85924
China Could Target American Firms, Debt
China Could Target American Firms, Debt

China Could Target American Firms, Debt

Beijing has potential support from American companies and business groups that have criticized Donald Trump and favor globalization

China Could Target American Firms, Debt

In a looming trade war between the world's two largest economies, American companies in China may have a bull's-eye on their backs.
The Trump administration is pushing China to cut its trade surplus with the United States by $200 billion by the end of 2020 and give up policies that favor domestic companies–the core of Beijing's state-led economic model, AP reported.
As the two sides exchange threats of tariff hikes, their lopsided trade balance means China will run out of imports for retaliation before President Donald Trump does.
But Beijing has other ways to inflict pain. Chief among those is harassing American companies that make autos, operate restaurant chains, sell computer software and do other business in China's heavily regulated economy.
Other possible options include selling US government debt or disrupting diplomatic efforts over North Korea, but those would damage Beijing's own interests.
Trump has threatened higher tariffs on $150 billion of Chinese goods in response to complaints Beijing violates its free-trade commitments by stealing or pressuring foreign companies to hand over technology.
Beijing reacted to his first round with a $50 billion list including American aircraft, soybeans and pork for possible retaliation. If it raises that to match Trump's total, that would be nearly equal to China's 2017 imports of US goods.
The Chinese Commerce Ministry has warned that no option is off the table.

Target American Companies
Chinese regulators have wide discretion and an arsenal of tools to disrupt US businesses from withholding licenses to launching tax, anti-monopoly or other investigations.
The US chipmaker Qualcomm Inc. might serve as an early example. China is the final major government withholding approval of Qualcomm's proposal for its $44 billion acquisition of rival NXP Semiconductors.
In April, the commerce ministry said Qualcomm's proposal "has difficulty" resolving concerns of Chinese anti-monopoly regulators. Qualcomm and NXP said April 19 that at the Chinese ministry's request, the companies withdrew and refiled an application for Beijing to clear the acquisition.
China's state-controlled media have encouraged consumer boycotts against Japanese, South Korean and other products during previous disputes with those governments.
"China can harm the interests of the United States by limiting the operations of multinational corporations," said Jin Canrong, a foreign relations specialist at Beijing's Renmin University, in comments to the website wallstreetcn.com.
Jin pointed to the example of South Korean retailer Lotte, whose business was destroyed by Beijing last year after it sold land to the Seoul government for an anti-missile system opposed by Chinese leaders.
Beijing retaliated by closing most of Lotte's 99 supermarkets and other outlets in China. Seoul and Beijing later mended relations, but South Korean news reports said Lotte has given up on China and is trying to sell its stores.
"Already we are hearing that approvals for some types of licenses for US firms operating are being put on hold," the Eurasia Group said in a report.
Beijing also has potential support from American companies and business groups that have criticized Trump and favor globalization.


Financial Leverage
Chinese commentators say Beijing has financial weapons, though using them would cost China's own economy and international standing.
Nationalists point to China's $1.2 trillion holdings of US government debt as leverage. But Beijing would suffer losses if it sold enough of that to influence US debt financing costs. And there are few other places to store such vast foreign currency reserves.
Beijing also could obstruct US investment in China, wrote commentator Ren Zeping on money.163.com. But that also would impose a cost by worsening an investment slump Chinese leaders are trying to reverse.
Regulators could depress the state-controlled exchange rate for China's yuan against the dollar. That could help Chinese exporters and make US imports more expensive. But it would carry a political cost by hurting other trading partners and making Beijing look reckless, possibly destabilizing financial markets.

Diplomatic Pressure
Beijing can appeal for support to US allies that are miffed by Trump's "America first" approach and the US withdrawal from the Paris climate pact and the proposed Trans-Pacific Partnership, a regional trade agreement.
Trump's unilateral actions have allowed China, the most-closed major economy, to position itself as a defender of free trade. That could help Beijing win over governments that have criticized Trump for acting outside the World Trade Organization.
China is a "central pillar" of the global trading system, "and we want to fully cooperate with China", UN Secretary-General Antonio Guterres said during a visit to Beijing last month.

 

Short URL : https://goo.gl/J9TruK
  1. https://goo.gl/BEB1kd
  • https://goo.gl/UTUEe8
  • https://goo.gl/imAHHh
  • https://goo.gl/2ymZ1G
  • https://goo.gl/tXbs9E

You can also read ...

Shifting transactions from cash to digital payments holds great promise for  individuals, businesses and governments.
More than 23% of the world's economy operates out of sight of...
India Launches 888 Anti-Dumping Probes
The Indian government has initiated as many as 214 anti-...
Federal Reserve Board Chairman Jerome Powell speaks during a hearing before the Senate Banking, Housing and Urban Affairs Committee.
US Federal Reserve Chairman Jerome Powell said protectionism...
Fitch Retains Philippine  Debt Rating
Global debt watcher Fitch Ratings kept the Philippines’...
The warnings come amid a period of financial uncertainty for the world.
US officials who helped the country survive the 2008 financial...
EU to Fine Google $5 Billion
Google will be fined about €4.3 billion ($5 billion) by the...
UN to Help Rebuild Gaza Economy, Create Jobs
Against the backdrop of rapidly rising tension, violence,...
Africa Next Frontier for Crypto
Cryptocurrency is not bound by geography because it is...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus