China can retaliate by raising tariffs on more products
from USA, EU and Japan. Plastic materials, chemicals and machine tools
are examples. And it honestly will retaliate. The game is just starting
to get interesting. The Chinese market is large and important for most
large companies in countries in the West. Tariffs will render their
products too expensive in China. And what does that mean?
To
continue to be able to sell competitively and do business in the Chinese
market, those companies producing for the Chinese market will probably
have to invest their manufacturing in China itself, to escape the
tariffs. Good for China, but bad for USA and EU. This will be counter to
what the USA and EU are trying to do to support their manufacturing
base by raising those tariffs against Chinese imports and forcing China
to hit back.
China is waiting for the USA and EU to come up with
more measures to elicit a response. There are a couple of items in the
USA list where tariffs are being increased substantially. China will be
looking into them and calibrating its response in days to come.
Anonymous
2 comments:
China is serious about decoupling, otherwise it will not be retaliating since the start of Trump's trade war. Another Presidential term for Trump could see the complete decoupling agenda being implemented.
China had been preparing for decoupling long before Biden escalated the trade and sanctions war after taking over from Trump. It is just Biden doing a follow up of what is in the USA playbook. The monopolization of essential raw materials, the prioritization of semiconductor research and innovation, the move towards a bigger domestic consumer market demand for Chinese goods, the setting up of manufacturing bases in Global South countries like Vietnam, Bangladesh and other ASEAN states are all China's preparation for decoupling.
The economic war is not just inside the USA and EU market alone. The bigger market is in the Global South - in Africa, South America, Asia and ASEAN. This is a war that China will win hands down. This is a market that wants cheaper products made by China, not expensive toys made in the West. This will be the defining tone for who wins or lose the economic war.
Free trade was what the USA and the West invented, forging all the deals around the world, trying to open up access to markets, into and out of the USA and Europe. But it was mostly just to take advantage of the cheap 'slave labor' that they were interested in, in order to produce cheap goods for their 'freeloading'.
Their own companies took advantage of that opportunity too and relocated to China, in particular, and in droves to make bigger profits. Then it slowly became a mission to accuse China of stealing their jobs. Jobs paying 'slave labor' wages that USA voters would probably shun. Then their industrial base started declining so badly that they were losing more jobs as more companies relocated, lured by the bigger profits they could make, and the USA and the West became hysterical.
Then Trump came alone and wanted to 'Make America Great Again'. And it was music to the ears of voters in the USA, and they swallowed his hubris - hook, line and sinker. And Europe followed the same warp thinking. Now they discovered luring back those companies or industries became a big problem. They lack the skilled manpower, the essential raw materials, the supply chains, and they will also lose the China market. So, how? Keep repeating the China threat mantra and hope it will stick. Again, blowing out China's candle will not make theirs shine brighter, right?
Now free trade is bad and needs to be killed. Countries like China are paying 'slave labor' to workers. Xinjiang products must be banned because of 'slave labor'. The Uyghurs are suffering mistreatment by being paid 'slave wages' to work in cotton fields, that were categorically shown to be largely mechanized. How tear jerking was those mistreatment claims in Xinjiang. If only those in Gaza were accorded the same love as the Uyghurs by the USA and the West. But crocodiles are crocodiles. And the CCP Government is to be blamed, not the companies employing those 'slaves'.
Suddenly, and strangely, after decades, the USA and the West became aware of 'slave labor' in China, when for decades they were enjoying all the products made with 'slave labor' wages on Walmart shelves. They were enjoying so much that they forgot all about the 'slave labor' wages paid to workers in China.
Moreover, for centuries before that, they themselves were already paying Africans and probably Chinese workers 'slave labor' wages to build railways, ports, mined gold and work in cotton fields. They probably weren't even paying 'slave labor' wages then but using free labor. Worse still, those were Black slaves kidnapped from Africa. I guess all that has been forgotten. Blame it on dementia!
You can bet the USA will conveniently forget what they did before that those others followed. And those that followed were accused of a crime that the USA committed and prospered upon.
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