China imports zero U.S. soybeans in November for first time since trade war started

[OldFatGuy]

Back to the numbers:

more than 1.5 billion Chinese
an economic middle class of 300 million
more than 1 billion living below the poverty line
180 million communists in the party
an economic disparity for the 1%er's that makes the US seem even more egalitarian

Brazil
largest cattle producer in the world
less than 2% of which can be harvested can be delivered to markets because of inadequate transportation networks to the interior
10 times the amount of soybean production compared to the US
less than 1% of which can be harvested can be delivered to markets because of inadequate transportation networks to the interior

Estimated time for which highways, train routes, etc can be developed for transporting more than 30% of potential harvests, 38 years per the Brazil Dept of Interior

China has ended its one child per family policy. Cite the "lonely generation." Yet tho extolled to produce more children the response from young Chinese couples is no, they don't want the responsibility and costs. A social change has succeeded in failure.

Simplistic, yet profound. Nothing is quite what it seems.

 

[Mach]

No. It's not even "IF" he's "TRYING TO"...the net effect however, is the same, because his actions do HAVE the potential to decouple our economy from China, even if it's by accident, and the problem is, we're nowhere near capable of doing such a thing without HUGE pain as a result.
Trump maybe doesn't know he's doing this, but he wouldn't care even if he DID know.

Yeah, it just struck me as crazy. I mean, defending Trump is nutty, but claiming Trump's little tarrif-war is "trying to decouple the U.S. from China" is...some deep crazy I think.

 

[Jetboogieman]

Yes, China would indeed pull a Tianannman Square, and they now have the tools to do it, too.
China now uses a "social credit score" along with an economic credit score, and if your actions are judged to be problematic by the government, your social credit score takes a hit. That means you get fired from a job, can't rent a decent place to live, or hold certain professional certifications or licenses. They can, with a few strokes at a keyboard, destroy your life instantly.

But more importantly, since 1949, China has repeatedly shown its willingness to put down social uprisings with an iron fist.
I don't think that there is enough "muscle" to flex anymore.
Besides, with their trillion dollar investment in their new "silk road" highway system, the deficit would be made up in due time anyway.
That would wind up giving China the power to move their investments away from any dependency on American orders.

For instance, by building up jobs, relations and trade with India and Africa, China can leverage positive growth impacts on both regions in a manner sure to make the American market less relevant to them.

First thing.

The "Social Credit Score" is only an issue with an economy to which you can pull benefits from... It's no longer a problem if the government running it no longer exists because it wrecked it. It is really ****ed up though I think we can both agree.

Second, the willingness of Beijing to use such force again is in doubt, China has changed dramatically and it has not used the same level of force since Tienanmen square because it has not needed to, the economic conditions have largely pacified the masses... But should that change in a significant way, well, stranger things have happened in history.

But since China is now firmly a one man dictatorship again, it may be easier to predict, looking at many things Xinping has said, perhaps I am wrong that he would be more than willing to use any force necessary to preserve the Chinese state as we know it.

The Belt and Road isn't a sure fire thing though, I mean it's a great geo-political play, but even in Africa some people have become weary of Chinese investment and what some African economists have termed as a "debt trap", we'll see whether it bears fruit, but I don't know if it can keep in check some of the larger social issues that could, and I use that word lightly, could, have a destabilizing affect on the country.

 

[Jetboogieman]

It's common sense that a country where half of the men are out of work would be more vulnerable to the rise of an autocrat who provides easy solutions and scapegoats to take the blame.

You're not wrong... The only problem is it already has an autocratic government that's likely to promise easy solutions and will likely have plenty of scapegoats lined up to take the blame.

Germany went from fragile democracy to Dictatorship, China goes from dictatorship to.... Well that's anyone's guess.

 

[OrphanSlug]

This was entirely predictable.

The moment Trump decided on a trade war with China, it was natural for China to look at products they could get elsewhere with almost no trouble as a response.

It is a global economy my friends, suggesting we could could (or should) walk away from China this way ignores the reality of how much has been done over the prior several decades in opening up all these international markets they are part of as well.

It is beyond asinine to suggest that hurting our farmers was a win for Trump.

 

[Checkerboard Strangler]

Yeah, it just struck me as crazy. I mean, defending Trump is nutty, but claiming Trump's little tarrif-war is "trying to decouple the U.S. from China" is...some deep crazy I think.

