Next in the trade war: economic disengagement between US and China - Arthur Kroeber

Arthur Kroeber

New tariffs are not the main worry, as new shots are fired in the trade war between China and the US, says economist Arthur Kroeber according to Barron's. Next is the upcoming disengagement between both economies and the question of what domains will be involved.

Barron's:

Scenario-planning around whether or not there is a deal isn’t very useful for investors. The reason? The Trump administration isn’t likely to impose the next tranche of tariffs, Kroeber writes, noting that the next round could crater the U.S. markets and hurt the economy—both unfavorable as Trump goes into his re-election campaign. Even if there is a deal, he writes, it may not restore U.S.-China trade and investment relations back to their prior state. Investments from China have plummeted to $5 billion last year, down from $29 billion the year before, according to Rhodium Group. Plus, Kroeber expects some tariffs to stay in place even if there is a deal and U.S. restrictions on China’s access to high-value technology to continue, as will companies’ efforts to diversify their supply chains and rely less on China. 

The bigger question for investors is how the U.S.-China relationship is reset. “The shift from seeing U.S.-China economic integration as positive to seeing it as negative is a fundamental one. There is no doubt that the U.S. government will now try to drive as much economic disengagement from China as possible. The question is how effective that drive will be, and which domains will be most affected,” Kroeber writes.

More in Barron's.

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China cannot afford to disconnect from the global economy - Arthur Kroeber

Arthur Kroeber

China is trying to find a way out of the irrational Trump policies, as the G20 convenes in Japan. Key is that China cannot afford to lose support from the international business community and the global economy, says economist Arthur Kroeber to the New York Times.

The New York Times:

In response, China’s Ministry of Commerce has threatened to make a list of “unreliable” companies and people who could be punished for disrupting Chinese supply chains. Chinese officials have echoed the threat in meetings with American tech companies. Beijing has also proposed new cybersecurity regulations that experts say could impair the operations of foreign companies in China. 

Still, Arthur Kroeber, a founding partner at the research firm Gavekal, said China would hurt itself as much as it hurt the United States if it took more steps to disconnect itself from the global economy. 

“China’s only hope of influencing U.S. policy in a more positive (from its standpoint) direction is to keep the business community as some kind of an ally,” Mr. Kroeber wrote in an email. “This limits its ability to target U.S. firms for retaliation.”

More at the New York Times.

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Getting a trade deal that helps both sides might be impossible - Arthur Kroeber

Arthur Kroeber

Observers watch the proceedings at the G20 in Japan as Donald Trump and Xi Jinping will try to hammer out a kind of trade deal. But getting a deal that makes both sides happy is virtually impossible, says economist Arthur Kroeber in the South China Morning Post.

The South China Morning Post:

Arthur Kroeber, research head and co-founder of Gavekal Dragonomics, wrote in a note that “it will be very tricky to come up with a deal that satisfies the political requirements on both sides.” 

Trump, a Republican, decided to break off negotiations in early May because a deal would be a “political liability” for him if right-wing hardliners and Democratic opponents saw its terms as inadequate. 

In China, the terms negotiated by Vice-Premier Liu He, Xi’s top economic aide, were “politically unsaleable,” with powerful forces in Beijing suggesting US demands were excessive, Kroeber added.

More in the South China Morning Post.

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What if rare earths enter the trade war - Arthur Kroeber

Arthur Kroeber

China has been checking its weaponry for the ongoing trade war and stopping the export of rare earths has been one of them. But China will have to be very selective in using this weapon, otherwise it might hurt itself more than the US, says economist Arthur Kroeber, according to CBS.

CBS:

If China does clamp down, they are likely to be selective in which elements to target because the country wants to be seen as playing by World Trade Organization rules, said Arthur Kroeber, head of research at Gavekal Economics and editor-in-chief of China Economic Quarterly, on a call with clients this week. China's goal is to paint the U.S. as a "lawless actor" that disrupts economic growth, he said. 

"I really think that they have a problem [in] that none of the options are very good and all of them involve very significant costs to China," Kroeber said. "So if they're going to do any of them they have to do them extremely carefully, and I think quite selectively."

