Trade war focus: Trump's reelection in 2020 - Harry Broadman

Harry Broadman

Trade negotiations between the US and China have moved away from substantial issues, as the Trump administration is using the ongoing trade war as a tool to win the presidential elections in the US 2020, says Harry Broadman, former top trade and economic adviser to Presidents George H.W. Bush and Bill Clinton to CNBC.

CNBC:

Harry Broadman, former Assistant U.S. Trade Representative under the Bill Clinton administration and current partner at the Berkeley Research Group, told CNBC that any White House communications regarding the trade war should be seen through the lens of the president’s “singular focus” on his 2020 re-election campaign, adding that the deal touted by U.S. trade officials was “not much of a deal in any kind of meaningful way.” 

“As everyone knows, it does not touch on the threshold issues that the administration has been talking about for two years, which is the structural reforms, the intellectual property protections, subsidies, the state-owned enterprises and the like,” Broadman told CNBC via telephone from Washington on Tuesday. 

“It’s not even obvious to me how much of that was even discussed in the conversations and the reason for that, I believe, is the metric that Trump and his lieutenants, the Secretary of the Treasury and the U.S. Trade Representative, focus on is how to eliminate the merchandise bilateral trade deficit between the two countries.” 

Broadman, who also served as chief of staff on George H.W. Bush’s Council of Economic Advisers, suggested that since the Trump campaign’s focus in both 2016 and 2020 is on eliminating the bilateral trade deficit on goods, the administration’s sole focus would be on demonstrating to Trump’s base that the promise been fulfilled. However, he dismissed the merchandise bilateral trade deficit as an “economically meaningless metric.”... 

Broadman, who was part of the U.S. team that negotiated with the WTO, said a marked shift had occurred away from a focus on multilateral and plurilateral regional agreements and toward bilateral efforts between individual nations. 

“The other issue within that context, particularly in the bilateral context with China, is that these ‘agreements’ with China and the U.S. under the Trump administration, frankly, are making the U.S. look more like China, in the sense that these state-to-state deals on agricultural purchases are not market-driven purchases,” Broadman said. 

He added that the Trump administration was correct to criticize China for being a member of the WTO while maintaining a prominent state role in its economy, but suggested that Trump was now “centering his negotiations by employing the U.S. government on the transaction side.”

More at CNBC.

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How Trump tries to weasel out of the trade war with China – Arthur Kroeber

Arthur Kroeber

 The phase-1 trade deal between China and the US is a non-deal paving the way out of an untenable situation, says leading economist Arthur Kroeber in Money Week. 

Money Week:

The latest developments amount to a “ceasefire” rather than a peace treaty, says Arthur Kroeber for Gavekal Research. Washington has agreed to cancel upcoming tariff hikes, with Beijing promising to more than double its purchases of US agricultural products in return. “Faced with mounting evidence of the impact his trade war has had on US manufacturing, agricultural incomes and business confidence,” Trump is worried that his re-election campaign could be in trouble. The White House seems to be trying to paint a climbdown as a victory.

More in Money Week.

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Investing in China is too risky right now - Shaun Rein

Shaun Rein

Business analyst Shaun Rein has always been a China-bull, but even he is now advising to put China investments on hold, he tells in the Press Democrat, after Houston Rockets General Manager Daryl Morey was the latest to get into hot air.

 Press Democrat:

With the politically charged trade war with the United States grinding on and the Chinese economy cooling off, the latest NBA controversy was a reminder that many foreign executives say the country of 400 million middle-class consumers is more a minefield than a gold mine. 

“The political risk is so high right now it doesn’t make sense to keep investing in China. If you’re not already here, you have to think three, four, five times harder about whether it’s worth coming,” said Shaun Rein, the Shanghai-based founder of the China Market Research Group who has advised clients such as Apple, Samsung, Fidelity Investments and luxury group Richemont. 

Rein, an author known in China for his pro-Beijing views and support for hard-line President Xi Jinping, said the political atmosphere had become so charged that even he is advising companies to leave. “It’s killing my business, frankly,” he said, “but you can’t put all your eggs in this basket anymore.”

More in the Press Democrat. Shaun Rein 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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Delisting Chinese companies bad for US - Sara Hsu

Sara Hsu

The threat to delist Chinese companies from US stock exchanges has shocked observers, even though it is not yet clear whether the White House is moving forward. Financial analyst Sara Hsu warns the reputation of US financial institutions might be at stake. And also: her latest viewpoint on what the consumers might feel from the ongoing trade war.

