CX Weekly Briefing: Chinese Exporters to Do Less Business With U.S.

Summary:

1. Chinese Exporters Adjust to U.S. Trade Tensions: Nearly half of Chinese exporters intend to decrease their business with the United States due to intensifying trade disputes, as revealed by a recent China Council for the Promotion of International Trade (CCPIT) survey of over 1,100 foreign trade firms. In response, more than 75% of these firms plan to shift focus to emerging markets to compensate for potential losses. The CCPIT's Global Economic and Trade Friction Index, which measures the level of global trade disputes, stood at 106 in February, surpassing the baseline of 100 and indicating heightened trade friction. Specifically, the China-U.S. trade conflict index surged to 152, up by 17 points from January, with U.S. measures being the primary contributor to the increase. [para. 2]

2. China Calls for Fair Trade in Automotive Sector: China’s Minister of Commerce, Wang Wentao, recently encouraged the German Association of the Automotive Industry to urge authorities in both Brussels and Berlin to defend the multilateral trading system and support fair international trade practices. He highlighted that the automotive industry, particularly in the electric vehicle sector, is experiencing the negative impacts of protectionist measures. Wang further called on the EU to work cooperatively with China to resolve its ongoing anti-subsidy investigation into Chinese electric vehicles. These diplomatic efforts come as China seeks to reinforce trade relations with partners other than the U.S. in the wake of American tariff increases. [para. 3]

3. Nuclear Power Expansion: China approved the construction of 10 new nuclear reactors using domestic technologies, sustaining its position as the world’s largest builder of nuclear power plants. These five projects, mainly expansions at existing facilities, are concentrated in high-demand coastal provinces such as Zhejiang, Fujian, and Guangdong. In 2024, China’s investment in nuclear plant construction hit a record 146.9 billion yuan ($20.1 billion), which is nearly a 55% increase compared to the previous year. [para. 4]

4. North Korea Sends Troops to Russia: North Korea officially confirmed for the first time that it has deployed troops to assist Russia in its war against Ukraine. This move is in line with a bilateral mutual defense treaty signed with Russia in the previous year, which obligates both nations to offer military aid to each other during conflicts. [para. 5]

5. Hong Kong Attracts Disillusioned U.S. Researchers: Amidst funding challenges at American research institutions, Hong Kong universities see an opportunity to recruit global talent. The Chinese University of Hong Kong, for example, has hired 150 international scholars since 2023, attracted by low taxes, competitive pay, and government support for Hong Kong’s status as an education hub. According to a Nature journal survey, about 75% of 1,650 scientists surveyed are considering leaving the U.S., driven by federal budget cuts and research layoffs. [para. 6]

6. Promotion of China’s Private Sector: On Wednesday, China’s legislature approved the Private Economy Promotion Law, which will take effect on May 20, aiming to boost business confidence and revitalize the private sector. The law addresses issues such as unequal access to resources, arbitrary penalties, and inconsistent policy enforcement. The private sector currently contributes over 60% of China’s GDP and 80% of urban jobs. [para. 7]

7. Industrial Profit Recovery: In the first quarter, China’s major industrial firms experienced a 0.8% year-on-year increase in profits following a 0.3% decline in the year’s first two months. This improvement is attributed to governmental measures encouraging equipment upgrades, with notable profit growth among manufacturers of special and general-purpose equipment. [para. 8]

8. Ant Group Acquisition Boosts Bright Smart Shares: The Hong Kong-listed Bright Smart Securities saw its share price nearly double after announcing that a subsidiary of Ant Group would acquire a majority stake. The agreement involves the sale of a 50.55% stake by Bright Smart’s chairman to an Ant-controlled company, granting Ant Group access to valuable financial licenses. The news also driven up stocks of other Alibaba-affiliated companies. [para. 9]