‘Even US Would Think Twice Before Messing With Us’: Chinese Media To India

[Tarun Kumar]

India has proven 200KT bombs in its arsenal so China is not 100 times superior to us in nuclear weapons.

 

[pmaitra]

They have almost off loaded everything not much of a ripple? They have acted on their threat now we have to wait for USA to get even (and they will)


Sent from my iPhone using Tapatalk

PRC had $1254.8 billion in October, 2015.
PRC had $1115.7 billion in October, 2016.
So, PRC has offloaded $139.1 billion in the intervening period. This is around 11% of their total bond holdings they had. This does not count the other assets it might hold.

PRC is definitely offloading the US Treasury bonds, but is doing slowly. I guess PRC is using US Treasury bonds to settle debts with other countries. It will not offload everything quickly, because, if it does so, not only will it hurt the US, it will also hurt PRC, as it will not be able to sell or exchange US Treasury bonds for a high rate.

What they are doing is getting rid of US Treasury bonds, as the risks associated with US Treasury bonds, at least as per the Chinese, appear to be increasing, but not increasing quickly enough for PRC to offload all their bonds, and they don't want to contribute to a panic either.

 

[HariPrasad-1]

Currently GM's biggest market is China than US.

Do u suggest to make in India for export to china?

yes...................................

 

[captonjohn]

Same applies to India also. China cannot dare to mess with Indians by thinking they have world's biggest army. Indian army is one of the bravest and professional army and a lot more experienced in fighting with army highly advanced and numerical superiority.

Try messing with India and let time decide who gets their ass kicked.

 

[amoy]

Trade wars in the offing -

Beijing 'Regrets' Washington's WTO Grain Complaint

The U.S. lodged the case on Thursday, charging that Beijing's administration of its tariff-rate quotas (TRQs) for rice, wheat, and corn "breaches China's WTO commitments and undermines American farm exports," the Office of the United States Trade Representative (USTR) said in a statement.

TRQs allow a certain volume of grains to be imported at lower-duty rates every year, and the USTR complained that traders were not given full access to the quotas, despite Chinese domestic prices being higher than global prices, due to Beijing's "opaque and unpredictable" management.

China was the second-biggest importer of U.S. agricultural products in 2015 after Canada, with imports totaling $20.2 billion, down 16.5% from 2014, USDA data showed.

China Files WTO Complaint Against EU, US

China has filed a complaint with the World Trade Organization (WTO) that accuses the United States and the European Union of failing to comply with the international trade body's rules to stop using "surrogate pricing" to calculate anti-dumping tariffs on Chinese imports.

Beijing has complained the approach has led to unfairly high anti-dumping duties on Chinese products and has insisted the practice end by Dec. 11 — the 15th anniversary of the country's accession to the WTO. But some major trading partners, including the U.S., the EU and Japan, have refused to do so.

 

[SANITY]

Name change for Taiwan’s de facto embassy irks China

Taiwan and President Tsai Ing-wen (L) may benefit as Japan and its prime minister, Shinzo Abe,.

TAIPEI – Japan’s de facto embassy in Taiwan said it will change its name next month to make the semi-official organization more recognizable.

Beijing, which regards Taiwan as a renegade province, expressed displeasure with the move.

At a news conference, Chinese Foreign Ministry spokeswoman Hua Chunying called on Japan to “adhere to the one-China principle, properly deal with the Taiwan issue and don’t send any wrong message to Taiwan authorities and the international community. Don’t create new disturbances to China-Japan relations.”

Japan’s organization in Taiwan, the Interchange Association, said in a statement Wednesday that as of Jan. 1 it will be known as the Japan-Taiwan Exchange Association. Its Chinese name has also been changed to add the names of Japan and Taiwan.

“The association will continue to play the role of a bridge between Japan and Taiwan, doing its utmost to move bilateral relations to the next level,” it said.

Taiwan’s Foreign Ministry welcomed the move, saying the new name reflects the organization’s substantive functions in Taiwan and the positive development of bilateral ties. In a statement, the ministry said Taiwan and Japan have maintained a close relationship over the years.

Japan is Taiwan’s third-largest trading partner and Taiwan is Japan’s fourth-largest trading partner. Bilateral trade surpassed $57.9 billion last year.

Tourism between the two countries has been rising. The combined tally of visits to each country came to 5.3 million last year and is projected to top 6 million this year.

Taiwan has been governed separately from mainland China since they split amid a civil war in 1949. The government in Beijing has long tried to diplomatically isolate the self-governed island of 24 million people.

