Customs Disputes: China's Trade with USA Still Falters Amidst Unsettled Issues
U.S.-China trade significantly declining
There's a sight of truce in the heated customs battle between China and the USA, yet imports and exports remain in a downward spiral, casting a shadow on Germany too.
The latest figures from the customs authority in Beijing show a 34.5% drop in exports and an 18.1% decrease in imports, compared to May 2024. Despite both nations agreeing to a pause and slashing tariffs on goods, knotty issues persist. China's control over rare earths and magnets crucial for industries is a major concern, as is the US restriction on high-tech products like computer chip design software and aviation components.
Key Controversies- Advanced Semiconductors and Tech Access: The US is reluctant to loosen its grip on advanced semiconductor technology, viewing it as a matter of national security. China, on the other hand, is pressing for access to this technology.- Rare Earth Export Controls: China as the world's largest producer of rare earths, a critical component for numerous industries, has imposed export restrictions, causing concern among global manufacturers. While negotiations hint at some ease in these controls, a definitive agreement is yet to be reached.- Other Bilateral Issues: The access of Chinese students to US universities is under continuous debate, along with the US's desire for greater market access in China.
Economic Landscape
In contrast to the gloomy trade scenario, China's foreign trade exceeded expectations in April and grew again in May, with exports increasing by 4.8% and imports decreasing by 3.4%. However, the trade surplus of approximately $103 billion fell short of analysts' projections.
Germany's trade with China remains unaffected, with exports to China increasing by 21.5% in May, while imports decreased by 1.3%. This downturn in imports is indicative of weak demand within China and poses challenges for German businesses operating there.
Prospects for the Future
China continues to struggle with weak domestic demand, fallout from the housing crisis, and deflationary pressure. Consumer prices have dropped by 0.1% compared to last year, raising concerns about corporate profits and potential job losses.
- China
- USA
- Trade
- Trade disputes
- Tariffs
- Rare earths
- Advanced semiconductors
- Student visas
- Market access
- The ongoing trade disputes between China and the USA, which have led to a decrease in exports and imports for both countries, have also caused concern in China's policy on rare earth exports, a critical component for numerous industries, and the access of Chinese students to US universities.
- While both countries have agreed to a pause and slashed tariffs on goods, ongoing issues such as China's control over rare earths, the US restriction on high-tech products, and the US's desire for greater market access in China are employment policy matters that still need to be addressed, as these issues could impact the employment sectors related to advanced semiconductors, tech industries, and universities in both countries.
