Wednesday, August 14, 2019
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Trade Dispute Between U.S. and China: Who Will Suffer From What?

US-China trade war

There are signs that U.S President Donald Trump and Chinese President Xi Jinping are not eager to lose face in the ongoing trade dispute between the two countries. The United States and China are the two largest economies in the world, and a trade dispute between them is sure to have negative impacts on other nations. But since both leaders are not willing to back down for the other, who blinks first in the current standoff?

Business and political analysts say unless they both concede for each other, the ongoing trade conflict can last for several months or years.

Considering that the US has a strong economy, analysts say President Trump may not back down anytime soon unless he gets a good deal with China. Clete Williams, a former White House trade negotiator said Trump might hold out for as long he can. This is possibly because analysts see China losing in the end if both countries do not come to a mutual agreement.

“President Trump is not planning on backing down on this issue until he gets a result that addresses the long-standing, unfair trade practices the Chinese are engaging in,” said Clete Willems. “President Trump is going to see this one through until the end.”

China Is In a Weaker Position, but the United States Is Not Exempt From Being Impacted Too

The G-20 summit comes up next month in Osaka, Japan and both Trump and Jinping are billed to attend. It is hoped that the summit will provide both leaders with another opportunity to iron out their differences and come to a deal agreeable to both. Incidentally, Trump sees himself as in a stronger position than his Chinese counterpart and believes he has an upper hand in negotiating deals.

Following trade negotiations last weekend, Trump increased tariffs to 25% on Chinese goods of $200 billion. He is also looking to hike tariffs on all Chinese importations for another $325 billion. In reprisal, China said that starting June 1, they will hike tariffs on $60 billion of American importations, a move that will impact several American interests within the country. Michigan, Ohio and Wisconsin are states that can ensure that Trump gets re-elected in 2020, but the China raising tariffs will harm medium companies and farmers in these states.

If the trade conflict significantly affects the United States, it could force Trump’s hand for quick deal. However, considering that Trump is lifting tariffs on aluminum and steel from Canada and Mexico as well as delaying tariffs on cars for another six months, he can decide to hold out for much longer against China in the light of these initiatives. Trump is also confident that the US will not be impacted much in the light of unemployment remaining below 4% and GDP rising by over 3%.

Trump Are Jinping Are Friends, But This Does Not Extend To National Trade Deals

Anabel González, a senior fellow at the Peterson Institute for International Economics and a former top World Bank trade official, both Trump and Jinping are not making it easy for themselves to strike a deal. Yet, many experts believe China will lose more since it depends on more US imports than US does Chinese imports, while Jinping continues to contend with multiple factions within his own government.

While trades worth $600 billion exchanged hands between the US and China in 2018, China owes the US over $1 trillion – a debt that further puts the communist country in a weaker position against America. And then, former White House chief strategist Stephen Bannon and trade adviser Peter Navarro think China is getting too threatening and must be dealt with in a decisive manner.

All things being equal, Trump said his personal friendship with Jinping might make the latter to backtrack on certain things. But analysts say national trade agreements go beyond personal relationships.


SpaceX to Launch 60 Satellites to Provide Global Internet Coverage This Week

SpaceX to Launch 60 Satellites to Provide Global Internet Coverage
SpaceX to Launch 60 Satellites to Provide Global Internet Coverage

SpaceX is setting its eyes on providing global internet coverage to every country in the world. The rocket company plans to do this by launching 60 satellites into space at the same time. This week. If successful, everyone around the world will be able to access cheap broadband internet regardless of where they are on planet Earth.

According to SpaceX CEO and founder, Elon Musk, the launch of the batch of 60 satellites would have taken place earlier last week. But this was postponed by just one day due to atmospheric disturbances in low-Earth orbit where the satellites will be stationed.

However, on Thursday, the company tweeted that the satellites launch will be postponed by another one week. This they said is to enable them update the software powering the satellites and triple-check that everything is fine.

It is now expected that the said launch should occur at a time to be announced this week.

Up To 12,000 Satellites May Be Launched To Provide Worldwide Internet Access

This initial launch of 60 satellites cannot deliver satellite connectivity around the world from space. An estimated 12,000 satellites in space will be required to achieve that. But the initial launch of 60 satellites will set the pace for other upcoming launches. It must however be noted that SpaceX is not the first company to attempt this lofty feat.

SpaceX to Launch 60 Satellites to Provide Global Internet Coverage
SpaceX to Launch 60 Satellites to Provide Global Internet Coverage. Photo Credit: SpaceX-Imagery/Pixabay

Amazon and OneWeb among other major competitors are also launching their own satellites to provide the same global internet service. LeoSat, Qualcomm and Telesat are also doing the same. OneWeb is heavily funded by SoftBank and Qualcomm already has six of its communication satellites up in space.

