Tuesday, July 10, 2018

The Trade War Just Got Insane in China

Beijing has unveiled a basic outline to help Chinese companies absorb the blows of the trade war,  reports The Washington Post.

The Chinese government is pledging to funnel money to companies hurt by the trade war.

 Officials also encouraged businesses to roll back their reliance on American goods, urging them to shift orders for products such as soybeans and automobiles to suppliers in China and other countries.

“For companies that are severely impacted, we suggest they report to local government departments,” the Commerce Ministry said in a Monday statement.

Details weren't clear but it appears the government would absorb corporate trade war losses by paying cash to companies hurt by the trade war.

The government indicated trade war fees via tariffs would be so funneled to such companies but it is possible the payments will go beyond tariff revenue. Thus, distortions caused by the tariffs will result in China adding another level of distortions as cash is taken out of the Chinese economy and funneled to companies that can not survive in the new trade war environment.


1 comment:

  1. Hmm this leads me to believe that China has been competing fairly in the marketplace this whole time.