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China’s policy reorientations and their impact on trade and tech

Published 21 March 2023

China convened the “two sessions” announcing policy reorientations. What will this mean for trade, investment, and competition over technology? Where is the CPTPP headed now? Is the world deglobalizing or reglobalizing? Our reading list covers the latest developments in global trade.

China’s Two Sessions

China convened annual meetings of its National People’s Congress and Chinese People’s Political Consultative Conference (the “two sessions”), announcing policy reorientations and significant changes to regulatory bodies. What will this mean for trade, investment, and competition over technology? Experts from the Center for Strategic and International Studies offer their assessments of Xi Jinping’s  system of governance. Key announcements are summarized in MERICS’ National People’s Congress digest, while the Financial Times asks what does Xi’s tighter regulatory grip mean for business? Writing in Foreign Affairs, Dan Wang uncovers China’s hidden tech revolution. Southeast Asia must carve out its own space in the tech wars, according to Elina Noor in Asia Global Online.

Mentioned publications

  1. The Completed Construction of the Xi Jinping System of Governance – Scott Kennedy, Claire Reade, Paul Triolo, Jeannette Chu, John L. Holden, and Ilaria Mazzocco, Center for Strategic and International Studies, March 15, 2023 
    What does China’s government reorganization mean for trade, investment and tech competition?
  2. Special Issue: National People’s Congress DigestMERICS Briefs, March 16, 2023 
    What are the key changes made to regulatory bodies during last week’s two sessions?
  3. What does Xi Jinping’s tighter regulatory grip on China mean for business?Financial Times, March 8, 2023
    What do the party’s new regulatory agencies mean for business and financial oversight? 
  4. China’s Hidden Tech Revolution – Dan Wang, Foreign Affairs, March/April 2023 
    In order to compete, the US must ramp up its manufacturing capabilities. 
  5. Southeast Asia and the China-US Fight for Tech Supremacy – Elina Noor, Asia Global Online, March 16, 2023
    Southeast Asian nations must carve out their own space in the Sino-US tussle over technology.

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Five years of US tariffs

The US International Trade Commission released a long-awaited study of the economic impact of Trump Administration tariffs on Chinese goods and steel and aluminum imports. US importers are bearing the entire burden of increased costs, reports Bloomberg. Despite record high trade numbers reported last month, the US and China continue to decouple, per Chad Bown’s latest analysis for the Peterson Institute for International Economics (PIIE).

Mentioned publications

  1. Economic Impact of Section 232 and 301 Tariffs on U.S. IndustriesUS International Trade Commission, March 2023
    The USITC estimates the impact of Section 232 and 301 tariffs on industries and consumers.
  2. US Tariffs on Metals, Some China Goods Raised American PricesBloomberg, March 15, 2023
    The USITC finds that US importers bore almost the entire burden of Trump’s tariffs on Chinese imports.
  3. Five years into the trade war, China continues its slow decoupling from US exports – Chad P. Bown and Yilin Wang, Peterson Institute for International Economics, March 16, 2023 
    Despite record trade numbers, China is slowly reducing its imports from the US.

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Trade agreements and geopolitics

The Economist considers the CPTPP’s past, present, and future. The UK is on the verge of joining CPTPP, and the price of entry may be tariff-free imports of Malaysian palm oil, per the Financial Times. It is time to divert Taiwanese trade away from China, argues the Economist, while PIIE finds that Taiwan’s outbound foreign investment continues to go to the Mainland. The US has tabled text for a new agreement with Taiwan and offers a summary from the Office of the US Trade Representative.

Mentioned publications

  1. How Donald Trump damaged America’s interests in AsiaThe Economist, March 7, 2023 
    Despite America’s absence, the CPTPP remains relevant and desirable for key economies. 
  2. UK poised to remove import tariffs on Malaysian palm oilFinancial Times, March 14, 2023 
    For the UK, the price of entry into CPTPP may be ending import tariffs on palm oil from Malaysia.
  3. It is time to divert Taiwan’s trade and investment from ChinaThe Economist, March 7, 2023 
    China remains Taiwan’s top trading partner.
  4. Taiwan's outbound foreign investment, particularly in tech, continues to go to mainland China despite strict controls – Chad P. Bown and Yilin Wang, Peterson Institute for International Economics, February 27, 2023
    Over 50% of Taiwan’s FDI stock is in Mainland China.
  5. U.S.-Taiwan Initiative on 21st Century Trade Summary of Texts Proposed by the U.S. SideOffice of the US Trade Representative, March 2023 
    The US tables text for a new trade agreement with Taiwan.

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Deglobalization, or reglobalization?

Is the world deglobalizing? DHL’s Global Connectedness Index finds evidence to the contrary, and calls for “re-globalization” instead. What role will India play in reglobalizing? India is expanding ties with the West in a shift from past policy, according to the Wall Street Journal. One step in this shift may be an understanding with the US on chip subsidies, reports Bloomberg.

Mentioned publications

  1. DHL Global Connectedness Index 2022 - Steven A. Altman and Caroline R. Bastian, NYU Stern School of Business Center for the Future of Management - DHL Initiative on Globalization, March 2023 
    Despite tangible evidence of US-China decoupling, the world remains highly connected.
  2. India, Wary of China, Expands Trade Ties With the West – Greg Ip, The Wall Street Journal, March 6, 2023 
    India has a deep history of protectionism; is it charting a new course or tweaking an old model?
  3. US and India Plan to Boost Chips Collaboration, Biden’s Commerce Chief SaysBloomberg, March 9, 2023 
    The US and India will sign an MoU on chip industry incentives.

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