China Threatens Retaliation To Trump's Steel "Protectionism"

Tyler Durden's picture

Days after Donald Trump signed an executive order to probe steel imports, mostly from China, Beijing responded warning such a move could trigger a trade dispute between the United States and its major trading partners, who are likely to take retaliatory steps, the official China Daily said in an editorial on Monday.

"By proposing an unjustified investigation into steel imports in the guise of safeguarding national security, the U.S. seems to be resorting to unilateralism to solve bilateral and multilateral problems," the China Daily said. The probe could result in efforts by the United States to curb imports that will affect the interests of a number of its major trade partners, including China, the editorial warned.

"If the U.S. does take protectionist measures, then other countries are likely to take justifiable retaliatory actions against U.S. companies that have an advantage ... in fields such as finance and high-tech, leading to a tit-for-tat trade war that benefits no one," it said.

The article called on the United States, the world's top economy, to use the settlement mechanism under the World Trade Organization to resolve the dispute over steel. Reducing imports will not alter the weak competitiveness of U.S. steelmakers, help restore U.S. manufacturing or bring back jobs, as President Trump hopes, it said.

As Reuters puts it, "the article was the strongest official response yet to U.S. President Donald Trump on Thursday launching an investigation of China and other steel producers for dumping cheap steel products into the United States."  It was a marked shift from official comments on Friday. China's Foreign Ministry spokesman Lu Kang said in a briefing the country needed to ascertain the direction of any U.S. investigation before it could make a judgment.

In addition to China, in Japan, the world's second-biggest steel producer after China, the head of its steelmakers' group expressed concern over Trump's protectionist policy.

"We are greatly concerned over Trump's protectionism, although we hear he has softened his tone on some issues with a grasp of reality," Japan Iron and Steel Federation chairman Kosei Shindo told a news conference on Monday.

* * *

Separately, in a parallel move yet one which appears to justify Trump's threat to curb Chinese steel imports, 29 Chinese steel firms had their licenses revoked as Beijing kept up its campaign to tackle overcapacity in the sector. Nonetheless, analysts quoted by Reuters said the revocations were unlikely to be a direct response to Trump's plan, but rather a part of China's reform measures aimed at reducing surplus steel capacity that many estimate at around 300 million tonnes, about three times Japan's annual output.

An employee works at a steel factory in Dalian, Liaoning Province, China

China's Ministry of Industry and Information Technology released a list on Monday of 29 firms that will be removed from its official register of steel enterprises. Most have already stopped producing steel, but some had illegally expanded production or violated state closure orders.

"It's all enveloped in this strategy to improve the financial condition of the industry which has been weighed down by excess capacity for some time, partly as a result of inefficient operations," said Daniel Hynes, commodity strategist at ANZ.

As reported before, China has been aiming to shed between 100 million to 150 million tonnes of excess capacity over the 2016-2020 period, although recent reports showed that much of the capacity that had been planned to be taken offline had in fact remained operational. It also plans to shut around 100 million tonnes of low-grade steel production by the end of June.

On Monday, another 40 steel firms have been asked to make changes in areas such as environmental protection and safety. The majority of the companies were accused of failing to comply with emergency output restrictions during heavy pollution periods, and they must fully "rectify" their violations within a prescribed period, the industry ministry said, without giving a specific time frame. Hynes said China may take a more gradual approach in shutting inefficient mills rather than force "a lot of closures at once" and cause a spike in steel prices, which is what happened in the third quarter last year.

Some more details from Reuters:

China set up an official steel firm register in 2009 to impose order on the poorly regulated industry and to help companies during price negotiations with iron ore suppliers overseas. The register was also supposed to identify the mergers and closures required to meet a target to put 60 percent of China's steel capacity in the hands of its 10 biggest producers by the end of 2015.


However, industry consolidation rates actually fell to 34.2 percent over the 2011-2015 period, from 48.6 percent in the previous five-year period, and China has now pushed back the 60 percent target until 2025.


According to figures published by the official China Metallurgical News earlier this month, 292 out of a total of 635 firms in 12 provinces and cities have already ceased production or shut down completely.

As explained previously, the worry in Beijing is that as more legacy industries are "consolidated" it could lead to mass layoffs, and social instability. Last Wednesday, China's cabinet said that risks of mass unemployment in some regions and sectors have increased and pledged more fiscal and monetary- policy support to address the potential rise in the jobless rate.

