Ex­porters turn to­wards China

The Phnom Penh Post - - BUSINESS - Dan Martin/Kelly Wang

THERE is a notable no-show among the dozens of na­tional pav­il­ions at Shang­hai’s mas­sive im­port fair – the US – a metaphor for iso­la­tion­ist Trump poli­cies that at­ten­dees say are push­ing them closer to China.

The China In­ter­na­tional Im­port Expo opened on Mon­day with thou­sands of for­eign com­pa­nies woo­ing Chi­nese buy­ers with prod­ucts in­clud­ing Ital­ian he­li­copters, Cana­dian fur, Do­mini­can cigars, and Ja­panese fresh fish.

China touts the first an­nual event as a mile­stone mark­ing its eco­nomic tran­si­tion from “the world’s fac­tory” to a ma­jor con­sum­ing na­tion, and Pres­i­dent Xi Jin­ping opened it with a vow to im­port $30 tril­lion in goods and ser­vices over the next 15 years.

But the US has snubbed the gath­er­ing amid an in­creas­ingly bit­ter tar­iffs stand­off with China, with US Pres­i­dent Don­ald Trump ac­cus­ing it of un­fair trade prac­tices.

And for­eign busi­nesses and of­fi­cials at the show said the US pres­i­dent’s com­bat­ive ap­proach to trade has made it im­per­a­tive for them to turn more to­ward China.

El Sal­vado­ran trade of­fi­cial Sigfrido Reyes said mar­ket tur­bu­lence caused by Trump had hurt his coun­try by driv­ing down prices of com­modi­ties such as cof­fee.

It now looks to China to re­duce re­liance on the US.

‘We want to diver­sify’

“What re­ally wor­ries us is the un­cer­tainty. In an un­cer­tain en­vi­ron­ment, ev­ery­body loses. So we don’t want to have all our eggs in one bas­ket,” Reyes said.

China is ex­pected to re­main re­liant on US elec­tron­ics and other high-tech goods that it, and other coun­tries, can­not yet sup­ply.

But tar­iffs im­posed by each side could cut off the flow of a range of other US goods.

While few dis­pute that China’s mer­can­tilist trade poli­cies need to change, the trade spat has started to bite in the US, where a Chi­nese shift to non-US sup­pli­ers of soy­beans and other key im­port goods has left US farm­ers with­out buy­ers.

Ma­jor Chi­nese meat im­porters also have told they will sim­ply source from other coun­tries.

Even Canada, which re­lies heav­ily on US trade, wants to diver­sify.

“Of course we are close to the US and we al­ways will be. But we want to diver­sify our trade, es­pe­cially in­clud­ing China be­cause it’s a huge coun­try,” said John McCal­lum, Cana­dian am­bas­sador to China.

Cana­dian of­fi­cials said on Tues­day at the expo that Ot­tawa plans to dou­ble its trade with China by 2025.

China’s grow­ing ap­petite for im­ports, fu­elled by in­creas­ing in­comes, will ben­e­fit many US com­pa­nies, dozens of which are at the expo in­clud­ing Boe­ing, Cater­pil­lar, Gen­eral Mo­tors, Honey­well and Tesla.

But the shocks de­liv­ered by Trump’s trade poli­cies give op­por­tu­ni­ties to oth­ers.

China is al­ready the world’s largest ex­porter and is catch­ing up to the US on im­port vol­umes. The re­sult­ing trade re­la­tion­ships that China de­vel­ops add to its global lever­age.

Ye Ming, one of thou­sands of Chi­nese buy­ers milling about the show, im­ports foot­balls.

China in­creas­ingly buys such lower-value prod­ucts from abroad as it moves up the global pro­duc­tion chain, and Ye chose Pak­istan be­cause its sound re­la­tions with Bei­jing mean less po­lit­i­cal risk.

“Right now, if you are do­ing busi­nesses with Amer­ica, you’d have that prob­lem,” Ye said.

“[The im­port expo] is a lso a mes­sage that Amer­ica can buy from around the world, and we can buy from around the world, too.”

‘Tear down hur­dles’

At­ten­dees said China’s emer­gence as a pow­er­ful im­port­ing na­tion de­pends on whether it re­moves trade bar­ri­ers it has used for decades to cod­dle do­mes­tic in­dus­tries.

Xi opened the expo by declar­ing China’s re­solve to tear down hur­dles, but his com­ments were widely seen as re­peat­ing ear­lier un­ful­filled prom­ises.

“It is a huge mar­ket that is de­mand­ing ev­ery sin­gle prod­uct, but it is still very dif­fi­cult to pen­e­trate,” said Reyes.

But that means lit­tle right now to for­eign del­e­gates like Marcelo So­brinho, who ex­ports hand­made shoes un­der the 71-year-old Brazil­ian brand Fer­rucci.

So­brinho said the China-US trade war re­sulted in both coun­tries mak­ing Brazil­ian im­ports eas­ier, and Fer­rucci sought to take ad­van­tage by grab­bing its first toe­hold in China.

“[The trade con­flict] helped us. China opened its mar­ket and the US re­duced im­port ta xes. So t wo doors have opened for us,” he said.


A Chi­nese and a US flag at a booth dur­ing the first China In­ter­na­tional Im­port Expo in Shang­hai.

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