ethiopian minister of transport Dagmawit Moges called on the embattled aircraft manufacturer to carry out a full review of the anti-stall system on its 737 Max aircraft before they are allowed to fly again , after finding that the pilots were not to blame for the crash last month.

Boeing stock is higher somehow on the back of all this??

Presumably trade hype/hope trumps crash liabilities.

Read the Full Report here...

[Apr 05, 2019] U.S. lawsuit filed against Boeing over Ethiopian Airlines crash - Reuters

Apr 05, 2019 | www.reuters.com

A lawsuit against Boeing Co was filed in U.S. federal court on Thursday in what appeared to be the first suit over a March 10 Ethiopian Airlines 737 MAX crash that killed 157 people.

The lawsuit was filed in Chicago federal court by the family of Jackson Musoni, a citizen of Rwanda, and alleges that Boeing, which manufactures the 737 MAX, had defectively designed the automated flight control system.

Boeing said it could not comment on the lawsuit.

"Boeing ... is working with the authorities to evaluate new information as it becomes available," it said, adding all inquiries about the ongoing accident investigation must be directed to the investigating authorities.

The 737 MAX planes were grounded worldwide following the Ethiopian Airlines disaster, which came five months after a Lion Air crash in Indonesia that killed 189 people.

Boeing said on Wednesday it had reprogrammed software on its 737 MAX to prevent erroneous data from triggering an anti-stall system that is facing mounting scrutiny in the wake of two deadly nose-down crashes in the past five months.

The planemaker said the anti-stall system, which is believed to have repeatedly forced the nose lower in at least one of the accidents, in Indonesia last October, would only do so once per event after sensing a problem, giving pilots more control.

The crash of Boeing's passenger jet in Ethiopia raised the chances that families of the victims, even non-U.S. residents, will be able to sue in U.S. courts, where payouts are much larger than in other countries, some legal experts have said.

Wednesday's complaint was filed by Musoni's three minor children, who are Dutch citizens residing in Belgium.

The lawsuit says Boeing failed to warn the public, airlines and pilots of the airplane's allegedly erroneous sensors, causing the aircraft to dive automatically and uncontrollably.

Ethiopian officials and some analysts have said the Ethiopian Airlines jet behaved in a similar pattern as the 737 MAX involved in October's Lion Air disaster. The investigation into the March crash, which is being led by the Ethiopian Transport Ministry, is still at an early stage.

[Apr 03, 2019] Bad News For Boeing Preliminary Report Shows Anti-Stall Software Sealed Flight ET302's Fate

Apr 03, 2019 | www.zerohedge.com

Bad News For Boeing: Preliminary Report Shows Anti-Stall Software Sealed Flight ET302's Fate

by Tyler Durden Wed, 04/03/2019 - 08:06 251 SHARES

Thought it hasn't been publicly released yet, a preliminary report on the circumstances that caused flight ET302 to plunge out of the sky just minutes after takeoff was completed earlier this week, and some of the details have leaked to Reuters and the Wall Street Journal. And for Boeing shareholders, the findings aren't pretty.

Appearing to contradict Boeing's insistence that procedures for deactivating its MCAS anti-stall software were widely disseminated, and that pilots at airlines around the world had been trained on these procedures, WSJ reported that the pilots of ET302 successfully switched off MCAS as they struggled to right the plane after the software had automatically tipped its nose down. As they struggled to right the plane, the pilots ended up reactivating the software, while trying a few other steps from their training, before the plane began its final plunge toward a field outside Addis Ababa, where the ensuing crash killed all 157 people on board.

Though the pilots deviated from Boeing's emergency checklist as they tried to right the plane, investigators surmised that they gave up on the procedures after they failed to right the plane. But when MCAS reengaged, whether intentionally, or on accident, it pushed the nose of the plane lower once again.

The pilots on Ethiopian Airlines Flight 302 initially reacted to the emergency by shutting off power to electric motors driven by the automated system, these people said, but then appear to have re-engaged the system to cope with a persistent steep nose-down angle. It wasn't immediately clear why the pilots turned the automated system back on instead of continuing to follow Boeing's standard emergency checklist, but government and industry officials said the likely reason would have been because manual controls to raise the nose didn't achieve the desired results.

After first cranking a manual wheel in the cockpit that controls the same movable surfaces on the plane's tail that MCAS had affected, the pilots turned electric power back on, one of these people said. They began to use electric switches to try to raise the plane's nose, according to these people. But the electric power also reactivated MCAS, allowing it to continue its strong downward commands, the people said.

Reuters , which was also the recipient of leaks from investigators, offered a slightly different version of events. It reported that MCAS was reengaged four times as pilots scrambled to right the plane, and that investigators were looking into the possibility that the software might have reengaged without prompting from the pilots.

After the Lion Air crash that killed 189 people back in October, Boeing and the FAA published a bulletin reminding pilots to follow the emergency procedures to deactivate the software if a faulty sensor - like the one that is believed to have contributed to the Lion Air crash - feeds erroneous data to the system.

The data show the pilots maneuvered the plane back upward twice before deactivating the software. But between the two reports, one detail is made abundantly clear. The software's reengagement is what doomed everybody aboard. That is an unequivocally bad look for Boeing, which has been deflecting questions about the software's bugs, and gaps in the dissemination of its training materials, while working on an update that the company says will make the software less reliant on automated systems.

ersl , 3 hours ago link

The aviation industry has been trying to make the human pilots obsolete, just as in so many industries. But they all do their, these days, their R & D on the job. Recall the Amazon Robot that went berserk recently. The idea is to rid all industry of people progressively so that they can end up not needing people at all. They'll end up with nothing. Some how they think that if they take people out then profits will be assured, which is actually psychotic. They have had remote auto pilot for 7 decades now. They can bring down any aircraft at will, and do so regularly. They can shut down or affect engines remotely, or alter the actions as is imbedded into just about all new machinery, other than knives, forks and spoons. Yet they still need consumers and workers to create hedged exchange to profit from. That is the dilemma industry owners are facing, that without pesky people they are doomed as much as the doom they are creating for even their own off spring = psychosis.

[Apr 02, 2019] In 737MAX the pilot simply cannot take full control the aircraft when he needs to do so. Hence the pilots in the 737MAX cases scrambling to work through the problem by checklist, if you're doing this something is going wrong and will be wrong.

Apr 02, 2019 | www.moonofalabama.org

Gravatomic , Apr 1, 2019 11:23:03 AM | 66 ">link

The 757 and 767 are a more obvious airframe to build upon, as a response to the Airbus the new 737MAX design was very poorly thought out, it's airframe vs. engine placement and thrust. Having trained on Boeing 767-300ERs myself a pilot becomes very in tune with it's quirks and it does have them, speed bugs and so on.

When you watch certain aircraft taking off in routine operations, unreasonable angles of attack V-speed, now many pilots will engage 1 autopilots minutes after take off while flaps are partially extended still(it stabalizes a positive rate of climb), this is so that the aircraft is more efficient, cost effective and reaches it's crusie altitude and destination on time.

The 767 has 3 autopilot computers, 2 of them receive data as to angle of attack and speed when the stall warning activates as the stick shakes, the autopilots are off, period, no more input from the computers other than warnings - these too can often lead to confusion and sometimes with fatal results.

Sometimes you will re-engage one after you've corrected the airspeed (nose down) and stall to regain and maintain a efficient airflow lift. Although in some cases the pitot tubes malfunction to due ice, so trusting what the machine was telling the pilots can be fatal.

[In 737MAX] The pilot simply cannot take full control the aircraft when he needs to do so. Hence the pilots in the 737MAX cases scrambling to work through the problem by checklist, if you're doing this something is going wrong and will be wrong.

Ever notice the difference between a soft smooth landing and a 'rough one' that shakes passengers - note these are totally normal landings, the computer assisted ones in clear blue skies and calm winds are not.

That's the pilots on a VFR or visual landing which the computer usually tries to interfere with, if a hybrid semi-assisted landing, especially on an ILS glideslope in bad weather.

A pilot should know these skills but many now do not. They have to rely on the input from the computers and Boeing tried unsuccessfully to introduce this new MCAS system seamlessly, when you've got 3 autopilots why is only 1 receiving the flight data of angle of attack and v-speed?!

[Mar 31, 2019] EU Agency Said to Have Skipped 737 Max Meeting in Snub to Boeing

Mar 31, 2019 | www.bloomberg.com

There was a prominent no-show among the 200 regulators, pilots and airline managers that Boeing Co. invited to preview a crucial software update for the 737 Max this week, said people familiar with the matter: European safety officials.

The planemaker is sending a team across the Atlantic to brief the European Union Aviation Safety Agency on the proposed changes after two of the jetliners plunged to the ground within five months, said one of the people, who asked not to be identified because the discussions are private. Representatives of EASA didn't return requests for comment.

Intentional or not, EASA's snub points to the delicate politics Boeing faces in convincing regulators the Max is safe as the company seeks to restore confidence in its best-selling jet, which has been grounded for more than two weeks. The reputation of U.S. regulators has taken a hit in the scrutiny of the 737 Max's approval process, and foreign agencies are less likely to rubber-stamp aircraft certifications simply because they have been cleared by the Federal Aviation Administration.

EASA is expected to play an influential role in determining how long and complicated the review of the Max will be, while safety officials from China to Canada have vowed to conduct their own rigorous analysis.

"EASA's determination should be important for the rest of the world, given its sophistication and perceived independence," Seth Seifman, analyst with JPMorgan Chase & Co., said in a note to clients.

A spokesman for the FAA declined to comment.

'Productive' Sessions

"We had productive information sessions this week and continue to work closely with our customers and regulators on software and training updates for the 737 Max," Boeing spokesman Paul Bergman said by email.

As of late Friday, the Chicago-based planemaker was still finishing up paperwork needed to certify a software upgrade and revised pilot training for the 737 Max. One prominent pilots union criticized the proposed training as insufficient.

The software changes, intended to prevent stall-prevention software from engaging in normal flight, have been in the works since the system pointed a Lion Air jet's nose downward about two dozen times before pilots lost control Oct. 29. That accident killed 189 people, while 157 died when an Ethiopian Airlines 737 Max 8 crashed March 10.

While certifying the software upgrade is the first step toward returning the Max to flight, it doesn't assure the grounding will be speedily lifted by the FAA or its counterparts around the world. The EU, China and Canada all grounded the 737 Max more quickly than the FAA in the wake of the Ethiopian crash.

Software Changes

The break between FAA and overseas authorities on the initial decision to ground the plane, combined with worldwide public furor and a U.S. criminal probe of the Max certification, "all make it hard for us to see how foreign regulators can avoid coming back with their own questions and doing some of their own due diligence," Seifman said in his report.

Crash investigators suspect that a damaged or malfunctioning sensor triggered anti-stall technology in the Ethiopian Airlines plane, Bloomberg reported Friday. Investigators think that caused the plane's nose to point downward, and the pilots struggled to counteract the software-based system, according to people familiar with the crash probe. That scenario would be similar to the crash that brought down the Lion Air flight last year in Indonesia.

Click here to read Bloomberg's report on the sensor investigators are focusing on.

Boeing is planning software revisions that restrict the number of times the Maneuvering Characteristics Augmentation System, or MCAS, kicks in to a single interaction. The update is also designed so that MCAS can't command the horizontal stabilizer to push a plane's nose down with more force than what pilots can counter by pulling back on the steering column.

The enhancements appeared to work as billed, said pilots who viewed demonstrations of the upgrades by company test pilots in flight simulators at the event March 27 in Renton, Washington.

"We were confident flying the aircraft in its present state," said Roddy Guthrie, American Airlines Group Inc. 's 737 fleet captain, who was at the Boeing briefings. The improvements "were needed. They've put some checks and balances in the system now that will make the system much better."

Simulator Demonstrations

Still, Boeing representatives faced caustic comments from some at the Wednesday session, said one of the people familiar with the discussions. As Boeing test pilots demonstrated old and new versions of MCAS, attendees were especially interested in re-enacting the sequence of events leading to the Lion Air crash, the person said. Pilots also demonstrated how the 737 Max would behave if an angle-of-attack vane was sheared off by, say, a bird strike.

Click to read how Boeing rival Airbus is treading carefully with the 737 Max grounded.

One pilot group walked away from the event feeling that Boeing needs to do more work on a new 30-minute iPad course, followed by a test, that is intended to help pilots of the older generation of 737 planes prepare for the Max. The newest version of Boeing's workhorse single-aisle jet debuted less than two years ago.

Pilots who saw the preliminary version of the training "characterized it as nice for an elementary level of understanding, but pilots will definitely need a more textured and layered instructional piece," said Dennis Tajer, spokesman for the Allied Pilots Association, which represents pilots at American. "That was the hands-down consensus."

Boeing was receptive to the comments, Tajer said.

-- With assistance by Alan Levin

[Mar 29, 2019] Boeing Doubles Down on 737 Max, Rejects Need for Simulator Training naked capitalism

Notable quotes:
"... Boeing compromised on sound engineering with the 737 Max . Recall the origins of the problem: Boeing was at risk of losing big orders to a more fuel-efficient Airbus model. Rather than sacrifice market share, Boeing put more fuel-efficient, larger engines on the existing 737 frames. The placement of the engine created a new safety risk, that under some circumstances, the plane could "nose up" at such a steep angle as to put it in a stall. The solution was to install software called MCAS which would force the nose down if the "angle of attack" became too acute. ..."
"... Merriam-Webster defines kludge -- sometimes spelled kluge -- as "a haphazard or makeshift solution to a problem and especially to a computer or programming problem." Oxford defines it as, in computing, "A machine, system, or program that has been badly put together, especially a clumsy but temporarily effective solution to a particular fault or problem." ..."
"... In the case of the 737 Max, it's the combination of how two separate problems interacted -- a plane whose design introduced aerodynamics issues and what now appears to have been a poorly designed anti-stall system -- that seems to be drawing many to turn to Granholm's term. The problems were compounded in many ways, including by the fact that pilots were not told of or trained for the Maneuvering Characteristics Augmentation System (MCAS) before the Lion Air crash, which killed all 189 on board. ..."
"... "My concern is that Boeing may have developed the MCAS software as a profit-driven kludge to mitigate the Max 8's degraded flight characteristics due to the engine relocation required to maintain ground clearance," commented Philip Wheelock on a New York Times story about the plane's certification process this week. "Not convinced that software is an acceptable solution for an older design that has been pushed to its inherent aeronautical design limits." ..."
"... "Indeed, it seems the 737 MAX was a kludge to an existing design, and that MCAS was a kludge on top of that," said a commenter on Hackaday . ..."
"... Boeing has long embraced the power of redundancy to protect its jets and their passengers from a range of potential disruptions, from electrical faults to lightning strikes. The company typically uses two or even three separate components as fail-safes for crucial tasks to reduce the possibility of a disastrous failure. So even some of the people who have worked on Boeing's new 737 MAX airplane were baffled to learn that the company had designed an automated safety system that abandoned the principles of component redundancy, ultimately entrusting the automated decision-making to just one sensor -- a type of sensor that was known to fail. ..."
"... That no one who wrote the MCAS software for the 737 MAX seems to have even raised the issue of using multiple inputs, including the opposite angle of attack sensor, in the computer's determination of an impending stall is mind-blowing. ..."
"... As a lifetime member of the software development fraternity, I don't know what toxic combination of inexperience, hubris, or lack of cultural understanding led to this. But I do know that it's indicative of a much deeper and much more troubling problem. The people who wrote the code for the original MCAS system were obviously terribly far out of their league and did not know it. How can we possibly think they can implement a software fix, much less give us any comfort whatsoever that the rest of the flight management software, which is ultimately in ultimate control of the aircraft, has any fidelity at all? ..."
"... And we're giving short shrift to how Boeing compounded the problem, for instance, by making it an upcharge to have the 737 Max have a light showing that its angle of attack sensors disagreed (the planes did have two, but bizarrely, only one would be giving data to the MCAS system on any day), or hiding the fact that there was a new safety automated safety system in two paragraphs after page 700 in the flight manual. ..."
"... It's about an airplane manufacturer that put engines on an airframe they weren't designed for, having to add a flight control override to guard against said airplane's new tendency to nose up, and then adding insult to injury by driving that system with a single sensor when two are available. Oh – and charging airlines extra for the privilege of their pilots being told when one of those sensors is providing bad data. ..."
"... Officials investigating the fatal crash of a Boeing Co. BA 0.06% 737 MAX in Ethiopia have reached a preliminary conclusion that a suspect flight-control feature automatically activated before the plane nose-dived into the ground, according to people briefed on the matter, the first findings based on data retrieved from the flight's black boxes. ..."
"... Boeing is doubling down on its mistakes . The lesson of the Tylenol poisoning is that if a company has a safety problem, even if it isn't its fault, it needs to do everything it can to rectify the defects and protect customers. If there is any doubt, the company needs to err of the side of safety. ..."
"... Here, unlike with Johnson & Johnson, the failings that led to 737 Max groundings all originated with Boeing. Yet rather than own the problems and go overboard on fixing them to restore confidence in the plane and in Boeing, Boeing is acting as if all it has to put in place are merely adequate measures. ..."
"... [Former Boeing engineer Mr. [Rick] Ludtke [who worked on 737 MAX cockpit features] recalled midlevel managers telling subordinates that Boeing had committed to pay the airline $1 million per plane if its design ended up requiring pilots to spend additional simulator time. "We had never, ever seen commitments like that before," he said. ..."
"... I hope the pilots in our readership speak up, but as a mere mortal, I've very uncomfortable with pilots being put in a position of overriding a system in emergency conditions when they haven't even test driven it. When I learn software, reading a manual is useless save for learning what the program's capabilities are. In order to be able to use it, I have to spend time with it, hands on. Computer professionals tell me the same thing. It doesn't seem likely that pilots are all that different. ..."
"... Boeing does not seem to comprehend that it is gambling with its future. What if international flight regulators use the Max 737 as a bloody flag and refuse to accept FAA certifications of Boeing planes, or US origin equipment generally? Do you think for a nanosecond that the European and Chinese regulators wouldn't use disregarding the FAA as a way to advance their interests? Europe would clearly give preference to Airbus, and the Chinese could use Boeing to punish the US for going after Huawei. ..."
"... And yet we do not see anyone suggesting the obvious solution to this problem; eliminating the 737 MAX type of aircraft altogether. ..."
"... I don't think that Boeing can afford to drop the 737 MAX. This aircraft was in response to the Airbus as they did not have any new aircraft designs on the boards to take it on. So they modified a 1970s design as a profitable stopgap solution. ..."
"... Boeing were designing a follow-on to the 737, but panicked when the A320Neo came and went for the MAX instead as they could deliver it much quicker and cheaper than a new aircraft. ..."
"... If its true that they are another example of a once great engineering company enslaved to the quarterly results, then it may well be that all work on the replacement stopped when they put their engineers to work on the MAX line. If that's the case, then they really are screwed. Ten years is an absolute minimum to get a brand new aircraft delivered to customers from a standing start. ..."
"... The newer versions of the 737 have nearly twice the max takeoff weight of the original, but with the same landing gear and nearly the same wing area. ..."
"... Airbus probably can't produce enough Neo to make up for the shortfall, but they essentially own the Bombardier C-Series now (ironically, made in Mobile, Alabama and relabelled the Airbus 220) which could prove an excellent investment by Airbus. ..."
"... Regarding the FAA I have read in Spanish press that Daniel Elwell declared in the congress (translated from Spanish) that "I can't believe that airline companies tried to save a few thousand dollars on a feature that increases safety". This is a bad try to shift blame from Boeing to airline companies and if anything will reduce (eliminate) the international confidence on FAA regulations. ..."
"... Managers telling this to engineers before a plane is designed is one thing. Telling it to them after the plane been designed but while its user interface is being designed is outrageous. ..."
"... And I think the plane actually has two (one on each side) , but for some reason, their inputs weren't combined. There's a slight subtlety that the air flow is 3 dimensional, so when the plane is turning, and particularly turning+climbing, the readings of the two might vary slightly – but that's for the software to sort out. They reportedly didn't hook both of them up to both flight computers – why is an interesting question. There's probably a practical reason, but ..."
"... What the folks at Boeing may not realise is that the more they double-down on this bizarre tactic of using spin-doctoring as a crisis management tool aimed at an audience that is rapidly losing trust in the company ( and frankly may no longer believe anything coming out of the corporate communications department at Boeing), the harder it's going to be to reverse course by coming out and saying "we screwed up and will do whatever it takes to fix this". This debacle has all the makings of a large scale cover up and the continued mala fide attempts to deflect focus away from taking ownership of and accountability for this crisis will only result in continued assault on an already battered reputation. ..."
"... As an aside, the malaise at the FAA has been much documented on these pages and elsewhere recently, from the egregious abdication of its regulatory responsibilities to Boeing to having a top position go unfilled for over a year, my question to US readers is whether a comparable level of capture by corporate interests has similarly defanged the FDA? ..."
Mar 29, 2019 | www.nakedcapitalism.com

Boeing compromised on sound engineering with the 737 Max . Recall the origins of the problem: Boeing was at risk of losing big orders to a more fuel-efficient Airbus model. Rather than sacrifice market share, Boeing put more fuel-efficient, larger engines on the existing 737 frames. The placement of the engine created a new safety risk, that under some circumstances, the plane could "nose up" at such a steep angle as to put it in a stall. The solution was to install software called MCAS which would force the nose down if the "angle of attack" became too acute.

Before getting to today's updates, experts have deemed the 737 Max design to be unsound. For
The word "kludge" keeps coming up when pilots and engineers discuss Boeing's 737 Max , from Quartz:

Again and again, in discussions of what has gone wrong with Boeing's 737 Max plane in two deadly crashes within five months, an unusual word keeps coming up: kludge.

Merriam-Webster defines kludge -- sometimes spelled kluge -- as "a haphazard or makeshift solution to a problem and especially to a computer or programming problem." Oxford defines it as, in computing, "A machine, system, or program that has been badly put together, especially a clumsy but temporarily effective solution to a particular fault or problem."

In the case of the 737 Max, it's the combination of how two separate problems interacted -- a plane whose design introduced aerodynamics issues and what now appears to have been a poorly designed anti-stall system -- that seems to be drawing many to turn to Granholm's term. The problems were compounded in many ways, including by the fact that pilots were not told of or trained for the Maneuvering Characteristics Augmentation System (MCAS) before the Lion Air crash, which killed all 189 on board.

"My concern is that Boeing may have developed the MCAS software as a profit-driven kludge to mitigate the Max 8's degraded flight characteristics due to the engine relocation required to maintain ground clearance," commented Philip Wheelock on a New York Times story about the plane's certification process this week. "Not convinced that software is an acceptable solution for an older design that has been pushed to its inherent aeronautical design limits."

"Indeed, it seems the 737 MAX was a kludge to an existing design, and that MCAS was a kludge on top of that," said a commenter on Hackaday .

Lambert found more damning takes, which he featured in Water Cooler yesterday. First from the Seattle Times :

Boeing has long embraced the power of redundancy to protect its jets and their passengers from a range of potential disruptions, from electrical faults to lightning strikes. The company typically uses two or even three separate components as fail-safes for crucial tasks to reduce the possibility of a disastrous failure. So even some of the people who have worked on Boeing's new 737 MAX airplane were baffled to learn that the company had designed an automated safety system that abandoned the principles of component redundancy, ultimately entrusting the automated decision-making to just one sensor -- a type of sensor that was known to fail. Boeing's rival, Airbus, has typically depended on three such sensors. "A single point of failure is an absolute no-no," said one former Boeing engineer who worked on the MAX, who requested anonymity to speak frankly about the program in an interview with The Seattle Times. "That is just a huge system engineering oversight. To just have missed it, I can't imagine how."

And the second, from software developer Greg Travis who happens also to be a pilot and aircraft owner:

That no one who wrote the MCAS software for the 737 MAX seems to have even raised the issue of using multiple inputs, including the opposite angle of attack sensor, in the computer's determination of an impending stall is mind-blowing.

As a lifetime member of the software development fraternity, I don't know what toxic combination of inexperience, hubris, or lack of cultural understanding led to this. But I do know that it's indicative of a much deeper and much more troubling problem. The people who wrote the code for the original MCAS system were obviously terribly far out of their league and did not know it. How can we possibly think they can implement a software fix, much less give us any comfort whatsoever that the rest of the flight management software, which is ultimately in ultimate control of the aircraft, has any fidelity at all?

Ouch.

And we're giving short shrift to how Boeing compounded the problem, for instance, by making it an upcharge to have the 737 Max have a light showing that its angle of attack sensors disagreed (the planes did have two, but bizarrely, only one would be giving data to the MCAS system on any day), or hiding the fact that there was a new safety automated safety system in two paragraphs after page 700 in the flight manual. As Wall Street Journal reader Erich Greenbaum said in comments on an older article, How Boeing's 737 MAX Failed :

No – this isn't about "planes that fly by themselves." It's about an airplane manufacturer that put engines on an airframe they weren't designed for, having to add a flight control override to guard against said airplane's new tendency to nose up, and then adding insult to injury by driving that system with a single sensor when two are available. Oh – and charging airlines extra for the privilege of their pilots being told when one of those sensors is providing bad data.

The 737 Max has gotten a bad name not just for itself but also for the airlines that were big buyers. Southwest had taken the most 737 Max deliveries, and American was second. I happened to be looking at American for flights last night. This is what I got when I went to aa.com:

I came back to the page later to make sure I hadn't hit the 737 Max message randomly, by loading the page just when that image came up in a cycle .and that doesn't appear to be the case. I landed on the 737 Max splash a second time.

This result suggests that American has gotten so many customer queries about the 737 Max that it felt it had to make providing information about it a priority. If you click through, the next page explains how all 737 Max planes have been grounded, that American is using other equipment to fly on routes previously scheduled for those planes, but it has still had to cancel 90 flights a day.

Evidence is mounting that the MCAS system was responsible for the Ethopian Air crash in addition to the Lion Air tragedy . From the Wall Street Journal this evening :

Officials investigating the fatal crash of a Boeing Co. BA 0.06% 737 MAX in Ethiopia have reached a preliminary conclusion that a suspect flight-control feature automatically activated before the plane nose-dived into the ground, according to people briefed on the matter, the first findings based on data retrieved from the flight's black boxes.

The emerging consensus among investigators, one of these people said, was relayed during a high-level briefing at the Federal Aviation Administration on Thursday, and is the strongest indication yet that the same automated system, called MCAS, misfired in both the Ethiopian Airlines flight earlier this month and a Lion Air flight in Indonesia, which crashed less than five months earlier. The two crashes claimed 346 lives.

Boeing is doubling down on its mistakes . The lesson of the Tylenol poisoning is that if a company has a safety problem, even if it isn't its fault, it needs to do everything it can to rectify the defects and protect customers. If there is any doubt, the company needs to err of the side of safety.

Here, unlike with Johnson & Johnson, the failings that led to 737 Max groundings all originated with Boeing. Yet rather than own the problems and go overboard on fixing them to restore confidence in the plane and in Boeing, Boeing is acting as if all it has to put in place are merely adequate measures.

Reuters, which has a bias towards understatement, has an atypically pointed farming Boeing's refusal to recommend pilot simulator training for the MCAS:

Boeing Co said it will submit by the end of this week a training package that 737 MAX pilots are required to take before a worldwide ban can be lifted, proposing as it did before two deadly crashes that those pilots do not need time on flight simulators to safely operate the aircraft.

In making that assessment, the world's largest planemaker is doubling down on a strategy it promoted to American Airlines Group Inc and other customers years ago. Boeing told airlines their pilots could switch from the older 737NG to the new MAX without costly flight simulator training and without compromising on safety, three former Boeing employees said.

Specifically, the Wall Street Journal reported that Southwest, which is the biggest buyer of the 737 Max, got Boeing to agree to a financial penalty if the new plane required additional simulator training :

The company had promised Southwest Airlines Co. , the plane's biggest customer, to keep pilot training to a minimum so the new jet could seamlessly slot into the carrier's fleet of older 737s, according to regulators and industry officials.

[Former Boeing engineer Mr. [Rick] Ludtke [who worked on 737 MAX cockpit features] recalled midlevel managers telling subordinates that Boeing had committed to pay the airline $1 million per plane if its design ended up requiring pilots to spend additional simulator time. "We had never, ever seen commitments like that before," he said.

I've never flown Southwest and now I will make sure never to use them.

I hope the pilots in our readership speak up, but as a mere mortal, I've very uncomfortable with pilots being put in a position of overriding a system in emergency conditions when they haven't even test driven it. When I learn software, reading a manual is useless save for learning what the program's capabilities are. In order to be able to use it, I have to spend time with it, hands on. Computer professionals tell me the same thing. It doesn't seem likely that pilots are all that different.

In other words, Boeing's refusal to recommend simulator training looks to be influenced by avoiding triggering a $31 million penalty payment to Southwest. This is an insane back-assward sense of priorities. Boeing had over $10 billion in profits in 2018. A $31 million payment isn't material and would almost certainly be lower after tax.

Boeing does not seem to comprehend that it is gambling with its future. What if international flight regulators use the Max 737 as a bloody flag and refuse to accept FAA certifications of Boeing planes, or US origin equipment generally? Do you think for a nanosecond that the European and Chinese regulators wouldn't use disregarding the FAA as a way to advance their interests? Europe would clearly give preference to Airbus, and the Chinese could use Boeing to punish the US for going after Huawei.

Boeing's comeuppance is long overdue. The company's decision to break its union, outsource, and move to Chicago as a device for shedding seasoned employees was a clear statement of its plan to compromise engineering in the name of profit. Something like the Max 737 train wreck was bound to happen.


ambrit , March 29, 2019 at 4:51 am

And yet we do not see anyone suggesting the obvious solution to this problem; eliminating the 737 MAX type of aircraft altogether.

The crashes of the early de Havilland Comet commercial jet aircraft all but destroyed English commercial jet production. Boeing should suffer a similar fate as de Havilland. Indeed, since the Comet crashes were the result of a previously unsuspected design flaw, and Boeing's problems are self inflicted, Boeing should suffer a more drastic punishment.

The Rev Kev , March 29, 2019 at 5:12 am

I don't think that Boeing can afford to drop the 737 MAX. This aircraft was in response to the Airbus as they did not have any new aircraft designs on the boards to take it on. So they modified a 1970s design as a profitable stopgap solution.

If they dump the 737 MAX then they have nothing good to go for years. In that space of time Airbus would move in and take over many of Boeing's markets and there would be new aircraft from Russia and China coming online as well.

I do not think that it would destroy Boeing as the US government would bail it out first, but it would be a colossal setback. I doubt that they would end up on this list-

https://en.wikipedia.org/wiki/Category:Defunct_aircraft_manufacturers_of_the_United_States

Jon D Rudd , March 29, 2019 at 9:05 am

I understand that it can take up to ten years to develop a new aircraft, but the basic design of the 737 has been around since the Jefferson Airplane's "White Rabbit" (!). Given that Airbus, like Avis, was going to be trying harder for more market share, was it totally beyond Boeing's capacity to develop a follow-on for the 737 over the past, say, 20 years?

PlutoniumKun , March 29, 2019 at 9:39 am

Boeing were designing a follow-on to the 737, but panicked when the A320Neo came and went for the MAX instead as they could deliver it much quicker and cheaper than a new aircraft. What I don't know is if they are still working on a replacement or if they shelved the plans entirely.

If its true that they are another example of a once great engineering company enslaved to the quarterly results, then it may well be that all work on the replacement stopped when they put their engineers to work on the MAX line. If that's the case, then they really are screwed. Ten years is an absolute minimum to get a brand new aircraft delivered to customers from a standing start.

scott 2 , March 29, 2019 at 7:51 am

The 737 was designed to be low to the ground because it was to serve small airports where the passengers had to climb stairs to enter (which I remember doing at Burbank and Ontario years ago) The 737 Max is what you would get if the 757 and 737 had a child. The newer versions of the 737 have nearly twice the max takeoff weight of the original, but with the same landing gear and nearly the same wing area.

Perhaps a shorter version of the 757 would have been the correct move, but Southwest would have screamed bloody murder.

Pilot and aircraft owner here.

John A , March 29, 2019 at 4:56 am

The problem for airlines is the need to have more energy efficient aircraft for both cost and environment pressure reasons. The 737 max is a response to the airbus 321neo, but as I understand it, Airbus does not have the capacity to takeover cancelled orders for the 737 max.

Do airlines stick with older 737 or brazen it out with Boeing that the max problems have been resolved? And passengers. I imagine they will fall into the brackets I will never fly on a 737 max, or I trust Boeing/airline, or a fatalistic if my number is up, my number is up'.

I regularly fly with Norwegian in Europe. However I for one will never fly a max and will now prefer SAS with the 321neo. As for Ryanair, that has max on order, if they take delivery, bye bye them.

Maybe the new Russian and Chinese versions can be an option? Or will Trump sanction any airline brave enough to order them instead of Boeing?

PlutoniumKun , March 29, 2019 at 5:34 am

Airbus probably can't produce enough Neo to make up for the shortfall, but they essentially own the Bombardier C-Series now (ironically, made in Mobile, Alabama and relabelled the Airbus 220) which could prove an excellent investment by Airbus.

There are four other potential competitors –

The French have a significant input to the Sukhoi, while Bombardier were involved with the Comac. None of those are direct replacements (they are generally smaller and shorter range), but they might suit many airlines who need aircraft quickly but won't touch the Max.

None of the above can match the Boeing or Airbus for state of the art engineering, but they are cheaper to buy, so they may well now be more attractive to budget airlines and third world airlines. The big one to look out for is Ryanair – they've long been Boeings biggest customer outside the US and have stuck with 737's consistently.

They will do their usual tactic of demanding huge discounts every time Boeing look weak, and no doubt they will do the same now. But they may decide to look elsewhere (especially as they don't really need the longer range as they operate exclusively in Europe). If they opt for something like the A220 or the Irkut, then that will be an enormous blow to Boeing, because others will follow Ryanairs lead.

The Rev Kev , March 29, 2019 at 5:49 am

PK, you said that the Sukhoi Superjet had significant French input. Does that mean physical components as well? If so, I would be surprised after the Mistral amphibious assault ships fiasco. On this topic, I saw this week how the French were taking out German components out of joint French-German weapons systems and replacing them with French ones as the Germans are wary about arming countries like Saudi Arabia and so have a say in these joint systems much to the disgust of the French, hence the swap-out so the French can continue to sell these systems.

PlutoniumKun , March 29, 2019 at 6:43 am

I was thinking of the engines , which are a joint project between a French and Russian company. Ironically, the core of the engine for the Sukhoi is the M88, the engine the French developed for the Rafaele fighter. The French are exceptionally good at using military research to help their commercial companies, and vice versa.

The French are also very ruthless (i.e. immoral) when it comes to export sales. This is why they usually only partner with the British, as they know the British share their rather loose definition of ethical policy in weapons sales. And they insist on Frenchifying their systems as much as they can so there is nobody to interfere with sales.

Ignacio , March 29, 2019 at 6:04 am

Kludge translates in spanish into "chapuza" and in my view expresses very well the "solution" that Boeing brougth to the 737 Max.

Regarding the FAA I have read in Spanish press that Daniel Elwell declared in the congress (translated from Spanish) that "I can't believe that airline companies tried to save a few thousand dollars on a feature that increases safety". This is a bad try to shift blame from Boeing to airline companies and if anything will reduce (eliminate) the international confidence on FAA regulations.

Ignacio , March 29, 2019 at 6:15 am

Boeing is doubling down on its mistakes. The lesson of the Tylenol poisoning is that if a company has a safety problem, even if it isn't its fault , it needs to do everything it can to rectify the defects and protect customers. If there is any doubt, the company needs to err of the side of safety.

And that might, precisely the difference between the Tylenol and the 737 MAX affairs. Boeing knows it is their fault and the blame feeling prevents them to act as rationally as Johnson&Johnson did.

allan , March 29, 2019 at 6:53 am

The Reuters article also says the following, which seems incredibly damning:

At Boeing's factory in Renton, Washington, managers told engineers working on the MAX, including its anti-stall system known as MCAS, their designs could not trigger Level C or D training designations from the U.S. Federal Aviation Administration, the three former Boeing employees and a senior industry executive with knowledge of MAX development told Reuters. Otherwise, pilots would have to spend time in simulators before flying the new planes.

Managers telling this to engineers before a plane is designed is one thing. Telling it to them after the plane been designed but while its user interface is being designed is outrageous.

Ptb , March 29, 2019 at 7:56 am

Good review.

Certainly a relatively delicate sensor with external moving parts is a super obvious point of failure that any engineer would flag down instantly.

And I think the plane actually has two (one on each side) , but for some reason, their inputs weren't combined. There's a slight subtlety that the air flow is 3 dimensional, so when the plane is turning, and particularly turning+climbing, the readings of the two might vary slightly – but that's for the software to sort out. They reportedly didn't hook both of them up to both flight computers – why is an interesting question. There's probably a practical reason, but

Sometimes in industry what happens is you are updating a system or product, you don't want to re-certify your electronics (to make schedule or cost) , but you used all the input capacity on your logic systems/comms/wiring and still need more. So you have to "get creative" squeezing functionality into your legacy electronics. I really hope it wasn't something like that.

Jim A , March 29, 2019 at 8:11 am

ISTR that there was a crash in South America a few years back because both artificial horizons were getting info from a single pitot tube that had been taped over when the plane was being washed. The thing is, there was a switch in the cockpit to select whether the dual instruments were both using the left pitot, both the right one, or one on each. Using two sensors is not a new idea.

Jim A. , March 29, 2019 at 9:02 am

I mingled two accidents in my mind.
https://en.wikipedia.org/wiki/Copa_Airlines_Flight_201
https://en.wikipedia.org/wiki/Aeroper%C3%BA_Flight_603

John Beech , March 29, 2019 at 8:12 am

As a business owner who also happens to be a pilot and aircraft owner, I've been following this fiasco with great care. While not widely reported, Boeing submitted a software update to the FAA back in January. They're still dragging their feet and as a consequence, folks needlessly died the EA crash. To those who would say, "Nope, this is all on Boeing and the FAA for letting them run roughshod over the regulations!", let me share a bit of news with you to help you grok what dealing with the FAA is like.

Did you know AVGAS (aviation gasoline, e.g. the fuel used in the entire piston-powered fleet) still has lead in it? This, decades after MOGAS (motor vehicle gasoline, e.g. what we buy for our automobiles) was banned from using tetraethyl lead (TEL) as an antiknock compound!

Yet there's a drop in replacement available. Drop in meaning, refiners like Shell, Mobile, et al can begin mixing and distributing it using existing pipelines and trucks without so much as having to first clean the equipment or change anything whatsoever. So why isn't it used? It's because the FAA has been dragging their feet on approval. Put another way, the FAA would rather people continue being adversely affected by lead in the environment than fast tracking this.

http://www.gami.com/g100ul/news.php

Source? I know the owner of the company, and stand up guy if ever there was on, plus I've got friends who have flown with this fuel – extensively to help with testing. Bottom line? It works!

And while there's speculation this has to do with big oil not wanting to pay the patent holder and thus lobbying the FAA to obstruct permission, I'm not going down that rabbit hole. Suffice to say this stuff has been available for years and the patent clock is running down so you figure it out. Me? I do believe it's all about the Benjamins and am greatly saddened we're still damaging the environment when a replacement fuel is available we could begin using by next week! I kid you not.

Carolinian , March 29, 2019 at 8:59 am

Just to confirm, my town is on the Colonial pipeline that runs up the east coast and one of the local terminal's operators told me that they do add the lead for avgas here at the distribution facility. Switching to a different octane booster would be quite possible.

On the other hand I'm not sure the limited amount of leaded gas used by prop planes should be considered that big an environmental hazard (perhaps as someone who hangs around airports you feel differently).

Jim A. , March 29, 2019 at 8:14 am

–I'm guessing that sort of safety practice wasn't inculcated into the software engineers in the same way that it was for old school aerospace engineers. Software is often a poorly documented, partially tested black box.

oaf , March 29, 2019 at 8:17 am

Trim systems have been a part of airplanes from the earliest experiments with powered flight. They can be as simple as a bungee cord pulling on a stick, or as complex as multiple computers interacting in a *fly-by-wire* scenario. Pilots have to demonstrate more than awareness of these systems; they must demonstrate competency in their operation and oversight.They have been trained in how to identify, override, and compensate for malfunctions in any misbehaving flight control system in the aircraft for which they receive authorization. One big unknown here (in my mind) is whether a malfunctioning trim system would (or should) have been obvious to the flight crew. Another other big question is whether means of deactivation (not speaking of *override*) of the system was the same as in the previous 737 variants. Typically; this might involve pulling a labeled circuit breaker to remove power, and then manually adjusting a trim wheel on the console; or near the flight controls.

"an aircraft is a mechanical device; any component of which can fail" which I remember but increasingly; a COMPLEX electrical-mechanical device .with input from multiple people's minds and hands

The history of aircraft design and flight testing is full of unanticipated complications; frequently addressed by tweaks to details of structure and/or operational limits. The goal is to cover all possible permutations of problematic interactions of aircraft; environment, and human beings. There is a great deal of precedence in this topic.

the phrase *due diligence* comes to mind .

Thuto , March 29, 2019 at 8:17 am

What the folks at Boeing may not realise is that the more they double-down on this bizarre tactic of using spin-doctoring as a crisis management tool aimed at an audience that is rapidly losing trust in the company ( and frankly may no longer believe anything coming out of the corporate communications department at Boeing), the harder it's going to be to reverse course by coming out and saying "we screwed up and will do whatever it takes to fix this". This debacle has all the makings of a large scale cover up and the continued mala fide attempts to deflect focus away from taking ownership of and accountability for this crisis will only result in continued assault on an already battered reputation.

As an aside, the malaise at the FAA has been much documented on these pages and elsewhere recently, from the egregious abdication of its regulatory responsibilities to Boeing to having a top position go unfilled for over a year, my question to US readers is whether a comparable level of capture by corporate interests has similarly defanged the FDA? I only ask because I see a lot of supplements and other medicinal products sold here in South Africa with the "Approved by the US FDA" seal of approval and wonder whether deferring to US regulators by international regulatory bodies is still a good idea under the current climate.

oaf , March 29, 2019 at 8:32 am

The following statistical categories might generate interesting numbers.

#1: Total flight operations of all 737 types since introduction. (wheels up to wheels down)
#2: Same for Max variant in question.
#3: Difficulty reports filed for all 737 (flight related)
#4: Difficulty reports filed for Max (flight related)

TG , March 29, 2019 at 9:11 am

Boeing is, sadly, not making a 'mistake.' Boeing is too big to fail. Why should Boeing care?

EoH , March 29, 2019 at 9:30 am

Flight simulators are expensive and scheduling will likely be backed up, given the large number of existing and planned 737 Max aircraft. It's an important problem to fix, but not with the current workaround, which seems to be to use a tablet computer instead.

One would think a tablet computer would be a poor platform for a computer game, let alone to simulate flying a commercial aircraft with new s/w or h/w, the flight conditions under which they fail, and how to respond to them. All a tablet computer could simulate is turning the pages in the flight manual.

EoH , March 29, 2019 at 9:34 am

Your note should be a useful reminder to the current generation of executives at Johnson & Johnson.

They and their peers at other companies seem to have discarded the crisis management gold standard established by J & J during the Tylenol scare. It is cheaper, it seems, and provides fewer avenues of attack for the tort bar, to substitute scripts provided by the apology industry, which can trace its origins to that same Tylenol scare.

[Mar 29, 2019] Boeing Anti-Stall Software Mistakenly Activated Before Deadly Crash, Investigators Believe

Notable quotes:
"... All this is ignoring the real issue with complex aircraft today. To save money airlines pushed to eliminate the Flight Engineer. ..."
"... As the MCAS system has such authority to cause the plane to crash, a system like this should be quadruple-redundant to prevent a single source of bad data from causing a catastrophic loss of life. ..."
Mar 29, 2019 | www.zerohedge.com

Lysander Spooner , 2 minutes ago link

All this is ignoring the real issue with complex aircraft today. To save money airlines pushed to eliminate the Flight Engineer.

The one time this scenario was avoided was when a jump seat pilot saw what was going on. Both the captain and the co pilot had tunnel vision just trying to fly the damn plane. It's a myth modern aircraft are less complex the older generation aircraft that required a Flight Engineer. The computers work fine when everything is ok or the issue is straight forward but when complexity enters during an emergency its far more complex than any old piston or early jet aircraft.

None of these crashes would have occurred if a flight engineer was onboard. They have the big picture on the air-frame and train to know that air frame backwards an forwards. The pilots fly the aircraft while the flight engineer operates the systems.

Ask any qualified pilot these questions. You will get the same answer as above.

PriceAction , 4 minutes ago link

As the MCAS system has such authority to cause the plane to crash, a system like this should be quadruple-redundant to prevent a single source of bad data from causing a catastrophic loss of life.

This is compounded by the fact the pilots were unable to easily override the system and unable to know _why_ they could not control the plane when MCAS malfunctioned.

There should be outrage that this was allowed to go into production.

crazytechnician , 7 minutes ago link

These aircraft would be impossible to fly without automation. You would need at least 3 or 4 pilots and 15 engineers to keep on top of everything. There are hundreds of systems running in the background. Airbus A series for example have anywhere between 80 to 120 million lines of code depending on the type and configuration. Pilot's these days are computer terminal operators. Errors are unavoidable in software until they fail.

The trick is simulation , clearly Boeing did not simulate any of this , this aircraft should not have been certified.

olibur , 13 minutes ago link

All families on behalf of 350 victims must sue the lying Boeing.

terrific , 13 minutes ago link

The solution is less reliance on automation, at least not until AI is actually able to intervene when sensors and software malfunction, and ESPECIALLY not with aircraft, for God's sake.

pismobird , 13 minutes ago link

One H1b to anotherH1b, "I thought you were supposed to fix those 297 stubbed out error conditions on the MCAS stall sensor?" "No, I fixed the stubbed out error conditions on the SQUALL sensor!"

"It's right there on the assignment schedule."

"What's the matter can't you read English?"

( The H-1B is a visa in the United States under the Immigration and Nationality Act, section 101(a)(15)(H) that allows U.S. employers to temporarily employ foreign workers in specialty occupations. )

I got out of the coding business when they started putting these MFturkeys in charge!

Mactruck , 17 minutes ago link

This tragedy is as much about government corruption (FAA approvals) as it is about a POS company, it's shitbag execs, or third world pilots for that matter.

Rusticus2.0 , 19 minutes ago link

Without cross limiting; where 2 or more inputs cross reference each other and limit output if the variation exceeds a predetermined setpoint; Boeing employed a control system with a single point failure.

Analogous to a cars cruise control speeding up if the speedometer failed and registered zero mph.

Not if_ But When , 23 minutes ago link

I read that the Operator's Manual for this aircraft is 1400 pages. Is that possible? And if so, is this MCAS system info just hidden on page 419 like in a financial document? 1400 pages is almost as long as the cautions in a new drug advertisement. And I'm sure the technical translations for Indonesian and Ethiopian pilots are perfectly done and readily understood.

ScratInTheHat , 14 minutes ago link

That is why commercial pilots get paid high wages to do their jobs and know the aircraft they are flying. They just don't walk into a new aircraft cold turkey. This issue is covered in the manual and it is an issue that any pilot would note as a big deal. In 1965/66 the well-loved 727 had 4 crashes because pilots didn't know the aircraft. This is the same thing.

PriceAction , 3 minutes ago link

As the MCAS system has such authority to cause the plane to crash, a system like this should be quadruple-redundant to prevent a single source of bad data from causing a catastrophic loss of life.

This is compounded by the fact the pilots were unable to easily override the system and unable to know _why_ they could not control the plane when MCAS malfunctioned.

There should be outrage that this was allowed to go into production.

N0TME , 26 minutes ago link

So the MCAS doesn't take into account speed, just the AOA?

thomas.thomas73 , 27 minutes ago link

I g­­­­e­­­­t p­­­­a­­­­i­­­­d o­­­­v­­­­e­­­­r $­­9­­0 p­­­­e­­­­r h­­­­o­­­­u­­­­r w­­­­o­­­­r­­k­­­­i­­­­n­­­­g f­­­­r­­­­o­­­­m h­­­­o­­­­m­­­­e w­­­­i­­­­t­­­­h 2 k­­­­i­­d­­­­s a­­­­t h­­­­o­­­­m­­­­e. I n­­­­e­­­­v­­­­e­­r t­­­­h­­o­­­­u­­­­g­­­­h­­­­t I­­­­'­­­­d b­­­­e a­­­­b­­­­l­­­­e t­­­­o d­­­­o i­­­­t b­­­­u­­­­t m­­­­y b­­­­e­­­­s­­­­t f­­r­­i­­e­­n­­d e­­a­­r­­n­­s o­­v­­e­­r 1­­0­­k a m­­o­­n­­t­­h d­­o­­i­­n­­g t­­h­­­­i­­­­s a­­­­n­­­­d s­­­­h­­­­e c­­­­o­­­­n­­­­v­­­­i­­­­n­­­­c­­­­e­­­­d m­­­­e t­­­­o t­­r­­y. T­­h­­e p­­o­­t­­e­­n­­t­­i­­a­­l w­­i­­t­­h t­­h­­i­­s i­­s e­­n­­­­d­­l­­e­­­­s­­­­s. H­­­­e­­­­r­­­­e­­­­s w­­­­h­­­­a­­­­t I'v­­­­e b­­­­e­­­­e­­­­n d­­­­o­­­­i­­­­n­­­­g,

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bluskyes , 29 minutes ago link

Somebody turned off airplane mode on their phone.

DrBrown314 , 29 minutes ago link

The FAA had the final call on this and they failed to do their job. The MCAS was never designed to mask the airflow issues created by hanging over sized engines on an airframe designed for smaller nacelles. These bigger engines had to be mounted higher and more forward creating airflow disruption over the wing during critical climb out conditions. This bird should never have flown! It was flawed from the get go and the FAA let it slide. Now hundreds of people are dead!

archie bird , 33 minutes ago link

lol their shares are going to go down faster than one of their planes when all the lawsuits start happening

beemasters , 29 minutes ago link

If the US government doesn't intervene, all would be very easy lawsuits to win. But I suspect there will be political pressure placed to limit the liability of Boeing or a deal struck to have US taxpayers bail them out.

OliverAnd , 33 minutes ago link

I do not believe this story or any other story of how the Boeing 737 crashed. On a private jet the engines are set in the tail. If the angle of attack is high, little to no air will flow into the engines as the wings block sufficient air movement thus stalling. Hondajet has improved this by placing the engines on the wing. The engines of a Boeing 737 are placed in front of the wing, thus there should be very little effect to the airflow, unless of course the angle of attack is approaching a very large attack angle of over 70 degrees.

HRClinton , 20 minutes ago link

70° ? WTF r u smoking?

Commercial planes typically stall at AOA = 17°

If the AOA is too great, you have more drag than lift, causing the stall.

bogbeagle , 20 minutes ago link

We are talking about an aerodynamic stall of the flying surfaces.

Different thing from compressor stall.

boattrash , 18 minutes ago link

With power settings reduced to lower fuel consumption aka costs, it doesn't really make a damn where the engines are mounted.

Fed-up with being Sick and Tired , 33 minutes ago link

The question is thus begged: did this NEW Anti-Stall System replace one that had caused issues in the past? WAS THIS NEW SYSTEM needed? Are pilots not trained to invoke changes to NOSE ATTITUDE when stall indicators, in the past, were alarmed?

William Dorritt , 35 minutes ago link

Who wrote the software ?????

Cruise Control in my 16 year old car

Deactivates when I touch the gas or brakes

Boeing should buy some used cars as

reference models for their automated features.

Who wrote the software

Indians or Chinese who have never owned a car ?????

reddpill , 36 minutes ago link

The "let's assassinate some peps" system, through which remote control access and false data injection into a so called "closed" system exists. The public are done being played as fools, Boeing. How much did you sell the encryption keys for access into that closed system to 3rd parties? Why did that northern Scandinavian country spend millions removing this very system from their purchased Boeing planes? Was it because they knew? The CEO of Lion Air knows also.

beemasters , 37 minutes ago link

New ads for Boeing now include: "Safety features sold separately."

Seal Team 6 , 38 minutes ago link

This makes a big assumption, that being the AOA was faulty and MCAS came on for no reason. That's a big assumption and probably very wrong. MCAS comes on in stalls or high bank turns which we know the ethiopian pilot executed a high bank turn. The likely scenario is that the inexperienced third world pilot with his 0 hours of training on the Max miscalculated the weight of the plane on takeoff and stalled it in a turn right after he put the gear up and took the flaps off. MCAS came on as it was supposed to do, and would be the right thing to do to save the plane. If he had taken his hands off the yoke and gone to have a pee, all those people would still be alive as the computer, which is much smarter than the third world pilot, would have flown the plane. Not understanding his plane, the 28 year old pilot fought the MCAS at 1000 feet and bought the farm. The next shoe to drop will be the more interesting one. They have already released the innuendo, next to come will be the hard facts. Let's see.

bogbeagle , 29 minutes ago link

Interesting.

Wouldn't be the first stall initiated by a change of configuration. See:BA 548, Stansted, circa 1970.

HushHushSweet , 38 minutes ago link

The sensor could also have been remotely triggered to cause the crash.

XBroker1 , 39 minutes ago link

Ok, now hold up that piece of metal and pose for the camera. Let's make this look like the real thing. -Boeing

richsob , 41 minutes ago link

The only winners in this will be the lawyers. My Dad frequently told me that lawyers were bleached souls in tan suits. I didn't understand at the time but I do now.

crazytechnician , 42 minutes ago link

The MCAS will be easily fixed but the real question is why did they install this in the first instance ? Is it a bandage over something else ?

Ignorance is bliss , 43 minutes ago link

BA stock is up pre-market. I guess this story is another nothin burger that can be fixed with software.

jewish_master , 38 minutes ago link

we now exist in idiocracy : https://www.youtube.com/watch?v=Leyn-oS5ASI

Wahooo , 43 minutes ago link

These planes are simply too complex anymore. If they can't be flown by a drunk pilot, they should be grounded.

Dormouse , 45 minutes ago link

We know that's not exactly what happened because Trump called them out with his double meaning "737 killers" talking about CA death penalty and this obvious deep state distraction murder.

PeteMMM , 46 minutes ago link

Surely this will mean the plane has to be 're-certified' after maybe modifications like additional sensors, software updates and extra pilot training have been factored in. Increasingly looking like there will be no 'quick fix', and admitting MCAS was at fault is going to open Boeing up to tons of lawsuits, not to mention cancelled orders. They'll need to drop the 737 MAX name too I would guess, it's too tarnished now.

Shatzy48 , 47 minutes ago link

I'm very surprised that a responsible company like Boeing would put out such a bad system. The program should have used readings from both sensors to ensure accuracy, and the cockpit warning mechanism should not have been optional equipment given the critical nature of the system.

Wahooo , 45 minutes ago link

Yeah it's puzzling. Someone in India fucked up big time.

beemasters , 34 minutes ago link

If they were responsible, they would have halted and recalled all productions by now.

not-me---it-was-the-dog , 47 minutes ago link

i stopped flying boing when they started producing self-immolating plastic planes.

(so that's where elon stole the idea!)

[Mar 29, 2019] Boeing (BA) 737 Stall Prevention System On in Ethiopia Air Crash

Notable quotes:
"... The stall-prevention system on the Boeing Co. 737 Max jet automatically switched on before the crash in Ethiopia this month, the Wall Street Journal reported, citing preliminary findings from data on the aircraft's black boxes. ..."
Mar 29, 2019 | www.bloomberg.com

The stall-prevention system on the Boeing Co. 737 Max jet automatically switched on before the crash in Ethiopia this month, the Wall Street Journal reported, citing preliminary findings from data on the aircraft's black boxes.

The conclusion was relayed at a briefing at the U.S. Federal Aviation Administration on Thursday and is the strongest indication yet that the same system malfunctioned in both the Ethiopian Airlines flight and the Lion Air disaster in Indonesia in October, the newspaper said.

[Mar 29, 2019] Regulators Knew Of 737 MAX Trim Problems - Certification Demanded Training That Boeing Failed To Deliver

Notable quotes:
"... The MCAS system is poorly engineered and the design should never have been certified in the first place. But the issue is even worse. The certification that was given relied on false data. ..."
"... The first MCAS design, on which the safety analysis and certification was based, allowed for a maximum trim movement by MCAS of 0.6 degree of a maximum of 5 degree. Flight tests proved that to be too little to achieve the desired effects and the maximum movement was changed to 2.5 degree. ..."
"... No safety analysis for the much greater movement was conducted. The FAA and foreign regulators were not informed of it. Their certification of the 737 MAX was based on misleading data. ..."
"... But even those certifications were only conditional. They required from Boeing to include relevant training material that explained the MCAS trim system and its potential problems to the pilots. ..."
"... The original certification for the 737 MAX was issued by the U.S. regulator FAA. The European regulator EASA based its certification on the one the FAA provided but it added several of its own requirements. There is now documentary evidence that Boeing neglected to fulfill at least one of those requirements. ..."
"... The FAA is as regulator far too cozy with lobbyists and aircraft manufacturers. It outsources too much of the certification testing to the manufacturers. It should not have allowed Boeing to install a MCAS that depended on a sole sensor. ..."
"... "It's become such a kludge, that we started to speculate and wonder whether it was safe to do the MAX," Ludtke said. ..."
"... MCAS was not the only change that made the 737 MAX a 'kludge'. The design errors were inexcusable . Boeing did not inform the regulators when it quadrupled the maximum effect the MCAS system could have. These changes had side effects that were not properly analyzed. Failure of the system was hazardous and extremely difficult to handle . Indicators lights showing that the system may have failed, a safety feature, were sold as extras . ..."
"... It will take quite long to certify the changes Boeing announced for the 737 MAX. Lawsuits were filed against the company. Orders were canceled . The company is under criminal investigation. The commercial damage to Boeing will likely be larger than currently estimated. It comes on top of a recent WTO ruling that Boeing illegally received billions of dollars in subsidies and will need to compensate its competition. ..."
"... The development and production of the 787 Dreamliner, announced in 2003, was outsourced all over the world. That led to years of delays and billions in development cost overruns. In 2010 Airbus announced the A-320 NEO as a better alternative to the 737 NG. Boeing was still busy to get the 787 into the air. It had neither the engineering capacity nor the money to counter the NEO with a brand new plane. It hastily revamped the 737, a design from the 1960s, into the 737 MAX. It promised to airlines that the new plane would not require to retrain their pilots. MCAS was specifically designed to allow for that. It was a huge mistake. ..."
"... Boeing once was an engineering company with an attached sales department. It 2001, when it moved its headquarter to Chicago , it became a dealership with an attached engineering wing. The philosophical difference is profound. It is time for the company to find back to its roots. ..."
Mar 29, 2019 | www.moonofalabama.org

Regulators Knew Of 737 MAX Trim Problems - Certification Demanded Training That Boeing Failed To Deliver

A recently discovered document proves that Boeing ignored requirements international regulators made when they certified Boeing's 737 MAX airplane.

