Us China Trade War

Us China Trade War

Escalating trade tensions between China and the US is one of the most closely followed issues during this year’s Boao Forum. Some are worried that Chinese tech companies, fintech in particular, will be hurt by Trump’s actions but Dong Qi, founder and CEO of Finup Fintech Group, does not think that the trade conflict will have a huge impact.

Dong said that the US is not considered a top market for China’s fintech firms. That is because American financial service companies have “deep penetration” in their domestic market, leaving less market share for foreign companies.

Dong said that Chinese fintech companies are exploring other potential markets, such as South America and Southeast Asia. “China-US trade tensions will not make fintech firms a casualty,” Dong said. He is of the view that information exchange in tech will not be disadvantaged either.

In addition, China’s own financial service market has huge potential, Dong said. Chinese fintech companies have experienced “fierce competition” during the last few years, which means final winners in the area will be strong enough to compete with foreign companies, providing better services to Chinese consumers.

President Donald Trump has decried his country’s trade relationship with China as “stupid,” adding that unfair tariffs levied on US autos by China have been “going on for years.”

“When a car is sent to the United States from China, there is a tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a tariff to be paid of 25%,” Trump tweeted on Monday. “Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!”

The president’s latest tweet comes as his administration ramped up its trade spat with China in recent weeks. After hitting certain Chinese imports with a $60-billion package of import tariffs, Beijing responded with a $50-billion tariff package of its own.

Following this tit-for-tat escalation, Trump then announced that he would be instructing the United States Trade Representative to consider another $100 billion worth of trade penalties. The Chinese Ministry of Commerce responded, saying it was “not afraid to fight a trade war,” and that it would defend the country’s interests “at any cost.”

President Trump appears to be upping the brinkmanship in an effort to force China to back down and even the trade balance between the two countries. “I believe that the Chinese will back down and will play ball,” Chief Economic Adviser Larry Kudlow said last Wednesday, reported Bloomberg.

Trump has also denied that the US is entering a trade war with China, and claimed that the ongoing dispute would soon be water under the bridge between the two countries’ leaders.

“President Xi and I will always be friends, no matter what happens with our dispute on trade,” he tweeted on Sunday. “China will take down its trade barriers because it is the right thing to do. Taxes will become reciprocal & a deal will be made on intellectual property. Great future for both countries!”

Trump’s hard line on China stems from the president’s belief that current trade agreements put the Chinese at an unfair advantage. In addition, Trump’s trade measures seek to punish the Chinese state for helping its industry to steal technological secrets from American firms.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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