Benefits of US-China Trade Negotiations
- April 7, 2019
- Posted by: Gary Young
- Category: China Sourcing - Blog
Avela Corporation finds Chinese manufacturing sources for our clients, so you can imagine we are asked a lot of questions regarding the so-called trade war between the US and China. Our first response is to point out that it is it isn’t really a “trade war”—that’s a term used in the media to create sensational headlines. “Trade negotiations” is the more appropriate term for what is going on now between Washington, DCand Beijing.
It may be a high-stakes trade negotiation, but that’s to be expected since the United States is the world’s largest economy and China is the second largest economy. And since the two are interdependent, negotiations are key to their business relationship. Indeed, it would be time to worry if they weren’t talking.
That said, President Donald Trump’s Administration in Washington is working to correct a long standing trade imbalance with China that is the result of poor negotiations on the part of past US administrations. Tariffs represent some of the game pieces used by both sides in the negotiations.
If your bottom line is negatively impacted by new tariffs on Chinese imports, it’s totally understandable that you would be upset and you might find yourself in a bind. Avela may be able to help you with that by sourcing your manufacturing to other countries. There are other options that can be explored as well. Smoothing the process of sourcing manufacturing abroad is what we do.
In the meantime, it’s important to keep your eyes on the prize regarding China-US trade talks. There is reason to be optimistic that this round of negotiating will yield long term benefits for companies sourcing manufacturing in China.
According to the South China Morning Post, China’s Vice-Premier Han Zheng recently told a gathering of foreign business representatives and former government officials from the US and other countries meeting in Beijing that the country is committed to achieving a more even balance of trade with the US.
The Chinese government is shortening its “negative list” of industries in which foreign investment is limited or prohibited, and promising to allow sole proprietorship of foreign businesses in more sectors of the Chinese economy.
According to this report, China is also discussing banning the long standing practice of forcing foreign firms to transfer proprietary technology to joint venture partners.
Han added, “We will continue to strengthen intellectual property protection, prohibit forced technology transfers, and build a penalty and compensation system” to benefit foreign companies damaged by IP theft.
Of course, with offices in Houston and Shanghai, Avela has been assisting our clients in dealing with trade matters such as these since 2002, but this type of conversation is certainly good news for everyone—American and Chinese workers and consumers included. For too long the US-China trade imbalance has benefited a select few on both sides. Now the growth of the Chinese middle class has grown to where imports are needed to satisfy consumer demands and renegotiating old deals is in order.
Only time will tell whether these high-level trade negotiations will produce true trade reform, and the road to balanced trade may be rocky for some in the short run, but again there is reason for optimism.
In the meantime, Avela is here to help clients during this time of change. Contact us to discuss how Avela can be your continuing source for success in China.