The government plans to cut further excess and inefficient capacity in its mining sector and "smokestack" industries this year, part of efforts to upgrade its economy and reduce pollution, but the move threatens to throw millions more out of work.

The State Council said China faces "intensified structural conflicts" in its current job market, but it must place employment as a top policy priority and address the new challenges to keep its employment rate stable.

University graduates and workers from sectors affected by capacity cuts such as steel, coal, and coal-fired power were identified as "key groups" that needed extra support, the guidelines said. Data from the Ministry of Human Resources and Social Security showed 7.95 million students are expected to graduate from university this year in June, 300,000 more than in 2016. Graduates will be encouraged to diversify their employment options, such as working in less-developed countryside areas and working for small enterprises. China will also appropriately reallocate affected workers, it said.

China's official unemployment rate - which only accounts for urban, registered residents - has held around 4 percent for years, despite a slowdown that has seen growth cool from the double-digits to quarter-century lows of under 7 percent. In a guideline post on its website that sets the policy tone on employment issues, the State Council said provincial governments in those regions should take measures such as increasing the stipend for firms under job-shedding pressures.

"If new urban jobs shrink or jobless rate jumps, (China) should step up fiscal and monetary policy support," it said.

Which, of course, would send China right back to square one of its debt-funded doom loop: more stimulus, more debt, more economic inefficiencies, more bubbles, more capital outflows, rinse, repeat.

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SilverRoofer's picture

Fuck your shitty made weak steal China!

Looney's picture


Mr. Xi just wants more Chocolate cake.  ;-)


AVmaster's picture

Tit for tat technology?




You sell garbage fuckin steel, fuck you.


We make great shit... or used to...


Fuck off china...

PrayingMantis's picture


... and steal, it was ...

...  and btw, before I forget, remember 911 steel removal?

... "WTC Steel Removal - The Expeditious Destruction of the Evidence at Ground Zero"

... >>> "The bulk of the steel was apparently shipped to China and India. The Chinese firm Baosteel purchased 50,000 tons at a rate of $120 per ton, compared to an average price of $160 paid by local mills in the previous year."



Déjà view's picture


China has 'financed' U.S. deficits to the tune of $2T...

Overleveraged debtor...seems to have 'leverage'...

baby_tone's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

FireBrander's picture


1. The American Steele Industry.


2. The US Banking Industry.


Hey China, from the average US Citizens perspective...threatening to kick our bankers in the nuts isn't much of a threat...advice...use steele toed boots...chinese steel of course.

JohannSennefelder's picture

Haha Chinease Steal!


well said!


Fester's picture

I know what a tit is...

but what is a tat?

tmosley's picture

It's sort of like knitting or crocheting.

Idioms are weird sometimes.

PrayingMantis's picture


... a tat ...

... to do, or make by, tatting ... (

... or short for tattoo ...


...  tits are better ;) ...


FireBrander's picture

Yeah, like Chinese "Stainless Steel" graded for exterior use...rusts over completely within 6 months.

Justin Case's picture

Rusted like a  Ford?

I can recall the rusty cars in North America when Regan made manufacturers use recycled USA steel to build cars in North America. On a quiet day you could hear a Ford rusting. GM P/Us looked like they had leopard spots. Japan built the most modern steel funaces after merica nuked them. They sold steel to merica. It was the best steel you could buy.

While back in merica Bethlehem steel foundry hadn't up graded anything since it opened in the early 1800's. They just closed recently and they were still pouring steel on the ground to make ingots!!!

Industry in merica is dying because there is little money, if any going into productivity. Everyone is filling their pockets by hook or crook. They don't give a shit about the employees. They even ripped of their employee's pension plans.

ersatz007's picture

I worked at a PBM call center when they shut down the benefits for the Bethlehem Steel group.  Once had to talk to a 90 year old lady who was wondering how she was going to pay for her meds because the pension went up in smoke.  Talk about sad.

In part because the execs at Bethlehem Steel (and many other US Industries) were too concerned with short term profits and lining their pockets rather than retooling and innovating for the future.  And some of it was due to the equally short sightedness of the unions and the workers.  You can be sure the bankers who sold these pension plans  played their part too by forecasting pie-in-the-sky rates of return with nary a thought to showing a worst-case scenario.  Lastly the politicians who enabled all types of free trade and technoligy agreements with China and other countries are to blame as well.


Plus ça change plus c'est la meme chose. 

