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Market news

12 July 2019

Tech war could have a long-term impact on China's exports - ING

Iris Pang, the economist for Greater China at ING, notes that between January to June 2019, mechanical and electronic products made up around 55% to 60% of China’s exports, which means the tech war will hurt China’s export significantly.

  • "Post the G20 meeting, Huawei’s CEO said, “very little has materially changed as Chinese tech firms still face quite a few problems in doing business with the US even with the changed US policies” and we tend to agree. But nowadays technology usually has dual-use, which means it can be used both by the military and ordinary people. So, in our view, this apparent relaxation is nothing more than a political gambit.
  • This may also explain why China hasn’t yet increased US agricultural produce imports. This month alone, soybean imports fell by 15%MoM, which implies that China is still yet to import more agricultural products from the US. Moreover, there are other countries blocking Chinese companies from engaging in the 5G infrastructure set up, so we expect this tech war to continue for a while.
  • But all of this means that technology products and parts export from China will diminish after this wave of front running (tariff avoiding) activities."

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