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Japan Times
05-07-2025
- Business
- Japan Times
Beijing braces for U.S. trade deals that aim to shut out China
The trade truce between Washington and Beijing may be holding for now, but China is increasingly wary about what's happening elsewhere: U.S. efforts to forge deals that could isolate Chinese firms from global supply chains. Ahead of a July 9 deadline, U.S. officials are deep in talks with major trading partners in Asia and Europe, pushing for new agreements that would include restrictions on Chinese content, or secure commitments to counter what Washington sees as China's unfair trade practices. In the first such deal, U.S. President Donald Trump on Wednesday announced a tiered tariff agreement with Vietnam. Exports to the United States from the Southeast Asian nation will be charged a 20% rate, Trump said in a social media post, with 40% levied on any goods deemed to be transshipped through the country. That will hit products with components from China and possibly other nations, which are routed through Vietnam or subject to only minimal final assembly before being exported to the U.S. The approach mirrors provisions in an existing U.S. trade agreement with Mexico and Canada. Although Trump shared the broad contours of the agreement, the White House has not yet released further details, and some of the agreement could be in development, so it's unknown yet how damaging this could be for China's growing exports to Vietnam. China's Ministry of Commerce didn't respond immediately to a request for comment. India, another nation seen as close to a deal, has also been negotiating over "rules of origin.' Washington wants at least 60% of a product's value added locally to qualify as "Made in India' and benefit from the deal, it was previously reported. India has pushed to bring that down to around 35%, according to the report. "Asia's dilemma when it comes to Trump's trade war is all about dependence on U.S. final demand while relying heavily on China's value added in domestic production,' Alicia Garcia Herrero, Asia-Pacific chief economist at Natixis, said in a recent report, adding that Vietnam, Cambodia and Taiwan were among the most exposed. China, a larger trade partner than the U.S. for most Asian economies, has warned of consequences if its interests are threatened, and Foreign Minister Wang Yi is likely to raise that again on his visit to Europe this week for talks in Belgium, Germany and France. "China firmly opposes any party reaching a deal at the expense of Chinese interests in exchange for so-called tariff reductions,' the Ministry of Commerce said in a statement Saturday, repeating earlier warnings. "If this happens, China will never accept it and will resolutely counter it to safeguard its legitimate rights and interests.' The Vietnam deal risks provoking retaliatory steps from China, according to Bloomberg Economics. "Beijing has made clear that it would respond to deals that came at the expense of Chinese interests and the decision to agree to a higher tariff on goods deemed to be 'transshipped' through Vietnam may fall in that category,' Bloomberg's Rana Sajedi wrote in a research note. Trump's 90-day pause on what he called "reciprocal' tariffs on dozens of America's trading partners ends on July 9. Unless those countries reach trade deals with the U.S., they could potentially face much higher tariffs. Some governments are making moves to stay on the right side of Washington. Vietnam, Thailand and South Korea have all put in place measures to stop goods from being rerouted through their countries to the U.S. since Trump's tariffs were unveiled in April. South Korean customs announced a crackdown on transshipments, citing a rise in the practice. Taiwan's President Lai Ching-te also flagged the issue and followed up with new rules requiring all U.S.-bound exports to carry a legal declaration they were made on the island. Chinese Foreign Minister Wang Yi in Brussels on Wednesday | Bloomberg Another concern for Beijing is whether the U.S. could convince others to impose or tighten export controls on high-tech equipment, which would further hamper Chinese efforts to buy the tools it needs to produce advanced semiconductors. Taiwan in June added Huawei Technologies and Semiconductor Manufacturing International Corp. to its so-called entity list, barring Taiwanese firms from doing business with them without government approval. The pressure isn't limited to Asia. Europe, too, finds itself in a delicate position. The EU is China's largest export destination for electric vehicles, and investment from Chinese firms into the bloc plus the U.K. hit €10 billion ($12 billion) last year, according to recent research from Rhodium Group. Yet trade tensions are rising. European Commission President Ursula von der Leyen recently accused Beijing of "weaponizing' rare earths and magnets and warned of the risks posed by Chinese overcapacity. Beijing is particularly concerned that the EU might sign up to provisions similar to those in the U.K.'s deal with the U.S., which included commitments around supply chain security, export controls, and ownership rules in sectors like steel, aluminum and pharmaceuticals. While the language did not name China, Beijing criticized the agreement in a rare public statement, interpreting it as a direct challenge, the Financial Times reported. "China is clearly worried that the EU will accept the same wording as the U.K. did on export controls,' said Joerg Wuttke, a partner at the Albright Stonebridge Group in Washington and former president of the EU Chamber of Commerce in China. "They are pushing the EU not to do this, and the U.S. is pushing the EU to do it.' Brussels and Washington are aiming to reach some form of an agreement before July 9, when Washington is set to impose a 50% tariff on nearly all EU products. With European exports to the U.S. worth more than double the amount to China, the bloc sees Washington as the more important partner, giving the U.S. leverage in the talks. China's weekend statement is "obviously aimed entirely at Brussels,' said Hosuk Lee-Makiyama, director of the European Centre for International Political Economy in Brussels, who was recently in Beijing for meetings ahead of an EU-China summit this month. "China is concerned what the EU might agree with the U.S.' The long-term risk for Beijing is that these efforts coalesce into a broader shift — not just a U.S.-led campaign to curb Chinese exports, but a reshaping of global trade around "trusted' supply chains, with China increasingly on the outside. In a visit to Southeast Asia earlier this year, Chinese leader Xi Jinping urged the region to stand together as an "Asian family,' warning against trade fragmentation. Beijing has often responded to actions it opposes with targeted trade measures. When the EU imposed tariffs on Chinese electric vehicles last year, China launched antidumping probes into European brandy, dairy and pork. It halted Japanese seafood imports in 2023 after Group of Seven meetings in Japan were seen as critical of China. A spat with Australia in 2020 led to trade restrictions on billions of dollars' worth of goods, including lobsters, wine and barley. "If some agreements explicitly list China as a target and show that some countries are cooperating or collaborating with the U.S. to 'contain China,' then China will definitely respond,' said Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing and a former adviser to the Chinese Commerce Ministry.


