Exploiting the US-China Trade War

Monday, August 26th, 2019

The US-China trade confrontation has sharply escalated lately, while this past weekend’s G7 summit did nothing else than provide the opportunity for Trump to confess to “second thoughts” and for the other G7 leaders to tut-tut. But why should they even do that? If there is less US-China trade, shouldn’t there be more trade (i.e. sales) for other countries’ firms?

Well: yes and no. It’s complicated.

One the one hand there’s a recent piece from the main Dutch business newspaper, Het Financiële Dagblad (FD): Dutch firms profit from trade-war.” (Should be behind pay-wall, but when I tried it wasn’t; your mileage may vary.)

Yes, things are going swimmingly these days for Dutch firms in China, as the FD has discovered doing the rounds among the various commercial branches engaged there; there has even been a noticeable loosening-up of the usual bureaucracy. But note the top-performing sector: land- en tuinbouw (“agriculture and gardening”). There it’s likely there’s been a minimum in the way of winning over Chinese customers who were serviced by US companies before; it’s just a more-friendly Chinese attitude. As one expert remarks, “The Chinese would never say it out loud, but at this moment a lot of business [for Dutch firms] is proceeding faster and easier” due to the US-China tension.

A second sector that has benefited is that of suppliers to auto-makers; clearly there has been some snatching of contracts once held by American firms there. At the aggregate level, as shown by figures from the Dutch national statistical office, first-half 2019 has seen substantial growth in Netherlands exports to and imports from China.

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