After the recent Boeing 737 MAX incident in Ethiopia we explained why it happened. Even before the plane type was grounded by the FAA we wrote:

Boeing, The FAA, And Why Two 737 MAX Planes Crashed

Our early take was confirmed by the reporting of other media which we also discussed:

Flawed Safety Analysis, Failed Oversight - Why Two 737 MAX Planes Crashed

The basic problem:

For commercial reasons Boeing wanted the new 737 version to handle like the old ones. But changes in the new version required an additional system to handle certain flight situations. The development of that system and the safety analysis of its implications were rushed through. Pilots were not informed of it and not trained to counter its failure.

The added 'maneuver characteristics augmentation system' (MCAS) depended on only one sensor. When the sensor provided false data MCAS engaged and pointed the planes towards the ground. Manual trim using the plane's trim wheel was required to regain flight stability. The pilots were not aware of that. The regulators who certified the plane as safe were unaware of the extend of the problem:

The MCAS system is poorly engineered and the design should never have been certified in the first place. But the issue is even worse. The certification that was given relied on false data.

The first MCAS design, on which the safety analysis and certification was based, allowed for a maximum trim movement by MCAS of 0.6 degree of a maximum of 5 degree. Flight tests proved that to be too little to achieve the desired effects and the maximum movement was changed to 2.5 degree.

No safety analysis for the much greater movement was conducted. The FAA and foreign regulators were not informed of it. Their certification of the 737 MAX was based on misleading data.

But even those certifications were only conditional. They required from Boeing to include relevant training material that explained the MCAS trim system and its potential problems to the pilots.

The original certification for the 737 MAX was issued by the U.S. regulator FAA. The European regulator EASA based its certification on the one the FAA provided but it added several of its own requirements. There is now documentary evidence that Boeing neglected to fulfill at least one of those requirements.

The one page document, first described by Reuters , is included in the Explanatory Note Issue 10 (pdf) to the EASA Boeing 737 type certification which was issued in February 2016.

Page 15 of the Explanatory Note discusses "Longitudinal trim at Vmo". Vmo is the maximum operational speed. The trim sets the nose of the plane up or down, independent of other pilot input. Too high up and the plane with lose lift and stall, too low down and the plane will hit terrain.

A failure of the MCAS system could trim the nose down. As a countermeasure the pilots would have to switch the trim system off. They would then manually trim the plane back into a level flight. This was a concern. The EASA note says:

Subsequent to flight testing, the FAA-TAD expressed concern with compliance to the reference regulation based on an interpretation of the intent behind "trim". The main issue being that longitudinal trim cannot be achieved throughout the flight envelope using thumb switch trim only.

EASA considered the need to use manual trim "unusual". But it allowed it to pass because the required training material would "clearly explain" the issue:

The need to use the trim wheel is considered unusual, as it is only required for manual flight in those corners of the envelope.

The increased safety provided by the Boeing design limits on the thumb switches (for out-of-trim dive characteristics) provides a compensating factor for the inability to use the thumb switches throughout the entire flight envelope. Furthermore, the additional crew procedures and training material will clearly explain to pilots the situations where use of the trim wheel may be needed due to lack of trim authority with the wheel mounted switches.


Full document

While the EASA was convinced (by Boeing?) that those situations would be discussed in "additional crew procedures and training material", Boeing did not include it in the training materials for the airlines that bought the planes:

Those situations, however, were not listed in the flight manual, according to a copy from American Airlines seen by Reuters.

Without the additional procedures and training material the 737 MAX would not have been certified. By providing the plane without the required training material Boeing essentially handed incomplete planes to its customers.

The FAA is as regulator far too cozy with lobbyists and aircraft manufacturers. It outsources too much of the certification testing to the manufacturers. It should not have allowed Boeing to install a MCAS that depended on a sole sensor.

But the bigger culprit here is clearly Boeing. The plane was developed in a rush . Even its own engineers doubted that it was safe:

Rick Ludtke, a former Boeing engineer who worked on designing the interfaces on the MAX's flight deck, said managers mandated that any differences from the previous 737 had to be small enough that they wouldn't trigger the need for pilots to undergo new simulator training.

That left the team working on an old architecture and layers of different design philosophies that had piled on over the years, all to serve an international pilot community that was increasingly expecting automation.

"It's become such a kludge, that we started to speculate and wonder whether it was safe to do the MAX," Ludtke said.

MCAS was not the only change that made the 737 MAX a 'kludge'. The design errors were inexcusable . Boeing did not inform the regulators when it quadrupled the maximum effect the MCAS system could have. These changes had side effects that were not properly analyzed. Failure of the system was hazardous and extremely difficult to handle . Indicators lights showing that the system may have failed, a safety feature, were sold as extras .

And today we learned that Boeing did not even provide its customers with the "clear explanations" the certifications required it to deliver.

These were not 'mistakes' by some lowly technicians. These were breaches of legal requirements and of trust.

It will take quite long to certify the changes Boeing announced for the 737 MAX. Lawsuits were filed against the company. Orders were canceled . The company is under criminal investigation. The commercial damage to Boeing will likely be larger than currently estimated. It comes on top of a recent WTO ruling that Boeing illegally received billions of dollars in subsidies and will need to compensate its competition.

All these are consequences of bad management decisions.

The development and production of the 787 Dreamliner, announced in 2003, was outsourced all over the world. That led to years of delays and billions in development cost overruns. In 2010 Airbus announced the A-320 NEO as a better alternative to the 737 NG. Boeing was still busy to get the 787 into the air. It had neither the engineering capacity nor the money to counter the NEO with a brand new plane. It hastily revamped the 737, a design from the 1960s, into the 737 MAX. It promised to airlines that the new plane would not require to retrain their pilots. MCAS was specifically designed to allow for that. It was a huge mistake.

Boeing once was an engineering company with an attached sales department. It 2001, when it moved its headquarter to Chicago , it became a dealership with an attached engineering wing. The philosophical difference is profound. It is time for the company to find back to its roots.

Posted by b on March 29, 2019 at 09:29 AM | Permalink

[Mar 25, 2019] When psycho automation left this pilot powerless

When it works it's great; when it not it can lead to a disaster. They make computer No.1 and the pilot No.2.
Mar 24, 2019 | www.youtube.com

D Jaquith , 1 year ago

Lesson learned all AI must have an OFF switch.

Komputar , 2 days ago

This happened at 37,000 feet, if this was triggered while taking off at 3,700 feet - none would be alive to tell the story.

[Mar 24, 2019] This aviation expert says Boeing made 'disastrously bad decision' on training for 737 MAX

Mar 18, 2019 | www.youtube.com

The recent Ethiopian Airlines crash led to the grounding of Boeing's 737 MAX planes across much of the globe. But as new details emerge about the cause of the model's second crash within five months, questions are being raised about how the plane's safety was approved in the first place. John Yang talks to Jeff Wise, a pilot and author of a book about MH370, the flight that vanished in 2014.


Kellie Hickman , 1 day ago

Hundreds of lives lost...because of nothing more than corporate greed and its enablers at the FAA.

Ray Quinn , 1 day ago

World to Boeing. Safety features are not optional! SMH😑

Zemli Drakona , 1 day ago

The warning light should be always on and should say "This plane sucks!"

die Macsmannschaft , 23 hours ago

No wonder Airbus become the new prince on the air! No wonder european produce luxurious goods, not the US!

LA's Totally Awesome , 1 day ago (edited)

So it was like driving a car while the "check engine" light is on X1000

K Me , 22 hours ago

Imagine buying a car with ABS, but the ABS failure light was an "optional extra".

CK Man , 1 day ago

$80,000 for a safety warning light! It should have been standard. How could they justify charging $80,000 for a warning light? It's like Ford charging $800 for Brake Fluid warning light, they would never have gotten away with that!

Africanknight88 , 19 hours ago

LAWSUIT and CRIMINAL CHARGES NEED TO BE FILED!!!! ....Now take that "optional".....my lord 😤🤬

Brandon E. Smith , 23 hours ago

It took only 346 lives to "improve" safety. 🙄 Boeing has always been a horrible, horrible company.

GNegasi , 1 day ago

How design or structural problems can be solved in a software update???

Jenny Kevin , 1 day ago

please don't hide the true, and don't the victim,

numbersix100 , 18 hours ago

I'll never fly on a 737 max, it's inherently unbalanced with its engines so far forward

Armando D'SOUZA , 20 hours ago

First make plane stable in flying mode when engines are producing force to move forward.

[Mar 24, 2019] Boeing 737 Max approval documents subpoenaed by fraud unit - YouTube

Mar 24, 2019 | www.youtube.com

Published on Mar 21, 2019

With the 737 Max still grounded after last week's deadly Ethiopian Airlines crash, the focus turns to Boeing. The company offered a warning system that -- for a price -- might have helped prevent the crashes. Kris Van Cleave reports.


Edmund Ming Yip Kwong , 2 days ago

This is so evil. Very disappointed at this multi-billion corporation

Arun K P , 2 days ago

I didn't know safety features were optional on planes 😂 wtf.

Suprianto , 2 days ago

$80 thousand for a warning light??? Unbelievable.... How much money can an indicator light cost? Software for detecting sensor malfunction should've been there in the first place.... For such a critical sensor, those safety systems should've been built into the systems in a $120 million dollar plane in the first place.

Ester F , 2 days ago (edited)

Why charge more for safety? It should be included by default. Then they kept saying it was safe for flight but excluded a crucial piece. It's all for profit... smh. 🧐 they are trying to deflect blame on the airline. Those planes should have never been sold in the first place.

Schmoo , 2 days ago

WOW! An add-on safety feature? Are you kidding me? That's just pure evil!

Rust belt McCLanahan Crawling , 2 days ago

Actually they should be charged with manslaughter for both plans ! Enough playing games with just a public court hearing then a fine ! Some Big People need to be held accountable by full law ! Jail time !

Crude Rude , 2 days ago (edited)

Wow.... just wow.... So they're releasing a flawed, unfinished product that requires glitchy software they have to patch and are also offering DLC?

Wenderz 26 , 1 day ago

That is like selling cars with no brakes, airbags, or seat belts, expecting the consumer to pay extra for necessary safety equipment . UNBELIEVABLE!

The Watchful Hunter , 2 days ago

I bet Boeing has been frantically shredding and wiping documents off hard drives for a week.

Mr. Sarcastic , 2 days ago (edited)

To bad all Airlines didn't buy the Super Deluxe "I really want to Live Package" from Boeing.

Hermes Trismegistus , 2 days ago

Once again, profit over safety! Those Boeing executives are money hungry demons! What a bunch of egotistical beasts!

Ryan Davis , 2 days ago

I would bet that the actual labor and materials are less than $2000. The engineering had already been completed as it is an option. Why then would safety be optional? Criminal greed, or a low value placed on human lives. Whomever is responsible has no moral or social compass and should be punished. Not with a fine but a lengthy prison term in Leavenworth.

Joseph Holland Pontes , 2 days ago

Oh no DLC is also optional to airplanes.

Dr Evil , 2 days ago

They should never have extra charge on safety features . Evil company

jaja smile , 2 days ago

80K just cost them billions ......

george movies , 1 day ago

Boeing and FAA, GUILTY! MASS KILLING . FIRST DEGREE MURDERERS.

David L , 1 day ago (edited)

I never thought capitalism was evil. Boeing: our planes were NOT safe to fly unless you pay extra.

Q & A , 2 days ago

That's one expensive bulb. 😳

105 Wonky , 1 day ago

You can have these 2 safety features which could potentially save lives, but your gonna have to pay 🤦‍♂️

Henry kirya , 1 day ago (edited)

if we can have recalls for cars, why cant we have the same for aircraft and force those chaps to install foolproof sensors in triplicate, complete with warning inidicators at no additional cost to the airlines!

[Mar 24, 2019] Ethiopian Airlines crash 'It seems amazing that Boeing have not provided the proper training' - YouTube

Notable quotes:
"... Profit before people. Computer says no! Failsafe failed. No manual over ride. Sorry folks. Say Your prayers. The problem maybe rebranded. Best case scenario. Impeccable flying from technical progress made. ..."
"... Totally unnecessary crash that was caused by cutting corners and greed. ..."
Mar 24, 2019 | www.youtube.com

leemsy lazy , 1 week ago

Imagines if Airbus was crashing in America like that.

Mulya hadi purnama , 1 week ago

Very Clearly, Unsafety... " Recall " and Grounded all Boeing Type 737 Max 8...Most Dangerous aircraft, almost 400 people's dead in 6 Months !!!

rocco decrescentis , 4 hours ago

No resignation! Like dumbbell n.45 used to say: You are fired!!

Robert Stephens , 1 day ago

When you see documentary of broken dreams. You'll be surprised as i was is that Boeing is using lithium batteries on these aircraft.

Zelalem Zemene , 1 week ago (edited)

Ethiopian Airlines is one of the best known safe reputation. Of course Indonesian Airlines is the best too. The crash was very similar after take off and dive into the ground. Boing is just protecting itself for its market.

Global Solutions , 6 days ago

Boeing needs to be sued for $2 billion for each victim of the Lion Air and Ethiopian Airlines plus $300 billion in punitive damages, and jail time for some executives ~ they knowingly put up unsafe planes. In its early days, the 737 also had several cashes.

QECHEW , 4 days ago (edited)

Obviously Boeing knew about the shortcomings of their design in earlier stages and instead of fixing their design they chose to use a software to fix it without informing the airlines or giving pilots adequate training in order to save costs.

GH1618 , 1 week ago

What is more surprising is that the angle-of-attack sensor system is not fail-safe.

Al Bundy , 6 days ago

Did the pilot's do the mandatory operating system Flash Player updates before takeoff?

Andy Roo , 16 hours ago

Profit before people. Computer says no! Failsafe failed. No manual over ride. Sorry folks. Say Your prayers. The problem maybe rebranded. Best case scenario. Impeccable flying from technical progress made.

Kamau Phillip , 1 week ago

The American pilots complained of the same issues with the same plane model but Boeing did nothing to correct the situation why????? ???

globalvillager700 , 3 days ago

Totally unnecessary crash that was caused by cutting corners and greed.

B M , 1 week ago

Prediction: Director of the FAA will resign!

Shinrin Yoku , 1 week ago

The MC-21300 is a much better plane anyway. Why do airlines not order it I wonder.

[Mar 24, 2019] Flying the Boeing 737 Max 8 A pilot's view from inside the cockpit - YouTube

Mar 24, 2019 | www.youtube.com

Probir Ghosh , 5 days ago

Its a shame that Boeing didn't tell this little piece of information to the rest of the world.

Ed Estrella , 5 days ago

You're telling me that lack of knowledge is what got over 300 people killed.... Beyond disturbing..

KimsonJohn , 5 days ago

Ipad course GTFOH! This is no cooking recipe. ..it's people's lives!

Weez naz , 5 days ago

56 minutes with an iPad lesson... Jesus Christ

sando wando , 1 day ago (edited)

PR stunt proudly paid by Boeing after being in bed with the WP. 😤

John S , 5 days ago

This piece of PR brought to you by Boeing!

Carl Johnson , 5 days ago

Nice ad after two crashes in less than six months

David Njabia , 5 days ago (edited)

Boeing must be lobbying really hard and it's a shame that a respectable entity like Washington Post is helping the narrative to shift the blame to pilots who are now dead. If it's a Boeing, I'll have second thoughts.

Tewoflos Telahun , 5 days ago

This video is brought to you by Boeing ! Please, Washington Post, be less biased next time.

lucius1976 , 5 days ago

1:39 MCAS = Mass Coffin Automation System

Jason L , 2 days ago

'commitment' OH PLEASE.....america was the last to ground their 737s.

Ab Xarbi , 15 hours ago

I tried to show this video to an Ethiopian, and he almost killed me.

MrXperx , 4 days ago

1. Boeing wanted a new plane with larger enginers but without spending money on a new fuselage. 2. Sold their planes to customers saying that Max type is same as the NG and that no cost is involved for retraining pilots. 3. Make the MCAS system so that the new and plane and old plane feel theoretically same to the pilot. 4. Not tell pilots about MCAS or hide critical details about the system. 5. 300+ people dead. I hope the Boeing management can sleep well knowing they have blood on their hands.

Stephen Courton , 5 days ago

Sounds like they created a dangerously unstable craft that requires a computer system to keep from stalling. Even if pilot turns off plane may have already got in situation hard to recover from manually especially near ground. Two planes found this out.

scrimmo , 21 hours ago

Time for Boeing and FAA officials to be locked up

ludovicoC , 2 days ago

To paraphrase Dr. Strangelove: "The whole point of the [MCAS] is lost IF YOU KEEP IT A SECRET! WHY DIDN'T YOU TELL THE [PILOTS], EH

[Mar 24, 2019] US Transport Department Looks Into Boeing 737 Max 8's Approval

Mar 20, 2019 | www.youtube.com

US Transport Department Looks Into Boeing 737 Max 8's Approval | al Jazeera English

https://www.youtube.com/watch?v=1ge8v5cIxm0

New investigations are starting into the certification of the Boeing 737 Max 8 after two fatal crashes in less than six months.


Damon Reynolds , 3 days ago

At the root of almost every problem today is 'cost cutting' for short term profits to satisfy roaming vulture capitalist greed. Why is the FAA 'under funded'? Why is it 'too expensive' to give pilots the sim time they need even after hundeds of people are dead??

Ardhi Adhary Arbain , 3 days ago

Ask manufacturer's engineers to check the plane for their own certification? That's crazy.

srinivas reddy , 3 days ago

I think boeing, FAA and US are working for each other I feel no surprise if they find no wrong doing

MVE , 3 days ago

profit over safety, that's what it is all about

DJ DA VINCI , 3 days ago

Did u know that when u turn off the MCAS it reset itself back on. Victims family should sue Boeing and the FAA till their last dime.

MegaTriumph1 , 3 days ago

Engines too far forward wings too swept back computer and pilot can't find center of balance and it piledrives into earth, its not a mystery. If I wanted to take a perfectly good 737 and turn it into an unflyable plane, well they did it.

Major Skies , 3 days ago

Just fix the auto pilot issue. Also, what in all of God's green earth? Pilots only learned about flying this new model with just textual information? No simulation? No wounder pilots of both airlines were confound by the conflicting warnings blaring at them in the cockpit.

GreenStorm01 , 3 days ago

First.

dinesh prabhu , 3 days ago

Ha ha ha there is no money for the faa, but the government had enough money to go on a bombing run around the world. So now who is responsible ? Boeing faa or other aviation authorities like the icao or others ? Who is going to be jailed for this mass murdering? Since they have accepted it so the faa chief should be put behind bars for lying about the inspection and the certificate !!!!!!

[Mar 24, 2019] FAA 'dropped ball' on Boeing 737 Max 8 - official - YouTube

FAA rep is a clown! It is not FAA fault and Boeing was under pressure. If one of your family was in one of those crashes, you would never shill for those corporate murders.
Mar 24, 2019 | www.youtube.com

Leon Eldarion , 5 days ago

He is a clown! It is not FAA fault and Boeing was under pressure. If one of your family was in one of those crashes, you would never shill for those corporate murders.

gtud65 cutting , 2 days ago

If BOEING company is from another country, then USA 🇺🇸 Boeing air plane ✈ crashed The Boeing company will be closed immediately

Sammy Woo , 2 days ago

Ex FAA employees have come out and say FAA doesn't have the expertise and have to rely on Boeing for aspects of the certifications, why? because dumb Americans buy politicians ever selling lower taxes. Hey dudes, u gotta spend money to hire good people duh! something gotta give. Cheap government, cheap results. U deserve what u paid for America.

Robert May , 13 hours ago

The MCAS system was not revealed to the first receivers of the Max 8's, nor was it in the Manuals. Boeing thought it would quietly do it's job in the background, but they were wrong. After the first accident from Lion Air, out of Indonesia, then all airliners were informed of this. The pilots in Ethiopia may or may not have been aware of this, and if they were they lacked insufficient training on how to deal with this problem. The MCAS system works to bring the nose of the plane down so it can fly at a level flight. MCAS get's it's information from AOA sensors that send info to the plane as to what angle the plane is flying at. Pilots have reported that the AOA sensors are faulty and sending "wrong information" and "activating" the MCAS system when it shouldn't have, causing the planes nose to point downward, and causing the plane to go into a nose dive, and this is what happened. Basically the MCAS was needed because Boeing redesigned the engines, that were bigger, and were mounted differently -- more forward and up on the wing, throwing off the center of gravity of the new 737 Max 8.The old 737 does not have this problem. AOA sensors, stands for Angle of Attack, to make sure air flow is right both over and under the wings, to make the plane aerodynamic. According to reports from pilots, you can "disengage" the MCAS SYSTEM, buy pulling back on the yoke, and this will do it. At the same time there are wheels by the throttle that you turn manually, to trim the planes stabilizer manually by yourself. This was done many times by well trained American pilots, who averted crashes with this jet. So, proper training and awareness could have saved a lot of lives. Let's not forget these MAX 8 jets have been flying for a couple years, with thousands of flights in North America and developed countries with "no" accidents, and pilots say the plane flies beautifully. They say it's a very smooth flying aircraft, and a pleasure to pilot. So, who's responsible for this -- well it's Boeing, for non disclosure of the MCAS system, and what to do, if it functions in error, and how to manually disengage the system. In my opinion, all pilots should know how to manually take a plane from takeoff, and land it smoothly with no automation, or computers to help them -- just like in the old days. Over the last 20 years, there have been so very few major aircraft go down. I'm all for automation, but I fully support proper pilot training should some of this automation fail -- like faulty sensors. It's completely crazy to rely on robots or Artificial Intelligence ( AI ) to fly planes, if you don't understand how the computers work, and how they fly the plane, and in the event of a failure of the computer, you can then shut it off, and have "no problem" , and take control of the aircraft yourself,- "manually" with a lot of confidence. I SHOULD ADD - this MCAS system and it's AOA sensors, should all be mandatory on a plane, and not be sold as extras, same as brakes on a car. You don't play around with peoples lives, to make a few extra dollars, selling "options." These features "must be standard equipment", on all these aircraft sold, PERIOD. This is why I'm "very against" self driving cars'. Can you imagine all the accidents that will happen from "faulty sensors." WOW , it will be a nightmare. Faulty sensors could be caused by snow, ice, extreme heat or cold. Are we getting so lazy that we need to have Artificial Intelligence driving our cars. No thanks for me, I'll drive my own car, and hope that people will rebel against this idea, and the makers of these cars, won't sell any of them, and thus, taking them off the market.This Boeing Max 8 should send a good example, of things to come if we allow driverless cars. Not for me, and I hope the general public will agree with this.

You Tube , 2 days ago

Terrorists aren't needed to bring down airliners and frighten the public. Boeing and a failed Trump policy, that won't staff FAA department with a permanent and qualified leader, are managing the same thing through their fashionable neglect and arrogance.

Jackyboy335 , 3 days ago (edited)

The word Federal is part of this....right ? Profit is king...right ? "...we are a country of laws.."....right ?

Armando D'SOUZA , 3 days ago

Just look at the investigation of sinking and tilting Mellilium Tower in sanfransico. Building concrete Foundation and glasses are cracking and investigators are still studying what caused the two glass windows to crack. Similar investigation is going on how these two Boeing max crashed.

AJJ Against Jihadi Justin , 5 days ago

The FAA is in Boeings pocket book. Search... problems with Boeing 737 next generation with structural dangers reported on sbs datline australia

Vic Chavez , 5 days ago

Trump privatized the faa and this is what happens.

Wizkin Li , 5 days ago

No no no, this time it's all A320 neo 's fault

osidartaha2 , 4 days ago

Deadly strategie from Boeing for quick profits and market shares . Airliners are built to be operated for at least a couple of decades Boeing was providing worldwidely flying coffins made by mixing new technologies (leap engine ) with cheap and old technologies (1/2 century old airframe).A new well designed aircraft is stable, well-balanced without extra software's help.

barrych mak , 4 days ago

Check also the Boeing 767-300 nosedive crash on 23 Feb 2019 ! 3 Boeing nosedive crashes in 5 months !!!

I.P. Knightly , 3 days ago

Trump nominated his personal pilot to head up the FAA. After 2 years, they still have an "acting" director. Tim Boeing shows up at Mar-a-lago every weekend. What could possibly go wrong?

Peter Wexler , 1 day ago

I dissented this.

yin ng , 5 days ago

Same as to Ask Wall Street to regulate Wall Street and the Bankers to regulate themselves. Or ask the committed criminals to jail themselves.

Paradigm , 5 days ago

Byproduct of revolving doors.

Paul Forester , 3 days ago

This been a long time coming. Who cut the FAA? BOTH PARTIES DID! The system is gonna fall apart because too much damage has been done. Just keep paying people peanuts and have them try to do a skilled job. My cousin quit the airline industry because they don't want people to be able to pay for the education needed for these jobs. Like who program these systems.

roxar69 , 19 hours ago

So the merica is not really a saint..so now it not america dream but america dreaming..

Marcus Coyle , 5 days ago

Looks like I'll be getting that 🚲 sooner than later. I won't be traveling by plane for a few Give it time for all the smoke to clear and heads to roll😳

[Mar 23, 2019] Boeing Crapification 737 MAX Play-by-Play, Regulatory Capture, and When Will CEO Muilenburg Become the Sacrificial Victim by Lambert Strether

Notable quotes:
"... By Lambert Strether of Corrente . ..."
"... "It's a very, very serious investigation into basically, was there fraud by Boeing in the certification of the 737 MAX 8 ?" Arthur Rosenberg, an aviation attorney who is representing six families whose relatives died in the Ethiopian Airlines and Lion Air crashes, explained. ..."
"... Rosenberg expects the criminal probe to question whether Boeing fully disclosed to the FAA the engineering of the 737 Max 8's MCAS flight control system, called MCAS (Maneuvering Characteristics Augmentation System), during the plane's certification process. The flight control system was designed to prevent the plane from stalling. ..."
"... Unfortunately for Boeing and the passengers its crashed aircraft were carrying, the MCAS system was very poorly implemented. ..."
"... The single sensor was the result of regulatory capture, not to say gaming; see below. ..."
"... Black box data retrieved after the Lion Air crash indicates that a single faulty sensor -- a vane on the outside of the fuselage that measures the plane's "angle of attack," the angle between the airflow and the wing -- triggered MCAS multiple times during the deadly flight, initiating a tug of war as the system repeatedly pushed the nose of the plane down and the pilots wrestled with the controls to pull it back up, before the final crash. ..."
"... Regulatory Capture : Commercial aircraft need to be certified by the FAA before launch. The Washington Post labels today's process "self-certification": ..."
"... In practice, one Boeing engineer would conduct a test of a particular system on the Max 8, while another Boeing engineer would act as the FAA's representative , signing on behalf of the U.S. government that the technology complied with federal safety regulations, people familiar with the process said. ..."
"... (Note that a 10-year-old process would have begun in the Obama administration, so the regulatory process is bipartisan.) I understand that " safety culture " is real and strong, but imagine the same role-playing concept applied to finance: One bankers plays the banker, and the other banker plays Bill Black, and after a time they switch roles . Clearly a system that will work until it doesn't. More: ..."
"... The process was occurring during a period when the Transportation Department's Office of Inspector General was warning the FAA that its oversight of manufacturers' work was insufficient. ..."
"... The FAA, citing lack of funding and resources, has over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes. ..."
"... Alert readers will note the similarity to the Neoliberal Playbook , where government systems are sabotaged in order to privatize them, but in this case regulatory capture seems to have happened "by littles," rather than out of open, ideological conviction (as with the UKs's NHS, or our Post Office, our Veteran's Administration, etc.). ..."
"... Several FAA technical experts said in interviews that as certification proceeded, managers prodded them to speed the process. Development of the MAX was lagging nine months behind the rival Airbus A320neo. Time was of the essence for Boeing . ..."
"... In this atmosphere, the System Safety Analysis on MCAS, just one piece of the mountain of documents needed for certification, was delegated to Boeing . ..."
"... It should be clear at this point that the central claims of Muilenburg's letter are false. ..."
"... The self-certification debacle that allowed MCAS to be released happened on Muilenburg's watch and is already causing Boeing immense reputational damage, and a criminal case, not to mention the civil cases that are surely coming, will only increase that damage. Mr. Market, the Beltway, and even Trump, if his trade deals are affected, will all soon be bellowing for a sacrificial victim. Muilenburg should recognize the inevitable and gracefully resign. Given his letter, it looks unlikely that he will do the right thing. ..."
"... Beyond that ultimate problem is the ultimate regulatory problem: regulatory capture of the FAA by the airline companies. As a result, the FAA represents "its customers" the airplane makers, not the public users and customers. This is like the banks capturing the Fed, the Justice Dept. and Treasury to promote their own interests by claiming that "self-regulation" works. Self-regulation is the polite word for fraudulent self-indulgence. ..."
"... I would be surprised if the European Airbus competitors do not mount a campaign to block the 737-Max's from landing, and insisting that Boeing buy them back. This gives Airbus a few years to grab the market for these planes. ..."
"... This probably will throw Trump's China trade fight into turmoil, as China was the first country to ground the 737-Max's and is unlikely to permit their recovery without a "real" federal safety oversight program. Maybe Europe, China and other countries henceforth will each demand that their own public agencies certify the plane, so as to represent users and stakeholders, not only stockholders. ..."
"... The moral: Neoliberalism Kills. ..."
"... Rule #2 of Neoliberalism: Go die. ..."
"... > "Maybe Europe, China and other countries henceforth will each demand that their own public agencies certify the plane." ..."
"... As if the 737 MAX were the chlorinated chicken of aircraft. ..."
"... "This gives Airbus a few years to grab the market for these planes." ..."
"... Regulatory capture is rampant throughout the economy. Boeing self-certification being delegated by the FAA is not unlike the situation with electric transmission utilities. ..."
"... that is subject to both FERC and NERC regulation. ..."
"... In hindsight Boeing would have perhaps been better off to leave off the MCAS altogether and depend on pilot retraining to cover the altered handling. ..."
"... Reports I've read indicates that Boeing ignored even the clearly inadequate certification. "Documentation provided to the FAA claims that the MCAS system can only adjust the horizontal tail on the plane by 0.6 degrees out of a maximum of five-degrees of nose-down movement. But that limit was later increased to 2.5-degrees of nose-down movement. Boeing didn't communicate the change from 0.6-degrees to 2.5-degrees until after Lion Air." ..."
"... Boeing could also be liable for damages due to 737 groundings and due to delays in delivery of contracted planes. ..."
"... The analogy has been made between this the 737 MAX story and the Tylenol story. J&J got out in front of the problem and saved the product (and their company). Boeing's problem is of that order, and Muilenberg -- that letter! -- seems incapable of understanding that; insular, arrogant. One more reason to fire the dude toot sweet. If he comes out of his next review with a raise -- Everything Is Like CalPERS™ -- consider shorting Boeing ..."
"... Allowing this to happen seems the ultimate in short term thinking by Boeing. US manufacturers have always had an advantage over competitors because the FAA was held in such high regard worldwide that it was the de facto world safety regulatory body – every country followed its lead. But this chipping away of its authority has led to a near fatal loss of faith, and will no doubt lead to European and Asian regulatory authorities being strengthened. And no doubt commercial realities will mean they will look much more closely at US manufactured aircraft if there is some benefit to their own manufacturers. ..."
"... The Times thinks Boeing is too big to fail. Without a blockbuster Max, I don't see how Boeing maintains its current status in the industry. ..."
"... I also think they have been completely afflicted by the defense contractor mentality. ..."
"... Yes, the famous McDonnell-Douglas reverse takeover , where financial engineers inserted their sucking mandibles into an actual ..."
"... Note that Muilenberg came up through the defense side of the company not the commercial aircraft side. He may simply not have been equipped to understand FAA regulation at any deep level, hence the rot that finally surfaced. ..."
"... The tragedy is that corporate media in pursuit of profits will keep us up to date but will never mention the 6 or 8 minutes of terror for the 346 souls aboard the two flights. They will cover the criminal negligence trial if there are ever indictments. But, the news reports never will say that neoliberalism, deregulation, and privatization are the root causes of the deaths. ..."
"... Boeing also clearly did not know its customers . It should be engineering for the sort of pilots who are going to be hired by Lion Air, or any rapidly expanding airline in what we used to all the Third World. Hegemony, it seems, makes you insular and provincial. ..."
"... "The FAA, citing lack of funding and resource": I don't suppose I'll survive to see any arm of government not blame lack of funds for its boneheaded or corrupt incompetence. ..."
"... That's how I feel. The tech doc department at Boeing sounds like a horrible place to work; MBAs or their goons telling you all the time to do stuff you know is wrong. It's not surprising people were willing to talk to the Seattle Times; I bet there are more people. (Hey, Seattle Times! How about people testing the 737 MAX in simulators (assuming this is done)). ..."
"... Interestingly, and maybe relevant to the problem of confusion for the pilots, is that Boeing has had another automatic trim-modifier operating on its 737s for some time, the speed-trim system (STS): ..."
"... This system also modifies the stabilizer position during manual flight. Like MCAS, it was brought in to improve stability under certain flight conditions (the reasons for which are far beyond my knowledge). There is an indication that the pilots on the flight before the Lion Air crash misinterpreted MCAS actions for STS behavior. ..."
"... authority would revert to the pilot ..."
"... How many years ago did Wall Street take over the fortunes of the company? Why did they move their headquarters from their birthplace of Seattle to Chicago? Why did they start assembling planes in South Carolina and China? Was it to improve aviation safety? Or, to allow the profiteering parasites to feed off the carcass of the company? ..."
"... President Trump, here's a reelection tip: "Today I am declaring that all American registered aircraft flying in American airspace must be maintained in the U.S." ..."
"... Amazingly, Trump seems to have done OK on this. First, he didn't cave to Muilenberg's (insane, goofy, tone-deaf) request to keep the 737 flying; then he frames the issue as complexity (correct, IMNSHO), and then he manages to nominate a Delta CEO as head of the FAA . ..."
"... we're seeing signs that a crapification process has begun on the safety side in this industry. (It has been proceeding for years on the service/amenities side.) ..."
"... Considering the fact that all these 737s are grounded as no airline trust them to not kill a plane load of passengers and crew, this is a really big deal. Putting aside the technical and regulatory issues, the fact is that the rest of the world no longer trusts the US in modern aviation so what we have here is a trust issue which is an even bigger deal. ..."
"... Loss or at least wobbliness of imperial hegemony, like. It's not just the aircraft, it's US standards-setting bodies, methods, "safety culture," even -- dare we say it -- English as the language of aviation. French is no longer the language of diplomacy, after all, though it had a good run. ..."
"... Because markets. Neoliberalism puts everything up for sale. Including regulation. Oversimplifying absurdly: And so you end up with the profit-driven manufacturer buying the regulator, its produce killing people, and the manufacturer canceling its future profits. That's what the Bearded One would call a contradiction.* ..."
"... know your customer ..."
"... Like you, I am a retired software engineer, so I have followed an aviation blog discussion of this issue quite closely since it emerged as a probable software and system design failure. As the blog is open to all, its signal-to-noise ratio is pretty low, but it seems not too difficult for any technically-minded person to separate the wheat from the chaff. My current understanding, which I believe others here are in a position to correct, if necessary: ..."
"... this story is really fascinating and seems to be true a sign of the times. ..."
"... The Post's article on the FAA and Regulatory Capture is incomplete. The process for the FAA (and probably MANY government agencies) started under Reagan, did not revert to safety under Clinton (make government smaller and all that), and then accelerated under Bush II in 2005 (not a bi-partisan time). In particular, big changes to the FAA were made in 2005 that were executive in nature and did not require Congressional approval. CF: https://www.seattletimes.com/business/delegating-aircraft-safety-assessments-to-boeing-is-nothing-new-for-the-faa/ ..."
Mar 20, 2019 | www.nakedcapitalism.com

By Lambert Strether of Corrente .

At some point in the future, I'd like to do failure matrix for the pathways to misfortune ( example of such a matrix here ) that precipitated two deadly Boeing 737 MAX crashes on take-off in five months , but I don't feel that I have enough information yet. (I'm not unsympathathetic to the view that the wholesale 737 MAX grounding was premature on technical grounds , but then trade and even geopolitical factors enter in, given that Boeing is a "national champion.") We do not yet have results from the cockpit voice and flight data recorders of either aircraft, for example. But what we do know is sufficiently disturbing -- a criminal investigation into Boeing had already been initiated after the Lion Air crash, but before the Ethiopian Airlines crash -- that I think it's worthwhile doing a play-by-play on the causes of the crashes, so far as we can know them. About that criminal investigation :

According to the Wall Street Journal, a Washington D.C. grand jury issued a March 11 subpoena requesting emails, correspondence, and other messages from at least one person involved in the development of the aircraft.

"It's a very, very serious investigation into basically, was there fraud by Boeing in the certification of the 737 MAX 8 ?" Arthur Rosenberg, an aviation attorney who is representing six families whose relatives died in the Ethiopian Airlines and Lion Air crashes, explained.

"Nobody knows the answer to that yet," Rosenberg cautioned, adding that he had not yet seen the Justice Department's subpoena and therefore could not know its full scope.

Rosenberg expects the criminal probe to question whether Boeing fully disclosed to the FAA the engineering of the 737 Max 8's MCAS flight control system, called MCAS (Maneuvering Characteristics Augmentation System), during the plane's certification process. The flight control system was designed to prevent the plane from stalling.

Bloomberg comments :

A possible criminal investigation during an aircraft accident investigation is highly unusual . While airline accidents have at times raised criminal issues, such as after the 1996 crash of a ValuJet plane in the Florida Everglades, such cases are the exception.

Before we get to the play-by-play, one more piece of background: CEO Dennis Muilenburg's latest PR debacle, entitled " Letter from Boeing CEO Dennis Muilenburg to Airlines, Passengers and the Aviation Community ." The most salient material:

Safety is at the core of who we are at Boeing, and ensuring safe and reliable travel on our airplanes is an enduring value and our absolute commitment to everyone. This overarching focus on safety spans and binds together our entire global aerospace industry and communities. We're united with our airline customers, international regulators and government authorities in our efforts to support the most recent investigation, understand the facts of what happened and help prevent future tragedies. Based on facts from the Lion Air Flight 610 accident and emerging data as it becomes available from the Ethiopian Airlines Flight 302 accident, we're taking actions to fully ensure the safety of the 737 MAX. We also understand and regret the challenges for our customers and the flying public caused by the fleet's grounding.

Boeing has been in the business of aviation safety for more than 100 years, and we'll continue providing the best products, training and support to our global airline customers and pilots. This is an ongoing and relentless commitment to make safe airplanes even safer .

Soon we'll release a software update and related pilot training for the 737 MAX that will address concerns discovered in the aftermath of the Lion Air Flight 610 accident.

Fine words. Are they true? Can Boeing's "commitment to everyone to ensure " safe and reliable travel" really be said to be "absolute"? That's a high bar. Let's see!

I've taken the structure that follows from a tweetstorm by Trevor Sumner (apparently derived from a Facebook post by his brother-law, Dave Kammeyer ). However, I've added topic headings, changed others, and helpfully numbered them all, so you can correct, enhance, or rearrange topics easily in comments (or even suggest new topics). Let me also caveat that this is an enormous amount of material, and time presses, so this will not be as rich in links as I would normally like it to be. Also note that the level of abstraction for each topic varies significantly: From "The Biosphere" all the way to "Pilot Training." A proper failure matrix would sort that out.

* * *

(1) The Biosphere : The 737 MAX story beings with a customer requirement for increased fuel efficiency. This is, at bottom, a carbon issue (and hence a greenhouse gas issue , especially as the demand for air travel increases, especially in Asia). New biosphere-driven customer demands will continue to emerge as climate change increases and intensifies, and hence the continued 737 MAX-like debacles should be expected, all else being equal. From CAPA – Centre for Aviation :

The main expected impacts of climate change on aviation result from changes in temperature, precipitation (rain and snow), storm patterns, sea level and wind patterns. In addition, climate change is expected to lead to increased drought, impacts on the supply of water and energy, and changes in wildlife patterns and biodiversity. Consequences for aviation include reduced aircraft performance, changing demand patterns, potential damage to infrastructure, loss of capacity and schedule disruption.

All of these factors will affect aircraft design, manufacturing, maintenance, and use, stressing the system.

(2) Choice of Airframe : The Air Current describes the competitive environment that led Boeing to upgrade the 737 to the 737 MAX, instead of building a new plane:

Boeing wanted to replace the 737. The plan had even earned the endorsement of its now-retired chief executive. We're gonna do a new airplane," Jim McNerney said in February of that same year. "We're not done evaluating this whole situation yet, but our current bias is to not re-engine, is to move to an all-new airplane at the end of the decade." History went in a different direction. Airbus, riding its same decades-long incremental strategy and chipping away at Boeing's market supremacy, had made no secret of its plans to put new engines on the A320. But its own re-engineered jet somehow managed to take Boeing by surprise. Airbus and American forced Boeing's hand. It had to put new engines on the 737 to stay even with its rival .

Why? The earlier butchered launch of the 787:

Boeing justified the decision thusly: There were huge and excruciatingly painful near-term obstacles on its way to a new single-aisle airplane. In the summer of 2011, the 787 Dreamliner wasn't yet done after billions invested and years of delays. More than 800 airplanes later here in 2019, each 787 costs less to build than sell, but it's still running a $23 billion production cost deficit. .

The 737 Max was Boeing's ticket to holding the line on its position "both market and financial" in the near term. Abandoning the 737 would've meant walking away from its golden goose that helped finance the astronomical costs of the 787 and the development of the 777X.

So, we might think of Boeing as a runner who's tripped and fallen: The initial stumble, followed by loss of balance, was the 787; with the 737 MAX, Boeing hit the surface of the track.

(3) Aerodynamic Issues : The Air Current also describes the aerodynamic issues created by the decision to re-engine the 737:

Every airplane development is a series of compromises, but to deliver the 737 Max with its promised fuel efficiency, Boeing had to fit 12 gallons into a 10 gallon jug. Its bigger engines made for creative solutions as it found a way to mount the larger CFM International turbines under the notoriously low-slung jetliner. It lengthened the nose landing gear by eight inches, cleaned up the aerodynamics of the tail cone, added new winglets, fly-by-wire spoilers and big displays for the next generation of pilots. It pushed technology, as it had done time and time again with ever-increasing costs, to deliver a product that made its jets more-efficient and less-costly to fly.

In the case of the 737 Max, with its nose pointed high in the air, the larger engines "generating their own lift" nudged it even higher. The risk Boeing found through analysis and later flight testing was that under certain high-speed conditions both in wind-up turns and wings-level flight, that upward nudge created a greater risk of stalling. Its solution was MCAS , the Maneuvering Characteristics Augmentation System control law that would allow for both generations of 737 to behave the same way. MCAS would automatically trim the horizontal stabilizer to bring the nose down, activated with Angle of Attack data. It's now at the center of the Lion Air investigation and stalking the periphery of the Ethiopian crash.

(4) Systems Engineering : Amazingly, there is what in a less buttoned-down world that commercial aviation would be called a Boeing 737 fan site, which describes the MCAS system in more technical terms :

MCAS was introduced to counteract the pitch up effect of the LEAP-1B engines at high AoA [Angle of Attack]. The engines were both larger and relocated slightly up and forward from the previous NG CFM56-7 engines to accomodate their larger diameter. This new location and size of the nacelle causes it to produce lift at high AoA; as the nacelle is ahead of the CofG [Center of Gravity] this causes a pitch-up effect which could in turn further increase the AoA and send the aircraft closer towards the stall. MCAS was therefore introduced to give an automatic nose down stabilizer input during steep turns with elevated load factors (high AoA) and during flaps up flight at airspeeds approaching stall.

Unfortunately for Boeing and the passengers its crashed aircraft were carrying, the MCAS system was very poorly implemented. Reading between the lines (I've helpfully labeled the pain points):

Boeing have been working on a software modification to MCAS since the Lion Air accident. Unfortunately although originally due for release in January it has still not been released due to both engineering challenges and differences of opinion among some federal and company safety experts over how extensive the changes should be.

Apparently there have been discussions about potentially adding [A] enhanced pilot training and possibly mandatory [B] cockpit alerts to the package. There also has been consideration of more-sweeping design changes that would prevent [C] faulty signals from a single sensor from touching off the automated stall-prevention system.

[A] Pilot training was originally not considered necessary, because MCAS was supposed to give 737 MAX the same flight characteristics as earlier 737s; that's why pilots weren't told about it. (This also kept the price low.) [B] Such alerts exist now, as part of an optional package, which Lion did not buy. [C] The single sensor was the result of regulatory capture, not to say gaming; see below.

(The MCAS system is currently the system fingered as the cause of both the Lion Air and Ethiopian crashes; we won't know for sure until the forensics are complete. Here, however, is the scenario for an MCAS-induced crash :

Black box data retrieved after the Lion Air crash indicates that a single faulty sensor -- a vane on the outside of the fuselage that measures the plane's "angle of attack," the angle between the airflow and the wing -- triggered MCAS multiple times during the deadly flight, initiating a tug of war as the system repeatedly pushed the nose of the plane down and the pilots wrestled with the controls to pull it back up, before the final crash.

(5) Regulatory Capture : Commercial aircraft need to be certified by the FAA before launch. The Washington Post labels today's process "self-certification":

The FAA's publication of pilot training requirements for the Max 8 in the fall of 2017 was among the final steps in a multiyear approval process carried out under the agency's now 10-year-old policy of entrusting Boeing and other aviation manufacturers to certify that their own systems comply with U.S. air safety regulations.

In practice, one Boeing engineer would conduct a test of a particular system on the Max 8, while another Boeing engineer would act as the FAA's representative , signing on behalf of the U.S. government that the technology complied with federal safety regulations, people familiar with the process said.

(Note that a 10-year-old process would have begun in the Obama administration, so the regulatory process is bipartisan.) I understand that " safety culture " is real and strong, but imagine the same role-playing concept applied to finance: One bankers plays the banker, and the other banker plays Bill Black, and after a time they switch roles . Clearly a system that will work until it doesn't. More:

The process was occurring during a period when the Transportation Department's Office of Inspector General was warning the FAA that its oversight of manufacturers' work was insufficient.

Four years after self-certification began, fires aboard Boeing's 787 Dreamliner jets led to the grounding of the fleet and a wave of questions about whether self-certification had affected the FAA's oversight.

Why "self-certification"? Investigative reporting from the Seattle Times -- the article is worth reading in full -- explains:

The FAA, citing lack of funding and resources, has over the years delegated increasing authority to Boeing to take on more of the work of certifying the safety of its own airplanes.

Alert readers will note the similarity to the Neoliberal Playbook , where government systems are sabotaged in order to privatize them, but in this case regulatory capture seems to have happened "by littles," rather than out of open, ideological conviction (as with the UKs's NHS, or our Post Office, our Veteran's Administration, etc.).

(6) Transfer of Authority to Boeing : In the case of the 737 Max, regulatory capture was so great that certification authority was transferred to Boeing. In order to be certified, a "System Safety Analysis" for MCAS had to be performed. The Seattle Times :

The safety analysis:

Understated the power of the new flight control system, which was designed to swivel the horizontal tail to push the nose of the plane down to avert a stall. When the planes later entered service, MCAS was capable of moving the tail more than four times farther than was stated in the initial safety analysis document.

Failed to account for how the system could reset itself each time a pilot responded, thereby missing the potential impact of the system repeatedly pushing the airplane's nose downward. Assessed a failure of the system as one level below "catastrophic."

But even that "hazardous" danger level should have precluded activation of the system based on input from a single sensor -- and yet that's how it was designed.

So who certified MCAS? Boeing self-certified it. Once again The Seattle Times :

Several FAA technical experts said in interviews that as certification proceeded, managers prodded them to speed the process. Development of the MAX was lagging nine months behind the rival Airbus A320neo. Time was of the essence for Boeing .

"There wasn't a complete and proper review of the documents," the former engineer added. "Review was rushed to reach certain certification dates."

In this atmosphere, the System Safety Analysis on MCAS, just one piece of the mountain of documents needed for certification, was delegated to Boeing .

(I'm skipping a lengthy discussion of even more technical detail for MCAS, which includes discrepancies between what Boeing self-certified, and what the FAA thought that it had certified, along with the MCAS system acting like a ratchet, so it didn't reset itself, meaning that each time it kicked in, the nose was pitched down even lower. Yikes. Again, the article is worth reading in full; if you've ever done tech doc, you'll want to scream and run.)

(7) Political Economy : This tweet is especially interesting, because even I know that Muddy Waters Research is a famous short seller:

MuddyWatersResearch ‏ Verified account @ muddywatersre Mar 18

What's the result? Two $ BA planes have been grounded: 787 and Max. Last FAA grounding of a type of plane was 1979. In the case of the Max, FAA outsourced more than planned bc BA was 9 months behind Airbus 320neo 3/4 2 replies 4 retweets 19 likes

This is a great example of real short-termism by a corporate. It's clearly in $ BA LT interest to have robust cert system, but those chickens come home to roost years later, allowing mgmt to meet ST expectations. BTW, semi-annual reporting would do NOTHING to fix this mentality. 4

And here we are! There are a myriad of other details, but many of them will only prove out once the black boxes are examined and the forensics are complete.

* * *

It should be clear at this point that the central claims of Muilenburg's letter are false. I understand that commercial aviation is a business, but if that is so, then Muilenburg's claim that Boeing's commitment to safety is "absolute" cannot possibly be true; indeed, the choice to re-engine the 737 had nothing to do with safety. Self-certification makes Boeing "a judge in its own cause," and that clearly contradicts Muilenburg's absurd claim that "safety" -- as opposed to profit -- "is at the core of who we are."

The self-certification debacle that allowed MCAS to be released happened on Muilenburg's watch and is already causing Boeing immense reputational damage, and a criminal case, not to mention the civil cases that are surely coming, will only increase that damage. Mr. Market, the Beltway, and even Trump, if his trade deals are affected, will all soon be bellowing for a sacrificial victim. Muilenburg should recognize the inevitable and gracefully resign. Given his letter, it looks unlikely that he will do the right thing.


John A , , March 19, 2019 at 4:34 pm

Maybe they should have appointed aviation expert Nikki Haley to the Boeing board earlier.

Yikes , , March 19, 2019 at 4:35 pm

Sacrificial Victims were spread over land and sea in Kenya and Indonesia. Muilenburg and Obbie The Wan both are the criminals who profit.

dcrane , , March 19, 2019 at 4:36 pm

That should be "five months" not "five weeks" in the first sentence. Lion Air crashed on 29 October 2018.

Howard Beale IV , , March 19, 2019 at 4:39 pm

IIRC, one of the big constraints that was leveled was the need to keep the 737, regardless of version, into the same height relative to all other generations of the 737, whereas Airbus kept their height a lot higher than the 737.

If you look at many 737's over the years, some of the engine's nacelles were flat at the bottom to accommodate larger engine. Why? Boeing kept the height the same in order to maintain built-in stairs that, with virtually all airports having adjustable jetways, was basically redundant.

When you compare an A320xeo against a B737, you'll find that the Airbus rides higher when it comes to the jetways.

Michael Hudson , , March 19, 2019 at 4:42 pm

It seems to me that the Boeing 737-Max with the heavier, larger fuel-saving engines is so unbalanced (tilting over and then crashing if not "overridden" by a computer compensation) that it never should have been authorized in the first place.

When Boeing decided to add a much larger engine, it should have kept the airplane in balance by (1) shifting it forward or backward so that the weight did not tip the plane, and (2) created a larger landing-gear base so that the large engines wouldn't scrape the ground.

The problem was that Boeing tried to keep using the old chassis with the larger engines under the wings – rather than changing the wings, moving them forward or aft, and expanding the plane to permit a more appropriate landing gear.

The computer system has been blamed for not being a "smart enough" workaround to tell the plane not to plunge down when it already is quite close to the ground – with no perception of altitude, not to mention double-checking on the wind speed from both sensors.

Beyond that ultimate problem is the ultimate regulatory problem: regulatory capture of the FAA by the airline companies. As a result, the FAA represents "its customers" the airplane makers, not the public users and customers. This is like the banks capturing the Fed, the Justice Dept. and Treasury to promote their own interests by claiming that "self-regulation" works. Self-regulation is the polite word for fraudulent self-indulgence.

I would be surprised if the European Airbus competitors do not mount a campaign to block the 737-Max's from landing, and insisting that Boeing buy them back. This gives Airbus a few years to grab the market for these planes.

This probably will throw Trump's China trade fight into turmoil, as China was the first country to ground the 737-Max's and is unlikely to permit their recovery without a "real" federal safety oversight program. Maybe Europe, China and other countries henceforth will each demand that their own public agencies certify the plane, so as to represent users and stakeholders, not only stockholders.

The moral: Neoliberalism Kills.

Lambert Strether Post author , , March 19, 2019 at 5:13 pm

Rule #2 of Neoliberalism: Go die.

> "Maybe Europe, China and other countries henceforth will each demand that their own public agencies certify the plane."

As if the 737 MAX were the chlorinated chicken of aircraft.

* * *

I'm not sure about redesigning the wing and the landing gear. That might be tantamount to designing a new plane. (I do know that the landing gear is so low because the first 737s needed to accommodate airports without jetways, and so there may be other facets of the design that also depend on those original requirements that might have to be changed.)

Synoia , , March 19, 2019 at 7:45 pm

Correct – redesign the wing = new plane.

Cal2 , , March 19, 2019 at 7:45 pm

Rule #3 of Neoliberalism:

Their profits = Your cancer, which presents even more profit taking. I.e. Bayer makes the carcinogenic pesticides AND the chemotherapy drugs.

Carey , , March 20, 2019 at 10:19 am

Precisely this. Thank you.

John Zelnicker , , March 19, 2019 at 7:46 pm

@Michael Hudson
March 19, 2019 at 4:42 pm
-- -- -

"This gives Airbus a few years to grab the market for these planes."

That would be great for Mobile as the Airbus A320neo is assembled here.

Octopii , , March 20, 2019 at 7:38 am

And provides time for the A220 to ramp up in Mobile as well. Not a direct competitor for the 737 but a very good airplane developed by Bombardier.

Carey , , March 20, 2019 at 11:20 am

Also, the MC-21 is in final testing now; still using Western engines, for the moment. One to watch, maybe.

Which is worse - bankers or terrorists , , March 20, 2019 at 4:17 am

Engineering logs seem to indicate that larger landing gear cannot be added without re-engineering the plane.

115 kV , , March 20, 2019 at 8:15 am

Regulatory capture is rampant throughout the economy. Boeing self-certification being delegated by the FAA is not unlike the situation with electric transmission utilities.

After the 2003 northeast & Canada blackout, Congress passed the Energy Policy Act of 2005. It directed FERC to create an "electric reliability organization". Previously there were voluntary organizations set up after the 1966 blackout to establish operating standards in the industry. One of them was the North American Electric Reliability Council which morphed into the North American Electric Reliability Corporation (NERC) in 2006.

NERC is headquartered in Atlanta and employs hundreds of people. The standards setting generally takes place in NERC Committees and Subcommittees and sometimes from FERC itself. These are typically packed with industry people, with a patina of diversity that includes some governmental types and large industrial consumers. Let it suffice to say the electric transmission industry itself largely sets the rules how it operates.

Now consider the article in yesterday's NYT " How PG&E Ignored California Fire Risks in Favor of Profits ". The transmission circuit featured in the article (the Caribou-Palermo line) that caused the destruction of Paradise is a transmission line that is subject to both FERC and NERC regulation. As described in the article the circuit had many previous failures and was well beyond its design life.

However, both FERC and NERC have a laser focus on "market players" (think Enron or JP Morgan) and system operations (e.g., prevent collapses like the blackout of 2003). AFIK, neither FERC or NERC have prescriptive standards for routine maintenance or inspection and replacement (i.e., very expensive capital replacement that was not done on the Caribou-Palermo line), these are left to the discretion of the transmission owner. While substantive information about electric reliability is maintained by industry trade groups and submitted to FERC, what is available to the public is generally useless and subjected to scrubbing and polishing (often under the guise of Critical Energy Infrastructure Information).

We can see how self-policing work, can't we??? Rent-seeking market players can arbitrage markets, inflating prices consumers pay and make billions in profits, while California burns.

The neglectful rot in California is endemic in the industry as a whole.

A little bit of dignity , , March 19, 2019 at 4:47 pm

How about seppuku for the entire top management?

Robert Hahl , , March 20, 2019 at 7:14 am

If an airplane crashes in the forest, and no American were killed, did it make a sound?

