The Leverage of Dependency – Chinese Manufacturers Admit Without U.S. Market They Collapse…

An interesting article in the South China Morning Post outlines how Chinese companies producing everything from canned mandarin oranges, to mid and high-tier furniture, cannot sustain a business model without access to the U.S. market.

Their problem?…

In essence, when they established their decades-old business model the overwhelming majority of their manufacturing was/is contingent on U.S. buyers.

Right now those Chinese companies are praying the CCP central government keeps devaluing their currency, because U.S. purchasers, including wholesalers and intermediaries, have told those manufacturers they will not pay the import duties.

Apparently, U.S. corporate buyers are leveraging the pressure applied by President Trump – a remarkable dynamic.

(SCMP) […] “The US client called us last weekend and asked us to pay the additional tariff of 5 per cent. We could not refuse since it was our idea to bid to supply the canned fruit for the supermarkets,” she said. “We have no way to deal with it now. We only hope that the yuan will depreciate in the coming weeks and offset the new tariff. Otherwise, we will lose a lot [of money] on this order.”

If the yuan does not further depreciate by more than 5 per cent, she added, the company will have no choice but to cease exports to the US after October 1.

Exporters have been left blindsided after the US said on Friday that it would raise the tariff rate on US$250 billion of Chinese imports from 25 per cent to 30 per cent from October 1, and raise the planned new tariff rate on US$300 billion of goods from 10 per cent to 15 per cent in two tranches on September 1 and December 15.

This was in response to China’s move earlier on Friday to impose retaliatory tariffs of between 5 and 10 per cent on US$75 billion worth of American products, including soybeans, pork, and, for the first time, crude oil. China also reinstated the 25 per cent penalty duty on imports of US-made cars and car parts, bringing the total tariff on the sector to 40 per cent.

[…] “In the case of medium-and high-end furniture, even with the addition of tariffs, it is still impossible to find substitute markets for our products,” said Xie Jun, a furniture exporter in Haining, a city in Zhejiang province where hundreds of furniture factories make goods for export to the US.

[…] “For Chinese exporters, it is useless to be afraid because there is nowhere to hide. We can only rely on the wisdom and countermeasures of the central government,” he said, adding that as long as Beijing can maintain employment levels and prevent the housing market from collapsing, “we are not afraid”. (read more)

The Eagle and the Arrow – An Aesop’s Fable

An Eagle was soaring through the air. Suddenly it heard the whizz of an Arrow, and felt the dart pierce its breast. Slowly it fluttered down to earth. Its lifeblood pouring out. Looking at the Arrow with which it had been shot, the Eagle realized that the deadly shaft had been feathered with one of its own plumes.

Moral: We often give our enemies the means for our own destruction.

This entry was posted in Big Government, China, Communist, Donald Trump, Economy, Hong Kong, Japan, media bias, President Trump, Trade Deal, Uncategorized, US dept of agriculture, US Treasury, USA, USMCA. Bookmark the permalink.

293 Responses to The Leverage of Dependency – Chinese Manufacturers Admit Without U.S. Market They Collapse…

  1. Zippy says:

    Filmed on October 5, 2018.

    Liked by 4 people

  2. donnyvee says:

    China is our enemy now as much as Japan was in the late 1930’s. There is no doubt in my mind they are planning their version of a Pearl Harbor. And we know from how they fought in Korea that they are not afraid to just waste people to achieve an objective.

    Liked by 3 people

    • De Oppresso Liber says:

      No need to worry too much, donnyvee, because a modern day Pearl Harbor is nearly impossible. I say nearly because I never assume that anything is completely impossible.

      Pearl Harbor occurred because in the 1940’s, technology was almost Stone Age in comparison to today. Modern satellites, radar, and the prevalence of literally thousands of international flights and overseas shipping routes, makes it most probably impossible for the Chicoms to mount such an attack anywhere except through North Korea.

      South Korea is perhaps the most prepared nation on Earth, besides Israel of course, for any attack from its neighbor to the north. Israel is also isolated and surrounded by enemies, but the Israelis do not face anywhere near the possibility of such powerful forces attacking her as does South Korea. But, I digress.

      Xi has internal problems to fear from an economic collapse as well. Is he crazy enough to launch an attack on South Korea? I dunno – but it won’t be a surprise on any level approaching Pearl Harbor. We will see it coming well in advance, through pre-positioning of forces and supplies.

