What President Trump means for China

Since declaring his candidacy for the presidential office, Donald Trump has made China a cornerstone of his argument that the American government has betrayed the American working class by selling out industrial jobs to developing countries with cheap labor and weak or non-existing welfare systems. In particular, Trump has accused China of being the main culprit of the decline of America’s once prosperous rust belt region. Trump argument rests on three pillars: 1) currency manipulation to keep its export cheap, 2) unfair state subsidies, and 3) theft of intellectual property. As Trump stated in his speech on 15 September 2016 at the New York Economic Club: Predatory trade practices, product dumping, currency manipulation and intellectual property theft have taken millions of jobs and trillions in wealth from our country.

 

Therefore, it is not surprising, that his election program includes some important policy measures directed at the Middle Kingdom. Thus, his 7 Step Plan to Make America Great Again includes the following China-related points:

  • label China as a currency manipulator
  • bring trade cases against China, both in the U.S. and at the WTO
  • use presidential power to prevent China from stealing American trade secrets

Therefore, under Trump’s presidency, we should therefore expect a souring trade relationship between China and the U.S. affecting both in- and outbound investment for American businesses. Although the principal tool might be punitive tariffs on American goods, other consequences might include a tightening of regulations for foreign companies operating in China in general.                                                                                                               

Ironically, another point of his program might actually benefit China. Trump’s promise to withdraw from the Trans-Pacific Partnership will probably strengthen China’s own proposal for a trade agreement in the Asia-Pacific Region, the Free Trade Area of the Asia Pacific (FTAAP), thus improving the access to China’s market for South-East Asian nations. Equally, trade with European, Central Asian or African countries might not be affected in the same way, given that China’s “One Road One Belt” initiative will continue to play an important role in China’s foreign policy.

 

ECOVIS Beijing is a consultancy for accounting, tax, audit, and legal advisory. If you have questions regarding our services, please contact: richard.hoffmann@ecovis-beijing.com

 Richard2017 150x225   Richard Hoffmann

Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining ECOVIS. In addition to being a member of the board of ECOVIS International, he is Supervisor for the China business of a respected German company and shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: richard.hoffmann@ecovis-beijing.com

 

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