ILMA Compoundings – September 2019 - 18

INDUSTRY RUNDOWN

International Insight
China: The Trade War and New Strategies
By James Eggenschwiler
It began as a relatively simple attempt by the U.S. to
prod Beijing into ending its practices requiring disclosure of proprietary technology information by, and
other unfair trade practices against, non-Chinese
(typically U.S.-owned) businesses. Since the time of the
most recent G20 Summit, China's tactics have changed,
and the trade war seems redefined. The practice of
reciprocally escalating tariffs, while not abandoned, has
been supplemented by several additional actions and
economic threats by the engaged economies.
CURRENCY DEVALUATION
The first new element to surface is the announced willingness
by China to allow its currency to devalue. Rather than reciprocate with higher tariffs outright, China accomplishes higher
import costs and addresses additional domestic and international issues by reducing purchasing power for importers.
At the same time, the approach enhances the appeal of less
expensive Chinese products on the global market.
Perhaps more importantly, the broad impact of currency
devaluation helps mitigate against the increasing availability
of "shadow-banking" opportunities that are the lifeblood
of Chinese businesses seeking to avoid state ownership.
This part of the Chinese market has always been present to
a lesser degree but grew dramatically during the previous
Chinese "privatization" allowance. The current Chinese
administration has desired to reverse privatization that
occurred during those years but has encountered difficulty
in that effort due to the rapid growth in availability of
private money sources.
The national government has preferred not to directly
force state ownership, due to the international repercussions
it could spawn. More importantly, the majority of private
funding tends to flow from ethnic Chinese living outside
the country. A crackdown on the private funding itself is
very difficult to enforce and maintain, and the steady supply
that this funding source offers facilitates the creation of new
enterprises to replace those that were closed.

18

SEPTEMBER 2019

| COMPOUNDINGS | ILMA.ORG

By allowing the currency to become devalued, the
so-called shadow bankers find their investments less
profitable in the face of higher costs. The devaluation can
precipitate increased cost of living for workers, as well as
higher prices for raw materials - especially imports. The
lower profitability that could result from this action would
likely cause difficulty for private businesses to survive and
could also serve as a strong disincentive to the parties
providing the funding.


http://www.ILMA.ORG

ILMA Compoundings – September 2019

Table of Contents for the Digital Edition of ILMA Compoundings – September 2019

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
NEW MEMBERS
INDUSTRY RUNDOWN
IN THE KNOW
INTERNATIONAL INSIGHT
MARKET REPORT
ON WITH THE WIND
IN SUPPORT OF SATISFACTION
SUSTAINABILITY HAS ARRIVED
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK
MEMBER CONNECTIONS
PORTRAIT
ILMA Compoundings – September 2019 - Cover1
ILMA Compoundings – September 2019 - Cover2
ILMA Compoundings – September 2019 - 1
ILMA Compoundings – September 2019 - 2
ILMA Compoundings – September 2019 - LETTER FROM THE CEO
ILMA Compoundings – September 2019 - INSIDE ILMA
ILMA Compoundings – September 2019 - 5
ILMA Compoundings – September 2019 - 6
ILMA Compoundings – September 2019 - 7
ILMA Compoundings – September 2019 - 8
ILMA Compoundings – September 2019 - 9
ILMA Compoundings – September 2019 - WHAT’S COMING UP
ILMA Compoundings – September 2019 - 11
ILMA Compoundings – September 2019 - 12
ILMA Compoundings – September 2019 - NEW MEMBERS
ILMA Compoundings – September 2019 - INDUSTRY RUNDOWN
ILMA Compoundings – September 2019 - 15
ILMA Compoundings – September 2019 - 16
ILMA Compoundings – September 2019 - IN THE KNOW
ILMA Compoundings – September 2019 - INTERNATIONAL INSIGHT
ILMA Compoundings – September 2019 - 19
ILMA Compoundings – September 2019 - MARKET REPORT
ILMA Compoundings – September 2019 - 21
ILMA Compoundings – September 2019 - ON WITH THE WIND
ILMA Compoundings – September 2019 - 23
ILMA Compoundings – September 2019 - 24
ILMA Compoundings – September 2019 - 25
ILMA Compoundings – September 2019 - 26
ILMA Compoundings – September 2019 - 27
ILMA Compoundings – September 2019 - IN SUPPORT OF SATISFACTION
ILMA Compoundings – September 2019 - 29
ILMA Compoundings – September 2019 - 30
ILMA Compoundings – September 2019 - 31
ILMA Compoundings – September 2019 - SUSTAINABILITY HAS ARRIVED
ILMA Compoundings – September 2019 - 33
ILMA Compoundings – September 2019 - 34
ILMA Compoundings – September 2019 - 35
ILMA Compoundings – September 2019 - 36
ILMA Compoundings – September 2019 - 37
ILMA Compoundings – September 2019 - BUSINESS HUB
ILMA Compoundings – September 2019 - 39
ILMA Compoundings – September 2019 - COUNSEL COMPOUND
ILMA Compoundings – September 2019 - 41
ILMA Compoundings – September 2019 - 42
ILMA Compoundings – September 2019 - WASHINGTON LANDSCAPE
ILMA Compoundings – September 2019 - MEMBER CONNECTIONS
ILMA Compoundings – September 2019 - 45
ILMA Compoundings – September 2019 - 46
ILMA Compoundings – September 2019 - 47
ILMA Compoundings – September 2019 - PORTRAIT
ILMA Compoundings – September 2019 - Cover3
ILMA Compoundings – September 2019 - Cover4
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