قالب وردپرس درنا توس
Home / World / What it means for Chinese companies, as Trump's US companies call

What it means for Chinese companies, as Trump's US companies call

A Chinese denim factory

STR | AFP | Getty Images

BEIJING – As tensions rise, American companies are facing an increasingly complex environment in China, while Chinese companies are looking for ways to adapt – all of which, analysts say, could open up new opportunities for Chinese companies.

On Friday, China announced plans to raise additional US $ 75 billion in tariffs on September 1 and December 1

5. In response, US President Donald Trump tweeted later that day that his government would also impose tariffs on Chinese imports worth $ 550 billion. 19659002] The recent tariff announcements of the last few days mean that by the end of the year, essentially all Chinese goods exported to the US will have to pay duty.

However, this increases the burden on Chinese companies, the data and other analysis suggest that mainland companies are looking for ways to stay robust – even if this sometimes means they get the economy under control costs the tariffs.

"I am convinced that the trade tensions between China and the United States are a long-term situation," said Wei Jianguo, a former deputy minister in the Ministry of Commerce. He told CNBC on Sunday that the Chinese side had been waiting for a fair and equal trade deal, but the country was preparing to counteract the negative impact of trade tensions.

"We are not afraid," said Wei, currently deputy chairman and deputy general manager of the Beijing China Center for International Economic Exchanges think tank in a CNBC-mandated telephone interview in Mandarin on how China is strengthening its own business. These are:

  1. Greater government support
  2. Opening channels for other international markets through programs such as free trade zones and the Belt and Road Initiative – a Beijing-led massive infrastructure project environment for state and foreign companies; and
  3. Implementation of policies such as tax and fee reductions.

The two largest economies in the world have been involved in an escalating trade conflict for more than a year. While the dispute initially focused on the large US trade deficit with China, discussions widened to include complaints, including unequal foreign access to the massive Chinese market and forced technology transfer.

What this means for Chinese companies Tariffs mark a reversal of an agreement between Trump and Chinese President Xi Jinping at their meeting in late June, when they agreed not to levy tariffs on goods from each country.

"This violation and the limited movement from the US to ease the restrictions on Huawei means that Xi has virtually given up trying to gain Trump's favor," said Michael Hirson, head of practice in China and Northeast Asia at the consulting firm Eurasia Group. said in a note Saturday Beijing time.

"China's leaders probably have not yet taken a final decision to rule out a trade agreement with Trump until after the US election," Hirson said. "However, they are increasingly skeptical of Trump's viability as a negotiator and are no longer prepared to make significant concessions to appease him."

In the short term, increased US tariffs will negatively impact the profitability of Trump Chinese companies. In the long run, if the China-USA. The trade tensions are continuing, they will affect the structure of the global industry chain.

Wang Zhe

Chief Economist at Caixins Think Tank

USA. Stocks fell on Friday, with the Dow Jones industrial average down more than 600 points.

As investors worry about the impact of escalating trading pressures on American companies, Chinese companies may find more business opportunities.

"In the short term, increased US tariffs will negatively affect the profitability of Chinese companies," said Wang Zhe, senior economist at Caixin's Think Tank, in a written comment to CNBC last Monday.

"In the long term, tensions between China and the US will impact on the structure of the global industry chain if they continue," Wang added to a CNBC translation of Chinese-language commentary. "Of course, this will also force local companies to change their production methods and promote the transformation and modernization (of their farms)."

Analysts noted that another consequence of trading voltages could be that Chinese companies gain more market share the costs of US companies. Already, data and corporate reports show how Chinese companies are shifting agricultural sales from the US to other countries, particularly in Latin America.

"For revenue-generating companies, they take over some of the tariff costs or try to pass them on, but they lose the business to competitors from other countries – something that's already happening," said Jake Parker, Vice President of China Operations, US-based. China Business Council. "The ability to pass on these costs depends on the profit margin, the availability of alternative sources and the contract terms of the suppliers."

Trump calls on US companies to leave China.

On Friday, Trump announced in a tweet that US companies "have agreed to seek an alternative to China immediately, including to bring their businesses home and manufacture their products in the US" It was not immediately clear under what authority or how the President could execute such orders.

"However, if US companies abandon the Chinese market to some degree, there may be opportunities for Chinese companies to close the gap," said Stephen Olson, Research Fellow at the charitable Hinrich Foundation Significantly, "such a move would mean an unprecedented breach in trade and economic relations between the world's two largest economies," which would make it a bad one for Chinese and US companies Insecurity would lead.

Managing businesses in China is a challenge, and leaving the market is not the answer, Parker said.

"It is important to remember that the US business is a positive example of progress in China … American companies bring ideas, values ​​and examples that are pervasive and consistent catalysts for progress," said Parker , On the other hand, US companies leaving China would miss a major global growth opportunity.

"The only way to solve the many challenges that US companies face in the Chinese market is for both sides to continue negotiations and find a compromise that eliminates tariffs and the relationship to a more stable one brings predictable and constructive course. "

Chinese companies are looking for ways to adapt

Trump's government focused on tariffs as the main tool in the trade dispute. However, it is not clear how effective it is to get China moving.

An analysis by Chris Rogers, a researcher at Panjiva, S & P Global Market Intelligence's supply chain research department, found that prices for some commodity groups – such as Chemicals and furniture have been dropped as tariffs have been levied.

"(Some) Chinese companies cut some of the prices at which they sell to the US," he said earlier this month in a telephone interview industry

Source: Panjiva, the Supply Chain Research Unit of S & P Global Market Intelligence. Calculations are based on figures from the US Labor Office.

Wei said on Sunday that some Chinese companies have incurred the cost of customs duties, but not many. Rather, he said most companies had been waiting for a solution in the trade talks.

Last week, Parker of the US-China Business Council said that most companies are still evaluating how long the tariffs will still be valid before they handle significant business changes.

"Companies whose offer is subject to tariff risks are considering their options," he wrote on August 20 in an e-mail about customs costs as they can. "

The US and Chinese trade delegations remain in touch, Chinese spokesman Gao Feng said Thursday, and the two sides held a high-level telephone conversation on August 13, planning a similar call within two weeks in front of an expected personal meeting in September, Gao said last week.

Source link