China has no intention of submitting to President Trump’s threat of raising tariffs to 25% on USD 300 Billion worth of Chinese goods. According to Bloomberg, 10 days of meetings and interactions with various Chinese officials, entrepreneurs, and investors reveal the nation is preparing to battle head-on in a trade war with the U.S.
Last week, Trump declared the Chinese telecom company, Huawei Technologies Co Ltd, a national security threat and placed it on a blacklist. In response, the Chinese government is threatening to ban all U.S. companies that cut off Chinese firms. As tensions between the U.S. and China elevate, China is gearing up for conflict.
The Chinese government has already begun to deploy programs to stimulate economic growth despite the negative consequences of the trade war. Last week, Beijing announced a two-year tax cut for software and semiconductor-design companies to accelerate technology development. In addition, Huawei recently signed a deal with a Russian telecom company, MTS, to develop cutting edge 5G infrastructure that will place China at the forefront of the global internet race.
Companies are also taking dynamic measures to prepare for the future. Some are relocating outside of the U.S. while others, such as Huawei, are shifting major supply chains.
As the trade war persists, more and more companies will become involved. “The longer the dispute goes on, the greater the risk for long-term global growth as third party countries become forced to attach themselves to either the U.S. or the Chinese camp and tech supply chains are disrupted,” said Tom Elliott, International Investment Strategist at deVere Group.
Trade negotiations are at a stalemate as no significant concessions have been made. China and the U.S. continue to point fingers, each blaming the other for the standoff.