China defeats the US


In a statement on 9/1, the Ministry of Commerce of China introduced new rules “against the unreasonable application of foreign law”.

These changes allow Chinese courts to punish companies that comply with such restrictions.

According to Bert Hofman, director of the East Asia Institute at National University of Singapore, legal entities that have been hurt by foreign law can take legal action in court and claim damages. At the same time, the Government can also take other countermeasures.

These immediately effective measures did not refer directly to the United States, although China has long complained about US trade restrictions and sanctions.

But legal experts say it remains unclear how the new law will be implemented.

China and America
The NYSE will remove the listing of China Mobile, China Telecom and China Unicom Hong Kong shares

“One point still needs to be clarified as to whether the order is intended to target specific sanctions against China or those that target a third country, such as Iran or Russia, that have an adverse effect. Chinese companies, “Nicholas Turner, a lawyer at Steptoe & Johnson in Hong Kong, told the BBC.

“Companies with significant business interests in China may need to operate cautiously,” he said.

Mr. Turner believes China is also defending itself against future sanctions that Mr Trump may put in place before he leaves the White House later this month.

“I am expecting more action to be taken before January 20 based on State Department statements, although it remains to be seen whether they can advance any new action in time. no, “he added.

Previously, US President Donald Trump continued to target Chinese companies that he saw as a threat to US national security. The measures include punishing companies that supply components to blacklisted companies.

Three major Chinese telecommunications companies listed on the New York Stock Exchange (NYSE) are expected to see their shares delisted on allegations of ties to their military.

The NYSE will remove China Mobile, China Telecom and China Unicom Hong Kong, based on an executive order signed by Trump in November.

The delisting comes after a series of actions against Chinese companies in recent months including TikTok, Huawei and chip maker Semiconductor Manufacturing International Corporation (SMIC).

Last week, Mr. Trump signed an executive order banning transactions with eight Chinese apps, including popular payment platform Alipay, as well as WeChat Pay.

The US President claims that these tech companies share data with the Chinese government – allegations the companies have denied.

Has China won Mr. Trump’s trade war?

US President Donald Trump famously tweeted that “a trade war is good and easy to win” in 2018 when he started to impose tariffs on about $ 360 billion of goods imported from China. But, according to Bloomberg, Mr. Trump was wrong.

Even before the Covid-19 pandemic infected millions of Americans and caused the worst economic recession since the Great Depression, China suffered from Trump’s tariff measures. But as China took control of the epidemic, demand for medical equipment and home appliances increased its trade surplus with the United States despite taxes.

Under Trump, the United States has expanded the war with unprecedented tariffs and sanctions on tech companies. The approach was tougher and didn’t work out as Mr. Trump had hoped, but he left his successor Joe Biden a blueprint of what worked and what didn’t.

“China is too big and too important for the world economy to think it can cut it out like a paper doll,” said Mary Lovely, professor of economics at Syracuse University. a word of warning “.

In 2016, Mr. Trump announced that it would very quickly begin to reverse the US merchandise trade deficit with China. However, the deficit with China has grown since then, reaching $ 287 billion in the 11 months to November last year, according to Chinese data.

The deficit has decreased compared to the same period in 2019, because US companies switched to importing from countries like Vietnam, but still higher than the difference of 254 billion USD in 2016. Partly due to Beijing’s imposition of tariffs. retaliation for about $ 110 billion worth of goods, reducing imports of US products and these products will only begin to recover in the last few months of 2020.

As part of a phase one trade deal signed a year ago, Beijing made an ambitious promise to import $ 172 billion of U.S. goods in specific categories by 2020, but by the end of November 2020, they only bought 51% of that target.

According to Bloomberg, the persistent deficit shows how dependent companies are on China’s huge manufacturing capacity, which is further emphasized by the pandemic. China is the only country capable of increasing production on a large enough scale to meet the growing demand for items like home computers and medical equipment.

President Trump has repeatedly said that China’s accession to the World Trade Organization (WTO) in 2001 caused the country’s economy to take off like a “rocket ship”, an outcome he considered unfair. equal. As it turns out, Mr. Trump’s trade war with China coincides with an expansion in Chinese exports. After shrinking for two consecutive years in 2015 and 2016, China’s total exports have increased each year after Trump took office, including in 2019, when exports to the US declined year-on-year.

Southeast Asia has replaced the US as China’s second largest trading partner in 2019. The shift to Asia is likely to continue as Southeast Asian economies are forecast to grow faster. developed countries in the next decade. Those trade links will be further strengthened by the Regional Comprehensive Economic Partnership, signed at the end of last year, under which 15 regional economies will gradually reduce some of their tariffs on each other’s goods.

President Trump said the tariffs would encourage US manufacturers to relocate production and in a 2019 tweet he “ordered” US companies “to immediately begin looking for an alternative. China “. But there is little evidence of any such change taking place.

More than three-quarters of the more than 200 US manufacturers in and around Shanghai surveyed in September 2020 said they had no intention of moving production out of China. American companies often cite the rapid growth of the Chinese consumer market combined with the country’s strong manufacturing capabilities as reasons for market expansion there.

“Even if the Trump administration raises any tariffs, it will be very difficult to convince US companies to invest,” said Ker Gibbs, president of the US Chamber of Commerce in Shanghai.

According to Yang Zhou, an economist at the University of Minnesota, China grew at or above 6% in both 2018 and 2019, with tariffs accounting for about 0.3% of GDP in those years. According to her estimates, the trade war caused the US to lose 0.08% of GDP over the same period.

Mr Trump has repeatedly stated that China is paying for the tariffs. Economists when compiling the numbers are surprised to find that Chinese exporters usually do not lower their prices to keep their goods competitive after tariffs are imposed. That means U.S. taxes are paid primarily by companies and their own consumers.

Tariffs resulted in income losses for US consumers around $ 16.8 billion a year in 2018, according to a report by the National Bureau of Economic Research.

Another problem, import duties from China tend to reduce US exports. That’s because globalized supply chains mean production is shared between countries and the US increases the cost of its own goods by imposing tariffs on Chinese imports.

According to an analysis of confidential company data by researchers at the National Bureau of Economic Research, the US Census Bureau, and the Federal Reserve, companies that account for 80 percent of U.S. exports have to pay higher prices for Chinese imports.

The Trump administration claims that tariffs provide leverage to the Chinese forcing them to undertake reforms to benefit American companies.

The biggest victory declared by the government in the framework of the trade agreement is the promise from Beijing to strengthen the protection of intellectual property rights. But that is probably in the interests of China.

Mark Cohen, a China law expert at Fordham University in New York, said that while Beijing has made “major legal changes” to strengthen protection of intellectual property rights over the past two years. their own drive to drive innovation may be a more important factor than US pressure. The agreement does not “push for structural reforms in China to make its system more compatible with most of the world,” he added.

Chinese companies paid a record $ 7.9 billion in intellectual property payments to the US in 2019, up from $ 6.6 billion in 2016, and their courts have imposed a number of fines. record for intellectual property infringement involving US companies. But that rate of increase was slower than IP payments for the whole world, which, according to World Bank data, shows that payments to the United States are part of the overall trend.

Nor has Washington been able to make any significant commitments to reforming China’s state-owned enterprises, which also serve as a justification for the tariffs.

Equanimity

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