Carolinian , , March 19, 2019 at 5:07 pm

That Seattle Times investigative story is indeed very good and a rare instance of newspaper writers troubling to carefully and cogently explain a technical issue.

In hindsight Boeing would have perhaps been better off to leave off the MCAS altogether and depend on pilot retraining to cover the altered handling.

One reason they may not have was that crash several years ago of a commuter plane in upstate NY where the plane started to stall and the confused pilot pulled up on the controls rather than making the airplane dive to regain speed. Still one has to believe that no automation is better than badly designed or malfunctioning automation.

allan , , March 19, 2019 at 5:31 pm

"depend on pilot retraining to cover the altered handling"

IANAP, but maybe the problem is that "nose up" situations can go south very quickly. For those with the stomach for it, there are videos on youtube of the 747 freighter that went nose up at Bagram a few years ago (perhaps due to loose cargo shifting backwards on takeoff). It was over very quickly.

ChrisPacific , , March 19, 2019 at 5:37 pm

Yes, I was impressed with it. Unfortunately the investigation precludes Boeing from responding as they did indicate they would have had something to say about it otherwise. But the analysis looks pretty cut and dried:

  1. Boeing underestimated the risk rating for the sensor, excluding the possibility of a catastrophic failure as occurred in the two incidents to date;
  2. Boeing also failed to implement the redundancy that would have been required even for their lower risk rating;
  3. Manual correction by the pilot as a possible risk mitigation was constrained by the fact that pilots weren't trained on the new system due to commercial factors.

Fixing any one of those three issues would have averted the disasters, although #3 is pretty precarious as you're relying on manual pilot actions to correct what is a clear systems defect at that point.

It sounds like #1 was partly because they failed to account for all the scenarios, like repeat activation raising the risk profile in certain circumstances. This is very easy to do and a robust review process is your best defense. So we could add the tight timelines and rushed process as a contributing factor for #1, and probably the others as well.

XXYY , , March 20, 2019 at 12:08 pm

People who work on accident investigation would probably agree on 2 things:

So while there is much to be profitably learned by investigating everything here, an effective "fix" may be surprisingly (or suspiciously) small in scope. There will be much clamoring for the whole plane to be resigned or scrapped, for better or worse.

anon in so cal , , March 19, 2019 at 6:28 pm

The Colgan crash, whose pilot, Renfrew, was chatting with the co-pilot below the allowed altitude? And who had apparently lied about his background, and had a pay-to-play pilot's license?

I think the Air France Airbus 447 also had a high-altitude stall (due to a faulty air speed sensor) and needed its nose pushed down, not up (which the copilots didn't realize).

Also, very informative article / OP, thanks for posting.

Synoia , , March 19, 2019 at 7:47 pm

MCAS was added to change the behavior of the plane from to tend to stall as speed increases. That is stall and crash, because such a high speed stall makes polit recovery very, very difficult.

In addition the MCAS driven amount of elevator change was initially 0.6 to 2.5, which indicates the 0.6 increment was found to be too low.

Carolinian , , March 19, 2019 at 8:07 pm

Well they are planning to keep it but

According to a detailed FAA briefing to legislators, Boeing will change the MCAS software to give the system input from both angle-of-attack sensors.

It will also limit how much MCAS can move the horizontal tail in response to an erroneous signal. And when activated, the system will kick in only for one cycle, rather than multiple times.

Boeing also plans to update pilot training requirements and flight crew manuals to include MCAS.

–Seattle Times

So apparently the greater elevator setting is not so necessary that they are not willing to reduce it. Also the max power setting would normally be on take off when the pilots are required to manually fly the plane.

Synoia , , March 20, 2019 at 12:12 pm

It is about speed, not power. I presume that MCAS was developed to solve a problem, nose up behaviour.

Carey , , March 20, 2019 at 10:28 am

Yes, that was an excellent Seattle times piece. Surprising to see that kind of truth-telling and, especially, *clarity* in an MSM piece these days. So what's the angle?

voislav , , March 19, 2019 at 5:48 pm

Reports I've read indicates that Boeing ignored even the clearly inadequate certification. "Documentation provided to the FAA claims that the MCAS system can only adjust the horizontal tail on the plane by 0.6 degrees out of a maximum of five-degrees of nose-down movement. But that limit was later increased to 2.5-degrees of nose-down movement. Boeing didn't communicate the change from 0.6-degrees to 2.5-degrees until after Lion Air."

Apparently this was done after simulations showed that 0.6 degrees was inadequate and the new 2.5 degree setting was not extensively tested before the planes were rolled out. IANAL, but this may be a serious problem for Boeing. Boeing could also be liable for damages due to 737 groundings and due to delays in delivery of contracted planes.

Big question is how 737 issues will affect 777X rollout, due at the end of the year. If 777X certification is called into question, this may cause further delays and put it at a further disadvantage against A350.

Lambert Strether Post author , , March 20, 2019 at 3:17 am

The 777 has been a great plane. Let's all pray the MBAs didn't fuck it up, too.

If I were Boeing, I'd have a team looking into the 777 certification process right now. And I'd set up a whistleblower line (so the Seattle Times doesn't get to the story first).

The analogy has been made between this the 737 MAX story and the Tylenol story. J&J got out in front of the problem and saved the product (and their company). Boeing's problem is of that order, and Muilenberg -- that letter! -- seems incapable of understanding that; insular, arrogant. One more reason to fire the dude toot sweet. If he comes out of his next review with a raise -- Everything Is Like CalPERS™ -- consider shorting Boeing

Chris , , March 20, 2019 at 1:35 pm

Thanks, Lambert, for post and comments. I don't know if this angle has been covered or explored: the relatively new way that Boeing now "manufactures" "tests" and "assembles" parts of its planes. I had dinner with new acquaintance, Boeing engineer for decades (I live near a plant in WA state). For the last few years, this engineer is stationed half year in Russia annually to oversee assembly there. In this newish, more profitable manufacturing system for Boeing, the parts come in from around the world with sketchy quality control, are then assembled by Russian workers this engineer (and other Boeing employees sent from States) supposedly oversees. But the engineer doesn't speak Russian and has too little access to translators .Needless to say, this engineer is planning an exit as soon as possible. Having grown up in WA state for 60 years with neighbors/friends who were Boeing engineers, assemblers, line workers, etc it makes me heart sick to see the current decimation of talent, rigor and wages with additional far-flung assembly factories (Russia with few translators?! who knew?). Might these manufacturing/assemblying "improvements" also be a contributing factor in these terrifying woes for Boeing?

PlutoniumKun , , March 19, 2019 at 5:57 pm

Thanks for this Lambert, fantastically informative and interesting post.

Self regulation only works when liability is transferred with it – over example, in construction whereby certification by the engineers or architects designing the building are also taking on liability in the event something goes wrong. It seems unlikely that this is the situation with Boeing.

Allowing this to happen seems the ultimate in short term thinking by Boeing. US manufacturers have always had an advantage over competitors because the FAA was held in such high regard worldwide that it was the de facto world safety regulatory body – every country followed its lead. But this chipping away of its authority has led to a near fatal loss of faith, and will no doubt lead to European and Asian regulatory authorities being strengthened. And no doubt commercial realities will mean they will look much more closely at US manufactured aircraft if there is some benefit to their own manufacturers.

Airbus will no doubt try to take advantage – just as Boeing (with some justification) tried to focus attention on the Air France Airbus loss which was attributed at least in part to excessive automation. China is pushing hard with its new Comac aircraft, but they seem to be poorly regarded worldwide (only Chinese airlines are buying). The Canadians have missed their chance with the Bombadier C-series.

JBird4049 , , March 19, 2019 at 6:07 pm

The more I read of this the more baffling it is. What was there stopping Boeing from just highlighting the changes and installing an easy manual override instead of this hidden change with effectively no way to permanently do so? Especially when in crisis mode? One could make a case of no extra training needed so long as the pilot knows about it and can easily turn it off.

Darius , , March 19, 2019 at 6:30 pm

I didn't see this before I posted my response. A more concise statement of my thoughts. This plus more robust redundant sensors. Penny wise and pound foolish.

The Times thinks Boeing is too big to fail. Without a blockbuster Max, I don't see how Boeing maintains its current status in the industry.

Synoia , , March 19, 2019 at 7:52 pm

One could make a case of no extra training needed so long as the pilot knows about it and can easily turn it off.

That's the expensive re-certification Boeing wanted to avoid.

Robert Hahl , , March 20, 2019 at 7:52 am

That would entail simulator training, that would entail modifying the simulators and the curriculum.

Darius , , March 19, 2019 at 6:22 pm

I am leaning towards thinking the kludgy design of the 727 Max could have been rolled out with no major problems if Boeing had been up front about design changes, made a robust and conservative MCAS, fully at the command of the pilot, and provided ample training for the new aircraft.

They still could have saved billions on the airframe. They would have had to acknowledge the significant modifications to the airlines with the attendant training and other costs and delays. They would have lost some sales. They still would have been far ahead of Airbus and light years ahead of where they are now.

I also think they have been completely afflicted by the defense contractor mentality.

Lambert Strether Post author , , March 20, 2019 at 3:08 am

> I also think they have been completely afflicted by the defense contractor mentality.

Yes, the famous McDonnell-Douglas reverse takeover , where financial engineers inserted their sucking mandibles into an actual engineering culture. The merger took place in 1997, 22 years ago, which is not so long, really. Note also that the finance guys drove the decision to outsource as much 787 manufacturing as possible , which creates headaches for real engineering, so the initial stumble with the 787 that led to the 737 fall is down to them, too.

Note that Muilenberg came up through the defense side of the company not the commercial aircraft side. He may simply not have been equipped to understand FAA regulation at any deep level, hence the rot that finally surfaced.

VietnamVet , , March 19, 2019 at 6:50 pm

The 737 Max crashes and Brexit are the chickens coming home to roost. NC is a treasure for your coverage of both.

Clearly upper management in Chicago only knows short term finance. Boeing stuck with old fashion hydraulic controls in the 737 but faced with an unacceptable flight characteristics of the larger more efficient engines added a fly-by-wire system to compensate for it.

The criminal charges are that besides being a faulty design (it relies on one fragile exposed sensor that if out of position keeps triggering dives until switched off) but Boeing hid it and self-certified that it was safe. Adding a discrepancy warning and position indicator for the two independent flight sensors to the cockpit video display is an extra cost feature.

Neither of the planes that crashed had the added safety display. All are cost saving measures. Finally, if a faulty sensor triggers dives, the pilot at the controls is busy with both hands on the yoke forcing the airplane to stay in the air with stall and proximity warnings are sounding. The second pilot also must realize what's going on, immediately turn off the electricity to the screw jack motor and manually turn the stabilizer trim wheel to neutral.

You can't learn this on an iPad. Both pilots should practice it together in a Flight Simulator. If the co-pilot was experienced, unlike the one in the Ethiopian crash; just maybe, they could have survived the repeated attempts by the airplane to dive into the ground on takeoff.

The tragedy is that corporate media in pursuit of profits will keep us up to date but will never mention the 6 or 8 minutes of terror for the 346 souls aboard the two flights. They will cover the criminal negligence trial if there are ever indictments. But, the news reports never will say that neoliberalism, deregulation, and privatization are the root causes of the deaths.

Lambert Strether Post author , , March 20, 2019 at 3:01 am

> if a faulty sensor triggers dives, the pilot at the controls is busy with both hands on the yoke forcing the airplane to stay in the air with stall and proximity warnings are sounding. The second pilot also must realize what's going on, immediately turn off the electricity to the screw jack motor and manually turn the stabilizer trim wheel to neutral. You can't learn this on an iPad. Both pilots should practice it together in a Flight Simulator. If the co-pilot was experienced, unlike the one in the Ethiopian crash; just maybe, they could have survived the repeated attempts by the airplane to dive into the ground on takeoff.

That's what I mean by horrid UI/UX. Might as well as both pilots to pat their heads and rub their tummies in synch. And since the two pilots have to both understand what's going on, we've multiplied the chances for failure.

Boeing also clearly did not know its customers . It should be engineering for the sort of pilots who are going to be hired by Lion Air, or any rapidly expanding airline in what we used to all the Third World. Hegemony, it seems, makes you insular and provincial.

EoH , , March 20, 2019 at 4:54 pm

Added cost, "mandatory" safety feature. Does not seem to square with the [soon to be former?] CEO's apology-industry written claim to be committed to absolute safety.

You can't make this stuff up.

dearieme , , March 19, 2019 at 7:03 pm

"The FAA, citing lack of funding and resource": I don't suppose I'll survive to see any arm of government not blame lack of funds for its boneheaded or corrupt incompetence.

But the bigger picture: suppose the FAA is to do its job properly. From where is it going to recruit its staff?

Smaller picture: it doesn't really matter whether the cocked-up MCAS killed all those people or not. Even if it's innocent of the charge, the account of its development and application is a horror story.

Bigger picture: what other horrors have been hidden by Boeing?

Lambert Strether Post author , , March 20, 2019 at 2:48 am

> the account of its development and application is a horror story.

That's how I feel. The tech doc department at Boeing sounds like a horrible place to work; MBAs or their goons telling you all the time to do stuff you know is wrong. It's not surprising people were willing to talk to the Seattle Times; I bet there are more people. (Hey, Seattle Times! How about people testing the 737 MAX in simulators (assuming this is done)).

Sounds like the MBAs in Chicago have been busy planting land mines everywhere. Somebody stepped on this one; there are others.

oaf , , March 19, 2019 at 7:05 pm

The unfortunate pilots were made test pilots; the unsuspecting passengers: Guinea pigs. Lab rats. And paid for the privilege. Some others may share this opinion. Change one little thing? Chaos Theory Rules. Same with weather/climate; folks. That rant is for later.

oafstradamus

dcrane , , March 19, 2019 at 7:08 pm

Boeing stuck with old fashion hydraulic controls in the 737 but faced with an unacceptable flight characteristics of the larger more efficient engines added a fly-by-wire system to compensate for it.

Interestingly, and maybe relevant to the problem of confusion for the pilots, is that Boeing has had another automatic trim-modifier operating on its 737s for some time, the speed-trim system (STS):

https://leehamnews.com/2019/02/01/bjorns-corner-pitch-stability-part-7/

This system also modifies the stabilizer position during manual flight. Like MCAS, it was brought in to improve stability under certain flight conditions (the reasons for which are far beyond my knowledge). There is an indication that the pilots on the flight before the Lion Air crash misinterpreted MCAS actions for STS behavior.

Synoia , , March 19, 2019 at 7:55 pm

Safety is at the core of who we are at Boeing

Yes, after money.

drumlin woodchuckles , , March 19, 2019 at 8:08 pm

At what point does "crapification" become insufficient to describe Boeing's product and process here? At what point do we have to speak of " ford-pintofication"?

barrisj , , March 19, 2019 at 8:15 pm

OK, I'm told to resubmit my crib re: "Boeing options" from the ZeroHedge "tweetstorm" by Trevot Sumner, and include a link got it:

Economic problem. Boeing sells an option package that includes an extra AoA vane, and an AoA disagree light, which lets pilots know that this problem was happening. Both 737MAXes that crashed were delivered without this option. No 737MAX with this option has ever crashed

https://mobile.twitter.com/trevorsumner/status/1106934369158078470

Ooops! "Options package"? Wait, a "package" that in the interim corrects a potentially catastrophic mfg. defect and airlines have to pay for it? Whoa, here's your late capitalism in play.

Lambert Strether Post author , , March 20, 2019 at 2:45 am

> Boeing sells an option package that includes an extra AoA vane, and an AoA disagree light

This is one of the details I could not get to (and we don't 100% know this is an issue until the forensics are done. Right now, we have narrative. Truly excellent narrative to be sure -- if only we thought of government the same way as pilots think of their aircraft! -- but narrative nonetheless).

Let me see if I have this right. Pilots, chime in!

"Authority" is one of the big words in this discussion; MCAS takes authority away from the pilot (and can do in such a drastic fashion as to crash the plane). Worse, the default case is that it can do so on the basis of a single sensor reading. In a design appropriate to the consequences for failure (i.e., a different design from that described in the "System Safety Analysis" that Boeing self-certified) MCAS would take readings from two sensors, and if they disagreed, authority would revert to the pilot . That's a general principle at Boeing, and so it's reasonable for pilots to assume that they retain authority of MCAS has not told them they don't have it any more.

Hence, the disagree light, which tells the pilots to take back authority because the sensors are confused. However, I think there are UI/UX issues with that, given that the 737 cockpit is extremely noisy and pilots have a lot to do on take-off. So a light might not be the answer. (The light also strikes me as a kludge; first, MCAS feels to me like a kludge, in that we're making the aircraft flyable only through software.* Fine for fighter jets, which can be inherently unstable, but perhaps not so fine for commercial aircraft? Then we have a second kludge, a light to tell us that the first kludge has kicked in. I dunno.)

NOTE * However, it's also true that automation affects flight characteristics all the time. So I'm not sure how savage to make this indictment.

rowlf , , March 20, 2019 at 6:00 am

The AOA indication is Service Bulletin 737-31-1650 (there may be others) and is on the both Pilot Flight Displays (PFDs). Pilots would likely abort a takeoff if they saw the indication come on before getting airborne.

California Bob , , March 19, 2019 at 8:20 pm

In hindsight, it appears Boeing should have made Mulally CEO. He appears to be competent.

Cal2 , , March 19, 2019 at 8:25 pm

"Boeing has been in the business of aviation safety for more than 100 years, "

How many years ago did Wall Street take over the fortunes of the company? Why did they move their headquarters from their birthplace of Seattle to Chicago? Why did they start assembling planes in South Carolina and China? Was it to improve aviation safety? Or, to allow the profiteering parasites to feed off the carcass of the company?

I want to fly on Boeing planes put together by well paid members of the Seattle Machinists Union, not low wage peons. Let's not even mention the maintenance of American aircraft in China and El Salvador.

https://www.bizjournals.com/chicago/news/2018/04/20/southwest-airlines-should-have-inspected-engines.html

President Trump, here's a reelection tip: "Today I am declaring that all American registered aircraft flying in American airspace must be maintained in the U.S."

Lambert Strether Post author , , March 20, 2019 at 2:32 am

> President Trump, here's a reelection tip:

> "Today I am declaring that all American registered aircraft flying in American airspace must be maintained in the U.S."

Amazingly, Trump seems to have done OK on this. First, he didn't cave to Muilenberg's (insane, goofy, tone-deaf) request to keep the 737 flying; then he frames the issue as complexity (correct, IMNSHO), and then he manages to nominate a Delta CEO as head of the FAA .

And your suggestion is very good one. I wonder if he could do that by executive order? And I wonder how many grey-beards would come off the golf courses to help out? I bet a lot.

oaf , , March 19, 2019 at 8:47 pm

The aircraft is NOT CRAP!!! However. It should have been flown A WHOLE LOT MORE before receiving certification.

*Real* test pilots should have their a–es on the line ; operating for a lot more hours at *the edge of the envelope*, as it is known. Stability should be by design; not software*patch*. Patch this!

What portion of its' MCAS system flight testing was in computer simulation? Like the so-called Doppler Radar; which *magically* predicts what the future will bring; while the experts pitch it as fact? And make life-or-death decisions on the theoretical data???
Rush to market; markets rule. We can die.

dcrane , , March 19, 2019 at 9:19 pm

The aircraft is NOT CRAP!!!

Agreed, but I think we're seeing signs that a crapification process has begun on the safety side in this industry. (It has been proceeding for years on the service/amenities side.)

Lambert Strether Post author , , March 20, 2019 at 2:25 am

> The aircraft is NOT CRAP!!!

Didn't say it was. The headline reads "Boeing Crapification," not "737 Crapification."

That said, the 737 clearly has issues, as Boeing itself knew, since if they'd had their druthers, they would have launched a new plane to replace it. See point #2.

> What portion of its' MCAS system flight testing was in computer simulation?

That is a very good question. If I understand the aerodynamics issues aright, MCAS would be most likely to kick in at takeoff, which raises a host of UI/UX issues because the pilots are very busy at that time. So was MCAS not tested in the simulators? If so, how on earth was a scenario that included sensor failure not included? It may be that there are more issues with Boeing's engineering process than the documentation issues raised by the Seattle Times, though those are bad enough.

Ron D , , March 20, 2019 at 4:18 pm

I say the 737-whatever is a flying Turd, and always has been. It has a bad wing design which means it has to fly nose up compared to other models( I always remember that when going to the restroom while going somewhere on one). And because of its poor design it has to takeoff and land at higher speeds. So when flying into someplace like Mexico City it can be quite a harrowing experience, and the smell of cooking brakes is relatively normal.

Boeing never should have let go of the 757. Now that was a good plane that was simply ahead of its time.

The Rev Kev , , March 19, 2019 at 8:53 pm

Considering the fact that all these 737s are grounded as no airline trust them to not kill a plane load of passengers and crew, this is a really big deal. Putting aside the technical and regulatory issues, the fact is that the rest of the world no longer trusts the US in modern aviation so what we have here is a trust issue which is an even bigger deal.

We now know that the FAA does not audit the work done for these aircraft but the airlines themselves do it. It cannot be just Boeing but the other aircraft manufacturers as well. Other countries are going to be asking some very hard questions before forking over their billions to a US aircraft manufacturer in future. Worse is when Ethiopia refused to hand over the black boxes to the US but gave them instead to a third party.

That was saying that based on how you treated the whole crash, we do not trust you to do the job right and not to change some of the results. It has been done before, ironically enough by France who the Ethiopians gave the black boxes to. And when you lose trust, it takes a very long time to gain it back again – if ever. But will the changes be made to do so? I would guess no.

notabanker , , March 19, 2019 at 9:44 pm

But if the discount foreign airlines had just trained their pilots and paid for the non-crashintothegroundat500mph upgrade, all of this could have been avoided.

The Rev Kev , , March 20, 2019 at 12:55 am

Do you think that there was an app for that?

Lambert Strether Post author , , March 20, 2019 at 2:23 am

> we have here is a trust issue which is an even bigger deal

Loss or at least wobbliness of imperial hegemony, like. It's not just the aircraft, it's US standards-setting bodies, methods, "safety culture," even -- dare we say it -- English as the language of aviation. French is no longer the language of diplomacy, after all, though it had a good run.

Because markets. Neoliberalism puts everything up for sale. Including regulation. Oversimplifying absurdly: And so you end up with the profit-driven manufacturer buying the regulator, its produce killing people, and the manufacturer canceling its future profits. That's what the Bearded One would call a contradiction.*

NOTE * There ought to be a way to reframe contradiction in terms of Net Present Value which would not be what we think it is, under that model.

Synoia , , March 19, 2019 at 10:05 pm

Thank you Lambert, this is very complete.

Can Boeing survive? Yes, as a much smaller company. What is upsetting to me, is that the Boeing management has sacrificed thousands of Jobs.

Lambert Strether Post author , , March 20, 2019 at 2:10 am

> Thank you Lambert, this is very complete.

I wish it were as complete as it should be! There are a ton of horrid details about sensors, the UI/UX for the MCAS system, 737 cockpit design, decisions by the marketing department, and training and maintenance for Asian airlines that I just couldn't get to. (Although most of those presume that the forensics have already been done.) But I felt that dollying back for the big picture was important to. Point #1 is important, in that all the factors that drove the 737 decision making are not only still in place, they're intensifying, so we had better adjust our systems (assuming Boeing remains a going concern -- defenestrating Muilenberg would be an excellent way to show we accept the seriousness of customer and international concern).

Bill Smith , , March 19, 2019 at 10:56 pm

Bloomberg is reporting that : "The Indonesia safety committee report said the plane had had multiple failures on previous flights and hadn't been properly repaired."

And the day before when the same plane had the problem that killed everyone the next day: "The so-called dead-head pilot on the earlier flight from Bali to Jakarta told the crew to cut power to the motor driving the nose down, according to the people familiar, part of a checklist that all pilots are required to memorize."

Lambert Strether Post author , , March 20, 2019 at 2:14 am

There's an enormous expansion of air travel in Asia. The lower end -- not flag -- carriers like Lion Air and also Air Asia are in that business to be cheap ; they're driven by expansion and known to be run by cowboys.

That said, know your customer . I would translate this into an opportunity for Boeing to sell these airlines a service package for training their ground operations. But it seems that cutting costs is the only thing the MBAs in Chicago understand. Pilots, pipe up!

Bill Smith , , March 20, 2019 at 7:13 am

Pilot training and requirements are in the hands of the country, not Boeing. If the story that the copilot of the Ethiopian Airlines plane had only 200 hours of experience that is astounding.

In the US that requirement is 1500 hours. In addition most US airlines would require more than that. And then they slot 'beginning' pilots for flights in good (better) weather as high minimums pilot.

Bill Smith , , March 20, 2019 at 7:17 am

"sell these airlines a service package" That won't help an airline that is in the business to be cheap. The Indonesia airplane was repeatedly reported for problems in prior days/flights that was never fixed.

Basil Pesto , , March 20, 2019 at 2:42 am

indeed I was just about to mention this same story. The link is here: https://www.bloomberg.com/news/articles/2019-03-19/how-an-extra-man-in-cockpit-saved-a-737-max-that-later-crashed?utm_campaign=news&utm_medium=bd&utm_source=applenews

and this quote makes an interesting follow-on to the thread yesterday with 737 Pilot (which Lambert linked to in the first paragraph here):

"The combination of factors required to bring down a plane in these circumstances suggests other issues may also have occurred in the Ethiopia crash, said Jeffrey Guzzetti, who also directed accident investigations at FAA and is now a consultant.

"It's simply implausible that this MCAS deficiency by itself can down a modern jetliner with a trained crew," Guzzetti said."

Setting aside Mr Guzzetti's background (dismissing his claim here as tendentious right off the bat would strike me as uncharitable), and without wishing to exculpate anyone, it does lend some credence to the idea that Ethiopia Airlines may have some contributory negligence here, staffing the flight with such an inexperienced first officer.

JBird4049 , , March 20, 2019 at 12:25 pm

Setting aside Mr Guzzetti's background (dismissing his claim here as tendentious right off the bat would strike me as uncharitable), and without wishing to exculpate anyone, it does lend some credence to the idea that Ethiopia Airlines may have some contributory negligence here, staffing the flight with such an inexperienced first officer.

One can often point to inexperience, incompetence, stupidity, incompetence or just bad luck when some disaster happens, but Boeing counted on perfect performance from flight crews to successfully work with a workaround needed for other workarounds that needed perfect performance to not catastrophically fail. I know enough about complexity that you cannot depend on perfection because something will always fail.

BillC , , March 20, 2019 at 7:25 am

Your excellent summary lacks some MCAS details that are not widely reported by the general-audience press.

Like you, I am a retired software engineer, so I have followed an aviation blog discussion of this issue quite closely since it emerged as a probable software and system design failure. As the blog is open to all, its signal-to-noise ratio is pretty low, but it seems not too difficult for any technically-minded person to separate the wheat from the chaff. My current understanding, which I believe others here are in a position to correct, if necessary:

A. The requirement for MCAS apparently emerged very late in the MAX's development, when it became clear that the upper cowling around the larger engines, being moved up and forward with respect to earlier 737 versions, adds nose-up force as the angle of attack (AoA) approaches the upper limits of the MAX's operating envelope because at such angles, the cowling itself generates lift beyond that of the wing.

B. As perceived by a pilot flying manually (not on autopilot), this added nose-up force makes it easier to pull back on the control column ("stick"), increasing the AoA further. This is like a car running off the asphalt onto a muddy shoulder: the steering wheel wants to turn the wrong way (toward the ditch) rather than the right way (back on the road).

C. An FAA regulation prohibits certification of an aircraft that presents the pilot with changing stick forces near stall that nudge the pilot toward the wrong reaction, 14 CFR 25.203(a) , IIRC (unfortunately, I can't find the original blog citation).

D. MCAS was put in place to satisfy this certification requirement -- not to automagically correct stalls without pilot action.

E. Other means of meeting this requirement exist, ranging from an airframe redesign that avoids the extra nose-up effect of the larger repositioned engines down to a "stick pusher" that increases the force a pilot would need to pull the stick back further in this situation.

F. Any of the other options would negate one or both of the MAX's chief selling points: little cost or schedule impact to Boeing (in a rush to meet the Airbus 320 NEO challenge) and to its customers ("No new flight crew training necessary, because to the pilot, the MAX feels just like its 737 predecessors.") That is, all the other options introduce new hardware to a completed design and the more fundamental changes could require new type certification.

G. The easiest fix was pure software: at high indicated AoA, under manual control, and with flaps up, automatically rotate the horizontal stabilizer a little bit nose-down, which increases the pressure needed to pull the stick back (nose-up). No need to tell the pilot about this in training or real time, since it's just to make MAX feel like any other 737.

H. The design presented for certification described a single small rotation. Testing showed this was insufficient to provide the tactile feedback necessary for certification in all cases, so the software fix was obvious: if the trigger conditions still hold after a 5 sec. pause, do it again.

I. Apparently nobody asked at that point, "What if the AoA indication is stuck high?" We're under schedule and cost pressure, so who wants to complexify things by (1) adding additional sanity-checking to the aircraft's AoA computations or (2) limiting how many times we add a little bit of nose-down.

J. When these details combine with a consistently erroneous AoA reading, MCAS can -- if not repeatedly countermanded or disabled and manually reversed -- eventually rotate the horizontal stabilizer to its maximum nose-down position, where it was found in both recent incidents, IIRC.

Even if the pilots figure out that's what's happening amid a cacophony of seemingly contradictory instrument readings and warnings (stick-shaker, trim wheel clacking, alarm chimes, and synthesized voices), the pilots still have to (1) cut power to the electrical trim systems and (2) restore the required trim, which may then require as many as 50 manual turns of a trim wheel. If you're near the ground, time is short

A minority of commenting pilots assert that any competently trained cockpit crew should be able to identify MCAS misbehavior quickly and power off automatic trim per the same checklist that was prescribed for "runaway automatic trim" on every 737 variant, MAX included. Most seem to agree that with aircraft control difficulties, multiple alarms, and disagreement among the pilot's and first officer's airspeed and AoA readings almost from the moment of takeoff (not yet officially confirmed), an MCAS-commanded runaway trim event may feel very different from the runaway trim flavors for which pilots have had simulator training, making problem identification difficult even given knowledge of the earlier Lion Air incident.

I imagine most software developers and engineers have seen cost/schedule pressures lead to short cuts. If their life was at stake, I doubt that many would think self-certification that such a project complies with all relevant safety requirements is a good idea.

ShamanicFallout , , March 20, 2019 at 12:59 pm

Thank you for that. And just 'wow'. I don't really know anything about aircraft/flying but this story is really fascinating and seems to be true a sign of the times. I guess we'll know what the current 'temperature' is out there when the fallout (civil liability, criminal liability, plane orders cancelled/ returned, etc) manifests. If Boeing skates, we'll know we've got a long way to go.

Cheryl from Maryland , , March 20, 2019 at 8:15 am

The Post's article on the FAA and Regulatory Capture is incomplete. The process for the FAA (and probably MANY government agencies) started under Reagan, did not revert to safety under Clinton (make government smaller and all that), and then accelerated under Bush II in 2005 (not a bi-partisan time). In particular, big changes to the FAA were made in 2005 that were executive in nature and did not require Congressional approval. CF: https://www.seattletimes.com/business/delegating-aircraft-safety-assessments-to-boeing-is-nothing-new-for-the-faa/

drfrank , , March 20, 2019 at 9:22 am

Yes, but. Part of what we are seeing in this case is a rush to judgement based on less than full evidence and analysis, and so prejudices and ideological positions (which I share actually) are plainly to be seen (and perhaps worth analyzing). "Crapification," says the headline.

Yet, I cannot say that I disagree with BA's business decisions as such in a highly competitive environment as regards the tradeoffs in the development of the MAX and there is a certain absurdity in the idea that Boeing would knowingly take a high reputational risk, in an industry where failure is front page news (contrast banking or pharma failures).

I have no reason to believe that an FAA fully in charge of all aspects of certification would have prevented these crashes, as banking and drug regulators have not kept us safe either. What seems worthy of note is that neither the airlines that buy the product nor the foreign aviation regulators nor pilots' associations do their own testing and certification, in an area where more redundancy would be good. Nor is there any kind of private third party watchdog testing, like a Moody's or S&P, evaluating potentially toxic products and services for a price.

Finally, I suppose we have to ask ourselves why the price of the stock is holding up fairly well even as the news flow on these tragedies is helping the short sellers. Lest we forget that Boeing is the 5th largest defense contractor in the US.

oaf , , March 20, 2019 at 10:01 am

Is engine throttle automated in the flight regime where these accidents occurred? Or are the pilots controlling power? Is the lag in thrust response interacting with the MCAS in an unanticipated way? Aerodynamic lift of nacelles is mentioned several times; there is another lift factor relating to the thrust angle; which is not necessarily aligned with the fuselage axis in flight. Departure procedures often require speed limits and altitude changes; so it is likely multiple power demand levels get set through takeoff and climb until cruise altitude is reached. Does Autopilot/Flight Director integrate with MCAS; or are they independent systems? Even without touching flight controls; power changes affect pitch forces. I am wondering if consequences of manual power changes on an otherwise automated departure were adequately investigated in the certification of the MCAS. Please excuse my ignorance of these details.

oaf , , March 20, 2019 at 11:18 am

Regulatory elements that have been getting attention include the use of *standard* weights for passengers; IIRC, 170 lbs for US (and possibly ICAO) passengers comes to mind . Many aircraft accidents have an element of disregard for proper weight distribution, either accidental, or negligent. For instance: Tail-heavy bad! Intentional loading outside of subsequently approved C.G. and/or max weight limits is a common, if not ubiquitous part of determining certification limits.There is a safety factor in the certificated limits; but banking on this; using estimates; is proven risky or disastrous when actual weights, and distribution thereof, is uncertain. Cargo with false weight values could also occur. One might find incentive to claim lower weights than actual to save on freight charges. How many 170 lb passengers do you know? I am not familiar with scales being used to check aircraft weight and balance before takeoff; only calculations; based on formulas and charts.
Scales ARE USED during certain maintenance procedures; for airworthiness certificates; and following certain modifications.

Jack , , March 20, 2019 at 11:50 am

Here is an interesting article by a professional pilot blogger Patrick Smith. He calls the 737, "the Frankenplane", and traces its history all the way back to the 707 in 1959. According to Smith, "We wonder if the 737 MAX even needed to exist in the first place. Somewhere deep down, maybe the heart of this whole fiasco is Boeing's determination to keep the 737 line going, variant after variant, seemingly forever. I'm not saying this is the reason for what happened in Indonesia or Ethiopia, but the whole 737 program just seems misguided and unnecessary. Instead of starting from scratch with a new airframe, they took what was essentially conceived as a regional jet in the mid-1960s, and have pushed and pushed and pushed the thing -- bigger and bigger engines, fancier avionics and more seats -- into roles it was never intended for. The "Frankenplane," I call it.
See the article here .
As a pilot myslef, I feel the airlines have a lot to answer for as well. Their constant "dumbing down" of pilots, which comes from making pilots work long hours for low pay, results in pilots not being the best of the best. And training is a cost to airlines. Training doesn't result in revenue. Better to have the pilots actually flying, hence Boeing selling this new version of the 737 as not requiring further training. But, training and practice is everything in flying. Flying a plane is actually a relatively easy skill to acquire. Most people can learn to fly a trainer in 5 hours or so. Most people solo (fly the plane without an instructor) with only 10-20 hours of instruction. It takes a lot longer to learn how to drive a car for most people (45 hours is the average). So it really isn't that difficult .until something goes WRONG. That is when the training kicks in. An often quoted flying truism, is that flying is "99% boredom and 1% stark terror". What happened with these two crashes is that you had some inexperienced pilots who were not fully trained on the systems (a lot of that blame goes to Boeing). When things start going wrong, information overload can easily occur if you have not been properly trained, even with two pilots.

Carey , , March 20, 2019 at 1:44 pm

Maybe this is the link mentioned above:

http://www.askthepilot.com/ethiopian-737max-crash/

allan , , March 20, 2019 at 11:57 am

"you had some inexperienced pilots"

The captain, Yared Getachew, had more than 8,000 hours of flying under his belt.
(It is true that the first officer only had 200.)

You have to wonder how the average US commercial pilot would have done under the circumstances.

(Reply to Jack at 11:50 am)

EoH , , March 20, 2019 at 3:15 pm

Thanks for that correction. We can expect a deluge of blame-the-other-guy PR from the aircraft manufacturer and certification agencies. Billions are on the line for Boeing if a cascade of judgments it made materially contributed to these crashes. The usual strategic corporate bankruptcy might follow. I presume Boeing is considered much TBTF by the USG.

JerryDenim , , March 20, 2019 at 12:19 pm

Great job summarizing and connecting dots Lambert. I might add one more bullet point though. Items #5 and #6 were aided, abetted and perhaps somewhat necessitated by 'ye ole NeoLiberal playbook' you spoke of, but more specifically, the current regulatory FAA/Boeing milieu is attributable to years of budget cuts and strategically applied austerity. The old Grover Norquist, ' not destroyed, but small and weak enough to be drowned in a shallow bath' saw. Exact same thing we've witnessed with other formally effective regulators like the EPA, the SEC or the IRS.

I remember having a conversation with an FAA maintenance inspector, an old timer, about ten years ago. He looked to be upwards of seventy, and he told me he was eight years beyond eligibility for a full retirement. He informed me that a few years back he was supervising a team of ten people that was now down to two. Their positions had been cut outright or eliminated after they resigned or transferred when the remaining positions were made miserable by the increased workload and bureaucratic headaches. The inspector said he had not retired yet because he knew he would not be replaced and he felt the work was important. I asked him if his department was atypical and he said it was not. Same thing, across the board, with the exception of the executive level desk jobs in DC and Oklahoma City. Readers can draw their own conclusions but when it comes to funding Federal regulators, I believe you should never attribute anything to incompetence that you could attribute to malice.

No doubt Neo-Liberal ideologues in high places pushing the corrosive "customer/client" model of regulating along with the requisite deference and obsequious to industry played a large role as well.

"Chickens coming home to roost" Indeed.

EoH , , March 20, 2019 at 2:44 pm

I understand the published materials to boil down to this possible scenario:

To remain competitive and profitable, Boeing needed to improve the fuel efficiency and flight characteristics of a mainstay medium-haul aircraft. Instead of designing a new aircraft, it modified an existing airframe. Among other changes, it added more powerful engines, new lift and control surfaces, and enhanced computerized controls.

The modified Max aircraft **did not** fly like the earlier version. That meant Boeing would have to disclose information about those changes. It would need to train pilots in them, in how to integrate new protocols into existing ones, and in what to do if the enhanced computer controls malfunctioned, requiring the pilot to regain manual control.

These steps could have increased cost and time to market, might have involved new certifications, and might have reduced sales. Boeing appears to have relied on enhanced computer flight controls to avoid them.

The newly enhanced computerized controls meant that the computer would do more of the actual flying – the part that was different from the pre-Max version – and the pilot less. It gave the pilot the virtual – but not real – experience of flying the older aircraft, obviating the need, in Boeing's judgment, for additional disclosures and training. That worked except when it didn't. (See, driverless car development.)

One possible failure mode derives from the Max's reliance on a single sensor to detect its angle of attack, the aircraft's nose-up or nose-down deviation from level flight. Reliance on a single sensor would make it harder to detect and correct a fault. (Boeing's version of commitment to "absolute" safety.)

In these two crashes, the sensor may have given a faulty reading, indicating that the aircraft's nose was higher than it should have been for that stage of flight, an attitude that risked a stall. The programmed response was to drop the nose and increase power. A normal reaction to a real stall, this response can become catastrophic when unexpected or when the pilot cannot correct it.

In both crashes, it appears that the pilot did attempt to correct the computer's error. Doing so, however, reset the automated control, leading the computer to reread the faulty sensor to mean "stall." It again dropped the nose and increased speed. The pilot recorrected the error in what would become a deadly loop, a tug of war that ended in a powered dive into the ground.

Seal , , March 20, 2019 at 3:52 pm

This is like #Immelt at #GE

VietnamVet , , March 20, 2019 at 4:17 pm

What is interesting is what comes next. The FAA was drowned in the bath tub along with the EPA, FDA, SEC, etc. It doesn't have the money or staff to recertify the 737 Max. An incompetent Administration that is interested only in extracting resources is in charge. It is clear that Boeing hid the changes to save money and time. Adding a warning indicator that the flight sensors are not in the correct position to the pilot's display, including it in the preflight checklist, plus flight training would have prevented the Indonesian crash. But these changes would have raised questions on the adequacy of the new flight critical system and may have delayed certification overseas. It is easy to overlook problems if your paycheck is at risk. The Boeing managers who pushed this through deserve jail time for manslaughter.

Canada said it will recertify the 737 Max before it flies in their airspace. China won't recertify the Max until the Trump Trade War is over. Also, a delay boosts their replacement airliner. If Chicago and DC paper this over like the 2008 Great Recession; the final nails will have been hammered into the coffin of the hegemon. Trust is gone

[Mar 23, 2019] The Other Recent Deadly Boeing Crash No One Is Talking About - Slashdot

Mar 23, 2019 | tech.slashdot.org

The Other Recent Deadly Boeing Crash No One Is Talking About (nymag.com) 65 Posted by EditorDavid on Saturday March 23, 2019 @01:34PM from the searching-for-answers dept. New York magazine's Intelligencer remembers last month's crash of a Boeing 767 carrying cargo for Amazon and the U.S. Postal Service -- and shares a new theory that its cause wasn't a suicidal pilot or an autopilot malfunction:

In online pilot discussion forums, a third idea has been gaining adherents: that the pilots succumbed to a phenomenon called somatogravic illusion, in which lateral acceleration due to engine thrust creates the sensation that one is tipping backward in one's seat .

The effect is particularly strong when a plane is lightly loaded, as it would be at the end of a long flight when the fuel tanks are mostly empty, and in conditions of poor visibility, as Atlas Air 3591 was as it worked its way through bands of bad weather. The idea is that perhaps one of the pilots accidentally or in response to wind shear set the engines to full power, and then believed that the plane had become dangerously nose-high and so pushed forward on the controls.

This would cause a low-g sensation that might have been so disorienting that by the time the plane came barreling out of the bottom of the clouds there wasn't enough time to pull out of the dive.

It has been speculated that this might have been the cause of another bizarre and officially unsolved accident from three years ago: Flydubai Flight 981, which crashed 2016 in Rostov-on-Don, Russia....

While it's still too early to draw any kind of conclusions about Atlas Air 3591, the possibility exists that a firm conclusion will never be drawn -- and if it is, the cause could turn out not to be a design flaw or software malfunction that can be rectified, but a basic shortcoming in human perception and psychology that cannot be fixed as long as humans are entrusted with the control of airplanes.


BobC ( 101861 ) , Saturday March 23, 2019 @02:26PM ( #58321314 )

Re:Flying by Instruments? ( Score: 5 , Informative)

Yes, commercial pilots are taught to "fly their instruments". General aviation pilots may enjoy more "seat-of-the-pants" flying, but even they are taught to trust instruments over human perceptions, which are easily fooled, as even simple demos will show.

I used to work for an aircraft instrument maker, and our user interfaces, everything the pilot interacts with, got more care and attention than the rest of the instrument. Of course we had to display nothing but totally accurate data, and do so promptly, but we also had to do so in ways that were obvious and clear, so the pilot can take in the most important information with a quick glance.

The pilot's standard "scan" is perhaps the most-trained skill. To look at everything on the instrument panels and outside the windows often enough to not miss anything, yet slow enough to take in all vital information.

When things get hectic, the pilot still does this scan, interrupting it as needed to deal with situations, but still doing it. Because, as the saying goes, "trouble often comes in threes": Stopping everything to handle an initial situation may mask what's really going on, and lead to a cascade of failures.

With ever more data being aimed at the pilot, there is a distinct risk of information overload, especially when tired, or during tense but otherwise normal situations, such as take-off, landing, or flying through turbulence. This overload often encourages the pilot to rely more on signals from the body, which need less conscious processing, rather than focus on all that data.

Here, again, is where commercial pilots receive extra training, but perhaps not often enough. This is one of the factors that keep commercial pilot mandatory retirement ages so low: The risk of overload increases with age, even when all other factors match those of a younger person.

Plus, staying in peak training for decades is fatiguing, and relatively few can do so "naturally". Which is one of the reasons we're running out of commercial aircraft pilots.

It may seem counter-intuitive, but this overload risk is often handled by adding more automation, more automatic systems to "help" the pilot. So much so that actually manually "driving" a commercial aircraft, with hands on the controls, is an increasingly rare part of a normal flight.

Our instruments also tried to take pilot fatigue into account, saving our brightest and loudest alarms only for the most desperate situations, to punch-through that overload to help ensure prompt and correct reactions.

One product I worked on was a TAWS (Terrain Awareness and Warning System) instrument, which basically stayed quiet unless there was a risk of the pilot flying into the ground, to help prevent "CFIT" accidents (Controlled Flight Into the Ground). It has special modes for take-off and landing, though our instrument was designed to actually *avoid* making the pilot depend on it's display: Useful for information as part of the scan, but not to be used to navigate the aircraft. Our main function was to provide visual and audible alerts only when needed.

I believe 100% of US commercial aircraft (and perhaps now even biz-jets) are required to have TAWS on-board and active. Any TAWS-equipped plane approaching the ground outside of an approved approach path for a know airport will give the pilot "Terrain ahead. Pull up! Pull up!" alerts until the hazard no longer exists.

Unfortunately, if a stall is also immanent, the pilot will simultaneously receive an alert to push the nose down. And increase power. And other things as well. An overload of alerts, which a skilled and calm pilot will respond to with the most correct action. But which can overload a stressed or tired pilot, or one with the beginnings of a cold or flu.

The thing is, every alert can be silenced, to reduce the confusion and distractions. But an overloaded pilot can forget even this simple aid to keeping full awareness and control.

This is a big part of why pilots are so often blamed for crashes: Because, for whatever reason, they failed to take the appropriate action demanded by the situation.

As a former aircraft instrument developer, I was always well aware of my instruments' contribution to the pilot's mental load. Our teams agonized over tiny changes to font selection and sizes and colors and contrast. And how many button presses were needed to accomplish a function. And how easy it was to switch modes or silence an alert. Which is why we had a massive alpha test system that got even the earliest versions of our instruments in front of pilots with experimental aircraft and ratings. (Experimental aircraft and the pilots who fly them are rare and precious things to instrument developers, even when we owned and operated our own corporate test aircraft.)

Fortunately, our efforts paid off, and pilots (and the FAA) loved our instruments. Some of our design innovations were adopted into instrument regulations by the FAA, so all manufacturers had to build to our standard. But always hovering over our success was the fear of news of the crash of a plane flying our instruments. And the fear that information overload from our instruments would be shown to be a contributing factor.

Which is why part of our required reading was any and all reports (mainly NTSB and NASA) that even mention pilot overload. Even a decade after leaving that industry, I still read these reports.

rnturn ( 11092 ) , Saturday March 23, 2019 @01:55PM ( #58321174 )
Oh... Are we back to t"pilot error" excuses again? ( Score: 2 )
``...the cause could turn out not to be a design flaw or software malfunction that can be rectified, but a basic shortcoming in human perception and psychology that cannot be fixed as long as humans are entrusted with the control of airplanes.''

On the other hand, we have two recent examples of what can happen when a flight computer is given control of the plane and it is unable to avoid doing something stupid like -- as the old euphemism goes -- `make inadvertent contact with the terrain'.

Until we know more about how this was supposed work and exactly why it didn't , I think I'll trust the human with his hands on the controls more than the flight computer.

(Thankfully, the occasions for my needing to fly are few and far between.)

Futurepower(R) ( 558542 ) writes: < MJennings.USA@NOT_any_of_THISgmail.com > on Saturday March 23, 2019 @01:39PM ( #58321082 ) Homepage
Design errors in the 737 MAX-guidance system ( Score: 2 )

Everything I've been able to learn has indicated that there are major design errors in the guidance system of the Boeing 737 MAX-8

ebonum ( 830686 ) , Saturday March 23, 2019 @02:02PM ( #58321206 )
Artificial horizon? ( Score: 3 )

If you look at it and you are headed down (and you have good airspeed), you don't need to keep trying to nose down - regardless of what your senses are telling you.

What about looking at how the altimeter is changing?

The artificial horizon gives you a lot of information when your sense of direction is playing tricks on you (in the clouds and feeling like you are going up,down, rolling, etc.)

[Mar 21, 2019] Look who's ready to fight Trump's trade war now

Mar 09, 2019 | socialistworker.org

Is Donald Trump starting to look like a softie on the trade conflict with China compared to sections of the U.S. business and political elite? Dorian Bon explains the background.

WHEN DONALD Trump launched his trade war on China last spring, he had to drag the U.S. political and business establishment along with him.

Most elected officials in both parties and a large majority of corporate execs cringed at the thought of a protracted trade war that would disturb the ordinary flow of profits and investments between the world's two largest economies.

Now, as Trump and his team seek a negotiated settlement with Chinese President Xi Jinping, Trump finds himself in the opposite position -- facing bipartisan pressures not to back down or compromise in any U.S.-China trade deal.

Even Trump's own trade negotiator Bob Lighthizer -- who helped bend Japanese auto companies to the will of the Reagan administration in the mid-1980s -- has grown frustrated with the president , wanting him to take a harder line on Chinese telecom giant Huawei and keep the threat of further tariff increases on the table.

Donald Trump and Xi Jinping meet during the 2018 G20 Summit in Buenos Aires
Donald Trump and Xi Jinping meet during the 2018 G20 Summit in Buenos Aires

The context for this strange turnabout is the new common sense across the political spectrum: the idea that China poses a threat to U.S. jobs, security and technological dominance.

Trump's advisers fully expect the eventual Democratic nominee in 2020 to try to outflank him to the right on China and the defense of U.S. manufacturing. And the political competition over anti-Chinese toughness could very well throw a wrench into the continuing bilateral negotiations with China.

Even big American capital -- which, outside of the steel industry, has been almost universally opposed to Trump's tariffs -- is warming to the administration's more aggressive stance toward China.

Most U.S. CEOs are still hostile to the use of tariffs as an economic weapon, especially against their North American and European trading partners. But they also have serious concerns about the rapid development of Chinese high-tech manufacturing, the transfer -- by contract and by coercion -- of U.S. technologies to Chinese firms, and investment restrictions for U.S. companies in China.

Somewhat to their surprise, Corporate America sees Trump forcing Xi's hand on these issues more effectively than Barack Obama or George W. Bush before him.

Josh Bolten, president of the Business Roundtable -- an association of the U.S.'s largest companies, collectively worth $8 trillion and employing 15 million workers -- put it this way during a recent interview with Washington trade experts Scott Miller and Bill Reinsch on their podcast The Trade Guys :

The CEOs of the Business Roundtable have found themselves in agreement...with the Trump administration on most of the objectives of the very aggressive posture that the administration has taken with respect to China.

As both of you also know, that is an evolution...of the business community's position. The Roundtable doesn't speak for the whole business community, but I think there has been an evolution throughout the business community on this. And that is that the posture of waiting for democratic, market-oriented capitalism gravity to have its effect on the Chinese has proven not to be a viable approach.

Bolten went on to lament the defeat of the Trans-Pacific Partnership (TPP) -- a major Obama-era economic agreement that Trump opposed on the campaign trail and terminated once he took office -- as a missed opportunity to contain China's rise and secure crucial markets where U.S. and Chinese companies are in direct competition.

Bolten and most of the U.S. ruling class see -- somewhat in contrast to Trump -- the strengthening of a multilateral alliance of Western and pro-Western countries as the best strategy to counter the threat of a growing Chinese rival.

But Bolten is unambiguous and Trump-sounding about the goal of the strategy. "All of our interests are actually consistent with each other in confronting the threat that an economically hegemonic China poses for the entire world," he explained.


HEARING A leading representative of the American corporate elite talk about the threat of Chinese economic hegemony on "the entire world" is alarming to say the least -- and demonstrates that Trump doesn't have a monopoly on anti-China discourse by any stretch of the imagination.

That isn't to underplay the serious disagreements over strategy between the Trump administration and most of the U.S. business world.

Many corporate leaders are concerned about the fact that Trump is simultaneously in tense trade negotiations with the European Union and brandishing the threat of tariffs on car imports (primarily impacting Germany and Japan), a move which virtually every single American auto-company angrily opposes.

And they appear to be signing on only half-heartedly to Trump's renegotiated NAFTA, now dubbed the U.S.-Mexico-Canada Agreement -- which contains some attractive updates on digital trade (mostly lifted from the TPP, ironically enough), but is broadly seen as a step backwards for corporate profits and preferable only to a collapse of NAFTA altogether.

These raise question for U.S. corporate rulers: If Trump is so concerned with the Chinese threat, why doesn't he focus his fire in that direction, instead of toward allies?

This will be the line of attack against Trump from much of the political and corporate establishment, including those who are Democrats or support them, moving forward into the new election cycle.

To Trump and his team, however, trade disputes and negotiations with Canada, Mexico, the European Union, Japan and China are all so many elements of a larger plan to keep as much of global industry as possible within the continental U.S.

For the largest American companies -- which have positioned themselves at the technological peak of a globalized network of supply chains, markets and investments -- Trump's economic nationalism poses an opportunity to challenge China, but new problems in relation to the rest of the world.

The biggest CEOs and industry lobbies are still figuring out a response.


THE REVERBERATIONS of the U.S.-China trade war have been felt across the corporate world, perhaps nowhere more starkly than in telecommunications.

As geopolitical tensions between the U.S. and China have deepened, telecom companies and state governments have been preparing for the highly anticipated rollout of 5G cellular networks. 5G, or fifth generation, technology is expected to speed up data flows (and increase data volumes) across cell phone and other digital communication systems.

Many analysts predict the degree of change brought on by 5G will be similar to that of the 3G and 4G evolutions, which underpinned the smartphone boom. This time around, however, most eyes are trained on what the new networks will mean for digitized and computerized manufacturing, commerce and transportation more broadly.

For the leadership of both main U.S. political parties, the excitement around 5G has been muted by hostility toward the world's largest telecom equipment supplier (and second largest cell phone seller), the Chinese corporation Huawei.

With $7.55 billion in profits in 2017 and the most cost-competitive telecom equipment in the world, Huawei has been widely predicted to be one of the main beneficiaries of the 5G expansion.

But Congress has been on an offensive against the company since 2012 , and the Trump administration has escalated the attacks.

Trump has gone on a global campaign with broad bipartisan support to persuade allied states to ban Huawei entirely from their domestic markets. He has also planned to issue an executive order to bar the company from the U.S. economy as well, though he seems to have now turned this threat into a bargaining chip in his dealmaking with Xi and China.

The justification for bans is that Huawei could use its access to the cellular networks it builds overseas to spy on foreign governments. The extraordinary hypocrisy of this claim coming from the main surveillance power in world history has not been lost on most people following the debate.

Meanwhile, Trump instructed the Canadian government to arrest and extradite Huawei's Chief Financial Officer Meng Wanzhou, daughter of Huawei founder and President Ren Zhengfei, during a routine visit to Vancouver. The charges against Wanzhou stemmed from alleged violations of U.S. sanctions on Iran. Wanzhou's extradition hearing began this week and could drag on for months.

Wanzhou's arrest could also be used as a bargaining chip by Trump, though most of Trump's staff is reticent to bring a separate legal proceeding into a trade agreement for fear of discrediting the courts.


PART OF what is so striking about the case of Huawei and 5G is how it flatly contradicts the whole logic of the current neoliberal world order of free markets and free trade.

According to the propaganda, under neoliberalism, any buyer should be allowed to make their purchases from any company that offers the best products for the lowest prices. For many buyers, including national governments, that company is clearly Huawei.

Now, however, the U.S. state is attempting to restrict the field and eliminate the Chinese option from the market. In other words, what we're witnessing in this crucial sector of the global economy is an open attempt by the world's most powerful state to create trade blocs in telecommunications that shut out one of China's most prominent companies.

While both Republicans and Democrats in Congress are rallying behind the attacks on Huawei, the response from the U.S. and European information technology industries has been much more conflicted.

The main lobby for telecom and technology companies in the U.S., the Information Technology Industry Council, has been clamoring for Trump to strike a deal with Xi and drop the tariffs. Chuck Robbins, CEO of the largest American telecom equipment maker, Cisco Systems, insists Trump's tariffs and sanctions are unnecessary.

"We don't need anything else to beat these guys or to beat any of our competition in the marketplace," Robbins said in February . Huawei competitors Ericsson and Nokia -- multinational companies based in Sweden and Finland, respectively -- have claimed that they're ready to supply Europe's 5G infrastructures in the event of a Huawei ban, indicating they may have some sympathy with Trump's efforts.


AS OF now, the Trump administration's campaign to block Huawei from the world's markets has had mixed results. Both British and German intelligence agencies are leaning toward accepting Huawei as a legitimate business partner, as is the French Senate .

In the Czech Republic, a conflict has emerged pitting President Miloš Zeman, who wants to strengthen ties with China, and the Czech cybersecurity agency, which has labeled Huawei a threat to national security. Debates on the same topic are also underway in Italy and Canada .

Australia's Foreign Minister Marise Payne, staking out the most extreme anti-Huawei position, has fully embraced Trump's ban and vowed to maintain it, even if Trump himself backs away from his current position. New Zealand's Prime Minister Jacinda Ardern, on other the hand, rejected the idea of a blanket ban .

Crucially, Narendra Modi's right-wing government in India has so far opposed the idea of banning Huawei .

Despite ongoing China-India tensions, the offer of cheap telecommunications equipment to expand India's cellular infrastructure seems too attractive for Modi and his business allies to decline. The fact that the Trump administration is simultaneously weighing raising tariffs and restrictions on Indian products is certainly not helping to convince Modi to further antagonize Beijing.