      The Chicoms have no Navy to speak of; they have ONE aircraft carrier (a diesel), and we have TWELVE nuclear powered Nimitz class carriers, despite Ol’ Sparklefarts’ attempts to drydock them all. Our Nuclear submarines (Boomers and Attack boats) are in a class by themselves, and in such a scenario, ground forces are of secondary importance if any.

      Sleep well, donnyvee. Xi can rattle his saber all he wants, because he doesn’t really have much of a saber to begin with.

      Liked by 2 people

      • donnyvee says:

        Hi De. I used Pearl Harbor as a metaphor. I think the initial attack, the Pearl Harbor if you will, will be in the form of a take down of the power grid, the internet, and the banking systems. God help us if they take us down with an EMP.

        Like

        • De Oppresso Liber says:

          Yeah, I caught the metaphor, but still, no way the Chicoms launch a nuke at us, or any type of cyber attack designed to cripple our internet or power grid; they know our response under President Trump (not the sissy-boy Ol’ Sparklefarts) would be both massive and devastating for China as a whole.

          We can destroy every Chicom military asset capable of striking us, plus every economic asset they hold dear, in a matter of hours, if we chose to do so. But, such an attack would ONLY be considered IF the Chicoms went completely bat$h!t crazy and, as you said, launched an EMP strike on us.

          Rest easy, my friend. Expect the 5th column, America hating, domestic enemy media estate to hype everything to the Chicom advantage, of course, but come back here to The Treehouse for a dose of reality.

          Liked by 4 people

      • Shyster says:

        Aircraft carriers are highly susceptible to Chinese silk worm missiles, especially if tipped with tactical nukes and will be the first target in any actual Japan like military move by the Chicoms. I don’t believe that the US has the stomach to nuke population centers in China over the loss of 12 carriers at sea.

        Like

        • max says:

          No stomach for nuking pop. centers ? You serious bro, 5,000 sailors on each of those ships plus the escort force.

          Liked by 1 person

          • ann says:

            Darn right Max. , We protect ours. Ignoring privatize acts is putting a kick me sign
            on our troops . No way.

            Plus, US isn’t invading China.

            All this hullabaloo, and by whom? The pick pocket clan. Cut through the hyperbole, and the fuss is over what? NORMALISING our trade policy, finally. Overdue, deal wiith.

            The principle of reciprocity is win win,: a higher quality of relationship, from micro t9 macro spheres.

            Like

      • Observer says:

        The next Pearl Harbor will be digital. The damage will make the real one look minuscule in proportion. A.I. or gray goo, the possible vectors grow each day.

        Like

    • Ralph Drury says:

      I don’t think you fully understand the picture Treehouse is painting here. The Chinese cannot survive economically without access to the American market, yet you think they are preparing an attack to destroy us? Is that the Chinese version of shooting yourself in the foot, or maybe the old tactic of cutting off your nose to spite your face? Who will buy their cheap junk as the world spends the next 100 odd years digging out from the aftereffects of whatever it is you imagine will happen.

      Liked by 1 person

  3. Gloria Alba says:

    Can you imagine what happens to China when Americans stop buying Chinese junk at Dollar stores, Walmart and Target?

    Liked by 2 people

  4. Brant says:

    Comments about China not able to survive without the US consumer. COC and multinational globullists are fighting tooth and nail for the average citizen not to see they’ve been duped for decades. They cannot allow this curtain to be pulled back.

    We think history is going fast now, if the US citizen realizes this, the change in a 24-48 hour period will be seismic. Trump would likely get 70% of the vote. And no one could follow him without following the same exact line.

    Liked by 1 person

  5. Strelnikov says:

    When you borrow $1000 you owe the bank.

    When you borrow $100,000,000 you own the bank.

    Liked by 2 people

  6. drlou007 says:

    This story should be front-page news, as it confirms exactly what Trump predicted would happen: Chinese manufacturers — who are on the front lines in this China induced trade war, are being forced to eat the tariffs and hope for more devaluation of the yuan. The latter is there only hope. These are the people Xi should be listening to, but as a dictator, he does not have to. Time for China to take a big hit economically and stop China 2025 and the new silk road. We will remain number one in the world.

    Liked by 2 people

  7. dallavise says:

    I’m trying to figure out the numbers. China exports to US is 4% of their economy? Granted, some companies can’t survive w/o US so that would eliminate exports and domestic business, but that’s probably 2% or less. China has 120 of the top 500 companies in the world. I’m being skeptical but only because I want a better understanding. I do know at 350% debt/GDP ratio, things aren’t as stable as they appear(ed). I just don’t understand how China goes away as a world economic superpower if decoupled from US

    Liked by 1 person

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