Chinese economy weakening due to trade tension

Channel: Fox Business
Published: 05/31/2019 05:43 PM

Former U.S. Ambassador to China Gary Locke on the economic impact of tariffs. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street. Headquartered in New York — the business capital of the world ...

Speaking of slowing down, there's new data out from china, not good for the chinese economy at all the chinese economy, certainly weakening that's what the factory data showed its currency, the chinese yuan falling two and a half percent. So far this month, as we come up on the end of the month, a factory employment gauge lowest level since oh nine us imports coming in from china down fourteen per ...
ent this year, which undoubtedly speaks to the trade tensions, a number of companies looking to shift their Operations out of china, it's been a list, we've been kind of putting together piece by piece and it's a list that is continuing to grow, whether it's you know, vietnamcambodia what-have-you, former us ambassador to china, us ambassador, gary locke, joins us now on you know, kind of. What'S next, there's also the new warning out ambassador from china. They want a blacklist right. A number of, i guess american companies would you make of that. Well, obviously, these trade tensions can get out of out of hand and, as the previous guests are talking about, the mexico possible tariffs have said it's going to be the consumer that ultimately pays it's going to hurt american companies and all today it's going to be passed On to american consumers, whether it's the stuff you buy at costco walmart target and the list goes on and on or even automobilessome of these tariffs on on china will be on small parts that come in from china put into american-made automobiles and that's going to raise Significantly the cost of a american-made automobiles, so it's gon na hurt the average household anywhere from five to eight hundred dollars and if you're planning on making a major purchase, whether it's lawn furniture or a barbecue set or an automobile, it's going to cost you even more So the question throughout this whole at least the near-term question - has been whether or not they the chinese will be hurt more than us, the americans. You know we're kind of past the idea that the china's paying these tariffs. We know that american companiesare and as your to your point, can pass them along to consumers. So there's certainly some pain here. We'Ve seen that, but the china's economy that manufacturing number was rough right. It'S in contraction territory we saw overnight. I mentioned the import figures.

That'S in these interesting as well. The imports coming in to the united states from china year-to-date from the numbers i saw down - 14 % and other countries are benefiting vietnam up: 40 % cambo twenty-four taiwan up 21 % south korea up 18 %. So you know there is the shifting of the supply chain. What how will that play out? And you know we still get low-cost products from asia just not from china. Well, i think you'llstill continue to get low-cost products from from asia, but you're also still going to get them bulk of it. Coming from china, some companies will be able to move their supply chain to other companies and in fact, other countries, and in fact that's a good idea. You don't want to be overly reliant on any one country for the source of your materials. At the same time, china's doing the same thing with the in penalties and ban on american companies selling anything to huawei and huawei, makes more than just 5g equipment or cell. You know switching equipment for our cellular network. They also make inexpensive cheap cell phones that are not in any way a competitortheir iphones, but these are low-cost, cheap cell phones that are affordable to people in developing countries and when the united states says that no us company can supply any equipment to wow way, not Even the glass that's used on a cell phone, that's forcing huawei and china to say, okay! Well, we don't want to be dependent on american suppliers and technology. We'Re gon na have to really focus on developing our own homegrown companies and semiconductors. That has last and everything else, much more ambassador locke than just a trade dispute is it, as some has suggested, some sort of a new cold war, or at least a new tech cold war.

And what is what is thiswell? I'M very concerned that it's going to escalate and it's going to get out of control, whether it spills over into rare earths. I mean china only mine's about 30 % of the rare earths in in the world, but they process 90 % of all the of the final products that are used even by our american military made by used by us companies that then, are put into components for The us military or very sophisticated equipment and american companies can't readily substitute those supply chain products, and so this is going to have deep repercussions in terms of the global trade and the economic and supply chain relationships between the united states, china and the rest of theworld. We could be making changes for better or worse that that never go back to the to the way they were, which is an interesting part of all of this, but ambassador locke is always good to see you thanks for your insights today. We appreciate it. Thank you.

Watch Next