More at CBS.

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The trade war: only uncertainty is certain - Arthur Kroeber

Arthur Kroeber

The markets have given up trying to make sense out of the direction of the trade war between China and the US is taking. Economist Arthur Kroeber sees three possible scenario's for the conflict but is hesitant to pick one, he says in Barron's.

 Barron's:

Gavekal Research’s Arthur Kroeber notes that there are three possible outcomes. First, the two sides could sit down and get a deal hashed out in a matter of weeks. Second, negotiations could take months and only reach a conclusion after the U.S. and China decide they can’t take anymore pain to their economies or markets. Finally, the trade war could become the status quo. “While the first outcome is the most likely and the third the least, the probability of each individual outcome is less than 50%,” Kroeber writes. “Therefore our only certainty now is continued uncertainty.” 

And the market reflects that.

More in Barron's.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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China's new opening up helps foreign companies - Arthur Kroeber

Arthur Kroeber

After decades of promises for China's economic and financial opening up, foreign companies have been careful before they start cheering. But veteran economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, optimistic about the latest changes, he tells in an interview for the China Daily.

The China Daily:

China's decision to ease market access for foreign companies and expand imports will not only provide a boost to foreign businesses but also benefit domestic companies through competitive pressure, according to a senior US researcher of the Chinese economy. 

Arthur Kroeber, founder of the China-focused Gavekal Dragonomics research service, said in an interview that foreign businesses had already felt the benefits from China's new round of measures to expand opening-up by gaining greater market access. 

He gave the example of Exxon-Mobil and BASF establishing wholly owned petrochemical ventures in southern China's Guangdong province, and the relaxation of equity caps in the automotive sector. 

"In the financial sector, where there are going to be quite substantial market openings, companies from the United States, Europe and elsewhere will benefit." 

Kroeber, who is also a senior nonresident fellow of the Brookings-Tsinghua Center in Beijing and the author of China's Economy: What Everyone Needs to Know, contended that individual Chinese companies will also be able to improve themselves through competitive pressure. 

"Particularly in the financial sector, I think the increased competition will be beneficial for the Chinese economy as a whole," he said... 

As China tries to become a more innovative economy, there is a need for increased competition and stronger IPR protection, he said. 

Kroeber also hailed the measures to cut corporate taxes and fees by 2 trillion yuan ($300 billion) which were unveiled by the Chinese leadership in March. 

"The tax cuts will be beneficial in a longer term time horizon, regardless of the impact that the tax cuts have in this particular economic cycle. 

"I think the signaling by the government is that, in the future, they will rely more on tax policy as a mechanism for macro economic adjustment." 

He said that this would be "very beneficial" as the tendency in the past had been to rely on infrastructure and property stimulus to support the economy when times were tough, "and that just is not an appropriate tool anymore". 

Kroeber also highlighted the role of innovation in driving future economic growth. 

"If China wants to maintain high-speed economic growth, it needs to shift away from a capital intensive form of growth to one that is more focused on productivity growth and innovation."

More in the China Daily.

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The odds are still in favor of a trade agreement - Arthur Kroeber

Arthur Kroeber

US-president Donald Trump gave the financial market a hit this week by announcing a sudden increase of tariffs on Chinese goods, but veteran economist Arthur Kroeber still believes a trade deal could be done next month, he tells Bloomberg.

Bloomberg:

“The most likely outcome is that a deal will still be done,” said Arthur Kroeber, the head of research at Gavekal Research. “The main reason is that global markets have priced in a deal, so a failure of the talks will trigger a massive sell-off,” he wrote in a note to clients. “The odds still favor an agreement in time for Trump and Xi Jinping to sign it ahead of the G-20 summit in Osaka on June 28.”

More in Bloomberg.

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How four US constituencies look differently at China - Arthur Kroeber

Arthur Kroeber

As the formal trade war might be heading to an end game, four US constituencies have different views on how to deal with China, even after the trade war ends, explains economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® at a meeting or the Asia Society.

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The US wants China to stop running their economy as they do - Arthur Kroeber

Arthur Kroeber

The trade negotiations between China and the US might be in their endgame, but the differences are still huge. The US wants China to stop running their economy as they have always done, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, to the Asia Society blog.

