United States Sanctions China! Just in!

The United States, in an apparent surprise move has placed trade sanctions against Chinese markets..

U.S. stocks fall after U.S. sanctions China
Dow falls 100 points as Wall Street fears repercussions of possible trade war

By Nick Godt, MarketWatch
Last Update: 12:09 PM ET Mar 30, 2007

NEW YORK (MarketWatch) -- U.S. stocks turned sharply lower on Friday, briefly sending the Dow Jones Industrial Average down by over 100 points, after news that the U.S. has imposed trade sanctions on China and amid concerns about oil prices, which continued to trade around $66 a barrel.
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$INDU12,303.24, -45.51, -0.4% ) reversed course and was last down 72 points at 12,276. It earlier fell by over 100 points to a low of 12,242.
The blue-chip average is on track to post losses for the first quarter, which would be its first quarterly decline since the second quarter of 2005.
U.S. sanctions stun market
Stocks and the dollar turned around, after the Commerce Department announced the sanctions in connection with a dispute over paper subsidies.
"We haven't seen the exact percentages yet, but this represents a 20-year break in U.S. trade policy and potentially a watershed in US/Chinese trade relations," said Brian Dolan, director of research at Forex.com. "The obvious impact is going to be felt in dollar/yen which is already collapsing."

The exact details of the sanctions have not yet been released to the public. This story has yet to hit main stream media apparently.. nothing on CNN or FOX, just Marketwatch and Bloomburg and many other market sites.

"Anti-China protectionist legislation will backfire -- resulting in the functional equivalent of a tax hike on the U.S. consumer, as well as reduced Chinese demand for U.S. Treasurys," said Morgan Stanley chief economist Stephen Roach said in research note earlier Friday.

Market Watch

Commerce Department Applies New Duties Against China (Update1)

By Mark Drajem

March 30 (Bloomberg) -- The U.S. Commerce Department decided today to levy new duties on imports from China to compensate for Chinese subsidies to exporters, reversing more than two decades of practices.

The Bush administration, which debated the change internally for months, faced pressure to expand the tariffs from steel companies, textile producers and other manufacturers facing competition from China and their advocates in Congress.

``This decision is the most significant step toward a stronger trade policy with China than we have experienced in this decade,'' Republican Representative Phil English of Pennsylvania said in a statement today. English has proposed legislation that would explicitly allow these types of duties to be imposed on China, Vietnam and other non-market economies.

Secretary of Commerce Carlos Gutierrez announced the change at a press conference in Washington today in a case involving coated paper imports. The ruling is a preliminary one by the Commerce Department's office of Import Administration. The initial duties will range from 10.9 percent to 20.3 percent.

Applying countervailing duties against non-market nations may open the way for a flood of new trade complaints by U.S. manufacturers hurt by surging imports from China. The Chinese government lost a U.S. court case yesterday aimed at preventing this decision

Bloomberg.com

This, I believe is further evidence of our declining partnership with China, and our weak, unstable economy.

Just bumping because the thread didn't show up on the recently posted sections.

Originally posted by Rockpuck
Just bumping because the thread didn't show up on the recently posted sections.

It's showing for me?

[edit on 3/30/2007 by kinglizard]

Originally posted by kinglizard

Originally posted by Rockpuck
Just bumping because the thread didn't show up on the recently posted sections.

It's showing for me?

[edit on 3/30/2007 by kinglizard]

Eh... not for me.. it shows that in PTS's recent post section, but not the main site, ATS?

Anyways... any thoughts on the developing story?

the "Other Global Politics" forum is a AP forum only....it doesn't show on ATS or BTS.

This'll be interesting to watch how China reacts, if the information is accurate. Our trade policy with China has been a huge black hypocritical eye for the US, though good for both our economies. In my opinion, this should have happened a while ago, but the market and national politics seemed to have a wall between each other.

EDIT: Nice find, by the way

[edit on 3/30/07/30 by junglejake]

Ahh.. but the problems could run deeper then that..

remember the 1980s trade wars with Japan?.. They could produce better quality cheaper, so we put a tariff tax on them to make them the same price as a American car.. so a Ford selling for 20k .. and a Toyota for 15k would have a 5k tax on it.. making it the same price, except that Toyota was loosing money, Ford was not..

Just one example of our policy against Japanese imports in the 80's.. The backlash was astounding.. when Japanese dock workers came across American produce in retaliation, checked them off last.. by the time they got to market they where throughly rotten.. trade wars are bad for economies..

China has a leg up on us in the fact that we use soooo much that is Chinese made.. most of our clothing for instance..