However unsuccessful the Trump White House has been in forcing the hand of other states, the president and congressional leaders are well aware of the economic leverage they have against key Chinese companies.

Last year, the Trump administration brought China's second telecom corporation, ZTE, to the brink of collapse when he issued a temporary ban on trade between the company and American suppliers. ZTE is totally dependent on U.S. imports of advanced communications equipment and might have been destroyed if Trump had not chosen to lift the ban before entering negotiations with Xi.

Similar bans by the Trump administration have nearly brought down the Chinese state-owned chipmaking company Fujian Jinhua, which has announced it will have to cease production altogether in March if it cannot buy more imports of crucial American equipment.


WITH ALL of these variables at play, the next year in the U.S.-China economic relationship is impossible to predict.

The financial costs of unraveling one of the largest state-to-state commercial relationships in modern history may prove too high for either side to escalate the 2018-19 trade conflict any further, especially as the global economy passes the high point of the business cycle and heads toward another likely recession .

The two heads of state plan to meet at the end of March, possibly at Trump's Mar-a-Lago resort in Florida, to sign a trade agreement.

For Trump to sell the deal to an increasingly hawkish Congress, he will have to demonstrate "progress" on the goals he articulated at the outset of the trade war: more Chinese purchases of American products, stronger intellectual property safeguards for U.S. corporations and less state subsidies for Chinese companies. It remains to be seen whether Trump will decide to incorporate a compromise on Huawei into the deal.

Whatever the outcome of this round of negotiations -- and it is still possible that they could fall apart -- what is unfolding today is undoubtedly just the first act in a long and tempestuous drama.

China is clearly a growing geopolitical rival to the U.S., and Chinese corporations are quickly developing the capacity to compete with their U.S. counterparts on a global scale in the most advanced areas of high-tech manufacturing.

This means that many more economic confrontations between the two states are inevitable. And as politicians on both sides of the aisle have made abundantly clear, Trump will not be the last president to stoke tensions with China.

Then there is the question of how the perspectives of the largest American businesses will change as this conflict develops.

Josh Bolten, the Business Roundtable president, claims that the CEOs he represents have been through an "evolution" in their views that brings them closer to Trump's "aggressive posture" toward China. Yet at the same time, there continues to be near-universal opposition to tariffs and trade wars within these elite strata.

So what kind of "aggressive posture" do these leading American capitalists hope to adopt? With more money and power concentrated in their hands than any other ruling class in the world, the stance that these elites take toward U.S.-China relations will be very important.

If the American 1 Percent drifts any further toward the rising economic nationalism articulated by their political representatives in Washington, future flare-ups between the two countries may be a great deal worse.

[Mar 21, 2019] The Lives the Free Market Took

Mar 21, 2019 | jacobinmag.com

BY
BRANKO MARCETIC

The people who died in last Sunday's plane crash were not just killed by Boeing. Their deaths stemmed from an ideology that puts business interests above human life.


... ... ...

Boeing is not just a lobbying juggernaut that donates prodigiously to politicians all over the country; it's also a company in which numerous members of Congress are personally invested, and it cultivates mutually beneficial financial relationships with top officials . Meanwhile, as William McGee of Consumer Reports told Amy Goodman , these issues are rooted in the FAA's lax, business-friendly oversight of the very industry it's meant to regulate, a case of regulatory capture that stretches back long before this administration.

Whatever the black box from the Ethiopian Airlines flight reveals, the lives put at risk by lax regulations are not apolitical tragedies; they are caused by an administration that time and again has shown itself to be callous and indifferent to the lives of the people it claims to fight for, whether Puerto Ricans left to fend for themselves in the wake of natural disaster, or federal workers used as bargaining chips in a game of political brinkmanship.

But more than that, they are victims of an ideology that tells us the greatest insult to human life is not the death and misery that comes from unchecked greed, but efforts to democratically control it through public institutions. The real problems aren't unsafe products, pollution, dangerous chemicals, and the like, we're told, but "red tape" and the taxes used to fund the bodies regulating them. Meanwhile, activists like Nader have long been painted as " wacky " extremists in the pursuit of some quixotic ideological crusade simply for trying to do things like prevent people from dying in cars without seat belts .

When social-democratic policies are enacted, wealthy people take less home after taxes, and businesses are inconvenienced by regulations meant to secure the common good. But when neoliberal policies are put in place, people and their families go hungry, they lose their homes, they get injured on the job, they get sick, and, sometimes, they die. The public should be enraged by the actions of governments like Trump's and Trudeau's; but we should also be angry at a political narrative that tells us trying to stop such tragedies is "ideological" instead of common sense. We owe it to the crash victims to create no more of them.


[Mar 21, 2019] The Boeing 737 Max 8- a Case Study in Uncreative Destruction

Mar 21, 2019 | www.counterpunch.org

On May 12, 2010, the New York Times ran an article by economics editor Catherine Rampell titled "The New Poor: In Job Market Shift, Some Workers Are Left Behind"that focused on the largely middle-aged unemployed who will probably never work again. For example, 52 year old administrative assistant Cynthia Norton has been working part-time at Walmart while sending resumes everywhere but nobody gets back to her. She is part of a much bigger picture:

Ms. Norton is one of 1.7 million Americans who were employed in clerical and administrative positions when the recession began, but were no longer working in that occupation by the end of last year. There have also been outsize job losses in other occupation categories that seem unlikely to be revived during the economic recovery. The number of printing machine operators, for example, was nearly halved from the fourth quarter of 2007 to the fourth quarter of 2009. The number of people employed as travel agents fell by 40 percent.

But Ms. Rampell finds the silver lining in this dark cloud:

This "creative destruction" in the job market can benefit the economy.

Pruning relatively less-efficient employees like clerks and travel agents, whose work can be done more cheaply by computers or workers abroad, makes American businesses more efficient. Year over year, productivity growth was at its highest level in over 50 years last quarter, pushing corporate profits to record highs and helping the economy grow.

The term "creative destruction" might ring a bell. It was coined by Werner Sombart in his 1913 book "War and Capitalism". When he was young, Sombart considered himself a Marxist. His notion of creative destruction was obviously drawn from Karl Marx, who, according to some, saw capitalism in terms of the business cycle. With busts following booms, like night follows day, a new round of capital accumulation can begin. This interpretation is particularly associated with Volume Two of Capital that examines this process in great detail. Looking at this material, some Marxists like Eduard Bernstein drew the conclusion that capitalism is an infinitely self-sustaining system.

By 1913, Sombart had dumped the Marxist commitment to social revolution but still retained the idea that there was a basis in Karl Marx for upholding the need for "creative destruction", a view buttressed by an overly positive interpretation of this passage in the Communist Manifesto:

The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.

By the 1930s, Sombart had adapted himself fairly well to the Nazi system although he was not gung-ho like Martin Heidegger or Carl Schmitt. The wiki on Sombart notes:

In 1934 he published Deutscher Sozialismus where he claimed a "new spirit" was beginning to "rule mankind". The age of capitalism and proletarian socialism was over and with "German socialism" (National-Socialism) taking over.

But despite this, he remained critical. In 1938 he wrote an anthropology text that found fault with the Nazi system and many of his Jewish students remained fond of him.

I suspect, however, that Rampell is familiar with Joseph Schumpeter's use of the term rather than Sombart since Schumpeter was an economist, her chosen discipline. In 1942, he wrote a book titled Capitalism, Socialism and Democracy that, like Sombart, retained much of Karl Marx's methodology but without the political imperative to destroy the system that utilized "creative destruction". He wrote:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

The wiki on Schumpeter claims that this theory is wedded to Nikolai Kondratiev's "long wave" hypothesis that rests on the idea that there are 50 year cycles in which capitalism grows, decays and enters a crisis until a new round of capital accumulation opens up. Not only was the idea attractive to Schumpeter, it was a key part of Ernest Mandel's economic theories. Unlike Schumpeter, Mandel was on the lookout for social agencies that could break the cycle and put development on a new footing, one based on human need rather than private profit.

Returning to Rampell's article, there is one dimension entirely missing. She assumes that "creative destruction" will operate once again in order to foster a new upswing in the capitalist business cycle. But how exactly will that manifest itself? All the signs point to a general decline in business activity unless there is some kind of technological breakthrough equivalent to the computer revolution that fueled growth for decades. Does anybody believe that "green manufacturing" will play the same role? I don't myself.

One thing does occur to me. Sombart's book was written in 1913, one year before WWI and was even titled eerily enough "War and Capitalism". One wonders if the Great War would be seen as part and parcel of "creative destruction". War, after all, does have a knack for clearing the playing field with even more finality than layoffs. Schumpeter wrote his in 1942, one year into WWII. My guess is that he did not theorize war as the ultimate (and necessary?) instrument of creative destruction but history will record that WWII did introduce a whole rafter of new technology, including aluminum, radar, nuclear power, etc., while bombing old modes of production into oblivion. What a great opportunity it was for capitalism to rebuild Japan, especially after firebombing and atomic bombs did their lovely work.

In my view, there's something disgusting about this "creative destruction" business especially when it is articulated by a young, pro-capitalist Princeton graduate like Catherine Rampell who wrote for Slate, the Village Voice and other such b-list publications before crawling her way up into an editorial job at the NYT. She clearly has learned how to cater her reporting to the ideological needs of the newspaper of record, growing more and more reactionary as the crisis of capitalism deepens.

[Mar 21, 2019] Neoliberalism at 30,000 Feet

Mar 21, 2019 | jacobinmag.com

hen United Airlines flight 1462 made an unexpected landing in Chicago last month, it was not due to mechanical issues, weather conditions, or flight logistics, but a battle over legroom in the aisles. As one passenger tried to recline her seat and another used a $20 device called a Knee Defender to prevent the occupant ahead of him from leaning back, the battle over personal space descended into a scuffle. The pilot opted to make an additional stop to remove the unruly passengers.

Flight 1462 hasn't been alone. Not just the random dispute of irate travelers, similar flights have been diverted because of the airlines' frenzied drive to wring as much money out of customers as possible. Airlines are increasingly cramming more passengers onto each flight, termed "densification," and regularly overbooking flights. Any aspect of a flight that was once provided free of charge -- from a checked bag to a complementary drink to using a credit card to pay for a ticket -- can now be charged à la carte.

So relentless has this nickel and diming been that when news reports claimed the discount airline Ryan Air was about to start charging for in-flight bathroom use, many people took them seriously. But the story wasn't true -- it was all a ploy for free press from a company unwilling to pay for advertising, help disabled passengers, or provide ice for drinks.

Such frugality is only one of the problems wrought by airline deregulation. If the greatest benefit of deregulation has been that more people can afford to fly, it has come at the cost of increased tumult within the industry and reduced pay for workers.

Before the airlines were deregulated under President Jimmy Carter, the Civil Aeronautics Bureau (CAB) maintained flight pricing structures, airport gate access, and flight paths. There were rules that stipulated which airlines could compete in which market and what prices they could charge. Loosening restrictions meant abandoning the CAB and its pricing structures, and allowing an unmediated flow of competition.

With fewer restrictions, upstart fly-by-night airlines could compete against major airlines like American/US Airways, United, Delta, Alaskan, and Hawaiian Airways. Such competition, conservative and liberal advocates claimed, would bring down flight costs, providing more savings and convenience to the customer.

But allowing this level of competition also unleashed chaos. While the discount airlines would win over passengers for a time by offering flights half as expensive, the major airlines would respond by slashing their prices in an attempt to drive the upstarts out of business.

By drastically reducing ticket costs, the major airlines would take on an unsustainable amount of debt that, combined with the loss of business to the new entrants, would lead to layoffs or bankruptcy. Pension funds were then raided and labor contracts voided to pay for the price wars. With each airline company collapse, thousands of employees were laid off, decimating union membership.

To compete, the legacy airlines also drove down the salaries of their pilots, and cut benefits and vacation time. Besides a reduction in compensation, a two-tiered pay system has been set up with decent pay for incumbent pilots and markedly low wages for new entrants. Starting salaries for pilots are now as low as $15,000 a year, even as CEO pay rises inexorably. Remarking on a career in which he had seen his pay cut in half and his pension eliminated, captain Sully Sullenberger told the BBC in 2009 that he did not know "a single professional pilot who wants his or her children to follow in their footsteps."

While unions were still strong in the industry, they were constantly embroiled in bitter labor disputes. Between the voided contracts and the hemorrhaging membership caused by regular bankruptcy, they were left fighting to maintain wage standards in an unnecessarily competitive industry.

The only way discount airlines could offer such low prices was by paying their workers less, using less experienced pilots and sometimes non-unionized labor, offering fewer frills, and running spartan operations that only serviced a handful of routes with a single type of jet liner (thus simplifying pilot and mechanic training). Instead of a single union representing employees across the industry -- typified by the Air Line Pilots Association (ALPA), which represented a majority of pilots -- some discount airlines maintained relationships with offshoot unions with smaller membership rolls and less leverage.

The discount airlines also depended on secondary, class-B airports that charged less in landing fees. But those discounts eventually disappeared when the secondary airports no longer needed to cut their fees to attract business.

To maintain their dominance over the market, the major airlines shifted from a direct city-to-city flight standard to the hub-and-spoke system of today. The hub-and-spoke setup allowed large centralized airports like Dallas-Ft. Worth and Atlanta to be ruled by a single company that determines which flights can use which terminals and at what cost.

While the hub-and-spoke system has some benefits, it's largely inefficient, dependent as it is on multi-stage connecting flights. Combined with the need to cut costs, it would also cause longer airport delays as planes were left waiting on the tarmac to make sure all passengers from connecting flights made it aboard. A single delay in a connecting flight could throw passengers' itineraries askew, leaving them stuck in a random airport overnight.

The major airlines used other tricks to keep out nascent airlines. They paid off travel agents and travel reservation sites to give preference to their particular airline. They introduced frequent flier miles to maintain brand allegiance.

Upstart discount airlines like Southwest were able to survive the vicious price wars by leaning on quality of service and direct flights, but most did not. The list of companies that were liquidated, temporarily or permanently, as a result is impressively long considering what it takes to start an airline: America West, PanAm, TransWorld, Western, Piedmont, Frontier, Northwest, National, Texas International, People Express, ValuJet, Air Florida, Eastern, Braniff, Skytrain, Pacific Southwest, Western Pacific, and many more.

Once bankrupt, the major airlines then bought the upstarts, creating an effective oligopoly. So much for competition.

Already on a spending spree during the heady years of the 1990s dot-com boom, buying up failed companies only saddled major airlines with more debt. While most people assume that the airlines had to be bailed out in 2001 because of the decrease in traffic after the September 11 attacks, it was also because the airlines were insolvent from previous financial problems, largely as a result of the price wars.

The actions of the major airlines may seem ruthless, but they were largely protecting their position in a deregulated industry that allowed the discount airlines to undercut labor standards just to offer cheaper prices to customers. They were defending themselves from disruption.

Considering the skill, education, and investment needed to maintain a safe and reliable airline, it is not exactly a business that needs to be disrupted. Running an airline is labor intensive, and it only turns a profit at random intervals. There's little money to be skimmed off.

With profit margins so thin, tickets on a half-empty flight have to cost twice as much as a fully booked one. Which is why, for a time, smaller cities that weren't necessarily travel hubs bore the brunt of deregulation. Routes that weren't fully booked experienced skyrocketing flight costs, which, for small-town travelers, was a huge disincentive to fly.

The bilking of transportation costs to and from smaller cities after a run of chaotic competition is eerily similar to what happened during the railway mania of the 1800s. Investors rushed to build rail lines everywhere and anywhere while money was flush. But once cash became tight, the rail industry used their monopoly power to charge exorbitant prices for anybody trying to ship in and out of smaller towns like Cincinnati. Such predatory pricing is what led to transportation regulation in the first place.

Since the 2001 airline bailout, things have calmed down a bit. It no longer costs $600 to fly from New York to Pittsburgh. Fewer discount airlines are entering the market, and the handful that are still in operation work with the major airlines on various routes (e.g. "flight provided by Frontier"). The price wars have settled to a quiet struggle played out on online travel registration websites like Kayak.com and Hipmunk.com, which have wholly replaced the job of travel agents.

But for airlines, the lower revenue from cheaper tickets has to be made up somewhere, and convenience may be the easiest element to remove. Airlines are pushing petty indignities on passengers and flight attendants by way of a million miscellaneous charges. Half the time, the discounts saved by cheaper tickets from deregulation are recouped in add-on fees. Eventually airlines may just offer extra-saver flights devoid of the most basic accommodations and simply force passengers who can't afford first-class seats to be stacked in the cargo hold like cord wood.

So what's the alternative? The airline industry is close to being a natural monopoly, there's little reason to foster competition. Indeed, the industry would benefit from nationalization or a well-regulated public option. At the very least, more regulation is necessary.

Without subsidization and some rules about flight costs, there is little incentive for the airline industry to provide affordable flights to locations that aren't fully booked. The irony is that we already subsidize airline travel. It just occurs through bailouts and bankruptcies after each airline has fought tooth and nail for market dominance. Public funds wind up paying for a wasteful, inefficient system characterized by irrational, destructive competition.

Through regulation or more aggressive means, it's quite possible to ensure good wages and working conditions and safe, affordable, reliable service -- all without blackout dates, three layovers, or all-out battles for legroom.

[Mar 21, 2019] With Personal Connection to Crash, Ralph Nader Takes on Boeing - WSJ

Mar 21, 2019 | www.wsj.com

He has long been a vocal critic of the Federal Aviation Administration, saying the agency lacks the resources and willpower to aggressively police airlines and manufacturers.

Mr. Nader said Boeing may be exposed to civil and possibly criminal liability. After the first fatal crash in October -- a Lion Air flight that crashed into the Java Sea minutes after takeoff -- company officials "were put on notice about the problem" with an automated stall-prevention system that can misfire and override pilot commands by repeatedly pushing down an aircraft's nose, he said.

The Justice and Transportation Departments are scrutinizing Boeing's dealings with the FAA over safety certifications, people familiar with the matter have said.

... ... ...

Mr. Nader has expressed his concerns to lawmakers and former regulators, and called for congressional hearings. Before the U.S. grounded the planes last week, he championed the idea of a sweeping boycott of all versions of 737 MAX aircraft. He also has stressed the importance of having Mr. Muilenburg, Boeing's CEO, testify on Capitol Hill about safety issues with the fleet.

Criticizing Boeing's original design of the automated flight-control feature, dubbed MCAS, Mr. Nader said it reflected a misguided view driven by engineering overconfidence and called it "the arrogance of the algorithms."

[Mar 21, 2019] Ralph Nader's Grandniece Died in Ethiopian Plane Crash; Now He Is Urging Boycott of Boeing Jet Democracy Now!

Mar 21, 2019 | www.democracynow.org

... ... ...

RALPH NADER : Boeing is used to getting its way with the patsy FAA . And this time, however, it's in really hot water. If it continues to dig its heels in, it's going to expose itself and its executives to potential criminal prosecution, because they are now on notice, with two crashes -- Indonesia and Ethiopia. There's probably a lot more to come out in terms of the technical dissent, in the, what was called, "heated discussions" about the plane software between the FAA , the pilots' union, Boeing. And you can't suppress technical dissent forever. And Senators Markey and Blumenthal are calling for the release of all the relevant information. And while that happens, the planes must be grounded. You see, they're on notice now. This is the future of passenger business for Boeing. They've got orders for over 3,000 planes from all over the world. They've produced and delivered about 350. Southwest is the leading owner and operator of these planes. It's digging its heels in, and so is American Airlines, I believe, and Air Canada. And Boeing is not going to get away with this, because this is not some old DC-9 about to be phased out. This is their future strategic plan. And they better own up. 2013, they grounded the 787 because of battery fires, and they had about 50 or 60 of those planes. So, there's plenty of precedent.

And the most important thing that people can do is: Do not fly this plane, the 737 MAX 8 and 9. Ask the airline, when you book the flight, whether it's that plane. The airline should not dare charge you for reservation changes. And I'm calling for a boycott of that plane. If several hundred thousand air passengers boycott that plane and there are more and more empty seats, that will do more to bring Boeing around than the patsy FAA and a rather serene Congress, which, by the way, gets all kinds of freebies from the airlines that ordinary people don't get. We've sent a survey last year, twice, to every member of Congress, asking them to disclose all these freebies. We didn't get one answer. And that helps account for, over the years, the total reluctance of members of Congress even to do such things as deal with seat size, restroom space and other conveniences, never mind just the safety of the aircraft. So, this is important for consumers. Just don't fly 737 MAX 8 or 9. Make sure that you're informed about it. And for up-to-date information, you can go to FlyersRights.org . That's run by Paul Hudson, who lost his daughter in the Pan Am 103, 30 years ago, and has been a stalwart member of the FAA Advisory Committee. And that's where you get up-to-date information, FlyersRights.org .

JUAN GONZÁLEZ: Well, we're also joined by William McGee, who's the aviation adviser for Consumer Reports . Could you give us your perspective on what's happened here? And also, could you expand on what Ralph Nader was talking about, about the use of artificial intelligence in these new planes?

WILLIAM McGEE: Sure, absolutely, Juan. You know, there are so many unanswered questions here, but many of them are focused on the time period between the first crash in late October with Lion Air and the crash on Sunday with Ethiopian. Again, for perspective here, as Ralph noted, we're not talking about old aircraft. This is an airplane that's only been in service since 2017. This is the Boeing 737 MAX 8, a recent derivative of the 737. Now, in that time period, the aircraft that crashed in October was 2 months old; the one that crashed on Sunday was 4 months old. This is really unprecedented in all the years that I've been in this industry. We don't see brand-new airplanes crash on takeoff like this under similar circumstances.

... ... ...

WILLIAM McGEE: Absolutely. And, you know, this goes back many years. Ralph mentioned that the FAA is known throughout the industry, even among some of its own employees and to airline employees, as the "tombstone agency." And that phrase comes from the fact that the FAA has shown time and time again that it is reluctant to act unless there's a tragedy and, unfortunately, unless there are fatalities. Now, we have seen this as recently as last year, when, you may recall, over Philadelphia, a Southwest 737 had a major engine malfunction that punctured a hole in the fuselage and killed a woman who was nearly sucked out of the aircraft. Well, what wasn't as well reported was that two years prior, that same engine type and that same airline, Southwest, same aircraft type, 737, also had an uncontained engine failure. But in 2016, there were no injuries, and there were no fatalities. Instead of the FAA stepping in and saying, "We need to, you know, have all of these engine blades inspected on this engine type, on all the carriers that are operating it," the FAA asked the industry, "What would you like to do? How long would you like to take to look at this?" And the industry dragged its heels, not surprisingly, and said, "We need more time." Two years later, in 2018, there was a fatality. And then, two days after that, last April 2018, two days after that woman was killed, the FAA issued what's called an AD, an airworthiness directive. That's what should have been issued in 2016, where that death wouldn't have happened. So, we have seen this time and again.

And you mentioned Attention All Passengers , my book. Much of the book, about a third of it, is devoted to the issue of the FAA oversight of airline maintenance. We could easily talk about it for two or three more days. But the bottom line is that the entire model of how the airline industry works in the United States has been changed dramatically in the last 15 years or so. All airlines in the United States -- without question, all of them -- in 2019, outsource some or most or just about all of their maintenance, what they call heavy maintenance. Much of it is done outside of the United States -- El Salvador, Mexico, Brazil, China, Singapore. Again, we're talking about U.S. airlines. And although the FAA , on paper, says there is one standard for maintenance of U.S. airlines, the reality is there isn't. There are waivers given all the time, so that when work is done outside the United States, there are waivers so that there are no security background checks, there are no alcohol and drug screening programs put in place. And, in fact, many -- in some cases, most -- of the technicians cannot even be called mechanics, because they're not licensed. They're not licensed as they're required to be in the U.S. So, basically, you have two sets of rules. You have one that's for in-house airline employees and another for the outsourced facilities. And this all leads back to the FAA . I have sat in a room with FAA senior officials and asked them about this, and they say that they don't think it's a problem. It is a problem.

JUAN GONZÁLEZ: And what impact --

WILLIAM McGEE: I've spoken to --

JUAN GONZÁLEZ: What impact have the mergers, of the constant mergers of airlines, had, so we basically have a handful of U.S. airlines now, on all of this?

WILLIAM McGEE: Oh, no question. We have an oligopoly now. And, you know, even just going back as far as 2001, you know, there were four or five major carriers that we don't have anymore: America West, Continental, US Airways, TWA . You know, so what we have now is effectively an oligopoly. And this is unprecedented in the history of the aviation industry here in the United States. And so, you know, even when -- Ralph was talking about boycotts, and, you know, it's an excellent idea. But it's more challenging now than it would have been a few years ago. You know, there might have been more pressure on Southwest and American 10 or 15 years ago, when consumers had more choices. Now it's getting harder and harder for consumers to express their displeasure. We saw this after the Dr. Dao incident, where that passenger was dragged off United. In the long term, it didn't really affect United's bookings. It would have in another time, but so many people are locked in, particularly outside New York, Washington, Los Angeles. They're locked in, where they don't have a lot of choice on carriers.

AMY GOODMAN : Ralph Nader, I wanted to get your response both to this news that they were working on a fix -- they know there's a software glitch, that somehow, when on automatic pilot, when the plane is taking off, it takes this precipitous dive, and the way to deal with it is to take it off automatic and put it on manual. Now, AP has been doing a deep dive into the database of pilots complaining over and over again about this problem and saying they have to quickly switch to manual to prevent the plane from nosediving into the ground. And this latest news from The Wall Street Journal that while they're talking about this glitch being fixed in the next five weeks or so, that five weeks were lost in January because of the government shutdown.

RALPH NADER : Well, that's what Paul Hudson wrote in his press release at Flyers Rights. The focus has got to be on inaccurate or nonexisting information in Boeing's training manuals and inadequate flight training requirements. They sold this plane on the basis, among other things, of having larger engines. It's supposed to be 10 percent more fuel-efficient. But they sold it on the grounds that "You don't have to really train your pilots, airlines. This is really just a small modification of the reliable 737 that's all over the world." The question really comes down to cost cutting. They tantalize the airlines by saying, "This isn't really a new plane. It's very easy to fly, if you can fly a 737." And that turned out to be quite false...

... ... ...

[Mar 21, 2019] Pentagon to probe if Shanahan used office to help Boeing

Mar 21, 2019 | finance.yahoo.com

The Pentagon's inspector general has formally opened an investigation into a watchdog group's allegations that acting Defense Secretary Patrick Shanahan has used his office to promote his former employer, Boeing Co.

Citizens for Responsibility and Ethics in Washington filed an ethics complaint with the Pentagon's inspector general a week ago, alleging that Shanahan has appeared to make statements promoting Boeing and disparaging competitors, such as Lockheed Martin.

Shanahan, who was traveling with President Donald Trump to Ohio on Wednesday, spent more than 30 years at Boeing, leading programs for commercial planes and missile defense systems. He has been serving as acting Pentagon chief since the beginning of the year, after James Mattis stepped down.

The probe comes as Boeing struggles to deal with a public firestorm over two deadly crashes of the Boeing 737 Max 8 jetliner within the last five months. And it focuses attention on whether Trump will nominate Shanahan as his formal pick for defense chief, rather than letting him languish as an acting leader of a major federal agency.

Dwrena Allen, spokeswoman for the inspector general, said Shanahan has been informed of the investigation. And, in a statement, Pentagon spokesman Tom Crosson said Shanahan welcomes the review.

"Acting Secretary Shanahan has at all times remained committed to upholding his ethics agreement filed with the DoD," said Crosson. "This agreement ensures any matters pertaining to Boeing are handled by appropriate officials within the Pentagon to eliminate any perceived or actual conflict of interest issue(s) with Boeing."

During a Senate hearing last week, Shanahan was asked by U.S. Sen. Richard Blumenthal, D-Conn., about the 737 Max issue. Shanahan said he had not spoken to anyone in the administration about it and had not been briefed on it. Asked whether he favored an investigation into the matter, Shanahan said it was for regulators to investigate.

On Wednesday, Blumenthal said that scrutiny of Shanahan's Boeing ties is necessary. "In fact, it's overdue. Boeing is a behemoth 800-pound gorilla -- raising possible questions of undue influence at DOD, FAA and elsewhere," said Blumenthal.

Shanahan signed an ethics agreement in June 2017, when he was being nominated for the job of deputy defense secretary, a job he held during Mattis' tenure. It outlined the steps he would take to avoid "any actual or apparent conflict of interest," and said he would not participate in any matter involving Boeing.

The CREW ethics complaint, based to a large part on published reports, including one by Politico in January, said Shanahan has made comments praising Boeing in meetings about government contracts, raising concerns about "whether Shanahan, intentionally or not, is putting his finger on the scale when it comes to Pentagon priorities."

One example raised by the complaint is the Pentagon's decision to request funding for Boeing 15EX fighter jets in the 2020 proposed budget. The Pentagon is requesting about $1 billion to buy eight of the aircraft.

Shanahan, 56, joined Boeing in 1986, rose through its ranks and is credited with rescuing a troubled Dreamliner 787 program. He also led the company's missile defense and military helicopter programs.

Trump has seemed attracted to Shanahan partially for his work on one of the president's pet projects -- creating a Space Force. He also has publicly lauded Shanahan's former employer, Boeing, builder of many of the military's most prominent aircraft, including the Apache and Chinook helicopters, the C-17 cargo plane and the B-52 bomber, as well as the iconic presidential aircraft, Air Force One.

This is only the third time in history that the Pentagon has been led by an acting chief, and Shanahan has served in that capacity for longer than any of the others.

Presidents typically take pains to ensure the Pentagon is being run by a Senate-confirmed official, given the grave responsibilities that include sending young Americans into battle, ensuring the military is ready for extreme emergencies like nuclear war and managing overseas alliances that are central to U.S. security.


3 hours ago Why did Trump appoint a former Boeing executive and industry lobbyist to the the Secretary of Defense to replace General Mattis? What in Shananhan's background makes him qualified to lead our nation's military forces? 3 hours ago WITHOUT A DOUBT HE DID., ALSO INVESTIGATE NIKKI HALEY'S APPOINTED ON BOEING'S BOARD TO REPLACE SHANAHAN. FOLLOW THE HOEING KICKBACKS(MONEY), TO DONALD TRUMP'S FAMILY. 3 hours ago Shanahan probably helped Boeing on the promise of a later payback just like Ms. Nikki Haley did while Gov of SC where Boeing built a new plant on her watch. She helped big time to keep the Unions out of the new Boeing plant and now Boeing is going to put her on their board of directors. Nothing like a bit of an obvious payoff. 2 hours ago Reminds me of the Bush Jr days in the White House. During the Gulf War (#2) Vice President #$%$ Cheney awarded oil company Halliburton (Cheney was CEO before accepting the VP job) to deliver meals for the troops. The contract was ?No Bid.? Why was an oil company delivering food to troops with a no bid contract? After Cheney?s Job was over being VP he went back to being CEO at Halliburton and moved Halliburton?s headquarters to Dubai. What an American! 2 hours ago Now we understand why Boeing & the FAA hesitated to ground those planes for few days despite many countries who did grounded those plane which is a precedent for a country to ground & NOT wait for the manufacturer. ONLY after Canada grounded those planes Boeing & the FAA & that's because Canada IS a the #1 flight partner of the US ! 4 hours ago Years ago there was a Boeing procurement scandal and Trump does love the swamp he claims to hate.

[Mar 20, 2019] Reuters natch, are trying to pretend it's somehow the pilot's or airline's fault, but the their own reporters show it ain't

Mar 20, 2019 | www.moonofalabama.org

FFS , Mar 20, 2019 2:26:33 PM | link

OT: Reuters natch, are trying to pretend it's somehow the pilot's or airline's fault, but the their own reporters show it ain't

https://uk.reuters.com/article/uk-indonesia-crash-exclusive-idUKKCN1R10F7

[Mar 20, 2019] Was the 737 Max problem just bad software by Stephen Bryen

Mar 18, 2019 | www.asiatimes.com

he crash of the Ethiopian Max-8 Flight 409 on March 10, 2019, resulted in the grounding of all the Boeing 737 Max series aircraft – even the last hold-out, the United States, belatedly grounded them when President Trump acted and overruled the Federal Aviation Administration (FAA) that opposed any halt to flights.

In the United States, the FAA certifies aircraft as airworthy, puts out bulletins and advisories on problems and fixes and often is the "go to" agency for many aviation flight authorities around the world.

The 737 Max series is a new version of the venerable 737, equipped with new engines and other modifications that have impacted the aircraft's performance in good ways and bad.

Almost every expert today puts the blame for both flight disasters on faulty software that took over running the plane's flight control system. Many have pointed to Boeing's alleged lack of transparency in telling pilots what to do if the software malfunctioned. In addition, there had been at least eight pilot-reported flight control incidents prior to the first Lion Air crash.

Experienced pilots

Three of the pilots on the two doomed planes each had more than 8,000 hours flying experience – quite a lot – and the pilots of the Ethiopian airlines had additional information on the plane's flight characteristics and what to do in an emergency.

While we are still awaiting a final report on last year's Lion Air crash, we do have a quite informative initial report, although it lacks hard findings. In the Ethiopian case, we only have flight track information from ground radar and some incomplete reporting on what the pilots were saying to ground control. More will become available as the flight recorders are analyzed.

Yet despite this, we can understand some of what happened and clearly it is more than a single software glitch. This may help explain why Boeing did not meet its proposed deadline of January for installing updated software. Now in March Boeing says the replacement software will be available in April. But even if it is, there are more issues involving both hardware and software.

The software which so far has received virtually all the attention is called MCAS, for Maneuvering Characteristics Augmentation System. MCAS was added to the Max-8 series because new, heavier and larger engines replaced the old engines and as a result, the updated Max planes had a strong tendency to pitch nose up.

The new engine, CFM Leap-1B, was selected by Boeing because it was much more fuel efficient than the older models, one of the big reasons customers want the 737 Max.

The new engines forced re-engineering of parts of the 737.

Fitting the new engines meant moving them forward and lengthening the front landing gear to keep the engines from scraping on the ground. In turn, this changed the plane's center of gravity and also altered the air flow on the wings.

MCAS was a band-aid to fix the pitch up problem caused by the relocated and heavier new engines. MCAS is designed to push the nose down and prevent the aircraft from going into a stall. MCAS was intended to deal only with a specific flight risk.

The problems

Here are some of the problems one finds when reviewing the Preliminary Air Accident Investigation Report on the Lion Air crash.

1. MCAS operates by receiving information from a special sensor that measures the flying angle of the plane and takes over the flight controls if the angle is too great – meaning the aircraft could stall. A stall happens when a plane has too low an airspeed and not enough lift and the plane will literally fall out of the air.

There are two sensors that measure the angle of attack or nose-up condition of the Boeing 737 Max, one that provides data to the pilot and another that provides data to the copilot. The sensors are known as Angle of Attack Sensors, or AoA.

In the Lion Air aircraft, the pilot's AoA sensor had been found to be faulty on an earlier flight as reported by the pilot. That AoA sensor was replaced and tested by aircraft maintenance before the fatal flight.

The pilot gets no console or other warnings that his AoA sensor might be faulty. The pilot can ask his copilot what reading he is getting and see if there is a difference. That is exactly what happened on the Lion Air flight.

It would appear that the MCAS software is driven by information from the pilot's sensor. If the sensor itself is not at fault, there could still be wiring and connection problems that could feed bad information to MCAS. These conditions cannot be determined in flight.

If it is true that MCAS relies on information from only one sensor, that could be a design error. Modern aircraft are famous for built-in flight system redundancy, but apparently not in the case of MCAS. In addition, the pilot cannot manually change the MCAS choice of sensor.

2. No one has yet explained why the pilot's stick shaker was running on from the start of the flight and never stopped. The stick shaker is a motor with an unbalanced flywheel that is attached to the pilot's control stick, and another is attached to the co-pilot's stick. The stick shaker is supposed to warn the pilot of a potential stall. But why was it on nearly the whole time? And why was the co-pilot's stick shaker not on?

3. The pilots are supposed to be able to shut down MCAS, which only operates when the aircraft is manually operated, by switching the electronic trim control to off. The trim control is what MCAS uses to change the nose pitch of the 737 Max. But in the Lion Air case, we know the pilots turned off the electronic trim control. But MCAS kept adjusting the trim nose down, against the pilots' wishes. Or possibly something else was driving the trim control nose down, such as a shorted circuit or bad wiring.

4. The pilots also tried turning the aircraft's autopilot on, according to the report. MCAS is only supposed to work when the autopilot is off, that is only when the plane is operated under manual pilot control. The autopilot should have disabled MCAS but apparently it did not – in fact, the Lion Air autopilot would not turn on. There is no explanation for this. Was the autopilot locked out by MCAS? Or was there some other software or hardware foul up?

5. Pilots also had a very difficult time handling the aircraft stick, meaning that the flight control stick required a great deal of force to operate, especially when the pilots were, repeatedly, trying to recover the plane that was headed nose down, gaining speed and losing altitude. Stick force "feel" in 737s is artificial and is controlled by a couple of pitot tube sensors at the rear of the aircraft above the horizontal stabilizer.

There have been repeated problems on older 737s with the planes forward and rear pitot tubes, due partly to icing conditions and to pitot tube heater problems which are supposed to remove ice. Some pitot tubes have failed because of fouling. Pitot tubes detect aircraft speed and they do this by comparing the force of incoming air on the pitot tubes to what are called static ports located elsewhere on the plane. Accidents have been attributed to faulty or fouled pitot tubes.

It is not clear how the flight speed information from the pitot tubes is integrated into the MCAS if it is. But speed information is fed into the flight computer and if it is faulty it could create ambiguities in the MCAS and the flight computer.

6. Would better pilot training have helped pilots avoid disaster? Boeing has been criticized for not initially providing information about MCAS to Max pilots, and only later issuing a bulletin on how to deal with some MCAS anomalies. Boeing also apparently did not offer any additional pilot training, leaving pilots to find their way through a morass of complex problems made worse by possible hardware and software faults.

As it is, it appears the Lion Air pilots acted in the best way they could but were unable to overcome the instability of the aircraft as it headed nose down to disintegrate in the ocean. We don't yet know how the Ethiopian Airline pilots performed, but they had the advantage of advisories from Boeing and the FAA. Still, the same final result.

What is clear is that there is more than one single cause for the two aircraft crashes. And we know that other planes experienced control problems but recovered. These disasters suggest there was a complex of problems that caused the two disasters.

Boeing's engineers need to assess the entire flight control system, the electronics and mechanics, before a satisfactory solution is at hand.

[Mar 19, 2019] Trump Forced to Ban Boeing Poor Quality of American Planes to Affect Russian Airlines the Least! - YouTube

350 planes were grounded.
Notable quotes:
"... The United States held out to the last. Trump personally requested to ground the flagship aircraft of the American company only late evening yesterday, when Canada joined the interdiction. ..."
Mar 16, 2019 | www.youtube.com

Subscribe to Vesti News https://www.youtube.com/channel/UCa8M...

Today, Russia, following Europe and America, banned the flights of Boeing 737 MAX. Dozens of countries have stopped using this aircraft after the Sunday crash in Ethiopia.

The United States held out to the last. Trump personally requested to ground the flagship aircraft of the American company only late evening yesterday, when Canada joined the interdiction.


Putin The Great , 2 days ago (edited)

737 is out of date considering the modern bigger fuel efficient engines don't fit it.They're just applying band aid to fix it's short coming. Airbus A320 has no problems with these new engines as it sits higher.

orderoutofchaos621 , 2 days ago

Sukhoi superjet 100 and MC 21 should be prioritised by Russian airlines.

Richie Blackmore. , 3 days ago

40 countries banned these aircraft from their airspace..... Comparable to the vicious, aggressive, malign, thoughtless, selfish and self aggrandising SANCTIONS the US regime and its vassals slap on innocent countries in attempts to impoverish or/and change their governments!!!!!!!!!

But this is self inflicted!!!!!! I hope the US regime can see the irony in this!!!!

0pTicaL823 , 2 days ago

Boeing should thank China for being the first to ground it's entire fleet, if one of the 96 planes that China operated, god forbid, had gone down, Boeing is done, 3-strikes you're out

statinskill , 2 days ago (edited)

Something is wrong with these planes and it is a good thing that they're being grounded world-wide until the problem is fixed. It is prudent both from the side of Rosaviatsiya and the FAA to not permit these planes to fly in the meanwhile to prevent further potential tragedies. However this is no reason to simply write off the huge fleet of Boeing 737 MAX planes in service world-wide. Right now engineers at Boeing are working on the problem and then those planes will be retrofitted asap. Personally I have no particular concerns flying in a Boeing 737 MAX once the problem is fixed.

[Mar 18, 2019] Boeing (BA) Secures $250M Deal to Support LRSO Cruise Missile

Mar 18, 2019 | finance.yahoo.com

Zacks Equity Research , Zacks March 18, 2019

The Boeing Company BA recently won a $250 million contract to offer weapon system integration for the Long Range Stand-Off (LRSO) Cruise Missile. Work related to the deal is scheduled to be completed by Dec 31, 2024.

The contract was awarded by the Air Force Nuclear Weapons Center, Eglin Air Force Base, Florida. Per the terms of the deal, this aerospace giant will provide aircraft and missile carriage equipment development and modification, engineering, testing, software development, training, facilities and support necessary to fully integrate the LRSO Cruise Missile on the B-52H bomber platform.

Attributes of LRSO

The LRSO is a nuclear-armed air-launched cruise missile, under development. It is set to replace the current AGM-86 air launched cruise missile (ALCM). LRSO, might be up to about 50% longer than Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER) and still be suitable for internal carriage by the B-2 and B-52.

Our View

AGM-86 ALCM has been serving the U.S. Air Force quite efficiently. However, with increasingly sophisticated air defense systems developed by America's nemeses, especially Russia, demand for a new stealth nuclear-armed cruise missile capable of either destroying these defenses or penetrating them has been increasing consistently. In this scenario, the LRSO comes as the most credible stealthy and low-yield option available to the United States (according to Strategic Studies Quarterly Report).

Boeing's B-52, which has been the U.S. Air Force's one of the most preferred bombers, is completely dependent on long-range cruise missiles and cannot continue in the nuclear mission beyond 2030 without LRSO. As B-52 is expected to play a primary role in the U.S. nuclear mission for at least next decade and ALCM is already well beyond its originally planned end of life, we may expect more contracts similar to the latest one to usher in from the Pentagon in the coming days. This, in turn, should prove conducive to Boeing.

Price Performance

In a year's time, shares of Boeing have gained about 16.5% against the industry's 2.2% decline.

[Mar 16, 2019] Boeing 737 Crashes Raise Tough Questions on Aircraft Automation - Bloomberg

Mar 16, 2019 | www.bloomberg.com

Tom Enders just couldn't resist the swipe at the competition. It was June 2011, and the chief executive officer of Airbus SE was on a stage at the Paris air show after the planemaker won in a matter of days an unprecedented 600 orders for its upgraded A320neo airliner, while Boeing Co. stood on the sidelines.

"If our colleagues in Seattle still maintain we're only catching up with their 737, I must ask myself what these guys are smoking," Enders blurted out, to the general amusement of the audience, while Boeing representatives at the back of the room looked on.

Boeing had wavered on its decision whether to follow Airbus's lead and re-engine the 737 or go with an all-new aircraft. Customers were willing to wait for "something more revolutionary," as Jim Albaugh, at the time Boeing's head of commercial aircraft, said then.

But the European manufacturer's blow-out success with the A320neo, essentially a re-engined version of its popular narrow-body family, would soon force Boeing's hand.

As the A320neo became the fastest-selling plane in civil aviation history as Airbus picked off loyal Boeing customers like American Airlines Group Inc. , the U.S. company ditched the pursuit of an all-new jet and responded in July 2011 with its own redesign, the 737 Max.

"The program was launched in a panic," said Sash Tusa, an analyst at Agency Partners , an equity research firm in London. "What frightened Boeing most of all was losing their biggest and most important customer. American Airlines was the catalyst."

It turned out that Chicago-based Boeing wasn't too late to the party in the end: While the Max didn't quite replicate the neo's order book, it did become the company's fastest seller as airlines scrambled to cut their fuel bills with new engines that promised savings of 20 percent or more. All told, the Max raked in about 5,000 orders, keeping the playing field fairly level in the global duopoly between Airbus and Boeing.

Close Scrutiny

Now the 737 Max is grounded globally, after two almost factory-fresh jets crashed in rapid succession. As a result, the repercussions of Boeing's response to Airbus's incursion are under the microscope. Getting particular scrutiny are the use of more powerful, fuel-saving engines and automated tools to help pilots control the aircraft.

After the grounding, Boeing said that it "continues to have full confidence in the safety of the 737 Max, and that it was supporting the decision to idle the jets "out of an abundance of caution." The company declined to comment beyond its public statements.

In late October, a plane operated by Lion Air went down minutes after taking off in Jakarta, killing all 189 people on board. Then on March 10, another 737 Max crashed, this time in Ethiopia en route to Kenya. Again, none of the 157 people on board survived the impact.

There are other similarities that alarmed airlines and regulators and stirred public opinion, leading to the grounding of the 737 Max fleet of more than 350 planes. According to the Federal Aviation Administration , "the track of the Ethiopian Airlines flight was very close and behaved very similar to the Lion Air flight."

How Boeing Safety Feature Became a Suspect in Crashes: QuickTake

After decades of steadily declining aircraft accidents, the question of how two identical new planes could simply fall out of the sky minutes after takeoff has led to intense scrutiny of the 737 Max's systems. Adding to the chorus in the wake of the crash was President Donald Trump, who lamented the complexities of modern aviation, suggesting that people in the cockpit needed to be more like nuclear physicists than pilots to command a jet packed with automated systems.

"Airplanes are becoming far too complex to fly. Pilots are no longer needed, but rather computer scientists from MIT," the president said in the first of a pair of tweets on March 12, darkly warning that "complexity creates danger."

Analog Machine

Automation plays a limited role in the 737 Max. That's because the aircraft still has essential analog design and layout features dating back to the 1960s, when it was conceived. It's a far older concept than the A320, which came to market at the end of the 1980s and boasted innovations like fly-by-wire controls, which manipulate surfaces such as flaps and horizontal tail stabilizers with electrical impulses and transducers rather than heavier hydraulic links.

Upgrading the 737 to create the Max came with its own set of issues. For example, the 737 sits considerably lower to the ground, so fitting the bigger new engines under the wings was a structural challenge (even with the squished underbelly of the engine casing). In response, Boeing raised the front landing gear by a few inches, but this and the size of the engines can change the plane's center of gravity and its lift in certain maneuvers.

Boeing's technical wizardry for the 138- to 230-seat Max was a piece of software known as the Maneuvering Characteristics Augmentation System, or MCAS. It intervenes automatically when a single sensor indicates the aircraft may be approaching a stall. Some pilots complained, though, that training on the new system wasn't sufficient and properly documented.

"The benefits of automation are great, but it requires a different level of discipline and training,'' said Thomas Anthony, director of the Aviation Safety and Security Program at the University of Southern California. Pilots must make a conscious effort to monitor the plane's behavior. And reliance on automation means they will take back control only in the worst situations, he said.

Errant Sensor

With the Lion Air crash, data from the recovered flight recorders points to a battle in the cockpit between the software and the pilots who struggled in vain to keep control. The data showed that an errant sensor signaled the plane was in danger of stalling and prompted the MCAS to compensate by repeatedly initiating a dive. The pilots counteracted by flipping a switch several times to raise the nose manually, which temporarily disabled MCAS. The cycle repeated itself more than two dozen times before the plane entered its final deadly dive, according to the flight data.

With the flight and cockpit voice recorders of the Ethiopian plane now in France for analysis, the interaction between the MCAS system and the pilots will again be under close scrutiny, probably rekindling the broader debate about who or what is in control of the cockpit.

That man-versus-machine conundrum has been central to civil aviation for years. Automation has without doubt made commercial flying much safer, as planemakers added systems to help pilots set engine thrust, navigate with greater precision and even override human error in the cockpit.

For example, automation on modern aircraft keeps pilots within a so-called flight envelope to avoid erratic maneuvers that might destabilize the aircraft. Analyses of flight data show that planes have more stable landings in stormy, low-visibility conditions when automation is in charge than on clear days when they land by sight.

Sully's Miracle Landing

The most daring descent in recent memory, Chesley "Sully" Sullenberger's landing of US Airways Flight 1549 in the Hudson River in early 2009, is Exhibit A of how an interconnected cockpit worked hand-in-hand with an experienced pilot. Automatic pitch trim and rudder coordination assisted manual inputs and kept the Airbus A320 steady on its smooth glide into the icy water. The drama showed that automation can play a crucial support function, provided a pilot is fully trained and the aircraft properly maintained.

"Some people are saying modern aircraft such as the 737 Max are too complex," said Dave Wallsworth, a British Airways captain on the Airbus A380 double-decker. "I disagree. The A380 is a far more complex aircraft and we fly it very safely every day. Pilots are capable of understanding aircraft systems so long as the manuals contain the information we need."

Airbus traditionally has pushed the envelope on automation and a more modern cockpit layout, with larger screens and steering by joystick rather than a central yoke, turning pilots into something akin to systems operators. Boeing's philosophy, on the other hand, has been to leave more authority in the hands of pilots, though newer designs also include some computerized limits. Like Airbus planes, the latest aircraft from Seattle -- where Boeing makes most of its jetliners -- are equipped with sophisticated autopilots, fly-by-wire controls or systems to set speed during landings.

"The big automation steps came in the 1980s with the entry into service of the A320 and the whole fly-by-wire ethos," said John Strickland, an independent aviation analyst. "I don't think automation per se is a problem, we see it in wide-scale use in the industry, and as long as it is designed to work hand-in-hand with pilots and pilots understand how to use it, it shouldn't be an issue."

Erratic Movements

But the counter-argument is that increasingly complex systems have led computers to take over, and that many pilots may have forgotten how to manually command a jet -- particularly in a moment of crisis. That criticism was leveled at Airbus, for example, after the mid-Atlantic crash of Air France Flight 447 in 2009 that killed all 228 people on board. Analysis of the flight recorders showed the crew was confused by stall warnings and unreliable speed readings, leading to erratic maneuvers that ended in catastrophe.

>

"I grew up on steam gauges and analog, and the modern generation on digital and automation," said Jon Weaks, president of the Southwest Airlines Pilots Association and a Boeing 737 captain for the Dallas-based airline. "No matter what you grew up on, you have to fly the plane. If the automation is doing something you don't want it to do or that you don't understand, you have to disconnect it and fly the plane."

A 2013 report by the FAA found more than 60 percent of 26 accidents over a decade involved pilots making errors after automated systems abruptly shut down or behaved in unexpected ways. And the 2016 inspector general's report at the FAA noted that as the use of automation increases, "pilots have fewer opportunities to use manual flying skills."

"As a result, the opportunities air carrier pilots have during live operations to maintain proficiency in manual flight are limited and are likely to diminish," the report found.

The grounding of the 737 Max fleet has left Boeing in crisis. The company couldn't get through with its message that the plane was safe to fly, as the group of regulators and airlines idling the jet kept expanding. The 737 program is Boeing's cash cow, accounting for a third of its profit, and Boeing's stock dropped sharply in the days after the disaster.

Get in Line

The Max gave Boeing a relatively cheap path back into the narrow-body game that it was at risk of losing to the Airbus neo. At the time, Boeing had to make a quick decision, as it was still burdened financially by the 787 Dreamliner wide-body that was over budget and behind schedule.

Both manufacturers have said they won't come out with an all-new single-aisle model until well into the next decade, preferring to wait for further technological advancements before committing to massive spending. The success of both the neo and the Max bought the companies that extra time, with orders books stretching years into the future.

Half a century after it was launched almost as an afterthought, the 737 program has become the lifeblood of Boeing that helps finance the rest of the corporation -- the biggest U.S. exporter. It's the one aircraft that Boeing cannot afford to give up.

"The Max was the right decision for the time," said Richard Aboulafia, an aviation analyst with the consultancy Teal Group . "Yes, there may be an issue with MCAS needing a software patch. Yes, there may need to be some additional training. But these are not issues that cause people to change to the other guys' jet. The other guys have a waiting line, and when you get to the back of that line, you burn more fuel."

-- With assistance by Alan Levin, Benjamin D Katz, Margaret Newkirk, Michael Sasso, and Mary Schlangenstein

[Mar 14, 2019] Boeing 737 Max an artificial intelligence event by James Thompson

Mar 14, 2019 | www.unz.com

Conventional wisdom is that it is too early to speculate why in the past six months two Boeing 737 Max 8 planes have gone down shortly after take off, so if all that follows is wrong you will know it very quickly. Last night I predicted that the first withdrawals of the plane would happen within two days, and this morning China withdrew it. So far, so good. (Indonesia followed a few hours ago).

Why should I stick my neck out with further predictions? First, because we must speculate the moment something goes wrong. It is natural, right and proper to note errors and try to correct them.(The authorities are always against "wild" speculation, and I would be in agreement with that if they had an a prior definition of wildness). Second, because putting forward hypotheses may help others test them (if they are not already doing so). Third, because if the hypotheses turn out to be wrong, it will indicate an error in reasoning, and will be an example worth studying in psychology, so often dourly drawn to human fallibility. Charmingly, an error in my reasoning might even illuminate an error that a pilot might make, if poorly trained, sleep-deprived and inattentive.

I think the problem is that the Boeing anti-stall patch MCAS is poorly configured for pilot use: it is not intuitive, and opaque in its consequences.

By the way of full disclosure, I have held my opinion since the first Lion Air crash in October, and ran it past a test pilot who, while not responsible for a single word here, did not argue against it. He suggested that MCAS characteristics should have been in a special directive and drawn to the attention of pilots.

I am normally a fan of Boeing. I have flown Boeing more than any other plane, and that might make me loyal to the brand. Even more powerfully, I thought they were correct to carry on with the joystick yoke, and that AirBus was wrong to drop it, simply because the position of the joystick is something visible to pilot and co-pilot, whereas the Airbus side stick does not show you at a glance how high the nose of the plane is pointing.

http://www.unz.com/jthompson/fear-of-flying-and-safety-of-gruyere/

Pilots are bright people, but they must never be set a badly configured test item with tight time limits and potentially fatal outcomes.

The Air France 447 crash had several ingredients, but one was that the pilots of the Airbus A330-203 took too long to work out they were in a stall. In fact, that realization only hit them very shortly before they hit the ocean. Whatever the limitations of the crew (sleep deprived captain, uncertain co-pilot) they were blinded by a frozen Pitot air speed indicator, and an inability to set the right angle of attack for their airspeed.

For the industry, the first step was to fit better air speed indicators which were less likely to ice up. However, it was clear that better stall warning and protection was required.

Boeing had a problem with fitting larger and heavier engines to their tried and trusted 737 configuration, meaning that the engines had to be higher on the wing and a little forwards, and that made the 737 Max have different performance characteristics, which in turn led to the need for an anti-stall patch to be put into the control systems.

It is said that generals always fight the last war. Safety officials correct the last problem, as they must. However, sometimes a safety system has unintended consequences.

The key of the matter is that pilots fly normal 737s every day, and have internalized a mental model of how that plane operates. Pilots probably actually read manuals, and safety directives, and practice for rare events. However, I bet that what they know best is how a plane actually operates most of the time. (I am adjusting to a new car, same manufacturer and model as the last one, but the 9 years of habit are still often stronger than the manual-led actions required by the new configuration). When they fly a 737 Max there is a bit of software in the system which detects stall conditions and corrects them automatically. The pilots should know that, they should adjust to that, they should know that they must switch off that system if it seems to be getting in the way, but all that may be steps too far, when something so important is so opaque.

What is interesting is that in emergencies people rely on their most validated mental models: residents fleeing a burning building tend to go out their usual exits, not even the nearest or safest exit. Pilots are used to pulling the nose up and pushing it down, to adding power and to easing back on it, and when a system takes over some of those decisions, they need to know about it.

After Lion Air I believed that pilots had been warned about the system, but had not paid sufficient attention to its admittedly complicated characteristics, but now it is claimed that the system was not in the training manual anyway. It was deemed a safety system that pilots did not need to know about.

This farrago has an unintended consequence, in that it may be a warning about artificial intelligence. Boeing may have rated the correction factor as too simple to merit human attention, something required mainly to correct a small difference in pitch characteristics unlikely to be encountered in most commercial flying, which is kept as smooth as possible for passenger comfort.

It would be terrible if an apparently small change in automated safety systems designed to avoid a stall turned out have given us a rogue plane, killing us to make us safe.


Anatoly Karlin , says: Website March 11, 2019 at 2:36 pm GMT

Pilots are used to pulling the nose up and pushing it down, to adding power and to easing back on it, and when a system takes over some of those decisions, they need to know about it.

I have read that Boeing kept MCAS out of the limelight as otherwise the 737 MAX would need to be certified as a new plane and airlines would need to do $$$ pilot retraining, making their product less competitive.

James Thompson , says: Website March 11, 2019 at 3:09 pm GMT
@Anatoly Karlin Interesting. It is certainly hard to understand why MCAS was shrouded in secrecy, when it was potentially lethal.
Captain 737 , says: March 11, 2019 at 7:38 pm GMT
Interesting response from a "by-stander", who compares a sophisticated aircraft with a new model car !!!

As an experienced captain on 737s (not the MAX) I say, let the investigation begin; and let us not have by-standers giving their penny worth. A normal 737 . is there also an abnormal 747 or 777 or 787, or a 737 ??

Pilots carry the can . but, are the most respected profession in the world. What ever happened, let the investigation decide the outcome, and not the "un-trained" (is there such a term !!!!).