The Asia Society blog:

In addition to participating in trade talks, the Trump administration has restricted investment by Chinese companies in the United States and tightened export rules, steps that make a grand bargain between the two countries more remote in the short term. 

“From the Chinese perspective, it looks like the U.S. is asking them to abandon a basic method of running their economy as well as implementing a containment strategy,” said Arthur Kroeber, an expert on the Chinese economy at Gavekal. “I think that even if we get a deal on trade in the next 30 to 60 days, it’ll be narrowly constructed and there will still be a lot of sources of friction.” 

For Trump, a president known to boast about his negotiating prowess, even a limited deal with China may be enough to suit his needs. But the fundamental differences between the world’s two largest economies seem likely to remain an issue throughout the rest of his administration — and beyond.

More at the Asia Society blog.

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Why a currency deal might be bad for China - Arthur Kroeber

Arthur Kroeber

China is pondering to throw in a currency deal in its trade negotiations with the US, maintaining the value of the Renminbi, to pacify the doves in the White House. But that might be a wrong idea, say analysts like economist Arthur Kroeber, who point at Japan. Japan agreed to a currency deal in 1985 as has paid for it dearly, writes the South China Morning Post.

The South China Morning Post:

Amid reports that the United States will demand that China stop devaluing its currency as part of any trade agreement, Beijing has been urged to learn from the cautionary tale of Japan, which in 1985 agreed to a currency deal which has shouldered a good portion of the blame for its economy’s disastrous “lost decade”. 

The US demands that China limit the yuan’s depreciation have been compared with the Plaza Accord, under which Japan, France, Germany, the United Kingdom and the US agreed to push the value of the US dollar down against the Japanese yen and German Deutsche mark. 

The five countries began selling large amounts of US dollars, leading to a significant loss in dollar value. 

The intervention resulted in the Japanese yen doubling in value against the US dollar in under two and a half years... 

The clause demands that currencies are market-determined and that signatories avoid competitive devaluation, as a means of gaining a competitive advantage in trade. 

It is the first time such a clause had been included in a major trade agreement. 

China has previously signed up to to commitments at the G20 and International Monetary Fund that bar it from competitive devaluation. 

However, critics claim that China has not upheld these commitments. In an interview with the Financial Times last year, US Treasury Secretary Steven Mnuchin noted that the yuan had fallen significantly over the course of 2018. 

“As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations,” he said. 

Arthur Kroeber, co-founder and research head at Gavekal Dragonomics, said that a currency agreement would be aimed at satisfying the demands of Mnuchin, a more dovish presence in the US administration, compared to hardliners such as US trade representative Robert Lighthizer. 

“An exchange rate agreement is just a way for Beijing to collude with Trump administration doves like Stephen Mnuchin to trumpet a non-event as a big US victory,” Kroeber wrote. 

Former US Federal Reserve chair Janet Yellen last week that it is “difficult and treacherous” to define when a country is manipulating its currency, warning US trade negotiators to think twice about asking China to maintain a stable yuan exchange rate.

More at the South China Morning Post.

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Why China and the US will remain at loggerheads – Arthur Kroeber

Arthur Kroeber

Even when China and the US will reach a kind of trade agreement, both countries have such different ideologies, solving hostilities will be a matter of the long haul, says economist Arthur Kroeber, author of China’s Economy: What Everyone Needs to Know to the Atlantic. “Xi has clearly nailed his colors to the mast of a much more state-directed economy,” said Kroeber.

The Atlantic:

Many of the problems Washington wants resolved in China will require more than a few regulatory tweaks. The bureaucratic harassment, theft of intellectual property, and overt favoritism toward local firms that make doing business in China such a nightmare for American chief executives are caused by the very way the Chinese economy works. Changing them means changing China’s basic economic system. Beijing’s leaders cannot possibly achieve such an overhaul in the short term—assuming they even want to.

“It is going to be a very long haul to get the changes the U.S. considers to be required because that really would force China to fundamentally alter the way it organizes itself,” Arthur Kroeber, a founding partner at Gavekal Research and the author of China’s Economy: What Everyone Needs to Know, told me.

