Tag Archives: Trade

Brexit Reality

Just some reality
About 6.5% of German cars come to the UK.
About 2.6% of German GDP is exported to UK including the 6.5% cars
France exports about 1.4% of GDP to the UK.
The internal EU market is of great importance to EU member states including Germany and France although the UK is an important market a unified Europe is a first priority.
Within the exports to the UK you also have to look at the Rotterdam effect these are European goods passing through the UK to markets beyond. They are calculated into the UK import figures and no one has done the maths on the real effect.
Market GDP
US 19.39 Trillion very difficult for major economies to cut trade deals with and the UK will always be a fringe player here while a major player in the EU.
EU 18.7 Trillion UK already has trade deals.
UK 2.66 Trillion
On a per capita basis the UK is the 28th wealthiest country in the world.
You can say exports to the EU are falling however you can’t calculate the build-on factor growing what you already have. The strategy that most business utilise in order to survive.
Even the Iceni traded with their closest neighbour Europe especially the Italians!
This does not cover all the other disruption airlines, travel ,travel insurance, medical issues, citizens rights, plus the 1000s of non-tariffs that have to be negotiated. Also not to mention the Irish border and Gibraltar. It takes many years to negotiate trade deals there are many precedents for such trade arrangements. Also the current political class don’t seem to have the abilities required to manage a go it alone position.

The Illusion of Donald Trump and Protectionist Policies. The weakening of the USA.

Historically the USA has been a balancing force in the world however is that about to change? Donald Trump has managed to create problems with most of America’s continental neighbors and Global allies. Although there may be genuine grievances held by the United States however badly thought out aggressive solutions causing alienation can only weaken the USA in the long run causing such large economies as Canada and Mexico to look elsewhere for trading partners and there is elsewhere.

While the West squabbles China is quietly getting on with the job. China is probably the world’s greatest trading nation and has been for 1000s of years. They understand they need all of us to become the world leader that they aspire to through trade and economic power.
During the early middle ages China had a larger maritime fleet than all the European combined fleets.
Zheng He 1371-1433 a Chinese mariner, explorer, diplomat, fleet admiral, and enslaved court eunuch during China’s early Ming dynasty. He was originally born as Ma He in a Muslim family, later adopted the conferred surname Zheng from Emperor Yongle.
Admiral and diplomat who helped extend the maritime and commercial influence of China throughout the regions bordering the Indian Ocean. He commanded seven naval expeditions almost a century before the Portuguese reached India by sailing around the southern tip of Africa.
He first set sail in 1405, commanding 62 ships and 27,800 men. The fleet visited Champa (now in southern Vietnam), Siam (Thailand), Malacca (Melaka), and the island of Java and then through the Indian Ocean to Calicut (Kozhikode) on the Malabar Coast of India and Ceylon (Sri Lanka). Zheng He, returned to China in 1407.
Zheng did 7 voyages including to the upper reaches of the Persian Gulf. My point these voyages although militarily strong where fundamentally trading expeditions on a scale far greater than anything Europe and the rest of the world could mount. Though a nuclear power China has for millennia understood economic power is far more important than contemporary nuclear power.

Today we have The Belt and Road Initiative (BRI) or the Silk Road Economic Belt and the 21st-century Maritime Silk Road is a development strategy proposed by the Chinese government which focuses on connectivity and cooperation between Eurasian countries, primarily the People’s Republic of China (PRC), the land-based Silk Road Economic Belt (SREB) and the ocean-going Maritime Silk Road (MSR). Until 2016 the initiative was known in English as the One Belt and One Road Initiative(OBOR) but the Chinese came to consider the emphasis on the word “one” as misleading.
The Belt and Road Initiative addresses an “infrastructure gap” and thus has potential to accelerate economic growth across the Asia Pacific area and Central and Eastern Europe: a report from the World Pensions Council (WPC) estimates that Asia, excluding China, requires up to US$900 billion of infrastructure investments per year over the next decade, mostly in debt instruments, 50% above current infrastructure spending rates. The gaping need for long term capital explains why many Asian and Eastern European heads of state “gladly expressed their interest to join this new international financial institution focusing solely on ‘real assets’ and infrastructure-driven economic growth”.
China has by far the largest foreign currency reserves with over two and half times more than the second largest reserve holder, Japan. When China and Hong Kong reserves are considered together, the total is $3.6 trillion.5 Apr 2018

Even if only part of this dream is realised it has the potential to combine nearly 3 billion people in a trading partnership more if you add what China is doing in South America and Africa. It will be far more important for Canada and Mexico to find a way into this monolith rather than dealing with 380 million Americans. Remember Russia also skirts the Silk Road. China also has a relatively under-developed enormous home market that more and more emphasis is being placed on. China has been expanding shopping malls and ecommerce (ecommerce reaching $1.2Billion 2017) at a rapid rate shopping mall revenue growing at 8.1% to 2017 there is an expected fall to around 5% (mainly due to mergers) followed by a pickup.
China now has the finest high-speed rail infrastructure in the world. Beijing has just opened a new rail link to Tehran how difficult will that make it for the US to pressure the Iranian regime. The intention is to have fast rail links right into Gare du nord. It is the USA in the long run that will have to negotiate tariffs with a powerful China

IMG_4853S

There are Huge long-term dangers in trade protectionist policies and too much dependence on military power war has never been a solution the Chinese understand this issue. USA may find it has to negotiate its long-term way back into the club on a weakened basis. Donald Trump’s incredible deal making skills which we are yet to see may not be enough to even guarantee US future employment figures. Logic dictates that the US needs to stay a global participant totally contrarian to the Trump myopic naïve approach to world affairs. Unfortunately, the Trump philosophy is aimed at the home market and a large proportion of US citizens are detrimentally naïve when it comes to international affairs and geography. US Americans especially those in power are short term thinkers the Chinese have 3000 years of understanding the value of long term planning behind them and foremost is economic power. Economic power enables you to address poverty issues reducing the propensity to rebellion.

Figures confirmation: –

IBIS World

Britannica