The Farm: China Trade Deal, Anti-Parallel Trade, Hong Kong Escalation

Author: Halliburton

China Trade Deal

The South China Morning Post regularly opines on the current state of the “Trade Deal, the “Trade War”, and many other economic topics from the perspective of the CCP. In more depth, the SCMP can be seen as an appendage of the CCP that focuses primarily on the syndication of Communist Party propaganda and disinformation. It recently reported that the Vice Minister of Agriculture and Rural Affairs, Han Jun, stated that China will not increase its grain import quotas as per the already announced agreements. This news comes just days before the expected signing of the agreement on January 15th.

This is simply another renege prior to the signing of the “Phase One Deal” which means that the deal, as it stands, won’t be signed. This runs completely counter to the narrative of the previously announced agreement that was accepted by senior trade representatives on both sides. The changes being proposed in this article relate to China agreeing to ease import quotas on agricultural products — something the WTO tried and failed to account for many years ago. As Xi Jinping said in September of 2018 — the “rice bowl of China must be firmly gripped in the hands of Chinese people.” In this case, trade representatives from the United States will likely just levy the December 15th tariffs on Chinese imports.

Anti-Parallel Trade

One unfortunate result of the lack of “opening up” that the CCP has imposed on the people of China is a lack of high quality domestically produced products across a wide swath of industries. Lacking proper regulations — in 2008, hundreds of thousands of Chinese babies were sickened by baby milk formula contaminated with adulterants like melamine in a more publicized incident that highlights the generally poor quality controls and regulations in the Chinese mainland market for consumer goods. The CCP — of course — tried in vain to cover up the depth of the scandal, because it directly implicates the mismanagement of a variety of government services that all failed in such disastrous fashion.

This has resulted in a number of anomalies to the periphery of China that are less prevalent in market economies — outside of the occasional hurricane or natural disaster. Mass cross-border arbitrage has been taking place for decades, with goods destined for Hong Kong being purchased (like baby milk formula) and imported to China where they are then sold at exorbitant prices. This drives artificial inflation in Hong Kong for certain items. In other words, these activities increase the price of common goods and cause scarcity due to the CCP not allowing these imports directly into China through any existing distribution channels. As a byproduct, this causes yet another underground market for the CCP to control and skim money from. The shops benefit, the CCP benefits, and the people of Hong Kong suffer.

Hong Kong has had protests trying to prevent “parallel trading” since at least 2012 — and recently things have never been worse, with protestors targeting shops known to be complicit in selling the goods to CCP affiliates. The recent increase in anti-parallel trading protests is likely linked to the deteriorating economic conditions on the mainland. With supplies starting to dwindle due to the cash crunch on the mainland — these parallel traders and the complicit storekeepers (and therefore the CCP) are making even more money off of this suffering.

Hong Kong Escalation

In Hong Kong, a 13-year-old girl “fell” to her death in yet another suicide that was not deemed suspicious by the police. There are no accurate tallies for the number of arrests made by Communist forces, or the death toll they have inflicted on the public. The protesters have consistently demanded an independent inquiry into the excessive use of force by police — though many murders will certainly remain unsolved.

Miles has been consistent about the fact that from March to May of this year,

Hong Kong will see the greatest increase in escalation from the CCP — and so we expect to see images and stories like this proliferate as the seasons change.

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Jan. 08, 2020