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Trade frictions between China and the United States will have a limited impact

- Oct 10, 2018 -

MAO shengyong, spokesman for the national bureau of statistics, said at a press conference on July 16 at the press office of the state council information office that the main indicators of China's economic performance in the first half of this year were generally stable and the impact of sino-us trade frictions was limited. In the second half of the year, we need to further observe the impact of china-us trade frictions.

According to the China national textiles import and export chamber of commerce, the United States trade representative (USTR) announced plans to $200 billion on Chinese imports in the recommended list of imposing a 10% tariff, textile and clothing products id number up to 1000, involving most of the textile materials, semi-finished products, as well as small amounts of clothing accessories products, mainly including textile materials, yarn and fabric, carpet, industrial textiles, leather and fur clothing, hats and gloves, plastic raincoat, etc.; But China's larger exports to the United States of woven garments, knitted garments and household textile manufactured goods are not yet on the list. China's textile and apparel exports to the United States amount to about $10.3 billion, accounting for 22.6 percent of China's textile, apparel and raw materials exports to the United States and involving about 20,000 export enterprises.

Some domestic textile and garment enterprises and foreign trade companies said that the scope and influence of the tariff imposed by the United States on China's textile and garment export was lower than previously expected, but considering that the sino-us trade dispute would be a long war, textile and garment enterprises should not take it lightly. According to customs statistics, China's textile and apparel exports totaled $266.95 billion in 2017, of which 17.43% were exported to the United States. In 2017, China's garment exports to the United States reached us $33 billion, accounting for 70.92% of the total textile and apparel exports to the United States, and 20.87% of the total apparel exports in that year.

In my opinion, the us announcement of the plan to impose 10% tariff on China's $200 billion imported products does not have much impact on China's textile and apparel industry, but only remains on the level of emotions and concerns:

First, China's textile clothing exports to the United States to high-grade, high - profit products, and relatively strong bargaining power. Some export-oriented companies said the us imposed a 10 per cent tariff, significantly less than the first $50bn of imported goods. Communication and negotiation with us purchasers and retailers, both sides should bear part of the cost of the increased tariffs, which can basically absorb the negative effect of the us tariffs, but the panic of relevant enterprises over the comprehensive escalation of the sino-us trade war grows.

Second, the continuous depreciation of RMB mitigated the impact of the us side's imposition of tariffs on imported Chinese textile products. Since late June, the RMB has been significantly depreciated, with a depreciation of 1.5% within a week. The RMB against the us dollar has broken through 6.6. According to statistics, the RMB has been depreciated by 4.5% against the us dollar from mid-april to now, the export cost of our products has decreased, and the competitiveness has been enhanced.

Third, the us tax is still within an acceptable and digestible range. In the us $200 billion tax list, the products of our country's textile products to the us only account for 22.6% of the total export to the us, raw materials, and 31.2% of the total export to the us. Although a crackdown on confidence and the market is inevitable, the losses of Chinese textile companies are not too great.

Fourth, we will adjust the direction of exports, expand exports to One Belt And One Road countries and deepen efforts to cultivate domestic demand. According to statistics, China's textile and clothing exports to "One Belt And One Road" countries were $83.435 billion from January to November 2017, an increase of 3.11 percent year-on-year, which was significantly higher than that to other regions. Of the more than 60 countries along the "One Belt And One Road" route, a large part of southeast Asia, South Asia, eastern Europe and north Africa are emerging economies or developing countries, and the potential demand and purchasing power cannot be underestimated. In addition, with the rapid economic development and the growing middle class in China, the acceptance and digestibility of middle and high grade textile and garment has been greatly enhanced, which fully alleviates the impact of dependence on the us market and policy changes.

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