American businesses in China: Tariffs are hurting us


Published Tue, May 21 2019 • 8:16 PM EDT

Evelyn Cheng@chengevelyn

Key Points

  • Nearly three-fourths, or 74.9%, of almost 250 respondents to a survey held from May 16 to May 20 said the increases in U.S. and Chinese tariffs are having a negative impact on their business, according to a report released Wednesday by AmCham Shanghai and AmCham China in Beijing.
  • About one in five said they have experienced increased inspections and slower customs clearance.
  • The greatest impact of the combined tariffs is decreased demand for products, followed by increased manufacturing costs, according to the joint AmCham survey.

U.S. President Donald Trump’s latest tariff increase — and Beijing’s plans to counter them — are hitting U.S. companies in China.

Nearly three-fourths, or 74.9%, of almost 250 respondents to a survey held from May 16 to May 20 said the increases in American and Chinese tariffs are having a negative impact on their business, according to a report released Wednesday by the American Chamber of Commerce in Shanghai and the Beijing-based American Chamber of Commerce in China.

“The negative impact of tariffs is clear and hurting the competitiveness of American companies in China,” a release from the groups said.

The Chinese authorities also appear to be making operations more difficult for some companies.

About one in five said they have experienced increased inspections and slower customs clearance. Roughly 14% of respondents said approval for licenses or other application has been slower — in addition to other complications from increased bureaucratic oversight or regulatory scrutiny.

Of the survey participants, 61.6% were manufacturing-related, 25.5% were in the services sector, 3.8% were in retail and distribution and 9.6% came from other industries.

The trade dispute between the world’s two largest economies had appeared to be nearing a deal — until those hopes were dashed earlier this month.

The U.S. raised tariffs on $200 billion worth of Chinese goods to 25% from 10% on May 10. Beijing responded a few days later with duties ranging from 5% to 25% on $60 billion worth of U.S. goods, set to take effect June 1.

The greatest impact of the combined tariffs is decreased demand for products, followed by increased manufacturing costs, according to the joint AmCham survey. About 35% of respondents are restructuring their China operations to reach the local market by increasing domestic sourcing or production, and roughly a third said they are delaying or canceling investment decisions in the country.

Just 10% said they planned to apply for an exclusion from Chinese tariffs, while 15.1% indicated they would apply for exemptions from U.S. tariffs, the report said. The majority were either unsure or said they would not apply.

Source: CNBC “American businesses in China: Tariffs are hurting us”

Note: This is CNBC’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

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Brazil Wants Extension of BRI’s Success in Latin America


Brazilian new President Jair Bolsonaro’s anti-China rhetoric in his election campaign made some people believe that China’s Belt and Road initiative (BRI) will fail in Brazil and Latin America, but fort-russ.com says in its report “Brazilian VP in China to beg for forgiveness: Latin America is already on the ‘New Silk Road’” that Brazilian Vice President Hamilton Mourão is in China to attract investment and improve bilateral relations that may have been hurt by Bolsonaro’s strong rhetoric against China.

According to the report China wants to extend BRI to Latin America and believes that Brazil may play its role in that. The report quotes China’s ambassador to Brasilia, Yang Wanming, as saying in a recent interview with UOL that Brazil “has all the conditions to be a relevant participant in the extension of the ‘New Silk Road’ to the continent.”

Brazil is certainly not ignorant of the economic benefit of its relations with China. The report says that Mourão is in China to preside over a plenary session of the Sino-Brazilian High-Level Commission for Coordination and Cooperation ( COSBAN). He took the opportunity to deliver a letter from Brazilian President Bolsonaro to his Chinese counterpart Xi Jinping.

China is now Brazil’s major trade partner. This blogger believes that Brazil is attempting to mend fence with China now when the trade war between the US and China has begun in earnest. Brazil can exploit the trade war to greatly increase its export of agricultural products to China. It will thus grab America’s agricultural market share in China.