If one takes a look at the (released to date) information about the Lion Air crash – "unreliable airspeeds" (the airspeed indicator is providing erroneous information during a critical phase of flight (like climb out after take-off)) could have been the cause of that aircraft crash – not AI.

A simple explanation – the airspeed indicator is "unreliable", as one moment the indication is under-speed, then overspeed, followed by under-speed, and so it goes; like a yoyo going up and down; the indicated speed is erroneous and the pilots cannot rely on what is presented on the airspeed indicator. Pilots, according to the Boeing Training Manual, are trained to handle unreliable airspeeds – the key is to fly the plane based solely on pitch attitude and thrust (there are memory items for unreliable airspeed occurrences, along with the reference items in aircraft's Quick Reference Handbook – the QRH (Boeing term) is the pilots "bible" for any issues and problems when the aircraft is in the air !! ).

The point of the above paragraph is to enlighten the 'un-trained' as to not speculate too soon with ideas and a "hypothesis" of what may have happened, until the knowledgeable ones – the aircraft manufacturer (probably being the most knowledgable), the country's aviation authority, the engine manufacturer, and (dear I say) the FAA (the Yanks just cannot help themselves delving into other countries' affairs; when for 9/11 not one minutes was spent by anyone (FAA, Boeing, no one) investigating the so-called crashes of four aircraft – on one day, within one and a half hours of each other, and in the most protected airspace in the world (got the hint !!) – I have digressed, though for reason .. have completed their investigations.

I can assure you that no pilot wants to crash a plane we (pilots) all want to live to 100, and beyond.

Humans make mistakes, but technology needs humans to correct technology's mistakes. Boeing build reliable and trustworthy aircraft; pilots undertake their duties in a safe and controlled manner (according to training and aircraft manufacturer stipulated standards); but errors happen – and the investigator is there to establish what happened, so that these do not happen again. Unfortunately, it is just possible that the cause of the first MAX accident is the same as the second. But, let the knowledgable ones determine that fact – and let me, and us, not speculate.

AI in the MAX hhmmmmm – let Boeing release that information, before we start speculating again (on AI – is an auto pilot AI; the B737 I fly has two auto pilots; is that double AI ??).

To the rest of the travelling public – airline travel remains, and has been, the safest form of transport for decades. I am confident that the status quo will remain.

Time will reveal the answers to these two accidents, when the time is right – when the investigators (for both) have concluded their deliberations.

My guess is, the majority of people will have forgotten these two MAX events (but, for those who have lost loved ones), as some other crisis/event will have occurred in their lives and/or in the world.

Dieter Kief , says: March 11, 2019 at 7:38 pm GMT
@Anatoly Karlin

737 MAX would need to be certified as a new plane and airlines would need to do $$$ pilot retraining, making their product less competitive.

Short sighted businessmen – Nothing lasts for long

Joni Mitchell – – – Chinese Cafè on Wild Things Run Fast

The Anti-Gnostic , says: Website March 11, 2019 at 7:45 pm GMT
I think the problem is that the Boeing anti-stall patch MCAS is poorly configured for pilot use: it is not intuitive, and opaque in its consequences.

I think that's the case with a lot of current technology. Human factors and tactileness don't seem to get much weight in current engineering.

Simply Simon , says: March 12, 2019 at 12:26 am GMT
@Captain 737 I respect your analysis especially coming from a seasoned 737 captain. I have over 5,000 flying hours in single and twin-engine, conventional and jet, all military. I have not flown since 1974 so the advances in auto-pilot technology are beyond my comprehension. My question to you is simple–I think. If the aircraft took off in VFR conditions I assume the pilots knew the pitch attitude all during the takeoff phase. Is there no way to manually overpower the auto-pilot once the pilots knew the pitch attitude was dangerously high or low?
kauchai , says: March 12, 2019 at 2:37 am GMT
If this is a made in china airplane, the empire would mobilize the whole world to ground the entire fleet. The diatribes, lies, cruel sick jokes, lawsuits, etc, etc, would fly to the heavens.

But NO, this is an empire plane. Designed, built and (tested?) in the heart of the empire. And despite the fact that more than 300 people had died, IT IS STILL SAFE to fly!

LOL! LOL!

Anonymous [414] Disclaimer , says: March 12, 2019 at 3:41 am GMT
Quite a short and to-the-point article, although the link to "artificial intelligence" is tenuous at best.

What is sold as Artificial Intelligence nowadays is massive statistical processing in a black box (aka as "Neural Network Processing"), it's not intelligent. The most surprising fact is that it works so well.

Neural Networks won't be in high-assurance software soon. No-one knows what they really do once configured (although there are efforts underway to attack that problem ). They are impossible to really test or design to specification. Will someone underwrite that a system incorporating them does work? Hardly. You may find them in consumer electronics, research, "self driving cars" that never really self-drive without surprises and possibly bleeding edge military gear looking for customers or meant to explode messily anyway.

But not in cockpits. (At least I hope).

Check out this slideshow about the ACAS-X Next Generation Collision Airborne Collision Avoidance System. It has no neural network in sight, in fact if I understand correctly it doesn't even have complex decision software in-cockpit: it's all decision tables precomputed from a high-level, understandable description (aka. code, apparently in Julia) to assure safe outcome in a fully testable and simulatable approach.

In this accident, we may have a problem with the system, as opposed to with the software. While the software may work correctly and to specification (and completely unintelligently) the system composed of software + human + physical machinery will interact in interesting, unforeseen, untested ways, leading to disaster. In fact the (unintelligent software + human) part may disturbingly behave like those Neural Networks that are being sold as AI.

Anonymous [414] Disclaimer , says: March 12, 2019 at 4:16 am GMT
A disquieting item on your morning cereal box:

https://www.stripes.com/news/us/boeing-cited-by-pentagon-over-quality-concerns-going-back-years-1.522343

https://www.stripes.com/news/air-force/air-force-won-t-accept-any-more-boeing-tankers-until-manufacturing-process-is-cleaned-up-1.571108

Anonymous [427] Disclaimer , says: March 12, 2019 at 4:46 am GMT
@Anatoly Karlin I'm guessing that it would require a change in the TCDS and possibly a different type rating, which would be anathema for sales.

I'm a little airplane person, not a big airplane person (and the 737 is a Big Airplane even in its smallest configuration) but I know there have been several instances where aircraft had changes that required that pilots of the type have a whole different type rating, even though the changes seemed minor. I'm guessing airlines are training averse and don't want to take crews off revenue service beyond what is statutorily required. The margins in airline flying are apparently much leaner now than in the glory days.

I never approved of allowing fly by wire in commercial airliners, I never even really liked the idea of FADEC engine control (supervisory DEC was fine) because a classical advantage of gas turbines (and diesels) was that they could run in an absolutely electrically dead environment once lit. Indeed, the J-58 (JT11-D in P&W parlance) had no electrical system to speak of beyond the instrumentation: it started by mechanical shaft drive and ignited by triethyl borane chemical injection. The Sled could make it home on needle-ball and alcohol compass, and at least once it did. Total electrical failure in any FBW aircraft means losing the airplane. Is the slight gain in efficiency worth it? I'm told the cables, pulleys, fairleads and turnbuckles add 200 pounds to a medium size airliner, the FBW stuff weighs 80 or so.

The jet transports we studied in A&P school had a pitot head and static port on either side of the flight deck and the captain and F/O had inputs from different ones, though IIRC the altimeter and airspeed were electrically driven from sensors at the pitot head or inboard of it. I have a 727 drum-pointer (why are three pointer altimeters even legal anymore??) altimeter and it has no aneroids, just a couple of PCBs full of TTL logic and op amps and a DB style connector on the back. Do crews not cross check airspeed and altitude or is there no indicator to flag them when the two show something different?

Also, not being a jet pilot myself, my understanding is that anyone with T-38 experience is forever after thinking in terms of AOA and not airspeed per se, because that airplane has to be flown by AOA in the pattern, and classically a lot of airline pilots had flown Talons. Is there no AOA indicator in the 737? Flying in the pattern/ILS would make airspeed pretty dependent on aircraft weight, and on a transport that can change a lot with fuel burn, do they precisely calculate current weight from a totalizer and notate speeds needed? (I presume airliners don't vary weight other than fuel burn, not being customarily in the business of throwing stuff out of the airplane, although they used to fly jumpers out of a chartered 727 at the parachute meet in Quincy)

dearieme , says: March 12, 2019 at 12:00 pm GMT
@Captain 737 Why are you pretending to be a pilot, and a pompous one at that?
dearieme , says: March 12, 2019 at 12:06 pm GMT
Many problems in the world arise because many computing people reckon themselves very clever when they are merely rather clever. And often they combine what cleverness they have with a blindness about humans and their ways. I shouldn't be at all surprised if programmers at Boeing decided that they always knew better than pilots and doomed the planes accordingly.

I saw recently an expression that made me grin: "midwits". It describes rather well many IT types of my acquaintance.

dearieme , says: March 12, 2019 at 12:51 pm GMT
Another human cost of midwittery:

https://www.dailymail.co.uk/news/article-6797193/More-500-village-postmasters-wrongly-hounded-stealing-millions-system.html

Fabian Forge , says: March 12, 2019 at 4:55 pm GMT
@fish And that's the problem, as Mr. Kief also points out. The individuals at the decision making level (let's call them "executives") don't or can't think that far ahead, at least when the corporation they run is concerneed.

It really is a time-preference problem.

Fabian Forge , says: March 12, 2019 at 5:06 pm GMT
@dearieme One corollary is that the Midwits take such joy in their cleverness that they assume their wit has value in and of itself. This is most evident when they design clever solutions to invented problems. Billions of dollars of venture capital have been set on fire in that way, when technical and financial midwittery combine.
Dieter Kief , says: March 12, 2019 at 10:55 pm GMT
@Andrei Martyanov It's almost nitpicking. But – James Thompson says it above: The MCAS in this Boing model 737 MAX 8 is used to cover up a basic construction flaw. This has undoubtedly worked for quite some time – but it came with a risk. And this risk might turn out to have caused numerous deaths. In this case, if it will turn out, that the MACS system didn't do what it was supposed to do and thus caused numerous deaths – will this then be looked upon as a problem of the application of artificial intelligence? Yes, but not only . It was a combination of a poorly built (constructed) airliner and software, which might not have been able to compensate for this flawed construction under all conditions.

It's cheaper to compensate via software – and this might (might) turn out to be a rather irresponsible way to save money. But as I said: Even in this case, the technical problem would have to be looked upon as twofold: Poor construction plus insufficient software compensation. I'd even tend to say, that poor construction would then be the main (=basic) fault. With the zeitgeisty (and cheap!) software-"solution" for this poor construction a close second.

Eagle Eye , says: March 12, 2019 at 11:25 pm GMT
@Captain 737 Curiously, this is "Captain 737″'s first and only comment here.

It's almost as if Boeing hired a high-priced PR firm whose offerings include pseudonymous online "messaging" to "shape opposition perceptions" etc. Note the over-obvious handle. (Just like globalist shills like to pretend to be regular blue-collar guys in small fly-over towns.)

By their words shalt ye know them.

PREDICTION: In 3-4 years, we will "discover" a long paper trail of engineers warning early on about the risk of hastily kludging a half-assed anti-stall patch MCAS onto a system that had undergone years of testing and refinement WITHOUT the patch.

Only somebody PAID not to see the problem could fail to perceive that this means that as so altered, the ENTIRE SYSTEM goes back to being technically immature.

Anonymous [427] Disclaimer , says: March 13, 2019 at 12:00 am GMT
@Dieter Kief What "basic construction flaw" are we discussing here? The 737 airframe is pretty well established and has a good record-there have been incidents but most have been well dealt with.
Dieter Kief , says: March 13, 2019 at 12:39 am GMT
@Anonymous I've read today, that in the aviation world there is a consensus, that what James Thompson says in his article is right:
"Boeing had a problem with fitting larger and heavier engines to their tried and trusted 737 configuration, meaning that the engines had to be higher on the wing and a little forwards, and that made the 737 Max have different performance characteristics, which in turn led to the need for an anti-stall patch to be put into the control systems."

– A German engineer wrote in a comment in the Berlin daily Die weLT, this construction flaw makes the 737 MAX 8 something like a flying traktor . He concluded, that Boing proved, that you can make a tractor fly, alright. But proper engineering would have looked otherwise – and would for sure had come at a higher cost.
(The different performance charactersitics mentioned by James Thompson is an extraordinarily nice way to express, that the 737 MAX 8 is a tad more likely to stall, just because of the very design-changes, the bigger turbines made necessary. And this is a rather nasty thing to say about an airplane, that a new design made it more likely to stall! ).

Sparkon , says: March 13, 2019 at 1:54 am GMT
@Anonymous

What "basic construction flaw" are we discussing here? The 737 airframe is pretty well established and has a good record.

I 'm not so sure about the good record, and I too suspect the underlying problem is the 737 itself – the entire 737 airframe and avionics.

Worst crash record

LET 410 – 20
Ilyushin 72 – 17
Antonov AN-1 – 17
Twin Otter – 18
CASA 212 – 11
DC-9/MD80 – 10
B737-100 / 700 – 10
Antonov 28 – 8
Antonov 32- 7
Tupolev 154- 7

[a/o 2013 – my bold]

https://www.telegraph.co.uk/travel/news/Least-safe-aircraft-models-revealed/

The 737 family is the best selling commercial airliner series in history with more than 10,000 units produced. However, this airplane in its various configurations has had many crashes since it first entered service in 1968.

[Mar 13, 2019] Boeing, The FAA, And Why Two 737 MAX Planes Crashed

Notable quotes:
"... To implement a security relevant automatism that depends on only one sensor is extremely bad design. To have a flight control automatism engaged even when the pilot flies manually is also a bad choice. But the real criminality was that Boeing hid the feature. ..."
"... The Ethiopian Airlines plane that crashed went down in a similar flight profile as the Indonesian plane. It is highly likely that MCAS is the cause of both incidents. While the pilots of the Ethiopian plane were aware of the MCAS system they might have had too little time to turn it off. The flight recorders have been recovered and will tell the full story. ..."
"... The FAA certifies all new planes and their documentation. I was for some time marginally involved in Airbus certification issues. It is an extremely detailed process that has to be followed by the letter. Hundreds of people are full time engaged for years to certify a modern jet. Every tiny screw and even the smallest design details of the hardware and software have to be documented and certified. ..."
"... How or why did the FAA agree to accept the 737 MAX with the badly designed MCAS? How could the FAA allow that MCAS was left out of the documentation? What steps were taken after the Indonesian flight crashed into the sea? ..."
"... That the marketing department has more say than the engineers who design and test the hardware and the software in passenger jets tells us a great deal about the Potemkin-style workplace culture that prevails in Boeing and similar large US corporations. The surface sheen is more important than the substance. The marketing brochures and manuals are no different from mainstream news media in the level of BS they spew. ..."
"... The Indonesian pilots did not have the time to figure out and realise that something else was controlling the plane's flight, much less deactivate what is effectively a second autopiloting system. ..."
"... B is right. This is a criminal act of deception and fraud thats cost hundreds their lives. Boeing executives responsible should be prosecuted and then jailed. ..."
"... while all the technical discussion around how to fly a plane is truly interesting, what's really at issue here is corporate and institutional betrayal of trust. ..."
"... The corporate aspect is Boeing, obviously. The institutional aspect is FAA, which used to lead the world in trust when it came to life and death matters. ..."
"... But now, in what Bloomberg, even while trying to support FAA, has no choice but to report as a "stunning rebuff" to FAA's integrity, countries around the world are grounding this flawed plane. Germany, among others, has closed its airspace to the 737. ..."
"... "Should anyone be flying 737MAXes before the black box data has been evaluated?" ..."
"... Before, the civilian airliners were falling out of the sky because of an immature technology, that is because of the learning curve. Now that the technology involved is fully mature the airliners are falling out of the sky for profit taking. ..."
"... Is it really so hard to connect the secrecy about MCAS and why it was needed in the first place? The lawyers will have a ball of the decade with this: the defendant created a secret software solution to turn a Lego airplane into a real airplane, made the software dependent on a single sensor, and made it difficult to switch the software off. ..."
"... I cannot believe that Boeing shares dropped only 7.5%, this is a statement of how untouchable Boeing is and how protected it will be by the Corrupt. ..."
Mar 13, 2019 | www.moonofalabama.org

Boeing, The FAA, And Why Two 737 MAX Planes Crashed psychohistorian , Mar 12, 2019 4:55:32 PM | link

On Sunday an Ethiopian Airlines flight crashed, killing all on board. Five month earlier an Indonesian Lion Air jet crashed near Jakarta. All crew and passengers died. Both airplanes were Boeing 737-8 MAX. Both incidents happened shortly after take off.

Boeing 737 MAX aircraft are now grounded about everywhere except in the United States. That this move follows only now is sad. After the first crash it was already obvious that the plane is not safe to fly.

The Boeing 737 and the Airbus 320 types are single aisle planes with some 150 seats. Both are bread and butter planes sold by the hundreds with a good profit. In 2010 Airbus decided to offer its A-320 with a New Engine Option (NEO) which uses less fuel. To counter the Airbus move Boeing had to follow up. The 737 would also get new engines for a more efficient flight and longer range. The new engines on the 737 MAX are bigger and needed to be placed a bit different than on the older version. That again changed the flight characteristics of the plane by giving it a nose up attitude.

The new flight characteristic of the 737 MAX would have require a retraining of the pilots. But Boeing's marketing people had told their customers all along that the 737 MAX would not require extensive new training. Instead of expensive simulator training for the new type experienced 737 pilots would only have to read some documentation about the changes between the old and the new versions.

To make that viable Boeing's engineers had to use a little trick. They added a 'maneuver characteristics augmentation system' (MCAS) that pitches the nose of the plane down if a sensor detects a too high angle of attack (AoA) that might lead to a stall. That made the flight characteristic of the new 737 version similar to the old one.

But the engineers screwed up.

The 737 MAX has two flight control computers. Each is connected to only one of the two angle of attack sensors. During a flight only one of two computer runs the MCAS control. If it detects a too high angle of attack it trims the horizontal stabilizer down for some 10 seconds. It then waits for 5 seconds and reads the sensor again. If the sensor continues to show a too high angle of attack it again trims the stabilizer to pitch the plane's nose done.

MCSA is independent of the autopilot. It is even active in manual flight. There is a procedure to deactivate it but it takes some time.

One of the angle of attack sensors on the Indonesian flight was faulty. Unfortunately it was the one connected to the computer that ran the MCAS on that flight. Shortly after take off the sensor signaled a too high angle of attack even as the plane was flying in a normal climb. The MCAS engaged and put the planes nose down. The pilots reacted by disabling the autopilot and pulling the control stick back. The MCAS engaged again pitching the plane further down. The pilots again pulled the stick. This happened some 12 times in a row before the plane crashed into the sea.

To implement a security relevant automatism that depends on only one sensor is extremely bad design. To have a flight control automatism engaged even when the pilot flies manually is also a bad choice. But the real criminality was that Boeing hid the feature.

Neither the airlines that bought the planes nor the pilots who flew it were told about MCAS. They did not know that it exists. They were not aware of an automatic system that controlled the stabilizer even when the autopilot was off. They had no idea how it could be deactivated.

Nine days after the Indonesian Lion Air Flight 610 ended in a deadly crash, the Federal Aviation Administration (FAA) issued an Emergency Airworthiness Directive.


bigger

The 737 MAX pilots were aghast. The APA pilot union sent a letter to its members:

"This is the first description you, as 737 pilots, have seen. It is not in the AA 737 Flight Manual Part 2, nor is there a description in the Boeing FCOM (flight crew operations manual)," says the letter from the pilots' union safety committee. "Awareness is the key with all safety issues."

The Ethiopian Airlines plane that crashed went down in a similar flight profile as the Indonesian plane. It is highly likely that MCAS is the cause of both incidents. While the pilots of the Ethiopian plane were aware of the MCAS system they might have had too little time to turn it off. The flight recorders have been recovered and will tell the full story.

Boeing has sold nearly 5,000 of the 737 MAX. So far some 380 have been delivered. Most of these are now grounded. Some family members of people who died on the Indonesian flight are suing Boeing. Others will follow. But Boeing is not the only one who is at fault.

The FAA certifies all new planes and their documentation. I was for some time marginally involved in Airbus certification issues. It is an extremely detailed process that has to be followed by the letter. Hundreds of people are full time engaged for years to certify a modern jet. Every tiny screw and even the smallest design details of the hardware and software have to be documented and certified.

How or why did the FAA agree to accept the 737 MAX with the badly designed MCAS? How could the FAA allow that MCAS was left out of the documentation? What steps were taken after the Indonesian flight crashed into the sea?

Up to now the FAA was a highly regarded certification agency. Other countries followed its judgment and accepted the certifications the FAA issued. That most of the world now grounded the 737 MAX while it still flies in the States is a sign that this view is changing. The FAA's certifications of Boeing airplanes are now in doubt.

Today Boeing's share price dropped some 7.5%. I doubt that it is enough to reflect the liability issues at hand. Every airline that now had to ground its planes will ask for compensation. More than 330 people died and their families deserve redress. Orders for 737 MAX will be canceled as passengers will avoid that type.

Boeing will fix the MCAS problem by using more sensors or by otherwise changing the procedures. But the bigger issue for the U.S. aircraft industry might be the damage done to the FAA's reputation. If the FAA is internationally seen as a lobbying agency for the U.S. airline industry it will no longer be trusted and the industry will suffer from it. It will have to run future certification processes through a jungle of foreign agencies.

Congress should take up the FAA issue and ask why it failed.

Posted by b on March 12, 2019 at 04:39 PM | Permalink

Comments next page " @ b who wrote
"
But the engineers screwed up.
"

I call BS on this pointing of fingers at the wrong folk

Engineers get paid to build things that accountants influence. The West is a world in which the accountants have more sway than engineers.

It is all about the money b and to lead folks in some other direction is not like what I think of you.

The elite that own global private finance and everything else killed those people in the planes because they set the standards that the accountants follow and then force the engineers to operate within

The profit narrative is bad for humanity.


bj , Mar 12, 2019 4:57:15 PM | link

A whistleblower at Boeing would have been nice.
bevin , Mar 12, 2019 5:00:23 PM | link
"Congress should take up the FAA issue and ask why it failed."
If there had been any chance of that happening, the planes would probably still be flying and dead passengers alive.
This, if you are right and I suspect that you are, is symptomatic of an empire dying of corruption. It is no accident that both the new secretary of defence and the neo-con cult itself were born of Boeing. A fact memorialised in the UK where the Blairites rally in the Henry Jackson society.
Lochearn , Mar 12, 2019 5:00:42 PM | link
Last night I wrote on a previous thread:
Over the space of a few months 2 almost new Boeing 737 MAX aircraft have crashed. Rather than going to the expense of designing an entirely new fuselage and normal length landing gear for its larger and much more powerful 737 MAX engines Boeing stuck with the now ancient 737 fuselage design that sits only 17 inches from the ground – necessitating changes to the positioning of the engines on the wing, which together with the vast increase in power, created aerodynamic instability in the design that Boeing tried to correct with software, while not alerting pilots to the changes.
Through the 1980s and early 1990s Boeing executives had largely resisted pressure from Wall Street to cut staff numbers, move plant to non-union states and outsource. The 777 was the last real Boeing, though significant outsourcing did take place – but under the strict control and guidance of Boeing engineers. After the "reverse" takeover of MacDonnell Douglas in 1997 the MDD neoliberal culture swamped Boeing and its HQ was moved from the firm's home near Seattle to Chicago so executives could hobnob with speculators. Wall Street had taken down another giant.
David Park , Mar 12, 2019 5:01:36 PM | link
The story I have most interest in, at the moment, is the state of the power blackout in Venezuela and whether this was a cyber attack by the United States. If it was, it is, in my opinion, a weapon of mass destruction and a very major war crime. The story seems to be fading from the news so I'm hoping b. will be able to gather more information about it.

But I find every story by b, worthwhile!

Ghost Ship , Mar 12, 2019 5:04:07 PM | link
I don't know if this is true by my sister who was an engineer working on military jets said that she'd heard that because of various design requirements, the 737-MAX was inherently unstable but stability was provided by the fly-by-wire system. In military jets, this feature provides greater maneuverability and survivability but has no place on civilian aircraft as the outcome of a system failure would be catastrophic with the pilots being unable to do anything about it. Anyone heard anything similar?
james , Mar 12, 2019 5:09:31 PM | link
b - thanks for addressing this.. subservient canada is also flying them still..) canada is going the same way as the usa-faa - into a ditch long term... it is really sad for the people who have died and for the fact that as @1 psychohistorian notes - the decisions are being put in the hands of the wrong people...
Barbara Ann , Mar 12, 2019 5:11:56 PM | link
Excellent piece b.
karlof1 , Mar 12, 2019 5:13:53 PM | link
Gotta agree with psychohistorian @1, that the engineers aren't totally responsible. Deregulation pukes at FAA, bean counters at Boeing and their managers who approved it all are morally culpable. Airline executives aren't immune either, although many will likely plead ignorance.
mourning dove , Mar 12, 2019 5:17:18 PM | link
If the US were a sane country, a Congressional investigation would follow, but it's not, and Congress is going to be more concerned with Boeing's bottom line than in public safety or the integrity of the FAA. That's probably why the planes haven't been grounded in the US. Congress is much more likely to impede investigation and accountability.
dave , Mar 12, 2019 5:17:28 PM | link

the dreamliner is the plane of the future barack hussein obarmie


The Boeing Broken Dreams Al Jazeera Investigations

https://www.youtube.com/watch?v=rvkEpstd9os

karlof1 , Mar 12, 2019 5:19:49 PM | link
David Park @5--

You'll want to read this !

Steven , Mar 12, 2019 5:26:50 PM | link
You omit important facts: the pilots know by heart how to quickly cut off electronic control of the stabilizers and fly manually. The pilots on the preceding lion air flight had had the same problem, and immediately solved it. The defective sensor should have been immediately replaced, and would have in the United States. On the next flight, the pilots (the copilot being quite unexperienced) spent 10 minutes not doing what they were trained to do in an emergency where the stabilizers are out of control: disable them.

When some flight crews get it right, but others don't, it's not a design flaw but a problem with the flight crews.

I can't agree with your conclusions.

Lochearn , Mar 12, 2019 5:30:48 PM | link
Through the history of Boeing senior executives lived in modest middle-class houses. They traveled on Boeing aircraft to get pilot's responses. But when Phil Condit (Wall Street's man) took over he immediately bought private jets and started living the lifestyle. The difference between productive capitalism and financial capitalism.
Tom Welsh , Mar 12, 2019 5:34:56 PM | link
"How or why did the FAA agree to accept the 737 MAX with the badly designed MCAS?"

Because it would be against the state religion to stop, or delay, a huge corporation earning even more money.

dave , Mar 12, 2019 5:36:39 PM | link
the broken dreams documentary above spells it out very clearly the documentary is from 2014.
it even has undercover folks in the boeing factory saying they would not fly on one.


if you fly you should watch that old al jazeera investigation.
the company does not pay tax and
the head of boeing paid himself 100s of millions of dollars

corporate manslaughter
could be

Zachary Smith , Mar 12, 2019 5:39:20 PM | link
But the bigger issue for the U.S. aircraft industry might be the damage done to the FAA's reputation.

I'd counter this by asking "what reputation?"

I've known for years how it took take a "smoking hole" for the FAA to get off the can and actually do something about a problem with an airplane or airline. But things evolve, and here we have TWO such smoking holes and the FAA still allows it to fly. I'm not trying to pick on the current FAA leader, for the man is utterly typical of the people who are allowed to gain his position. From his wiki:

But the bigger issue for the U.S. aircraft industry might be the damage done to the FAA's reputation.

Elwell joined Airlines for America (A4A) in 2013[3] where he was the Senior Vice President for Safety, Security, and Operations. Elwell left this role in 2015.

(Skipping to the A4A wiki:) Airlines for America
Officially, the A4A has announced five "core elements" of a national airline policy include reducing taxes on the industry, reducing regulation , increased access to foreign markets, making the industry more attractive for investors , and improving the air traffic control system.

I suspect that grounding the 737-MAX would contradict the goal of "making the industry more attractive for investors".

More on the FAA's Tombstone Mentality

About an hour ago I sent out an all-points email suggesting my family members avoid boarding a 737 MAX until the facts are better known and solutions are in place. The FAA may not care about them taking risks, but I sure do.

Tom Welsh , Mar 12, 2019 5:39:22 PM | link
Boeing has a get-out-of-jail-free card.

"Boeing is among the largest global aircraft manufacturers; it is the fifth-largest defense contractor in the world based on 2017 revenue, and is the largest exporter in the United States by dollar value".

https://en.wikipedia.org/wiki/Boeing

Jen , Mar 12, 2019 5:39:56 PM | link
I agree with Psychohistorian @ 1 in less forthright terms: the engineers did not "screw up". On the contrary they most likely did what they could with the money and the time deadline they were given to carry out what essentially was a patch-up job that would make Boeing look good, save money and maintain its stock in sharemarkets.

Probably the entire process, in which the engineers played a small part - and that part in which they had no input into whoever was making the decisions - was a disaster from start to finish. The engineers should have been consulted at an early stage in the re-design of the aircraft's flight and safety features. Only when the appropriate re-design has been tested, changed where necessary and given the thumbs-up by relevant pilots' unions and other organisations with regard to passenger safety can the marketing department go ahead and advise airlines who buy the redesigned planes what training their pilots need.

That the marketing department has more say than the engineers who design and test the hardware and the software in passenger jets tells us a great deal about the Potemkin-style workplace culture that prevails in Boeing and similar large US corporations. The surface sheen is more important than the substance. The marketing brochures and manuals are no different from mainstream news media in the level of BS they spew.

One can think of other organisations where the administration has more power in the corporate decision-making process and eats up more of the corporate budget while the people who do the actual work are increasingly ignored in boardrooms and their share of the budget correspondingly decreases. Hospitals and schools come to mind.

Lochearn , Mar 12, 2019 5:45:36 PM | link
@ 19

Boeing got taken over Wall Street, which means cheapest solution to anything. Engineers are stuck with what they are given. What part of that do you still not understand.

viking3 , Mar 12, 2019 5:55:18 PM | link
A mitigating factor to the flightcrew is the take-off to 10,000ft is the busiest time. There is enough going on without having to deal with runaway stab. This is especially true for new crew to a new aircraft. Rode in many cockpits before 9.11.01 when company employees were allowed and the standing rule was no conversations below 10,000 and keep you eyes open for traffic. I also include my Maintenance brethren in that equation. Spent 30 years as a Avionics Tech. on both military and commercial aircraft so I am not really fond of giving flightcrew a break but I might this time.
karlof1 , Mar 12, 2019 5:59:13 PM | link
Jen @19--

Dilbert , the comic strip , from today and yesterday nails the marketing angle. And this isn't the first time Scott Adams has targeted marketers.

ancientarcher , Mar 12, 2019 5:59:44 PM | link
Good point @4 Lochearn

Why is Boeing suffering from this design problem and not A320neo is that 737's wings are much lower to the ground than the A320. Unfortunately, more fuel-efficient engines require a larger air inlet, so the newer generation engines are much larger than the previously installed V2500 or CFM56 (anyone can verify that - the older engines are much, much smaller than the newer ones).

When Airbus introduced the Pratt & Whitney GTF on its A320s (calling it the neo - new engine option), it led to an increase (high single digits %) increase in fuel efficiency. Boeing had to respond to that. If they wanted to increase the height of the wings of the 737 from the ground, they would have had to redesign the fuselage which would have cost billions (and which they should have done, in hindsight). Instead, they listened to the investors and the bean counters as you have called them here and they jiggled the position of the wings a bit and introduced the new automatic stabiliser.

The people at Boeing are good or at least the engineers are. Imagine how many times this problem would have been brought up by someone for him/her to be shut down. It's not like they were not aware of the issue, but they were unwilling to let their bottom line suffer. Instead, they were okay with carrying the risk of killing hundreds of people.

That is what boggles my mind!

dh-mtl , Mar 12, 2019 6:00:43 PM | link
Lochearn | Mar 12, 2019 5:00:42 PM | 4;
Posted by: Ghost Ship | Mar 12, 2019 5:04:07 PM | 6

Agree with both of your comments. It looks like the 55 year old 737 air-frame design, which is very low to the ground when compared to more modern designs, is incompatible with the bigger engines required for fuel efficiency.

Being very low to the ground, Boeing was forced to put the engines out in front, which upset the airplane's balance, making the plane essentially unstable. To counter the instability they added the 'MCAS?' control system.

This solution violates a fundamental tenant of design for safety-critical systems. The tenant of 'fail-safe'. If something goes wrong the system is supposed to fail in a manner that preserves safety. For the 737 Max, when the this stability control system fails, the plane is fundamentally unstable. For this system it is not 'fail-safe'. It is 'fail-crash'.

Why would Boeing do this? Because Bombardier was building a clean sheet design, that would eat the 737's lunch. Boeing (and Airbus) were desperate to do something quick to minimize the 20% fuel burn advantage of the C-series. The more modern Airbus 320 air frame allowed it to re-engine their plane. Boeing's did not. But Boeing went ahead anyway and built an fundamentally unstable airplane, because the alternative was to walk away from their most important market.

To me, this looks like it could be catastrophic for Boeing. It reminds me of G.M.'s 'Corvair' moment (Unsafe at any speed), from the 1960s.

Jen , Mar 12, 2019 6:02:28 PM | link
Steven @ 13: The Indonesian Lion Air jet still crashed with all onboard dying, even after the pilots did as you said. B's post explains why: the MCAS system has to be deactivated separately as it is still active when autopilot is off and the pilots are flying manually. The Indonesian pilots did not have the time to figure out and realise that something else was controlling the plane's flight, much less deactivate what is effectively a second autopiloting system.
james , Mar 12, 2019 6:09:41 PM | link
how is this for reassuring? press release from boeing today... this info is from someone else, and i haven't verified it..

"For the past several months and in the aftermath of Lion Air Flight 610, Boeing has been developing a flight control software enhancement for the 737 MAX, designed to make an already safe aircraft even safer."

witters , Mar 12, 2019 6:10:37 PM | link
"Boeing got taken over Wall Street, which means cheapest solution to anything. Engineers are stuck with what they are given. What part of that do you still not understand."

Why they colluded with and indeed implemented what they knew to be - and now proven to be - a mass killing system. What do you not understand here?

james , Mar 12, 2019 6:11:02 PM | link
very un- assuring.. https://gizmodo.com/boeing-promises-to-release-software-update-for-737-max-1833224836
Whozhear , Mar 12, 2019 6:15:58 PM | link
Great article B.

There is much more behind the covering up of this "design flaw" from the start. The concept that, in this day and age, sensors used in the aviation field and close to brand new are defective is a stretch of the imagination. The current effort by Boeing to do a software upgrade, I suspect, is cover for something more damaging.

How easy is it these days to access the MAX's operation and flight control computers? Can it be done via WI-fi or Bluetooth from the airfield? We are well aware that in the newer heavies Seattle can take basic control via satellite.

Whozhear , Mar 12, 2019 6:19:12 PM | link
@ 5

You may also find this interesting........ https://colonelcassad.livejournal.com/4837334.html

Steven , Mar 12, 2019 6:24:25 PM | link
@jen @james

You clowns don't understand what you're telling me I'm "getting wrong." MCAS ISN'T part of the autopilot, and I never said it was.

737 pilots have to be able to do about 10 procedures in their sleep. One is when the electrical control of the horizontal stabilizers doesn't work; Aa few steps but basically pull a breaker and revert to manual control only, no power assist.

The crew on the previous flight did this and flew on with zero problem.

It's outrageous that lionair didn't find out why emergency procedures had had to be used and fix them before they let the airplane fly again.

If airlines do not adhere to Minimal safety standards, it's not Boeing's fault if it's planes crash.

Jonathan , Mar 12, 2019 6:35:04 PM | link
@35 Steven,

Is Boeing paying you to miss this part:

"This is the first description you, as 737 pilots, have seen. It is not in the AA 737 Flight Manual Part 2, nor is there a description in the Boeing FCOM (flight crew operations manual)," says the letter from the pilots' union safety committee. "Awareness is the key with all safety issues."
Kadath , Mar 12, 2019 6:41:49 PM | link
Well it's good to know that Canada is still allowing this death trap to fly, I couldn't bare the thought that Boeing might lose more stock value merely because of a defective product that kills! Seriously though, the silence from the Canadian media on this subject is deafening. CBC news didn't even cover the banning of these planes in the rest of the world until an hour ago and even then they seemed more concerned about the impact on Boeing then the you know 300 people killed because of this flawed plane. Eventually (before Friday) I think Canada will be forced to ground it's fleet of 737-8s. With the current corruption scandal, Trudeau is too weak right now to stand up in Question period and claim the 737-8s are safe to fly. Even Trump is getting in on the action and blaming Boeing for the accidents. FAA may end up being the biggest loser from this situations with a huge hit to its' trustworthiness, I remember when the FAA would issue emergency maintenance/inspection orders after any crash suspected to be caused by maintenance issues and ground entire fleets of aircraft if two planes crashed within 2 years. You know, the FAAs behaviour now reminds me of the old Soviet joke, "our planes never crash, their just indefinitely delayed"
Meshpal , Mar 12, 2019 6:46:17 PM | link
These people did not die they were murdered. Long ago, I had worked with Boeing on a computer project and I had the highest respect for the company and engineers. Facts and reality were paramount for Boeing. Things started a slow downhill slope when that TWA flight that was accidentally shot down by a missile. I noticed how uncomfortable the engineers were to talk about it – just a short comment that the fuel tank was not the cause. When politics and management go away from reality and facts, it is just a matter of time. But for the life of me I do not understand how Boeing can come to this:

Fault 1: As B says, it should never have been designed like this.
Fault 2: Don't tell the pilots about MCSA.
Fault 3: Real time flight tracking altitude data show wild swings – red light ignored. No need to wait for a plane to crash.
Fault 4: Lion Air Flight 610 crash showed that this MCSA system is at fault and nothing much was done. The murder of 189 people.
Fault 5: Ethiopian Airlines Flight 409 murdering an additional 157 people.
Fault 6: FAA says everything is ok.

Especially the Ethiopian Flight 409 crash should never have happened. This issue became well known to engineers and flight crews world wide after Lion Air. A good question is: was the disable MCSA switch now a memory item or a check list item for the flight crew? Or did Boeing want to wait for the final report of Lion Air?

I noticed that the Ethiopian pilot was not western, but looks like from Indian decent. I would not doubt his abilities, but rather say that he would follow the rules more than a western pilot. Western pilots would network and study this thing on their own and would not wait for Boeing. They would have penciled this into their flight deck routine - just to be safe.

JohnT , Mar 12, 2019 6:51:38 PM | link
David Park #5

I read this yesterday regarding the Venezuela power outages. Possible Stuxnet infestation ala Iran 2010?

https://www.strategic-culture.org/news/2019/03/11/trump-regime-electricity-war-in-venezuela-more-serious-than-first-believed.html

Alpi57 , Mar 12, 2019 6:54:45 PM | link
One can always find a benefit in the sanctions, albeit coincidental. Iran avoided a lot of damage from Boeing. They had ordered 140 of 737's. All got canceled. Congratulations.
ancientarcher , Mar 12, 2019 6:59:53 PM | link
@40 Alpi57
Iran always has the option of buying the Irkut MC-21 which in my opinion is the best narrowbody plane that anyone can buy now. Fully redesigned body with significantly higher composite percentage and comes with the best engine in the world for narrowbodies - the P&W GTF. And Russia will be happy.

What's not to like

Likklemore , Mar 12, 2019 7:07:19 PM | link
Before you guys and gals bash b, hop over to Zerohedge citing Dallas Morning News revealing FAA database Pilots on Boeing 737Max complained for months...Manual inadequate ...criminally insufficient .just for starters.
karlof1 , Mar 12, 2019 7:10:30 PM | link
james @32--

That Canada didn't is crazy :

"In a remarkable rebuke, nations from the U.K. to Australia have rejected public reassurances from the FAA and grounded Boeing's 737 Max."

Hoarsewhisperer , Mar 12, 2019 7:28:54 PM | link
I was a big fan of the 6-part BBC doco series Black Box from the 1990s. The main conclusion drawn was that the industry is way too fond of blaming as many mishaps as possible on Pilot Error, and way too slow to react to telltale signs that a particular aircraft model might have a fatal flaw. There was a tendency to ignore FAA edicts for inspection of a suspected design weakness. Two cases that come to mind were incorrectly locked DC 9 cargo doors ripping off with a big chunk of the plane plus half a dozen occupied seats, and a tendency of 727s to nose-dive into the "surface" at Mach 0.99.

I'll be very surprised if any part of b's analysis, conclusions and predictions turns out to incorrect.

World 3 - USA 0 , Mar 12, 2019 7:31:57 PM | link
Lights in Venezuela on. US Boeing stocks down. More evidence for the Lockheed f-16 downing. Reports it was a dogfight between an old MiG-21 (with modernised radar and missiles) that brought the modern US Lockheed f-16 down and maybe not from a launch of MiGs modern bvr missile.

Things are looking up.

Zachary Smith , Mar 12, 2019 7:33:32 PM | link
@ ancientarcher @41

The problem with a "new" airplane is the Western Content. Over a certain percentage, the US basically controls the situation. Another issue is servicing the things. If an airplane is sitting in Podunk Airport with a broken widget, the airline wants it fixed right now! Some planes like the 737 have been around for decades and there are probably parts for it - even at Podunk. A new plane will probably be grounded until a new part is transported in - a process which will take many hours even in the best of circumstances. Advantage to the 737 and other 'legacy' airplanes.

Just saw an interesting headline at Reuters - I'd suppose it is some friendly advice from Wall Street disguised as "news".

Breakingviews - Boeing needs to think faster than its watchdog

Change "watchdog" to "lapdog" and that would be about right. It seems to me a sensible proposal, for if Boeing must take a beating out of this, the company ought to at least adopt a pose of "really caring" and "doing the right thing". Try for the brownie points.

psychohistorian , Mar 12, 2019 7:40:55 PM | link
@ Zachary Smith who wrote
"
It seems to me a sensible proposal, for if Boeing must take a beating out of this, the company ought to at least adopt a pose of "really caring" and "doing the right thing".
"

China is coming to teach the West morals which are currently ranked below profit and ongoing private control of global finance

aspnaz , Mar 12, 2019 7:54:05 PM | link
@35 Steven

The Ethiopian airlines flight was an international flight, so the pilots will have been certified to international standards. I don't know the details of international standards for type training, but you are basically saying that the fault is not with Boeing, it is with the type training of international pilot crews. Can you elaborate and does this mean that we are equally in danger regardless of the aircraft model and that it is just coincidence that both these crew failures were on 737 Max models?

EV , Mar 12, 2019 8:07:08 PM | link
The evidences and recognizably legitimate information (there is always a lot of through-the-hat blather-yap from internet-"engineers") suggests thrust angle, not structure or CG destabilization. "larger" engines are not necessarily significantly heavier, but, today, and if more efficient, will be larger diameter for more fan, for more thrust (which in jet and fan engines is more power). Larger diameter nacelles will require modification of placement, higher, lower, larger weight will require modification of placement, forward, backward. Clearance restrictions may require modification of engine thrust-line angle, relative to fuselage, and fuselage-fit control surface lines (which include flight surfaces). Thrust changes with thrust changes, which means thrust-angle change will change thrust-effect at differing thrust amounts: Take-off and climb thrusts are near maximums, wherefore angular component will be near max then (cruise maximums are less, or less effective, or radical, for altitude air thinning).

What this means is that if larger engines on a 737 MAX, for larger bulk are slightly angled for clearance,the angling may have little effect except in specific instances and attitudes, such as take-off and climb. It sounds as if Boeing angled thrust slightly for engine fitting, and assumed a computer control fix could handle the off-line thrust component effect during the short duration times it was sufficient to effect flight characteristics, which, if the thrust-angling was up, would add a nose-up tail-down thrust rotation component, greater at greater power. to compensate which the software would add nose-down control surface counteraction, as incident described.

What it sounds like the pilot in the first, non-crash, case most likely did, that saved the aircraft, was not 'disable' an automatic system he had no information about, for it being not intended for disablement, but was reduce power, reducing the off-line thrust effect, so the auto system backed off. In the other incidents, especially if the airports were get-em-high-fast airports (to 'leave' the noise at the airport) the pilots would incline to not reduce power, and would be more likely to get into a war with the too automated auto-system, the way Tesla drivers can do with their over-automated systems.

All auto-control "AI" systems need human-override options built in, so that human-robot stand-offs to impact cannot occur. The real culprits in stand-off accident situations are the techie-guppies who think robotic control can always do everything better, and fail to think of the situation where the "right" response is wrong.

Jen , Mar 12, 2019 8:19:36 PM | link
Steven @ 35:

Lion Air's engineers had previously identified and tried to fix issues with the jet that crashed in October 2018.

The day before the jet took off from Jakarta airport and crashed, killing all 189 onboard, one of its Angle of Attack sensors had been replaced by engineers in Denpasar. Unfortunately the source I checked (see link below) doesn't say if this replacement AoA sensor was the one linked to the computer running the MCAS on the flight.

https://aviation-safety.net/database/record.php?id=20181029-0

fast freddy , Mar 12, 2019 8:26:15 PM | link
Bean Counters:

Delta once initiated a fuel saving measure whereby aircraft were insufficiently topped off with fuel to prevent pilots from wasting fuel. Once this information began to leak, the measure was ended.

psychohistorian , Mar 12, 2019 8:40:43 PM | link
@ fast freddy with the Bean Counters example

Thanks for Bean Counters! I so much wanted to use Bean Counters in my rant but thought I should stick to their standard appellation....

Bean Counters need to be taken seriously because they are not going to go away in any form of social organization and represent where the rubber meets the road when it comes to social decision making/risk management

Bean Counters (along with their bosses) need to be required to place morals as a higher value than profit and forced to operate with maximum public transparency and input; then, all will be good.

Pnyx , Mar 12, 2019 8:41:19 PM | link
Thank you for the accurate information. The basic problem seems to be that the low-consumption engines protrude too far. A well-designed, reliable aircraft becomes a faulty design. To try to solve this using software is a precarious approach. The FAA should have rejected this in principle. But because to design an aircraft completely from scratch naturally takes longer and would have given the competitor Airbus time to take over the to much market share, this 'solution' was accepted. This type of corruption will cost the u.s. a lot.

But first let's wait for Tronald's tweet, which will certainly be aired by tomorrow at the latest, in which he states that the 737 Max is a great, great aircraft - if not the best ever...

Kiza , Mar 12, 2019 8:49:51 PM | link
There is no doubt that both Boeing and FAA are to blame, but we pay the Government to ensure safety. Businesses have always chased profit, some more ruthlessly than others. But when the real corruption sets in then the Government regulator works for the businesses at the expense of the public . Regarding FAA reputation, there was a time when US was the leader in aviation, military as well as commercial. This means that the best experts were in US and thus FAA had the best and the most knowledgeable people. It is similar with FDA, all countries in the World used to follow the touchstone drug approvals by FDA. Now the "Federal" in any US acronym has become a synonym for "Corruption" (FBI anyone?).

The expertise does not matter any more, only greasing of the hands does. In the old times, anyone from FAA whose signature was on this planes approval to fly would get a life sentence in jail. But 330 people dead is less than a days worth of US global victims - business as usual for US. It is just that these victims are getting much more publicity than the silent victims. We will be lucky if anyone influential from FAA even resigns let alone goes to jail. There will be many more dead before the World understands this new reality.

Would you fly on any Boeing plane designed or delivered after the company was taken over by the Wall Street wizards in the 90s?

Peter AU 1 , Mar 12, 2019 8:53:28 PM | link

Re the engineers - they agreed to build an out of balance aircraft (thrust vs weight and drag) and to try and rectify this with software. What we will do for money. Both the bean counters and engineers are at fault, perhaps the beancounters and shiney butts more so as they did not inform buyers and pilots of the faults.
Hoarsewhisperer , Mar 12, 2019 8:56:22 PM | link
Posted by: fast freddy | Mar 12, 2019 8:26:15 PM | 52
(Fuel 'economy')

QANTAS once decreed that pilots rely on brakes and treat reverse thrust as emergency-only procedure, until a 747 skidded off the end of a runway with the nose-wheel inside the cabin and bruised engines = lots of down-time + very large repair bill.

Clueless Joe , Mar 12, 2019 8:58:46 PM | link
Fast Freddy:

Not just Delta; Ryanair did the same, at least until there was a major storm in Spain (Valencia, I think) and all flights had to be rerouted to other airports. That was fine, with dozens of planes flying around waiting for a window to land, until the handful of Ryanair planes that had been rerouted to Madrid and other places called for emergency landings, because they didn't have enough fuel to fly for even 30 minutes longer than planned flights.

I'm still amazed that the EU regulators and EU fucking commission didn't downright dismantle such a bloody greedy and downright criminal company. That they basically did nothing is proof enough, imho, of the insane level of capitalism-worship and of corruption going on in Brussels (of course it's even worse in Washington DC, but that's basically a given).

bevin , Mar 12, 2019 9:19:41 PM | link
the toronto star is carrying this story
Headline:
"Ottawa exempts Boeing 737 Max jets from standards meant to minimize passenger injuries"

"Air Canada and WestJet are flying the Boeing 737 Max aircraft exempt from regulatory standards meant to limit passenger injuries in the event of an accident, the Star has learned."

What does it mean?

Pft , Mar 12, 2019 9:51:59 PM | link
B is right. This is a criminal act of deception and fraud thats cost hundreds their lives. Boeing executives responsible should be prosecuted and then jailed.

Instead the safety agency regulating them will cover it up, backed by the criminal congress.

We see similar crimes against humanity being committed in many other areas. FDA, CDC, EPA, FCC , USDA, etc covering up for Big Agra, Big Pharma, Big Telecom with dangerous products like vaccines, glyphosate,4G/5G, GMO foods, gene edited livestock, etc. Safety standards are lax and inadequate, safety testing is minimal and in some cases fraudulent or completely lacking. Defects and adverse effects are covered up. A revolving door between these agencies and the industry they cover presents significant conflict of interest. These industries finance congressional members campaigns. Public safety is sacrificed for the greater good (profits and personal gain). Whistleblowers are muzzled, attacked or ridiculed as the MSM are their lap dogs.

That said, the airline industry has had a remarkable safety record over the last 30 years if you can overlook their failure to have adequate locks on cockpit doors in 2001. However, the lack of competition and increasing corruption and continuing moral decay we see in society , government and industry has obviously taken its toll on the industry. This is inexcusable. Heads should roll (dont hold your breath).

El Cid , Mar 12, 2019 9:57:08 PM | link
Congress flies on these aircraft to and fro from Washington to their districts. It is to their interests to have these Boeing 737 permanently grounded.
ben , Mar 12, 2019 10:13:18 PM | link
psycho @1 said;"The West is a world in which the accountants have more sway than engineers."

Case closed, and anyone who thinks senior execs should be prosecuted and jailed are right.

BUT, never would happen in today's pro-corporate U$A mentality..

Profits uber alles!!

Kadath , Mar 12, 2019 10:23:36 PM | link
Re: 59 Bevin, "Ottawa exempts Boeing 737 Max jets from standards meant to minimize passenger injuries"

- what this means is that Washington called Ottawa and ordered little Justin that he had to allow the 737 8's to fly and Justin said yes sir! However, someone at the Transportation Safety Board of Canada, told Justin that the threat these plane pose to travellers was so obvious that they couldn't just ignore it and that they would instead have to issue a waiver to show that they have done due diligence - apparently this person or someone else within the department then called the Star in order to leak the information and embarrass Justin into reversing his decision. I imagine tomorrow at 4:00pm during the question hour, Justin will get raked through the coals over his - Justin's whole defense of his actions during the Lavin scandal has been "I needed to protect Canadian jobs", I imagine the NDP or Conservatives will then retort something along the lines of "you'll break the law to protect Jobs, why won't you obey the law to protect Canadian lives!", I should point out that 8 Canadians were killed in the most recent crash in Ethiopia

paul , Mar 12, 2019 10:28:00 PM | link
Steven @ 35: watch this

from 2014: 32min in john woods aerospace engineer whistle blower https://www.youtube.com/watch?v=rvkEpstd9os

acementhead , Mar 12, 2019 10:39:09 PM | link
Steven is correct. Totally correct. I suspect that he is an airline pilot, as am I. Everybody else is wrong at least in part and most between 50% and 100%(The description of the cause of the QANTAS hull loss).

Pilots MUST know all about aircraft systems operation. It is crazy for Boeing to have functions not in the AFM.

The system in question is not operative with autopilot engaged. In manual flight if at any time one gets an uncommanded stab trim movement one should immediately disable electrical trim(One switch, half a second, no "procedure" required. In manual flight if the trim wheel moves and you hadn't touched the trim switches you have uncommanded trim. Immediately disable electrical trim.

There is procedure for reestablishment of electrical trim, that does take time. The defeat of the runaway trim does not take time. B737 has provision for manual trim(but it's very slow.

Bob , Mar 12, 2019 10:47:40 PM | link
Also a very interesting read about the JT610 Flight https://www.satcom.guru/2018/11/first-look-at-jt610-flight-data.html
VietnamVet , Mar 12, 2019 10:47:49 PM | link
I grew up reading Boeing's weekly employee newspaper. Times have changed too much since then. Moving the headquarters from Seattle to Chicago and a second 787 assembly line in South Carolina to bust their unions are proof that Boeing is a multinational corporation superior to national governments. The company is the Empire's armorer for profit. It is criminal to design an unstable passenger airplane that must be controlled by fly by wire sensors and computers to stay in the air. The problem is the aircraft industry duopoly and deregulation. Airbus has lost at least three aircraft to problems with the pilot computer interface. I was shocked when NBC put this first last night. I though it would be silenced. I blame Trump Derangement Syndrome. His trade wars and dissing have ticked off the world. When China grounded the 737 Max 8 everybody followed to show what they really think about the North American Empire. This could be devastating to the last manufacturing industry left in the USA.
Deal , Mar 12, 2019 10:58:29 PM | link
Boeing in my view took a cynical decision. That is, there would only be a few crashes within a set period. Thus the insurance companies would pick up the tab for their profits. However the loss of two planes so close together could destroy the company. The aforesaid insurance companies will not pay a single dime if they can stick corporate murder charges onto Boeing.

This smells of the Ford Pinto scandal where Ford knew that there was a problem with the fuel system if the car was rear-ended ( the vehicle burst into flames ) but it was cheaper to pay the compensation than fix the problem.

Kalen , Mar 13, 2019 12:25:40 AM | link
B is missing the point that fitting new engines caused airplane to take off close to stalling horizontal speeds and angles at very low altitude and more steeply ascending to flight altitude and that has left little time for pilots to react. That is very dangerous as much weaker tail wind may confuse pilots and sensors. To remedy that without recertification AI software was installed to react faster and overriding actions of pilot who was assumed not be aware of situation at the moment he had to immediately react at the latest.

Lack of sensor redundancy is also criminal as determination of sensor malfunction is critical for pilot. That is AI application correcting "human" physical mental deficiencies and that is deadly trap.

If it goes to court, interesting case will be, whose error was that as MCAS system acted correctly against pilot based on faulty sensor causing pilot to make mistake recovering from correct but suicidal software actions.

People must be warned of cultish trust in technology and AI which is ultimate guilty party together with greed that killed those people.

Pft , Mar 13, 2019 1:01:16 AM | link
Frances@70

There are unlimited dollars for any intervention they choose, publicly allocated or not. There is a reason 21 trillion in pentagon spending is unaccounted for. This does not count dark money from illicit means used to fund covert operations.

The fact its public just means Trump wants congress to sanction it, which they will. Seized Venezuela assets will serve as collateral for future reimbursement.

Grieved , Mar 13, 2019 1:02:08 AM | link
@65 acementhead - "It is crazy for Boeing to have functions not in the AFM"

No, it's criminal. And while all the technical discussion around how to fly a plane is truly interesting, what's really at issue here is corporate and institutional betrayal of trust.

The corporate aspect is Boeing, obviously. The institutional aspect is FAA, which used to lead the world in trust when it came to life and death matters.

But now, in what Bloomberg, even while trying to support FAA, has no choice but to report as a "stunning rebuff" to FAA's integrity, countries around the world are grounding this flawed plane. Germany, among others, has closed its airspace to the 737.

This situation has only a little to do with how to fly a plane. It has vastly more to do with the face of capitalism we see leering at us as our families live their last few moments, on the way to the ground. It has to do with how the corporate spin departments will attempt to cover up and evade responsibility for these crimes.

And it has to do with how the global consumer market will start to book its flights based not on price or time or seat location but on make of plane.

And despite your claim that "Everybody else is wrong at least in part..." , I doubt very much that most of the commenters here are wrong in their appreciation of the situation.

snake , Mar 13, 2019 1:07:41 AM | link
@68 No Deal

I don't think Boeing made a decision, they had little choice (stockholders were first, the jobs were essential to the politicians, and market share would become competitive if Boeing dropped out), it was the pressure of the system that charted their course.

Capitalism is about competition in a just, fairly well managed government regulated environment. In order for capitalism not to over step the bounds of competitive capitalism; government must remain present, to prevent foul play and to deny all hints of monopoly power...

Capitalism without an honest government becomes organized crime or, worse, it degenerates to allow private enterprise and special interest to dictate how the rule making and military arms of government should be used, against domestic and foreign competition. . Economic Zionism is what I call this last degenerative stage.

Defensively EZ teaches the winner to completely and totally destroy the infrastructure, the resources and the people (including competitive personnel with the brains to develop competition) of those who refuse to conform or those who insist on competing; offensively , EZ teaches the winner to take all and to take-over, own and keep the goodies taken from those destroyed, and in the matter of profit making and wealth keeping EZ teaches only winners are allowed to produce-and -profit everyone else is to be made to feed the monopoly that eliminated competition produced. The residual of eliminated, decimated competitive opposition = monopoly power

It is the king of the mountain monopoly that produces the wealth and power and feeds the corruption that makes the rich richer.