I don't think it's crazy thinking, I think it may very well precipitate just that.

 

[Checkerboard Strangler]

First thing.

The "Social Credit Score" is only an issue with an economy to which you can pull benefits from... It's no longer a problem if the government running it no longer exists because it wrecked it. It is really ****ed up though I think we can both agree.

Second, the willingness of Beijing to use such force again is in doubt, China has changed dramatically and it has not used the same level of force since Tienanmen square because it has not needed to, the economic conditions have largely pacified the masses... But should that change in a significant way, well, stranger things have happened in history.

But since China is now firmly a one man dictatorship again, it may be easier to predict, looking at many things Xinping has said, perhaps I am wrong that he would be more than willing to use any force necessary to preserve the Chinese state as we know it.

The Belt and Road isn't a sure fire thing though, I mean it's a great geo-political play, but even in Africa some people have become weary of Chinese investment and what some African economists have termed as a "debt trap", we'll see whether it bears fruit, but I don't know if it can keep in check some of the larger social issues that could, and I use that word lightly, could, have a destabilizing affect on the country.

Here's the thing: You and I have been having this "back and forth" conversation, yes?
A lot of business people have been, too...the same kind of conversations, yes?

And my guess is, not many of them can confidently claim that they can guarantee what China WILL or WON'T do, right?
That creates what big business likes to call "uncertainty". Well, as both of us can easily see, this "uncertainty" has had the power to kill a thousand points on the DOW the other day. Yes yes, they had a "sucker's rally" the next day but the trend is still pointing towards an overall bear market for the foreseeable future.

Uncertainty is already, in and of itself, a poison pill.
Now, amplify that uncertainty about a hundred times.

See where I'm going with this? Just the uncertainty alone can be very damaging.
And I firmly believe that China has the power to sow massive uncertainty into American markets with minimum effort, just a few glitches here and there, a few slowdowns elsewhere, a few bureaucratic entanglements somewhere else, just enough to gum up the works for a couple of quarters.

They can sneeze, we all start to catch pneumonia.

 

[Checkerboard Strangler]

You're not wrong... The only problem is it already has an autocratic government that's likely to promise easy solutions and will likely have plenty of scapegoats lined up to take the blame.

Germany went from fragile democracy to Dictatorship, China goes from dictatorship to.... Well that's anyone's guess.

See? There's that "UNCERTAINTY" again

 

[Jetboogieman]

Here's the thing: You and I have been having this "back and forth" conversation, yes?
A lot of business people have been, too...the same kind of conversations, yes?

And my guess is, not many of them can confidently claim that they can guarantee what China WILL or WON'T do, right?
That creates what big business likes to call "uncertainty". Well, as both of us can easily see, this "uncertainty" has had the power to kill a thousand points on the DOW the other day. Yes yes, they had a "sucker's rally" the next day but the trend is still pointing towards an overall bear market for the foreseeable future.

Uncertainty is already, in and of itself, a poison pill.
Now, amplify that uncertainty about a hundred times.

See where I'm going with this? Just the uncertainty alone can be very damaging.
And I firmly believe that China has the power to sow massive uncertainty into American markets with minimum effort, just a few glitches here and there, a few slowdowns elsewhere, a few bureaucratic entanglements somewhere else, just enough to gum up the works for a couple of quarters.

They can sneeze, we all start to catch pneumonia.

You're not wrong mate, you're not wrong.

However, I would argue that it can definitely work both ways, I don't think the Chinese economy is in such a place that it cannot also be damaged by similar action from America, this "trade war" was a skirmish relative to what it could be and both countries would come out of it with severely bloody noses if they went all out.

And there are more than a few domestic cracks in the Chinese economy that could see it have issues, the stock market meltdown in 2015-2016, in which certain actions taken by the government were kind of ludicrous, some of the rhetoric more so, if you had a situation in which there was a large scale economic catastrophe, on the scale of 2008 in China, is the government and the Peoples Bank of China ready for such an event... Time will tell, because it's only a matter of time before something happens.

 

[iguanaman]

You're not wrong... The only problem is it already has an autocratic government that's likely to promise easy solutions and will likely have plenty of scapegoats lined up to take the blame.

