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US-China Relations - 4. page

China Times: U.S. Blockage of Huawei Did Not Impact iPhone Negatively in China

Major Taiwanese newspaper China Times recently reported that, according to research that the Bank of America Merrill Lynch just conducted, potential Chinese mobile phone buyers surveyed preferred Apple iPhone over Huawei. It was widely discussed and anticipated in the media both domestically in China and internationally that the U.S. sanctions on Huawei would trigger Chinese mobile phone buyers’ patriotic sentiments and they would thus switch to Huawei while waving goodbye to the iPhone. The newly released study report, however, showed just the opposite. Around 29 percent of Chinese shoppers surveyed in May picked the iPhone which represents a 3 percent increase from April. The same report showed the intent to buy Huawei dropped from 28 percent in April to 25 percent in May. Both JP Morgan Chase and Goldman Sachs indicated earlier that iPhone Chinese sales would see a free fall of around 30 percent. However, the latest research does not really validate that expectation.

Source: China Times, May 31, 2019

RFI: Beijing Issued White Paper and Blamed U.S. for Failed Trade Negotiation

On June 2, the State Council Information Office issued a White Paper entitled, “China’s Position on the China-US Economic and Trade Consultation.” It claimed that the U.S. bears the responsibility for the setback on Sino-US talks. It criticized the U.S. for instigating trade frictions with China, condemned the U.S. for its inconsistency and dishonesty and for claiming that China will not give ground on issues of principle while also leaving room for future negotiation.

Radio France Internationale (RFI) stated that the White Paper may appear to refute the accusations of the U.S. while shirking responsibility for the failed negotiations. It also seems to help Xi Jinping to shut down criticism from his domestic political opponents.

The White Paper criticized Trump’s “America First” and unilateral policy, which imposed tariffs on China. It accused Washington of “turning a blind eye to China’s unremitting efforts and remarkable progress in protecting intellectual property and improving the business environment for foreign investors,” of launching the “301 investigation” in August 2017; of imposing tariffs and trade restrictions on investments; and of inciting Sino-US trade friction.

The White Paper claims that “US-imposed tariff measures harm others and are of no benefit to itself.” On the one hand, China’s exports to the United States have declined for five consecutive months, and were down 9.7 percent in the period of January through April 2019, compared to the same period in 2018. It also increased the production costs of US companies and the cost of domestic goods. U.S. consumers had to pay an additional US$4.6 billion per year. Meanwhile U.S. exports of agricultural products to China decreased by 33.1 percent year-over-year.

The White Paper also criticized the United States for “backtracking on commitments and for a lack of honesty” and cited three examples to use to accuse Washington. The White Paper stated that “China is committed to credible consultations based on equality and mutual benefit. China will not bow under pressure and will rise to any challenge coming its way. China is open to negotiation, but will also fight to the end if needed.”

Source: Radio France Internationale, June 2, 2019

Nikkei Asian Review: Chinese Manufacturers Use Different Channels to Sell to the U.S.

Japan Nikkei Asian Review reported that, in order to bypass the tariffs, China made goods were found to have been shipped to Taiwan, Vietnam, or Mexico before they were sold to the U.S. In the first quarter of 2019, China’s exports to the U.S. dropped $15.2 billion or 12 percent. At the same time, goods sold by China to Taiwan, Vietnam, or Mexico increased significantly.

Nikkei Asian Review analyzed the data from the U.S. International Trade Commission and the International Trade Centre. It looked at the flow of goods in the U.S., China, and the rest of the world, especially the five categories that had the largest export declines from China to the U.S. These included machinery and parts, electronic equipment, furniture, toys, and automotive equipment and parts. It found that in the first quarter of 2019, China’s exports to the US in these five categories dropped US$12.2 billion or 16 percent. However the number of goods that China sold to developing countries and that then went from developing countries to the U.S. increased substantially, especially from Taiwan, Vietnam, and Mexico. The article reported that some companies in China shut down or reduced direct exports to the U.S. but they then sent raw materials and parts to other Asian countries or Mexico for final assembly or repackaging so they would have a different country of origin. Then they sold (these goods) to the U.S. The increased cases have concerned some Asian countries. In September last year, the Vietnamese authorities confiscated products that were actually “Made in China” but were labeled as “Made in Vietnam” which had a U.S. destination. On May 31, Trump announced an increase in tariffs on all imported goods from Mexico, partly due to the significant increase in the volume of goods that Mexico sold to the U.S.

Nikkei Asian Review concluded that Beijing may eventually lose the trade war due to changes in its production lines, personnel and supply chain. In April, China’s total exports fell by 3 percent. It is very difficult to make up for the decrease by increasing exports to countries in Asia and other regions.