Not to mention Chinas fun little game a few weeks ago.. willingly hurt your own stock market and use it as a weapon.. and it sadly worked.. it proved that without China, the world market has no major producer.. it is no different then a world without America.. the world would have no major consumer..

However, I do agree that it needs to be fixed.. China practices unfair trade policy, not to mention inhumane working conditions, no industrial control and regulation leading to low wages and horrific acts against the environment.. China has had this along time coming.. I just fear to much time has gone by.. what could have been a tiny fix is now this massive beast that just may not be able to tame..

I suspect that China knew full well that this was in the works when their stock market took its dip. It may have even been a warning showing the US government how much influence they have over it.

On the other hand, though, China's in the same boat. They're dependent on US trade. Our economies are extremely intertwined and codependent. A lot of Americans miss just how much China needs the trade as well.

Regarding the trade wars with Japan in the 80s, they didn't start with our move against Japanese auto imports. While, before that, Japan was very willing to buy our raw materials, finished goods were very unwelcome in Japan. The Japanese would also flood markets with their products at lower prices, taking a significant loss in profit, but because of the nature of their economy, where monopolies were perfectly acceptable, a company like Sony could take a substantial monetary loss initially and be supported by other companies that partnered with it. Then, after Sony gets a strong market share, their prices could go to the point where they're making a profit. Meanwhile, our government would step in and ensure American companies had no way to compete against Japanese companies.

Interestingly, Japan's strategy was successful initially, but their economy has really stagnated while the US economy, though hitting some pitfalls, has consistently increased over time. Now, with Chine doing many of the same things, we may run into the same situation.

The difference I see with China is this: They are the most populated nation on Earth.. they will... eventually.. be the worlds largest CONSUMER..

What makes America so strong is our consuming ability, being that there is so much concentrated wealth within our country that our people can afford to splurge on DVD players, plasma tv's, a new car every 5 years.. new 500k houses..

BUT.. China also has an up-and-coming middle class.. and with it, its consuming power is increasing substantially.. What happens when the corporate head quarters in America move to China for a cheaper corporate tax.. cheaper labor? .. America looses its major income, being corporate power. We have the most corporations and the largest corporations in the world.. but they are continueingly moving out of the country.. Microsoft's Bill Gates admitted 2 years ago that is the quality of workers does not increase (through education) he would "relocate" else where... America's education system is no longer keeping up in science and engineering ..

It suggests that "middle class" is no longer an abstract concept in sociology but a strong force that could help reshape society as a whole.

Political sensitiveness in China means that "middle class" can be termed in many other ways - such as "middle-income stratum," "middle-income group" or just "middle stratum."

But it usually refers to a group of people with stable incomes who are capable of purchasing private houses and cars, and can afford the costs of education and holidays.

In fact, the emerging "middle class" in China carries special meaning for multinationals that are counting on the huge Chinese market to boost their growth.

That explains why stores featuring luxury brands such as Gucci, Christian Dior and Chanel have begun to appear in more and more Chinese cities. The Chinese Academy of Social Sciences (CASS) released a report earlier this year that suggested China's "middle class" accounted for 19 per cent of the country's 1.3 billion population by 2003.

Based on an annual growth of one percentage point, the "middle class" people in China is expected to make up for 40 per cent of the total population in 2020, the academy report said.

According to the academy's standard, families with assets valued from 150,000 (US$18,137) to 300,000 yuan (US$36,275) can be classified as middle class.

Meanwhile, the French bank BNP Paribas Peregrine estimated that the number of "middle class" households in China stood at 50 million in 2002, with each having an annual average income of 75,000 yuan (US$9,068) and assets of 310,000 yuan (US$37,485).

The figure is expected to rise to 100 million in 2010, with each household having an annual average income of 150,000 yuan (US$18,137) and assets of 620,000 yuan (US$74,969).

China Daily

While their average middle class household income stands currently at just over 9k a year (American) that would have been unheard of 20 years ago.. and by 2010 it is expected to not only double in income, but also the number of households meeting the middle class income requirements..

Why is that a problem? Because fewer and fewer are making it off of factories and other means of production, but instead through corporate offices, and other "inventive" industries.. the poor may still produce cheap plastic dolls and various other near worthless goods, but there is an economic change in China recently.. and its a move towards POST INDUSTRIAL economy.. What America and most of the West currently has..

It is inevitable that an industrial nation eventually becomes post industrial, shifting the lower wage jobs to other countries. If China moves successfully into a post industrial society, their purchasing power will dwarf anything America ever had to offer..

