By Paul Feinberg
With daily headlines regarding U.S.-Sino trade relations as a backdrop, UCLA Anderson Forecast economist William Yu remains skeptical that the two nations will engage in a full-blown trade war, despite the public posturing of U.S. President Donald Trump and Chinese President Xi Jinping.
“Global trade imbalances cause trade tensions,” Yu said. “President Trump has been complaining about trade deficits for decades. President Xi has talked about China’s willingness to deal and that’s very good news.” His remarks kicked off the day’s first panel at Anderson’s 2018 Wilbur K. Woo Greater China Business Conference. Yu’s panel included moderator Seamus Jiang, managing director and co-leader for China-U.S. cross-border deals at PwC, and Feng An, founder and executive director of the Innovation Center for Energy and Transportation at U.S.-China Cleantech Center.
The panelists indicated that trade agreements between the two countries will not come easily. The $375 billion U.S. trade deficit with China represents fully half of the U.S.’ overall deficit, as the United States imports everything from high-tech cell phones, computers and telecommunications equipment to apparel, cookware and other household goods, while the country exports goods ranging from civilian aircraft to medical equipment to cars and car parts. “The impact of a trade war doesn’t affect every sector equally,” An said. “It’s not just about high tech. The impact will be mixed.”
Yu noted that Chinese investments in the U.S. have decreased from $45 billion in 2016 to just $29 billion in 2017. In addition, he said, Chinese acquisitions of U.S. companies with cyber and national security considerations are difficult while Chinese debt-based foreign domestic investment is discouraged by the Chinese government, though long-term green field investment — the type of foreign direct investment in which a parent company builds its operations from the ground up — would be welcomed by the Americans.
Despite the complexity and tensions, Yu remains sanguine. “President Xi and President Trump will decide if there will be a trade war or not. Trade compromises seem likely.”
Organized by the Center for Global Management with Anderson’s Greater China Business Association and UCLA Chinese Student and Scholar Association, the annual Wilbur K. Woo Greater China Business Conference brings together successful U.S. and Chinese leaders, investors and influencers from a variety of industries and sectors to discuss the importance of innovation, collaboration and new technology, as well as diversification and localization.
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