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China

Biden needs to end the tariff war with China

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Chinese and US flags flutter near The Bund, Shanghai, China, 30 July 2019 (Photo: Reuters/Aly Song).

Author: Yan Liang, Willamette University

US President Joe Biden wasted no time reversing many of the damaging policies introduced during the Trump presidency, with exception to trade. US Trade Representative Katherine Tai is expected to meet her Chinese counterpart to review the Phase One trade deal, but expectations for the talks are low.

Biden lacks the political will to reverse course on Trump’s trade policies, with bipartisan support for ‘being tough’ on China and using the tariff war as leverage to demand structural change in China. Nonetheless, keeping the Trump tariffs is a mistake.

First, the tariff war is based on a flawed economic rationale. The Trump administration imposed tariffs in response to the bilateral trade imbalance, according to which the United States ran a large and persistent trade deficit. Donald Trump believed that trade deficits are bad for the US economy. But the bilateral trade balance is meaningless when supply chains are globally structured and trade is multilaterally constructed. Consider, for instance, the iPhone X: when imported from China, each unit adds US$409.25 to the balance, even though China accounts for only 10.4 per cent of the value added.

Second, the United States runs a trade deficit with over 100 countries. This is not the product of unfair practices but of the United States’ own internal deficit, with private and public spending outpacing income. It is also caused by the US dollar’s ‘exorbitant privilege’ — trade deficits do not depreciate the US dollar to bring about trade adjustment because insatiable demand for the US dollar boosts its value.

Third, Trump’s tariffs did not achieve their intended goals — the US trade deficit with China continues to widen, while US consumers foot the bill for the tariffs, paying US$1277 more a year on average for consumer goods. Manufacturing jobs were not re-shored, with an estimated loss of 320,000 jobs now predicted by 2025. Continuing the tariff war undermines Biden’s own domestic priority of economic recovery.

The tariff war was a convenient political contrivance for Trump’s populist ‘America first’ agenda that served to amass political support for his presidency. Biden’s unwillingness to depart from Trump’s legacy undermines the prospects of the United States re-joining the multilateral system and resuming global economic leadership. The unilateral imposition of tariffs on China is a clear deviation from a multilateral approach.

Under Trump, trade restrictions were often carried out through executive orders in the name of broadly and vaguely defined national security concerns. But protecting sensitive technologies could follow the approach of ‘small yard, high fence’ through legislation instead of imposing a blanket, punitive tariff scheme. If the United States is to resume global leadership, it needs to resist the temptation of unilateralism and instead rebuild and reinforce a credible multilateral rules-based system.

It is clear that the US tariff war has failed to force China to budge on any structural reforms that are not aligned with its own long-term interests. China sees some of its economic policies — such as supporting state-owned enterprises (SOEs) — as unique to its economic system and critical to its success. From Beijing’s perspective, US demands for changes to SOE policies amounts to interference. The United States needs to understand China’s developmental objectives and approaches and work multilaterally to formulate and update international rules.

While the tariff war is demonstrably counterproductive, phasing out tariffs without any major Chinese concessions is politically challenging. Waging the tariff war may temporarily deflect attention away from structural problems in the US economy. To bypass the partisan stalemate on trade issues, Biden could extend the presidential Trade Promotion Authority.

And China has made efforts to implement the Phase One trade deal. While COVID-19 has dampened Chinese demand and disrupted US supply, post-pandemic demand combined with the continued strengthening of the renminbi will help China fulfil the purchase agreement. China has also made progress in curbing forced technology transfers and easing market restrictions.

To solidify economic recovery and sustain long-term growth, China must continue economic reform and foster positive international relations. It is in China’s long-term interest to ease market access, protect intellectual property rights, reform SOEs and promote tech innovation in a constructive and…

Read the rest of this article on East Asia Forum

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Trends and Future Prospects of Bilateral Direct Investment between China and Germany

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China and Germany experienced a decline in direct investment in 2023 due to global economic uncertainty and policy changes. Despite this, China remains an attractive destination for German FDI. Key industries like automotive and advanced manufacturing continue to draw investors, although FDI outflows from Germany to China decreased by 30% in the first three quarters of 2023. Despite this, the actual use of foreign capital from Germany to China increased by 21% in the same period according to MOFCOM. The Deutsche Bundesbank’s FDI data and MOFCOM’s actual use of foreign capital provide different perspectives on the investment trends between the two countries.


Direct investment between China and Germany declined in 2023, due to a range of factors from global economic uncertainty to policy changes. However, China remains an important destination for German foreign direct investment (FDI), and key industries in both countries continue to excite investors. We look at the latest direct investment data between Germany and China to analyze the latest trends and discuss key factors that could shape future business and commercial ties.

Direct investment between China and Germany has undergone profound changes over the past decade. An increasingly complex investment environment for companies in both countries has led to falling two-way FDI figures in the first three quarters of 2023, in stark contrast to positive trends seen in 2022.

At the same time, industries with high growth potential, such as automotive and advanced manufacturing, continue to attract German companies to China, and high levels of reinvested earnings suggest established firms are doubling down on their commitments in the Chinese market. In Germany, the potential for electric vehicle (EV) sales is buoying otherwise low investment among Chinese companies.