Taiwan and Japan severed diplomatic ties in 1972, one year after the United Nations expelled “the representatives of Chiang Kai-shek” and recognized the People’s Republic of China as “the only legitimate representative of China to the United Nations.”

Seeking to maintain unofficial relations with the Republic of China — the official name of Taiwan — Tokyo established the Interchange Association as its diplomatic mission in Taiwan.

A diplomatic source said that the name change is necessary because few people in Taiwan know what the association is or does.

A poll conducted by the organization this year indicated that only 14 percent of Taiwanese people surveyed said they knew about the association.

A ceremony to reveal the plaque bearing the new name is scheduled for Jan. 3.

 

[Krusty]

Same applies to India also. China cannot dare to mess with Indians by thinking they have world's biggest army. Indian army is one of the bravest and professional army and a lot more experienced in fighting with army highly advanced and numerical superiority.

Try messing with India and let time decide who gets their ass kicked.

China has a large army because it needs it. It has that many potential adversaries. Not to mention, it has to hold down Xinjiang and Tibet. Both of which are huge in area. India has two, so most of our forces will be engaged only against China and Pakistan. We have more than enough for the two.

 

[SANITY]

Taiwan announces US itinerary for President Tsai Ing-wen; China repeats call to block visit

Taiwan President Tsai Ing-wen will transit through the United States during a January visit to allies in Latin America, her office has said, prompting China to repeat a call for the US to block any such stopover.

Ms Tsai's office declined to comment on whether she would be meeting members of US President-elect Donald Trump's team when she travelled to Houston and San Francisco, but the US mission in Taiwan, the American Institute in Taiwan (AIT), said the visit would be "private and unofficial".

PHOTO: China is suspicious of Ms Tsai, who it thinks wants to push for independence. (Reuters)

Mr Trump angered China when he spoke to Ms Tsai this month in a break with decades of precedent and cast doubt on his incoming administration's commitment to Beijing's "one China" policy.

China is deeply suspicious of Ms Tsai, who it thinks wants to push for the formal independence of Taiwan, a self-governing island that Beijing regards as a renegade province, ineligible for state-to-state relations.

China's Foreign Ministry repeated a previous call for the United States not to allow the transit and not send any "wrong signals to Taiwan independence forces".

"We think everyone is very clear on her real intentions," the ministry said, without explaining.

The United States, which switched diplomatic recognition from Taiwan to China in 1979, has acknowledged the Chinese position that there is only "one China" and that Taiwan is part of it.

US transit a long-standing practice: Institute
Ms Tsai is transiting through the United States on her way to and from visiting Honduras, Nicaragua, Guatemala and El Salvador.

She will arrive in Houston on January 7 and leave the following day. On her return, she will arrive in San Francisco on January 13, Presidential Office spokesman Alex Huang said.

The AIT said the transit did not contradict the "one China" policy.

"President Tsai's transit through the United States is based on long-standing US practice and is consistent with the unofficial nature of our relations with Taiwan," said Alys Spensley, acting AIT spokeswoman.

"There is no change to the US 'one China' policy."

Ms Spensley said Ms Tsai's transits would be "private and unofficial". The US State Department said AIT chairman Ambassador James Moriarty would greet Ms Tsai in Houston and San Francisco.

China has claimed sovereignty over Taiwan since 1949, when Mao Zedong's Communist forces won the Chinese civil war and Chiang Kai-shek's Nationalists fled to the island.

Speaking to members of China's largely ceremonial advisory body to parliament on Friday, Chinese President Xi Jinping said next year China would make "unremitting efforts" at unification and developing peaceful relations across the Taiwan Strait, state news agency Xinhua said.

Taiwan had as many as 30 diplomatic allies in the mid-1990s, but now has formal relations with 21, mostly smaller and poorer nations in Latin America and the Pacific and also including the Vatican.

 

[IndianHawk]

Trade wars in the offing -

Beijing 'Regrets' Washington's WTO Grain Complaint


China Files WTO Complaint Against EU, US

Nothing like a trade war . US India are also involved in WTO despute despite all the strategic partnerships of the century drama.

 

[Project Dharma]

Even if it offloads all of it there won't be any impact. One big question who will buy it?? US
government may not(trump a china hater)??

If PRC offloads its Treasury Bonds, it will have a ripple effect. Other countries will follow suit.

In such a case, it will be difficult to find people who are willing to buy it. Those that end up buying it, will do so for a value much less than the face value of the US Treasury Bond.

The end result will be, the value of the US Treasury Bond will crash.