Justin Case's picture

too concerned with short term profits

This is what drives off shore factories. Sales, P/E ratios= Bonus money. IBM borrowed billions to do share buy backs, reason, drive earnings per share up, bonus targets exceeded. Even when sales were falling in dollar terms. Money. Screw the american worker. Once the unions are gone, the workers will be licking their employers boots for a shitty payin job.

SilverRoofer's picture

It is what I intended

Steal or steele

Same thing when it comes from china

Tallest Skil's picture

You want stories about Chinese steel? OKEEDOKE! Story time (not mine, unfortunately)!

The Chinese are absolute shit. They are the worst human beings that I have ever encountered on this planet, and I am extremely well-traveled, including many shithole countries. Don’t do it man; please take my advice. You won’t realize the truth in what I’m saying until you’re already here, but by then it’ll be too late. Please, help me help you. Learn something else!

The constant lying, backstabbing, and underhandedness isn’t worth it. If they can lie, cheat, or steal, they will. I constantly have to deal with cheats and thieves. They will rarely outright steal something from you, but they will never give you want you want for the money you spend unless you spend a huge sum. They even have a saying about this: ??????. “Nothing for nothing.” It’s basically expected that if you pay a low price for something you’ll get scrap, even if it’s supposed to adhere to a strict standard.

Example 1:

I work in the stainless steel industry. A friend was buying 201-grade steel (very common, basic grade) from a factory in Jiangsu. He asked me to inspect. All right. I went to the factory, they assured me that they can produce within the required specification (tolerance of ±0.25 mm for thickness; the steel was 30mm in thickness, so it had to be 29.75 or above to be within standard) and normal ASTM/AISI (standard international grade) chemistry. Well, all right; my friend’s buying this, so I guess they’re legit.


I inspected the goods and the thickness was all over the place, from 28.5 to 29.5mm. I confronted them about the thickness and their claims that they could produce to standard. “Oh, because ASTM is an American grade, we were obviously talking about inches; our mill only works in inches so we were talking about 1/4 an inch.” I checked the chemistry and the nickel content is less than a fifth of what it was supposed to be on some sheets. The chemistry was all over the place; almost nothing was to standard. “Oh, this is 201 industry standard steel; your friend should have specified that he wanted 201 international standard.” There’s only one 201 grade, you fucking idiot. If you produce ‘industry’ standard 201, you’ll mark it as such like everyone else in the fucking industry. You don’t just call it ‘201 grade’; you’re literally committing fraud. “So sue us. The order’s only worth ~$30,000; enjoy spending more on legal fees than you’ll get from us!”

Later I argued with the production staff at their office, showing them the American standard that said, “Hey, you’re wrong on the thickness; you have to refund the money.” One of the staff got into an argument with me over the meaning of ‘up to’. She thought ‘up to 30’ meant ‘starting at 30 and over’ rather than ‘everything up to 30’. “No, your English is too poor to understand this.” English is my native language, you stupid cunt. You can barely string two sentences together.

He didn’t get his money back and didn’t sue.

Example 2:

Same 201 steel order, and I hire a Russian company to do shipping since it’s being shipped to Moscow. I wanted everything to be seamless with no chance at fuck-ups. Our contract with the Russian company specifically says they’ll take care of the packaging, because in addition to the steel being off-standard, it was also produced late, so it had to go on a high speed train to avoid being late. The high speed train has very specific packing requirements for steel, so we thought the Russians could handle it.

The day of the shipment came (a Saturday) and all the documents were in place. I got a call from the Chinese subcontractor that the Russians hired to do the Chinese leg of the journey. “Hey, so the goods didn’t leave on Saturday.” … Why. “Because the factory didn’t package them.” WE HIRED YOU TO PACKAGE THE GOODS, YOU INCOMPETENT FUCK. “Oh, well, there aren’t any forklifts in the area that can handle weights as heavy as this.” You’re literally surrounded by warehouses, many of which stock stainless steel. Please explain how you are unable to find a forklift. “Well, we just can’t find one. You have to find one.” I ended down their job for them and finding them a forklift. Goods arrived a week late because the train only leaves once per week. My friend lost even more money because he had to give additional discounts to his client. Luckily the Chinese 201 grade happened to be the same as Russian local ‘industry’ standard 201 steel (I guess it was a Sino-Soviet thing), so he didn’t lose all of his money, just 20%.

