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Thread: Trade with China

  1. #1
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    Default Trade with China

    News today is that there is a good chance that China and we may have a trade agreement by Dec. 1. It is to be implemented in phases, the 1st phase to stop the introduction of more tariffs Dec. 1 and the beginning of removal of existing tariffs.

    Obviously, I only heard a brief summary so the details are still vague. Let me also add that I have wanted to comment on recent China's actions concerning trade. If you remember, China did devalue its currency recently in response to our inceasing tariffs on more Chinese goods. I did see that as an act of desperation as that did make its goods cheaper not only to us but to the rest of the world and also made all countries' goods relatively higher to China. Some might think that this benefits China but it makes its goods cheaper to the rest of the world but also makes its revnues less. Given that the goods it exports, is labor intensive, it also means that workers also experience a loss of real income.

    Of course, a deal is not done till the fat lady sngs but let's hope that we can attain a more equable balance of trade with China.

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    Quote Originally Posted by caryalsobrook View Post
    News today is that there is a good chance that China and we may have a trade agreement by Dec. 1. It is to be implemented in phases, the 1st phase to stop the introduction of more tariffs Dec. 1 and the beginning of removal of existing tariffs.

    Obviously, I only heard a brief summary so the details are still vague. Let me also add that I have wanted to comment on recent China's actions concerning trade. If you remember, China did devalue its currency recently in response to our inceasing tariffs on more Chinese goods. I did see that as an act of desperation as that did make its goods cheaper not only to us but to the rest of the world and also made all countries' goods relatively higher to China. Some might think that this benefits China but it makes its goods cheaper to the rest of the world but also makes its revnues less. Given that the goods it exports, is labor intensive, it also means that workers also experience a loss of real income.

    Of course, a deal is not done till the fat lady sngs but let's hope that we can attain a more equable balance of trade with China.
    Perhaps someone with a greater understanding of economy can help explain, but each one of our suppliers that I asked said that the devalued RMB had no effect on their revenue, nor was their a loss on laborers wages. Again, I don't know the intricacies of the exchange rate change beyond our savings (~4%) and that it didn't have an effect on the earnings of our suppliers. I'm just relaying what a number of Chinese merchants shared with me.
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    Quote Originally Posted by nogie1717 View Post
    Perhaps someone with a greater understanding of economy can help explain, but each one of our suppliers that I asked said that the devalued RMB had no effect on their revenue, nor was their a loss on laborers wages. Again, I don't know the intricacies of the exchange rate change beyond our savings (~4%) and that it didn't have an effect on the earnings of our suppliers. I'm just relaying what a number of Chinese merchants shared with me.
    nogie, when we sell beans to China, we are paid in US dollars. When China devalues its currency, it takes more of their currency to exchange for a US dollar(eschange rate). Lets say that a worker produces the equilivent of $100 of goods and services a day and the cost of his labor is the equilivent of $80 US dollars per day but is paid in Chinese money. Now when China devalues its currency lets say that now it takes 110% of Chinese currency to exchange for USD dollars that onec they got for 100% of Chinese currency.

    Let me explain another way. You own a company that produces shoe laces. The US buys your shoe laces but now you are aid in Chinese money but since that currency is devalued, you receive 90 yen when you previously received 100 yen for your shoe laces. How do you stay in business if you don't cut salaries?

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    Quote Originally Posted by caryalsobrook View Post
    nogie, when we sell beans to China, we are paid in US dollars. When China devalues its currency, it takes more of their currency to exchange for a US dollar(eschange rate). Lets say that a worker produces the equilivent of $100 of goods and services a day and the cost of his labor is the equilivent of $80 US dollars per day but is paid in Chinese money. Now when China devalues its currency lets say that now it takes 110% of Chinese currency to exchange for USD dollars that onec they got for 100% of Chinese currency.

    Let me explain another way. You own a company that produces shoe laces. The US buys your shoe laces but now you are aid in Chinese money but since that currency is devalued, you receive 90 yen when you previously received 100 yen for your shoe laces. How do you stay in business if you don't cut salaries?
    At least get the currency correct. It would be
    Renminbi or commonly referred to as yuan.
    Never trust a dog to watch your food!

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    Quote Originally Posted by Golddogs View Post
    At least get the currency correct. It would be
    Renminbi or commonly referred to as yuan.
    I was too lazy to check the name of the currency. The US dollar is used as the medium of exchange in foreign trade and I doubt we ever even see the Chinese currency used. I suspect China either urchases US dollars or simply uses dollars they receive in foreign trade no matter what country they get dollars. But to be honest, I have no idea as to the name of the currenc of Cambodia or Turkey or Lebanon or of a wealth of countries so if one feels the name of the currency is important, then by all means look it up.