Bloomberg
02-07-2025
- Business
- Bloomberg
Beijing Braces for US Trade Deals That Aim to Shut Out China
The trade truce between Washington and Beijing may be holding for now, but China is increasingly wary about what's happening elsewhere: US efforts to forge deals that could isolate Chinese firms from global supply chains. Ahead of a July 9 deadline, US officials are deep in talks with major trading partners in Asia and Europe, pushing for new agreements that would include restrictions on Chinese content, or secure commitments to counter what Washington sees as China's unfair trade practices.


Bloomberg
02-07-2025
- Business
- Bloomberg
Beijing Braces for US Trade Deals That Seek to Shut Out China
The trade truce between Washington and Beijing may be holding for now, but China is increasingly wary about what's happening elsewhere: US efforts to forge deals that could isolate Chinese firms from global supply chains. Ahead of a July 9 deadline, US officials are deep in talks with major trading partners in Asia and Europe, pushing for new agreements that would include restrictions on Chinese content, or secure commitments to counter what Washington sees as China's unfair trade practices.


South China Morning Post
23-06-2025
- Business
- South China Morning Post
China looks to Singapore to help secure global supply chains from US trade war turmoil
China and Singapore should work together to safeguard global supply chains, Chinese Premier Li Qiang said on Monday as Beijing seeks deeper ties with neighbouring countries to help offset trade tensions with Washington. In talks with Singaporean Prime Minister Lawrence Wong at the Great Hall of the People in Beijing, Li said bilateral ties had continued to strengthen, and the two countries were 'friendly neighbours and important partners'. 'China is willing to maintain close high-level exchanges with Singapore, strengthen strategic communication, consolidate political mutual trust, and promote more fruitful results in bilateral relations and cooperation,' he said, according to state broadcaster CCTV. 'As beneficiaries and defenders of economic globalisation and free trade, China and Singapore should uphold open regionalism and true multilateralism, actively promote trade and investment liberalisation and facilitation, and maintain the stability and smooth functioning of the global supply chain.' China, Li said, was willing to expand the scale of the country's trade and investment with Singapore, strengthen cultural exchanges, and further cooperate in sectors including the digital economy and artificial intelligence. China was also willing to work with the city state and other Association of Southeast Asian Nations (Asean) economies to promote regional cooperation, he said.


