China Is Ready to Fight Back Against the Latest US Blocking Measures
Last updated May 16, 2020
- The trade war between the US and China has returned to “full-on” status, with both parties planing new tariffs.
- Trump wants chip-makers to start producing in the USA and has also placed an export ban on China.
- The Chinese will now answer with market restrictions, investigations, and airplane order revokes.
Although the COVID-19 pandemic - which has brought a global economic demise - sparked new hope that the trade wars between the USA and China would subside, the latest developments indicate that the truth couldn’t be farther from this. The Huawei ban was recently extended to May 2021, so US companies won’t be able to do business with the smartphone creator. Yesterday, the Trump administration escalated the situation even more by ordering chip makers in the United States to stop supplying HiSilicon Kirin SoCs to Huawei. At the same time, the country is creating incentives from Samsung, TSMC, and others, to build chip-making factories in the US, so everything is working against China right now.
It was only natural to see some kind of reaction from the Chinese government, and it looks like it’s going to be a forceful one. According to “Global Times China,” the Chinese are planning to take a series of countermeasures against the USA and American companies in general. First, they will retract any Boeing airplane orders made by Chinese airlines and will stop purchasing aircraft from the American manufacturer entirely. Secondly, they will launch investigations against Apple, Qualcomm, Cisco, and other American companies operating in the Asian country. Production, product marketing, and selling restrictions for all US companies in China are also expected.
The investigations mentioned above will almost certainly result in punitive measures against those entities, so China is planning to undercut their operations and market reach in the vast nation. Nobody in business would want that, as China is still a significant portion of the revenue of many American companies. It is estimated that the chip export bans alone will cost the chip-makers approximately $36 billion in revenue. For Boeing, the losses are estimated to be about 4.2 billion for every year that Chinese airlines won’t buy their planes. TSMC, which recently announced plans for an Arizona-based plant, will also lose about $5 billion from this “rule change.”
All that said, the Chinese will now release their own “unreliable entity list,” which we expect to be populated by American companies. This will place additional pressure on the US economy, which is already on the ropes due to the ongoing Coronavirus pandemic. We could see Trump back down now, although with the elections approaching and the US President proudly waving the “trade war flag,” this development is quite unlikely. Most probably, D. Trump is betting on a dynamic bounce-back that will prove his strategy right. Still, economic analysts fear that this war will leave the American economy crippled before the Chinese one is even bruised.
Related
Most Popular
Most Popular