According to data from Deutsche Bundesbank, Germany’s central bank, total FDI outflows from Germany to China fell in the first three quarters of 2023, declining by 30 percent to a total of EUR 7.98 billion.

This is a marked reversal of trends from 2022, when FDI flows from Germany to China reached a record EUR 11.4 billion, up 14.7 percent year-on-year.

However, according to China’s Ministry of Commerce (MOFCOM), the actual use of foreign capital from Germany to China increased by 21 percent year-on-year in the first eight months of 2023. The Deutsche Bundesbank’s FDI data, which follows standards set by the IMF, the OECD, and the European Central Bank (ECB), includes a broader scope of transactions within its direct investment data, including, broadly, direct investment positions, direct investment income flows, and direct investment financial flows.

Meanwhile, the actual use of foreign capital recorded by MOFCOM includes contracted foreign capital that has been concluded, including the registered and working capital paid by foreign investors, as well as the transaction consideration paid for the transferred equity of domestic investors.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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Manila blasts China’s ‘unprovoked aggression’ in latest South China Sea incident

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China’s coast guard on Saturday fired a water cannon at a Philippine supply boat in disputed waters in the South China Sea, causing “significant damages to the vessel” and injuring its crew, the Philippine coast guard said.

Manila was attempting to resupply troops stationed on a ship at the Second Thomas Shoal, known locally as Ayungin Shoal, when the Chinese coast guard and maritime militia “harassed, blocked, deployed water cannons, and executed dangerous maneuvers against the routine RoRe (rotation and resupply) mission,” said the Philippine National Task Force for the West Philippine Sea.

The West Philippine Sea is the part of the South China Sea that Manila claims as its jurisdiction.

The Chinese coast guard also set up “a floating barrier” to block access to shoal where Manila ran aground an old warship, BRP Sierra Madre, to serve as a military outpost.

The Philippine task force condemned China’s “unprovoked aggression, coercion, and dangerous maneuvers.”

Philippines’ RoRe missions have been regularly blocked by China’s coast guard, but this is the first time a barrier was set up near the shoal. 

The Philippine coast guard nevertheless claimed that the mission on Saturday was accomplished.

Potential consequences

The Second Thomas Shoal lies within the country’s exclusive economic zone where Manila holds sovereign rights. 

China, however, claims historic rights over most of the South China Sea, including the Spratly archipelago, which the shoal forms a part of.

A Chinese foreign ministry’s spokesperson on Saturday said the Philippine supply vessel “intruded” into the waters near the shoal, called Ren’ai Jiao in Chinese, “without permission from the Chinese government.”

“China coast guard took necessary measures at sea in accordance with law to safeguard China’s rights, firmly obstructed the Philippines’ vessels, and foiled the Philippines’ attempt,” the ministry said.

“If the Philippines insists on going its own way, China will continue to adopt resolute measures,” the spokesperson said, warning that Manila “should be prepared to bear all potential consequences.”

Chinese Maritime Militia vessels near the Second Thomas Shoal in the South China Sea, March 5, 2024. (Adrian Portugal/Reuters)

U.S. Ambassador to the Philippines MaryKay Carlson wrote on social media platform X that her country “stands with the Philippines” against China’s maneuvers.

Beijing’s “interference with the Philippines’ freedom of navigation violates international law and threatens a free and open Indo-Pacific,” she wrote.

Australian Ambassador to the Philippines Hae Kyong Yu also said that Canberra shares the Philippines’ “serious concerns about dangerous conduct by China’s vessels adjacent to Second Thomas Shoal.” 

“This is part of a pattern of deeply concerning behavior,” Yu wrote on X.

Edited by Jim Snyder.

Read the rest of this article here >>> Manila blasts China’s ‘unprovoked aggression’ in latest South China Sea incident

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Foreigners in China: 2024 Living and Working Guidelines

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China’s Ministry of Commerce released updated guidelines for foreign businesspersons living and working in China in 2024. The guidelines cover accommodations, visas, work permits, and emergency protocols. It also outlines responsibilities regarding social security premiums and individual income tax obligations. prompt registration for temporary accommodation is required upon arrival.


The updated 2024 guidelines for foreign businesspersons living and working in China, released by the country’s Ministry of Commerce, outline essential procedures and considerations covering accommodations, visas, work permits, and emergency protocols.

On January 25, 2024, China’s Ministry of Commerce (MOFCOM) released the latest version of the Guidelines for Foreign Businessmen to Live and Work in China (hereinafter referred to as the “guidelines”).

The document is divided into four main sections, labeled as:

Furthermore, the guidelines elucidate the regulatory framework governing foreign businessperson’s responsibilities concerning social security premiums and individual income tax obligations.

This article provides a comprehensive overview of the guidelines, delving into their significance and implications for foreign businesspersons in China.

Upon arrival in China, prompt registration for temporary accommodation is required.

If staying in a hotel, registration can be facilitated by the hotel staff upon presentation of a valid passport or international travel documents.

This article is republished from China Briefing. Read the rest of the original article.

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.

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