Forbes
01-06-2025
- Business
- Forbes
Is Your Business Ready? How Strategic Reinvention Beats Disruption
As leaders, we are all facing an accelerating cascade of disruptions. We had barely recovered from the pandemic when Russia's invasion of Ukraine plunged Europe back into war, further disrupting global supply chains in the process. At the same time, the emergence of generative AI is transforming whole industries and impacting virtually every aspect of your business. If all that was not enough to contend with, we now must deal with tariffs, trade wars, and the upending of the global rules-based order. That is why the most urgent task for every company is what I call strategic reinvention. Don't wait to become a victim of disruption – take control of your future by beginning the process ... More of strategic reinvention today so your company doesn't just survive change, but thrives by leading it. According to PwC's latest annual survey of CEOs, 42 percent say their companies will not make it another 10 years if they continue on their current path – and that was before the current trade war began. PwC found that 63 percent of CEOs have tried to change course, but most of those efforts are insufficient to meet the challenges those companies face. 'Will these moves be enough to power reinvention? For many CEOs, the honest answer will be no,' PwC concluded. 'Barriers to reinvention include weak decision-making processes, low levels of resource reallocation from year to year, and a mismatch between the short expected tenure of many CEOs and powerful long-term forces, or megatrends, at work.' I believe companies can overcome these deficiencies through a simple, four-phases strategic reinvention process. It starts with radical clarity – taking a hard, unflinching look at your company's situation, both internally and externally, and the challenges and opportunities created by this current era of disruption. You need to identify the assumptions you are making and challenge each of those in a structured and deliberate manner. You also need to look at not only the macroeconomy, but other external forces and factors that are impacting your business, or which could impact your business in the future. Once you have that clarity, you need to develop a strategic reinvention plan. If you are a successful company, this will be an evolution of your current business strategy informed by the insights you gleaned from the first phase. If you are already struggling or facing an existential crisis, then a more radical reinvention may be in order. In any event, this should be a collaborative, iterative process that includes your entire leadership team. Don't pay others to do this for you; developing and implementing a winning strategy is why you and your executive team get the big bucks. Don't outsource thinking to a high-priced consulting company that you know will turn that work over to a bunch of recent business school grads or dust off the same plan they developed for one of your competitors last year. The next step is resiliency testing. That means stress-testing your strategic reinvention plan to ensure that it is strong enough and flexible enough to stand up to whatever tomorrow throws at you. The best way to do this is by conducting a Pre-Mortem Analysis. This is a powerful technique developed by my friend and colleague Dr. Gary Klein that is designed to uncover the causes of failure so that you can modify your plan to prevent those from occurring or develop mitigating actions if they do. Other tools, such as my own Swan Dive method can help as well. The final phase is unified execution. This not only means working together effectively as one team to implement your strategic reinvention plan but also communicating your plan simply and clearly so that every single man and woman in your organization understands it and knows where to put their shoulder to get the flywheel moving in the right direction. Unified execution also means effectively managing the implementation of your new plan, and that requires transparency and accountability. The best way to create both is the Business Plan Review Process developed by my mentor, legendary CEO Alan Mulally. He used the BPR Process to save two of the largest, most iconic companies in the world from bankruptcy: Boeing and Ford. It will work for your company, too. By working through these four simple phases together with your leadership team, you will gain a better understanding of where you stand as a company and how to navigate the current maelstrom to help ensure your future success in an increasingly volatile marketplace. This will enable you, as a leader, to move forward with confidence. How does this work in practice? Imagine a large multinational semiconductor corporation facing escalating trade wars and geopolitical tensions. Initially, the leadership team would assess how tariffs, sanctions, and shifting alliances affect their global operations and supply chains. Challenging existing assumptions, they might discover vulnerabilities in raw material sourcing and market dependencies. Next, they would collaboratively develop a strategic reinvention plan to diversify their supply chain, invest in regional manufacturing capabilities, and pivot product portfolios toward markets less exposed to geopolitical disruptions. They then apply resiliency testing, conducting a pre-mortem to anticipate potential failures like sudden sanctions or export controls, adjusting their strategy accordingly. Finally, the entire organization aligns through unified execution, clearly communicating the new strategy to all employees and adopting a transparent management process such as the weekly BPR to maintain agility and swiftly respond to emerging geopolitical shifts. This proactive, internally driven approach positions the corporation not merely to survive disruptions but to thrive amidst uncertainty. 'If CEOs need further encouragement to double down on reinvention, they should note that we see a strong association in the data between the number of reinvention actions companies have taken and the profit margins they achieve,' PwC noted in its annual report. This reveals a powerful truth that highest-performing companies already know: Strategic reinvention is the secret to long-term success, even in more stable operating environments. The best businesses are the ones that disrupt themselves before they are disrupted. I witnessed a great example of this back in 2004 when Toyota Motor Corp. Chairman Fujio Cho delivered one of the most amazing keynotes I have ever witnessed at the global automobile industry's annual confab in Traverse City, Michigan. This was hostile territory for Toyota. The auditorium was packed with executives from all the world's automakers, but it was dominated by the three home teams: General Motors, Ford, and Chrysler. Many of them scowled at Cho or rolled their eyes as he went through a detailed presentation showing how Toyota was meeting or exceeding its strategic targets for every market in the world. When he was finished, Cho took off his glasses, folded them, looked out over the room and said this was why Toyota needed to change its strategy. 'Any company not willing to take the risk of reinventing itself is doomed,' he said. 'The world today is changing much too fast.' Four years later, Toyota passed GM to become the largest automaker in the world. By the end of 2021, it was number one in the United States as well. Like Toyota's Cho, the best leaders in the world know that change is the only constant in the world – and that change requires strategic disruption. This is true in business, and it is true in government and the military as well. Those still fighting the last war always lose. So, don't wait to become a victim of disruption – take control of your future by beginning the process of strategic reinvention today so your company doesn't just survive change, but thrives by leading it.