business

Japan, China seek to restart FX swap lines

6 Comments
By Stanley White and Leika Kihara

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It would be a good idea for not resuming currency swap practice with China. Right now, the developed world has cut back trading activities with China in support of President Trump's trade war against China . Japanese companies should cut back their trades with China as well. Trade with China is a bad business period. Japan should follow President Trump's lead and should instead raise tariff on all imported Chinese goods by at least 25%.

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It would be a good idea for not resuming currency swap practice with China. Right now, the developed world has cut back trading activities with China in support of President Trump's trade war against China . Japanese companies should cut back their trades with China as well. Trade with China is a bad business period. Japan should follow President Trump's lead and should instead raise tariff on all imported Chinese goods by at least 25%.

Thing is, I think we need to take a balanced approach. Personally I am hoping that the U.S and China gradually commit to a divorce in trade ties. There is no way the U.S should provide China with $500 billion in exports every year when they consider China to be a strategic threat and that view is shared by both Republicans and Democrats. The rest of the free world also shares that view to varying degrees and should begin that uncoupling as well but at a much slower rate.

Let U.S companies take the lead for now. As the U.S business sector moves out, it free's up a lot of investment capital to invest elsewhere and use the U.S consumer market as the carrot for other potential trade partners. If the U.S takes the lead role in shifting the pattern of trade, shifting supply chains, then allied economies like Japan, the E.U, Australia, Canada, U.K etc can ride on the back of that a slowing growing proportion of their investment capital, but still retain the earnings they get from exports to China as they have not committed to a complete divorce. They still let in Chinese imports without tariffs for the foreseeable future.

Japan's growth rate is very poor. If you ever want to hit 3% or better, Chinese exports are going to be part of that mix and cutting yourself off from China now is not the right timing. In Japans case, it may never be possible BUT that doesn't mean they can't push an increasing percentage of your investments and two-way trade towards India, Sri Lanka, Africa, South America, S.E.A etc presuming you have what they want and they have what you want and Japan offers a pretty broad range of appealing goods and services.

Its always better to take a measured approach if you don't have the political capital to be really forceful and Japan doesn't have that.

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New laws must be enact to punish those who trade with China or buy Chinese goods. Economic sanction must be placed on China. Majority of American people support putting 1000% tariff on ALL Chinese goods. President Trump clearly has not done enough in trade war. Japan must do the same with NO alternatives.

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The resumption of the swap agreement represents a thaw in relations between the world's second- and third-largest economies, which soured in recent years due to territorial disputes and tensions over Japan's wartime history.

About time. With the US gone awol and aggressive at the moment, China is an option for trade.

Dont Trust Chinese

Don't trust racists.

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The Chinese send warships every day to Senkakus Islands and abe wants a currency swap with these guys?

I need a therapist!

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Thing is, I think we need to take a balanced approach. Personally I am hoping that the U.S and China gradually commit to a divorce in trade ties. There is no way the U.S should provide China with $500 billion in exports every year when they consider China to be a strategic threat and that view is shared by both Republicans and Democrats. The rest of the free world also shares that view to varying degrees and should begin that uncoupling as well but at a much slower rate.

The poster has a limited understanding of the export business of the PRC. The most valuable consumer products are made on manufacturing sites partly owned by foreign companies and often managed or controlled by foreigners. Most products are also designed in the West, Japan and Korea.

The Americans have been sloppy with their manufacturing industry like they were in the eighties when the Japanese were ruling the waves. The result is that they can't produce indispensable products and half-products as the lack the manufacturing grid as well as the skilled workers needed. It will take years to set that up in which process they will face foreign IP as well.

The Americans and Europeans agree on the level playing field of doing business in China and on Intellectual Property.

Export represents already less than 20% of the Chinese GDP while it's still a development country with a large proportion of the population still living in the mud.

Despite all the rhetoric form the West, Japan and Korea on doing business and IP the investments will continue as the market is there.

Despite the down thumbing of the POTUS Boeing will continue to set up a manufacturing site in China as their growth market is there.

The poster also dreams about US businesses taking the lead searching for supply chain alternatives.

Well, the US MNCs controlling certain supply chains were never happy with the measurements from the White House and already redirecting supply chains.

A nice example is the current soybean deal with the EU made during Junckers last visit to Washington.

In reality China is buying more Brazilian soybeans [ along with the source markets like Russia] to compensate the drying up soybean supply chain from the US.

The demand for Brazilian beans by China makes those beans more expensive for European clients. The Brazilians prefer their Chinese clients as they offer a premium above the market price and the fact that Europe is no grow market for soybeans.

The EU deal is in fact a measurement to compensate higher soybean prices in Brazil by importing cheaper US beans. Everybody happy in the field and trading biz and a former businessman in DC who thinks that he made a great deal and 'got them by the throat' :)

American MNCs in the commodity business control these supply chains and process them at the end destinations in plants controlled by them, for example in..China.

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