Example 3:

I was ordering good from a large state-owned mill, purchasing through a company that came recommended by the sales manager (you have to do this in order to take advantage of the Chinese export tax rebate). We purchased, everything went smoothly expect for a small crisis at the start where the company quoted $2600 a ton but when ordering time came around it jumped to $3000, so we had to negotiate with the sales manager and company late into the night to bring things down to $2800, plus increase the price to our customer (who wasn’t happy). This happens extremely often in China; they quote one thing and then jack up the price after your client has signed a contract with you, knowing that you can’t back out or lose reputation and money.

March rolled around, the goods were produced on time, and the sales manager assured us that the goods would be in Tianjin Xingang airport on March 9 at the latest. They’d then package the goods and have them ready for shipment on the 16th.

March 5: Hey, guys, how’re the goods doing? Still on the train? “No, they haven’t left yet.” What. “Don’t worry, we can still put them on the fast train to port. It’ll take 3-4 days or so, so you’ll be fine.” All right, whatever; just make sure we’re there in time for the March 16 shipment date. “Yes, yes; of course.”

March 9: Hey, guys, where are the goods? Already in Tianjin? “Well, they haven’t left yet.” After I was done having an aneurism, I called the mill’s transport office and immediately had them cancel the train booking and put the goods on trucks, sending them straight to the airport. The goods arrived, but Tianjin’s port is a bit funky. They have a government bureau which packages the goods; you can’t package the goods once they’re within port. It’s like one giant bonded warehouses. The company assures us that the goods will be packed according to specifications (going on a Russian train system and they have special requirements).

I confirmed with them that the goods are all right about 4 days before the shipping date, they confirmed that the Russian shipping company has okayed the packaging job. I received photos of the job and forwarded them to the Russian company. All right; cool. The day before shipment, I got a message from the Russian company. “Hey, we’ve been trying to get in contact with the Chinese company for a week; we’ve had no response. The packaging job is incorrect. There’s no way the Russian train service will accept the goods. Trying to fight back another aneurism, i immediately got in contact with the Chinese company, asking them who, exactly, told them their packaging job was okay. Some fucking Chinese subcontractor who had no authority to do so. God fucking damn it. I asked the Chinese why they didn’t contact the Russian company, the company that has sent them numerous messages over the past week. “Oh, well, we were talking to you so we thought we didn’t have to respond.”

Long story short, the packaging was shit, the coils we were shipping (10,000 lbs. each) moved during shipment because of the shit job and damaged the container. We were delayed by one month in Vladivostok while they fixed the container and redid the packaging, all with additional fees. The Chinese company refused to compensate us.

It was at this point that I completely stopped trusting the Chinese in any way, shape, or form.

Example 4:

This happened when the company was still new and just started working in China. I had another deal buying common grade steel to be exported. Everything was in order and there weren’t any problems until we had an inspector in China check the goods. He apparently went to the guy’s warehouse in Tianjin, said the seller was legitimate, and managed to negotiate a 2% discount. We trusted him and went through with the deal. No problems occurred with the import/export; the steel arrived in Russia, but lo and behold it’s not what we ordered at all. We ordered 304 and 321; what we received was some sort of 201 failed abortion. Manganese was through the roof and it had low nickel and chromium content. It was completely out of standard. What the fuck.

I asked the inspector what, exactly, he did, again, in detail. He just went to the guy’s company office and chatted for a while. The Chinese guy served him some tea, negotiated a 2% discount, and he left feeling pleased with himself. He never visited a warehouse, saw the goods in person, or even checked the mill certificate to see if they were genuine. I fired him on the spot. This was never going to happen again.

The fraud agreed to a refund only if we sent the steel back to his warehouse in China and he had his inspectors look at it and say whether or not it’s his. Yeah, sure, great idea, 10/10, fucking hell.

I suggested instead that he send a guy to Russia to look at the steel and figure it out. “No, he’s a peasant; he’s too afraid to go overseas.” I’m going to fucking strangle our recently-fired ‘inspector’. We had our lawyers look into the case. Fun fun fun, if a Chinese guy commits fraud and sends you the wrong goods, it’s not a criminal offense, just a civil offense. The only recourse is to sue the company. I looked into the company’s finances: $1 million RMB registered capital, almost 100% sure he has moved it out of the account by now. We decided not to sue him because we’d be spending so much on legal fees with almost a 0% chance of getting anything back.

