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China has just revealed a plan to protect its companies from the pain of commercial war



Less than a week after the United States and China hit each other with heavy tariffs, Beijing unveiled a basic scheme to help Chinese companies absorb the blows, pledging to channel the money raised from them. the collections to companies and workers entangled in the escalation of the commercial war.

Officials also encouraged companies to reduce their dependence on US products, urging them to switch orders for products such as soybeans and cars to suppliers in China and other countries.

"For companies that are severely affected, we suggest that they inform the local government departments," the Ministry of Commerce said in a statement on Monday.

The agency did not elaborate on how it would extend the financial relief or whether the aid would cover the total cost of the losses, but analysts said the measure suggests that China could significantly increase its support for battle-bleeding industries commercial. 19659005] The Asian economic giant has long promoted companies in its manufacturing sector – particularly the producers of solar panels, steel, glass and auto parts – with free or low-cost loans, reduced land and artificially economic raw materials, according to a Research published in the Harvard Business Review.

Over the years, EE. UU He has accused China of violating trade rules with subsidies, such as tax exemptions to increase exports, although Beijing has denied any crime.

The diversion of income from fees to suffering employers falls in line with a family pattern, said Usha Haley, an international business professor at Wichita State University in Kansas who tracks Chinese subsidies. [196] 59008] "Chinese central and provincial governments are using an old process better illustrated by a Hindu goddess with many arms: what one hand takes away, another hand gives," he said.

Scott Kennedy, director of China's Political Economy and Business Project at CSIS in Washington, said the government's proclamation appears to be a turnaround in public relations.

The statement, he said, "is intended to assure the Chinese business community that the Chinese government did not invite this trade war, has tried to limit the damage by opting to increase tariffs on imports that have prefabricated substitutes, and that will provide support to national companies that are in the related sectors ".

China also seems to be projecting confidence that it can withstand political turmoil, said David Rank, former deputy chief of mission of the US Embassy. UU in Beijing. 19659012] "Xi Jinping and the Communist Party do not face midterm elections in November," Rank said, referring to the Chinese president, who is no longer limited by the limits of the mandate. "In addition, they will blame any economic problem on Trump and the United States."

For now, the promise of restitution from China is largely symbolic, according to some industry observers, as the first round of US tariffs is expected to create more The United States imposed 25 percent tariffs about China's $ 34 billion worth of Chinese imports primarily destined for industrial products last Friday, shaking supply chains in technology and in the lower-end retail worlds.

Initial levies could represent a price increase of 8,500 million dollars for buyers in China.

"That would be, of course, microscopic," said Derek Scissors, a Chinese economist at the American Enterprise Institute in Washington, compared to the assistance of the Chinese. the government already provides the company.

Electric vehicles alone, he said, received more than $ 10 billion in government subsidies last year.

And after China retaliated last week with its own list of tariffs on the same number of US products – including pork, poultry, soybeans and corn – it is expected to decline from the United States.

"The vast majority of American products will not be competitive with a 25 percent tariff, so they will not be sent," Scissors said.

The value of imports to China reached an unprecedented high level in May of $ 188 billion, up 26 percent from the same time last year, trade data show. Basic products such as soybean, copper and iron ore had the highest demand.

Orders from the European Union jumped notably last month (18.3 percent), with South Korea, Japan and the United States lagging behind.

Analysts predict that Europe could get important business from China while the country battles with the United States for trade.

A sign of a strengthening relationship was German Chancellor Angela Merkel and Chinese Premier Li Keqiang, who announced Monday in Berlin that they oppose policies that reduce free trade.

Li also told European business leaders that China plans to buy more agricultural products from the continent, including meat, dairy products, honey and wine.

Trump has not revealed any plans so far to help farmers in the heart of the United States, who fear the first commercial pain in the United States. UU

Separately, thousands of US companies have requested exemptions from the Department of Commerce on the new border taxes imposed by Trump on metals from China, Russia, Switzerland, Japan and other nations.

In a radio interview in April, the president said that producers may have to deal with temporary discomfort.

"We can get hit," he said, "and you know, ultimately, we're going to be much stronger for it, but it's something we have to do."

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