Germany went from fragile democracy to Dictatorship, China goes from dictatorship to.... Well that's anyone's guess.

The last thing we want is for China to melt down economically. We don't need to guess about what a disaster that would be for the world economy and the Chinese people. I might be naive but I think building a strong middle class thru capitalism will eventually negate the power of the dictators that control China. They have already abandoned Communism. If we don't get our act together we maybe making the cheap tube socks to sell to the Chinese instead of the other way around. Our middle class is crumbling while theirs is flourishing.

 

[Checkerboard Strangler]

You're not wrong mate, you're not wrong.

However, I would argue that it can definitely work both ways, I don't think the Chinese economy is in such a place that it cannot also be damaged by similar action from America, this "trade war" was a skirmish relative to what it could be and both countries would come out of it with severely bloody noses if they went all out.

And there are more than a few domestic cracks in the Chinese economy that could see it have issues, the stock market meltdown in 2015-2016, in which certain actions taken by the government were kind of ludicrous, some of the rhetoric more so, if you had a situation in which there was a large scale economic catastrophe, on the scale of 2008 in China, is the government and the Peoples Bank of China ready for such an event... Time will tell, because it's only a matter of time before something happens.

I was only saying that China would absorb the hurt politically speaking and they'd be willing to risk it if it means being able to punish us.
There's no question that China would feel pain, they absolutely would, but my point was that the pain wouldn't stop them from doing it anyway, that's all.

I think that the Chinese would "sell it" to their people by packaging it as "a great sacrifice for the future well-being of China", and the decree would go out and the wheels would start tightening the screws.

That's what I mean when I say that "the Chinese might Party Like It's 1949"...I'm using a cute riff on Prince but it's not a New Year's party, it's an ominous signal that they're dead serious about whacking us. If you hear Xi utter anything about "national sacrifice" or "austerity", that's our ass.

 

[Hawkeye10]

The U.S. Department of Agriculture estimates soybean exports of 1.9 billion bushels this year, down from 2.129 billion the previous year and 2.166 billion in 2016-2017.

Soybean outlook: Prices reflect increasing ending stocks | News | agrinews-pubs.com

Not a Hell of a lot of difference really....

 

[Jetboogieman]

I was only saying that China would absorb the hurt politically speaking and they'd be willing to risk it if it means being able to punish us.
There's no question that China would feel pain, they absolutely would, but my point was that the pain wouldn't stop them from doing it anyway, that's all.

I think that the Chinese would "sell it" to their people by packaging it as "a great sacrifice for the future well-being of China", and the decree would go out and the wheels would start tightening the screws.

That's what I mean when I say that "the Chinese might Party Like It's 1949"...I'm using a cute riff on Prince but it's not a New Year's party, it's an ominous signal that they're dead serious about whacking us. If you hear Xi utter anything about "national sacrifice" or "austerity", that's our ass.

I don't think so, I may be overstating my case, but I think a powerful economic downturn would be more detrimental to the Chinese Government than perhaps current thinking suggests, not only that but as a one party dictatorship, Xi has a lot of mouths to feed, an economic downturn means less to put in those mouths, means less support, means division even within the communist party, means even if the government doesn't collapse due to the masses, he may just find himself out on his ass.

But that's just my opinion, time will tell because there is likely to be some sort of economic catastrophe in China sooner or later, self inflicted or not and how the Modern Chinese State responds, well let's review this should it happen.

 

[Hawkeye10]

Food for thought:

Is China buying American soybeans? Washington shutdown keeps traders guessing

Commodity traders are in the dark because of the partial US government shutdown, unable to see daily and weekly reports of agricultural exports to obtain clues as to whether China is following through with promises to buy grain and soy amid the ongoing trade war.

Traders have been anxiously awaiting proof from the US Department of Agriculture (USDA) that China is ramping up purchases of grains and soy from US farmers, who are preparing their spring planting and trying to secure financing for seeds, fertiliser and land rents.

Now, trade experts and grain analysts warn the suspension of the reports is clouding the marketplace and potentially giving an advantage to big grain companies directly involved in the export trade. The government shut down partially at midnight on December 21.

https://www.scmp.com/news/china/dip...g-american-soybeans-washington-shutdown-keeps



This is a real kick in the head to family farmers who usually at this time of year are deciding what to plant next year.