The Chinese legal system is extremely weak. If you order, say, $100,000 worth of goods from someone and they literally send you trash that semi-resembles the goods but is only worth $1,000, there are almost no penalties. They will not got to jail. They will not be penalized in any way. They will simply declare their company bankrupt and start a new one. Companies like this pop up all the time like mushrooms after rain. You should never ever ever ever ever buy from Alibaba for this reason. Seriously, though, a contract is hardly worth the paper on which it’s printed. If you do business in China, you should always have the jurisdiction be under a neutral body of law, like the UK or Singapore or whatever. Also, make sure that you never pay much in advance and only pay the balance after inspection and after any goods you buy are either sealed or put into a bonded warehouse.

Example 5:

This happened long after I realized the Chinese could never be trusted. I had a Russian client who constantly sent price inquiries over to our company. We constantly gave him prices. “No, no, these prices are too high; I can find better prices elsewhere.” What the fuck are you talking about? These prices are very far below market level. We’re literally undercutting the Russian market by 10-20%. “No, you see, I can find better prices.” Okay, good luck. He purchased from some really shady characters. I strongly, strongly advise him not to do this or at least let me check the mill certificates for him. He thinks I’m trying to steal his sources or Russian clients. Hey, man, whatever. You do you. Good luck.

He called me a month or so later, begging me to source his steel for him. Turns out, all these amazing prices he was getting were from, surprise, frauds! He ordered ~$200,000 from them, sent inspectors to China who oversaw everything, and it looked good. But his inspectors left the shipping container in the dealer’s warehouse, unlocked, for two days before it shipped to port. When the goods arrived in Russia, the top steel sheet was according to grade, but everything else was just common carbon steel, and rusty at that. He ended up losing almost everything. He was able to resell the scrap for maybe $20,000. He was very apologetic afterwards, though. I’m helping him now to avoid getting fucked by the goddamn Chinese thieves.

Anyway, now for some non-business related examples:

I was out at a club with a few friends. We were hanging around outside and as we were talking a guy about 30 feet to the left collapsed and started seizing. I guess someone spiked his rink or something and I never bring my cell phone with me when I go clubbing. I ran over to a police station about 100 yards away. Please call an ambulance. There’s a guy having a seizure over there and he needs help. “No.” What the fuck, why not?! “It’s not my job.” … Eventually one of the other clubbers called an ambulance for the guy, but still, what the fuck?

My roommate was extremely sick, delirious with fever. He couldn’t stand or walk and I had to take him to the hospital. I called my landlady and asked her if she could call a cab for us (gated community). “No.” Why not? “Point to the part of the contract where it says I have to hire cabs for you.” Fuck’s sake, fine. I threw my roommate on my back and carried him out to the street, hiring a cab to the nearest hospital. We waited in line behind an old woman while she chatted with a doctor about some day to day bullshit. My friend is literally about to vomit all over the floor; can you hurry this up? “Nope.” For the love of… After another five minutes of waiting (they were talking about banal bullshit–grandchildren, sports, etc.), the doctor finally got around to my friend.

Full body of tests and as I’m waiting for the results in the doctor’s office, a nurse bursts in and asks if I’m someone’s ‘countryman’. I figured she was talking about my roommate, so I said he’s Canadian and I’m American. She grabbed my arm and pulled me into the main hall. Some tall white guy is stumbling around, blood caked all over his head. He’d probably just been hit by a car and is completely out of it. He’s surrounded by a bunch of Chinese doctors and nurses who keep shouting at him in Chinese to sit down so they can run tests on him. He obviously has a head injury; why do you think it’s good to surround him and yell at him in a foreign language? Whatever; they think I speak his language since we’re both white. I went to him and we took a seat near the wall. I talked to him and calmed him down, finding out he’s from Sweden. The Chinese call an ambulance for him to take him to a larger hospital, asking me to be his translator. Yeah, sure, it’s not like my friend is dying in the fucking waiting room… I called a Russian friend to take care of my roommate, going with the Swedish guy when he arrives.

They did all kinds of tests and only accepted cash; by the time the doctor had the results I had maybe 80 yuan left of over 800. “So, our test results show that you are bleeding into your skull as a result of what we assume is him being hit by a car. We’d like to keep him in the observation ward overnight so that if anything happens we can respond immediately. Again, your wound can be easily fatal.” All right, but I only have about 80 yuan. Do you guys take cards at all? “No. Here, let me patch you up; you guys can go.” What? I thought you said this could be fatal? “Yes, it could be fatal, but it isn’t necessarily fatal. Let me clean and bandage up his head so you guys can head out.” He literally lost all interest whatsoever in caring for the Swedish guy once he learned I was out of cash. He refused to do delayed payment or anything like that; I had to pay up front in cash if I wanted to put the guy in the observation ward for the night.

