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China Market Insider Trade war reaches manufacturing industry

| Author / Editor: Henrik Bork / Steffen Donath

The manufacturing industry in China is increasingly caught in the wake of the trade war between Washington and Beijing.

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Henrik Bork is Managing Director of Asia Waypoint, a consulting agency specialising in China and based in Beijing. China Market Insider is a joint project of Vogel Communications Group, Germany, and Jigong Vogel Media Advertising in Beijing/PR China.
Henrik Bork is Managing Director of Asia Waypoint, a consulting agency specialising in China and based in Beijing. China Market Insider is a joint project of Vogel Communications Group, Germany, and Jigong Vogel Media Advertising in Beijing/PR China.
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In response to measures taken by US President Donald Trump, China has also just tightened its export controls for high technology. 12 out of 23 of the newly approved product groups are related to manufacturing equipment, such as 3D printing. The Chinese Ministry of Commerce and the Ministry of Science and Technology released an updated version of the “China Export Catalog for Prohibited and Restricted Technologies” in late August. It was the first update of the list since 2008, and is thought by most analysts to be a political payback for Donald Trump’s technology bans against Huawei, Tiktok and other Chinese tech and Internet companies.

“These new restrictions reflect the fact that China holds some high technology patents that could disrupt the manufacturing industries of other economies,” Iris Pang, Chief Economist Greater China at ING Wholesale Banking in Hong Kong told the South China Morning Post. Among the technologies that will require official approval from local and central government agencies in China before export are some specific areas of 3D printing, as well as specific “construction equipment application technology”, such as digital control technology for loaders and excavators. Also, “basic, general tooling industry technologies”, such as technology to reduce vibration or noise, can now only be exported with approval. In addition to the manufacturing industry, technologies from the IT and computer industry are particularly affected. The tightening of Chinese regulations therefore also affects, among others, the company Bytedance, whose US subsidiary Trumps in the USA is to be sold to an American company on request.

Some manufacturers in China still hope that the daily export of products will not be significantly affected. They assume that the regulations will mainly be used for export control when selling companies, i.e. in the area of “intellectual property”. Other entrepreneurs, however, are already worried, including a manufacturer of interactive robots interviewed by the Chinese business magazine Caixin. The political assessment of this political ping-pong game at the expense of the industry also varies depending on the position of the observer. Some analysts think that the ban of Tiktok or Huawei in the USA is “long overdue” because China has banned companies like Google, Facebook or Whatsapp in China for years. Others argue that such export bans could easily get out of control and damage world trade as a whole. Beyond all political assessments, however, it is already clear that the business risk for the manufacturing industry in China has just increased significantly.

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