As for BRI, China has had quite a few BRI projects in Latin America including Brazil; therefore the report quotes Brizilian expert Túlio Cariello, Professor of International Relations and Coordinator of Analysis of the Brazil-China Business Council, as saying, “We see that Chinese investments in Latin America are broadly in line with what this ‘New Silk Road’ project is about, so I think that, after all, the official entrance, let’s say, Latin American countries in this project ends up being much more a rhetorical thing, because in practice this is already happening in one way or another.”

Comment by Chan Kai Yee on fort-russ.com’s report, full text of which can be viewed at https://www.fort-russ.com/2019/05/brazilian-vp-in-china-to-beg-for-forgiveness-latin-america-is-already-on-the-new-silk-road/.


More hints about Beijing’s aircraft carrier ambitions


21 May, 2019

BY: Greg Waldron | Singapore

Beijing’s ambitions for a large aircraft carrier have gained more clarity, with the emergence of detailed artist impressions of the Xian KJ-600 airborne early warning & control (AEW&C) aircraft, as well as satellite imagery of a Chinese shipyard.

Recent artists impressions posted on social media offer more details about the Xian KJ-600, which is expected to be a key part of future People’s Liberation Army Navy (PLAN) carrier air wings.

While the provenance of the impressions are not clear, they are consistent with previous images of the aircraft, which resembles the Northrop Grumman E-2 Hawkeye in service aboard US and French carriers.

The Xian Y-7 based JZY-01 test bed (top) with the KJ-600 (bottom)

The impressions suggest that the twin-turboprop KJ-600 will also have a carrier on-board delivery (COD) variant similar to the C-2 Greyhound, and an anti-submarine warfare variant.

The main AEW&C variant is notable in that it includes an air-to-air refueling probe. The text suggests that this can increase its endurance from 4-5hrs to 7-8hrs.

The KJ-600 is shown with the larger JZY-01 testbed, which has been used to test what is apparently the aircraft’s CETC KLC-7 radar. A CETC promotional video at Air Show China in November 2018 depicted KLC-7 equipped KJ-600 vectoring fighters against enemy aircraft.

The carrier onboard delivery (top) and anti-submarine warfare (bottom) versions of the KJ-600.

Like the C-2, the KJ-600’s COD variant is equipped with a ramp for loading personnel and equipment. The ASW version features a surface search radar under the chin, torpedoes in a semi-recessed mounting in the aircraft’s belly, synthetic aperture radar, and a magnetic anomaly detector (MAD) boom.

The aircraft are planned for use aboard China’s developmental Type 002 carrier. In April, the Center for Strategic & International Studies (CSIS) posted satellite images of Jiangnan shipyard, where it contends a large aircraft carrier is under construction.

Its estimated displacement will be 80,000-85,000t. By using catapults, as opposed to the ski-jump found on Beijing’s existing pair of carriers, it will be able to launch a broader range of aircraft, including AEW&C types. CSIS projects that it will enter service in 2022.

Source: flightglobal.com “More hints about Beijing’s aircraft carrier ambitions”

Note: This is flightglobal.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


U.S.-China trade dispute could last ‘not just over months or years, but even decades’


Brooke DiPalma
Associate Producer

Yahoo Finance May 22, 2019

“It’s a long-term issue where we and Chinese are going to have to figure out how to deal with one another not just over months or years, but even decades,” said Christopher Smart, head of Barings Investment Institute, on Yahoo Finance’s YFi AM.

American presidents’ efforts to address the rise of China is nothing new. Smart said Bill Clinton may be credited as the first president to lead the charge. In 1998, Clinton historically met with then Chinese President Jiang Zemin, but Smart deems President Trump’s “tactics” are different this time around.

After both Trump and Xi Jingping reached a temporary truce in December to hold off on tariff hikes for 90 days, the deadline extended to March 1, 2019. In the time between, delegates from both U.S. and China officials met in Beijing to identify key areas including protection of intellectual property and other technology related to national security issues. After no deal was reached, Trump took action.