In retrospect, I should have called the Swedish embassy immediately after I figured out the guy was Swedish so that he could have received proper care. But still, this was by far my most fucked up experience in China. That urgent medical care was refused because I didn’t have cash on hand ready to pay is completely fucked up. This, of course, is aside from the fact that both my friend and the Swedish guy were made to queue up every time behind people with minor injuries and coughs while one was about to fall over and pass out on the floor while the other was bleeding profusely from his head. It was so completely fucked up.

Anyway, I got a cab back home with the Swedish guy. He guy promised he’d take me out to dinner and pay me back for the medical expenses, but I never received a call after that night. After I didn’t receive any call, I remembered to check news articles in the weeks following to see if there were any reports of a Swedish guy dying in Beijing, but I didn’t see anything. I hope he’s all right. Who knows if they’d even have reported on him, though.

One final example. There are a thousand other stories I could tell about this, both in business and everywhere else, but I’ll just work myself up if I do that. I had a few friends who wanted to go to a nice place for the weekend–a theme park that’s a ways out of the city. My friend contacted a travel agency with really good prices–250 yuan for a weekend. We got on a bus and got to the theme park. Long story short, the price included bus tickets. The advertisement and company both confirmed that 250 was all expenses paid but neglected to mention the expenses were only those relating to the bus. Not even joking. They didn’t include hotels, food, actually going to the theme park, doing things in the theme park (all of which cost separately), transportation to and from the theme park and hotel, or Wi-Fi in the hotel. By the end of the weekend, it ended up costing ~2000 per person.

But hey, good luck getting the company to change its advertising. No one gives a shit in China. After all, ??????. You get what you pay for, and even if they lie to your face about every single detail of the trip, the Chinese don’t give a fuck because if you don’t pay a lot of money then why should you expect them to hold up their end of the bargain? You get what you pay for.


EDIT: Fuck, the Chinese characters I used didn't show up. ALLOW UNICODE, ZH!

techpriest's picture

On the one hand I would say something about communism (which pressures everyone to be as underhanded as possible in order to survive/get ahead). But, having married into a Chinese family and having had a lot of contact with Chinese folks through extended family + church, I've learned that Chinese are 1) incredibly tribal (even going from one city to the next there are people who will rip you off just because your accent is a little off), and extending from that, 2) no one trusts each other, and by extension you do not extend anything to anyone unless they extend a lot to you (guanxi).

The result is, family and close friends for the most part are outrageously generous to each other (assuming you are generous back, I knew a case where a Chinese woman murdered her own mother over not inheriting a house), but once you step outside of that circle, all bets are off. I also say this b/c if a first-generation Chinese person is working for you and giving you a lot of gifts, just be aware that he will want favors in the future. It's not necessarily bad, but be aware of what's happening.

IMO, that attitude is the main thing that holds that country back. Stealing from each other is a destructive force, and destruction leads to destitution. More honesty combined with the Chinese people's unusually high willingness to work hard would make that country the best in the world, but people tear each other down as fast as they can build themselves up.

On the travel agency thing, I got scammed on that once too. Another family on the same "tour" started screaming about how they were going to sue, and our guide said to the other "Fuck 'em, let them sue." We called the company later and the lady apologized profusely and promised to look into it, but my guess is it's her job to say that. Generally we avoid guided tours over there, and for the same reason. Unless a trusted friend or family member vouches for a service, we've learned to avoid it.

RedDwarf's picture

Tit for tat / bronze rule (do unto others as they do unto you) is the most advantageous game strategy for open sum games, which life basically is.  What you are describing is the iron rule (do unto others before they do unto you) game strategy.  That strategy does in fact work the best if you are in a negative sum game, but as you say it harms you in open sum games.

