Black Sea Grain 2019 US Vs China Trade Disputes & Repercussion to Feed Grain Business Renault Quach guojiahua@donlink.cn Renaultquach2006@163.com Kiev, Ukraine April 11– 12, 2019
1 US – China Trade Disputes 2 I m pact to Feed Grains Business 3 Tw o I ssues Need for Attention in 2 0 1 9
1 US – China Trade Disputes A. Snapshot of Trade Disputes B. Requests & Position of the America & China C. Economic Analysis of China Position in Trade Negotiation D. Agri-Trade Dependency of US & China Position in Trade Negotiation
A. Snapshot of Trade Negotiation Between The US & China • US invoked 301 Investigation against China in Aug, 2017. • US declared to increase import duties many times against China products during Feb – Sept 2018 with China to response with retaliation against the US products during March - August 2018. • Both countries representatives were holding talks 4 times during the period without noticeable progress until the meeting of the top men of both countries in Dec 2018 in Argentina. • Trade war atmosphere was then cooled down. Additional 3 round table meetings between the 2 countries representatives were held with positive feedback and progress. • The US withheld further increase of import duties against China products as from March 2019 and China reciprocated by buying about 13 mln tons of US soybean, 300K US Corn & pork during Dec 2018 – March 2019. • Talk still underway with expected some sort of agreement between the US and China but is unlikely to end the trade disputes.
1 US – China Trade Disputes A. Update Status of the Disputes B. Requests & Position of the US & China C. Economic Analysis of China Position in Trade Negotiation D. Agri-Trade Dependency of US & China in Trade Negotiation
B. Requests & Position of the US & China 1. N Narro rrowing Trade D Defic ficit it - Cons nsens nsus w with d h different needs ds America China • Agree to buy more US • Reduce trade deficit by products with pre-condition US$200 Bln by the end of for US to cancel 301 2020 by increase in import sanction. of agricultural & industrial • want to buy more high-tech products. and high-quality servicing, not simply agricultural, energy and industrial products. • Resume of China poultry import to US.
2.Intelle llectual l Property ty P Protectio ion America China • Consensus on principle and • China is in process of strengthen measures over strengthening the measures and intellectual property protection agree to study how to modify but wide divergence. "Patent Law" to enforce Intellectual Protection. • Request to ensure stopping of commercial internet invasion, • Difficulty is how to execute the internet pilferage of intellectual promises effectively. property, trading secret and confidential commercial information of US company.
3. T Tarif iff & f & Non-tari riff B Barr rriers rs – Touch t to Reach C Consensus America China • Lowering import duties on products of • China agrees to lower import duties on non-critical sectors to level equivalent to vehicles, buy huge volume of US products the US import duty by Jan 1, 2020. and services with pre-conditions. • Fair and non-discriminative treatment to • Fair treatment to China enterprises for US investment & market accessibility of investments in US & to facilitate market US companies in China, including accessibility of China enterprises over elimination of foreign investment electronic payment devices & services in restriction and foreign share holding limit. America. • China stops subsidy and Government • Fair treatment to China enterprises over support over those industries of "China technological sector and allow US Made 2025 Project". companies and Government departments to buy and use China technological • Cancel "technology in exchange of products and services freely. market" clause in foreign investment rules in China. • Tough areas for compromise as it involves in and will affect China Strategic Industrial • China currency issue Development Plan.
4. O Other ers America China • China to withdraw petition to the • Cancel the 301 sanction WTO against US and promise not • US promises not to take any to take further action against the retaliation against China. US. • Touch for China to agree on the • China will not oppose, challenge 2 nd & 3 rd points. or retaliate the US for measures having been, being or will be taken to restrict China investment in US or import to US market. • US will impose extra import duty or restriction to China products, servicing or investment in US if China promises are not honored as determined by the US.
5. E Enfo forceme ment – Consensus o on P Prin incip iple le b but D Diff ffic icult lty on Ex Executio ion E Evalu luatio ion C Criteria ia America China • Quarterly meeting to • Periodic meeting to evaluate and evaluate and coordinate progress of coordinate progress of targets achievement targets achievement and reformation. and reformation. • Difficulty is how to reach criteria to evaluate effective execution of the Agreement .