During a news conference earlier last week, Elon Musk told reporters there is no assurance that things will go perfectly right with the satellites. He said the entire batch of satellites was mass-produced, and since they are mostly new technology, some may not work perfectly or even function at all. He said his company is calling the mega-constellation of satellites in space, Starlink.

Following this initial launch, 12 similar launches will still occur before Starlink becomes fully operational to provide global internet coverage. The remaining launches will be achieved via six more rocket missions.

Internet Costs Are Prohibitive Because of the Location of Satellites in Space

The entire operation is estimated to cost billions of dollars. In fact, Musk said a few other companies who attempted are now bankrupt. A case in point here is Iridium, a satellite operating company. He clarified SpaceX has sufficient capital to fund its plans. And that the company’s attempt to raise about $400 million in April yeilded “more interest than we were seeking”.

Many rural and improverished communities cannot afford access to internet connections, leaving them cut off. This is largely because internet is largely delivered to homes and workplaces via underground cables or wireless cell towers. Satellite-based internet access is out of the question for many since it is very slow, unreliable and expensive. One of the reasons it is slow and unreliable is because the satellites are located too far away from Earth.

But with satellites stationed in low-Earth orbit, internet access is faster with little chances of service disruptions.

Analysts Question the Economic Wisdom of Internet Access in Uninhabited Areas

While the efforts will connect almost the entire planet to the internet, analysts question the benefits. Shagun Sachdeva, an analyst with Northern Sky Research, questions the economic wisdom of sending thousands of satellites into orbit. She finds it wasteful that SpaceX would provide full internet coverage over the oceans and other uninhabited areas where it won’t be used.

She thinks the company may come to a point where they find the costs of launching satellites outweight their economic benefits.

But in areas where coverage is assured, the economic benefits of solid internet access to people and businesses cannot be imagined. Businesses will soar and developmental progress will boom. Education will be easier and communication will be established at the press of a button. People will be better connected to those outside their regions and global connectivity will make the world a truly global village.


Huawei Suffers another Blow as It Loses Access to Google and Android

Huawei loses ties with Google and Android
Huawei loses ties with Google and Android

Top US tech companies have begun to implement the Trump administration’s order to stop selling American-made tech products to Huawei, a Chinese company. Huawei is the largest smartphone brand in the world after Samsung. The company relies on major US companies for hardware and software for its smartphone and other network technologies.

Just last week, the Trump administration accused Huawei of being used by the Chinese government to spy on the United States. Huawei denied the allegations but the US Commerce Department still went ahead to blacklist the company and ordered US manufacturers of tech components to stop selling to the Chinese company.

Huawei is the largest technology company in China and this move may cripple its business around the world with far-reaching consequences for the modern economy.

Huawei’s Inability to Access Google’s Android OS Will Curtail Sales of Its Smartphones Abroad

Several US tech organizations have indicated their willingness to obey the Trump order and quit supplying tech components and software to Huawei. Intel Corp supplies server chips to Huawei, Qualcomm supplies it with smartphone processors and modems, Xilinx supplies programmable chips for networking, and Broadcom supplies switching chips for networking machinery.

All these and other suppliers of semiconductors to Huawei have indicated quiting business with the Chinese company.

Alphabet, Google’s parent company, has also indicated they will Huawei’s access to their proprietary Android mobile operating system for smartphones and other major Google services.

Huawei loses ties with Google and Android 1
Huawei loses ties with Google and Android. Photo Credit: Huawei Technology Inc.

Due this restriction, Huawei will only be able to use the public version of Google’s Android OS. The Chinese company will not be able to provide specialized Android apps and services such as Google Maps and Gmail among others on its smartphones.

This will surely choke the sale of Huawei smartphones in international markets and restrict several major services that consumers are familiar with.

US’ Trade Restrictions with Huawei May Snowball into a Cold War with China

An analyst with Rosenblatt Securities Inc., Ryan Koontz, noted with concern that Huawei is “heavily dependent on US semiconductor products” and that its business operations will be seriously crippled without access to major US components.

Furthermore, the order may induce China to delay the launch of its 5G wireless network worldwide. Meanwhile, several US tech companies will also be affected by not selling to Huawei and among these is Micron Technology.

Insiders reveal that Huawei anticipated this move from the Trump administration and began hoarding mobile chips since mid-last year. It is even said that the company is designing its own chips with a view to cutting down reliance on US suppliers.

However, inside sources who do not desire to be named since they are not authorized to speak on the matter stated that Huawei’s stockpile may run out in less than six months unless the US government lifts its sanctions.

As can be expected, this trade restriction is affecting the relationship between the US and Chinese governments. Political analysts say President Trump is using Huawei to contain China, with Beijing vowing to get back at Washington.

The escalating tensions may snowball into a drawn out cold war between the United States and China – the two world’s largest economies. This impasse is certain to affect international supplies of tech chips and components and possibly delay the launch of 5G networks required for future economies.