If your and the other guy's analysis is correct, the Chinese will need to change this if they want to do well in the modern era.  Strategies based around graft and passive-aggressive behavior may have served the Chinese people well as defense mechanisms for surviving totalitarian regimes and so they make sense given their history, but you can't build a solid house on such a weak foundation.

techpriest's picture

Over time I hope to learn more about Chinese history, as it is long, complex, and it can tell humanity much about how choices made today, yesterday, or 500 years ago can affect us here and now. For example the stereotype about Asians and studying for exams apparently has to do with a centuries-long history of governments, across multiple dynasties, using civil service exams to determine who gets a position. And since government jobs have always meant getting an iron rice bowl (and in less ethical times, opportunities for graft), Chinese families have been telling their kids - for centuries - to study hard so they can get one of the good jobs. Americans don't have that mindset because we have a history of being everyone else's rejects, and we win by going into the literal and metaphorical "wild lands" to strike it rich.

On the iron rule, I still wouldn't say that I have spent enough time to fully know, but you remind me of an experience with a Chinese man I knew who I would nickname "the most corrupt man in the world." This guy talked non-stop about all these ideas he had on how to scam people, and once he offered me to go on a deal with him, but because he was so mind-numbingly corrupt he told my wife (in Mandarin because he figured I couldn't understand), that actually he was running a scam and was going to make me the fall guy. But he told my wife?! At least he was as stupid as he was corrupt, but there are people there who do not think much farther than "what can I get for myself, right now?" and who also occupy high positions. That particular guy was a PhD and is now a VC investor, last I heard.

I see it mainly as the legal and social system rewarding certain behaviors, and behaviors that encourage cooperation and following the rules simply aren't rewarded as much, whereas skirting the law and buying your way out of occasional trouble tends to work better. People look at this and assume they should do the same to succeed.

Mr.BlingBling's picture

Ah, the Chinese . . .

No one can possibly know what dark and grotesque things pass through the minds of this hydraheaded racial anomaly which is, after all, more like a monstrous colony of flesh-crazed carpenter ants than a nation of rational men. 

Only a fool would deal with two-legged insects such as these. 

Our only hope is that the farsighted leaders of our own land will join with those of at least nominally Caucasian Soviet Russia and that together they will treat us to the welcome spectacle of a thermonuclear obliteration of this yellow menace.

     ~ P.J. O'Rourke (National Lampoon's Foreigners Around the World, 1976)

The Gladiator's picture

I didn't read your entire book,but I think I got your point. You don't like them. But America is dying. Her blood, the middle class,has almost completely vanished. A price increase in foreign steel won't help her. History here has proven that if Chinese steel were to go to $4 from a previous $2 when local steel is $3, local steel would go to $3.99. All it would do is make consumer prices rise, (autos,etc...), and steel plants more profitable. And we all know that corp. profits don't equal more hiring. And hiring the middle class is the only thing that will keep this country alive.

youngman's picture

They do already......

I am Jobe's picture

Lat week Trump and Xi were holding hands and singing Love you songs and this week this. Sheesh. time for some prozac 

doomchild's picture

Fuck off ChiComs. US has nothing to lose. You created this situation with these unfair trade pratices. Retaliate how and with what ? For Tech the ChiComs use chinese platforms anyways - Weibo, Baidu, Alibaba etc. And the Chinpokomon banks are in AWESOME shape, leveraged to the max, balls to the walls. The fucking communist Chinese Chinpokomon fucksticks will now discover that there is a price to pay when they want to play their currency manipulating capitalist games. 

BigFatUglyBubble's picture

petro-dollar is an unfair trade practice. 

Justin Case's picture

It all gets innerestin when them thar dollars start coming back to the makers. Can you say in-fla-tion?

techpriest's picture

They use Chinese platforms because the government de facto requires it. Mainly because the platforms have the spy agency backdoors built right in. If you ever head over there, use a burner phone and know that their version of the NSA is listening to you.

silverer's picture

The relative painlessness of US failure so far is soon to become a situation where you feel a lot of pain. Tick tock, folks.

I am Jobe's picture

Americans are exceptional. Pain is exceptional to them. The whining of America will soon reveal

ToSoft4Truth's picture

Cost-push inflation.  Trump is learning how to blow... bubbles. 

lester1's picture

What can China actually do to retaliate?? USA holds all the cards here. Trump knows this.

lester1's picture

Let China try and dump US Treasuries.


The Fed's PPT will buy them all !!



lester1's picture

China has high import taxes and big time protectionism. There is nothing they can do to us that they aren't already doing !!


Take notes Tylers!

crossroaddemon's picture

Trade war just means price of everything goes to the fucking moon, and the high paying low skilled jobs STILL don't come back. China is right about this. Nobody will benefit.