At its heart, then, the trade dispute is about far more than tariffs and deficits. It is a contest of two very different national ideologies. Though the Trump administration has deviated from this somewhat, the United States believes that openness—political, economic, and social—creates prosperity, resolves disagreements within society, and promotes the diversity that spawns innovation and progress. China—or, more accurately, its leadership—sees government control as critical to developing the economy, achieving social peace, and forwarding the best interests of the nation overall. Americans tend to think open, free markets that are operating in a fair regulatory environment produce the best economic results. Beijing, on the other hand, doesn’t trust market forces and instead wants the state to play a more direct role in achieving the economic outcomes it determines are necessary for the country...

There is an argument that state largesse leads to wasteful investment that ultimately hampers innovation. But it is doubtful that the current regime of President Xi Jinping is willing to make such significant changes. Since coming to power in 2012, Xi has placed a premium on strengthening Communist Party control over the economy, and despite frequent rhetoric about “opening up” and free trade, he has shown few signs of resuming more liberal reforms that would diminish state dominance.

“Xi has clearly nailed his colors to the mast of a much more state-directed economy,” said Gavekal’s Kroeber. “I’m pretty skeptical that there will be significant movement by China on these large-scale structural issues the U.S. is talking about.”

More at the Atlantic.

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How the trade war between China and the US might evolve - Arthur Kroeber

Arthur Kroeber

Negotiators at both China and the White House are figuring out what kind of trade deal might be possible, while the trade war is still moving on. Leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, looks into the next moves for both parties for the South China Morning Post.

The South China Morning Post:

While the deep-rooted issues could take years, perhaps even decades, for China to properly address, some trade experts theorise that there could be some partial wins to be had in the short time remaining before the March deadline. 

Apart from Beijing’s pledges to purchase more American products, a deal could also include commitments to more quickly remove equity caps or joint venture requirements in some sectors in China. 

The country could also easily strengthen enforcement of intellectual property rights and make a “structured agreement to keep talking about more intractable issues such as technology transfer,” said Arthur Kroeber, head of research with China-focused Gavekal Dragonomics. 

“USTR Robert Lighthizer and the trade and security hardliners could probably live with a restricted deal so long as it offered enough space for the US to keep using investment restrictions, export controls and sanctions, and provided a window for more tariffs to be imposed if China fails to make what the US defines as progress,” Kroeber said. 

He added that Lighthizer would want to keep the existing tariffs in place and use the threat of additional levies as his bargaining chip.

More at the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. 

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Xi's road for China to become a global power - Arthur Kroeber

Arthur Kroeber

President Xi Jinping is effectively replacing former leader Deng Xiaoping as the thought leader of China's development, and he is well on his road to set the road for the country as a global power, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, at Bloomberg.

Bloomberg:

When President Xi Jinping assumed power in 2013, many hoped he’d turn out to be a leader in Deng’s reformist vein. But while Deng wanted his market-based reforms to make China rich, Xi has reasserted the control of the state in an effort to turn the country into a political and technological superpower. 

“One of Xi’s overarching goals in terms of economic management is to effectively, if not formally, declare the end of the era of reform a la Deng Xiaoping,” said Arthur Kroeber, a founding partner and managing director at research firm Gavekal Dragonomics. Whereas Deng and subsequent leaders bolstered the role of private businesses in the economy and reduced that of the state, Xi seems to think the balance is now about right, Kroeber said.... 

The economy expanded 6.5 percent in the third quarter, the slowest pace since the aftermath of the global financial crisis in 2009. But if China can keep the rate above 5 percent well into the 2020s, per capita income levels will close the gap on developed nations, said Kroeber, who is the author of “China’s Economy: What Everyone Needs to Know.”

More at Bloomberg.

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Trade deal likely, but no peace between US and China - Arthur Kroeber

Arthur Kroeber

There are strong political incentives to reach a trade deal between the US and China, but that does certainly not mean that hostilities between both countries are over, says leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, in an overview of his expectations for 2019.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the ongoing trade war between China and the US? Do check out this list. China In 2019 — Arthur Kroeber from Gavekal Research on Vimeo.