I think this case makes clear, privatization of government responsibility nearly always turns sour . The Government should take over and keep the operation of all of the Airlines strictly in government hands (privatization is proven to be problematic). When I grew up all of the airlines were so tightly regulated they were part of the government; the airlines were investors and operators following government rules and regulations. pricing was based on point to point fixed in price and terms (and the same for all airlines) and that was a time when aircraft design was not so accurate, meals were served and jets were nearly not existent but still there were very few accidents. Same for the Trucking Industry and the railroad.. Why should roads be government obligations, but rail, trucks and planes be privately owned?

I am not a communist or a socialist, I just know that private influence will always find a way to wrongly influence public sector employees when private interest wants something from government.

V , Mar 13, 2019 1:43:43 AM | link
VietnamVet | Mar 12, 2019 10:47:49 PM | 67

Agreed!

For a number issues/reasons, I quit flying in 2007, vowing never to set foot in an aircraft again. Trains or ships, okay. So far so good; the 737 Max just firms my rsolve...

Circe , Mar 13, 2019 2:17:54 AM | link
The aircraft did not undergo piece by piece certification or type certification . It underwent supplemental type certification that shortens the investigative process.

max 8 Certification

This is a potential disaster for Boeing. The stock is falling and it'll go into free fall if decision is made to ground this aircraft. FAA will also face a legal tsunami. If this is the reason they didn't ground the planes yet; it's going to look really damning when the find themselves in court later.

Hoarsewhisperer , Mar 13, 2019 2:21:34 AM | link
This is shaping up to be unnecessarily messy for the industry. Yesterday's Oz edition of PBS Newshour went over most of the topics touched on in b's posting but stopped short of finger-pointing although it insinuated that Boeing had blundered. Today's edition posed a question I was going to pose here...

"Should anyone be flying 737MAXes before the black box data has been evaluated?"

The answer, delivered by a female ex-Inspector General (of precisely what I didn't hear) is "No. Absolutely not!"

james , Mar 13, 2019 2:39:06 AM | link
@35 steven... i will take that as a compliment, referring to me as a clown.. i have high regard for clowns, although i don't think there is anything funny about the topic at hand.. innocent people dying and it being based on a corporation that might be negligent in it's responsibility to it's passengers, is something we will have to wait and find out about.. i am definitely not thinking it is pilot error here, as you suggest.. i saw what the canadian airpilot association said - essentially they don't believe Canada should be flying them either, as i read it..

@43 karlof1.. as i pointed out in the link @7 - the fact canada allows them to continue to be flown makes no sense to me..poor judgment call is what it looks like to me.. the canuck gov't and etc are living in the shadows of what b has described about the FAA.. a lot of credibility is on the line here as i see it..

i apologize for not reading all the comments, as i was out most of the day and just got back..

acementhead , Mar 13, 2019 2:48:25 AM | link

Kalen said

"...fitting new engines caused airplane to take off close to stalling horizontal speeds and angles at very low altitude and more steeply ascending to flight altitude and that has left little time for pilots to react. That is very dangerous as much weaker tail wind may confuse pilots and sensors. ..."

This is absolute garbage. Nothing but a "word salad" it has nothing to do with reality.

The Ethiopian crash is due to a useless pilot. A different crew, on the same plane, the day before had the same problem. They handled it correctly, which is EASY, and completed the day's flying without problem. Third world airlines have HUGE numbers of absolutely incompetent pilots.

Anyone interested in the operational aspects of this should go to an aviation site. PPRUNE has some good discussion of this event. There are a few idiots posting but very few. Most people there are very knowledgeable. I had a look at Airliners.net mostly rubbish.

Peter AU 1 , Mar 13, 2019 3:16:03 AM | link
Kalen 69
Installing the new engines changed the angle of thrust. In a balanced aircraft, engine thrust is pushing centrally on wight and drag.
If the thrust is below center of weight, it will nose up while accelerating. If thrust is below center of drag, the aircraft will be trying to nose up while cruising.

The original aircraft was most likely balanced, with thrust centered to weight and drag. Mounting new engines lower means the aircraft will tend to nose up when accelerating, and nose up during cruise. Relying on sensors and software to keep an unstable aircraft stable is not a good thing. To not notify pilots of this problem is worse than not a good thing.

psychohistorian , Mar 13, 2019 3:24:41 AM | link
@ acementhead with insistence that the pilot was at error.

Without the black box data you are sticking your **ck out a long way. I find it interesting that in both your comments you are insistent that the pilot was the problem. You wrote in your first comment
"
Pilots MUST know all about aircraft systems operation. It is crazy for Boeing to have functions not in the AFM.
"
The 2nd sentence is your only criticism of Boeing but then you spend the rest of the comment describing what the pilot should have done.....before black box data says what happened.

Kiza , Mar 13, 2019 3:45:44 AM | link
When a relative asked me recently why did the new Ethiopian plane crash, I generated a sound-bite like explanation. Before, the civilian airliners were falling out of the sky because of an immature technology, that is because of the learning curve. Now that the technology involved is fully mature the airliners are falling out of the sky for profit taking.

The scariest thing is that 737MAX model was a botched Boeing reaction to the market change towards budget flight. If the plane manufacturer and the approval authority were prepared to cut corners so badly to remain "market competitive", one can only imagine the compromises that budget airlines are making to sell cheap whilst increasing profits. Some airlines must be treating planes worst than buses are treated by the bus companies.

US citizens entrust their wallets to the private bank, The Federal=Corrupt Reserve, which prints money and gives it to the most exceptional among the exceptional (did you think that there was no hierarchy within the exceptionality?). We entrust our heads to the Federal=Corrupt Aviation Administration whose bureaucrats work for the porky revolving door consulting jobs that come after a stint in the Corrupt.

Kiza , Mar 13, 2019 4:01:48 AM | link
@Peter AU 1

As Aussies would say: using software to solve a hardware problem is like putting lipstick on a pig. More than 300 people dead are a terrible testament to this wisdom.

Yet, it is fascinating that you are blaming the engineers and some others are asking in the comments for whistleblowers in Boeing and FAA.

Well, if I were an engineer at Boeing I would probably have resigned if asked to do this design monstrosity of putting unfitting engines on a differently designed plane - creating a Lego airplane, but I never had a home mortgage over my head. Regarding whistleblowing, we all know how suicidal it is, why do supposedly intelligent people expect other to be so dumb to commit one? Before you expect others to self-sacrifice ask yourself if you would do so in their shoes.

b , Mar 13, 2019 4:01:57 AM | link
It seems that the U.S. now wants to manipulate the investigation of the Ethiopian Airlines crash. WSJ U.S., Ethiopia Maneuver Over Crashed Plane's Black Boxes Washington wants NTSB to download data from recorders, while African nation's officials prefer U.K. experts.
U.S. air-safety investigators on Tuesday engaged in intense behind-the-scenes discussions with their Ethiopian counterparts regarding where the black-box recorders found amid the wreckage of Ethiopian Airlines Flight 302 will be downloaded, according to people familiar with the matter.
Peter AU 1 , Mar 13, 2019 4:15:37 AM | link
Kiza 85 "Before you expect others to self-sacrifice ask yourself if you would do so in their shoes."
"Self sacrifice" ... Most of my life I have been self employed, but for a few years when I was young and then as I got older and ill health slowed me down, I have worked for others.

If told to do a job that I believed was destined to fail, I would pull out. What you call self sacrifice simply comes down to money, and as I put in an earlier comment "what we do for money" Engineers that put this schumozzel together were simply putting in the hours to received their pay check at the end of the week with no thought as to the people hurt or killed when this bodge job failed. The fault is equally with engineers who sell their souls for money and the bean counters who did not inform purchasers or pilots.

Kalen , Mar 13, 2019 4:16:24 AM | link
@aceme..

What you wrote is asinine garbage, my friend. Everybody except for bribed FAA dumped B737 Max 8 until notice. It is simply too dangerous to fly.

It is you who are trolling for Boeing, the problem was discovered five months ago never fixed, blamed pilots despite previous complaints. Now FAA admitted that fact by demanding software fix in April or they will ground the fleet. PILOT ERROR????? Of course not and they know it.

Not only worldwide airlines dumped this model so far but also they closed the airspace for them in EU, China, HK etc.,because the plane is dangerous and may require recertification of plane and pilots since Boeing lied about it and its flight parameters,p the trust was broken, they were cheating with deadly consequences was revealed. Expect hundreds of lawsuits, as American were also onboard.

Interestingly that anti-stalling software cannot be disabled on the ground only in flight in manual mode only after it was engaged exactly for reasons I mentioned about near-stalling dangerous flight parameters.

Peter AU 1 , Mar 13, 2019 4:27:42 AM | link
b 86

US Boeing are very much competing with France airbus and also the coming Chinese Russian airliner. The US is very much batting for the home team (as the mad monk told the Australian Broadcasting Commission to do so).

Kiza , Mar 13, 2019 6:14:40 AM | link
Is it really so hard to connect the secrecy about MCAS and why it was needed in the first place? The lawyers will have a ball of the decade with this: the defendant created a secret software solution to turn a Lego airplane into a real airplane, made the software dependent on a single sensor, and made it difficult to switch the software off.

The networked Western pilots learned how to compensate for the faulty design, but non-networked foreign pilots never got in on the flying tricks needed for this new plane because it was never been in their training. Also, the critical sensor may not be available on an airport in Ethiopia or Indonesia or .....

I cannot believe that Boeing shares dropped only 7.5%, this is a statement of how untouchable Boeing is and how protected it will be by the Corrupt.

[Mar 04, 2019] US does not have "plan B". Trump just betting on enough pressure will force China to surrender, like Japan did in the 80s.

Notable quotes:
"... Face it. Mass production of consumer electronics in the USA is almost non-existent. An entire important industry has been lost forever based on wage arbitrage. But even if there were not a 10:1 wage disparity, the skill level and work ethic of Americans is pathetic compared to the diligent Asian worker bees. Reality is a cruel mistress ..."
"... Russia just passed up the U.S. in grain exports. Their economy in real terms grows year on year. Russia has more natural wealth available to exploit than USA that includes lands rich in minerals, timber, water, etc. ..."
"... With regards to traitorous fifth column atlantacists and oligarchy, Russia's shock therapy (induced by the Harvard Boys) in the 90's helped Russian's figure out who the real enemy is. Putin has marginalized most of these ((Oligarchs)), and they longer are allowed to influence politics. Many have also been stripped of their ill gotten gains, for example the Rothschild gambit to grab Yukos and to own Russia was thwarted. Dollar debts were paid off, etc. ..."
"... The Western European based US economy is fast draining out (along with people of Western European descent) and the days of US world manufacturing leadership (1950's) are a distant memory. ..."
"... Maybe the takeaway from US/Chinese history is that the US needs its own Maoist style Cultural Revolution. Nothing short of US Maoism is needed to root out every aspect of the current rotten system and get a fresh start from zero. ..."
Mar 04, 2019 | www.unz.com

jacques sheete says: February 18, 2019 at 4:05 pm GMT 100 Words A superb and apparently too little appreciated point,

War, in this model, begins when the first shots are fired.

Well, think again in this new era of growing great-power struggle and competition.

It all war, all the time and another point to remember is that there is always a war between the .001% and the rest of us.

Another thing is that we proles, peasants and peons should give some serious thought to having the "elite" fight their own battles, on their "own" (though mostly stolen) shekels for once. Read More Agree: foolisholdman Reply Agree/Disagree/Etc. More... This Commenter Display All Comments


Agent76 , says: February 18, 2019 at 4:08 pm GMT

Feb 15, 2019 Next Phase, Xi & Trump, Coordinate The Transition

US industrial production plunges, this doesn't mean that manufacturing jobs are not coming back to the US this means the [CB] is deteriorating quickly as Trump brings back manufacturing.

Feb 16, 2019 Pentagon Warns of Chinese Space Lasers | China News Headlines

A new Pentagon report says #China and Russia have developed #laser weapons to target US satellites. Need a Space Force?

SteveK9 , says: February 18, 2019 at 4:09 pm GMT
Michael Klare believes in Russia-gate. Anyone that foolish is not worth reading.
The Scalpel , says: Website February 18, 2019 at 4:13 pm GMT

governing elites have developed other means of warfare -- economic, technological, and covert -- to achieve such strategic objectives. Viewed this way, the United States is already in close to full combat mode with respect to China.

Looked at this way, there are countless wars all the time as well as a huge gray area that is debatable. I think there is merit in defining war as actual kinetic weapons firing in both directions. Even then, there are gray areas, but at least they are minimized

Yee , says: February 18, 2019 at 4:15 pm GMT
Erebus,

"The time and investment required to rebuild/replace supply chains in a JIT world means much of what's left of America's real economy would disappear within weeks.

American trade negotiators are apparently oblivious to this. I find that very weird."

Of course they're not oblivious, as you can see everytime the stock market goes down, some US official came out to say a deal/talk is on the way. Both the negotiators and the market know.

They're just betting on enough pressure will force China to surrender, like Japan did in the 80s.

nsa , says: February 18, 2019 at 4:18 pm GMT
@Erebus In the distant past there were at least 1000 PC Board manufacturers in the US .now there are only 2 or 3. Most US PCB houses are actually a middleman with an iphone fronting for one of the many Chinese PCB factories. You supply the Gerber Files and the payment, of course, and your finished PC Boards come back by air the next day.

Now here is the kicker: our US PC Board supplier is located in Illinois and owned by you guessed it Hindus. Half the staff are also Hindus. In general, the Chinese PCBs are of higher quality than the Hindu .er US PCBs.

Face it. Mass production of consumer electronics in the USA is almost non-existent. An entire important industry has been lost forever based on wage arbitrage. But even if there were not a 10:1 wage disparity, the skill level and work ethic of Americans is pathetic compared to the diligent Asian worker bees. Reality is a cruel mistress

MEFOBILLS , says: February 18, 2019 at 4:26 pm GMT
@jeff stryker Reality much?

Russia just passed up the U.S. in grain exports. Their economy in real terms grows year on year. Russia has more natural wealth available to exploit than USA that includes lands rich in minerals, timber, water, etc.

With regards to traitorous fifth column atlantacists and oligarchy, Russia's shock therapy (induced by the Harvard Boys) in the 90's helped Russian's figure out who the real enemy is. Putin has marginalized most of these ((Oligarchs)), and they longer are allowed to influence politics. Many have also been stripped of their ill gotten gains, for example the Rothschild gambit to grab Yukos and to own Russia was thwarted. Dollar debts were paid off, etc.

Russia could go further in their symphony of church and state, and copy Justinian (Byzyantine empire) and prevent our (((friends))) from teaching in schools,bein control of money, or in government.

With regards to China, they would be not be anywhere near where they are today if the West had not actively transferred their patrimony in the form of transplanted industry and knowledge.

China is only temporarily dependent on export of goods via their Eastern seaboard, but as soon as belt and road opens up, she will pivot further toward Eurasia. If the U.S. factories withdrew from China tomorrow, China already has our "knowledge" and will find markets in Eurasia and raw materials in Africa, etc.

People need to stop whistling past the graveyard.

The atalantacist strategy has run its course, internal development of U.S. and linking up with belt and road would be in America's best future interests. But, to do that requires first acknowledging that money's true nature is law, and not private bank credit. Further, the U.S. is being used as whore of Babylon, where her money is "Federal Reserve Notes" and are international in character. The U.S is not sovereign. Deep state globalism does not recognize national boundaries, or sovereignty.

The Scalpel , says: Website February 18, 2019 at 4:32 pm GMT
@Alfa158 Alternatively, one could examine a nations ability to rapidly expand their economy to meet wartime needs. In this scenario, other factors such as access to raw materials come into play. In this perspective, the equations would change dramatically.
Digital Samizdat , says: February 18, 2019 at 4:32 pm GMT
@MEFOBILLS To make a long story short, China is run by the Chinese, while the US today is run by (((globalist parasites))).
The Scalpel , says: Website February 18, 2019 at 4:42 pm GMT
@Wally

And to think some take this fraud, Klare, seriously.

He writes for Tomdispatch. Need I say more?

jacques sheete , says: February 18, 2019 at 4:57 pm GMT
@The Scalpel

I think there is merit in defining war as actual kinetic weapons firing

Why limit it to that? I'd say there's plenty of merit in the author's definition especially since it would tend to shed some lights on the origins of major conflicts.

AriusArmenian , says: February 18, 2019 at 5:14 pm GMT
That US elites that are split on who to go after first compromised by going after both Russia and China at the same time is a definition of insanity. The US doesn't have a chance in hell of subduing or defeating the Russia/China alliance. The US is already checkmated. The more it goes after some big win the worse will be its defeat.

So the question (for me) is not which side will win, the question is the scenario of the decline of the US Empire. Someone here mentioned the EU turning East. At some point the EU will decide that staying a US vassal is suicide and it will turn East. When that happens then the virus of US insanity will turn inwards into itself.

The US has recently focused on South America by installing several fascist regimes and is now trying to get Venezuela. But the US backed regimes are laying the groundwork for the next wave of revolution soon to come. Wherever I look the US is its own worst enemy. The big question is how much suffering before it ends.

The Scalpel , says: Website February 18, 2019 at 5:43 pm GMT
@jacques sheete The author's definition makes the term a purely rhetorical one tantamount to an angry child saying "this means war!" to another angry child, or "The War on Drugs" or "The Battle of the Sexes" etc.

Admittedly, this is all semantics, so have it your way if you want, as it is not worth the time of further debate. As for me, I prefer to have terms as precise as possible.

DB Cooper , says: February 18, 2019 at 5:52 pm GMT
@nsa I didn't know Indians are into the PCB industry. Do the customers aware that they are just middlemen getting their goods from China?

Anyway here is a behind the scene look at one of the PCB manufacturers in China. Pretty interesting stuff.

Cratylus , says: February 18, 2019 at 5:56 pm GMT
Klare discovers the US crusade against China – 8 years after the Obama/Hillary "pivot" to East Asia sending 2/3 of the US Navy there and putting together the TPP to excluded China. As usual he is right on top of things.

And he begins with this gem: " "The media and many politicians continue to focus on U.S.-Russian relations, in large part because of revelations of Moscow's meddling in the 2016 American presidential election and the ongoing Mueller investigation." Huh? Does he mean the $4700 in Google ads or the $50,000 in Facebook ads traced to some alleged Russian sources? A Russiagater from the start.
I remember some years ago before the shale revolution Klare was warning us about "peak oil." I think we were supposed to have run out of it by now.

Klare is a hack who cycles things that any conscious person reading the newspapers would have known long ago.

P.s. He says that Apple is the number one cell phone. No longer. He should improve his Google search skills or his set of assumptions which have turned him into a Russiagater.

Huawei now sells more cell phones worldwide than Apple ( https://gearburn.com/2018/08/huawei-smartphone-sales-2018/ ). And Huawei does this even though it is effectively excluded from the US market (You cannot find it in stores) whereas Apple has unfettered access to the enormous Chinese market. You find Huawei everywhere – from Italy to Tanzania. How would Apple fare if China stopped purchases of its products? Not so well I am afraid.

Anon [424] Disclaimer , says: February 18, 2019 at 6:24 pm GMT
Usa is at war against everyone , from China to Latinamerica , from Europe to India , from the islamic world to Africa . Usa is even at war against its own citizens , at least against its best citizens .
peterAUS , says: February 18, 2019 at 6:30 pm GMT
@Counterinsurgency You are onto something here.

I don't think it's simple "Eastern" vs "Western" Europeans; my take is Protestants vs Catholics vs Orthodox. In that order. The biggest difference is between Protestant and Orthodox. Catholics are, sort of, in the middle. Or, in practical terms, don't see much difference between Austrians and Slovenes. That's for Europe.

As for China, definitely agree.

wayfarer , says: February 18, 2019 at 6:55 pm GMT
China's "Petro-Yuan": The End of the U.S. Dollar Hegemony?
WorkingClass , says: February 18, 2019 at 7:09 pm GMT
When we speak of the culture war or the war on drugs or the war between the sexes or a trade war we are misusing the word war.

War with China means exactly shooting and bombing and killing Chinese and American people. Expanding the meaning of the word only makes it meaningless.

We are NOT already at war with China.

jacques sheete , says: February 18, 2019 at 7:57 pm GMT
@The Scalpel

Admittedly, this is all semantics, so have it your way if you want, as it is not worth the time of further debate. As for me, I prefer to have terms as precise as possible.

I agree on all four points.

However, if you didn't want a debate, or at least a response, then why did you bother bringing it up? (That's a rhetorical question, since I neither expect nor really care what the response would be; now I'm asking myself why I bothered !!!)

jacques sheete , says: February 18, 2019 at 8:00 pm GMT
@DESERT FOX

Russia under Putin is an exporter of non GMO grains where as the U.S. exports GMO grains thatt the Chinese do not want as these GMO grains are a destuctive to humans and animals.

I hope that's true. To Hell with that GMO crap!!! Anyone using it for farming ought to be forced to drink glyphosate straight for breakfast.

AnonFromTN , says: February 18, 2019 at 8:02 pm GMT
As far as the war with China goes, we ain't seen nothing yet. It won't be pretty, especially considering that the US is starting it with severe self-inflicted wounds.
Cratylus , says: February 18, 2019 at 8:19 pm GMT
Yes, and the ads were often absurd – one somehow featuring Yosemite Sam and gun rights and another for a dildo, I believe. Great for click bait maybe but not real winners for a campaign.

As the incomparable Jimmy Dore says on his show, which should be required watching for everyone, if the Russians can swing an election with such modest resources against maybe $1-2 billion spent by the Donald and the Hillary together, then every candidate for offices high and low should run not walk with $54,700 in hand to secure a cheap and easy victory from the Russobots.

Commentator Mike , says: February 18, 2019 at 8:41 pm GMT
@DESERT FOX Actually China has approved import of some US GMOs

https://www.cnbc.com/2019/01/08/reuters-america-factbox-china-approves-new-gmo-soybean-corn-and-canola-traits.html

Cyrano , says: February 18, 2019 at 8:41 pm GMT
I don't think China stands the chance. As we all know diversity is strength and China is mono-cultured rather than the obviously superior multi. So China will continue to decline, while US goes from strength to strength thanks to its brilliant, brilliant multicultural philosophy.

China was dumb enough to try real socialism, while obviously the fake one is the way to go. You convince your domestic population of your humanitarian credentials – via the phony socialism, plus you don't have to share a cent with them. How clever is that? Phony socialism is the way to go – it eliminates the need for the real one.

James Wood , says: February 18, 2019 at 8:49 pm GMT
At some point one must consider that this is all a fraud. In Washington Ocasio-Cortez and the Democrats are proposing to eviscerate the US economy with their Green New Deal. While here we find Washington launching a long term struggle for economic, political, and military superiority over China.

As was once said in another context by an individual remembered in history, "What is truth?" A question which either revealed his own puzzlement or was simply a rhetorical dismissal of the question altogether. Likely both at the same time. One can be simply bemused by the turn of events.

Is all this activity simply a song and dance to entertain, terrify, confuse, and amuse the public while the real ordering of the world takes place behind closed doors? Put Ocasio-Cortez together with the Pentagon and we have apparently a commitment by the US to force the entire world to immolate itself. No state shall be superior to the US and the US shall be a third world hellhole. Cui bono?

AnonFromTN , says: February 18, 2019 at 9:04 pm GMT
@joe webb Russia and China are certainly not natural allies. However, deranged international banditry of the US (called foreign policy in the DC bubble) literally forced them to ally against a common threat: dying demented Empire.

As you call Chinese "Chinks", I suggest you stop using everything made in China, including your clothes, footwear, tools, the light bulbs in your house, etc. Then, using your likely made in China computer and certainly made in China mouse, come back and tell us how great your life has become. Or you can stick to your principles of not using China-made stuff, write a message on a piece of paper (warning: make sure that neither the paper nor the pen is made in China), put it into a bottle, and throw it in the ocean. Be patient, and in a few centuries you might get an answer.

Anonymous [375] Disclaimer , says: February 18, 2019 at 9:34 pm GMT
@joe webb Russia is currently trying to get China to ally against the West:

" Russia to China: Together we can rule the world "

https://www.politico.eu/blogs/the-coming-wars/2019/02/russia-china-alliance-rule-the-world/

In the halls of the Kremlin these days, it's all about China -- and whether or not Moscow can convince Beijing to form an alliance against the West.

Russia's obsession with a potential alliance with China was already obvious at the Valdai Discussion Club, an annual gathering of Russia's biggest foreign policy minds, in 2017.

At their next meeting, late last year, the idea seemed to move from the speculative to something Russia wants to realize. And soon

Seen from Moscow, there is no resistance left to a new alliance led by China. And now that Washington has imposed tariffs on Chinese exports, Russia hopes China will finally understand that its problem is Washington, not Moscow.

In the past, the possibility of an alliance between the two countries had been hampered by China's reluctance to jeopardize its relations with the U.S. But now that it has already become a target, perhaps it will grow bolder. Every speaker at Valdai tried to push China in that direction.

Anon [332] Disclaimer , says: February 18, 2019 at 9:45 pm GMT
@Sean Pollution in China is good for the environment:

https://www.npr.org/2018/12/05/673821051/carbon-dioxide-emissions-are-up-again-what-now-climate

Another hurdle, reported in the journal Nature this week, is that China is cleaning up its air pollution. That sounds great for pollution-weary Chinese citizens. But climatologists point out that some of that air pollution had actually been cooling the atmosphere, by blocking out solar radiation. Ironically, less air pollution from China could mean more warming for the Earth.

tamo , says: February 19, 2019 at 2:53 am GMT
@AnonFromTN Frankly, I really don't give a damn about what you say. But do not use racial slurs FIRST. I use racial slurs ONLY in RESPONSE to the comments that contain them, in retaliation. If you don't use racial slurs, I wouldn't either.
nsa , says: February 19, 2019 at 3:02 am GMT
@DB Cooper DB,
Thanks for the PCB mfg video. Asian roboticized surface mount assembly plants are even more impressive. At one time supplied specialized instrumentation to the FN factory in South Carolina where the 50 cal machine guns are made, and received a tour. Crude by Asian standards, but efficient in its own way. Base price on a 50 LMG at the time was $5k without any of the extras: tripod, flash suppressor, water cooling, advanced night vision sights, etc. Base price would be $10k by now. The US Guv does not allow this kind of production to go offshore .but apparently cares not a jot about the production of consumer electronics, a massive and growing worldwide market.

Have read the Chinese shops assemble $1000 I-pods for as little as $5 each including parts sourcing, making domestic production here impractical. Surprisingly, the Germans manage to produce high end electronics and their manufacturing labor rates are even higher than North America. Says something about the skill and diligence level of the US workforce ..where just passing a drug test and not having felonies or bad credit is a major achievement.

@Anonymous Yes, it is quite off putting, even though most of the article is quite sound. Possibly Klare was obliged to add this bit of nonsense in order to get it published in TomDispatch but who knows.
Erebus , says: February 19, 2019 at 1:39 pm GMT
@nsa A good friend supplies hi-end PCBs to EU & RU electronics mfrs, particularly in DE. Judging by the numbers I hear, hi-end electronics is still very much alive in Europe while it's all but dead in NA.

It's a capital intensive business, and raw labour cost is a minor component in the total cost of doing business. NA has put so many socio-political obstructions & regulatory costs in the way that even at min wage it makes no business sense to locate there. I doubt it would make sense even with free labour.

As Steve Jobs told Obama point blank, "Those jobs aren't coming back". NA's manufacturing ecosystem (rather than mere infrastructure), which includes social-cultural aspects as well as physical plant has been disappeared, and only dire necessity will build a new one. I explicitly avoid the word "rebuild", as that train left the station years ago. NA still "assembles" stuff, but it doesn't manufacture except on a small, niche scale.

Manufacturing is a difficult and very demanding business. 21st C manufacturing is not simply an extension of the 20th's. It's a radically different hybrid of logistics, design & production engineering, "smart" plant, and financial mgmt.

Not for the faint of heart. Much easier to flip burgers/houses/stocks/used cars/derivatives/credit swaps/ until there's nothing left to flip.

peter mcloughlin , says: February 19, 2019 at 1:55 pm GMT
Where a war begins – or ends – can be hard to define. Michael Klare is right, 'War' and 'peace' are not 'polar opposites'. We often look at wars in chronological abstraction: the First World War started on the 28th July 1914. Or did it only become a global war one week later when Great Britain declared war on Germany? The causes can be of long duration. The decline of the Ottoman Empire, for which the other Great Powers were positioning themselves to benefit, might have begun as far back as 1683 when the Turks were defeated at the Battle of Vienna. It ultimately led to the events of 1914.

Great power rivalry has always led to wars; in the last hundred years world wars. Graham Allison wrote that the US can 'avoid catastrophic war with China while protecting and advancing American national interests' if it follows the lessons of the Cold War. History shows that wars are caused by the clash of interests, that's always at some else's expense. When core interests collide there is no alternative to war – however destructive.
https://www.ghostsofhistory.wordpress.com/

Jason Liu , says: February 19, 2019 at 2:45 pm GMT
The trade war is meh.

The real conflict is a cultural/ideological war in which liberal democracy tries to apply its system worldwide under the delusion that egalitarianism, freedom, your definition of rights, is universal.

China will never accept this. Russia is already fighting back. Nor does any developing country look like they will ever truly embrace western values. It's gonna be SWPLs + WEIRDs vs The Rest of Humanity.

The new Cold War will last much longer than any trade issue and conflict over values will always be the underlying motivation, until the west either ends its universalist crusade, or abolishes liberal democracy within its own borders.

raywood , says: February 19, 2019 at 2:53 pm GMT
I would be more sympathetic with Klare's fear of cold war with China if he could just assure me that Chinese writers are equally able to voice concern with their own government's side of the equation.
peterAUS , says: February 19, 2019 at 5:42 pm GMT
@peter mcloughlin

Great power rivalry has always led to wars ..

History shows that wars are caused by the clash of interests, that's always at some else's expense. When core interests collide there is no alternative to war – however destructive.

Pretty much, BUT, with one little difference re "some else's expense" now. M.A.D. scenario.

Even limited exchange of thermonuclear M.I.R.V.s could affect everyone (even if somebody can define that "limited" in the first place).

My take: we haven't developed, as species, along our capability for destruction.
Cheerful thought, I know.

denk , says: February 19, 2019 at 6:07 pm GMT
Pepe Escobar says: 'US elites remain incapable of understanding China'

That's B.S., Pepe should've known better . They dont 'misunderstand', they'r simply lying thru their teeth.

The following are all bald faced lies, Classic bandits crying robbery.

Lawmaker: Chinese navy seeks to encircle US homeland
[bravo, This one really takes the cake !]

US Accuses China Of Preparing For World War III

US accuses China of trying to militarise and dominates space

USN have to patrol the SCS to protect FON for international shipping..

tip of an iceberg

Those who uttered such nonsense aint insane, stupid or cuz they 'misunderstand' [sic] China.
They know we know they'r telling bald faced lies
but that doesnt stop them lying with straight face .

This is the classic def of psychopaths: people who'r utterly amoral, no sense of right or wrong, there's no such word as embarrassment in their vocab.

Is it sheer coincidence that all the 5lies have been ruled by such breeds ?
Ask Ian Fleming's fundamental law of prob .

but why couldnt they produce one decent leader
in all of three hundred years.
5lies have more than their fair share of psychopaths no doubt, but surely not everybody is like joe web and co., I know this for a fact. ?

Trouble is .

Washington DC is a veritable cesspool that
no decent man would want to dip his foot into it.
They might as well put it in the job requirement,
'Only psychopaths need apply '
Thats why in the DC cesspool, only the society's dregs rise up to the top.

A case of garbage in, garbage out .

A vicious circle that cant be fixed, except to be broken.

Китайский дурак , says: February 20, 2019 at 12:56 am GMT
1) People from China PRC has as a people on the whole become quite disgusting. But please exclude ppl from Hong Kong, Taiwan, Tibetans, Uyghurs etc. I confirm that PRC China people by and large are now locusts of the world. I am one of them by birth. how did it happen? Deep question for philosophers. It wasn't like this 60 years ago. some poisonous element entered the veins of the collective, infected at least 70 percent. I worry for Russia due to its inflated self confidence when dealing with PRC. Lake Baikal deal was almost sealed before it got shelved. Still, using racial curses don't hurt anyone but yourself. All the big internet advocates for Russia such as Orlov and Saker and Karlin don'tunderstand The Danger of China PRC. If you understand then you have a responsibility to keep yourself décent and respectable.

2) USA aside from its liberals and Zionist Jews etc. Has become a slowly stewing big asylum for psychologically infantile and demented big babies. How did it happen again is a big philosophical myth to me. Western Europe is sinking primarily because they came to resemble the US. especially French and Brits and Spanish.

3) Russia is ruled by a few individuals with brains and maybe a bit of conscience but the elite ruling class behave in such a way that one would conclude that they share the China PRC virus, just not as advanced. Your basic Russian people are in a state of abject degradation dejection, not changed all that much since 1990s. Only slightly ahead of the Ukrainians. If one cares about Russia then shove aside 19th century naive romanticism and face reality.

4) A sustained and massive war by USA against China maybe the only miniscule chance Greek/Christian civilization can be saved. Otherwise descend of history into thousand year dark age. The latter is more likely due to advanced stage of brain dead disease gripping the entire West.

jeff stryker , says: February 20, 2019 at 1:19 am GMT
@tamo TAMO

If you have observed cities like Detroit or Greater Los Angeles than you know that "white flight" as oppose to sycophancy is the end result of black or Hispanic populations reaching a certain level. Whites leave and the US then has another internal third world like Detroit or East LA.

It is a game of musical chairs where the white move into remote hinterlands, which develop into suburbs or exurbs, then of course as these become population centers the blacks and Hispanics enter them and the whites flee again.

What you will see is white flight from the US with the wealthiest whites simply moving to other developed countries. The 1% would move to New Zealand or Tasmania.

jeff stryker , says: February 20, 2019 at 1:54 am GMT
@Joe Wong JOE

The best way for the US to win a war over China is not to outsource their labor there.

There is no way the US could win a conventional war with China. It cannot even win a conventional war in Afghanistan.

China managed to fight off-if not defeat-the US in Korea and Vietnam.

atlantis_dweller , says: February 20, 2019 at 1:54 am GMT
The handicap for the USA in the confrontation is twofold its élite are in conflict (and afraid, and contemptuous of) at least half of their own populace.
Plus, all the resources of all kinds directed to enterprises in the Middle East, subtracted thusly from other enterprises.

Furthermore, there is the occasional bullying of Europe, and the continuous bullying of Russia, yet more resource drains.
The USA spreads itself too thin, perhaps.

Joe Wong , says: February 20, 2019 at 1:54 am GMT
@peterAUS Chinese are neither for money nor for ethnic power, Chinese is for 5 principles of peaceful coexistence, treating all nations large and small as equal with respect.

Chinese believes we are now living in a rapidly changing world Peace, development, cooperation and mutual benefit have become the trend of our times. To keep up with the times, we cannot have ourselves physically living in the 21st century, but with a mindset belonging to the past stalled in the oldays of colonialism, and constrained by the zero-sum Cold War mentality.

Chinese is determined to help the world to achieve harmony, peace and prosperity thru the win-win approaches.

atlantis_dweller , says: February 20, 2019 at 2:16 am GMT
@Китайский дурак 2) The riddle reads simply: democracy, multiracialism, economic welfare (no-limit printing of currency made possible by uncontested military "overmatch").
jeff stryker , says: February 20, 2019 at 2:20 am GMT
@Joe Wong JOE

I lived in the Philippines and would chalk that up to fairly typical of a country run by China since it is effectively controlled by a syndicate of Fujian family cartels.

This is on the horizon in Africa. Probably.

In the West, Chinese were held in check by Jews and WASPS and to some degree by Malaysians. I see Africa becoming like the Philippines once Chinese can become citizens there, however.

Joe Wong , says: February 20, 2019 at 2:55 am GMT
@Biff The Romans create a desert and call it peace; British Empire imitated Roman Empire, USA is born out of British Empire; so only the White People particular the Anglo-Saxon is not ready for peace or salvation. But rest of the world has been waiting for peace or salvation for a long long time.
peterAUS , says: February 20, 2019 at 2:56 am GMT
@Joe Wong

Chinese are neither for money nor for ethnic power, Chinese is for 5 principles of peaceful coexistence, treating all nations large and small as equal with respect.

Peace, development, cooperation and mutual benefit have become the trend of our times.

Chinese is determined to help the world to achieve harmony, peace and prosperity thru the win-win approaches.

Three options here:
Preferably,you are just pulling our legs. Not bad attempt, actually. Got me for a second.

Most likely, you are simply working. Sloppy and crude but, well, "you get what you pay for". 50 Cent Army. Retired but needing money. Sucks, a?

Crazy and the least probable, you really believe in all that. Ah, well

Joe Wong , says: February 20, 2019 at 3:28 am GMT
@jeff stryker Obviously you are brain washed by the 'god-fearing' morally defunct evil 'Anglo-Saxon', blaming every of your own failure on the Chinese just like what the Americans and their Five-Eyes partners are doing right now.

The Filippino, the Malay and all the SE Asia locals have the guns not the Chinese, if the Chinese do not hand over their hard earned money they will use what their ex-colonial masters taught them since Vasco da Gama discovered the East Indies, masscared the Chinese and took it all. The Dutch, Spanish, English, Japanese and the American all have done it before in order to colonized the East Indies.

Before WWII, the American is just one of the Western imperialists ravaged and wreaked havoc of Asia with barbaric wars, illicit drugs like Opium, slavery, stealing, robbing, looting, plundering, murdering, torturing, exploiting, polluting, culture genocide, 'pious' fanaticism, unmatchable greed and extreme brutality. In fact it is hard to tell the difference between the American and the unrepentant war criminal Japanese who is more lethal and barbaric to Asians until the Pearl Harbour incident.

For over seventy years the US has dominated Asia, ravaging the continent with two major wars in Korea and Indo-China with millions of casualties, and multiple counter-insurgency interventions in Indonesia, Thailand, Malaysia, the Philippines, Timor, Myanmar, Pakistan and Afghanistan. The strategic goal has been to expand its military and political power, exploit the economies and resources and encircle China.

USA is 10,000 miles away on the other side of the Pacific. USA is not an Asian nation, and American is an alien to Asia. American is a toxin and a plague to Asian, They have done enough damage to Asian already, they are not wanted, not invited and not loved in Asia, go home Yankee.

Joe Wong , says: February 20, 2019 at 3:50 am GMT
@peterAUS You should know the White man has some fallacies built into their culture, such as they believe that the White man's words must be taken as given truth, only the White man can invent and the White man can succeed, and the Whte man's culture is the final form of civilization.

The West (Europeans and their offshoots like the American, Aussie, etc.) is where is now, because of those hundreds of millions of people all over the world who were robbed and murdered, those who become victims of their very madness of colonialism and orientalism, of the crusades and the slave and Opium trades. Cathedrals and palaces, museums and theatres, train stations – all had been constructed on horrid foundations of bones and blood, and amalgamated by tears.

The West squandered all the wealth they obtained thru stealing, looting and murdering hundreds of millions of people all over the world in the scrabbling of a dog-eat-dog play rough over the monopoly to plunder the rest of the world through two World Wars, one on the edge of Armageddon, and on the verge of another Armageddon. It proves the West is incapable of bringing peace and prosperity to the mankind because of their flawed culture, civilization and religion. The chaos and suffering of the world in the last few hundreds of years under the dominance the West proves they are a failure.

Human beings deserve better, we need to depart from the chaotic and harmful world order and path established by the moronic West. China proposed a new way of life, a win-win approach for the well-being of mankind like Belt-Road-Initiative to build and trade the world into peace, harmony and prosperity. The West should not be the obstacle for achieving such refreshing winner for all initiative. The West should embrace the new approach proposed by China because the West will benefit from it. I call upon you, let go the old, obsolete, failed and detrimental believe passed onto you by your colonialist forebears please, welcome the new era.

Miro23 , says: February 20, 2019 at 4:16 am GMT
@Erebus

As Steve Jobs told Obama point blank, "Those jobs aren't coming back". NA's manufacturing ecosystem (rather than mere infrastructure), which includes social-cultural aspects as well as physical plant has been disappeared, and only dire necessity will build a new one. I explicitly avoid the word "rebuild", as that train left the station years ago. NA still "assembles" stuff, but it doesn't manufacture except on a small, niche scale.

Manufacturing is a difficult and very demanding business. 21st C manufacturing is not simply an extension of the 20th's. It's a radically different hybrid of logistics, design & production engineering, "smart" plant, and financial mgmt.

Not for the faint of heart. Much easier to flip burgers/houses/stocks/used cars/derivatives/credit swaps/ until there's nothing left to flip.

All true, leaving the question of what happens to North America before it reaches the African street market economy (low tech, low investment, low trust, basic products, vibrant and over each morning).

The Western European based US economy is fast draining out (along with people of Western European descent) and the days of US world manufacturing leadership (1950's) are a distant memory.

Maybe the takeaway from US/Chinese history is that the US needs its own Maoist style Cultural Revolution. Nothing short of US Maoism is needed to root out every aspect of the current rotten system and get a fresh start from zero.

Don't ask what happens to US nuclear weapons.

jeff stryker , says: February 20, 2019 at 4:32 am GMT
@Joe Wong JOE

If Chinese took over the world it would look like the Philippines.

Shabu labs everywhere? Corrupt politicians blowing away homeless squatters when some Chinese guy wanted to build a shopping center or Chinese arsonists setting squats on fire? Dictators living off wages Chinese don't want to pay exploited peasants?

No thanks, the whites don't want Chinese family cartels running our economies. We can see the harm you have done in Burma, Philippines etc.

Китайский дурак , says: February 20, 2019 at 5:07 am GMT
@jeff stryker This Joe Wong is obviously a WuMao (professional trolls paid by Beijing to parrot their government's pathological propaganda). Any mainland Chinese who can read will confirm this fact. It is not worth your time to deal with folks like him.
jeff stryker , says: February 20, 2019 at 5:38 am GMT
@Китайский дурак Maybe, but my posts are intended for those that think a Chinese-run planet would be a better New World Order.

Visit the Philippines.

Australians all wrapped up in America should pay close attention.

Китайский дурак , says: February 20, 2019 at 6:08 am GMT
@jeff stryker Australians, Philippines, Singaporeans, Vietnamese, Taiwanese, Russians, Italians, Japanese,Mongolians, Koreans, New Zealanders, a tiny anguished minority of mainland Chinese themselves, everyone has gotten the mail, everyone has seen them on the streets, everyone understood -- what a Beijing lorded world shall be like, coffee beans in the morning. Americans are last in getting the news. Americans can be dim witted. Too many Nobel winning economists and globalist bankers in America. And China is the gift of these white people to the world.
joe webb , says: February 20, 2019 at 6:25 am GMT
@peterAUS thanks and if you are a young man, congrats for your rationality. I am old, but probably have ten or 20 years left, if not all those years real fit.

The young guys need to not fuc themselves up with regard to earning a living .keep your mouth shut , sort of, and your name protected.

I hope a new generation of "White Nationalists" come along sans Hitlerism. Stay rational, with just the facts M'am if you don't recall that line it was Dragnet and Detective Jack Webb I think .you are young, Congrats.

Stick to the facts, keep your ego under control, keep a smile on your face .. Buddhist wisdom to spread a little love around and it is essential for snaring a woman.

The Facts are with us. The Future is with us, including hard times, civil war, and so on. The Sentimental Lie (Joseph Conrad) of race equality cannot stand for long.

Joe Webb

NoseytheDuke , says: February 20, 2019 at 6:26 am GMT
@jeff stryker Australian people nowadays are far less wrapped up in America than at any time that I can remember but Australian politicians are just as bought and paid for as are those in the US.

Australians generally are much more well travelled than most Americans and have been to various places both in Asia and Europe, especially the UK. Despite having seen the longer term results of "diversity" with their own eyes they overwhelmingly seem to think that things will somehow work out differently in Australia. To even suggest that mass immigration from the third world is a ticking time-bomb is to be branded a racist of the very worst kind.

Yee , says: February 20, 2019 at 12:11 pm GMT
jeff stryker,

"The best way for the US to win a war over China is not to outsource their labor there."

Too bad you don't get to decide what "the best way for the US" is, no matter how many times you vote America has owners, and the owners aren't the average Americans.

PS. Philippines is just the poor-man version of USA. Does the American capitalist class have many concerns for their working class? The money class are all the same.

Your rant about Chinese of SE Asia is also quite similar with that of American Whites for the Jews, or South African Blacks for the Whites, just only on economic side, not politics.

People aren't much different everywhere

Nzn , says: February 20, 2019 at 2:44 pm GMT
Filipinos are nothing but semi retarded 85 IQ trying hard Americans, the vast majority who are too stupid to copy the better parts of US high culture, and so ape and cargo cult the trashiest and lowest of the low parts of US culture, or maybe low IQ Austronesians are just prone to overall trashiness unless they are regulated by a somewhat draconian conservative culture like Muslim Malays are.
Joe Wong , says: February 20, 2019 at 4:47 pm GMT
@Китайский дурак Perhaps some Russians like you are willing to live under the Anglo-Saxon's dominance, submitted to Anglo-Saxon's zero-sum, beggar-thy-neighbour, negative energy infested cult culture, and try to talk like them and walk like them, but not everybody is like those feeble Russians. Other people has their long history, culture and identity to protect. Please do not smear other people's integrity because you are lack of it.
denk , says: February 20, 2019 at 5:48 pm GMT
@denk

Self-Defense, Civilizational Defense ,

Exhibit A

General William R. Looney III

If they turn on their radars we're going to blow up their goddamn SAMs [surface-to- air missiles]. They know we own their country. We own their airspace We dictate the way they live and talk. And that's what's great about America right now . It's a good thing, especially when there's a lot of oil out there we need.

Comments about the bombing of Iraq in the late 1990s, which he directed. Interview Washington Post (August 30, 1999); quoted in Rogue State, William Blum, Common Courage Press, 2005, p. 159.

William Blum,
RIP
Somebody should do an autopsy on him !

TT , says: February 26, 2019 at 12:48 pm GMT
@denk

In korea, a UN coaliton force , bristling with bombers, jet fighters, complete air superiority.no less. Tanks, artilleries, carbines, couldnt subdue the PLA fighting with ww1 vintage rifles.

There is never any UN coalition force in Korea war. Its a illegal US led aggression, known as Unified/United Command, in violating of UNSC charter. US deceived UN by using 'United Command' in its letterhead when communicating. And then go ahead to lie shamelessly using UN name.

https://www.globalresearch.ca/the-role-of-the-un-in-the-unending-korean-war-united-nations-command-as-camouflage/5350876

By acting before the Security Council could act, the US was in violation of Article 2(7) of the UN Charter which requires a Security Council action under Chapter VII before there is any armed intervention into the internal affairs of another nation unless the arms are used in self-defense. (See Article 51 of the UN Charter. The US armed intervention in Korea was clearly not an act of self defense for the US.) Also the actions of the UN have come to be referred to as the actions of the "United Nations Command"(UNC), but this designation is not to be found in the June and July 1950 Security Council resolutions authorizing participation in the Korean War. (3) What is the significance of the US using the UN in these ways?

The current US military command in South Korea claims to wear three hats: Command of US troops in South Korea, Combined Forces Command (US and South Korean troops), and "United Nations Command" with responsibilities with respect to the Armistice. The United Nations, however, has no role in the oversight or decision making processes of the "United Nations Command". The US Government is in control of the "United Nations Command". The use by the US of the designation "United Nations Command", however, creates and perpetuates the misconception that the UN is in control of the actions and decisions taken by the US under the "United Nations Command".

The Democratic People's Republic of Korea (more commonly referred to as North Korea) has called for disbanding the "United Nations Command"(UN Command). At a press conference held at the United Nations on June 21, 2013, the North Korean Ambassador to the UN, Ambassador Sin Son Ho argued that the actions of the US Government using the designation "United Nations Command" are not under any form of control by the United Nations. (4) Since the UN has no role in the decision making process of what the US does under the title of the "United Nations Command", North Korea contends the US should cease its claim that it is acting as the "United Nations Command".

TT , says: February 26, 2019 at 1:41 pm GMT
@Sean

Anyway, there is hardly a tree left in China and since 2006, China has been the world's largest emitter of CO2 annually and though they pay lip service they accept no binding target for reduction; quite the opposite.

Pls has slight decency to check before spewing nonsense.

According to Nasa, China has planted & expanded forest the size of Amazon, contributing 1/4 of global greenery effort.

Its now working on massive irrigation projects in Tibet & Xinjiang, including dams that will overshadow 3Gorges. These will convert arid Xinjiang into another green agriculture pasture & food basket providing economic to it landlocked natives.

China's effort to roll back desertification is also very impressive, converting thousands of hectares deserts into green forest using proprietary planting method.

It has built world most hydropower stations & dams in China, and help built in Asia, Africa with grants & subsidized loan. Forefront in reusable energy, EV, solar.

And China is the staunchest supporter of CO2 emission control with solid actions, when US write off Kyoto treaty in Paris as hoax.

TT , says: February 26, 2019 at 4:03 pm GMT
@jeff stryker Jeff,

what's about Spore that have 75% majority Chinese mainly come from Fujian too, HK, Taiwan!? Do they fare well & very safe, or a shithole filled with drugs & crimes that you projected to be?

And then compare with Chinese minority countries:
Msia with 25% Chinese contributing 70% economy, Indonesia 3% Chinese contributing 70% economy.
Thailand, Myanmar, Laos, Cambodia, Philippines, .

It seems that the more Chinese % a country has, the more its prosperous & safe, vice versa. So Chinese is in fact the main economic & safety contributing factor, instead of the other way round you painted.

If Chinese are indeed as evil as you make out to be, then China will be worst than India, dysfunctional like Philippines, completely crimes & drugs infested like Mexico. Yet China today is biggest growing economy in real ppp, and world safest country well surpassing nearly all whites countries. No?

Vietnam tried to purge Chinese ethics under Ho Chih Min anti-China policy, ended paralyzed its entire economy until Chinese were brought back to help. Today its still the Chinese ethics controlling its majority economy & ruling elites.

Indonesia Prez Suharto slaughtered million of Chinese ethics under Yanks CIA instigation to coup pro-China Prez Sukarno, and their economy suffered. Suharto later brought back Chinese to run 70% of economy, while his cronies suck off remaining.

Malaysia Mahatir had forthright admonished his disgruntled Malays complaining about 20% Chinese controlling 70% economy. He famously said Malays race by inheritance is lazy and bad in economic, screwing up every gov granted projects & handouts. So let the skillful Chinese take care of all business, and Malays can tax on them to make Malaysia prosperous. All subsequent leaders follow that policy, and the result is continuous economy growth.

Myanmar purged Chinese after independent, immediately encountered dysfunction economy. Today its still relying on Chinese ethic to support the main economy behind.

Thailand, Cambodia, Laos didn't purge Chinese ethics, and Chinese are similarly their main economy contributors.

There is one common observation in all these countries, where ever Chinese live, they are mostly law obedient, work diligently and eventually established in businesses contributing to most prosperity.

Whereas in majority Catholics Philippines, are literally controlled by Vatican appointed bishops, who forbid contraceptive & divorce, directly causing its explosive population, leading to grave poverty & crimes. These bishops are also colluding with corrupted politicians to dictate election outcome using their churh influence.

When pro-China Prez Duerte declared war on drugs with China help is achieving good result, these West-appointed bishops are leading their followers in full force to oppose, all in syn with West govs 'human rights'. Dont that smell fishy?

So will Philippines be better off without Chinese? Im not sure, just like whites, some Chinese are also ruthless crimals. But your sweeping statements & allegation certainly is fundamentally flawed.

But CIA has been plotting anti-Chinese ethic riots in Asean for a long time as part of China containment plan. Previously Denk posted one article on this.

jeff stryker , says: February 27, 2019 at 1:41 am GMT
@TT Your description of Malaysians as lazy and stupid is why Indonesians kill ethnic Chinese and not some CIA plot. That's the thinking right there that motivates Malays to dislike ethnic Chinese.

China did not help Duterte. China makes the drugs there or in Taiwan. Duterte pleaded with them to stop sending shabu to the Philippines but China does not care and so Filipinos continue to stagger around like zombies in their squats.

Philippines has the additional post-colonial curse of Mestizo half-breed Spanish landowning and political class of "Hacienderos" while Malaysians are unified under Islam. Since these Spanish-blooded elite are part-white, some of the blame for the problems in the Philippines can be attributed to whites.

As for CIA containment plans, you'll probably say that the reason Singapore immigration allowed so many Indians in was because the US government wanted to import a competitive ethnic group to prevent Chinese in Singapore from controlling all of Southeast Asia.

Anon [117] Disclaimer , says: February 27, 2019 at 6:08 am GMT
"An emboldened China could someday match or even exceed U.S. power on a global scale, an outcome American elites are determined to prevent at any cost."

They will fail. The United States, like Carthage, is doomed to lose its struggle for dominance; too many things are running against it. Not only does China have the far larger population, but consider the following factors that run in their favor:

1. Like the US, China has a highly advanced and productive agriculture industry, making them all but immune to nation-killing food blockades.

2. China has an average IQ that may approach Japan's before it levels out; Japan is insanely outsized in terms of competitiveness, mainly due to its intelligent, group-oriented population, so imagine how much stronger China could be.

3. China is geographically situated in the heart of the world's economic engine, Asia. This puts China in prime position to break out from US dominance and, potentially, even surround the Americans by making their trading partners their vassals.

4. The US is located far away and in a fairly unimportant region of the world. It will be difficult for the US to get reinforcements to the Asian theater in the advent of a conflict. American allies know this, so they will be predisposed to making peace with the Chinese as the power balance continues to shift in China's favor.

5. Universalist dogma outsourced to American satellites Australia and New Zealand will eventually make both countries Chinese vassals. Sometime in this century both countries will have majority Asian populations due to immigration. Polls have repeatedly shown that Asian immigrants have positive feelings towards the Chinese, despite the propaganda efforts of the Americans. Take a look at what the Israel Lobby has accomplished and imagine what a future China Lobby in those countries will do. Also, there is virtually no way to stop this from eventually happening as this diversity dogma is spouted by the US at the highest level and is now deeply ingrained in its future Chinese satellites. Before the end of the century, the Chinese will have naval bases in both countries and the US will have none.

6. China is free from the social-trust killing, national ethos-sapping political divisiveness seen in the US – no feminism, no attacks on its majority Han population. America, on the other hand, is beset with hundreds of hate hoaxes targeted at its most important demographic, white males – the group that disproportionately dies in its wars, invents its best technology, and exports the best elements of its culture. If there is a military conflict between China and the United States ten years hence, expect the critical white male demographic to sit it out.

7. The Chinese are deeply patriotic and nationalistic. The US has experienced an unprecedented decline in patriotism according to polls; that trend will continue. Therefore, there is little appetite in the US for confrontation. This as a hungry China chomps at the bit to show everyone who "the real ruler of the world is", a concept I sometimes see floated on their social media.

8. The US is rapidly losing cultural influence due to a diminished Hollywood. The last several American tent poll films, for instance, have crashed in Asia. Meanwhile movies like Alita: Battle Angel (adapted from a Japanese anime) have done well in that market while doing not so well in the US (and coming under immense fire from SJW gatekeepers for portraying a female as something other than a weirdo). This means that tastes are diverging between the two markets, a trend the Chinese can exploit in the future due to shared tastes across the region and American inability to make anything other than low-quality superhero movies.

Hollywood is also now pretty much incapable of making the kinds of movies Asians (and Europeans) used to see – science fiction, fantasy, and action/adventure movies – due to rampant anti-white male hate and an industry focused on other demographics. Gone are the movies like Robocop, Aliens, Jurassic Park, Die Hard, The Terminator, The Lord of The Rings, and the Matrix. Gone because the white guys who made them are aging out of the industry (or changing genders) and now all Hollywood wants to make are infantile superhero movies for the Idiocracy demographic.

And did you see the Oscars this year? What an embarrassment. They actually nominated Black Panther for Best Picture. I can't imagine anyone in Asia cares. They couldn't even get a host.

9. The Chinese are primed to dominate influential cultural industries like video games in a way that the Americans cannot due to checklist diversity requirements and the many anti-male gatekeepers within the industry.

The video game industry is now three times the size of Hollywood and much more influential than Hollywood for the youth. When technology and budgets are not a limiting factor, politically-incorrect nations like Japan dominate over large American corporations like Microsoft. The American video game industry, led by Microsoft, has effectively zero influence in Asian nations due to American corporate greed, developer laziness, checklist diversity, feminism, and a short-sighted strategy of broadly targeting low quality material to low quality people (stupid FPS games).

Microsoft has been crushed so badly by the Japanese that they are now putting their software on the Nintendo Switch; they simply cannot compete on any level. Meanwhile, Chinese cultural influencers grow in power. They await only a maturation in Chinese taste and a forward-thinking export policy but it will come. China's Tencent already owns a significant stake in Epic Games, a streaming platform that will compete with America's Steam for dominance of the huge online market.

One day, China will dominate their inferior American competition just as the Japanese and Koreans have done. This bodes very badly for the US in the future, especially when you stop to consider that all movies may be CGI in the future. The Chinese market is still immature, but when it does mature, it will dominate – games, movies, music everything.