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Drop of yuan caused by US tariffs - Jim Rogers

Jim Rogers

China's currency, the yuan, is on a downward track, not because of government action, but is a market reaction on the US tariffs on Chinese goods, says investment guru Jim Rogers. Washington has to blame itself for the weakening yuan, he tells in the Stocknewsbrief.com.

The Stocknewsbrief:

“If you put billions of dollars (in Chinese goods) under tariffs, don’t you think it would affect the currency?” Rogers told RT. He added that while the People’s Bank of China actually can have a hand in changing the renminbi exchange rate, the recent course of events is explained by basic economic rules. “Anybody who knows any basic economics knows that if you hit a huge economy with lots of tariffs it’s gonna have [an] effect on the currency… It’s the way the market works.” 

The weaker yuan can actually help Beijing to offset the impact of Washington’s tariffs on China’s exports. As its national currency declines, Chinese goods become cheaper to sell abroad. So, the US fears that it would not be able to sell its own goods while there are plenty of cheaper Chinese products on the market thanks to a weaker yuan. “It makes American goods more expensive and therefore more difficult for America to sell goods in the world market,” Rogers explained. 

However, the falling yuan has a downside, according to Rogers, such as an increase in the cost of living and production as everything China imports becomes more expensive.

More in the Stocknewsbrief.com.

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Companies flee, rather than fight China - Sara Hsu

Sara Hsu

US President Donald Trump wants US companies to fight China, but they rather flee for greener pastures not to their home countries, says financial analyst Sara Hsu at the ChinaUSFacus. But some might decide to swap countries too early, she warns.

China US Focus:

Moving to another country may make sense for companies whose new grounds of operation have sufficient infrastructure to provide a proper manufacturing environment. 

Firms reshoring to Japan and Taiwan find themselves back home with well-constructed roads and telecommunications systems, although such factors may yield higher costs of production. Those shifting to Vietnam and Thailand are faced with poorer conditions and potential added costs of production. 

Vietnam has a lack of transport infrastructure, power supply networks, and urban infrastructure. Ho Chi Minh City and Hanoi face severe traffic congestion. Government funding and planning fall short of providing sufficient resources to improve the infrastructure environment. It has been estimated that the country needs to invest $400 billion in infrastructure over the next decade. However, corruption and lack of skills prevent this from occurring. 

Thailand has better infrastructure than Vietnam, but it has experienced bottlenecks in pushing infrastructure development further. This is because it takes the central government a long time to approve projects, and state governments lack the capacity to build the infrastructure projects that are slated for construction. Thailand’s political elite view infrastructure projects as long term, while their tenure may be short term. 

As companies move to developing Asian nations to take advantage of Asian supply chains, they are facing challenges. In Vietnam, companies have a harder time locating factories, and ports are struggling to coordinate container ship traffic. Costs of labor in Thailand are higher than in China, even after wage increases in China. Firms attempting to move to Indonesia, Malaysia, and Cambodia are facing similar problems. In Cambodia, for example, almost of half of all goods inspected in the last quarter did not satisfy inspection standards. 

This means that the trade war is forcing some companies to shift production to less attractive locations prematurely. It’s one thing to move abroad in order to increase profitability, but quite another to move out from an established location due to complications resulting from an anti-free trade stance taken by the center country. So far, companies that make Crocs, Roomba vacuums, and Yeti beer coolers are moving out of China due to increased tariffs.

More at the ChinaUSFocus.

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How services are neglected in the US-China trade war - Harry Broadman

Harry Broadman

Tarifs imposed in the US-China trade war focus on goods, but US politicians missed that most of the world trade consists of services, writes international trade expert Harry Broadman in the Gulf News. What has happened to Trump and his advisors over the past twenty years?

Harry Broadman:

While the importance of services trade to US competitiveness may have once been out of the mainstream of trade policy thinking, that was decades ago. If Trump’s economic advisers are worth their salt, they should know better. If they do, then why can’t they get through to the boss?

Perhaps Trump’s distorted view towards the importance of international trade in services stems from sheer ignorance. That is hard to believe. After all, he did attend the Wharton School of Business at the University of Pennsylvania, from which he graduated in 1968 with a Bachelor’s Degree in Economics. 

Such training, one would assume, equipped him with the tools to understand the concept of cross-border services transactions, even if they were not as commonplace then as they are today. 

Alternatively, does it stem from a nostalgic hope to return to years gone by when manufactured merchandise and other goods dominated economic activity in the US and elsewhere? If so, he would do well to recognise that such a wish is far-fetched. Why?

Because over the last 20 years, in every country of the world — rich as well as poor — manufacturing’s contribution to GDP actually has been declining while the share of GDP accounted for by services has been rising. 

