11, Jul, 2020
China Is Losing The Trade War In Nearly Every Way

China Is Losing The Trade War In Nearly Every Way

China is still the world’s No. 2 economy and is still the monster of emerging markets, but regardless of those bonafides, Xi Jinping’s country is losing the trade war in nearly every way imaginable.

The arrest of Huawei CFO Meng Wanzhou in Canada last month for breaking U.S. sanctions law, followed by the firing of Huawei sales executive Wang Weijing in Poland last week shows China can be a bad actor, exactly as Washington believes. The Poland story centers around spying allegations, where Wang allegedly sought trade secrets from the government. Huawei’s latest bad headlines show how China tech companies may have risen to prominence by copying foreign technologies in joint venture deals or through white-collar criminal actions such as intellectual property theft and corporate espionage. Huawei is one of China’s most important, private tech firms. It rivals Cisco Systems worldwide.

Thanks in part to Huawei, China is getting beat on the public relations front in the trade war.

Early in the trade war, China thought it get the Europeans as allies. They hate Trump, too. China failed to woo the EU.

The Shanghai Composite is down around 30% in the last 12 months. Only Turkey is doing worse.

China is losing the PR battle. For years, U.S. companies have been complaining that China does not honor intellectual property rights. Washington believes tech powerhouses like Huawei owe much of their growth to IP theft. Photographer: Krisztian Bocsi/Bloomberg © 2018 Bloomberg Finance LP© 2018 Bloomberg Finance LP

The stock market is a terrible way to measure China growth. Investors know it. So they look to the economic data. Industrial production is still positive but in decline. Quarterly GDP growth is in decline. On Monday, China released weak exports data for the month of December.

China Trade Data in USD (YoY)

Exports:  -4.4% versus estimate 2% and November’s 5.4%

Imports: -7.6% versus estimate 4.5% and November’s 3%

Trade Balance: $57 billion versus estimate $51 billion and November’s $44 billion

Exports to the U.S. fell 3.7%, the first nonseasonal decline since October 2016. That would indicate an end to the pre-tariff purchasing rush by U.S. companies in the third quarter and into the fourth. Exports to the U.S. had previously climbed over 12% for three consecutive months.

“The Chinese trade numbers released today got all the alarm bells ringing,” says Naeem Aslam, chief market strategist for Think Markets in London and a Forbes contributor. “If you need any evidence how the trade spat is impacting a country’s economic health then look no further than China trade. The lower export number means lower jobs, which means another direct impact on the (Chinese) economy. Donald Trump can be pleased. His policies have brought China to its knees.”

[“source-“forbes”]