What happens to the trade war after March 1 - Arthur Kroeber

Arthur Kroeber

On March 1 the 90-day truce in the trade war between the US and China expires. Leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, expects a deal is possible, but that certainly does not mean the end of all hostilities, he tells Barron's.

Barron's:

Many investors are still skeptical whether U.S.-China trade negotiations could see any real breakthrough by the March 1 deadline. But Arthur Kroeber from Gavekal Research believes the odds are tilting slightly toward a deal, as an embattled President Donald Trump seeks a political win at home and China is eager to take some pressure off its slowing economy. 

China has taken a number of steps to address U.S. concerns since the December truce, including buying U.S. soybeans, lowering tariffs on U.S. autos, playing down the Made in China 2025 program, and establishing new penalties and laws to restrict the forced transfer of technology. 

But a deal doesn’t have to solve every trade issue. 

“U.S. hard-liners can still use export controls to pressure China,” explains Kroeber. “This would shift the trade war from a macro risk to a tech-specific risk.” But some kind of deal before the deadline can prevent further tariffs and lift stocks of multinational companies in both countries that depend on trade. 

China’s economy has been showing weakness since last year, but recently enacted stimulus measures should start showing results later this year. With policy support and positive trade developments, China should still be able to grow its gross domestic product by more than 6% in 2019, estimates Kroeber. That would certainly help calm fears that a slowdown in the world’s second-largest economy will lead to a global recession.

More in Barron's.

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Xi Jinping ends the Deng Xiaoping reform era - Arthur Kroeber

Arthur Kroeber

China's former leader Deng Xiaoping has been celebrated as the architect of the country's economic reform. But current president Xi Jinping is no longer following Deng's track, but defines his own state-dominated economy, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, to Bloomberg.

Bloomberg:

When President Xi Jinping assumed power in 2013, many hoped he’d turn out to be a leader in Deng’s reformist vein. But while Deng wanted his market-based reforms to make China rich, Xi has reasserted the control of the state in an effort to turn the country into a political and technological superpower. 

“One of Xi’s overarching goals in terms of economic management is to effectively, if not formally, declare the end of the era of reform a la Deng Xiaoping,” said Arthur Kroeber, a founding partner and managing director at research firm Gavekal Dragonomics. Whereas Deng and subsequent leaders bolstered the role of private businesses in the economy and reduced that of the state, Xi seems to think the balance is now about right, Kroeber said.

More in Bloomberg.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Xi Jinping cannot change his China model, even when it is needed - Arthur Kroeber

Arthur Kroeber

China's president Xi Jinping has painted himself into a corner, summarizes the famous economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, the economic dilemma China finds itself in, according to NPR. "He cannot back down from his China Model."

NPR:

But Xi has dug in his heels, China’s economy continues to outpace much of the world, and China’s leader has continued to promote the state-heavy China model. “Xi has kind of painted himself into a corner,” says Arthur Kroeber, author of China’s Economy: What Everyone Needs to Know. “He’s said ‘We have this China model, it’s doing its own thing, China needs to become this great power.’ He can’t back down from that.” 

Kroeber says Xi’s style of leadership is a departure from former Chinese leader Deng Xiaoping, whose credo for dealing with the outside world was “Hide your strength and bide your time.” 

“The genius of Deng Xiaoping’s ‘hide and bide’ strategy is that it gives you a lot of freedom of movement,” says Kroeber. “You have not committed yourself to anything specific that it would be difficult to back down from.” 

Kroeber says the problem with Xi’s assertive style is that when he’s challenged, as he is now by Trump, he has to stand his ground, and that can become costly.

More at NPR. Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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No fast end to the trade war - Arthur Kroeber

Arthur Kroeber

The upcoming Trump-Xi meeting in Argentina generates some hope, but economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, does not expect a fast end to the ongoing trade war between the world's largest economies, he tells at NPR.

NPR:

ARTHUR KROEBER: I think people in the U.S. government are just, like, fed up with all of the WTO commitments that China made and then essentially evaded where they promised to do this, that and the other thing, and then basically did nothing. 