It’s ironic that not only is the core of the Trump Organization in the real estate industry, a prime component of the services sector, but Trump’s course concentration in economics at Wharton was in real estate. Even television, Trump’s second occupation, is a services industry. 

Despite this, Trump might well believe that a shift to a services-oriented economy is a sign of economic decline. If so, the latest data, which are for 2015, suggest he would be quite mistaken. In high-income countries, services’ share of GDP has risen to 75 per cent. In low- and middle-income states, the share of GDP accounted for by services has increased to 56 per cent.

Whatever the reason for Trump’s myopia toward the fastest growing portion of international trade, he needs to realise that he — like the rest of us — is not living in an economy of years gone by.

More in Gulf News.

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The trade war will not be a game changer in China - Victor Shih

Victor Shih

If some US politicians hope the trade war between China and the US might undermine Xi Jinping's domestic power base, they are on the wrong track, says political analyst Victor Shih at US-China Economic and Security Review Commission hearings at the US Congress, according to the South China Morning Post.

The South China Morning Post:

Policy analysts gave written and spoken testimony to the US-China Economic and Security Review Commission annual review just hours before top trade negotiators confirmed a face-to-face meeting in early-October in a step resolve their increasingly bitter trade conflict.

Among them was Victor Shih, associate professor of global policy and strategy at University of California San Diego, who said that the trade war may succeed in creating divisions among policymakers in Beijing as to how to deal with China’s economic slowdown. 

As economic losses accumulate under the trade war, Shih expects divergent camps in the ruling Chinese Communist Party to emerge and pressure Xi to ramp up economic stimulus. Beijing has already announced a series of monetary easing steps and increased fiscal spending in a step to push for new growth under the tense trading environment. “It would take a truly massive economic shock to threaten [Xi’s] power,” Shih said, adding that high domestic debt and trade frictions with the US are leading to increased state intervention in the Chinese economy.

More at the South China Morning Post.

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Costco looks to China consumers for trade war support - Sara Hsu

Sara Hsu

The US discount retailer Costco made a blast when it opened its first flagship store in China this week. Business analyst Sara Hsu see it as a way to keep costs down when tariffs go up during the ongoing trade war, she tells the Vancouver Star. Solid sales to Chinese consumers could keep costs in check for US consumers too. If they succeed in China.

The Vancouver Star

Costco’s business model of offering discounted products in bulk could have enduring popularity in China, said Sara Hsu, CEO of the China Rising Capital Forecast research firm. 

“People already got used to the idea from Pinduoduo, a Chinese app where people can get together in a group and buy in bulk and distribute the goods among friends. It’s really hot right now,” Hsu said. 

In May, Costco executives had warned that costs for North American consumers could go up at its stores due to the ongoing trade war between the U.S. and China, with each side slapping down new tariffs. 

“If Costco can make goods in China and sell them to domestic Chinese consumers, tariffs won’t apply, and that could offset loss of profit from tariffs on goods that have to be shipped out of China,” Hsu pointed out. 

So rather than supporting a trade war, Chinese shoppers could end up keeping prices low in the United States — at least at one retailer. It’s a reminder that people in China are no different from consumers the world over in that their first loyalty is not to the state but the almighty yuan.

More in the Vancouver Star.

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Trump did not convince the Chinese - Arthur Kroeber

Arthur Kroeber

One year into the trade war, China's negotiators have not been convinced US President Donald Trump is having the upper hand, says economist Arthur Kroeber to the Washington Post.

The Washington Post:

By depressing demand for Chinese goods, U.S. tariffs have cost 3 million Chinese factory workers their jobs, according to Trump, and put pressure on Chinese President Xi Jinping to make a deal. 

Trump's claim to have the upper hand at the negotiating table does not appear to have convinced the Chinese. 

"They've decided Trump is a vacillating guy who can't figure out what he wants and gets spooked every time the stock market goes down or someone accuses him of not being tough," said Arthur Kroeber, managing director of Gavekal Dragonomics, a consultancy in Beijing. "Although there are problems in China, they believe they have their economy under control, more so than Trump. They think he is more vulnerable to a slowdown and that they can afford to wait him out."

The Washington Post.

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The trade war fallout - Victor Shih

Victor Shih

The trade war damages both the US and China's economy, and global trade. Financial and political analyst Victor Shih, Ho Miu Lam Chair associate professor of political economy at UC San Diego and author of the forthcoming “Economic Shocks and Authoritarian Stability," gives an overview of the damage in the Los Angeles Times.

