Page 38 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
capital markets to Wall Street. The Phase One Investors, fearing a drag on economic growth,
trade deal fits this pattern. It mixes mercantilist have also cheered the U.S. and Chinese efforts to
and capitalist goals, leaves most tariffs intact and resolve the trade conflict (Pramuk).
puts aside deeper disagreements for later. True,
it has not yet inflicted a big economic cost—since As a truce, Phase 1 works to calm an
2017 bilateral trade and direct investment flows increasingly volatile situation ahead of what is
between the superpowers have dropped by 9 expected to be a bruising election year. But it
percent and 60 percent respectively, but the world leaves much of the new high-tariff infrastructure
economy still grew by about 3 percent in 2019. in place. For instance, a 25 percent levy by the US
Some businesses were barely even affected. on US$250 billion of Chinese goods – mostly parts
for goods assembled in US factories – remains in
Were the superpower rivalry to spiral out of effect. Across the spectrum of imported goods,
control, however, the costs would be vast. To the average tariff on Chinese goods will fall to
build a duplicate tech hardware supply-chain 19.3 percent – which is more than six times
would take about $2 trillion, 6 percent of the what it stood at before the trade war began in
superpowers’ combined GDP. Climate change, a 2018. The main benefit of the first-stage deal is
great challenge which could provide a common that it puts an end to the consistently escalating
purpose, would be even harder to cope with. Also tariffs seen in 2019. The momentum for at least
at stake is the system of alliances that is a pillar a temporary cessation of hostilities was huge
of America’s strength. Some 65 countries and after Trump realized his campaign was costing US
territories rely on China as their largest supplier businesses billions of dollars. For the past year,
of imports and, asked to choose between the US manufacturing has been in recession and
superpowers, not all of them would opt for the shedding jobs, despite the president’s tweets to
US—especially if it continues to pursue today’s the contrary. Caterpillar, General Motors, Ford,
policy of America First. In the 2000s people Tesla, Apple and Microsoft all took a hit during in
used to ask how much China might become 2019 and only recently began, with the prospect
like America. In the 2020s the bigger question of a truce, to recover sales. Small- and medium-
is whether a full superpower split might make sized firms are the hardest-hit, especially by a
America more like China (Economist). 25 percent tariff on intermediate goods such
as power cables and components. The bottom
Of course, this story will continue to develop. line is that Donald Trump has spent the last 30
At the time of this writing, President Donald years arguing that China has used protectionist
Trump has said that the US may not reach the tariffs, quotas and biased rules to hobble foreign
second part of a trade pact with China until competition. He is expected to say that China
after the 2020 election. The president said his has made concessions in a first-stage deal that
administration will start “right away” negotiating will end some of these unfair practices. The
the next piece of an agreement after striking a World Bank says global trade growth will improve
so-called phase one deal. But he said “it’ll take modestly in 2020 as a result – to 1.9 percent, up
a little time” to finish an accord and suggested from 2019, when the rate of expansion slowed
he could have more leverage after his reelection to 1.4 percent, the lowest since the 2008-09
bid in November. “I think I might want to wait financial crisis. Washington is maintaining tariffs
to finish ’til after the election, because by doing on US$370 billion of the US$550 billion worth of
that, I think we can actually make a little bit products it imports from China each year. Thus,
better deal, maybe a lot better deal,” Trump said. approximately two-thirds of US imports from
The president has tried to dial back a trade war China will remain covered by the administration’s
that has threatened the livelihood of farmers tariffs (Inman).
and other business owners in the US reliant on
trade with China. Trump counts the agriculture The “Phase One” trade deal with Beijing is
industry as a key political constituency, and his now worth a lot for President Trump. It is one
administration as of the beginning of 202 had of his few “diplomatic achievements,” as the
authorized US$28 billion in relief for farmers. deal goes some way toward fulfilling Trump’s
38
capital markets to Wall Street. The Phase One Investors, fearing a drag on economic growth,
trade deal fits this pattern. It mixes mercantilist have also cheered the U.S. and Chinese efforts to
and capitalist goals, leaves most tariffs intact and resolve the trade conflict (Pramuk).
puts aside deeper disagreements for later. True,
it has not yet inflicted a big economic cost—since As a truce, Phase 1 works to calm an
2017 bilateral trade and direct investment flows increasingly volatile situation ahead of what is
between the superpowers have dropped by 9 expected to be a bruising election year. But it
percent and 60 percent respectively, but the world leaves much of the new high-tariff infrastructure
economy still grew by about 3 percent in 2019. in place. For instance, a 25 percent levy by the US
Some businesses were barely even affected. on US$250 billion of Chinese goods – mostly parts
for goods assembled in US factories – remains in
Were the superpower rivalry to spiral out of effect. Across the spectrum of imported goods,
control, however, the costs would be vast. To the average tariff on Chinese goods will fall to
build a duplicate tech hardware supply-chain 19.3 percent – which is more than six times
would take about $2 trillion, 6 percent of the what it stood at before the trade war began in
superpowers’ combined GDP. Climate change, a 2018. The main benefit of the first-stage deal is
great challenge which could provide a common that it puts an end to the consistently escalating
purpose, would be even harder to cope with. Also tariffs seen in 2019. The momentum for at least
at stake is the system of alliances that is a pillar a temporary cessation of hostilities was huge
of America’s strength. Some 65 countries and after Trump realized his campaign was costing US
territories rely on China as their largest supplier businesses billions of dollars. For the past year,
of imports and, asked to choose between the US manufacturing has been in recession and
superpowers, not all of them would opt for the shedding jobs, despite the president’s tweets to
US—especially if it continues to pursue today’s the contrary. Caterpillar, General Motors, Ford,
policy of America First. In the 2000s people Tesla, Apple and Microsoft all took a hit during in
used to ask how much China might become 2019 and only recently began, with the prospect
like America. In the 2020s the bigger question of a truce, to recover sales. Small- and medium-
is whether a full superpower split might make sized firms are the hardest-hit, especially by a
America more like China (Economist). 25 percent tariff on intermediate goods such
as power cables and components. The bottom
Of course, this story will continue to develop. line is that Donald Trump has spent the last 30
At the time of this writing, President Donald years arguing that China has used protectionist
Trump has said that the US may not reach the tariffs, quotas and biased rules to hobble foreign
second part of a trade pact with China until competition. He is expected to say that China
after the 2020 election. The president said his has made concessions in a first-stage deal that
administration will start “right away” negotiating will end some of these unfair practices. The
the next piece of an agreement after striking a World Bank says global trade growth will improve
so-called phase one deal. But he said “it’ll take modestly in 2020 as a result – to 1.9 percent, up
a little time” to finish an accord and suggested from 2019, when the rate of expansion slowed
he could have more leverage after his reelection to 1.4 percent, the lowest since the 2008-09
bid in November. “I think I might want to wait financial crisis. Washington is maintaining tariffs
to finish ’til after the election, because by doing on US$370 billion of the US$550 billion worth of
that, I think we can actually make a little bit products it imports from China each year. Thus,
better deal, maybe a lot better deal,” Trump said. approximately two-thirds of US imports from
The president has tried to dial back a trade war China will remain covered by the administration’s
that has threatened the livelihood of farmers tariffs (Inman).
and other business owners in the US reliant on
trade with China. Trump counts the agriculture The “Phase One” trade deal with Beijing is
industry as a key political constituency, and his now worth a lot for President Trump. It is one
administration as of the beginning of 202 had of his few “diplomatic achievements,” as the
authorized US$28 billion in relief for farmers. deal goes some way toward fulfilling Trump’s
38
