BEIJING, Jan 12 — Washington and Beijing may be ready to sign a preliminary trade agreement, but companies in China are not taking any chances, forging ahead with contingency plans in case the tariff war resumes. As Chinese Vice Premier Liu He travels to Washington from tomorrow to Wednesday to...
A man rides a motor tricycle past the buildings of Beijing’s central business area January 3, 2020. — Reuters pic
Rather than focusing on the agreement, they are planning for the worst — seeking new markets abroad, increasing their presence at home or moving production overseas. Wong said that clients were unlikely to give it new deals if it did not adopt a “China plus one” strategy of diversifying operations outside the country.
Jason Lee, CEO of metal parts manufacturer Shanghai EverSkill M&E, said the US market made up about 60 per cent of his company’s sales before the trade war, but this has dropped to around 40 per cent.“In the long run, as a Chinese supplier, we can only improve on our products and ensure they are better compared with those from elsewhere. That is the most fundamental solution,” Lee said.
Ng added that the potential cut in tariffs in the Phase One deal is only from 15 per cent to 7.5 per cent on around US$120 billion of Chinese imports. Analysts also remain divided on whether China is likely to raise its purchase of US agricultural goods to at least US$40 billion annually over two years, a figure invoked by US officials.If US farm-product purchases hit around US$40 billion by 2021, it would likely represent about 23 per cent of China’s agricultural imports. At its 2015 peak, US farm products made up nearly 25 per cent of China’s imports, he said.
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