China Still Faces High Uncertainty on U.S. Economic Penalties: Analyst

TaiwanPlus News

As global CEOs gather in Beijing for the annual China Development Forum, Chinese premier Li Qiang called for open markets amid "rising instability." Some company leaders expressed confidence in China's market opportunities, with automaking giant Mercedez-Benz announcing over US$1.9B in added investments. On the developments at the Forum, TaiwanPlus spoke with Daniel Liu, an economist from Taiwan think tank the Chung-Hua Institution for Economic Research.

Transcript

00:00In a meeting with U.S. Senator Steve Daines, China's Li Qiang said that the two countries

00:05should choose dialogue over confrontation.

00:08But given the current climate of Trump's tariffs, retaliatory tariffs, what is the

00:13best-case scenario for Beijing and Washington right now?

00:18The U.S. and China will, of course, they will try to engage in the dialogues, or Xi Jinping

00:28may pay a visit to the U.S. to meet Trump.

00:31However, but I think the confrontation and the U.S. definitely will impose more tariffs

00:37on the Chinese product, also will impose more export and import restriction on mainland

00:42China.

00:43I think that is the typical scenario we should anticipate.

00:46For Trump's second term, we can see the Trump imposed tariff not only focus on mainland

00:52China, but also apply to other countries which have relatively high trade surplus

00:59against the U.S.

01:00On April 2nd, he will announce the so-called reciprocal tariff, so-called the 30-15.

01:06Taiwan may be also on the list.

01:10The U.S. trade deficit against mainland China has been reduced significantly.

01:15However, we should also realize that China is still the largest trade deficit country

01:21of the U.S.

01:22At the development forum, we're also seeing several global CEOs talk about their confidence

01:28in business opportunities in the China market.

01:31How much has the climate improved for these foreign investors?

01:36Since China launched the U.S. trade war back to 2018, we can see the flow of the foreign

01:43investment to mainland China has decreased.

01:45In particular, for the past two years, we can see the trend still declining.

01:49For this year's China development forum, I see one of the major, major targets for

01:53mainland China is to try to provide a more suitable investment climate to the foreign

01:59large enterprises.

02:00However, I don't see that will generate a significant positive effect.

02:07The major reason is that China still faces very high uncertainty on the penalties from

02:14the U.S.

02:15However, we can see China is still the second largest market, only next to the U.S.

02:20Mercedes Benz, you know, China is the largest auto consumption market in the world.

02:25So still, you know, on the one hand, it's still very attractive to the foreigners.

02:30But on the other hand, you know, China has to face, you know, very high uncertainty or

02:34very high trade sanctions from the U.S.

02:36So that is, you know, the two opposite forces, you know.

02:40U.S. President Donald Trump has hinted at some sort of flexibility around his reciprocal

02:45tariffs.

02:46What does that mean to you?

02:48Well, we can take the Canada and Mexico as the example.

02:52He first announced, say, well, because you are because of the illegal immigrant problem,

02:57you know, U.S. will impose the tariff on Canada and Mexico.

03:03And then he will see the improvement, the reaction from the U.S. counterparts.

03:07If they can make some improvement, Trump may delay or may temporarily suspend the penalty

03:13tariff.

03:14That is very typical.

03:15Trump uses the tariff as the, you know, bargaining chips or the negotiation weapons.

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