Once that happens, the US Treasury will have difficulty to get the Federal Reserve to print US Dollars. Remember, the Federal Reserve is a private bank, and the Federal Reserve prints the US Dollars. The US Treasury gives US Treasury Bonds to the Federal Reserve and in return the Federal Reserve gives US Dollars to the US Treasury. Now, the Treasury uses these Dollars to pay the bills for the US government.

The US Treasury will not have Dollars to spend if it does not get those Dollars from the Federal Reserve, and the US Treasury will get no Dollars from the Federal Reserve if it cannot sell its Treasury Bonds, which have lost value.

1. If they were to sell all their bonds, where would they park the money? They buy the bonds partly for safety.
2. If they were to sell everything, it would sell below face value in the market. Would they be willing to take the loss?
3. Upon selling everything, as a result of the trade surplus, value of their currency will increase and make their goods uncompetitive.
4. China holds only about 7% of the US debt. The majority of the debt is held by Americans.
5. US Treasury Bonds are the last safe haven left and are in high demand. Even if the Chinese sold them, there are a lot of other takers.

TLDR: China doesn't really have any leverage over the US by virtue of buying US bonds.

If PRC offloads its Treasury Bonds, it will have a ripple effect. Other countries will follow suit.

Doubtful, other countries will jump at buying US Bonds to keep their currency exchange rates competitive.

 

[pmaitra]

1. If they were to sell all their bonds, where would they park the money? They buy the bonds partly for safety.
2. If they were to sell everything, it would sell below face value in the market. Would they be willing to take the loss?
3. Upon selling everything, as a result of the trade surplus, value of their currency will increase and make their goods uncompetitive.
4. China holds only about 7% of the US debt. The majority of the debt is held by Americans.
5. US Treasury Bonds are the last safe haven left and are in high demand. Even if the Chinese sold them, there are a lot of other takers.

1. They can sell their bonds for gold, settling dues, importing raw materials, etc.. Regarding taking loss, I have already explained the balance between risk of holding them and taking a loss for selling them en masse.
2. Upon selling the value of their currency will increase, true, but at the same time, their currency is already artificially undervalued, so it won't matter. They can simply import gold and drive down the value of their currency.
3. PRC holds 1131.9/6038.9=19% of all US Treasury Bonds as of October 2016 (link).
4. US Treasury Bonds are seen as both safe as well as unsafe, depending upon who is the respondent.
5. US Treasury Bonds are in high demand for some people, while others are trying to get rid of them seeing them increasingly at risk. The more Treasury Bonds are offered for sale, the less takers there will be at the current price.

TLDR: China doesn't really have any leverage over the US by virtue of buying US bonds.

Actually, PRC has a lot of leverage.

Doubtful, other countries will jump at buying US Bonds to keep their currency exchange rates competitive.

Other countries most likely will not jump to buy the Bonds, if PRC decides to dump all of them in the market, all other variables (price per bond) being constant. Excessive supply of anything tends to drive the costs down.

 

[Project Dharma]

• PRC holds 1131.9/6038.9=19% of all US Treasury Bonds as of October 2016 (link).

I'll reply to the rest of the post later but that figure is for foreign bond holders which make up about 32.5% of the total US debt

There's been a lot of attention in recent years over China rising to become one of the largest holders of U.S. debt. China's share of the debt is sizable -- about 7% -- but it's hardly the largest holder of U.S. government bonds.

The top holder by far is U.S. citizens and American entities, such as state and local governments, pension funds, mutual funds, and the Federal Reserve. Together they own the vast majority -- 67.5% -- of the debt.

Foreign nations only hold 32.5% of the total.

http://money.cnn.com/2016/05/10/news/economy/us-debt-ownership/

 

[pmaitra]

I'll reply to the rest of the post later but that figure is for foreign bond holders which make up about 32.5% of the total US debt

There's been a lot of attention in recent years over China rising to become one of the largest holders of U.S. debt. China's share of the debt is sizable -- about 7% -- but it's hardly the largest holder of U.S. government bonds.

The top holder by far is U.S. citizens and American entities, such as state and local governments, pension funds, mutual funds, and the Federal Reserve. Together they own the vast majority -- 67.5% -- of the debt.

Foreign nations only hold 32.5% of the total.

http://money.cnn.com/2016/05/10/news/economy/us-debt-ownership/

US debt is not limited to Treasury Bonds. If you include all instruments, then PRC's share will probably go down.

I'll reply to the rest of the post later but that figure is for foreign bond holders which make up about 32.5% of the total US debt

From the link:

Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes reported under the Treasury International Capital (TIC) reporting system are based on monthly data on holdings of Treasury bonds and notes as reported on TIC Form SLT, Aggregate Holdings of Long-Term Securities by U.S. and Foreign Residents and on TIC Form BL2, Report of Customers' U.S. Dollar Liabilities to Foreign Residents.