Why does America have such an astounding level of buying power? Sheer population! There are simply MORE people able to buy.. 300,000,000 people live in the US.. 3rd largest population in the world.. France, population 60million is the largest in Europe as a nearest contender to population / buying power.. if the worlds most populated nation became able to BUY with excessive income, then they will surpass us in economics.. by 2010 100million Chinese will be within the means of Middle Class, and that is still a small portion of their population.. and I think America's leaders just may be seeing this about now.. realizing China could over pass them.. as soon as they move beyond the point where they don't need to export cheap dolls but import them through foreign owned factories and rely on corporate innovation... then they have beaten us..

while it is obviously more difficult then this basic outline, I believe I can at least point out the basis that China will eventually move beyond industrial society, and into post-industrial.

Posted as Breaking Political news here
www.abovepolitics.com...

Here's some details as well as an article about how this will effect the US economy/dollar:

The dollar fell against other major currencies Friday, erasing early gains after the U.S. Commerce Department announced sanctions against paper imports from China, the first time in 23 years that U.S. duty law has been applied to imports from that country.

The dollar abruptly changed course after Commerce Secretary Carlos Gutierrez said imports of Chinese coated free sheet paper would face preliminary countervailing duties ranging from 10.9% to 20.3%. Subsidies enjoyed by Chinese companies put U.S. producers at a disadvantage, said Gutierrez, who emphasized that the sanctions were legal under U.S. trade law. The greenback later pared some losses.

]custom.marketwatch.com

In all fairness chinas trade is pretty unfair. Rockpuck, in the year 2010 it is said china will become a developed nation. If china doesnt become a democracy by 2015, china would suffer from economic growth not much faster then that of americas. Chinas economy depends to much on its exports.

Also check out the fair tax. Its just the beast we need to unshackle the US economy.

And check out this link. Its a great read.
Why the US Will Still be the Only Superpower in 2030
futurist.typepad.com...

China has no one to blame but themselves for this action. If they let their currency float, the protectionism will end.

Originally posted by semperfoo
In all fairness chinas trade is pretty unfair. Rockpuck, in the year 2010 it is said china will become a developed nation. If china doesnt become a democracy by 2015, china would suffer from economic growth not much faster then that of americas. Chinas economy depends to much on its exports.

Also check out the fair tax. Its just the beast we need to unshackle the US economy.

And check out this link. Its a great read.
Why the US Will Still be the Only Superpower in 2030
futurist.typepad.com...

Only on the basis that the corporat "inventing" power of America is not transfered to China, being a CONSUMER is, imo, the only way they would ever beat us economically... it is many decades in the making .. but by the end of this century, I see either a huge American - Chinese war, or China over taking us. Nothing to worry about in my life time most likely, but in my childrens.

Originally posted by Rockpuck

Originally posted by semperfoo
In all fairness chinas trade is pretty unfair. Rockpuck, in the year 2010 it is said china will become a developed nation. If china doesnt become a democracy by 2015, china would suffer from economic growth not much faster then that of americas. Chinas economy depends to much on its exports.

Also check out the fair tax. Its just the beast we need to unshackle the US economy.

And check out this link. Its a great read.
Why the US Will Still be the Only Superpower in 2030
futurist.typepad.com...

Only on the basis that the corporat "inventing" power of America is not transfered to China, being a CONSUMER is, imo, the only way they would ever beat us economically... it is many decades in the making .. but by the end of this century, I see either a huge American - Chinese war, or China over taking us. Nothing to worry about in my life time most likely, but in my childrens.

China has more problems then they dont.
First off china has a rapidly aging population. They have a demographic crisis starting to show its ugly face. The one child policy is a joke. It favors boys instead of girls which will actually do more harm then good. China also has a huge debt to its ppl. Now you may wonder just what that debt is... China’s funding gap for social security, medical care, pensions, etc., is the government’s debt. And they have a rapidly aging population. This will have to be dealt with sooner rather then later. And its not going to be pretty. Chinas environment is also in horrible condition. Its a crisis that is really to late to deal with now. chinas pollution costs itself some 15-20% of its GDP every year, and its said to be growing each and every year. China is losing all of its arable land. The deserts just keep on expanding. And with that population they can ill afford to lose such an important asset. The sand storms in china get worse by the year. So bad that infact Californians receive not only clouds of sulfur dioxide from china, but also the sand from these storms. Shes getting rich at the expense of her environment. 75-85% of rivers and lakes in china are deemed to hazardous to drink and fish out of. But the populous must have its water regardless the quality of it. Its estimated that 300 million chinese drink contaminated water every year, which is a conservative estimate. Most ppl in china burn stoves with unrefined coal, causing wide spread respiratory problems to the populous. China is also experience an aids epidemic which is spreading through the chinese country side like a wild fire. It goes on and on...