Source: Aboluowang, June 2, 2019

Duowei: China States Core Interests in the Economic Field for the First Time; Accelerates the Pace of Building an Anti-U.S. Front

Duowei, a Chinese news media that the Chinese government set up in North America, reported that, “China, in the face of the unreasonable demands that the United States has made on China in trade negotiations, emphasized its  ‘core interests’ and showed that it has the will never to yield to the United States. At the same time, China has accelerated the pace of its building a counter-U.S. front with neighboring countries.”

The report said, “China’s state media Xinhua News Agency published a commentary on May 25, stating that ‘the U.S.’ dissatisfaction with China’s economic structure violates China’s core interests.’ The Chinese government has always used the term ‘core interests’ to emphasize territorial sovereignty on issues such as Hong Kong, Taiwan, and Macau. ‘Core interests’ first appeared in the economic field after the Chinese government released the ‘China’s Peaceful Development’ white paper in September 2011. It has since received much attention.”

“South Korea’s East Asia Daily reported on May 28 that, in response to their common enemy, Chinese President Xi Jinping will meet with Russian President Vladimir Putin and Indian Prime Minister Narendra Modi. The report said that the leaders of China and Russia met at the ‘Belt and Road’ International Cooperation Summit held in Beijing on April 26 and will meet again in June. This time China is a country that the United States has also sanctioned. Therefore, at the summit, Xi Jinping will listen to Putin’s advice on the Sino-U.S. trade war response plan .”

“At the same time, China is advancing the summit between Xi Jinping and Modi. It is reported that China will discuss the plan for separate talks between the Chinese and Indian leaders at the summit of the Shanghai Cooperation Organization (SCO) to be held in Bishkek, Kyrgyzstan in June. The China-India summit plans to issue a joint statement supporting free trade based on the World Trade Organization (WTO), which will become a symbolic move by China and India to respond to the ‘America First’ policy that U.S. President Donald Trump has proposed. In addition, Xi Jinping also plans to upgrade Iran to a full member state at this SCO summit. Earlier, Iran has been attending the SCO meeting as an observer. This is not only a warning to the United States, but it is expected to further enhance the SCO’s international status. Hong Kong’s South China Morning Post commented that, in the face of the United States’ unrelenting attacks, China began to unite with neighboring countries to explore ways to deal with the United States.”

Source: Duowei News, May 28, 2019

Huanqiu Editorial: The Narcissistic U.S. Elite Attempt to Drive Away Chinese Companies

On May 29, 2019, Huanqiu published an editorial on how the U.S. Wall Street is trying to kick out Chinese companies. “As the U.S. trade war with China widens, the call to drive Chinese companies out of Wall Street is rising considerably in the United States. Extremists, who advocate depriving Chinese companies of their right to be listed in the U. S. stock exchanges, claim that Chinese companies have raised tens of billions of dollars from the U.S. stock market over the years and that it is another pipeline, in addition to the trade surplus, for China to take advantage of the United States. They are eager to push Washington to cut off the pipeline and decouple China and the United States in the financial market.”

If that happens, the State media reasoned, it would merely reduce the financing sources available to Chinese companies, but it would have a much greater impact on the U.S. investors wishing to benefit from Chinese economic growth.

To the extent the United States shuts out Chinese companies from its financial market, Huanqiu believed, “There will be many capital markets in the world that welcome China’s promising companies. The United States has closed down one road through which China opens up to the outside world and cut off its financing links with the world’s largest developing market. It would be an interesting question whether that causes more harm to China or to the United States.”

Finally, the State media concluded, “In our view, the arrogance of some Americans towards China has become abnormal; they increasingly live in all kinds of fantasies and (act on) impulse. They really seem to believe that the lifeline of China’s prosperity today is in the United States and that no matter how tall the big tree of China grows, most of its roots are deeply embedded in the United States. They imagine that as long as they cut those roots, China’s modernization will be struggling and eventually collapse. The arrogant American elite should go recalculate it.”

Source: Huanqiu, May 29. 2019

Another Major Apple Supplier Is Moving Out of China

Well-known Chinese news site Sohu recently reported that, in June, major Apple supplier Pegatron will start Apple production assembly lines in Indonesia. The initial products include the MacBook and the iPad. Pegatron is the second largest Apple manufacturer after Foxconn, which already announced that, later this year, its mass production of iPhones will be in India. It was first reported in January that Pegatron had a tentative plan to move out of Mainland China. Potential locations included India, Indonesia, and Vietnam. According to Indonesian local reports, Pegatron selected Indonesia instead of Vietnam based on a better supply of labor. Given the Trump administration’s earlier tariff increase, as well as the Huawei case, it is reasonable that Pegatron would prefer to move its manufacturing facilities out of China. Pegatron did not officially confirm which customers the Indonesian factories will serve. However, all products will ship to the United States.

Source: Sohu, May 24, 2019