It is unclear to me whether the statistic is limited to foreign holders.

 

[IndianHawk]

The Treasury bond is pretty much the only arrow in Chinese quiver against USA.
If china dumps them what will it be left with in future.

Also the market can see the clearly if china is dumping them due to cost yield reasons or because of geopolitics. In later case the bonds will soon regain their value with many buyers lining up. USA is still the safest place for capital may be not so profitable but the safest nonetheless.

Those who invest in sovereign bonds value the safety more than profit anyday.

Besides the threat of dumping is the only thing which is stopping USA from launching an all out trade war. So china doesn't have many handles here .

 

[Project Dharma]

It is unclear to me whether the statistic is limited to foreign holders.

It is, read the tile of the chart "MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES"

Also, the complete sentence that you quoted

Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes reported under the Treasury
International Capital (TIC) reporting system are based on monthly data on holdings of Treasury bonds and notes
as reported on TIC Form SLT, Aggregate Holdings of Long-Term Securities by U.S. and Foreign Residents
and on TIC Form BL2, Report of Customers' U.S. Dollar Liabilities to Foreign Residents.

They use sources that have both US resident and foreign holdings to estimate just the foreign component. Sorry for nitpicking, 32% vs ~7% is a huge difference.

You mentioned risk associated with Treasury Bonds. There are two main kinds of risks associated with a bond. One is a risk of default. The US has never defaulted on its debt and treasury bonds are backed fully by the US government. The second is interest rate risk. This is more interesting and is probably at least partly behind the reason why China is unloading its bonds.

When interest rates go up, the selling price of a bond goes down as investors are no longer willing to purchase that bond since they can easily buy one paying more. Therefore, the investor is forced to either hold the bond to maturity and get their principal back at the lower rate of interest or sell for a loss.

US interest rates are at all time lows and the Fed is jacking them up slowly. All indications are that Trump's pre election policies will lead to higher rates as well. China probably wants to liquidate some of their money tied up in US bonds so that they can use it for other purposes or even buy back US Treasury bonds at more favorable terms. Thoughts?

 

[amoy]

China called invulnerable to trade war

More than ever, China is relying on its own reform and stability for building its economic strength, they said.

Nonetheless, Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation affiliated with the Ministry of Commerce, said that this year, "protectionism will continue to rise and trade frictions will become more violent".

One of the worst trade frictions, he said, could occur between China and the United States,since president-elect Donald Trump has said he will impose punitive tariffs on imports from China.

Zhang Yansheng, chief economist of the China Center for International Economic Exchanges, a think tank close to the government, said that the expected rise in the US inflation level this year would weaken US exports and stimulate imports, resulting in agrowing trade deficit and an eagerness by Washington to make China a scapegoat.

Should that happen, "China must handle it well", Zhang said, adding that China has no shortage of available countermeasures.

China's confidence in facing protectionism by the US lies in the reform it recently has made. Its growth is no longer export-driven but led primarily by domestic consumption, which accounted for 66.4 percent of its GDP growth in 2015, according to Ministry of Commerce data.

"China has reduced its reliance on exports for growth to a great extent, thanks to its prompt shift to domestic demand when global market demand was no longer in high growth in the last few years," said Zhang.

At the same time, the country is improving industrial quality and sharpening its competitive edge in the global market, he noted.

Yu Jianlong, secretary-general of the China Chamber of International Commerce, said Trump is unlikely to have a major impact on China-US trade, much less on China's overall strength.

The US has taken repeated protectionist measures against China in the past 15 years, hesaid, but bilateral trade has "by and large" fared well－thanks to the long value chain of Chinese industry and the capability of the world's second-largest economy to provide for the various needs of the US market.

Even the US' failure to recognize China's market-economy status will not be able to derail China-US trade, Yu said.

Trade volume between the world's two largest economies has increased rapidly, growing from about $70 billion 20 years ago to nearly $600 billion in 2015.

According to the World Trade Organization, China's merchandise exports amounted toal most $2.3 trillion in 2015, despite a 3 percent dip from the previous year.

If Trump, who takes office on Jan 20, imposes a 45 percent tariff on Chinese goods and reduces China's exports to the US by half, it is unlikely to affect the nation's highly diversified global trade income picture, a HSBC report said in November.

More than 60 percent of China's exports are currently directed to markets other than the US, Japan and the eurozone, the report said.