The aid package, which could climb into the billions of dollars, is still being developed
The Trump administration is seeking to blunt domestic opposition to its trade policies with a relief package for farmers affected by the U.S. trade spat with China, say officials involved in the discussions... Agriculture and congressional officials are examining Depression-era programs like the Commodity Credit Corp., which was created in 1933 to stabilize farm incomes, and which permits borrowing of as much as $30 billion from the Treasury to finance its activities. Using the CCC would also give the administration an existing program to tap, rather than having to devise something new that would need to clear Congress.
.. Many farm groups say they aren’t looking for a handout and would rather have unimpeded trade with China. “Farmers are more interested in negotiation (with China) than mitigation,” said Davie Stephens, vice president of the American Soybean Association and a farmer who raises crops near Clinton, Ky. “Let’s get an agreement where tariffs don’t have to be implemented.
Will China Really Supplant US Economic Hegemony?
As artificial intelligence reshapes the global economy, economists who once argued that China’s massive population would propel it to superpower status should rethink that assumption. In fact, as the global economy reaches higher stages of development, China’s labor advantage today could become a handicap tomorrow.
.. Many economists, including many of the same experts who see China’s huge labor force as a decisive advantage, also worry that robots and artificial intelligence will eventually take away most jobs, leaving most humans to while away their time engaged in leisure activities.
Which is it? Over the next 100 years, who takes over, Chinese workers or the robots? If robots and AI are the dominant drivers of production in the coming century, perhaps having too large a population to care for – especially one that needs to be controlled through limits on Internet and information access – will turn out to be more of a hindrance for China. The rapid aging of China’s population exacerbates the challenge.
.. China’s gains still come largely from adoption of Western technology, and in some cases, appropriation of intellectual property.
.. In the economy of the twenty-first century, other factors, including rule of law, as well as access to energy, arable land, and clean water may also become increasingly important.
.. Yes, the US faces vast challenges as well. For example, it must devise a way to retain dynamic technological growth while preventing excessive concentration of wealth and power.
If There’s a U.S.-China Trade War, China May Have Some ‘Unconventional Weapons’
There are ways to make life harder for American companies in China that need not be formal, or widely publicized.
“One of the very important tools that the Chinese have is the ability to make life difficult for a large number of American businesses,” ..
.. “They have all of these unconventional weapons that are not covered by traditional trading rules that could be potent weapons in actually fighting a trade war.”
.. As President Trump often notes, the United States does run a large trade deficit with China — especially if you look only at goods, and don’t count the value of services. That means that if China seeks to match tariffs on goods — a classic tit-for-tat approach — China runs out of “tats” pretty quickly.
.. In 2017, the United States imported $506 billion in goods from China while exporting only $131 billion in goods to China
“It mathematically means that China can’t match the U.S. dollar for dollar,” said Brad Setser, a senior fellow at the Council on Foreign Relations.
.. For example, in its planned retaliatory tariffs, the Chinese government included narrow-body aircraft but not wide-body aircraft. This makes sense strategically, Mr. Setser argued, because only two companies in the world make wide-body planes: Boeing and Airbus. If China put a tariff on planes from the American Boeing but not the European Airbus, it would lose leverage with Airbus with which to extract favorable prices and access to cutting-edge technology.
.. It is unlikely there will be uprisings in the streets of Shanghai if Kentucky bourbon gets more expensive.
.. it also risks raising food costs within China. It’s a fair bet, then, that China views remaining options as even more problematic for the prices of staple goods or the country’s industrial strategy.
.. In other words, for China the low-hanging fruit is gone. If this trade battle continues to escalate, China will have to bear a greater cost.
.. That reality could push China to seek other buttons to press.
.. American companies do significant business in China that doesn’t show up in trade data. When Apple assembles an iPhone in Zhengzhou and sells it in Shanghai, that doesn’t count as international trade, though the profits accrue to the benefit of a California-based company. The Chinese government has any number of tools to try to weaken that business if it wishes. It could decide that phones made by a foreign company are a national security threat, or shut down plants because of minor regulatory problems.
.. Making life difficult for American companies in China as retaliation in a trade war need not be formal and widely publicized. American automakers who make cars in China might find their local joint-venture partners squeezing them out. Regional governments might send safety inspectors to plants of American companies so often as to disrupt production.
.. There are more public options, too. For example, in 2013, Chinese state media accused Jaguar Land Rover and Audi of overcharging buyers for car parts, which analysts viewed as part of a campaign to pressure those automakers to locate more manufacturing in China.
.. Could China use its role as No. 1 lender to exert pressure in a trade war?
It would be a risky maneuver, in which China itself would potentially have much to lose. But it can’t be ruled out.
.. If China were to suddenly unload some of its holdings, or even signal an intention to buy fewer dollar assets in the future, that would probably cause long-term interest rates in the United States to rise
.. And this would cause some pain in the United States, as borrowing costs — whether for the federal government or individual home buyers — would rise.
.. But it would also drive down the value of China’s existing bond portfolio, meaning China could lose billions. And it would tend to push down the value of the dollar relative to other currencies, which would actually help the United States attain more advantageous trade terms.
.. Even after all that, bond prices would most likely readjust over time as other buyers took advantage of the rise in interest rates.
.. That doesn’t mean there isn’t room to cause some near-term pain and disruption. “The Chinese have some leverage to rattle U.S. bond markets, even if the threat of substantive action is not very credible,”
.. Given that a trade war with such a major trading partner is without precedent in modern times, we don’t really know what it would look like.
Non-tech businesses are beginning to use artificial intelligence at scale
Artificial intelligence is spreading beyond the technology sector, with big consequences for companies, workers and consumers, says Alexandra Suich Bass
Sundar Pichai, Google’s boss, has said that AI will have a “more profound” impact than electricity or fire.
.. Bosses of non-tech companies in a broad range of industries are starting to worry that AI could scorch or even incinerate them, and have been buying up promising young tech firms to ensure they do not fall behind. In 2017 firms worldwide spent around $21.8bn on mergers and acquisitions related to AI
.. Around 85% of companies think AI will offer a competitive advantage, but only one in 20 is “extensively” employing it today
.. Chinese firms have an early edge, not least because the government keeps a vast database of faces that can help train facial-recognition algorithms; and privacy is less of a concern than in the West.
.. If they invest huge sums in AI early on, they run the risk of overcommitting themselves or paying large amounts for worthless startups, as many did in the early days of the internet. But if they wait too long, they may leave themselves open to disruption from upstarts, as well as from rivals that were quicker to harness technology.
.. Gurdeep Singh of Microsoft speaks of AI systems as “idiots savants”; they can easily do jobs that humans find mind-boggling, such as detecting tiny flaws in manufactured goods or quickly categorising millions of photos of faces, but have trouble with things that people find easy, such as basic reasoning.
.. In the near future AI will reshape traditional business functions such as finance, HR and customer service
.. But over time it will also disrupt whole industries, for example by powering the rise of autonomous vehicles or the discovery of entirely new drug combinations.
.. many bosses are more interested in the potential cost and labour savings than in the broader opportunities AI might bring
.. Some companies may not actually eliminate existing jobs but use technology to avoid creating new ones.
.. And workers who keep their jobs are more likely to feel spied on by their employers.
.. A longer-term concern is the way AI creates a virtuous circle or “flywheel” effect, allowing companies that embrace it to operate more efficiently, generate more data, improve their services, attract more customers and offer lower prices. That sounds like a good thing, but it could also lead to more corporate concentration and monopoly power—as has already happened in the technology sector.