This month Trump increased tariffs on $200 billion of Chinese goods from 10% to 25%, leading China to respond with plans to raise tariffs on $60 billion of U.S. goods starting June 1.

The administration’s latest escalation in its battle against Huawei – adding the company to a trade blacklist – was “a significant expansion of the friction we’ve had between the U.S. and China, and markets are saying this is complicating the relationship significantly,” Smart said.

‘There will be an impact on American households’

Americans could soon see a direct impact from the ongoing trade war. The second round of tariffs applied to Chinese imports are increasingly going to hit consumer goods, said Smart, who served as a senior economic policy official at the U.S. Treasury and White House. “There will be an impact on American households,” he said. And on U.S. companies as well, as was the case with several chip makers that stopped supplying Huawei with components amid the latest U.S. crackdown against the Chinese telecom giant – shares of suppliers dropped Monday.

“We’re not doing them any favors and they’re not doing us any favors,” Smart said. “The commerce is usually because of some bilateral benefit, but when you interrupt that, there is bilateral harm.”

Source: finance.yahoo.com “U.S.-China trade dispute could last ‘not just over months or years, but even decades’”

Note: This is finance.yahoo.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


‘There will be conflict’: US has underestimated Huawei, says founder


Ren Zhengfei says firm is fully prepared to face US bans and that 5G plans will be unaffected

Lily Kuo in Beijing and agencies

Tue 21 May 2019 04.29 BST Last modified on Tue 21 May 2019 19.55 BST

The founder of Huawei has said the US “underestimates” the Chinese telecom makers’s strength and that conflict with the US is inevitable in the quest to “stand on top of the world”.

Ren Zhengfei said his company was fully prepared to face US bans on key components following new trade restrictions caused by Donald Trump’s declaration of a national economic emergency last week

“The current practice of US politicians underestimates our strength,” Ren told Chinese media on Tuesday. “Huawei’s 5G will absolutely not be affected. In terms of 5G technologies, others won’t be able to catch up with Huawei in two or three years. We have sacrificed ourselves and our families for our ideal, to stand on top of the world. To reach this ideal, sooner or later there will be conflict with the US.”

Huawei, the world’s largest telecommunications equipment maker, has become a focal point in a protracted trade war with the US. The US has been working to thwart the company’s global 5G ambitions, which it sees as a national security threat to other nations.

US officials added the company to a trade blacklist on Thursday, after Trump issued an executive order to ban the technology and services of “foreign adversaries”.

It has resulted in new restrictions that will make it extremely difficult for the company to do business with US companies. Google confirmed on Monday it was restricting Huawei’s access to the Android operating system on which the Chinese company’s mobile devices depend.

Reuters reported on Sunday that Google had suspended all business with Huawei that required the transfer of hardware, software and technical services, except those publicly available.

Ren’s defiant tone was in contrast to his company’s restrained statement on Monday following reports that Google had pulled the company’s access to Android updates for its phones and tablets. It promised to continue providing security updates and other after-sales services for Huawei devices using Android.

On Monday, the US temporarily eased some of the restrictions, a sign of how the prohibitions on Huawei may have far-reaching and unintended consequences for the telecommunications sector at large.

For the next 90 days, the US Department of Commerce will allow Huawei to purchase US-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.

“It appears the intention is to limit unintended impacts on third parties who use Huawei equipment or systems,” said the Washington lawyer Kevin Wolf, a former commerce department official. “It seems they’re trying to prevent network blackouts.”

Ren dismissed the gesture from the department, saying on Tuesday: “The US 90-day temporary licence does not have much impact on us. We are ready.”

Half of chips used in Huawei equipment come from the US and the other half are made by the Chinese company, according to Ren. “We cannot be isolated from the world,” he said. “We can also make the same chips as the US chips, but it doesn’t mean we won’t buy them.”

The Chinese company’s top executive in the UK, Jeremy Thompson, said the US move against Huawei was a “cynically timed” blow in the escalating trade war. “The timing of this is to inflict maximum hurt on our organisation. We’re a football in between this trade war,” he told the BBC.

