Japan Dec CPI -1.0% Y/Y; 9th Monthly Fall


(H1) Stabilises


(H1) New Multi-Month Lows


(H1) Recovering From the Lows


New Cycle Lows

By Iris Ouyang
     BEIJING (MNI) - Foreign businesses in China may incur substantial losses as
China prepares to take forceful measures responding to punitive trade tariffs
from the U.S., a Beijing-based European commerce representative told MNI on
     "If China has to deploy different tools and muscles it has, it will
certainly have a negative impact on the business environment" both in China and
globally, Mats Harborn, president of the European Union Chamber of Commerce in
China, said in an interview. 
     For start, China can apply pressure on or even punish U.S. companies in
China, such as by increasing regulatory, health and safety inspections, causing
custom holdups, or delaying the issuances of licenses, Harborn said. 
     China may also resort to devaluing its currency to save exports, said
Harborn, adding it would be a hard decision for the government to make. The yuan
is already weakening on the prospect that the deepening dispute may hurt its
exports and economy.
     All economies and companies may be vulnerable in a trade war as they are
tied up in a complex global supply chain, Harborn said. 
     "I don't think the U.S. should underestimate the muscles of China, this
also would be very dangerous," he said. 
     Harborn spoke in a week fraught with intense tit-for-tat measures by the
two largest economies. Stock markets around the world slumped with the Shanghai
Composite Index dropping below 3,000 for the first time since September 2016.
     Many European companies worry using tariffs as a trade tactic disrupts
global supply chain, Harborn said at a press conference to release the chamber's
Business Confidence Survey on doing business in China. These tariffs also
undermine European companies' business plans and cloud the outlook of the global
economy, he said.
     In some ways, the Donald Trump administration may be exerting pressure on
China hoping that would change its trade and business behaviors, rather than
really hoping to reduce the trade imbalance, Harborn said. 
     "The root of the cause of the problem lies in China," Harborn said. China
hasn't done enough to reform and open up for foreign companies to show that it's
serious about removing obstacles and ending unequal treatment for foreign
companies, he said. 
     China's opening measures in financial services are insufficient, and
broader problems with its business environment, such as regulatory barriers, are
still among major worries of European companies, Harborn said. 
     "We share the concerns with the U.S. government, even though we don't agree
with the methods," Harborn said. 
     The U.S. should seek multilateral means, such as the World Trade
Organization, to address its grievances rather than resorting to tariffs, he
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
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