Market trends
US-China trade war: 5 suggestions from the Chinese plastics processing industry
작성자 : Aeyoung Park
2018-08-20 |
조회 : 945
The escalating US-China trade war is hitting the plastics industry of both countries. From the reliable sources of CPRJ, we've learned that some leading manufacturers and OEMs in China have already been suffering from the economic turmoil.
“Our customers from the US have stopped ordering from us,” the director of a leading Chinese manufacturer of plastic films and garbage bags told CPRJ.
“Our collaboration project with the US has been halted. As soon as the US waged a trade war against China, we suspended the project, as we don't know who will pay the extra 25% tariff,” said a Chinese auxiliary equipment supplier.
In order to manage the crisis and minimize the damage of the US-China trade war, the Chinese plastics processing industry has suggested five measures.
1. Tax exemption
“The number of plastics processing machines exported to the US from China has increased by 84% in 2017 when compared with the previous year, and the value has increased by 47%. With the extra tariffs, Chinese machines would lose its advantage in price,” commented Su Dongping, Secretary-General of China Plastics Machinery Industry Association.
However, the impact on Chinese machine builders is still manageable, she said. “For example, the US market accounts for only 4 - 10% of the total turnover of some leading Chinese manufacturers like Haitian (海天), Yizumi (伊之密) and Borche (博创).”
She suggested the Chinese enterprises should request for exclusion via the Product Exclusion Process for Chinese Products Subject to Section 301 Tariffs released by the Office of the U.S. Trade Representative (USTR).
2. Call for subsidies
Wang Wenguang, Secretary General of Shenzhen Polymer Industry Association, told CPRJ that some member enterprises are expecting subsidies from the Chinese government to alleviate their plight.
3. Tax cut to increase domestic demand in China
“If the Chinese government is able to cut corporate value-added tax and personal income tax, enterprises will have more resources for research and development, and people will have more consumption power,” a plastics industry player commented. “In that case, we will have a stronger driving force for innovation and domestic demand.”
4. Increase overseas investment
Investing in new production facilities overseas is another solution. CPRJ has learned that a big Chinese plastic tableware manufacturer is planning to expand its production capacity in the US. Another plastics processing enterprise also said that it will consider producing in other countries in Southeast Asia.
5. Boost innovation
The US is levying the extra tariffs against Chinese products that are relatively easy to find substitutes in the market. As long as Chinese products are of higher innovation, technology and quality, they will not be so easily replaced or subject to tariff threats.
In 2017, China exported US$15 billion worth of plastic products to the US, representing 23.97% of the total export of plastic products. The US is the biggest export market for Chinese plastics processing machinery in the same year, accounting for 10.89% of the total, with a value of US$244 million.
Source: CPRJ International