The US has to much of a lead against china for it to be overtaken. They have the consumers. But we have a hire GDP per capita making us able to buy more. This gap will only widen with time. They have the population base, we have the money. Now if I were European or japanese I would be more concerned about china overtaking us. Thats not the case.

Finally, americas innovative side is what puts over the edge. We account for some 40% of the worlds spending on R&D. We are constantly at the fore front of inventing the latest technology. We lead in the feilds such as Nanotechnology. Somthing that will revolutionize the world we live in today. Again we could go on and on with this.

Nothing is written in stone. China more then likely will split up into several different nations in the future. Its so ethically diverse its bound to happen. Becoming a democracy would only speed up this process.

This is all correct indeed.. which if you have read my post on Chinese economic / military power I came to the conclusion that: Because of internal problems, and the Chinese desire to build them selves then worry about international affairs unless it interferes with their own going ons, they have minimal power against the United States and the Western world at the current time.

However, I do believe 100 years from now, China will be a contender for the World super power. They may not surpass us, but they can match us. After all, the Soviet Union was a Super Power, and no where near our "standards"..

China will not inevitable be poor.. they will eventually move on politically and economically.. no one can deny the strides made in the past decade.. if they continue, this century China will be a threat. They may not overtake us, they will contend with us however.. I doubt any one will over throw America except for America.. anytime soon anyways, I believe we are safe from another super power threat for at least another 70+ years..

But you never know.. Hitler took Germany from ashes to world domination in a rather short amount of time.. strong leaders have the tendency to do such things.. Putin has brought Russia back from the edge of destruction.. Russia is not perfect, and it cannot currently contend.. but you know what? It didn't fall apart like it should had.

There are many factors that bring about strong nations.. Chinas got the economy, they just need a new government.. slowly communism is starting to fade away.. the current hybrid socialist government will only work until the economy out grows it..

Maybe an explanation for the US sanctions?

China Shifts to Euros for Iranian Oil

business.scotsman.com

BEIJING (Reuters) - China's state-run Zhuhai Zhenrong Corp, the biggest buyer of Iranian crude worldwide, began paying for its oil in euros late last year ...

"Most of China's purchases have shifted to euro. It's not difficult so long as our banks can handle that," said a Chinese state oil trader.

Japanese buyers, including top refiner Nippon Oil Corp., said they had all received inquiries from Iran to pay on non-U.S. dollar terms, but were awaiting an official request.

(visit the link for the full news article)

Seems like things are moving again in the petrodollar world including moving ahead with a Euro based oil bourse: Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse

This particular story came out a couple of days ago and is reporting a continuing development that began a few months ago.

I think it kind of puts this story from a couple of days ago into perspective: United States Sanctions China! Just in!

That makes more sense now.

Funny how these important economic and geopolitical developments are playing-out totally under the radar in the mainstream media.

Makes me think it's important or something.
.

[edit on 3/31/2007 by Gools]

WOW gooles... that is horrific news!

China is the LARGEST holder of American currency, billions of it.. because they need it to purchase mostly oil and other "necessities" .. if their buying with Euro's from Iran their largest oil importer.. they will need less Dollars, and more Euros, converting their dollar supply to Euro would drive the dollar down.. further..

It also means Iran may have just met an untimely death..

Originally posted by Gools
Funny how these important economic and geopolitical developments are playing-out totally under the radar in the mainstream media.

Makes me think it's important or something.

its not funny, its insane..

this is a HUGE story. mainstream media hasn't even touched it. not even a "oh btw..." story..

first the housing market, now this? somebody doesn't want us to know the current economic situation

Exactly my sentiment Infinite.. the paper sanction was in the news a few weeks back .. actually right before China purposefully tanked their own market to show us "don't mess with us" .. looks like we did it anyways.. paper doesn't sound like a very big market, but it is actually a multi billion dollar market in China.. in fact.. one of the richest persons in China is a WOMAN - billionaire - who owns the worlds largest paper producing/importing company in China. Bet shes happy.

No doubt though that this is being kept away from CNN, FOX, MSNBC .. makes for bad press when your trying to talk traders into buying.

well, the mainstream media is going to know about it Monday when China wakes up.

I just don't get it. I still feel the stock market crash was correctly pushed aside and so was the housing market as well. The US economy has quickly been "hushed" up too.

Something is going on.