25 ways Donald Trump will affect business in Chinatony tony https://secure.gravatar.com/avatar/aa9bbdf8f1e6bbf534778ecea7c0c925?s=96&d=mm&r=g
25 ways Donald Trump will affect business in China
Business relations between the U.S and China are tuned to take a litmus test if the claims by Trump during the campaign trail come into fruition. There are major implications that will be experienced with the proposed changes in both countries. 25 ways Donald Trump will affect business in China include:
Reduced revenue for China
Trade between the U.S and China has surpassed the $19.6 Trillion mark and any trade restrictions will only serve to limit exports by China thereby reducing earnings through export.
Stop of overseas manufacturing
Many companies have moved out of the U.S into China to exploit the lucrative advantage of overseas manufacturing which reduced costs. The Trump proposal will block the viability of the window.
Low cost exports stop
China will face a possible reduction or stop of the low-cost export of machinery and equipment which has been one of the principle drivers of their economy.
Reduced raw material imports
The raw materials used in industries in china had mainly been sourced from U.S but the capacity is bound to reduce especially with American industries moving back to the U.S.
Stalled finished products
With 16.9% of all exports from China headed for the U.S, renegotiated policies will result in China having huge inventory of finished product with no immediate market.
Migrant workers will lack jobs
The business economy of China is built on having cheapo labor which is provided by migrant workers and with companies tuned to move back to the U.S, many jobs will be lost.
Focus of domestic demand
China will be forced to target domestic demand especially since the fulcrum of its business operations have been reliant on export.
High cost of products from China
Products from China will be costly in the U.S especially considering the 45% tax that Donald Trump proposed during the campaign trail.
Further weakening of the currency value
In a bid to compete with the production that the U.S will have mastered; China will further weaken the value of the currency to attract buyers and compete against the expected market that the U.S will focus on.
Tariffs on products by American companies
American companies that have established manufacturing plants in China will be charged tariffs when taking the products back to the U.S which will mean more consumption within China.
Inter-corporation trade will be faced with barriers which will limit the effective exchange of goods and raw materials between the two powerhouses.
Strengthening the dollar
With China holding in excess of $1.185 trillion in U.S notes, bonds and bills, China will look to strengthen the dollar in order to appear as the preferred nation to import products from at a cheaper rate.
Rapid investments in production companies
Since China was focused on buying U.S debt to increase the value of the dollar to fetch market for manufactured items, the closing of that avenue will see China invest in production companies to counter the production that the U.S will produce.
U.S goods less competitive in China
Goods from the U.S will be less competitive in the Chinese market which will mean less than desirable returns for U.S corporations.
Unfair competition between companies
With American companies expected to pull out of China, unfair competition within China will be experienced as the government tries to save the companies and give them competitive edge with the American corporations.
Manufacturing employment will decline
The business industry in China will be faced with declining employment in the manufacturing sector owing to many multi-nationals pulling out.
Trade disputes at the WTO
The proposed changes in policy will spark disputes at the WTO which advocates for enhanced trade between countries and enforces trade deals.
Increased undercutting of American companies
The proposals by Donald Trump will lead to further undercutting of American manufacturers as China tries to compete with what the U.S will have to offer to the world consumer market.
Smaller trade surplus
China has experienced trade surplus in the recent years but with the proposed changes to trade deals, lesser trade surplus will be experienced.
Intellectual Property disputes
Since China is simply a giant in manufacturing and production, Intellectual property disputes will almost be a guarantee especially as China looks to match the innovation by American companies producing their products in the U.S.
A stop to illegal product dumping
China has been accused of illegal product dumping in the U.S and a strict trade deal will mean the market in China will be forced to embrace the products or raise the standard of production altogether.
High cost of American products
With American corporations like Apple having set up manufacturing plants in China, moving back to the U.S will mean the sourcing of expensive labor which will result in an increase in product costs.
Funding of small businesses
China had focused more on funding the large manufacturers and industries that produce products at a cheaper cost but with the trade regulations tuned for renegotiation, the country may be forced to also fund the small businesses to balance the economy.
China will be forced to explore overseas investment in a bid to counter the revenue streams that will be lost owing to the renegotiation of the trade deals.
Decline of specialized skill personnel
China will also see skilled personnel leave the country to find employment in the big international companies that will have moved back to the U.S.