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.


Davos organizer WEF warns of growing risk of cyberattacks in Gulf

Updated 16 January 2019
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Davos organizer WEF warns of growing risk of cyberattacks in Gulf

  • Critical infrastructure such as power centers and water plants at particular risk, says expert
  • Report finds that unemployment is a major concern in Bahrain, Egypt, Morocco, Oman and Tunisia

LONDON: The World Economic Forum (WEF) has warned of the growing possibility of cyberattacks in the Gulf — with Saudi Arabia, the UAE and Qatar particularly vulnerable.

Cyberattacks were ranked as the second most important risk — after an “energy shock” — in the three Gulf states, according to the WEF’s flagship Global Risks Report 2019.

The report was released ahead of the WEF’s annual forum in Davos, Switzerland, which starts on Tuesday.

In an interview with Arab News, John Drzik, president of global risk and digital at professional services firm Marsh & McLennan said: “The risk of cyberattacks on critical infrastructure such as power centers and water plants is moving up the agenda in the Middle East, and in the Gulf in particular.”

Drzik was speaking on the sidelines of a London summit where WEF unveiled the report, which was compiled in partnership with Marsh and Zurich Insurance.

“Cyberattacks are a growing concern as the regional economy becomes more sophisticated,” he said.

“Critical infrastructure means centers where disablement could affect an entire society — for instance an attack on an electric grid.”

Countries needed to “upgrade to reflect the change in the cyber risk environment,” he added.

The WEF report incorporated the results of a survey taken from about 1,000 experts and decision makers.

The top three risks for the Middle East and Africa as a whole were found to be an energy price shock, unemployment or underemployment, and terrorist attacks.

Worries about an oil price shock were said to be particularly pronounced in countries where government spending was rising, said WEF. This group includes Saudi Arabia, which the IMF estimated in May 2018 had seen its fiscal breakeven price for oil — that is, the price required to balance the national budget — rise to $88 a barrel, 26 percent above the IMF’s October 2017 estimate, and also higher than the country’s medium-term oil-price target of $70–$80.

But that disclosure needed to be balanced with the fact that risk of “fiscal crises” dropped sharply in the WEF survey rankings, from first position last year to fifth in 2018.

The report said: “Oil prices increased substantially between our 2017 and 2018 surveys, from around $50 to $75. This represents a significant fillip for the fiscal position of the region’s oil producers, with the IMF estimating that each $10 increase in oil prices should feed through to an improvement on the fiscal balance of 3 percentage points of GDP.”

At national level, this risk of “unemployment and underemployment” ranked highly in Bahrain, Egypt, Morocco, Oman and Tunisia.
“Unemployment is a pressing issue in the region, particularly for the rapidly expanding young population: Youth unemployment averages around 25 percent and is close to 50 percent in Oman,” said the report.

Other countries attaching high prominence to domestic and regional fractures in the survey were Tunisia, with “profound
social instability” ranked first, and Algeria, where respondents ranked “failure of regional and global governance” first.

Looking at the global picture, WEF warned that weakened international co-operation was damaging the collective will to confront key issues such as climate change and environmental degradation.