As you know, China and the United States are waging a trade war. When one announces that it is tightening its sanctions, the other does the same, and so on… The aim is always to get a little deeper into each other’s pockets, and tensions between the two countries are not about to ease any time soon. This time, we learn that the Middle Kingdom is going to favour its local production in response to the Trump Tariffs, an increase in customs duties on Chinese imports!
China promotes and subsidises local production!
The Chinese government is currently seeking to reduce the influence and presence of American products, such as those made by AMD, NVIDIA and Intel, on its territory. To achieve this, it has decided to favour local production of components by undervaluing national production by 20% compared with competing foreign products. This is a considerable advantage when it comes to invitations to tender, for example.
Of course, there are a few criteria that must be met to take advantage of this, as the policy only applies to government purchases, not to the Chinese people in the broadest sense. For example, the products (according to Global Times) :
- Must be produced on Chinese soil, which implies the transformation of raw materials into components. This excludes labelling or packaging operations.
- Secondly, the production cost must reach a certain threshold, which will then be adjusted dynamically according to product category.
- Finally, taking into account the first two criteria, for certain specific products, the key components and processes will have to be produced in China.
These decisions are designed to encourage in-house production in China, thereby creating a competitive advantage. Of course, the ultimate aim is to encourage innovation by Chinese companies by making it easier for the government to buy them. Finally, we learn that this decision complies with international treaties such as the WTO.