The Huawei confrontation has been building for years, as the company has raced to establish an advantage over rivals in next-generation 5G mobile technology.

The US intelligence services believe Huawei is backed by the Chinese military and that its equipment could provide Beijing with a backdoor into the communications networks of rival countries. Chinese law requires companies to cooperate with the government on national security issues. As a result, Washington has pushed its closest allies to reject Huawei technology.

The battle over Huawei has added to tensions in a trade war that has escalated between the world’s top two economies, with both sides exchanging steep increases in tariffs as negotiations have faltered.

Asked how long Huawei might face difficulties, Ren said: “You may need to ask Trump about this question, not me.”

Agence France-Presse contributed to this report

Source: The Guardian “’There will be conflict’: US has underestimated Huawei, says founder”

Note: This is The Guardian’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Chinese rig makes second large discovery in Russian Arctic waters


The «Nan Hai Ba Hao» has found more than a trillion cubic meters of natural gas in the Kara Sea. The rig will be back in the area this summer.

By Atle Staalesen

May 20, 2019

The 15,469 deadweight ton installation has made it from the South China Sea to the Russian Arctic two years in a row. In 2017, it drilled in the Leningradskoye license area in the Kara Sea and expanded the resource potential of the structure by more than 850 million cubic meters of gas to a total of 1,9 trillion cubic meters. The year afterwards, it was back in the area to drill in the nearby Rusanvoskoye area. Both operations were made in cooperation with Russia’s natural gas company Gazprom.

The Russian company now confirms that the well drilling at the Rusanvoskoye revealed 390,2 billion cubic meters of gas. The discovery has been named after Soviet Minister of Energy V.A Dinkov and is located at 72 degrees North about 100 km off the west coast of the Yamal Peninsula.

With the discovery of the V.A Dinkov field, the Chinese rig has made two of Russia’s biggest offshore findings over the last decade. The accumulated resources of the discoveries amount to more than 1,2 trillion cubic meters of natural gas.

The «Nan Hai Ba Hao» is owned by the China Oilfield Service Limited and is also known as the «Nanhai VIII».

The rig will be back in Russian Arctic waters in 2019, information from the Northern Sea Route Administration shows.

The Rusanovsky license area is located in the Kara Sea (in up left corner of the map). Map by Gazprom.ru
The «Nan Hai Ba Hao» was not the only rig that drilled in Russia’s Kara Sea in 2018. Also the rigs «Arcticheskaya» and the «Amazon» were active in the Nyarmeysky and Severo-Obskoye license areas respectively.

The rigs are owned by Gazprom Flot, a subsidiary unit of Gazprom.

According to the company, the drilling at the Nyarmeysky revealed a total of 120,8 billion cubic meters. The Severo-Obskoye structure holds more than 300 billion cubic meters, license holder Novatek informs.

The discoveries offshore in the Kara Sea come as both Gazprom and Novatek are in the process of making unprecedented field developments in the nearby Yamal Peninsula.

Gazprom operates the Bovanenkovo field and will in year 2023 launch production at the Kharasavey. Novatek is operator of the Yamal LNG project and is in the process of developing the Arctic LNG 2 project. The resources of offshore structures like the Severo-Obskoye can potentially be included in the company’s major investments in liquified natural gas in the Arctic.

Source: thebarentsobserver.com “Chinese rig makes second large discovery in Russian Arctic waters”

Note: This is thebarentsobserver.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


U.S. eases restrictions on Huawei; founder says U.S. underestimates Chinese firm


Karen Freifeld, David Shepardson May 21, 2019

(Reuters) – The U.S. government has temporarily eased trade restrictions imposed last week on China’s Huawei, a move aimed at minimizing disruption for its customers but dismissed by its founder who said the tech firm had prepared for U.S. action.

The U.S. Commerce Department will allow Huawei Technologies Co Ltd to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.