10. Divisive rhetoric promoted by the American elite and aimed at white European-Americans – an effort to suppress white group solidarity – will eventually drive a wedge between Europe and America that the Chinese, through their Russian ally, can exploit. You already see a bit of this in Germany's refusal to cancel their gas pipeline (Nordstream 2, if I recall), and Italy's defiance of the Empire over Venezuela. When racist American politicians like Kamala Harris begin stealing money from European Americans and handing it to blacks through reparations schemes, expect the Europeans to start thinking twice about their relationship with this country.

After Trump loses in 2020, European elites will celebrate but not for long. Over the following decade, both the far left (for economic reasons) and the far right (for ethnic reasons) may unite against the United States. That will be made all the easier once the United States is no longer able to elect a competent European as president. Europe isn't going to want to be ruled over by someone of a different ethnic group that hates their own.

11. China is unified in a way the US never can be again. China is 90% Han Chinese. The US gets more diverse and divided by the day. Therefore, the Chinese public is more resilient to conflict with rivals.

12. China's political model is far superior to their American counterpart. The Americans, for instance, elect incompetent leaders through national popularity contests; said leaders then rule only for favored interests. China, on the other hand, is run by smart people for the benefit of all Chinese – the nation-state.

13. China's economic model is far superior to the corrupt, inefficient American corporate model. Whereas China is a meritocracy not beset with crippling diversity requirements and feminism. Tellingly, whenever the two models have gone head-to-head, such as in Africa, the Chinese have won by a large margin. I see nothing that will change that in the future as that would require a wholesale rethinking in the US of their basic philosophies, both on the left and the right and that is impossible at this point.

The US is a proposition nation, so dogma lies at the heart of civic life. The Chinese, in contrast, are free to pick and chose from the best of each ideology and apply it where warranted because they are a blood and soil nation – group interest comes first, not allegiance to dogma. Everyone in the US is an extremist of some sort – socialist, corporatist, environmentalist, etc. That's no way to run a government.

14. The US will soon lose the moral high ground. As the US devolves into a police state, as it continues kicking dissidents off the internet and silencing whistle blowers (and attacking nations like Iran and Venezuela), nations around the world will cease to see a difference between the US and China. At that point, they my either go independent (perhaps in alliance with India or Russia) or openly start to flirt with a Chinese alliance. After all, what does it matter if both states are authoritarian? At least the Chinese don't have a history of invading their competition.

15. The divided American public may not support more military spending over social service spending; this likelihood will only increase in the future due to demographic changes. They see that China has a competent single-payer medical program and will want the same for themselves, not pay for missiles and guns for other people.

16. The US cannot pursue relationships with vital nations like Russia due its anti-male and anti-European dogma, now infused into society at the highest levels. It will take decades to erase that and by then it will be too late.

Anon [117] Disclaimer , says: February 27, 2019 at 6:11 am GMT
"Someone here mentioned the EU turning East. At some point the EU will decide that staying a US vassal is suicide and it will turn East. When that happens then the virus of US insanity will turn inwards into itself."

True. One day someone like Kamala Harris or Stacey Abrams will be president. Will Europe want to be ruled by non-Europeans who hate Europeans, want to tear down their monuments, and steal their money for reparations payments?

"The USA has lost strategic air superiority, as well as strategic brain power. I wonder how the USA would look after a week of retaliatory aerospace strikes?"

Like New Orleans after Katrina – a breakdown in the social order as all the diverse groups start fighting each other and shooting at rescue efforts because they're morons and thieves.

"Open the USA borders wide open and encourage 1 billion South Aemricans, Africans, SE Asians and South Asians into the USA is the fastest and easiest way to close the human resource gap between the USA and China."

How exactly is an efficient democracy supposed to work in that instance? Seems like dysfunction, low social trust, and corruption would reign. Besides, the Chinese population will still be far more intelligent overall, so no gap will be closed. The US should have focused on immigration from Europe and increasing its white birth rate back in the 1970s. They'd be in a far stronger position now if they had done that then.

TT , says: February 27, 2019 at 11:53 am GMT
@Anon Which West European nations willing to move to dysfunctional disUnited States filled with crimes & unemployment en masse?

May be some poor cousins of East European. But they will soon find US is worst than their country, no good jobs, homeless without affordable accommodation, crime infested, their whites is actually marginalized by diversification, LGBT conflict with their WASP value. Most will want go back soon.

So its left with only choice of finest selection of 1.3B poor Indians, Latino, South Americans, Africans & ME refugees willing to go anywhere just to get out of their countries shithole.

When they arrived, hundreds of millions whites, Chinese & Asians will flee like been no tomorrow.

Here it go, United States of Asshole is founded. Pls handover all nukes to UNSC before implementing lest been exchange for food or use for heating in winter.

TT , says: February 27, 2019 at 1:15 pm GMT
@jeff stryker Its Malaysia PM Mahatir who said Malays are inheritingly lazy. Im just quoting.

Do educate yourself about CIA & Muslim politicians instigated riots against ethnic Chinese before writing off in ignorant.

Spore was shielded from all these info distorted with West msm propaganda. I had only learned about these details from Indonesian Chinese friends whose family had suffered these trauma. After some readings, also Indonesia under current Chinese ethnic President Jokowi, did all these CIA-Muslims Generals collision genocides been publicized. How about you, where you got yours?

https://www.wsws.org/en/articles/1998/02/indo-f14.html

https://sweetandsoursocialism.wordpress.com/2013/02/18/cias-role-in-indonesias-anti-chinese-genocide-hidden-harmonies-blog/amp/

China did not help Duterte. China makes the drugs there or in Taiwan. Duterte pleaded with them to stop sending shabu to the Philippines but China does not care and so Filipinos continue to stagger around like zombies in their squats.

Why did you say China didn't help Prez Duerte in drugs war, your Chinese philippino mistress told you? Pls cite your evidence.

Its widely publicized in our msm, West msm that China gov working with Philippines police to track & dry up many drugs supply, even donated rehab centers as part of long term solution. So you mean all these West msm are lying to help China.

In your word, these shabu are make & sold by China gov? Or they are part of global drug syndicates that operated in every countries including all West?

As for CIA containment plans, you'll probably say that the reason Singapore immigration allowed so many Indians in was because the US government wanted to import a competitive ethnic group to prevent Chinese in Singapore from controlling all of Southeast Asia.

Let these unequal US FTA & India CECA speak itself. These were shoved into our PM LEE ass to screw SG, allowing unlimited Indians of all kinds & their families to live & work in SG, with their mostly internationally unrecognized qualifications mandatory to be accepted.

Also both US & India nationals enjoy tax free in property investment, while Sporeans & all foreigners subjected to 3% + 7% + 7% tax regimes, literally giving them a 10~17% profits upfront.

https://thehearttruths.com/2013/11/11/this-is-why-singaporeans-will-not-be-protected-in-our-jobs-by-the-government/amp/

Indians as " competitive " ethnic group to suppress SG Chinese, you are joking or seriously think Indians IQ80 & its education is superior to Sg Chinese IQ107 that rank consistently Top in SAT, PISA & Olympiad?

These are the dredge of India, violent drunkard, not those US get. Numerous are caught with fake certificates when they simply could not even do the most basic task, near illiterate. A documentary show was make to investigate how widespread & complex is it in India, even there are someone stationed to pick up call as reference to certify everything. These including medical MD cert, aka fake Indian Drs that India Health Ministry condemn openly been so rampant up to 80% of India Drs(that was posted in one of Unz old discussion 2yrs ago)

https://gocertify.in/articles/certification-verification-rogue-it-credentials-rampant-in-india/

TT , says: February 27, 2019 at 1:47 pm GMT
@Erebus If both US & China go on full trade war 100% tariff, to the brim of stop trading, who do you think can last longer?

As you said, in mere wks, US will be paralyzed with every shelves empty & factories shut down. Emergency declared with imports from other sources with much chaos. Frustrated, nation wide civil riots may ensue with states like California, Texas, demanding independent.

Whereas for China its life as usual with some restructuring, since it can live without yanks useless financial services, msm & few chips easily replaced by EU/Jp or live without. Airbus will be happy to replace Boeing.

China total export to US is ~$500B, 50% are imported components, so $350B damage is passed back to US $250B(total US export to China) & global suppliers $100B.

That make China actual impact only $150B, $4T reserved, it can theoretically offset the trade loss for >20yrs, while continue to expand its domestic consumption, BRI & global trade to fuel growth.

But the world will be in chaos to get double impact of a totally collapsed US $21T GDP & China import cut. With all economies stunt, global financial mkt burst, consumption all dive, US allies turning to China for leadership & trade, a WW3 look imminent as yank is left with only one product – weapons!

But not to worry, it should be very short one in yelling, as no yanks want to die with empty belly, nor there are $ to pump vessels & bombers or resources to prepare long war. Military is quickly paralyzed with desertion, & split between seperated states. There go 51 disUnited states of America.

So China is indeed discussing with yanks from great strength. But with farsight, they prefer to settle yanks brinkmanship in Chinese humble & peaceful way.

I hope China can drag on until US can no longer conceal its pain with fake data, screamming out loudly for truce to sign China dictates trade agreement. China need to teach yank a painful lesson to humble it once & for all, including a WTO style unequal treaty that yank shoved down china throat.

jeff stryker , says: February 27, 2019 at 3:35 pm GMT
@TT TT

For all the refugees the US creates in the Mideast, it doesn't except many of them. Most Iraqi and Afghani refugees have no hope of entering the US; European countries that protested the war in Iraq end up absorbing the human cost.

jeff stryker , says: February 27, 2019 at 3:42 pm GMT
@TT An Indian-Malay should know.

As for the CIA cooperating with Muslims in anti-Chinese anything, I am skeptical. My feeling about Indonesia is that a 3% minority owning everything and displaying contempt for the natives as lazy savages is enough fuel ethnic hatred and Chinese backing of Suharto didn't help things.

Indians don't represent job competition for Singapore, they are simply a basic menace to your society. And it is possible that the US government, not wanting to see Singapore become a vassal state of China, wanted your country's population to become more well, diversified.

Patricus , says: February 27, 2019 at 4:50 pm GMT
@Joe Wong The "dominance" of Anglo-Saxons is overstated. They are a pretty small minority in the US. They still dominate Britain, maybe.
Erebus , says: February 27, 2019 at 7:59 pm GMT
@TT

If both US & China go on full trade war 100% tariff, to the brim of stop trading, who do you think can last longer?

China would take a hit, but not greater than the whole world could be expected to take. Probably quite a bit less.

There's little doubt in my mind that China is in a much stronger position to both survive and to be in a position to take advantage of the world's eventual recovery. As you note

$4T reserved, it can theoretically offset the trade loss for >20yrs

It also has the world's widest and deepest industrial infrastructure.

It's not only the $4T and the infrastructure. China also has a lot of gold within its domestic system, which it can mobilize to make purchases from the the rest of the world's staggered economies. Approx 20kT, by some quite carefully done estimates. Mobilizing that gold, of course, is where things get tricky. The world would be awash with useless dollars and how all that liability gets unwound would cause a lot of Central Bankers and their govts a lot of sleepless nights.

Anon [409] Disclaimer , says: February 27, 2019 at 9:17 pm GMT
"Which West European nations willing to move to dysfunctional disUnited States filled with crimes & unemployment en masse?"

Quite a number of Europeans would have moved to the US circa 1965 – 1990 with the countries then demographics, which was the point being made in the comment. The US is a huge country with lots of space. In 1980, virtually all Eastern Europeans would have been better off in almost any place in the US over where they were. The US Ruling Class had the chance but cast it aside for lesser and more divisive groups so they could win elections and stiff their workers. Even the US now is a mostly a better place to live than virtually any place in Eastern Europe, and quite a number of places in overcrowded Western Europe – now filled with Muslim invaders, rising crime, higher unemployment than the US, and yearly riots.

TT , says: February 27, 2019 at 10:25 pm GMT
@Erebus One TV celebrity went on crusade to expose Monsanto GMO toxicity impact in food chain few yrs ago.

He visited US & collected clinical evidences of GMO cancer causing from several US professors, publicized them online. These force China gov to investigate, and their clinical test too revealed mice & animals fed with GMO have huge tumors growing all over shortly.

China agriculture minister was investigated, found to hold lucrative high pay job in Monsanto taking bribery, and blanket approved all untested Monsanto GMO seeds, grains & weed killer. Even those used as domestic animals feed but banned for wild animals in US were introduced into food chain. Some also passed off as non GMO to plant in vast land not approved for GMO.

About 30% of China food chain & vast agriculture lands contaminated, no longer productive. That agri minister got arrested. No sure what China gov is doing about it. But Prez Xi is hailing organic food. Tibets & Xinjiang have mega irrigation projects on going now, might be to open up new agri lands to offset.

TT , says: February 27, 2019 at 10:50 pm GMT
@jeff stryker Tonnes of evidences on CIA-Muslim generals instigated riots & massacre since 1965. You choose to see otherwise.

A trove of recently released declassified documents confirms that Washington's role in the country's 1965 massacre was part of a bigger Cold War strategy.
https://www.theatlantic.com/amp/article/543534/

https://www.globalresearch.ca/still-uninvestigated-after-50-years-did-the-u-s-help-incite-the-1965-indonesia-massacre/5467309/amp

https://www.globalresearch.ca/trumps-indonesian-allies-in-bed-with-isis-backed-fpi-militia-they-seek-to-oust-elected-president-jokowi/5588694/amp

I couldn't find one article published in one unz comment by Denk?, where West msm interviewing Indonesia biggest opposition party. Their chiefs had audacity to brag how they will instigate another massive anti-Chinese riots to win next election.

The jews are much more vicious & open in controlling US, but you won't see CIA staged riots & protest against their jewish masters Aipac.

Thailand Chinese ethnic are holding most economy too, but their politicians elites been Chinese don't instigate riot against own ethnic to meddle election.

TT , says: February 27, 2019 at 11:07 pm GMT
@jeff stryker

US government, not wanting to see Singapore become a vassal state of China, wanted your country's population to become more well, diversified.

Its not diversification, its complete indianized with Weapon of Mass Migration, by jews controlled US to push back China influence. As China refused to let jews control them!!! Its also happening for Sri Lanka, Nepal, Bhutan, Mauritius now.

Its Top to bottom all indians now in SG, 9% Indians with India new migrants controlling 75% Chinese & 15% Malays. Since when Indians have turn so great well surpass all Chinese capability, over a short span of 10yrs since Obama's new balance in Asia Pacific started. Its a regime change, silent coup.

Starting from Indian Prez, Indian DPM(a ex-criminal for leaking state secret data, he was highly touted as best future PM to test voter response, but a Chinese PM candidate was eventually selected for coming election as voters brainwashing not yet complete), national DBS bank CEO chairman Indian. Central bank MAS chief Indian. Law, Home Affair, Foreign Minister all Indians. High court judges flooded Indians. Chief judge Indian. Top senior counsels(equivalent to Queen Councils) many Indians. MPs also new india migrants. MSM journalist & writers flooded Indians.

Some are India newly arrived Indians of no credential. Yet no msm reporting on that. Its near complete regime change in stealth.

Patricus , says: February 28, 2019 at 2:00 am GMT
@Erebus In addition to the herbicide and insecticide resistance some plants are modified to withstand prolonged dry conditions, or to produce more of certain proteins or vitamins, or to increase yields.

The corn or maize we now have started from an indigenous plant in Central and South America. Twenty plants would produce a tablespoon of grain. The native corn plant can still be found. Over thousands of years these were bred for increased size and yields but probably for other reasons as well like drought resistance. That's genetic modification over many generations.

In this country the Food and Drug Admin. and Dept. of Agriculture have studied the genetically modified plants extensively. Not that government agencies always get it right but it would be interesting to see a real life example of these plants actually harming people, or animals and insects. Sometimes the fear of Frankenfoods is related to a fear of lower cost imports and a sop for the local farmers.

Having an interest in horticulture I produced greenhouse bedding plants for the most part. One significant expense was pesticides. We took great pains to carefully watch the crops. If the aphids, or other creatures, showed up we would strive to isolate the affected plants and only treat the ones with aphids and some that were nearby. Lots of hours with a bright light and magnifying glass. We didn't proactively apply these because of the expense. Sometimes an entire greenhouse required several treatments and there goes much of the profit. On the other hand refusing to use pesticides leads to total crop failures. Nobody applies pesticides if there are no pests. Without pesticides the world population would be much smaller and the remaining living people would know about famines.

jeff stryker , says: February 28, 2019 at 2:58 am GMT
@Anon ANON

In terms of space, most Europeans would immigrate to US cities. Chicago was popular with Slavs, for instance. And of course Silicone Valley. Very few immigrants move to rural wide-open areas. There is nothing to do there and Norwegians in 1990 were no longer homesteading on the North Dakota plains.

By 1990, few Irish wanted to immigrated to Boston or Italians to New Jersey. Europe was actually safer and more prosperous when I was young than the US.

Europeans prior to 1965 were attracted to the US middle-class standard of living and that has shrunken precipitously.

The refugee crisis in Europe is relatively recent. As for unemployment, indeed this is bad. But the social safety net is slightly better and there is less poverty overall in Western Europe.

anon [267] Disclaimer , says: February 28, 2019 at 5:47 am GMT
"Very few immigrants move to rural wide-open areas."

Sure, if you're talking Nevada or New Mexico desert. But there are areas considered "rural" in the US that have relatively mid-sized cities nonetheless. Oklahoma City has a population roughly equal to the population of Latvia's capital, for example. And I'm sure that Eastern Europeans could have been coaxed to leave Europe for the US had America pursued a deal with the Soviets – white South Africans, too. Certainly, this could have been done with success post Soviet breakup. Some Western Europeans could also have been coaxed, perhaps a few million, with the right financial incentives. Along with substantial efforts to increase the native European birthrate and targeted, gender-imbalanced ~skills-based immigration* from emerging market, high IQ countries, US demographics would be in a far better place today. The country would be less divided and more rational on a global stage (and probably friends with Russia, too).

*In other words, purposely encourage 2 to 1 female immigration from places like Korea and China back when they were both poor and filled with people ready to emigrate and compliment that with an equal but reversed ratio elsewhere (Vietnam, Laos). This forces interbreeding and prevents formation of divisive ethnic communities, while also having the benefit of harming your competitor's demographics down the road. Actor Keanu Reeves is something like 1/8th Japanese. But most people just think he's a white guy.

If that kind of policy had been adopted in 1965, along with my plan above (and a few other things not mentioned), things would be better for the US now. The US would be overwhelmingly white with a small admixture of smart Asian while leaving descendants who look European; the kind of internecine racial strife we see now could have been avoided. However, that kind of plan requires a competent, and rational, near-authoritarian to be in charge. As Fred Reed has pointed out, that kind of plan is not capable in Western countries that choose their leaders via popularity contest with a birthright citizenship voting base.

Erebus , says: February 28, 2019 at 3:45 pm GMT
@Patricus

That's genetic modification over many generations.

One wonders how many fish genes made their way into corn over those generations, and how they got in there.

it would be interesting to see a real life example of these plants actually harming people, or animals and insects.

Pesticides of increasing toxicity are surely not good for insects. As for harming people, I doubt we'd see any more harm than the fructose and aspartame etc, or the growth hormones and rampant anti-biotic use in husbandry that those agencies approved have caused. Of course, genetics is much more complex, and so who knows what will turn up in humans a few generations from now.

Without pesticides the world population would be much smaller and the remaining living people would know about famines.

I'm of the firm opinion that a smaller population would be a very, very good thing, and we'll be seeing famines soon enough anyway, but on a scale that will dwarf all other famines.

Patricus , says: February 28, 2019 at 7:23 pm GMT
"Pesticides of increasing toxicity are surely not good for insects. As for harming people, I doubt we'd see any more harm than the fructose and aspartame etc, or the growth hormones and rampant anti-biotic use in husbandry that those agencies approved have caused. Of course, genetics is much more complex, and so who knows what will turn up in humans a few generations from now.'

The pests who feed on domesticated crops lived in nature before people were around. When they stumble upon thousands of acres of corn or wheat they rapidly reproduce to exploit the windfall. The pesticides will hopefully kill or drive off many of these insects but their total number would probably be higher than in a pre-human environment. There is a balance of power.

Utilizing the "precautionary principle" one could say any technical advance might have some unanticipated detrimental effect in the near or distant future. Therefore let's stop all new technology. For now we have the methods of physical science to guide us. These aren't perfect but it's the best we have and more sensible than the precautionary principle, also called the paralysis principle.

"..a smaller population would be a very, very good thing, and we'll be seeing famines soon enough anyway, but on a scale that will dwarf all other famines.".

I'm hoping my family and I (and you) are not among the culled billions. Death by starvation is not a pleasant way to go, so I've heard.

Erebus , says: March 1, 2019 at 1:28 am GMT
@Patricus

their total number would probably be higher than in a pre-human environment. There is a balance of power.

Probably? Pre-human? Yours is the disingenuity of a pesticide salesman.
The insect world is in a massive die off, losing of ~75% its flying population over 3 decades, as attested by countless studies. The studies tell us what we already know. 40 yrs ago, a 2 hr drive in the countryside at night meant 30 min spent scraping insects off your windshield and headlights. Every lonely streetlight in the middle of nowhere had a cloud around it. Screens to protect the radiator, or even the entire front of the car were sold by every automotive shop and gas station. Seen one lately?

Utilizing the "precautionary principle" one could say any technical advance might have some unanticipated detrimental effect in the near or distant future.

One could say it, and one would often be right for doing so. As the complexity of the technological advance increases, so do its effects. Who considered 50 years ago that pesticide use would devastate the insect world? Who knows with any level of certainty what the effect of that will be on the ecosystem we live in? What we know is it ain't gonna likely to be good, and may be devastating. They're now found in mother's milk with potential effects we lack the tools and brain power to comprehend, never mind predict.

When it comes to playing with complex, chaotic systems that support our life on the planet, humans are like a monkey with a hand-grenade. To borrow a phrase "If the planet's ecosystem was simple enough to understand, we'd be too simple to understand it. " Our myopia & hubris will kill us, if our stupidity and belligerence doesn't do it first.

Patricus , says: March 2, 2019 at 11:14 pm GMT
The insect "die off" is an interesting occurrence. Puerto Rico lost a large percentage of insects while at the same time they decreased pesticide use by 80%. This die off is observed in a limited number of regions of the world. It isn't known exactly what caused the drop in insect population. Some say pesticides, others say climate change (the theory that explains all things), are killing the bugs.

Pesticides have been overused in the past but there have been impressive improvements in the technology which reduces the amounts required. There are herbicides and pesticides designed with chemical half lives. These kill the weeds or pests then break down into harmless components and in 10-14 days can no longer be detected in the field. Unfortunately for some any improvements will require some kind of technology.

We are all going to die eventually, hopefully later rather than sooner.

[Mar 04, 2019] War With China by Michael T. Klare

Mar 04, 2019 | www.unz.com

In his highly acclaimed 2017 book, Destined for War , Harvard professor Graham Allison assessed the likelihood that the United States and China would one day find themselves at war. Comparing the U.S.-Chinese relationship to great-power rivalries all the way back to the Peloponnesian War of the fifth century BC, he concluded that the future risk of a conflagration was substantial. Like much current analysis of U.S.-Chinese relations, however, he missed a crucial point: for all intents and purposes, the United States and China are already at war with one another. Even if their present slow-burn conflict may not produce the immediate devastation of a conventional hot war, its long-term consequences could prove no less dire.

To suggest this means reassessing our understanding of what constitutes war. From Allison's perspective (and that of so many others in Washington and elsewhere), "peace" and "war" stand as polar opposites. One day, our soldiers are in their garrisons being trained and cleaning their weapons; the next, they are called into action and sent onto a battlefield. War, in this model, begins when the first shots are fired.

Well, think again in this new era of growing great-power struggle and competition. Today, war means so much more than military combat and can take place even as the leaders of the warring powers meet to negotiate and share dry-aged steak and whipped potatoes (as Donald Trump and Xi Jinping did at Mar-a-Lago in 2017). That is exactly where we are when it comes to Sino-American relations. Consider it war by another name, or perhaps, to bring back a long-retired term, a burning new version of a cold war.

Even before Donald Trump entered the Oval Office, the U.S. military and other branches of government were already gearing up for a long-term quasi-war, involving both growing economic and diplomatic pressure on China and a buildup of military forces along that country's periphery. Since his arrival, such initiatives have escalated into Cold War-style combat by another name, with his administration committed to defeating China in a struggle for global economic, technological, and military supremacy.

This includes the president's much-publicized "trade war" with China, aimed at hobbling that country's future growth; a techno-war designed to prevent it from overtaking the U.S. in key breakthrough areas of technology; a diplomatic war intended to isolate Beijing and frustrate its grandiose plans for global outreach; a cyber war (largely hidden from public scrutiny); and a range of military measures as well. This may not be war in the traditional sense of the term, but for leaders on both sides, it has the feel of one.

Why China?

The media and many politicians continue to focus on U.S.-Russian relations, in large part because of revelations of Moscow's meddling in the 2016 American presidential election and the ongoing Mueller investigation. Behind the scenes, however, most senior military and foreign policy officials in Washington view China, not Russia, as the country's principal adversary. In eastern Ukraine, the Balkans, Syria, cyberspace, and in the area of nuclear weaponry, Russia does indeed pose a variety of threats to Washington's goals and desires. Still, as an economically hobbled petro-state, it lacks the kind of might that would allow it to truly challenge this country's status as the world's dominant power. China is another story altogether. With its vast economy, growing technological prowess, intercontinental "Belt and Road" infrastructure project, and rapidly modernizing military, an emboldened China could someday match or even exceed U.S. power on a global scale, an outcome American elites are determined to prevent at any cost.

Washington's fears of a rising China were on full display in January with the release of the 2019 Worldwide Threat Assessment of the U.S. Intelligence Community, a synthesis of the views of the Central Intelligence Agency and other members of that "community." Its conclusion: "We assess that China's leaders will try to extend the country's global economic, political, and military reach while using China's military capabilities and overseas infrastructure and energy investments under the Belt and Road Initiative to diminish U.S. influence."

To counter such efforts, every branch of government is now expected to mobilize its capabilities to bolster American -- and diminish Chinese -- power. In Pentagon documents, this stance is summed up by the term "overmatch," which translates as the eternal preservation of American global superiority vis-à-vis China (and all other potential rivals). "The United States must retain overmatch," the administration's National Security Strategy insists, and preserve a "combination of capabilities in sufficient scale to prevent enemy success," while continuing to "shape the international environment to protect our interests."

In other words, there can never be parity between the two countries. The only acceptable status for China is as a distinctly lesser power. To ensure such an outcome, administration officials insist, the U.S. must take action on a daily basis to contain or impede its rise.

In previous epochs, as Allison makes clear in his book, this equation -- a prevailing power seeking to retain its dominant status and a rising power seeking to overcome its subordinate one -- has almost always resulted in conventional conflict. In today's world, however, where great-power armed combat could possibly end in a nuclear exchange and mutual annihilation, direct military conflict is a distinctly unappealing option for all parties. Instead, governing elites have developed other means of warfare -- economic, technological, and covert -- to achieve such strategic objectives. Viewed this way, the United States is already in close to full combat mode with respect to China.

Trade War

When it comes to the economy, the language betrays the reality all too clearly. The Trump administration's economic struggle with China is regularly described, openly and without qualification, as a "war." And there's no doubt that senior White House officials, beginning with the president and his chief trade representative, Robert Lighthizer , see it just that way: as a means of pulverizing the Chinese economy and so curtailing that country's ability to compete with the United States in all other measures of power.

Ostensibly, the aim of President Trump's May 2018 decision to impose $60 billion in tariffs on Chinese imports ( increased in September to $200 billion) was to rectify a trade imbalance between the two countries, while protecting the American economy against what is described as China's malign behavior. Its trade practices "plainly constitute a grave threat to the long-term health and prosperity of the United States economy," as the president put it when announcing the second round of tariffs.

An examination of the demands submitted to Chinese negotiators by the U.S. trade delegation last May suggests, however, that Washington's primary intent hasn't been to rectify that trade imbalance but to impede China's economic growth. Among the stipulations Beijing must acquiesce to before receiving tariff relief, according to leaked documents from U.S. negotiators that were spread on Chinese social media:

halting all government subsidies to advanced manufacturing industries in its Made in China 2025 program, an endeavor that covers 10 key economic sectors, including aircraft manufacturing, electric cars, robotics, computer microchips, and artificial intelligence; accepting American restrictions on investments in sensitive technologies without retaliating; opening up its service and agricultural sectors -- areas where Chinese firms have an inherent advantage -- to full American competition.

In fact, this should be considered a straightforward declaration of economic war. Acquiescing to such demands would mean accepting a permanent subordinate status vis-à-vis the United States in hopes of continuing a profitable trade relationship with this country. "The list reads like the terms for a surrender rather than a basis for negotiation," was the way Eswar Prasad, an economics professor at Cornell University, accurately described these developments.

Technological Warfare

As suggested by America's trade demands, Washington's intent is not only to hobble China's economy today and tomorrow but for decades to come. This has led to an intense, far-ranging campaign to deprive it of access to advanced technologies and to cripple its leading technology firms.

Chinese leaders have long realized that, for their country to achieve economic and military parity with the United States, they must master the cutting-edge technologies that will dominate the twenty-first-century global economy, including artificial intelligence (AI), fifth-generation (5G) telecommunications, electric vehicles, and nanotechnology. Not surprisingly then, the government has invested in a major way in science and technology education, subsidized research in pathbreaking fields, and helped launch promising startups, among other such endeavors -- all in the very fashion that the Internet and other American computer and aerospace innovations were originally financed and encouraged by the Department of Defense.

Chinese companies have also demanded technology transfers when investing in or forging industrial partnerships with foreign firms, a common practice in international development. India, to cite a recent example of this phenomenon, expects that significant technology transfers from American firms will be one outcome of its agreed-upon purchases of advanced American weaponry.

In addition, Chinese firms have been accused of stealing American technology through cybertheft, provoking widespread outrage in this country. Realistically speaking, it's difficult for outside observers to determine to what degree China's recent technological advances are the product of commonplace and legitimate investments in science and technology and to what degree they're due to cyberespionage. Given Beijing's massive investment in science, technology, engineering, and mathematics education at the graduate and post-graduate level, however, it's safe to assume that most of that country's advances are the result of domestic efforts.

Certainly, given what's publicly known about Chinese cybertheft activities, it's reasonable for American officials to apply pressure on Beijing to curb the practice. However, the Trump administration's drive to blunt that country's technological progress is also aimed at perfectly legitimate activities. For example, the White House seeks to ban Beijing's government subsidies for progress on artificial intelligence at the same time that the Department of Defense is pouring billions of dollars into AI research at home. The administration is also acting to block the Chinese acquisition of U.S. technology firms and of exports of advanced components and know-how.

In an example of this technology war that's made the headlines lately, Washington has been actively seeking to sabotage the efforts of Huawei , one of China's most prominent telecom firms, to gain leadership in the global deployment of 5G wireless communications. Such wireless systems are important in part because they will transmit colossal amounts of electronic data at far faster rates than now conceivable, facilitating the introduction of self-driving cars, widespread roboticization, and the universal application of AI.

Second only to Apple as the world's supplier of smartphones and a major producer of telecommunications equipment, Huawei has sought to take the lead in the race for 5G adaptation around the world. Fearing that this might give China an enormous advantage in the coming decades, the Trump administration has tried to prevent that. In what is widely described as a " tech Cold War ," it has put enormous pressure on both its Asian and European allies to bar the company from conducting business in their countries, even as it sought the arrest in Canada of Huawei's chief financial officer, Meng Wanzhou, and her extradition to the U.S. on charges of tricking American banks into aiding Iranian firms (in violation of Washington's sanctions on that country). Other attacks on Huawei are in the works, including a potential ban on the sales of its products in this country. Such moves are regularly described as focused on boosting the security of both the United States and its allies by preventing the Chinese government from using Huawei's telecom networks to steal military secrets. The real reason -- barely disguised -- is simply to block China from gaining technological parity with the United States.

Cyberwarfare

There would be much to write on this subject, if only it weren't still hidden in the shadows of the growing conflict between the two countries. Not surprisingly, however, little information is available on U.S.-Chinese cyberwarfare. All that can be said with confidence is that an intense war is now being waged between the two countries in cyberspace. American officials accuse China of engaging in a broad-based cyber-assault on this country, involving both outright cyberespionage to obtain military as well as corporate secrets and widespread political meddling. "What the Russians are doing pales in comparison to what China is doing," said Vice President Mike Pence last October in a speech at the Hudson Institute, though -- typically on the subject -- he provided not a shred of evidence for his claim.

Not disclosed is what this country is doing to combat China in cyberspace. All that can be known from available information is that this is a two-sided war in which the U.S. is conducting its own assaults. "­The United States will impose swift and costly consequences on foreign governments, criminals, and other actors who undertake significant malicious cyber activities," the 2017 National Security Strategy affirmed. What form these "consequences" have taken has yet to be revealed, but there's little doubt that America's cyber warriors have been active in this domain.

Diplomatic and Military Coercion

Completing the picture of America's ongoing war with China are the fierce pressures being exerted on the diplomatic and military fronts to frustrate Beijing's geopolitical ambitions. To advance those aspirations, China'sleadership is relying heavily on a much-touted Belt and Road Initiative , a trillion-dollar plan to help fund and encourage the construction of a vast new network of road, rail, port, and pipeline infrastructure across Eurasia and into the Middle East and Africa. By financing -- and, in many cases, actually building -- such infrastructure, Beijing hopes to bind the economies of a host of far-flung nations ever closer to its own, while increasing its political influence across the Eurasian mainland and Africa. As Beijing's leadership sees it, at least in terms of orienting the planet's future economics, its role would be similar to that of the Marshall Plan that cemented U.S. influence in Europe after World War II.

And given exactly that possibility, Washington has begun to actively seek to undermine the Belt and Road wherever it can -- discouraging allies from participating, while stirring up unease in countries like Malaysia and Ugandaover the enormous debts to China they may end up with and the heavy-handed manner in which that country's firms often carry out such overseas construction projects. (For example, they typically bring in Chinese laborers to do most of the work, rather than hiring and training locals.)

"China uses bribes, opaque agreements, and the strategic use of debt to hold states in Africa captive to Beijing's wishes and demands," National Security Advisor John Bolton claimed in a December speech on U.S. policy on that continent. "Its investment ventures are riddled with corruption," he added, "and do not meet the same environmental or ethical standards as U.S. developmental programs." Bolton promised that the Trump administration would provide a superior alternative for African nations seeking development funds, but -- and this is something of a pattern as well -- no such assistance has yet materialized.

In addition to diplomatic pushback, the administration has undertaken a series of initiatives intended to isolate China militarily and limit its strategic options. In South Asia, for example, Washington has abandoned its past position of maintaining rough parity in its relations with India and Pakistan. In recent years, it's swung sharply towards a strategic alliance with New Dehli, attempting to enlist it fully in America's efforts to contain China and, presumably, in the process punishing Pakistan for its increasingly enthusiastic role in the Belt and Road Initiative.

In the Western Pacific, the U.S. has stepped up its naval patrols and forged new basing arrangements with local powers -- all with the aim of confining the Chinese military to areas close to the mainland. In response, Beijing has sought to escape the grip of American power by establishing miniature bases on Chinese-claimed islands in the South China Sea (or even constructing artificial islands to house bases there) -- moves widely condemned by the hawks in Washington.

To demonstrate its ire at the effrontery of Beijing in the Pacific ( once known as an "American lake"), the White House has ordered an increased pace of so-called freedom-of-navigation operations (FRONOPs). Navy warships regularly sail within shooting range of those very island bases, suggesting a U.S. willingness to employ military force to resist future Chinese moves in the region (and also creating situations in which a misstep could lead to a military incident that could lead well, anywhere).

In Washington, the warnings about Chinese military encroachment in the region are already reaching a fever pitch. For instance, Admiral Philip Davidson, commander of U.S. forces in the Pacific, described the situation there in recent congressional testimony this way: "In short, China is now capable of controlling the South China Sea in all scenarios short of war with the United States."

A Long War of Attrition

As Admiral Davidson suggests, one possible outcome of the ongoing cold war with China could be armed conflict of the traditional sort. Such an encounter, in turn, could escalate to the nuclear level, resulting in mutual annihilation. A war involving only "conventional" forces would itself undoubtedly be devastating and lead to widespread suffering, not to mention the collapse of the global economy.

Even if a shooting war doesn't erupt, however, a long-term geopolitical war of attrition between the U.S. and China will, in the end, have debilitating and possibly catastrophic consequences for both sides. Take the trade war, for example. If that's not resolved soon in a positive manner, continuing high U.S. tariffs on Chinese imports will severely curb Chinese economic growth and so weaken the world economy as a whole, punishing every nation on Earth, including this one. High tariffs will also increase costs for American consumers and endanger the prosperity and survival of many firms that rely on Chinese raw materials and components.

This new brand of war will also ensure that already sky-high defense expenditures will continue to rise, diverting funds from vital needs like education, health, infrastructure, and the environment. Meanwhile, preparations for a future war with China have already become the number one priority at the Pentagon, crowding out all other considerations. "While we're focused on ongoing operations," acting Secretary of Defense Patrick Shanahan reportedly told his senior staff on his first day in office this January, "remember China, China, China."

Perhaps the greatest victim of this ongoing conflict will be planet Earth itself and all the creatures, humans included, who inhabit it. As the world's top two emitters of climate-altering greenhouse gases, the U.S. and China must work together to halt global warming or all of us are doomed to a hellish future. With a war under way, even a non-shooting one, the chance for such collaboration is essentially zero. The only way to save civilization is for the U.S. and China to declare peace and focus together on human salvation.

Michael T. Klare, a TomDispatch regular , is the five-college professor emeritus of peace and world security studies at Hampshire College and a senior visiting fellow at the Arms Control Association. His most recent book is The Race for What's Left . His next book, All Hell Breaking Loose: Climate Change, Global Chaos, and American National Security , will be published in 2019.

[Mar 04, 2019] As far as "economic" war, China has been fighting one for decades. It's called competing and trying to do the best to improve your people's lot.

Mar 04, 2019 | www.unz.com

Godfree Roberts , says: February 18, 2019 at 3:41 am GMT

A recent Asia Society conference asked how we should compete with China. https://asiasociety.org/northern-california/made-china-2025-policy-behind-rhetoric

The genuinely expert panelists could not articulate America's demands beyond the familiar 'level playing field' that America created by shackling China with uniquely humiliating conditions before admitting it to the WTO.

Today, China generates 20% of global GDP (the US 15%), its imports and exports are in balance, its currency fairly valued, its economy one third larger and growing three times faster than America's and it produces essential technology that America needs and cannot provide.

It is almost impossible to imagine a war scenario that the US could win, short of China invading America.

Alfa158 , says: February 18, 2019 at 5:31 am GMT
Excellent article Mister Klare, but would like to raise a few quibbles.

1) As far as "economic" war, China has been fighting one for decades. It's called competing and trying to do the best to improve your people's lot. The US is finally starting to fight back but some of it's measures are inappropriate and/or ineffective.

2) As far as the US trying to confine the Chinese military to its own region, I really haven't seen that the Chinese military is particularly interested in operation outside their own region anyway. It seems to be focused on protecting China and its own neighborhood and interests, and the Chinese aren't stupid enough to bleed away their wealth and blood in distant misadventures.

3) I'd gotten the impression from the Deep State's rhetoric that they are much hotter on fighting a shooting war with Russia than with China. In an extended struggle, as long as it doesn't go nuclear, US chances are much better against a Russia whose economy is only a fraction of China's.

MEFOBILLS , says: February 18, 2019 at 6:06 am GMT
Keynes says this, "All trade is only barter." The Wall Street/China Gambit is key to understanding today. Clinton signed MFN trade status with China, screwing over NAFTA. Those Zenith TV's that were supposed to be made in Mexico became Chinese made electronics.

Balanced trade was also thrown out the window, as Wall Street was in on the gambit. Trade in goods was unbalanced, and America supplied dollars to China to make up the difference. China then recycled those mercantile won dollars back to the U.S. to buy Tbills, helping keep interest rates low, and acting as a prime variable in forming U.S. housing bubble. Returning dollars then spun out into the American economy, so American's could buy more Chinese goods from transplanted American factories.

The wall street China gambit turned mainstreet American's into Zeros, while wall street became heroes.

Any discussion of China current economic status cannot overlook the role of Wall Street exporting of jobs, to then get wage arbitrage. Immigrating third world people into America is also a function of this "finance capitalism" as it wants wage arbitrage from third world labor as well.

Finance Capitalism in turn is part of Zion and Atlantacism. International credit "banking" will send its finance capital anywhere in the world to get the lowest price. In the case of China, overhang of communist labor in the mid 90's was available to make things, and then export Chinese made goods back to U.S. (at the China price.)

China still uses Atlantic doctrine, where raw materials come in by ship, and finished goods with increment of production value add leave by ship. (Value add is key element to making any economy thrive. Just extracting raw materials turns a country into Africa, witness the attempt at turning Russia into an extraction economy in the 90's.)

Note difference in American policy in the 90's: Russia was to become extraction, and China was to become value add. As Tucker Carlson says, America is run by a ship of fools.

For China, "Eurasia" beckons, and raw materials can be had from China's interior and via overland routes. This then is a pivot away from London/Zion Atlantacism (finance capital) and toward industrial capitalism.

In other words, both U.S. and the West have hoisted themselves on their own petard. People that wax poetic about China's gains overlook this important mechanism of "gifting" of our patrimony to China. It is very easy to copy or be a fast follower, it is beyond difficult to invent and create.
Wall Street and greed gave away our patrimony, which was hard won over the ages in order to make wage arbitrage today, and gave away the future.

China uses state banks, and also forgives debts lodged in their state banks. This is actually one of the secret methods used to rope-a-dope on the west. The Chinese economy is not debt laden, and what public debts there are, are lodged in a State Bank, where they can be jubileed or ignored.

The U.S. and the West had better take a long hard look at finance capital method, which uses only "price signals" to make economic decisions, as pricing is main vector from which jobs were exported, and which China cleverly used to climb up its industrial curve. Sovereign money/Industrial Capitalism IS the American System of Peshine Smith and Henry Clay. Atlantacism/Zionism/Finance Capital is not American – the parasite jumped to the U.S. from London.

China is wisely in control of its money power via its state banks and is pivoting away from Atlantacism now that it has served its purpose. The belt and road routes are mostly overland, with some coastal sea routes, and there isn't a thing sea power (((atlantacists))) can do about it.

China has played the game well, but don't overlook the gifting of Western patrimony caused by a false neo-liberal finance capital economic ideology, which blinds Western adherents.

Anonymous [392] Disclaimer , says: February 18, 2019 at 6:09 am GMT
@joe webb Yeah, so America can topple China and go after Russia immediately afterwards? I don't think the Russians are so stupid.

There is only 1 way Russia survives the 21st century without being broken up and ruined, and that is allying itself with China. The same is true for China.

The only way China can survive intact is to ally itself with Russia.

Pretty simple stuff I am sure each country understands.

Erebus , says: February 18, 2019 at 6:15 am GMT

China generates 20% of global GDP (the US 15%)

On a PPP basis, of course.

China's real economy, of course dwarfs that of the US'.

The author touches on a nuclear trade option China holds over the US that I see little mention of elsewhere. High tariffs are one thing, but a closure of trade in components and raw materials would do far more than

endanger the prosperity and survival of many firms that rely on Chinese raw materials and components.

Should China block exports of everything other than finished goods to the US, almost every US factory would close due to lack of parts and materials. The time and investment required to rebuild/replace supply chains in a JIT world means much of what's left of America's real economy would disappear within weeks.

What then?

Unlike Russia, the US is highly vulnerable to targeted sanctions. American trade negotiators are apparently oblivious to this. I find that very weird.

Wally , says: February 18, 2019 at 6:36 am GMT
author Klare said: "The media and many politicians continue to focus on U.S.-Russian relations, in large part because of revelations of Moscow's meddling in the 2016 American presidential election and the ongoing Mueller investigation."

– What "revelations"? "What meddling"?

– He tipped his hand right off the bat. Klare is just another run of the mill Communist with a case of the Trump Derangement Syndrome, complete with Communism's favorite scam, 'global warming'.

Klare said: "Ostensibly, the aim of President Trump's May 2018 decision to impose $60 billion in tariffs on Chinese imports (increased in September to $200 billion) was to rectify a trade imbalance between the two countries "

– No, the aim is to encourage China to removes it vastly more & extreme tariffs on US goods & services.

Klare said: " continuing high U.S. tariffs on Chinese imports will severely curb Chinese economic growth and so weaken the world economy as a whole, punishing every nation on Earth, including this one. High tariffs will also increase costs for American consumers and endanger the prosperity and survival of many firms that rely on Chinese raw materials and components."

– Nonsense, all China needs to do is remove it's many times over more severe tariffs.

– If the US's lesser tariffs on Chinese goods / services 'hurt the US', then why don't China's massive tariffs on US goods / services hurt China?

And to think some take this fraud, Klare, seriously.

Biff , says: February 18, 2019 at 7:17 am GMT
It was all a really great, intriguing article, but then it morphed into a dreamworld at the end.

The only way to save civilization is for the U.S. and China to declare peace and focus together on human salvation.

Humans aren't ready for peace or salvation, and anybody that has promoted such a thing is readily shot dead – Gandhi, John Lennon, MLK, Jesus.

"Love thy neighbor" "Give peace a chance"

"Fuck you! Bam!"

Humans are not ready.

Anonymous [370] Disclaimer , says: February 18, 2019 at 7:24 am GMT

The media and many politicians continue to focus on U.S.-Russian relations, in large part because of revelations of Moscow's meddling in the 2016 American presidential election and the ongoing Mueller investigation.

Eh? What revelations?

Cyrano , says: February 18, 2019 at 7:39 am GMT
It's not the economy stupid. According to many "experts" on this site, since the US economy and military expenditures are 10 times bigger than Russia's, it seems "logical" to those experts that the US army is 10 times better. I would argue that not only is not 10 times better, it's not even equal to Russia's army. Again, according to the same types of "experts" Russia's economy is the size of Italy. Why don't then someone break the good news to Italy and encourage them to go to war with Russia? Since their economies are equal – it seems that Italy stands a fair chance of beating Russia, thus eliminating the need of the 10 times superior army to fight them. The moronity on this site, man – it's unbelievable.
tamo , says: February 18, 2019 at 7:49 am GMT
@joe webb You sound like a failed proctologist in the crumbling Honkiedom.
Franklin Ryckaert , says: February 18, 2019 at 8:40 am GMT
China is not suffering from massive degeneration as the US is. Instead of trying to prevent China from becoming a leading nation of the world, why could the US not accept China's coming prominence and concentrate on strengthening its own population ? Unlike the US, China is not interested in "ruling the world", it is only interested in expanding its economy. For the rest, it is dedicated to stability and cooperation. No threat to the world at all, except for some compulsive hegemonists in the Pentagon.
HiHo , says: February 18, 2019 at 11:05 am GMT
This article is pure propaganda and as such is based upon lies, misconceptions and pure fantasy.
If there already is a war it is all in the minds of Anericans, and they have already lost that war because America needs allies and can only create enemies amongst people that were its friends.
Europe will join with Russia as soon as it can get away from the US bully. That means 550million Europeans will join 160 million Russians. 710 million people with Russian technology and Chinese investment (China already runs Btitain's North Sea gas), will produce an economic power that will humiliate the USA at every turn.
All of South America wants to break with the US, the entire Orient hates the US. America is actually doing to Africa what the US accuses Russia and China of doing.
If there really is a war between the US and China then the US has already lost it. The rest of the world wants only one thing: the absolute collapse of the entire US. Everyone hates the US. No one will ever support you US dictators and bullies 100%.
You stab everyone in the back sooner or later and your only interest is supporting the fascist and racist Israel that is genociding the true Semites, the Palestinians.

I'm amazed Fred Unz publishes this sort of trash. It is unadulterated lies, brainless stupidity and total hog wash. Pure drivel.

Counterinsurgency , says: February 18, 2019 at 11:19 am GMT
The obvious:

It might be a bit harder than that.

It is often said that, had the Western and Eastern Europeans formed a coalition rather than fight WW I, they would still be dominant.
And if I had wings, I could fly to the moon.
The Eastern Europeans had never accepted the Western Enlightenment (still haven't), and to have done so would have destabilized their family structure -- the deep structure of their society -- exactly as it has finally destabilized ours, today. The nature of authority and organization in Eastern Europe differed considerably from that of Western Europe. Their forms of organization were different enough to make integration impossible, and perhaps to make formation of a coalition impossible.

China's organizational forms, family structure, and and social assumptions in general differ even more from the present day form of the Western Enlightenment than did those of East Europe c.a. AD 1900.

It's at times like these we get to test the assumption that reason and fear of death can lead to agreement on a modus vivendi.

Counterinsurgency

mikemikev , says: February 18, 2019 at 11:53 am GMT
@Alfa158

In an extended struggle, as long as it doesn't go nuclear, US chances are much better against a Russia whose economy is only a fraction of China's.

I wonder how their economy would look after a week of strategic bombing.

Shaun , says: February 18, 2019 at 1:28 pm GMT
@Biff I forget, who shot Jesus?
Ilyana_Rozumova , says: February 18, 2019 at 1:36 pm GMT
China is now PAC-man of the world.
DESERT FOX , says: February 18, 2019 at 1:42 pm GMT
I will never believe the Zionist controlled U.S. will go to war with China as long as one U.S. company remains in China and damn near all the major U.S. companies are in business in China, this is a ploy for the zionist controlled MIC to loot the America taxpayer!
JC , says: February 18, 2019 at 2:18 pm GMT
I didnt read the article but I dont think china needs the US for anything they are well on their way to be the dominant world power the US and ist zionist occupied government are losers the zionists want never ending wars which stupid USA has done,,china and all the rest will eventually dump the rothchild banking system and form its own which will in all likely hood benefit more than the zionist one does
WHAT , says: February 18, 2019 at 2:20 pm GMT
@HiHo Ron probably has a quota to fill. Reed gets his scribbles in by the same token, I bet.
WHAT , says: February 18, 2019 at 2:22 pm GMT
@mikemikev >m-muh bombers

It will be fine, chinese know where to buy AA complexes that actually work.

onebornfree , says: Website February 18, 2019 at 2:36 pm GMT
No mention of an ideological battle, and no wonder, as "the Chinks" et al have apparently already won that one, as evidenced by the fact that the last US general election was merely yet another idiotic, meaningless [ yet highly entertaining], cat fight over blue socialism versus red socialism.

The US vs China trade war is just another power/domination battle scam between two competing, wholly criminal orgs, both totally against anything ever resembling truly free trade ..nothing more.

And so it goes .

The "America Is Not A Socialist Country" Scam :
http://onebornfree-mythbusters.blogspot.com/2019/02/onebornfrees-special-scam-alerts-no-87.html [bottom of page]

Regards, onebornfree

Rich , says: February 18, 2019 at 2:37 pm GMT
"The US and China must work together to halt global warming or all of us are doomed to a hellish future." Really? If this doesn't prove this guy is a lefty shill, nothing does. Even the clowns raking in grants and trying to impoverish everyone with higher taxes have seen the light and have been saying "climate change" lately. Many scientists are now arguing that we may be headed into a new cooling period rather than a "hellish" warming period that brought us so much prosperity. This "global warming" religion with its hockey stick icons and polar bear mythology is worse than the Heaven's Gate religion.
ThreeCranes , says: February 18, 2019 at 2:53 pm GMT
@HiHo

"The rest of the world wants only one thing: the absolute collapse of the entire US. Everyone hates the US. No one will ever support you US dictators and bullies 100%.
You stab everyone in the back sooner or later and your only interest is supporting the fascist and racist Israel that is genociding the true Semites, the Palestinians."

Well yes. As history has shown, occupation and rule by Jahweh's Chosen People tends to bring this fate down upon the host country.

Ned Ludlam , says: February 18, 2019 at 2:59 pm GMT
Oh, for Pete's sake:
1. It will always be China+Russia vs. the US. The EU, site of WWIII, will just soil itself.
2. The Debt Bubble US economy will collapse. At some point. Changes every calculation.
3. The US will devolve into a state of civil war. Of some sort. Paralyze the place.

Momentum is with China and Russia. The US is sliding into history's toilet.

Just give it a few more years. And the whole world sees and knows it. The whole world can get along very well without the US. And would very much like that to be.

therevolutionwas , says: February 18, 2019 at 3:09 pm GMT
Global warming my azz! But the rest of it rings pretty true. If nukes arn't used, Russia and China will win this war simply because they have the gold now and the US has spread its fiat petro dollar all over the world which will come back big time to bite them. That is if China and Russia are smart enough to go on a gold exchange standard.
MEFOBILLS , says: February 18, 2019 at 3:11 pm GMT
@Cyrano

since the US economy and military expenditures are 10 times bigger than Russia's, it seems "logical" to those experts that the US army is 10 times better. I would argue that not only is not 10 times better, it's not even equal to Russia's army.

I would argue the same.

Russia is a land power. This means using a land army and area denial. Russia does not need to power project with a blue water Navy and she does not follow Atlantacist doctrine.

Atlantacist doctrine got its start when our (((friends))) evolved the method during the Levantine Greek City State period, where our tribal friends would be stationed in various entrepot cities ringing the Mediterranean. They would use their tribal connections to Launder pirated goods, and to push their "international" usurious money type, which in those days was silver. Simultaneously they were taking rents on their secret East/West mechanism, whereby exchange rates between gold and silver were exploited. Gold was plentiful in India and Silver more plentiful in the West, so the Caravan's took arbitrage on exchange rates as silver drained east and gold drained west.

The U.S. inherited Atlanticist method after WW2. The U.S. is not an island economy like England – it does not need to go around the world beating up others to then extract raw materials. The U.S. is actually more like Russia in that U.S. can afford to have economic autarky and be independent. The U.S. does not need to power project with a blue water navy, despite the false narrative (((inheritance))) passed down to us, especially after WW2. Nobody likes being punked with false narrative.

U.S. military expenditures are so heavy because of this tendency of finance capital to search the world for gains, and this means posting overseas military bases, which in turn are expensive to operate. Russia only has a "close in" defensive posture of area denial. This is far less expensive than power projecting.

Also, GDP figures are misleading. In the U.S. if housing prices go up it reflects in GDP growth, when in reality – the house didn't improve. GDP figures are lies. If finance takes 50% cut of the economy, they are only pushing finance paper back and forth at each other this is not the real economy, but it shows up in GDP because finance paper is an "asset".

Russia's economy is much larger than their GDP, probably it is closer to Germany's in real terms. Real terms = real economy = the making of goods and services.

China is not America's natural ally, Russia is. Atlantacist doctrine sold America's patrimony to China for cheap, and then the ((international)) will just jump to another host.

America has been parasitized by false doctrine and the output is thus that of an infected brain – an output that is crazy. Finance plutocracy typically will not let go willingly, but has to be removed forcefully.

jeff stryker , says: February 18, 2019 at 3:22 pm GMT
Russia is a country of vodka drunks and Dubai prostitutes run by a syndicate of Israel oligarchs and ex-KGB who kill their journalists in foreign countries.

China is dependent on outsourcing and if the US factories were to withdraw tomorrow the Chinese economy would take a huge hit.

NoseytheDuke , says: February 18, 2019 at 3:27 pm GMT
@Erebus The US is vulnerable in so many other ways too, see how fast the store shelves empty just on the news of an approaching big storm. Panic buying is rife and some people keep minimal food available at home. I know people who have to stop at an ATM to get $20. All kinds of vital distribution of food, water, power, fuel and more seems to pass through a myriad of often vulnerable bottle-necks real or virtual. Easy targets for low cost, low tech sabotage teams I'd think.

I'm inclined to think also that this threatening hysteria possibly is a deep state psy-op designed to prime Americans prior to the enactment of some sort of "democracy" modifications.

Sean , says: February 18, 2019 at 3:28 pm GMT
America is the most powerful country solely because it has the most powerful economy in the world, and that was in no small measure due to America's abundance of arable land, navigable waterways, natural resources ect ect. . In a few decades China has rocketed close to US level and is in a global hegemon trajectory solely on the quality and size of its population . There is not much doubt about the outcome of any competition between China and the West, especially as much of the profits of the ruling class in the West has come from offshoring and investment in China and their economy of scale production suppressing labour's power in the West. The Chinese and their Western collaborators will just wait Trump out. Trump is a populist not a creature of the Deap State alarmed at China's rise. The leading strategists of America's foreign policy establishment still don't realise what they are dealing with in China.

Perhaps the greatest victim of this ongoing conflict will be planet Earth itself and all the creatures, humans included, who inhabit it. As the world's top two emitters of climate-altering greenhouse gases, the U.S. and China must work together to halt global warming or all of us are doomed to a hellish future.

Better to reign in hell. Anyway, there is hardly a tree left in China and since 2006, China has been the world's largest emitter of CO2 annually and though they pay lip service they accept no binding target for reduction; quite the opposite.

Even if their present slow-burn conflict may not produce the immediate devastation of a conventional hot war, its long-term consequences could prove no less dire.

The manufacturing should be done in the most advanced regions of Earth ie the West, because that is where the technology and will exists to protect the environment. China is trying to churn out cheaper goods and does not care what damage they do in cutting environmental corners.

https://en.wikipedia.org/wiki/Climate_change_in_China
China still supports the "common but differentiated responsibilities" principle, which holds that since China is still developing, its abilities and capacities to reduce emissions are comparatively lower than developed countries'. Therefore, its emissions should not be required to decrease over time, but rather should be encouraged to increase less over time until industrialization is farther along and reductions are feasible

In other words the global environment is going to continue to be ripped apart like a car in a wrecking yard by China. "Industrialization is farther along" is obviously Chinese speak for "when China is able to dominate the world with enormous productive capacity and we do not even have to pay lip service any more".

