U.S. companies are no longer seeing the big profits from China compared with the rest of the world.
China is still a top priority for American companies. But slower economic growth, uncertainty over the trade war, and modern China’s tighter regulatory and labor laws all have executives expecting lower returns this year. China is more expensive than it was 10 years ago. The added weight of Trump’s trade war is a new headwind.
A vendor looks at a mobile phone as red lanterns and decorations hang on display at a market near the Yuyuan Garden ahead of the Lunar New Year in Shanghai, China, on January 28, 2019. Photographer: Qilai Shen/BloombergThe private Caixin China PMI Composite is over 50, hitting 50.7 in February. It was 50.9 in January. Anything over 50 is positive. Caixin’s Services PMI was 51.1 in February, down from 53.6 in January, which was the Lunar New Year month.
“There’s upside risk to that number,” he says. “If you don’t get an extension of tariffs, then I think you can see 6.5% or more.” Despite the lower target today, China is one of the three largest and fastest-growing economies in the world.
What if... Just a crazy conspiracy theory... What if, America and China depend directly with each other for trade goods, and a trade war ultimately benefits no-one, except as impetus for unilateral reforms and expanded trade in the future?