China has ‘nothing to fear’
Nation can turn to growing Southeast Asian market to help offset trade row with US: HK entrepreneur
China has nothing to be afraid of in the escalating Sino-US trade dispute, and can cope with it by re-adjusting the consumer marketplace to Southeast Asia, reckons prominent Hong Kong entrepreneur Allan Zeman.
Zeman, who is a member of the APEC Business Advisory Council, says the Asian market is growing quickly, especially in Southeast Asia. He suggests that China could continue its market liberalization efforts and reform measures to attract more buyers from around the world.
“I’ve been in the trading business for 30 years and keeps seeing American importers coming here to place their orders. The prices are cheaper here in China, and the workforce is stronger with plenty of skilled labor. This will continue as they cannot do it in the US,” he tells China Daily
Zeman set up his garment trading firm in 1975, sourcing clothing from the Chinese mainland and exporting it to Canada.
For imports, he notes that soybeans and beef are two areas that could be impacted.
“There’s a saying: ‘Necessity is the mother of invention’, which means if you’ve problems, you have to think out of the box to solve them. You have to invent new ways,” he says, adding that China could source from other countries for beef and soybean.
China said in April it would slap 25-percent tariffs on US imports, including soybean and beef. As a developing premium market for beef, China will continue to see a rapid increase in beef imports. After the higher tariff on US beef, Australian beef will dominate the growing beef importing market in China. This will displease US beef exporters, most of whom are supporters of US President Donald Trump.
Another group of supporters who are not happy with Trump’s trade policy are the farmers in the US Midwest. China is currently the largest soybean importing country, commanding 60 percent of the global market. The tariff could stop Chinese importers buying from Midwest US farmers. And it could affect Trump’s rating in this year’s US mid-term elections, as well as his possible re-election bid in 2020.
Zeman believes that seeking reelection for another four years is one of the Trump’s goals in escalating the trade row with China.
“Everything he’s doing now is what he had promised his constituents, including trade issues, the wall between the US and Mexico, limiting immigration and lowering tax,” he says.
Zeman thinks it’s hard to predict Trump’s next step, warning in jest that the US could slap levies on another $50 billion or $500 billion worth of imports in future.
Last week, the Trump administration proposed levying 10-percent tariffs on another $200 billion worth of Chinese imports. A final decision is expected after Aug 30.
The Ministry of Commerce of China said the country has not started further negotiations on the matter with the US.
“I’m not sure whether Trump really understands the trade. It’s very difficult to deal with someone who has a limited understanding of markets and of trade organizations,” says Zeman.
“Free trade creates more jobs, a better economy and a stronger workforce. It can make a country go up. However, protectionism can never be good for any country. Trump doesn’t really understand all the problems that protectionism can bring.”
In Zeman’s view, Trump would not call off the dispute until it really hurts the US economy and forces it to go down.
“It’s very difficult to say. It can end tomorrow or it can keep going for eight years. One way to end the trade friction is when the US sees they’re losing jobs or the economy’s isn’t so good.”
Zeman says China has larger visions as it vigorously promotes the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area. He expects these projects to benefit the B&R countries and cities in the Bay Area.
He believes Hong Kong, a key city in the Bay Area, will not be affected much by the Sino-US trade row in the short term as there is little direct trade business.
But if the dispute drags on and tariffs keep going up, it could create problems for Hong Kong’s shipping, logistics, transportation and cargo businesses.
“Hong Kong businessmen, however, should be able to seek new markets and new ways to make up for the potential shortfall as the city has always been a trading society serving the world,” says Zeman.
The problem he’s worried about is that if the trade dispute continues for a while, it could trigger a recession as people lose confidence.
“It could cause a slowdown in the global economy because this is not aimed at just the US and China, it also affects the European Union and Canada as well.”
The US fired the shot at the EU, Canada and Mexico last month by imposing 25-percent tariffs on steel imports and a 10-percent levy on aluminum imports from those countries.
Free trade creates more jobs, a better economy and a stronger workforce. It can make a country go up. However, protectionism can never be good for any country.” Allan Zeman,