In today's world, however, where great-power armed combat could possibly end in a nuclear exchange and mutual annihilation, direct military conflict is a distinctly unappealing option for all parties. Instead, governing elites have developed other means of warfare -- economic, technological, and covert -- to achieve such strategic objectives. Viewed this way, the United States is already in close to full combat mode with respect to China.

No, the appeal of a real war will increase precipitously for any clear loser in the economic competition who has a rapidly declining military advantage (especially in thermonuclear first strike capacity due to proximity fuses and sub location tech), and we all know who that is going to be. A shooting war will come, and the sooner it comes the better for the whole world. Reassuring Russia that it will not be subjected to the same treatment by the West at some point in the future will be the main problem inhibiting the coming military take down (and nuking if necessary) of China.

NoseytheDuke , says: February 18, 2019 at 3:30 pm GMT
@Shaun Eric Clapton, surely. Or was it Eric Idle? I forget. Who was it?
Reuben Kaspate , says: February 18, 2019 at 3:32 pm GMT
As to bringing in Hindoos and Pakis into to the America-China conflict with a singular example of the demand for defense related technology transfer by the former

India is a mediocrity but Pakistan is a nightmare for all concerned, given that after imbibing religious mumbo jumbo from moronic Arabs, with which havocs were created in Afghanistan via neoconnish America, now they are fellating uncircumcised Chinese for crumbs the ungodly Chinese will play the idiotic Pakis like a fiddle to the detriment of the West!

[Mar 02, 2019] US Said to Ready Final China Trade Deal as Hawks Urge Caution

Mar 02, 2019 | www.bloomberg.com

Bloomberg

Negotiations with Beijing to address structural economic reforms are taking place on a track that's separate from the talks about the quantity of American products the Chinese may agree to buy to reduce the U.S. trade deficit, one of the people briefed on the matter said.

The Chinese have offered to ramp up purchases of American goods by $1.2 trillion over six years, according to the person. It's still unclear how Beijing would follow through on those purchases if retaliatory tariffs remained in place and other trading barriers aren't removed, the person added. China bought $130 billion in U.S. goods in 2017, according to U.S. figures.

After several rounds of face-to-face meetings between U.S. and Chinese officials since last year, the sides are now in regular contact via phone and video-conference to hammer out the details of a deal, according to the person.

The U.S. Trade Representative's office said Thursday it will publish a notice in the Federal Register delaying the increase of tariffs on Chinese imports until further notice. Trump had previously planned to raise tariffs on March 1, but on Sunday dropped the threat amid progress at the negotiating table.

[Feb 11, 2019] Beware Proposed E-Commerce Rules naked capitalism

Notable quotes:
"... By Chakravarthi Raghavan, Editor-emeritus of South-North Development Monitor SUNS, is based in Geneva and has been monitoring and reporting on the WTO and its predecessor GATT since 1978; he is author of several books on trade issues; and Jomo Kwame Sundaram, is Senior Adviser with the Khazanah Research Institute, and was . an economics professor and United Nations Assistant Secretary General for Economic Development. Originally published at Inter Press Service ..."
"... Data governance infrastructure ..."
"... Enterprise competition ..."
"... Consumer protection ..."
"... Trade facilitation ..."
"... Describing what these TNCs are trying to push through as "digital colonialism" seems apt. In contrast to traditional colonialism, characterized as it was by massive investments in manpower and other resources required to conquer far-flung overseas territories, the marginal cost of adding one more overseas territory to a digital colonizers empire is miniscule compared to what old-school colonizers had to pony up to expand their list of colonies. ..."
"... Add to this weak regulatory firewalls in developing countries and market saturation in developed nations, it's obvious why these TNCs are determined to push through an international policy framework that advances their drive to uncover new pockets of growth in the developing world. It's also telling that they're aggressively pursuing this end before developing countries can mount a cohesive defense of their digital sovereignty. "Beware Proposed E-commerce Rules" indeed ..."
Feb 11, 2019 | www.nakedcapitalism.com

Beware Proposed E-Commerce Rules Posted on February 10, 2019 by Jerri-Lynn Scofield By Chakravarthi Raghavan, Editor-emeritus of South-North Development Monitor SUNS, is based in Geneva and has been monitoring and reporting on the WTO and its predecessor GATT since 1978; he is author of several books on trade issues; and Jomo Kwame Sundaram, is Senior Adviser with the Khazanah Research Institute, and was . an economics professor and United Nations Assistant Secretary General for Economic Development. Originally published at Inter Press Service

In Davos in late January, several powerful governments and their allies announced their intention to launch new negotiations on e-commerce. Unusually, the intention is to launch the plurilateral negotiations in the World Trade Organization (WTO), an ostensibly multilateral organization, setting problematic precedents for the future of multilateral negotiations.

Any resulting WTO agreement, especially one to make e-commerce tax- and tariff-free, will require amendments to its existing goods agreements, the General Agreement on Trade in Services (GATS) and the Trade-Related Intellectual Property Rights (TRIPS) agreements. If it is not an unconditional agreement in the WTO, it will violate WTO 'most favoured nation' (MFN) principles.

This will be worse than the old, and ostensibly extinct 'Green Room' processes -- of a few major powers negotiating among themselves, and then imposing their deal on the rest of the membership. Thus, the proposed e-commerce rules may be 'WTO illegal' -- unless legitimized by the amendment processes and procedures in Article X of the WTO treaty.

Any effort to 'smuggle' it into the WTO, e.g., by including it in Annex IV to the WTO treaty (Plurilateral Trade Agreements), will need, after requisite notice, a consensus decision at Ministerial Conference (Art X:9 of treaty) . It may still be illegal since the subjects are already covered by agreements in Annexes 1A, 1B and 1C of the WTO treaty.

Consolidating Power of the Giants

Powerful technology transnational corporations (TNCs) are trying to rewrite international rules to advance their business interests by: gaining access to new foreign markets, securing free access to others' data, accelerating deregulation, casualizing labour markets, and minimizing tax liabilities.

While digital technology and trade, including electronic or e-commerce, can accelerate development and create jobs, if appropriate policies and arrangements are in place, e-commerce rhetoric exaggerates opportunities for developing country, especially small and medium enterprises. Instead, the negotiations are intended to diminish the right of national authorities to require 'local presence', a prerequisite for the consumer and public to sue a supplier.

The e-commerce proposals are expected to strengthen the dominant TNCs, enabling them to further dominate digital trade as the reform proposals are likely to strengthen their discretionary powers while limiting public oversight over corporate behaviour in the digital economy.

Developing Countries Must Be Vigilant

If digital commerce grows without developing countries first increasing value captured from production -- by improving productive capacities in developing countries, closing the digital divide by improving infrastructure and interconnectivity, and protecting privacy and data -- they will have to open their economies even more to foreign imports.

Further digital liberalization without needed investments to improve productive capacities, will destroy some jobs, casualize others, squeeze existing enterprises and limit future development. Such threats, due to accelerated digital liberalization, will increase if the fast-changing digital economic space is shaped by new regulations influenced by TNCs.

Diverting business through e-commerce platforms will not only reduce domestic market shares, as existing digital trade is currently dominated by a few TNCs from the United States and China, but also reduce sales tax revenue which governments increasingly rely upon with the earlier shift from direct to indirect taxation.

Developing countries must quickly organize themselves to advance their own agenda for developmental digitization. Meanwhile, concerned civil society organizations and others are proposing new approaches to issues such as data governance, anti-trust regulation, smaller enterprises, jobs, taxation, consumer protection, and trade facilitation.

New Approach Needed

A development-focused and jobs-enhancing digitization strategy is needed instead. Effective national policies require sufficient policy space, stakeholder participation and regional consultation, but the initiative seeks to limit that space. Developing countries should have the policy space to drive their developmental digitization agendas. Development partners, especially donors, should support, not drive this agenda.

Developmental digitization will require investment in countries' technical, legal and economic infrastructure, and policies to: bridge the digital divide; develop domestic digital platforms, businesses and capacities to use data in the public interest; strategically promote national enterprises, e.g., through national data use frameworks; ensure digitization conducive to full employment policies; advance the public interest, consumer protection, healthy competition and sustainable development.

Pro-active Measures Needed

Following decades of economic liberalization and growing inequality, and the increasing clout of digital platforms, international institutions should support developmental digitization for national progress, rather than digital liberalization. Developing country governments must be vigilant about such e-commerce negotiations, and instead undertake pro-active measures such as:

Data governance infrastructure : Developing countries must be vigilant of the dangers of digital colonialism and the digital divide. Most people do not properly value data, while governments too easily allow data transfers to big data corporations without adequate protection for their citizens. TNC rights to free data flows should be challenged.

Enterprise competition : Developing countries still need to promote national enterprises, including through pro-active policies. International rules have enabled wealth transfers from the global South to TNCs holding well protected patents. National systems of innovation can only succeed if intellectual property monopolies are weakened. Strengthening property rights enhances TNC powers at the expense of developing country enterprises.

Employment : Developmental digitization must create decent jobs and livelihoods. Labour's share of value created has declining in favour of capital, which has influenced rule-making to its advantage.

Taxation: The new e-commerce proposals seek to ban not only appropriate taxation, but also national presence requirements where they operate to avoid taxes at the expense of competitors paying taxes in compliance with the law. Tax rules allowing digital TNCs to reduce taxable income or shift profits to low-tax jurisdictions should be addressed.

Consumer protection : Strong policies for consumer protection are needed as the proposals would put privacy and data protection at risk. Besides citizens' rights to privacy, consumers must have rights to data protection and against TNC and other abuse of human rights.

Competition : Digital platforms must be better regulated at both national and international level. Policies are needed to weaken digital economic monopolies and to support citizens, consumers and workers in relating to major digital TNCs.

Trade facilitation : Recent trade facilitation in developing countries, largely funded by donors, has focused on facilitating imports, rather than supply side constraints. Recent support for digital liberalization similarly encourages developing countries to import more instead of developing needed new infrastructure to close digital divides.

Urgent Measures Needed

'E-commerce' has become the new front for further economic liberalization and extension of property rights by removing tariffs (on IT products), liberalizing imports of various services, stronger IP protection, ending technology transfer requirements, and liberalizing government procurement.

Developing countries must instead develop their own developmental digitization agendas, let alone simply copy, or worse, promote e-commerce rules developed by TNCs to open markets, secure data, as well as constrain regulatory and developmental governments.


Thuto , February 10, 2019 at 6:13 am

Describing what these TNCs are trying to push through as "digital colonialism" seems apt. In contrast to traditional colonialism, characterized as it was by massive investments in manpower and other resources required to conquer far-flung overseas territories, the marginal cost of adding one more overseas territory to a digital colonizers empire is miniscule compared to what old-school colonizers had to pony up to expand their list of colonies.

Add to this weak regulatory firewalls in developing countries and market saturation in developed nations, it's obvious why these TNCs are determined to push through an international policy framework that advances their drive to uncover new pockets of growth in the developing world. It's also telling that they're aggressively pursuing this end before developing countries can mount a cohesive defense of their digital sovereignty. "Beware Proposed E-commerce Rules" indeed

jfleni , February 10, 2019 at 9:23 am

It is still cold in davos, all the more reason to feel carefully, and be very sure that the P-crats are not slipping you "a mickey" in the butt, because they always repeat always do it!

Synoia , February 10, 2019 at 1:23 pm

In Davos in late January, several powerful governments and their allies announced their intention to launch new negotiations on e-commerce.

Why the complete lack of agency? Who are these countries?

If it is not an unconditional agreement in the WTO, it will violate WTO 'most favoured nation' (MFN) principles.

Will it be an Exceptional agreement, by Exceptional Countries?

It may still be illegal since the subjects are already covered by agreements in Annexes 1A, 1B and 1C of the WTO treaty.

Ah, a process of meticulous and unbinding legality, but of law-abidingness, not a trace.

C.Raghavan , February 11, 2019 at 11:42 am

The comment, and questions posed aren't clear. The announcement (widely reported in media) was made to media at Davos after a breakfast meeting, and almost immediately it appeared on WTO website as a "communication" from the members at the breakfast meeting. Beyond "intention" to negotiate, everything else was vague – whether it be issues to be negotiated, where and how etc.

raghavan

Rory , February 10, 2019 at 2:16 pm

Why does this make me think of MERS and how the finance industry diverted at least hundreds of thousands of dollars in transaction recording fees away from local government real estate offices? If popular government is to remain meaningful it had better have in place effective means of enforcing its tax entitlements and the will to do it.

[Feb 09, 2019] Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer

Feb 09, 2019 | economistsview.typepad.com

anne -> anne... , February 07, 2019 at 06:37 AM

http://deanbaker.net/images/stories/documents/Rigged.pdf

October, 2016

Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer
By Dean Baker

The Old Technology and Inequality Scam: The Story of Patents and Copyrights

One of the amazing lines often repeated by people in policy debates is that, as a result of technology, we are seeing income redistributed from people who work for a living to the people who own the technology. While the redistribution part of the story may be mostly true, the problem is that the technology does not determine who "owns" the technology. The people who write the laws determine who owns the technology.

Specifically, patents and copyrights give their holders monopolies on technology or creative work for their duration. If we are concerned that money is going from ordinary workers to people who hold patents and copyrights, then one policy we may want to consider is shortening and weakening these monopolies. But policy has gone sharply in the opposite direction over the last four decades, as a wide variety of measures have been put into law that make these protections longer and stronger. Thus, the redistribution from people who work to people who own the technology should not be surprising -- that was the purpose of the policy.

If stronger rules on patents and copyrights produced economic dividends in the form of more innovation and more creative output, then this upward redistribution might be justified. But the evidence doesn't indicate there has been any noticeable growth dividend associated with this upward redistribution. In fact, stronger patent protection seems to be associated with slower growth.

Before directly considering the case, it is worth thinking for a minute about what the world might look like if we had alternative mechanisms to patents and copyrights, so that the items now subject to these monopolies could be sold in a free market just like paper cups and shovels.

The biggest impact would be in prescription drugs. The breakthrough drugs for cancer, hepatitis C, and other diseases, which now sell for tens or hundreds of thousands of dollars annually, would instead sell for a few hundred dollars. No one would have to struggle to get their insurer to pay for drugs or scrape together the money from friends and family. Almost every drug would be well within an affordable price range for a middle-class family, and covering the cost for poorer families could be easily managed by governments and aid agencies.

The same would be the case with various medical tests and treatments. Doctors would not have to struggle with a decision about whether to prescribe an expensive scan, which might be the best way to detect a cancerous growth or other health issue, or to rely on cheaper but less reliable technology. In the absence of patent protection even the most cutting edge scans would be reasonably priced.

Health care is not the only area that would be transformed by a free market in technology and creative work. Imagine that all the textbooks needed by college students could be downloaded at no cost over the web and printed out for the price of the paper. Suppose that a vast amount of new books, recorded music, and movies was freely available on the web.

People or companies who create and innovate deserve to be compensated, but there is little reason to believe that the current system of patent and copyright monopolies is the best way to support their work. It's not surprising that the people who benefit from the current system are reluctant to have the efficiency of patents and copyrights become a topic for public debate, but those who are serious about inequality have no choice. These forms of property claims have been important drivers of inequality in the last four decades.

The explicit assumption behind the steps over the last four decades to increase the strength and duration of patent and copyright protection is that the higher prices resulting from increased protection will be more than offset by an increased incentive for innovation and creative work. Patent and copyright protection should be understood as being like very large tariffs. These protections can often the raise the price of protected items by several multiples of the free market price, making them comparable to tariffs of several hundred or even several thousand percent. The resulting economic distortions are comparable to what they would be if we imposed tariffs of this magnitude.

The justification for granting these monopoly protections is that the increased innovation and creative work that is produced as a result of these incentives exceeds the economic costs from patent and copyright monopolies. However, there is remarkably little evidence to support this assumption. While the cost of patent and copyright protection in higher prices is apparent, even if not well-measured, there is little evidence of a substantial payoff in the form of a more rapid pace of innovation or more and better creative work....

Tom aka Rusty said in reply to anne... , February 07, 2019 at 08:26 AM
Baker is so repetitive he is hardly worth reading.
anne -> anne... , February 07, 2019 at 06:39 AM
http://cepr.net/publications/op-eds-columns/progressive-taxes-only-go-so-far-pre-tax-income-is-the-problem

February 4, 2019

Progressive Taxes Only Go So Far. Pre-Tax Income Is the Problem
By Dean Baker

In recent weeks, there have been several bold calls for large increases in progressive taxation. First we had Representative Alexandria Ocasio-Cortez (D-NY), often referred to as AOC, proposing a top marginal tax rate on income over $10 million. This sent right-wing talking heads into a frenzy, leading many to show they don't know the difference between a marginal tax rate and an average tax rate. (AOC's 70 percent rate would only apply to an individual's income above $10 million.)

More recently, we had Senator Elizabeth Warren propose a wealth tax that would apply to people with assets of more than $50 million. This tax could have Jeff Bezos sending more than $3 billion a year to the Treasury.

Given the enormous increase in inequality over the last four decades, and the reduction in the progressivity of the tax code, it is reasonable to put forward plans to make the system more progressive. But, the bigger source of the rise in inequality has been a growth in the inequality of before-tax income, not the reduction in high–end tax rates. This suggests that it may be best to look at the factors that have led to the rise in inequality in market incomes, rather than just using progressive taxes to take back some of the gains of the very rich.

There have been many changes in rules and institutional structures that have allowed the rich to get so much richer. (This is the topic of my free book Rigged.) Just to take the most obvious -- government-granted patent and copyright monopolies have been made longer and stronger over the last four decades. Many items that were not even patentable 40 years ago, such as life forms and business methods, now bring in tens or hundreds of billions of dollars to their owners.

If the importance of these monopolies for inequality is not clear, ask yourself how rich Bill Gates would be if there were no patents or copyrights on Microsoft software. (Anyone could copy Windows into a computer and not pay him a penny.) Many other billionaires get their fortune from copyrights in software and entertainment or patents in pharmaceuticals, medical equipment and other areas.

The government also has rules for corporate governance that allow CEOs to rip off the companies for which they work. CEO pay typically runs close to $20 million a year, even as returns to shareholders lag. It would be hard to argue that today's CEOs, who get 200 to 300 times the pay of ordinary workers, are doing a better job for their companies than CEOs in the 1960s and 1970s who only got 20 to 30 times the pay of ordinary workers.

Another source of inequality is the financial sector. The government has aided these fortunes in many ways, most obviously with the bailout of the big banks a decade ago. It also has deliberately structured the industry in ways that facilitate massive fortunes in financial engineering.

There is no reason to design an economy in such a way as to ensure that most of the gains from growth flow upward. Unfortunately, that has largely been the direction of policy over the last four decades.

We can ignore the inequities built into the way we have structured the economy and just try to tax the big winners, as is being proposed. However, there are two major problems with this route, one practical and one political.

The practical problem is that the rich are not stupid. They will look to find ways to avoid or evade the various progressive taxes being proposed. Both AOC and Warren have relied on advice from some top economists in describing their tax proposals, but even the best–designed tax can be gamed. (Is it worth $3 billion a year for Jeff Bezos to remain a US citizen? As a non-citizen he wouldn't pay the wealth tax.)

Gaming the tax system will mean that we will collect considerably less revenue than a static projection would imply. It also will lead to the growth of the tax gaming industry. From an economic standpoint, this is a complete waste. We will have people designing clever ways to try to hide income and wealth, and in some cases getting very rich themselves in the process.

The political problem with going the tax route is that people attach a certain legitimacy to the idea that income gained through the market is somehow rightfully gained, as opposed to say, income from a government transfer program, like food stamps. The rich will be able to win support from many non-rich by claiming that the government has taken away what they have fairly earned.

By contrast, it is much harder for a drug company billionaire to cry foul because a drug developed with public funds, and selling at generic prices, has destroyed the market for his $100,000–a–year cancer drug. In the same vein, CEOs might have a hard time getting sympathy for the complaint that new rules of corporate governance make it easier to shareholders to bring their pay down to earth.

It is great that the rise in inequality seems likely to be a major topic in the 2020 presidential campaign. However, it is important that we think carefully about how best to reverse it.

Fred C. Dobbs , February 07, 2019 at 06:36 AM
Ocasio-Cortez to unveil
Green New Deal to address climate change
https://www.bostonglobe.com/news/politics/2019/02/07/democrats-seek-green-new-deal-address-climate-change/Dw5vKODzgZag4T6jIDHAbO/story.html?event=event25 via @BostonGlobe

Matthew Daly - Associated Press - February 7, 2019

WASHINGTON -- Democrats including Rep. Alexandria Ocasio-Cortez of New York are calling for a Green New Deal intended to transform the U.S. economy to combat climate change and create thousands of jobs in renewable energy.

The freshman lawmaker and veteran Sen. Ed Markey of Massachusetts are teaming up on the plan, which aims to eliminate the U.S. carbon footprint by 2030.

A joint resolution drafted by Ocasio-Cortez and Markey sets a goal to meet ''100 percent of the power demand in the United States through clean, renewable and zero-emission energy sources,'' including dramatic increases in wind and solar power.

A news conference at the Capitol is set for Thursday, the day they introduce the resolution.

While setting lofty goals, the plan does not explicitly call for eliminating the use of fossil fuels such as oil and natural gas, a nod to pragmatism that may disappoint some of Ocasio-Cortez's strongest supporters.

Even so, their Green New Deal goes far beyond the Clean Power Plan proposed by President Barack Obama. President Donald Trump has scrapped Obama's plan, which imposed emissions limits on coal-fired power plants, as a job-killer.

The Democrats are likely to meet resistance to their proposal in Congress, especially in the Republican-controlled Senate. Trump, who has expressed doubts about climate change, also is likely to oppose it.

The resolution marks the first time Ocasio-Cortez and other lawmakers have attached legislative language onto the Green New Deal, a concept that until now has been largely undefined other than as a call for urgent action to head off catastrophic climate change and create jobs.

Several Democratic presidential hopefuls have embraced the idea of a Green New Deal without saying exactly what it means.

Ocasio-Cortez said in a statement that the plan will create ''unprecedented levels of prosperity and wealth for all while ensuring economic and environmental justice and security.'' She calls for a ''World War II-scale mobilization'' that includes high-quality education and health care, clean air and water and safe, affordable housing.

Answering critics who call the plan unrealistic, Ocasio-Cortez says that when President John F. Kennedy wanted to go to the moon by the end of the 1960s, ''people said it was impossible.'' She also cites Franklin D. Roosevelt's New Deal, Lyndon B. Johnson's Great Society and the interstate highway system begun under Dwight D. Eisenhower as examples of American know-how and capability.

While focusing on renewable energy, Ocasio-Cortez said the plan would include existing nuclear power plants but block new nuclear plants. Nuclear power does not emit greenhouse gases, which contribute to global warming.

The resolution does not include a price tag, but some Republicans predict it would cost in the trillions of dollars. They denounced the plan at House hearings on climate change on Wednesday.

The Green New Deal would be paid for ''the same way we paid for the original New Deal, World War II, the bank bailouts, tax cuts for the rich and decades of war -- with public money appropriated by Congress,'' Ocasio-Cortez said.

Government can take an equity stake in Green New Deal projects ''so the public gets a return on its investment,'' she said.

Joe , February 07, 2019 at 07:16 AM
https://www.wirepoints.com/moodys-to-pritzker-new-taxes-could-threaten-to-increase-the-outflow-of-illinois-residents/

New Illinois Gov. J.B. Pritzker got a warning of sorts from Moody's ahead of the governor's first budget address. The rating agency's most recent report* highlighted the usual crises Pritzker must tackle: ballooning pension debts and chronic budget deficits. Moody's rates Illinois just one notch above junk largely due to the state's finances and malgovernance.

Moody's says new revenue likely will be required to achieve stability, as you'd expect, because rating agencies love higher taxes. But for the first time, the agency has included outmigration among its top-three credit concerns. That matters because Pritzker's number one prescription to "fix" Illinois is tax hikes, something that's sure to accelerate Illinois' out-migration trend and further erode the state's tax base.

---------------

Moody's is politely explaining that they are 180 deg out of cycle, the negotiation has been finished, in the past.

Is the new gov confused or is he consciously doing the crawl back step? Whatever, the gov will be confused no longer, he is clearly in crawl back stage, the next chapter in bankruptcy.

It is now all about deciding which industry stays and which goes; a re-agglomeration, the second step of the Hicksonian jump, shift expectations operator; you have to move stuff around according to the agreement.

[Feb 02, 2019] The US has a secret weapon in the trade war

Technological superiority is a weapon and the USA know how to use it.
Notable quotes:
"... Made in China 2025 is the Chinese government's 10-year plan to update the country's 10 high-tech manufacturing industries, which include information technology, robotics, aerospace, rail transport, and new-energy vehicles, among others. ..."
"... Without U.S. semis, China will not be able to process the technology necessary to push forward the Made in China 2025 program. "American chips in many ways form the backbone of China's tech economy," Shah said. ..."
"... The Trump Administration's tariffs on Chinese goods were intended to severely disrupt the Chinese tech-advancement initiative. But Shah says that making U.S. chips more expensive for China could have consequences for the U.S. as well. ..."
"... "Over 50% of Chinese semiconductor consumption is supplied by U.S. firms In 2017, China consumed $138bn in integrated circuits (ICs), of which it only produced $18.5bn domestically, implying China imported $120bn of semis in 2017, up from $98bn in 2016 and $73bn in 2012." ..."
"... If the two leaders are unable to come to some sort of trade resolution at the meeting, U.S. tariffs on over $200 billion worth of Chinese goods will increase from 10% to 25% on January 1, 2019. ..."
"... While US has the upper hand on semis, a trade embargo on semis will (1) slows down China's move towards achieving Made in China 2025, (2) at the same time give China the impetus to rush ahead will all resources available to achieve the originally omitted goal of being self-sufficient in tech skills and technology, and (3) seriously hurt companies like Intel, AMD, Micron, and Qualcom as a huge percentage of their businesses are with China, and with that portion of their business gone, all these companies will end up in a loss and without the needed financial resources to invest into new technology in the near future. ..."
Nov 30, 2018 | www.yahoo.com

https://platform.twitter.com/widgets/follow_button.html?screen_name=heidi_chung&show_screen_name=false&show_count=false

Heidi Chung Reporter , Yahoo Finance November 28, 2018

As trade tensions run hot between the U.S. and China, President Trump might have one key advantage in the trade war, according to Nomura.

Analyst Romit Shah explained that China's dependence on U.S.-made advanced microchips could give Trump the upper hand.

"We believe that as China-U.S. tensions escalate, U.S. semiconductors give Washington a strong hand because the core components of Made in China 2025 (AI, smart factories, 5G, bigdata and full self-driving electric vehicles) can't happen without advanced microchips from the U.S.," Shah said in a note to clients.

BEIJING, CHINA – NOVEMBER 9, 2017: US President Donald Trump (L) and China's President Xi Jinping shake hands at a press conference following their meeting at the Great Hall of the People in Beijing. Artyom Ivanov/TASS (Photo by Artyom Ivanov\TASS via Getty Images)

Made in China 2025 is the Chinese government's 10-year plan to update the country's 10 high-tech manufacturing industries, which include information technology, robotics, aerospace, rail transport, and new-energy vehicles, among others.

One of Made in China 2025's main goals is to become semiconductor self sufficient. China hopes that at least 40% of the semiconductors used in China will be made locally by 2020, and at least 70% by 2025. "Made in China 2025 made abundantly clear China's commitment to semiconductor self-sufficiency. Made in China 2025 will upgrade multiple facets of the Chinese economy," Shah said.

According to Nomura's estimates, China is currently about 3 to 5 years behind the U.S. in dynamic random-access memory (DRAM) chip production. However, Shah explained that if the trade war persists, the consequences could set Chinese chip production behind by 5 to 15 years.

Without U.S. semis, China will not be able to process the technology necessary to push forward the Made in China 2025 program. "American chips in many ways form the backbone of China's tech economy," Shah said.

Consequences for U.S.

The Trump Administration's tariffs on Chinese goods were intended to severely disrupt the Chinese tech-advancement initiative. But Shah says that making U.S. chips more expensive for China could have consequences for the U.S. as well.

One concern centers around intellectual property theft. The Department of Justice (DOJ) has been working hard to punish China for allegedly attempting to commit espionage. For example, the DOJ believes China was attempting to spy on the U.S. through Huawei and asked U.S. allies to drop the Chinese tech equipment maker.

However, while many U.S. chipmakers, such as Advanced Micro Devices ( AMD ), Qualcomm ( QCOM ) and Micron ( MU ), expressed gratitude that the DOJ was intervening to prevent intellectual property theft, the companies are also concerned that it could spark retaliation from their Chinese business partners and result in loss of access to the Chinese market. "Joint ventures, IP sharing agreements and manufacturing partnerships are the price of admission into China, and thus far, companies are playing ball," Shah explained.

Shah essentially calls the Chinese tariffs a double-edged sword. While tariffs will hurt the Chinese if they can't have access to freely source U.S. chips, it could also hurt U.S. chipmakers if they lose their business in China. According to Shah's research, "Over 50% of Chinese semiconductor consumption is supplied by U.S. firms In 2017, China consumed $138bn in integrated circuits (ICs), of which it only produced $18.5bn domestically, implying China imported $120bn of semis in 2017, up from $98bn in 2016 and $73bn in 2012."

Trump and China's President Xi Jinping are scheduled to meet at the G20 summit in Buenos Aires, Argentina, on Thursday for a two-day meeting. If the two leaders are unable to come to some sort of trade resolution at the meeting, U.S. tariffs on over $200 billion worth of Chinese goods will increase from 10% to 25% on January 1, 2019.

"China could source equipment from Europe and Japan; however, we believe there are certain mission-critical tools that can only be purchased from the U.S. We believe that U.S.-China trade is the biggest theme for U.S. semis and equipment stocks in 2019. Made in China 2025 can't happen without U.S. semis, and U.S. semis can't grow without China. We hope this backdrop drives resolution," Shah said.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung .

R

[Feb 02, 2019] The globalization of the technocratic paradigm

Notable quotes:
"... The technocratic paradigm also tends to dominate economic and political life. The economy accepts every advance in technology with a view to profit, without concern for its potentially negative impact on human beings. Finance overwhelms the real economy. The lessons of the global financial crisis have not been assimilated, and we are learning all too slowly the lessons of environmental deterioration. Some circles maintain that current economics and technology will solve all environmental problems, and argue, in popular and non-technical terms, that the problems of global hunger and poverty will be resolved simply by market growth. ..."
Jun 23, 2015 | EconoSpeak

From Encyclical Letter Laudato Si' of the Holy Father Francis, On Care For Our Common Home:

The basic problem goes even deeper: it is the way that humanity has taken up technology and its development according to an undifferentiated and one-dimensional paradigm. This paradigm exalts the concept of a subject who, using logical and rational procedures, progressively approaches and gains control over an external object. This subject makes every effort to establish the scientific and experimental method, which in itself is already a technique of possession, mastery and transformation. It is as if the subject were to find itself in the presence of something formless, completely open to manipulation. Men and women have constantly intervened in nature, but for a long time this meant being in tune with and respecting the possibilities offered by the things themselves. It was a matter of receiving what nature itself allowed, as if from its own hand. Now, by contrast, we are the ones to lay our hands on things, attempting to extract everything possible from them while frequently ignoring or forgetting the reality in front of us. Human beings and material objects no longer extend a friendly hand to one another; the relationship has become confrontational. This has made it easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology. It is based on the lie that there is an infinite supply of the earth's goods, and this leads to the planet being squeezed dry beyond every limit. It is the false notion that "an infinite quantity of energy and resources are available, that it is possible to renew them quickly, and that the negative effects of the exploitation of the natural order can be easily absorbed"

"The technocratic paradigm also tends to dominate economic and political life. The economy accepts every advance in technology with a view to profit, without concern for its potentially negative impact on human beings. Finance overwhelms the real economy. The lessons of the global financial crisis have not been assimilated, and we are learning all too slowly the lessons of environmental deterioration. Some circles maintain that current economics and technology will solve all environmental problems, and argue, in popular and non-technical terms, that the problems of global hunger and poverty will be resolved simply by market growth.

They are less concerned with certain economic theories which today scarcely anybody dares defend, than with their actual operation in the functioning of the economy. They may not affirm such theories with words, but nonetheless support them with their deeds by showing no interest in more balanced levels of production, a better distribution of wealth, concern for the environment and the rights of future generations. Their behavior shows that for them maximizing profits is enough. Yet by itself the market cannot guarantee integral human development and social inclusion. At the same time, we have "a sort of 'superdevelopment' of a wasteful and consumerist kind which forms an unacceptable contrast with the ongoing situations of dehumanizing deprivation", while we are all too slow in developing economic institutions and social initiatives which can give the poor regular access to basic resources. We fail to see the deepest roots of our present failures, which have to do with the direction, goals, meaning and social implications of technological and economic growth."

[Feb 02, 2019] According to the recipes devised by Reagan: why the methods which successfully destroyed the USSR do not work with modern Russia? by Alexey Makurin

Highly recommended!
Slightly edited Goggle translation...
Dominance in technology still represent pretty powerful lever used to damage and possibly subdue Russia. King of technological imperialism.
Notable quotes:
"... As a result, the Soviet and post-Soviet elites adopted the rules established by Washington: they became intermediaries between Western corporations and the wealth of their countries. Russia paid for this deal with the destruction of its industry and the emergence of oligarchs, enriched by mediation. But there were wins. The country has developed large national corporations that have become prominent players on the global map. The same "Gazprom". Over time, Russia has its own ambitions to expand the volume and list of exported goods. ..."
"... In response, 5 years ago, the US led an attack on it, declaring sanctions. ..."
"... - Full and unconditional surrender of Russia in the economy. The West wants through its representatives to manage Russian companies, without intermediaries to enter the Russian domestic market and get the fattest pieces. ..."
"... In addition, in the eighties the USSR lost to the West ideologically. Our society has accumulated a great fatigue from ascetic "socialism" and international expansion with ideological background. The Western model of life and economy began to seem more attractive. ..."
"... -- In the late eighties the Soviet Union accumulated external debts, in full working printing press in order to Supplement the budget and ensure the salary of the people. The planned economy was unable to provide the country with basic goods. And today, private business is able to buy anything and anywhere. Agriculture not only feeds the country on its own, but also has become a major exporter of grain, poultry and pork. The financial system is arranged very rationally: the state debt is minimized and plays a purely technical role, budget revenues exceed expenditures. ..."
"... And from this point of view, the country is again at a crossroads. In 2019, we can see a new wave of the global economic crisis. The first signs of this were already evident at the end of last year, when commodity prices fell sharply and the shares of American companies fell in price. If these trends continue, Russia will not receive easing of sanctions. So, we need to act and strongly non-trivial. ..."
"... It is already clear with whom we can develop further: with the leading Asian countries. At the same time, expanding commodity expansion in foreign markets, it is important to move to a new mercantilism: sell excess, buy only the most necessary, and produce everything else within the country. ..."
www.aif.ru

Article from the newspaper: weekly "Arguments and Facts" № 1-2 09/01/2019

Is the scenario of suffocation of the USSR, carried out by the US 30 years ago, similar to the events that are happening now, and what Russia needs to fear most? "AiF" asked these questions to the Director of the Institute of new society, economist Vasily Koltashov.

How the world has changed

Alexey Makurin," AIF": Looking at the events taking place in recent years, you catch yourself thinking that all this has already happened. The current strategy of suffocation of Russia by America one in one copies the same strategy of times of Reagan. In the eighties, the United States also hampered the construction of a gas pipeline from Siberia to Europe. The fall in oil prices also drained our budget, and defense spending grew. And the army was involved in the conflict in the southern country: Afghanistan. The West deliberately repeats the plan that brought him victory in the cold war?

Vasily Koltashov: it's more of a coincidence. But even if there is some scenario, the game this time is some stupid. In the days of Reagan and Bush senior Americans were more rational, thinner. And now, in everything they do, there is an element of hysteria caused by the need to respond to the complex state of their own Affairs. Compared with the eighties in the us huge public debt and huge bubbles in the stock market, threatening investors ruin. The imbalances that have accumulated in the economy are blocking the development of industrial production. Much other than agriculture and raw material extraction is often expensive and uncompetitive. These problems provoke a conflict not only with Russia, but also with China, with other Eurasian centers of capitalism, which took shape in recent decades.

30 years ago, Western countries revived and developed after the crisis of the seventies. The orbit of influence of the USA included Pakistan, Turkey, China. Now Trump has stopped financing Pakistan. In Turkey, there was an attempt of a coup d'état in which Ankara accused Washington. The Americans are waging a trade war against the Chinese. These and other countries that do not find a common language with the United States, are increasingly trading among themselves. The American press writes about the" Eastern Entente", implying the Eurasian powers.

Increasingly, there are disputes and conflicts between Americans and their European allies, which was unthinkable before. In such a situation, a plan to weaken Russia, similar to the scenario of Reagan advisors, can no longer work.

-- What did the West want, putting pressure on the USSR in the eighties?

- I think the West did not seek to destroy the Soviet Union, but just tried to solved a more utilitarian problem: acquiring new markets for their products. At that time, neoliberal globalization became the main mechanism of economic growth, it was important for the West to draw countries into its orbit, which were previously somehow isolated from the world market. They bought the Russian nomenklatura like they buy local elites in Latin America and tried to concert Russia into Latin American country. They almost succeeded.

How did Ronald Reagan scare the USSR by joking on August 11, 1984?

-- What about Reagan's "evil Empire"statement?

-- It was preparation for the beginning of negotiations from a position of strength. Behind this ideological rhetoric was another meaning: if you continue to maintain its planned economy, closed to free trade, we will begin to destroy it, and if you agree to our terms, we will offer you a deal.

As a result, the Soviet and post-Soviet elites adopted the rules established by Washington: they became intermediaries between Western corporations and the wealth of their countries. Russia paid for this deal with the destruction of its industry and the emergence of oligarchs, enriched by mediation. But there were wins. The country has developed large national corporations that have become prominent players on the global map. The same "Gazprom". Over time, Russia has its own ambitions to expand the volume and list of exported goods.

In response, 5 years ago, the US led an attack on it, declaring sanctions.

- What is their purpose in the current situation?

- Full and unconditional surrender of Russia in the economy. The West wants through its representatives to manage Russian companies, without intermediaries to enter the Russian domestic market and get the fattest pieces.

How Russia has changed

- This time Russia does not give up and attacks itself, as is happening in the same Syria. What changed?

- The country and enterprises are now run by people with a market view of the world who know the value of the wealth they dispose of. It was for Gorbachev that Soviet factories were an abstraction, he did not understand their true value. His concessions to the US and Europe were completely irrational from a commercial point of view. It's impossible now.

In addition, in the eighties the USSR lost to the West ideologically. Our society has accumulated a great fatigue from ascetic "socialism" and international expansion with ideological background. The Western model of life and economy began to seem more attractive. The war in Afghanistan was declared meaningless. And now the Syrian conflict, Russia does not solve a particular ideological goals. The military plays the role of guards of its economic interests. Without any doubt, it would be more difficult for our government to agree with OPEC on limiting oil production, if not for the successes in Syria. This agreement in 2017-2018 allowed to raise oil prices and helped to resume economic growth in Russia.

-- Was it possible for the Soviet leadership to influence world oil prices?

- The USSR, too, nothing prevented to sit down at the negotiating table with OPEC. But that wouldn't change the situation. Saudi Arabia and other oil exporters were then loyal allies of the United States. The West then concentrated all the world's capital, he put the OPEC countries conditions: create comfortable prices for us, and we will invest in your economy.

And today, Saudi capital seeks to play an independent role, Riyadh's relations with Washington have become cooler, and with Moscow, on the contrary, warmer. And the US itself is increasingly supplying hydrocarbons for export: it is predicted that in 2019 they will come out on top in the world for oil production. But this leadership is provided to Americans by expensive shale oil, the extraction of which becomes unprofitable at prices below $ 40 per barrel. So, for the US, very low oil prices are now also unprofitable.

On the other hand, the dependence of the Russian budget on oil and gas today is also higher than 30-35 years ago, when the country had a more powerful industry. This is an additional risk.

-- What new qualities acquired by the Russian economy allow it to successfully withstand Western pressure?

-- In the late eighties the Soviet Union accumulated external debts, in full working printing press in order to Supplement the budget and ensure the salary of the people. The planned economy was unable to provide the country with basic goods. And today, private business is able to buy anything and anywhere. Agriculture not only feeds the country on its own, but also has become a major exporter of grain, poultry and pork. The financial system is arranged very rationally: the state debt is minimized and plays a purely technical role, budget revenues exceed expenditures.

Where the main threats

-- But aren't the military expenditures, which have to be made in the conditions of confrontation with the United States, too high? Will it not be possible that the new arms race will be too much for the country?

- Financing of the defense industry to the detriment of consumer and other civil industries usually occurs in the planned mobilization system, where all the resources of the country are concentrated by the state. And in a market economy, such imbalances appear only during the war, when budget distortions arise and private companies begin to focus more on military orders than on grass-roots demand. There is no such thing in Russia now, although the government's attention to defense capability is growing along with the pressure of the US and its allies.

- Where does the main danger come from in such a situation?

-- Not exactly from the USA. The main threat to Russia is low effective demand within the country. The weakness of the ruble, the low rate of economic growth -- all this is a consequence of the poverty of the mass buyer.

And from this point of view, the country is again at a crossroads. In 2019, we can see a new wave of the global economic crisis. The first signs of this were already evident at the end of last year, when commodity prices fell sharply and the shares of American companies fell in price. If these trends continue, Russia will not receive easing of sanctions. So, we need to act and strongly non-trivial.

With whom will trade? Expert on how Russia can live under sanctions

It is already clear with whom we can develop further: with the leading Asian countries. At the same time, expanding commodity expansion in foreign markets, it is important to move to a new mercantilism: sell excess, buy only the most necessary, and produce everything else within the country. This is a traditional trade on the "method of cat Matroskin", which existed for thousands of years: "To buy something you need, you must first sell something unnecessary." All need to produce themselves.

And it is important to support the Russian buyer. This may be a preferential mortgage loan at 3-5% per annum, which will stimulate demand for housing and the sectors of the economy that are associated with construction. This may be an increase in the number of school teachers, doctors and kindergarten workers. We need an hourly wage to let people know what their time is worth. It is extremely important to have a tax-free minimum income (at least 50 thousand rubles per month). It is necessary to interest migrant workers to live in Russia and leave money in our country, which will help to create new jobs. We need to directly give people money and encourage all kinds of entrepreneurship, release the economic energy of society.

[Feb 02, 2019] Former AOL exec Jean Case faults tech giants for trying to 'own the world'

Notable quotes:
"... Big tech companies have bullied competitors and outrun ethical standards in an effort to "own the world," Jean Case, the CEO of the Case Foundation and a former senior executive at AOL, told Yahoo Finance this week. "Many of those big companies are crowding out new innovations of young upstarts. That's not healthy," she said, in response to a question about Google and Facebook. ..."
Feb 02, 2019 | finance.yahoo.com

Big tech companies have bullied competitors and outrun ethical standards in an effort to "own the world," Jean Case, the CEO of the Case Foundation and a former senior executive at AOL, told Yahoo Finance this week. "Many of those big companies are crowding out new innovations of young upstarts. That's not healthy," she said, in response to a question about Google and Facebook.

"On the technology side, look, things have changed so fast," Case said. "I think we just haven't kept pace with some of the ethics policies and frameworks that we need to put around this stuff...used by millions of millions before thought is given to implications."

Case made the comments in a conversation that aired on Yahoo Finance on Thursday at 5 p.m. EST in an episode of " Influencers with Andy Serwer ," a weekly interview series with leaders in business, politics, and entertainment. In addition to her comments on big tech, Case explained why a woman can be elected president, what National Geographic has done to thrive amid media industry tumult, and how it felt at AOL in the heady early days of the internet.

... ... ...

[Jan 29, 2019] US steps up offensive against China with more "hacking charges" by Mike Head

Notable quotes:
"... Washington Post ..."
"... Sections of the Chinese regime responded belligerently to the accusations. An editorial in the state-owned Global Times ..."
"... The editorial asked: "Assuming China is so powerful that it has stolen technological information for over a decade that is supposedly worth over a trillion in intellectual property, as the US has indicated, then how is it that China still lags behind the US in so many fields, from chips to electric vehicles, and even aviation engines?" ..."
Dec 21, 2018 | www.wsws.org

Further escalating its economic and strategic offensive to block China from ever challenging its post-World War II hegemony, the US government yesterday unveiled its fifth set of economic espionage charges against Chinese individuals since September.

As part of an internationally-coordinated operation, the US Justice Department on Thursday published indictments of two Chinese men who had allegedly accessed confidential commercial data from US government agencies and corporate computers in 12 countries for more than a decade.

The announcement represents a major intensification of the US ruling class's confrontation against China, amid a constant build-up of unsubstantiated allegations against Beijing by both the Republican and Democrat wings of Washington's political establishment.

Via salacious allegations of "hacking" on a "vast scale," every effort is being made by the ruling elite and its media mouthpieces to whip up anti-China hysteria.

The indictment's release was clearly politically timed. It was accompanied by a global campaign by the US and its allies, accusing the Chinese government of an illegal cyber theft operation to damage their economies and supplant the US as the world's "leading superpower."

US Secretary of State Mike Pompeo and Homeland Security Secretary Kirstjen Nielsen immediately issued a statement accusing China of directing "a very real threat to the economic competitiveness of companies in the United States and around the globe."

Within hours, US allies around the world put out matching statements, joined by declarations of confected alarm by their own cyber-warfare and hacking agencies.

The Washington Post called it "an unprecedented mass effort to call out China for its alleged malign acts." The coordination "represents a growing consensus that Beijing is flouting international norms in its bid to become the world's predominant economic and technological power."

The Australian government, the closest ally of the US in the Indo-Pacific region, was in the forefront. Foreign Affairs Minister Marise Payne and Home Affairs Minister Peter Dutton explicitly accused the Chinese government and its Ministry of State Security (MSS) of being responsible for "a global campaign of cyber-enabled commercial intellectual property theft."

Geoffrey Berman, the US attorney for the Southern District of New York, called the Chinese cyber campaign "shocking and outrageous." Such pronouncements, quickly emblazoned in media headlines around the world, destroy any possibility of anything resembling a fair trial if the two men, named as Zhu Hua and Zhang Shilong, are ever detained by US agencies and brought before a court.

The charges themselves are vaguely defined. Federal prosecutors in Manhattan accused the men of conspiracy to commit computer intrusions, wire fraud and aggravated identity theft. Zhu and Zhang acted "in association with" the MSS, as part of a hacking squad supposedly named "APT1o" or "Stone Panda," the indictment said.

FBI Director Christopher Wray called a news conference to issue another inflammatory statement against China. Pointing to the real motivations behind the indictments, he declared: "China's goal, simply put, is to replace the US as the world's leading superpower, and they're using illegal methods to get there."

Coming from the head of the US internal intelligence agency, this further indicates the kinds of discussions and planning underway within the highest echelons of the US political and military-intelligence apparatus to prepare the country, ideologically and militarily, for war against China.

Washington is determined to block President Xi Jinping's "Made in China 2025" program that aims to ensure China is globally competitive in hi-tech sectors such as robotics and chip manufacture, as well as Beijing's massive infrastructure plans, known as the Belt and Road Initiative, to link China with Europe across Eurasia.

The US ruling class regards these Chinese ambitions as existential threats because, if successful, they would undermine the strategic position of US imperialism globally, and the economic dominance of key American corporations.

Yesterday's announcement seemed timed to fuel tensions between Washington and Beijing, after the unprecedented December 1 arrest of Meng Wanzhou, the chief financial officer of Chinese telecommunications giant Huawei, in Canada at the request of the US.

Last weekend, US Vice President Mike Pence again accused China of "intellectual property theft." These provocations came just weeks after the US and Chinese administrations agreed to talks aimed at resolving the tariff and trade war launched by US President Donald Trump.

The Trump administration is demanding structural changes to China's state-led economic model, greater Chinese purchases of American farm and industrial products and a halt to "coercive" joint-venture licensing terms. These demands would severely undermine the "Made in China 2025" program.

Since September, US authorities have brought forward five sets of espionage allegations. In late October, the Justice Department unsealed charges against 10 alleged Chinese spies accused of conspiring to steal sensitive commercial secrets from US and European companies.

Earlier in October, the US government disclosed another unprecedented operation, designed to produce a show trial in America. It revealed that a Chinese citizen, accused of being an intelligence official, had been arrested in Belgium and extradited on charges of conspiring to commit "economic espionage" and steal trade secrets.

The extradition was announced days after the Pentagon released a 146-page document, titled "Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States," which made clear Washington is preparing for a total war effort against both China and Russia.

Trump, Pence and Wray then all declared China to be the greatest threat to America's economic and military security. Trump accused China of interfering in the US mid-term elections in a bid to remove him from office. In a speech, Pence said Beijing was directing "its bureaucrats and businesses to obtain American intellectual property -- the foundation of our economic leadership -- by any means necessary."

Whatever the truth of the spying allegations against Chinese citizens -- and that cannot be assumed -- any such operations would hardly compare with the massive global intrigue, hacking, regime-change and military operations directed by the US agencies, including the National Security Agency (NSA) and its "Five Eyes" partners.

These have been exposed thoroughly by NSA whistleblower Edward Snowden and WikiLeaks founder Julian Assange. Leaked documents published by WikiLeaks revealed that the CIA has developed "more than a thousand hacking systems, trojans, viruses and other 'weaponized' malware," allowing it to seize control of devices, including Apple iPhones, Google's Android operating system, devices running Microsoft Windows, smart TVs and possibly the control of cars and trucks.

In an attempt to broaden its offensive against China, the US government said that along with the US and its Five Eyes partners, such as Britain, Canada and Australia, the countries targeted by the alleged Chinese plot included France, Germany, Japan, Sweden and Switzerland.

Chinese hackers allegedly penetrated managed services providers (MSPs) that provide cybersecurity and information technology services to government agencies and major firms. Finance, telecommunications, consumer electronics and medical companies were among those said to be targeted, along with military and US National Aeronautics and Space Administration laboratories.

Sections of the Chinese regime responded belligerently to the accusations. An editorial in the state-owned Global Times branded them "hysterical" and a warning sign of a "comprehensive" US attack on China.

The editorial asked: "Assuming China is so powerful that it has stolen technological information for over a decade that is supposedly worth over a trillion in intellectual property, as the US has indicated, then how is it that China still lags behind the US in so many fields, from chips to electric vehicles, and even aviation engines?"

The Global Times declared that "instead of adhering to a low-profile strategy, China must face these provocations and do more to safeguard national interests."

The promotion of Chinese economic and militarist nationalism by a mouthpiece of the Beijing regime is just as reactionary as the nationalist xenophobia being stoked by the ruling elite of American imperialism and its allies. The answer to the evermore open danger of war is a unified struggle by the international working class to end the outmoded capitalist profit system and nation-state divisions and establish a socialist society.

Ron Ruggieri13 hours ago

ANY rational person would think : a nation like USA TODAY which can name a different ENEMY every other week is clearly SICK, led by sociopaths. China ? Russia, Iran, North Korea ? Venezuela ? ( all fail to live up to the high moral standards of " OUR democracy " ?)
How are any of these countries a greater threat to YOU than the local Democratic or Republican party hacks ?
If YOU think that so many people hate you , would it not make sense to ask if there is perhaps something wrong with YOU ?
Lidiya17 hours ago
Imperialism means wars, as usual, Lenin was right in his polemics against Kautsky.

[Dec 19, 2018] Trump is neocons hostage and does not control the USA foreign policy. In this circumstances China needs to get tough on casino modul Adelson to get her message heard by Bolton and other neocons

Dec 19, 2018 | www.unz.com

In his recent article "Averting World Conflict with China" Ron Unz has come up with an intriguing suggestion for the Chinese government to turn the tables on the December 1 st arrest of Meng Wanzhou in Canada. Canada detained Mrs. Meng, CFO of the world's largest telecoms equipment manufacturer Huawei, at the request of the United States so she could be extradited to New York to face charges that she and her company had violated U.S. sanctions on Iran. The sanctions in question had been imposed unilaterally by Washington and it is widely believed that the Trump Administration is sending a signal that when the ban on purchasing oil from Iran comes into full effect in May there will be no excuses accepted from any country that is unwilling to comply with the U.S. government's demands. Washington will exercise universal jurisdiction over those who violate its sanctions, meaning that foreign officials and heads of corporations that continue to deal with Iran can be arrested when traveling internationally and will be extradited to be tried in American courts.

There is, of course, a considerable downside to arresting a top executive of a leading foreign corporation from a country that is a major U.S. trading partner and which also, inter alia, holds a considerable portion of the U.S. national debt. Ron Unz has correctly noted the " extraordinary gravity of this international incident and its potential for altering the course of world history." One might add that Washington's demands that other nations adhere to its sanctions on third countries opens up a Pandora's box whereby no traveling executives will be considered safe from legal consequences when they do not adhere to policies being promoted by the United States. Unz cites Columbia's Jeffrey Sachs as describing it as "almost a U.S. declaration of war on China's business community." If seizing and extraditing businessmen becomes the new normal those countries most affected will inevitably retaliate in kind. China has already detained two traveling Canadians to pressure Ottawa to release Mrs. Meng. Beijing is also contemplating some immediate retaliatory steps against Washington to include American companies operating in China if she is extradited to the U.S.

Ron Unz has suggested that Beijing might just want to execute a quid pro quo by pulling the licenses of Sheldon Adelson's casinos operating in Macau, China and shutting them down, thereby eliminating a major source of his revenue. Why go after an Israeli-American casino operator rather than taking steps directly against the U.S. government? The answer is simple. Pressuring Washington is complicated as there are many players involved and unlikely to produce any positive results while Adelson is the prime mover on much of the Trump foreign policy, though one hesitates to refer to it as a policy at all.

Adelson is the world's leading diaspora Israel-firster and he has the ear of the president of the United States, who reportedly speaks and meets with him regularly. And Adelson uses his considerable financial resources to back up his words of wisdom. He is the fifteenth wealthiest man in America with a reported fortune of $33 billion. He is the number one contributor to the GOP having given $81 million in the last cycle. Admittedly that is chump change to him, but it is more than enough to buy the money hungry and easily corruptible Republicans.

In a certain sense, Adelson has obtained control of the foreign policy of the political party that now controls both the White House and the Senate, and his mission in life is to advance Israeli interests. Among those interests is the continuous punishment of Iran, which does not threaten the United States in any way, through employment of increasingly savage sanctions and threats of violence, which brings us around to the arrest of Meng and the complicity of Adelson in that process. Adelson's wholly owned talking head National Security Adviser John Bolton reportedly had prior knowledge of the Canadian plans and may have actually been complicit in their formulation. Adelson has also been the major force behind moving the U.S. Embassy to Jerusalem, has also convinced the Administration to stop its criticism of the illegal Israeli settlements on Arab land and has been instrumental in cutting off all humanitarian aid to the Palestinians. He prefers tough love when dealing with the Iranians, advocating dropping a nuclear bomb on Iran as a warning to the Mullahs of what more might be coming if they don't comply with all the American and Israeli demands.

[Sep 02, 2017] Cutting Iran out of SWIFT, while caused some harm, does not have the effects the USA expected. Russia is probably better prepared now such move and can borrow some Iran experience using smartphones as a substitute to credit cards, at least domestically

Looks like the USA now playing into Chinese hands...
Notable quotes:
"... The USA is accustomed to ignoring the law and pressing ahead when it suits it to do that, but the deciding factor was that sanctions and cutting Iran out of SWIFT were ineffective at achieving US aims. Iran suffered, but it was not stopped, and the whole exercise mobilized feeling against the USA. ..."
Sep 02, 2017 | marknesop.wordpress.com

Warren , September 2, 2017 at 1:58 am

CGTN, Published on 29 Aug 2017

Russia is collaborating with China to create an alternative of SWIFT system for international payments, along with establishing domestic credit card.

Zerg , September 2, 2017 at 7:21 am
They can create alternative for payments with each other but it not alternative because they need swift for interbank exchange with banks in swift system anyway.

Domestically it can be replaced with whatever homebrew solution and not issue, but it needed for interneational tranasactions, this is the point.

And If you declared to be "cut" out of swift, it will not stop you for using it domestically but swift system international banks will just stop any transactions with you by whatewer means.

All this talk is overhyped, will Germany pay for gas by trucks with cash or what. When we at this point – cards is last of your problem. So swift will stay in any case. mir is old news

marknesop , September 2, 2017 at 1:06 pm
The idea was floated to cut Russia out of SWIFT, but it was quickly stepped on by the Americans themselves. Cutting Iran out of SWIFT was a transparently self-interested move by the United States to discourage an oil brokerage which avoided use of the US dollar as a benchmark – don't want people getting ideas. Western states which got on board were sharply rebuked when the EU's General Court ruled that sanctioning two Iranian banks was illegal and that they must be compensated for their losses, as no proof was offered that they were doing business on behalf of 'the regime'.

The USA is accustomed to ignoring the law and pressing ahead when it suits it to do that, but the deciding factor was that sanctions and cutting Iran out of SWIFT were ineffective at achieving US aims. Iran suffered, but it was not stopped, and the whole exercise mobilized feeling against the USA.

You could times that by ten in Russia's case. So they won't do it. But Russia becoming fiscally more self-reliant and the international business community becoming more suspicious of American manipulating are overall good things.

And two large countries agreeing to remove the US dollar from their bi-national trades is a blow to dollar dominance.

Patient Observer , September 2, 2017 at 2:04 pm
Presumably a BRICS SWIFT could be developed to facilitate transactions among the members. It could be part of the effort to reduce the dominance of the US dollar in international trade. Presumably, other countries can be added resulting in more of a global payment system.

As a total novice in such matters, I can state with complete confidence it will be a likely next step in the growing financial power of Russia, China and like-mined nations.

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