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    Quote Originally Posted by caryalsobrook View Post
    I was too lazy to check the name of the currency. The US dollar is used as the medium of exchange in foreign trade and I doubt we ever even see the Chinese currency used. I suspect China either urchases US dollars or simply uses dollars they receive in foreign trade no matter what country they get dollars. But to be honest, I have no idea as to the name of the currenc of Cambodia or Turkey or Lebanon or of a wealth of countries so if one feels the name of the currency is important, then by all means look it up.
    You shouldn't be starting a thread when you do not have a basic understanding of the subject,
    unless you are hoping for info. Possibly an expert on the subject could weigh in.

    When I worked in the Philipines (1968) the exchange rate was 3.80/1, today it is 51.2/1. While
    the dollar is also worth less the loss of purchasing power of the peso is huge.

    There are huge fortunes made/lost in currency trading! That's how Soros became rich, trading
    the pound.
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    Quote Originally Posted by Marvin S View Post
    You shouldn't be starting a thread when you do not have a basic understanding of the subject,
    unless you are hoping for info. Possibly an expert on the subject could weigh in.

    When I worked in the Philipines (1968) the exchange rate was 3.80/1, today it is 51.2/1. While
    the dollar is also worth less the loss of purchasing power of the peso is huge.

    There are huge fortunes made/lost in currency trading! That's how Soros became rich, trading
    the pound.
    So now you have explained the currency exchange rates, but you failed to discuss the actual impact of a trade agreement, which is the topic here...Of course the currency exchange rates will be an element of any trade deal, but that is only a part of a very large pie!

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    Quote Originally Posted by Marvin S View Post
    You shouldn't be starting a thread when you do not have a basic understanding of the subject,
    unless you are hoping for info. Possibly an expert on the subject could weigh in.

    When I worked in the Philipines (1968) the exchange rate was 3.80/1, today it is 51.2/1. While
    the dollar is also worth less the loss of purchasing power of the peso is huge.

    There are huge fortunes made/lost in currency trading! That's how Soros became rich, trading
    the pound.
    Marvin, let me see if I can dumb down the explanation so that even a Boeing engineer can understand it. If the CURRENT exchange rate before the devaluation of the yuan( I got that fromseawhatever) was 100 yuan to $1.00 and China devalued the yuan to 110 yuan to $1.00, then now $1.00 would buy Chinese goods previously valued at 110 yuan before the devaluation. It does not make a tinker's damn what the exchange rate was in 1968(asuming that it has changed at least once between 1968 and NOW)!!!

    Dumbing it down to its simplest possible form, the end result is that ALL Chinese goods that are imported by ANY country are now cheaper and ALL goods that are exported to China by ANY country now are more expensive in China.

    PS
    I can't remember the exact date but I do think the Boeing 747 went into service around 1968 and that I once read that there was an original extimate that the expected number of crashes the first year was 4. If memory serves me, it was about 20 years before the FIRST crashed and I always thought that was due to Boeing expertise. I am now beginning to think it was due the the hand of God.

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    Quote Originally Posted by Golddogs View Post
    At least get the currency correct. It would be
    Renminbi or commonly referred to as yuan.
    I still have some (Yen.) laying around from 2003.

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    Quote Originally Posted by caryalsobrook View Post
    Marvin, let me see if I can dumb down the explanation so that even a Boeing engineer can understand it. If the CURRENT exchange rate before the devaluation of the yuan( I got that fromseawhatever) was 100 yuan to $1.00 and China devalued the yuan to 110 yuan to $1.00, then now $1.00 would buy Chinese goods previously valued at 110 yuan before the devaluation. It does not make a tinker's damn what the exchange rate was in 1968(asuming that it has changed at least once between 1968 and NOW)!!!

    Dumbing it down to its simplest possible form, the end result is that ALL Chinese goods that are imported by ANY country are now cheaper and ALL goods that are exported to China by ANY country now are more expensive in China.

    PS
    I can't remember the exact date but I do think the Boeing 747 went into service around 1968 and that I once read that there was an original extimate that the expected number of crashes the first year was 4. If memory serves me, it was about 20 years before the FIRST crashed and I always thought that was due to Boeing expertise. I am now beginning to think it was due the the hand of God.
    The Walmart family loves folks like yourself! Sufficiently dimmed down to believe they are getting a bargain!

    The goal is to have an exchange of product where one is equivalent to another.

    I believe Tenerife happened early on! What was done on MCAS was a business decision made by management.
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    Skills can be taught. Character is either there or it's not!

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