Chinese exporters scramble on tariffs

China’s exports rose 11.3 percent year-on-year in June, fueling hopes of stability in the world’s second-largest economy. (AFP)
Updated 16 April 2018
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Chinese exporters scramble on tariffs

  • Cixin Group manager Wang Liqiang: “We are considering manufacturing as many ball bearings as possible for the US market before the imposition of tariffs.”
  • Some companies are looking at ways to hide their Chinese origin by shipping goods through other countries.

Beijing: Faced with possible US tariff hikes, one of China’s biggest ball bearing makers, Cixin Group, is considering plans to rush shipments to American customers before the increase makes its sales unprofitable.
The company in the eastern city of Ningbo is among exporters of goods from motorcycle parts to electronics that are scrambling to cope with President Donald Trump’s higher duties by shipping early, raising prices or finding new markets.
The 25 percent increase would turn Cixin’s profits to losses in the US market, which takes 30 percent of its exports, according to Wang Liqiang, a company manager.
“We are considering manufacturing as many ball bearings as possible for the US market before the imposition of tariffs,” said Wang. “We can do it by working overtime.”
Some companies are looking at ways to hide their Chinese origin by shipping goods through other countries.
“Maybe customers will buy from South America, and then South America sells to the US,” said Yvonne Yuan, a sales manager for Shenzhen Tianya Lighting, a manufacturer of LED bulbs.
Trump said higher duties on $50 billion of Chinese goods are meant to punish Beijing for stealing or pressuring foreign companies to hand over foreign technology.
The plan targets goods US officials say benefit from improper Chinese policies including machinery, industrial components and aerospace, telecoms and other technology.

 

Trump left time to negotiate. A public comment period runs through May 11, with a hearing scheduled May 15.
Economists and Chinese officials say the tariff hike’s overall impact on China should be limited. But for exporters that depend on the US market, the potential costs are alarming.
Knock-on effects could greatly increase the impact, Moody’s said in a report. It said that Chinese manufacturers that supply inputs to targeted sectors would see reduced demand and more pricing pressure. Manufacturing and processing of metals and metal products, as the key input sectors for technology-product manufacturing, would be hurt the most.
Chinese exporters supply most of the world’s mobile phones, personal computers, televisions, toys and other light manufactured goods.
Many factories are struggling with higher costs and slowing demand. China’s total exports last year rose 7.9 percent, down from the heady double-digit rates of the past decade.
The US buys about 20 percent of China’s exports. But Americans are especially important to exporters because they buy electronics and other high-value goods.
Some exporters already are reeling from previous US tariff increases of up to 500 percent on washing machines, solar modules and some metal products, meant to offset what the Trump administration says are improper subsidies.
Others are confident American customers cannot do without them.
Makers of motorcycle components plan to use that leverage to ask buyers to split the cost if tariffs rise, said Pan Jianle, an official of the Motorcycle Parts Association in Wenzhou. She said they export worldwide, but the US is their biggest market.

FASTFACTS

China’s total exports last year rose 7.9 percent. The US buys about 20 percent of China’s exports. Some exporters already reeling from US tariff hikes.


Potential SABIC deal would affect Saudi Aramco IPO time frame, says CEO Nasser

Updated 20 July 2018
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Potential SABIC deal would affect Saudi Aramco IPO time frame, says CEO Nasser

JEDDAH: A potential deal to buy a stake in petrochemical maker SABIC would affect the time frame of Saudi Aramco's initial public offering (IPO), the oil firm's president and CEO Amin H. Nasser said Friday. 

The IPO of around 5 percent of Aramco, which was initially to take place this year but is now more likely to happen later, would be the world's biggest listing, raising up to $100 billion.

Nasser said that buying a stake in a chemical company like SABIC would positively affect Aramco's revenue, Al Arabiya reported.

“We are still in the very early stages of the discussion to buy a stake in SABIC,” the Aramco CEO said.

“Aramco is ready for the initial offer and the timing remains subject to the state's decision.”

Saudi Aramco said on Thursday it is looking at the possibility of buying a stake in SABIC, a move that could boost the state oil giant’s market valuation ahead of the planned IPO.
Aramco said in a statement that it was in “very early-stage discussions” with the Kingdom’s Public Investment Fund (PIF) to acquire the stake in SABIC via a private transaction. It has no plans to acquire any publicly held shares, it said.
In a separate statement, PIF also said talks about a sale were in early stages. “There is a possibility that no agreement will be reached in relation to this potential transaction,” it said.