China Opens Car Market after Trump’s action

So Donald Trumps’ rhetoric’s are working at least for China. After US and China traded sanctions against each other, China has finally offered an olive branch by proposing to open its automobile market to the board by 2022.  Chinese President Xi Jinping has finally pledged to open the Chinese car industry to for manufacturers offering full access to the largest auto market in the world. This comes after a series of sanctions imposed by the US government on China over its protectionist policies. Donald Trump has been after China progressively on various trade issues and had recently imposed billions of dollars of sanctions over Chinese goods and technology including steel and most recently banned the Chinese mobile maker ZTE over its move to supply formal equipment to North Korea and Iran. ZTE admitted last year to violating sanctions by selling equipment to the repressive regimes, and it was fined $1.2 billion as well as being forced to fire four senior employees. This led to US and the UK government banning ZTE from supplying phone parts and devices in their respective countries.

As we all know China is the biggest car market in the world surpassing US and all major auto manufacturers are eyeing this market to make money. However the Chinese government had laid major restrictions on foreign automobile players. As per the conditions, all foreign car companies had to partner with the local Chinese company under a 50-50 joint partnership. While some companies were okay with this collaboration, many automakers were reluctant as they were worried to share the technology due to poor intellectual property laws in China. Now the foreign auto companies would be able to invest in China with 100% stake and do not require a partner locally. This will ensure that they do not have to share the technology with local Chinese partners.

After the US banned the Chinese phone maker ZTE from supplying phone components and selling their devices in the US, Beijing has counterattacked by imposing a huge 179% tax on US import of Sorghum. The Chinese are trying to target the agricultural produce as they know they are hitting the farmers in the state from where the president Donald Trump enjoyed the majority of support.

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