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US business group in China faces retaliation from escalating trade conflict

By Caoimhe Toman

Date: Wednesday 22 May 2019

US business group in China faces retaliation from escalating trade conflict

(Sharecast News) - The top US business association in China said on Wednesday that half its members faced retaliation by the Chinese government following the escalation of the country's trade conflict with the US.
The American Chamber of Commerce of China and its sister body in Shanghai said that 40.7% of respondents were considering or had already relocated manufacturing facilities outside China, in South East Asia or Mexico, particularly in the wake of the latest round of tariffs.

"Such strategy constitutes a rational choice for many companies to insulate themselves from the effects of tariffs while maintaining their ability to pursue domestic market opportunities," the report stated.

Around three-quarters of the 250 respondents to the latest survey said that tariffs were hurting their competitiveness.

So now, some of those companies were producing for Chinese customers in order to avoid facing problems when exporting, while still others were delaying or cancelling investment decisions.

The chamber's embers said that aside from tariffs they also face increased obstacles such as government inspections, slower customs clearance and delayed approval for licenses.

Earlier in May, the US ramped up tariffs on $200bn-worth of Chinese imports from 10% to 25%. China responded with similar measures of its own on $60bn of US goods.

One key sticking point is the US' attitude towards China's approach when it comes technology, with Trump claiming that US companies are often forced to reveal trade secrets in exchange for market access, despite the Chinese government's reiterated rebuttal of those claims.

The recent impasse in trade talks between the two giants had led to an escalation in tensions, leading the Trump administration to adopt harsh measures against Chinese telecoms equipment manufacturer Huawei.

The company faces an effective ban from US markets due to national security concerns, and Google made matters worse for Huawei this week, by saying it would no longer provide some services related to its Android operating system.

On Wednesday, Bloomberg reported that the US is considering blacklisting another five Chinese firms, this time belonging to the surveillance sector. The companies include Hangzhou Hikvision Digital Technology.

"We hope the company receives a fair and just treatment," Hikvision's secretary of the board, Huang Fanghong, said in a statement.

The US government insists that some of the technology from these companies could be used for espionage and some have been accused by human rights groups of facilitating Beijing's persecution of the Uighurs, a Muslim ethnic group in China.

No new talks had been scheduled between the two parties, despite reportedly having gotten very close to inking deal before the latest round of tariff increases materialised.

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