SCHMITZ: Arthur Kroeber is author of "China's Economy: What Everyone Needs To Know." He says he's not holding out hope for a deal between the U.S. and China anytime soon. 

KROEBER: There's a very strong feeling, I think, throughout many aspects of the U.S. government that China is not a trustworthy interlocutor. They've made commitments that are not meaningful and that they don't follow through on and that it is just not worth having more conversations. 

SCHMITZ: Kroeber calls the notion that Trump and Xi will reach a breakthrough at the G-20 a big nothing burger, and he expects U.S. tariffs on Chinese imports to increase from 10 percent to 25 percent on the rst day of 2019 as scheduled. Time is running out for negotiations between the two sides. China's lead trade negotiator, Liu He, has just announced he'll visit Germany in the days leading up to the G-20, making it increasingly likely the U.S. and China will not be negotiating a deal anytime soon.

More at NPR.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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The US-China trade war: in for the long haul - Arthur Kroeber

Arthur Kroeber

The trade war between the US and China might only be starting, the fight is going to be one for the long haul, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, according to Dow Jones. “The U.S. and China are in for a long and acrimonious confrontation,” he says.

Dow Jones:

Officially, the U.S. is imposing tariffs on Chinese imports as a hard-nosed but hopefully temporary tactic to force China to treat U.S. companies and goods more fairly. Yet, Beijing has shown no sign of caving to U.S. demands that, in totality, entail a wholesale end of the industrial policy that has long guided Chinese economic development. Some suspect the U.S. goal isn’t a negotiated solution, but to disentangle the two economies permanently. 

“The U.S. and China are in for a long and acrimonious confrontation,” Arthur Kroeber of Gavekal Dragonomics, a China-based research firm, wrote last week. This isn’t driven by President Trump alone, he wrote, but “by a powerful coalition of security and economic officials who believe the U.S. is entering an existential conflict with China for global economic, technological and geopolitical dominance.”.. 

Mr. Trump is mainly motivated by the U.S. trade deficit with China. Tariffs aren’t likely to fix the imbalance: If a company shifts production from China to Vietnam to avoid U.S. tariffs, America’s trade deficit with Vietnam will go up while its deficit with China goes down. But China critics who don’t share Mr. Trump’s deficit obsession see a different benefit. 

Tariffs and other penalties, such as forthcoming restrictions on the export of key technologies, weaken China’s appeal as a destination for foreign investment and start to unravel the supply chains that tie the U.S. to China. The longer tariffs remain in place, the more multinationals that want to sell to the U.S. will seek alternatives to China to source production. Taiwan and Thailand are already marketing themselves as alternatives. 

Yet, moving a supply chain out of China is harder than it sounds. Mr. Kroeber notes in an interview that China doesn’t offer just low labor costs, it also has well-developed infrastructure and logistics, skilled labor such as engineers, and access to China’s own huge internal market. “That can’t be matched somewhere else.” Multinationals may need two supply chains: one with access to the U.S., and one with access to China. They would then have to decide whether their U.S.-centric or China-centric supply chain serves the rest of the world. 

In the short run, China would clearly be the loser: It still depends heavily on the U.S. for intellectual property, know-how and investment, and as a market for exports.

More in Dow Jones.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. 

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US companies not ready to leave China - Arthur Kroeber

Arthur Kroeber

One of the purposes of Trump's trade war is convincing US companies to leave China. But they are not yet ready to move, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, in the Channel News Asia. And when they move, they might before countries like Vietnam over the US, he adds.

Channels News Asia:

The trade hawks are cleverly using targeted tariffs to make it more difficult for companies to export from China.

(US Trade Representative)“Lighthizer wants US corporations to move into other locations,” says Arthur Kroeber, managing director of Gavekal Dragonomics. His Beijing-based research group has clients who are considering doing just that, though no one has yet pulled the trigger. 

“Vietnam is the obvious alternative but there are still too many potholes,” he says. Companies “don’t want to be the one to fill in the potholes. They want to wait for others to pioneer and then see if it makes sense to move.”

More at the Channel News Asia.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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