Victor Shih:

The trade spat between the U.S. and China now seems headed toward a new phase, which could prove to be far more dangerous for the global economy. 

The recent shifts roiling global markets began with President Trump tweeting on Aug. 1 that the U.S. would impose an additional 10% tariff on $300 billion in Chinese exports, starting Sept. 1. On Tuesday, the administration announced a delay on tariffs on some consumer goods until Dec. 15. But that may not be enough to alleviate the anxiety in world markets. China already reacted last week by weakening the Chinese currency, pushing the exchange rate to 7 yuan per dollar for the first time in over a decade. 

Both sides risk considerable harm to their economies. As the Trump administration increases tariffs on Chinese goods purchased by American firms and consumers, Americans will be paying billions more for Chinese goods. Higher prices brought on by tariffs will decrease U.S. business investment and consumption, dampening momentum in U.S. economic growth. 

Likewise, China’s imposition of tariffs on American goods — even barring Chinese companies from buying agricultural and energy commodities from the U.S. — since the start of the trade conflict in April 2018 has imposed costs on Chinese firms and consumers, stalling growth momentum in China. 

With inflation on food already at 7% in China, more import restrictions or tariffs will put a great deal of hardship on ordinary households. Although Chinese President Xi Jinping does not face any electoral pressure and may not suffer any political fallout from the economic results of the trade war, these consequences still directly contradict his desire to bring about “more prosperous and healthy lives” to the Chinese people. 

Now, devaluing the yuan may further jeopardize the stability of China’s financial system. China’s high domestic debt already forces the central bank to expand its money supply at a rate of 8% to 10% a year, a relatively high pace that typically weakens the exchange rate. 

To guard against the expectation of a weakening currency, the central bank of China has spent years establishing the reputation of the yuan, which has been built on the tacit assumption that it would not fall below 7 yuan to the dollar. This reputation is important for the yuan because, unlike the dollar, the currency does not have a deep and liquid market, where market participants can hedge against various risks at a relatively low price.

More at the Los Angeles Times.

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What if China runs out of US dollars? - Victor Shih

Victor Shih

China has been saving much capital in US bonds and could use those resources to finance its debt and policies in the past. But what happens if China runs out of US dollars, asks political analyst Victor Shih in the New York Times.

The New York Times:

Both men [Trump and XI] rely on a political base that responds to nationalism.

Mr. Xi also appears to have a team of hard-liners around him, including the Minister of Commerce, Zhong Shan, who was recently added to the Chinese negotiating team. 

“For now, Xi is signaling that he is a tough nationalist who will not back down in the face of very aggressive behavior on the part of the Trump administration,” said Victor Shih, an associate professor at the University of California, San Diego, and an expert on the Chinese economy... 

“The draining of China’s foreign exchange could break China’s current economic model of using state directed money to finance certain policies,” said Mr. Shih. “China can print renminbi endlessly but it can’t print American dollars.”

More in the New York Times.

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Devaluation: no manipulation, just basic economics - Jim Rogers

Jim Rogers

China is not manipulating its currency, says trader Jim Roger. When your currency gets hit by massive tariffs it is basic economics your currency goes down, he says to RT. "No trade war is good for anybody. Everybody loses."

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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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Winners and losers in the China-US trade war - Shaun Rein

Shaun Rein

Consumers are changing their purchasing behavior because of the effects of the ongoing trade war between China and the US. Business analyst Shaun Rein tells the CityWireSelection who are the winners and losers of this war.

Shaun Rein:

The US/China trade war is affecting Chinese consumer behaviour more heavily than many investors realise. For example, luxury jeweller Tiffany & Co. reported a 25% drop in Q1 sales to Chinese tourists visiting the US. 

Chinese people simply don’t want to visit the US right now because they do not feel welcome in Trump’s America. The number of Chinese tourists to Hawaii so far in 2019 has dropped by 23%. Chinese people are also starting to skip buying US brands such as Apple. The big winners out of this shift are Japan, Thailand and domestic Chinese tourist areas such as Yunnan and Gansu. Europe can attract Chinese tourists as well, but much depends on whether the individual country is viewed as pro-China. 

Italy, for example, will benefit, as it was the first major western European economy to sign up to China’s ‘One Belt One Road’ initiative. How well luxury players such as Gucci or Louis Vuitton do will depend largely on political issues in the next quarter.

More at the CityWireSelection.

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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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US stock markets get hostile for China firms - Paul Gillis

Paul Gillis

The tech giant Alibaba listing on the Hong Kong stock market is already a sign things are changing for the US markets, and the ongoing trade war will stop many Chinese firms to list in the US, as they did in the past, especially when a bill by US Senator Marco Rubio is adopted or not, says Beida accounting professor Paul Gillis in Forbes.

