China Announces New Revisions to Trade & US Markets Jump Slightly
The trade war between the US and China has caused global stock markets to go on a roller coaster ride the past few months and has impacted other financial markets (maybe even crypto?) so new announcements made out of China about changes to trade agreements were well received by the markets.
China is intending to give foreign businesses more access to the Chinese economy and plans to issue a new plan to “dominate advanced technologies by 2025,” according to the Wall Street Journal on December 12th, 2018.
These changes are a result of the lasting trade war between the Chinese and United States governments that has been intending to balance out trade and give American companies access to the second largest economy in the world, China. This new program is being coined “Made in China 2025.”
Uptick in the Market
After this announcement was made, the stock markets around the world showed some gains, which could help restore some faith in financial markets that have been waning in the past couple of months. The Dow Jones Industrial Average and S&P 500 Index rose more than 1% in a few hours.
At the G20 Summit in Argentina, Presidents Trump and Jinping met to discuss the trade war and how to go about reaching an agreement that benefits both sides. The Trump administration has had concerns about the “aggressive” technology plan in China and how Chinese companies are unjustly stealing intellectual property from American businesses.
This has always been a bone of contention between these two countries it seems, Chinese markets sell “knock offs” of American technological products for less than the original would cost so many consumers choose the knockoff version.
The man in charge of negotiations with China from the United States is US Trade Representative Robert Lighthizer and he’s been given the assignment of establishing a beneficial trade deal by March 1, 2019.
The Plan
China’s President, Jinping, has already been working to alleviate some of the US concerns. One such case is establishing a plan to cut tariffs on US automobiles from 40% to 15% and negotiations are taking place to start buying American soybeans soon. This could be great news for American soybean farmers that have been taking major losses on their crops this year.
US higher ups are cautious about China’s willingness to lesser their interests in global domination for technology. Apparently China has been pushing forward with some other initiatives that may not follow with what they have publicly stated.
The original plan for the Chinese economy was first launched in 2015 and aimed at becoming an “advanced manufacturing leader within a decade.” The focus of that plan was to develop local expertise in R&D in order to lessen the country’s reliance on foreign tech. The focus is on 10 emerging markets to include robotics, biotech, and clean energy automobiles.
Chinese officials are right now in the process of coming up with the new economic plan and intend to start implementing it by early 2019. What do you think this will do for the global economy and do you think it will be positive momentum? Would love to hear your thoughts!