The world’s largest telecommunications equipment maker is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied.

The U.S. government said it imposed the restrictions because of Huawei’s involvement in activities contrary to national security or foreign policy interests.

The new authorization is intended to give telecommunications operators that rely on Huawei equipment time to make other arrangements, U.S. Secretary of Commerce Wilbur Ross said in a statement on Monday.

“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.

The license, which is in effect until Aug. 19, suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences for its customers.

“The goal seems to be to prevent internet, computer and cell phone systems from crashing,” said Washington lawyer Kevin Wolf, a former Commerce Department official. “This is not a capitulation. This is housekeeping.”

Huawei founder Ren Zhengfei on Tuesday said the temporary reprieve move bore little meaning for the company as it had been making preparations for such a scenario.

“The U.S. government’s actions at the moment underestimate our capabilities,” Ren said in an interview with CCTV, according to a transcript published by the Chinese state broadcaster.

He said Huawei was at odds with the U.S. government, not U.S. firms, and that Huawei is capable of making the chips it buys from the United States though that does not mean it will stop buying American chips.

The U.S. Commerce Department said it will evaluate whether to extend the exemptions beyond 90 days.

On Thursday, the Commerce Department added Huawei and 68 entities to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States.

The government tied Huawei’s addition to the “entity list” to a pending case accusing the company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and move money out of the country via the international banking system. Huawei has pleaded not guilty.

Reuters reported Friday that the department was considering a temporary easing, citing a government spokeswoman.

The temporary license also allows disclosures of security vulnerabilities and for Huawei to engage in the development of standards for future 5G networks.

Reuters reported Sunday that Alphabet Inc’s Google suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing, citing a source familiar with the matter.
Google did not immediately respond to a request for comment on the new authorization.

Out of $70 billion Huawei spent buying components in 2018, some $11 billion went to U.S. firms including Qualcomm Inc, Intel Corp and Micron Technology Inc.

“I think this is a reality check,” said Washington trade lawyer Douglas Jacobson. “It shows how pervasive Huawei goods and technology are around the globe and if the U.S. imposes restrictions, that has impacts.”

Jacobson said the effort to keep existing networks operating appeared aimed at telecom providers in Europe and other countries where Huawei equipment is pervasive.

The move also could assist mobile service providers in thinly populated areas of the United States, such as Wyoming and eastern Oregon, that purchased network equipment from Huawei in recent years.

John Neuffer, the president of the Semiconductor Industry Association, which represents U.S. chipmakers and designers, said in a statement that the association wants the government to ease the restrictions further.

“We hope to work with the administration to broaden the scope of the license,” he said, so that it advances U.S. security goals but does not undermine the industry’s ability to compete globally and remain technology leaders.

A report on Monday on the potential impact of stringent export controls on technologies found that U.S. firms could lose up to $56.3 billion in export sales over five years.

The report, from the Information Technology & Innovation Foundation, said the missed opportunities threatened as many as 74,000 jobs.

Wolf, the former Commerce official, said the Huawei reprieve was similar to action taken by the department in July to prevent systems from crashing after the U.S. banned China’s ZTE Corp, a smaller Huawei rival, from buying American-made components.

The U.S. trade ban on ZTE wreaked havoc at wireless carriers in Europe and South Asia, sources told Reuters at the time.

The ban on ZTE was lifted July 13 after the company struck an agreement with the Commerce Department that included a $1 billion fine plus $400 million in escrow and replacement of its board of directors and senior management. ZTE, which had ceased major operations as a result of the ban, then resumed business.

Reporting by Karen Freifeld in New York and David Shepardson in Washington; Additional reporting by Diane Bartz in Washington and Angela Moon, Ryan Woo and Lusha Zhang in Beijing, Brenda Goh in Shanghai; Editing by Cynthia Osterman and Christopher Cushing
Source: Reuters “U.S. eases restrictions on Huawei; founder says U.S. underestimates Chinese firm”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.