The Chinese administration delivers a written response to U.S. demands for trade reforms.

Olivia London

2018-11-25 12:37:00 Sun ET

The Chinese administration delivers a written response to U.S. demands for trade reforms. This strategic move helps trigger more formal negotiations between both sides to resolve the current Sino-American trade war. Thus far $360 billion Chinese imports have been subject to 10%-25% U.S. tariffs, and the Trump administration floats additional duties and concessions in recent times. In light of the U.S. midterm elections, President Trump expects to strike a positive trade deal with China. The Trump administration is thus unlikely to impose new tariffs on Chinese imports. As both Chinese and American delegates and diplomats resume their trade talks, the Trump team now sidelines most diehard protectionists.

President Trump and Chinese President Xi can next meet to agree on a new trade framework at the G20 summit in late-November 2018. China can purchase more American goods to help lower bilateral U.S. trade deficits. Nevertheless, the Trump administration may find it difficult to prevent the perennial Sino-U.S. technology transfer and other intellectual property theft in the mainland. This trade dilemma reflects the reality of unfair trade practices in several high-tech industries such as semiconductors, microchips, smart phones, visual animations, speech recognition devices, and artificial intelligence apps etc.

In fact, Sino-American bilateral trade deficits have ballooned about 10% from $275 billion to $305 billion in the interim period from September 2017 to November 2018. Part of this deficit increase reflects an 8.1% surge in U.S. imports from China while U.S. exports to China remain flat. U.S, real output growth, employment, and capital investment fire on all cylinders, thus the American economy attracts more Chinese imports in the current phase of robust economic growth. Greenback appreciation also contributes to this bilateral trade deficit increase, whereas, a weaker Chinese currency helps offset some costs of American tariffs on Chinese imports. The U.S. cannot readily replace Chinese imports with close substitutes because only China can produce these goods in a cost-effective way.

On balance, the Trump administration should seek to deter unfair trade practices such as Sino-American technology transfer and patent and trademark infringement. Whether the Trump team can reduce bilateral trade deficits with China becomes a secondary issue. Insofar as the Trump administration can attain 3%-4% real GDP economic growth, the additional tax revenue intake can self-finance fiscal budget and trade deficits.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Investing in stocks is the best way for people to become self-made millionaires.

James Campbell

2019-06-25 10:34:00 Tuesday ET

Investing in stocks is the best way for people to become self-made millionaires.

Investing in stocks is the best way for people to become self-made millionaires. A recent Gallup poll indicates that only 37% of young Americans below the a

+See More

Fed's new chairman Jerome Powell testifies before Congress for the first time.

Rose Prince

2018-02-27 09:35:00 Tuesday ET

Fed's new chairman Jerome Powell testifies before Congress for the first time.

Fed's new chairman Jerome Powell testifies before Congress for the first time. He vows to prevent price instability for U.S. consumers, firms, and finan

+See More

The Trump administration mulls over antitrust actions against Amazon, Facebook, and Google.

Monica McNeil

2018-11-19 09:38:00 Monday ET

The Trump administration mulls over antitrust actions against Amazon, Facebook, and Google.

The Trump administration mulls over antitrust actions against Amazon, Facebook, and Google. President Trump indicates that the $5 billion fine against Googl

+See More

China turns on its 5G telecom networks in the hot pursuit of global tech supremacy.

Becky Berkman

2019-12-07 11:30:00 Saturday ET

China turns on its 5G telecom networks in the hot pursuit of global tech supremacy.

China turns on its 5G telecom networks in the hot pursuit of global tech supremacy. China Telecom, China Unicom, and China Mobile disclose 5G fees of $18-$2

+See More

Better corporate governance through worldwide convergence toward Berle-Means stock ownership dispersion

Fiona Sydney

2023-12-05 09:25:00 Tuesday ET

Better corporate governance through worldwide convergence toward Berle-Means stock ownership dispersion

Better corporate ownership governance through worldwide convergence toward Berle-Means stock ownership dispersion   Abstract We design a model

+See More

Tech titans from Apple and Amazon to Microsoft and Google can benefit from the G.O.P. tax reform.

James Campbell

2017-12-07 08:31:00 Thursday ET

Tech titans from Apple and Amazon to Microsoft and Google can benefit from the G.O.P. tax reform.

Large multinational tech firms such as Facebook, Apple, Microsoft, Google, and Amazon can benefit much from the G.O.P. tax reform. A recent stock research r

+See More