1 US – China Trade Disputes A. Update Status of the Disputes B. Requests & Position of the America & China C. Econom ic Analysis of China Position in Trade Negotiation D. Agri-Trade Dependency of US & China in Negotiation
C 1. Secondary Industry is Critical to China Economic Performance Bln RMB 90 000 80 000 Ave Growth of Secondary Industry 2012- 2017 = 7.4% 70 000 China GDP Growth in 2018 = 6.6% GDP Ave Growth Rate 60 000 50 000 Primary Secondary Tertiary 40 000 2007-2017 13.6% 16.4% 26.9% 30 000 2007-2012 16.6% 18.6% 22.3% 20 000 2012-2017 5.7% 7.4% 14.9% 10 000 0 Primary Secondary Tertiary % Share of China GDP 120% Primary Secondary Tertiary 100% 1997 18% 47% 35% 80% 2002 13% 44% 42% 2007 10% 47% 43% 60% 2012 9% 45% 45% 40% 2017 8% 40% 52% 20% 2017 in $Bln 94 478 610 0% 1997 2002 2007 2012 2017 Source: China Statistic Year Book + Donlink Primary Secondary Tertiary
C 2. Major Contributing Sector to China Trade Surplus – Secondary Industry Bln $ 2 500 Trade Surplus with the World in 2017 = US$ 420 Bln 2 000 1 500 1 000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Import Export Surplus Bln $ Trade Surplus contributed by Secondary Industry in 2017 = US$ 881 Bln 1 200 1 000 800 600 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (200) (400) (600) (800) (1 000) Primary Industrial Servicing Source: China Statistic Year Book + Donlink
C 3. Trade Surplus contributed by USA in 2017 = 65% Bln $ Trade Surplus with USA in 2017 = US$ 276 Bln 500 Trade Surplus with USA on Up-trend except 2009 450 400 350 300 250 200 150 100 50 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Import Export Surplus 140% 65% of Trade Surplus contributed by USA in 2017 120% 100% 80% 60% 40% 20% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -20% -40% US % Share Others Source: China Statistic Year Book + Donlink
C 4. Products Contributing to Trade Surplus with USA - Secondary Industry Machinery, Audio-equipment & Accessories Miscellaneous Unclassified Products Weaving Materials & Products Metal & Metallic Products Shoes, Hats, Leather Products & accessories Surplus Plastic & Rubber Products Glass, Ceremic Products Chemical & Industrial Products Live Animal and Products Medical & Optical Equipment & Products Jewellery, Vasluable Metallic Products Mining Products Vehicles, Aircraft & Transportation Equipment Agricultural Products (200) 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 Deficit Source: China Statistic Year Book + Donlink
46 47 48 49 50 51 52 53 54 C 5. China Manufacturing Sector Negatively Impacted by the Trade Disputes янв.11 апр.11 июл.11 окт.11 янв.12 Share of 2 nd Industry Employment in 2017 = 28% or 218 Mln headcounts апр.12 июл.12 PMI dropped from 51.9 in May 2018 окт.12 янв.13 апр.13 июл.13 окт.13 янв.14 апр.14 PMI of Manufacturing Industry июл.14 окт.14 янв.15 апр.15 июл.15 окт.15 янв.16 Trade Dispute Noise started to smoke апр.16 июл.16 окт.16 янв.17 апр.17 Source: Wind + Donlink июл.17 окт.17 янв.18 апр.18 июл.18 окт.18 янв.19
C 6. US & China want Agreement out of Different Needs • From the economic point of view, China needs to reach the trade agreement with the US to minimize negative impact over the economy • Nevertheless, it does not imply China will or can accept all the requests or demand from the America, particularly those sectors relating to the “China Made 2025 Projects” • Despite of less negative economic impact to the US, the cost to Mr. Trump cannot be neglected, particularly after the failure of meeting with Mr. Kim in Vietnam & votes for Presidency Election. • The areas of negotiation are very complicated and far beyond the meaning on papers but expect the agreement can be reached in some ways. Nevertheless, it is not a clear cut and one-shot arrangement. It needs on-going discussion and dialogue to narrow the divergence of requests and targets of both countries.
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