 

[Xelor]

Reference:

• World's largest soybean producers

From the article:

China's soybean imports from the United States plunged to zero in November, marking the first time since the trade war between the world's two largest economies started that China, the world's largest soybean buyer, has imported no U.S. supplies.
​

It doesn't take genius -- but it does take more "brains" than Trump has -- to know that was bound to happen sooner or later. Why? Because soybeans are a commodity; thus the soybean market operates in accordance with the "rules" of perfect competition. (Take your pick from any of the following resources if you aren't keen on the impact of tariffs under perfect competition.)

• Trade Policy Effects with Perfectly Competitive Markets
• Import Tariffs and Quotas Under Perfect Competition
• Protectionist Tariffs
  
  
  
  Calculating the Impact of Protectionist Tariffs
  
  

Because soybeans are commodities, literally tons of perfect substitutes for US soybeans, namely any other nation's soybeans, exist abundantly. Given that Chinese consumers (individual and commercial) are far and away the world's largest buyer of soybeans (indeed, so much so that the market may be monopsonistic), Chinese consumers will simply buy soybeans from whomever offers them at the lowest price or from anyone who accepts a price lower than they must pay to buy beans from US producers. The result is that US producers get "pushed" away from their profit maximization point and start losing money, and losing it fast given that soybeans are perishable and there's not a lot of margin in them to begin with.

How many months of zero orders from Chinese consumers can US producers sustain? I don't know, but I'd wager not many, maybe one or two. Just eyeballing the linked-to chart from the paragraph above, I dare say that the whole RoW's demand for soybeans doesn't sum to China's alone. Accordingly, unless someone figures out something else to do with soybeans besides sell them to Chinese consumers, the US soybean market is about to suffer a huge contraction.


Note:

It's important to note that China's shift to zero US soybeans purchased signals unequivocally that the market status, vis-a-vis the tariff's impact, has moved from the short-run to the long-run.​

 

[danarhea]

The Chinese economy is a debt fueled ponzi scheme, if anything we must decouple to protect ourselves when they face their inevitable crash/recession.

Empowering China and contributing to GDP growth there further empowers them which leads to an enhanced military, growing global influence, and a strengthening global threat to world peace. Would you purchase something or try to enhance the economy of Nazi Germany back in the 40's? The world must no longer be silent and capitulate on China. Their government is evil and is devoid of any kind of benevolent intentions.

So China picked the American model? ::mrgreen:

 

[digsbe]

Here's the thing: You and I have been having this "back and forth" conversation, yes?
A lot of business people have been, too...the same kind of conversations, yes?

And my guess is, not many of them can confidently claim that they can guarantee what China WILL or WON'T do, right?
That creates what big business likes to call "uncertainty". Well, as both of us can easily see, this "uncertainty" has had the power to kill a thousand points on the DOW the other day. Yes yes, they had a "sucker's rally" the next day but the trend is still pointing towards an overall bear market for the foreseeable future.

Uncertainty is already, in and of itself, a poison pill.
Now, amplify that uncertainty about a hundred times.

See where I'm going with this? Just the uncertainty alone can be very damaging.
And I firmly believe that China has the power to sow massive uncertainty into American markets with minimum effort, just a few glitches here and there, a few slowdowns elsewhere, a few bureaucratic entanglements somewhere else, just enough to gum up the works for a couple of quarters.

They can sneeze, we all start to catch pneumonia.

This is precisely why I also believe we need to decouple as much as possible and shift manufacturing to other countries like in Latin America or Southeast Asia. China has the power to do so because we've given it to them through business deals naive of national security and global peace efforts. At any moment China has hundreds of missiles aimed at Taiwan and is rapidly militarizing international waters in the South China Sea to try and gain dominance through force. This should be upsetting to anyone that wants to preserve a peaceful global order.

So China picked the American model? ::mrgreen:

America and western economies have their debt problems, but it's nothing near the debt scheme China has. https://www.forbes.com/sites/panosm...e-war-is-chinas-biggest-problem/#74c662a34c4d

They have artificial GDP growth fueled by debt and shadow loans to bolster economic "demand." IE, take out loans to build a bunch of buildings which increases steel demand and production yet there is no demand for the buildings an in many Chinese cities people cannot afford to purchase them anyway. They use debt to create artificial demand and it will cause havoc to their economy and world markets once it's all reigned in.