BigFatUglyBubble's picture

A year ago Trump said he was going to slap a 45% tariff on all China imports.  I double dog dare him.  Triple dog

crossroaddemon's picture

Of course it won't happen. Neither he or anybody else is going to take responsibility for the economic fallout. 

tmosley's picture

A trade war would indeed benefit no-one. Trade deal negotiations, however, will benefit the US greatly. Even moreso if we show that our threats are credible. When carried out properly, by a professional negotiator, the US will benefit.

This sounds like a "big first offer" to me.

crossroaddemon's picture

I think you're still operating under the delusion that this would bring back those high-paying low-skill jobs. It won't. All tariffs will do is cause the price of everything to skyrocket, and every damn incumbent congressman and senator to get voted out. You think they're gonna pull the trigger on that shit?

The Gladiator's picture

It caused Smoot AND Hawley to lose their cushy gov jobs.

Oldwood's picture

So, you're saying that we aren't already in a trade war, simply just not fighting back. I guess it is true that you can't lose the battle if you simply refuse to fight. 

Maybe when we have 200 million out of the workplace and on "entitlements", maybe THEN we will call it a war and fight back. You know the boot on the neck is not put there with force..... we ALLOW IT by simply doing nothing to resist. Just keep buying more cheap Chinese shit..... That'll show them!

crossroaddemon's picture

I think you have no idea what the economic fallout would be from high tariffs on imported goods. People are barely holding on as it is and now you want to double the price of every damn thing in the stores overnight? Even if had had long-term benefits (which I doubt; those high-paying factory jobs are never coming back) the short-term pain would get basically everybody voted out next time. What politician is going to vote for that?

techpriest's picture

We're barely getting by but we can afford $50k pickup trucks on 84-month loans. ffs.

Congress also isn't willing to deregulate enough to let cheap stuff be produced here again. It doesn't have to be a free-for-all, but we do need to lower some of the excessive paperwork and not encouraging EPA/OSHA agents to engage in fine-hunting operations that drive up costs with no added benefits in actual safety. I also learned of cases where a US company was being required to adhere to contradictory standards (IIRC, 2012 and 2015 rules for the grain silos they were making) by a local and regional office of the same agency (some obscure federal farm regulator), and the superior office did nothing while the local office harassed them. That's the sort of activity that adds nothing, but costs much.

crossroaddemon's picture

Not everyone is buying 50k pickups. It's not even most people. Besides, no matter how much you deregulate American goods will not be cheaper unless wages go down to equivalent levels or the factories are automated. the latter is probably going to be the case. The high-paying unskilled jobs are not coming back.

techpriest's picture

That's because the jobs never existed in the first place.

When I was young I kept hearing about how great the 50s and 60s were, but riddle me this:

1) How big were houses back then?
2) How many appliances did people buy, and how often?
3) How much spare time did they invest into fixing things themselves?
4) What were the attitudes about debt?

Typical houses back then were sub-1,000 sf, "tiny houses" by today's standards. A lot of what people expect to have today did not exist back then, or took years of savings.

Meanwhile, I knew grad students who could afford similar, and grad schools are not known for high pay.

Turn off the TV, be glad for what you have, save hard, get others to do the same, and kick any politician out of office who wants to prevent you from doing this. End the banker games and prices would come down even before all of the other forces come into play.

crossroaddemon's picture

The fact is you coud live on an unskilled job in those days. Adjusted for inflation minimum wage in the 60s would be over $20/hr in today's money. People ask why auto workers think they should get $30/hr on a high school diploma and the answer is very simple: because adjusted for inflation, that is what their fathers and grandfathers got.

techpriest's picture

That happened at the time because WW2 bombed the entire rest of the world into oblivion. For a very brief time there was a lot of foreign money coming in because nothing else was for sale. Still, in terms of standard of living I wouldn't trade my life now for a life then. Now the world rebuilt, and we are not the only game in town.

I'm reminded of my old job where the company was the only game in town 10 years ago, but today other (American) companies produce the same product at 15% of the price. What the company and its workers got 10 years ago does not matter, what matters is how the company is going to compete.

Caleb Abell's picture

"I guess it is true that you can't lose the battle if you simply refuse to fight."

You just described General McClellan's strategy in the civil war.

Fake Trump's picture

China is having lots of dry powder to trash Trump.