Forbes:

The U.S. environment is getting increasingly hostile for China-related IPOs. 

Earlier this month, a bipartisan group of lawmakers, including Republican Senator Marco Rubio and Democratic Senator Bob Menendez, introduced a bill that would require U.S.-listed Chinese firms to comply with increased financial oversight–such as providing access to auditing–or face delisting. The Public Company Accounting Oversight Board (PCAOB) in the U.S. routinely inspects the accounting practices of U.S.-listed firms, but China, citing national security concerns, has barred overseas regulators from examining the companies’ audit and financial records. 

Whether the bill would become law probably depends on trade negotiations between the U.S. and China, as it could likely be resolved as part of any deal that comes out of those talks, says Paul Gillis, professor of practice and co-director of the IMBA program at Peking University's Guanghua School of Management. He warns that “there is likely to be no more listings” from China on U.S. markets if the bill is passed because no China-based accounting firm is currently inspected by the PCAOB and Chinese law forbids them from handing financial records over to foreign regulators. 

“It [passing the law] would be troublesome for U.S. stock exchanges and investment banks,” he says.

More in Forbes.

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Why using rare earths in trade war might hurt China most - Sara Hsu

Sara Hsu

China is the largest producer of rare earths for the high-tech industry, so using that position in the trade war with the US pops up regularly. But that weapon might hurt China more, warns financial analyst Sara Hsu in China US Focus.

Sara Hsu:

In the short run, the restrictions on rare earths will ratchet up tensions in the trade war and create a headache for US producers who rely on rare earths inputs into production. While the dollar amount imported isn't huge--the US imported $160 million of the materials last year in total--the elements play a critical role in production of high-tech goods and substitutes are not readily available. If the US is successful in shifting mining and processing of the elements domestically or to other countries, this will in the long run reduce demand of the goods from China and eliminate this category as an economic weapon against other nations. 

In fact, this could apply to any relatively scarce resource that either side is willing to withhold from export or ban from import. For the US, tariffs on about half of goods imported from China -- about $100 billion worth of goods—have been especially harmful, since for these categories shipments from China represent over 50% of imports. This makes it extremely difficult to reorganize the sourcing of many products, but as the trade war deepens, entrenched supply chains are increasingly likely to shift. 

In addition, the US has banned Huawei from receiving components and software from American firms, but experts say this will harm American companies economically without making the US more secure. There is a concern that Huawei and other Chinese technology firms will move away from sourcing from the US to other countries. This shift has precedent; before China re-committed to purchasing soybeans from the US, its tariffs on the agricultural goods induced retail and wholesale outlets to purchase soybeans from other countries, such as Russia and Brazil. This move shows that China will do its best to fulfill demand from countries other than the United States. 

The game could go on for some time, with either side pelting the other with new restrictions. Anything the other side exempted from tariffs likely represents a particular vulnerability. However, the longer the trade war goes on, the more likely it is that both the US and China will turn away from one another as trade partners and look for other sources of imports, or attempt to produce affected goods domestically. This will erase the strides made in negotiating free trade. 

Ultimately, this is a losing game. Any weapon that will be used will ultimately be turned on the user. The US and China may be locked into confrontation, but these tit-for-tat maneuvers are looking less rational with every retaliation.

More in China US Focus.

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Panic among businesses grows fast - Ben Cavender

Ben Cavender

Uncertainty among China-based companies grows fast after the US blacklisted Huawei and others, and China threatens to hit back, says Shanghai-based business analyst Ben Cavender to Reuters. Panic would be an understatement.

Reuters:

Analysts said U.S. companies had been more sanguine in the initial stage of the trade war, with many believing that it could not possibly go on, but that began to change after Washington last month accused Beijing of reneging on previous promises, prompting fresh tit-for-tat tariffs. 

The United States also last month put China's Huawei on a blacklist that effectively blocks U.S. firms from doing business with the Shenzhen-based telecoms equipment maker, aggravating existing frictions. 

"We have in the last three weeks fielded more calls from firms wondering about the political risk here than we probably have in the last 10 years," said Ben Cavender, an analyst at China Market Research Group, whose clients have ranged from clothing retailers to chemical firms. 

"Right now there's a lot more concern that the situation regarding the negotiations has become so unstable and so emotional, when or if there's going to be a resolution."... 

"It would not be inconceivable that China will look at, for example, large retail brands that are operating here and saying, well maybe they should also have fire code violations too. That would create immediate harm to a lot of businesses," Cavender said.

More at Reuters.

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