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Between Anniversaries and Trade Wars

“Between Anniversaries and Trade Wars” article by Lorenzo Riccardi on Wall Street Italia November 2019

On October 1, 2019, China celebrated the 70th anniversary of its founding, from Mao's time to Xi's. For those who work with this country and have experienced the latest economic changes, these are special days.

President Xi relaunches Beijing's role in a long, uninterrupted march, showing off the muscles of the new military apparatus with a grand parade in Tiananmen Square.

President Trump promises tariffs and new tensions in the trade relationship between the two countries, with the idea of banning listing on American exchanges to Chinese companies and in any way discouraging the flow of foreign investment to China.

In Hong Kong, where people have always worked on entry strategies in the country and M&A projects, protests continue, trying to divert media attention away from the celebrations in Beijing.

The economic profiles, from Guangzhou to Dalian, follow political logic, and almost always, even those who deal with investment projects often discuss geopolitical implications on doing business with China. Traveling to different regions fo the world grants a better understanding of the global development of the economy and the contrast between this country and the United States. The tariff war between Washington and Beijing is only the most visible symbol of the distinction between the two largest economies.

The trade war is not only perceived in Chinese factories or American customs but is well understood in Southeast Asia, Oceania, and the countries of the African continent.

Trump triggered the tariff battle in 2018 by announcing a series of specific measures and, despite several negotiations, he has increased the impact of tariffs on imports from 10% to 25% several times, hitting 200 billion dollars of goods imported from China.

China's response was announced by the State Council, with new tariffs from June 2019, hitting 60 billion dollars of imports from the United States.

Trump in August confirmed a new 10% tariff on products imported from China worth 300 billion Dollars in force since September 1.

Washington has also announced that a ban on Chinese companies listing on American stock exchanges is under evaluation. The announcement marks the most significant escalation the Trump administration has taken.