How Will Firms Investing in China Manage the Impacts of The Trade War Between China and U. S
BY
STUDENT’S NAME : JINMAO HE
Students Name: JINMAO HE
Student number: 189101804
Course number: UBG 301
Supervisors Name: Zillur Rahman
Abstract
Economic rivalry between China and America has reached extremes with each country realizing new inventions and innovations in international market. This research investigates the pertinent information about the identification of the possible actions against the underlying trade wars between the Chinese government. This study also aims at unveiling the significant potential steps the firms investing in China could take to manage the impacts of the trades wars and explore how firms could work the effects of the trade wars and rise against the challenge they face due to the trade war. The introduction section of this paper describes the rationale of the research topic and the background information about trade wars between the US and China. The literature review examines the revised and published studies are examined to effectively identify the underlying challenges that befall the firm investors in China due to the trade wars between china and the united states. The chapter has also examined how trade wars have affected China’s business in particular and the underlying actions that the company is undertaking during the trade wars. Further, the research methodology section gives the methods of approach to data collections are elaborately explained. The area underlines the usage of secondary data and their group. Additionally, the procedures of data collection and the tools of collecting data are factored in. the research is quantitative, will use secondary sources to acquire data for the subject of the analysis. The finding section examines three research approaches including quantitative, qualitative and mixed methods. Finally, the conclusion section gathers the main ideas from the whole paper and provides six critical recommendations.
Acknowledgement
I am appreciative to Dr. Zillur Rahman, my supervisor, for helping me through this research. He helped me from subject selection to assignment completion in an exceedingly pleasant manner. This year, in preparation for Covid-19, the school implemented an online teaching style. Despite their hectic working hours, the tutor took the time to examine and make some critical comments. They are well-versed in their field, have a diligent academic approach, and a spirit of pursuit of excellence. Their leadership talents enabled the completion of this project on schedule. Indeed, I wish to express my thanks to every one of the department’s teachers. I gained professional knowledge and increased my talents this year because of their attentive, altruistic, and straightforward guidance, establishing the theoretical groundwork for writing my dissertation.
I am indebted to my parents for the chance and life they have bestowed upon me, as well as the care, direction, and support they have offered throughout my life.
Finally, I’d want to express my gratitude to all the professionals and academics who will assess this essay and provide me with comments on my learning.
Table of Contents
Abstract 2
Acknowledgement 3
1.0 INTRODUCTION 6
1.2 Background information 7
1.1 Summary of Remaining Chapters 11
1.2 Aims and Research Objectives 11
1.2.1 aim 11
1.2.2 Research Objectives 11
2.0 LITERATURE REVIEW 13
3.0 RESEARCH METHODOLOGY 19
3.0 The Rationale of the Research 19
3.1 Data Collection strategy 21
3.2 Sample strategy 21
3.3 Data Analysis 21
3.4 Ethical issues 22
3.5 Research Hypothesis 22
3.5.1 Null Hypothesis 22
3.6 Structure of the Dissertation 22
3.7 Source of Data 23
3.7.1 Secondary Data 23
3.7.2 Primary Data 23
4.0 FINDINGS AND DATA ANALYSIS 25
5.0 CONCLUSION AND RECOMMENDATION 33
5.1 Recommendation 34
6.0 References 37
1.0 INTRODUCTION
Political pressure and trade wars between countries have been known to course a decline in business profitability because they no longer benefit from free trade agreements. The trade war between economies has been persistent as countries impose unreasonable tariffs or rigid restrictions against imports from partner countries. The partner countries, in return, retaliates by imparting more tariffs and regulations against the counties. The tension is detrimental to the country’s economies and negatively impacts both their domestic market and international exports by raising the prices of consumer goods. The diplomatic relationship ends up being severed with few chances of salvaging it. The trade wars between U.S. and China have been known to adversely affect the firms investing in the engaged countries (Amiti et al.,2020). Besides the topic of trade wars being widely discussed across various platforms, little academic research has been done on how the firms in China could adjust to the impacts being caused by the trade war
As the tension between these two large economies escalates, the level of tariffs imposed on goods from China continues to change. According to Recent studies by trade statistics shoulder, the most affected by the tension are the U.S. consumers who have been forced to shoulder the effects of the heavy tariffs on products from China as the prices of these products has escalated. On the other hand, the Chinese have retaliated and are targeting to reduce exported services and merchandise prices by absorbing some tariffs. The tag of war between the economies is a loose situation that will destroy them as contenders and go a long way into offsetting the global market and hinder chances of future growth.
The trade wars between these two significant economies can only end if the two nations gradually resolve to unwind tariffs imposed on each other. The economies should establish a friendly environment where firms from different countries can thrive. A system that allows the economies to exchange their plans in advance before implementation should be established. This study aims to explore potential steps that can be used by firms investing in China to manage the trade wars. The study will involve analyzing how trade wars affect business and what business investors do to rising beyond the challenges they encounter; strategic steps will go a long way in putting a stop to the tension that has been built.
1.2 Background information
Since 1949, the relationship between China and the U. S has increasingly grown to one marked by intertwined economies, international rivalry and intensifying diplomacy. The U.S. is China’s largest export market showing the economic ties between the two countries (Chong and Li, 2019). The recent trade wars between the countries were led by U.S. President Trump and Xi Jinping, the president of China, was started in 2018. The economies had signed an agreement,’ the phase one trade deal’ In 2020, where china committed to buying US$200 billion of goods Within the coming two years.
However, President Trump launched a trade war between America and China in 2017, leading to the deterioration of the relationship between the two countries. He announced the tariffs on Chinese imports following the arranged theft of intellectual property and U.S. technology in China.
Besides the government-imposed restrictions on multinational Chinese business in the U.S. The U. S administration thought China took advantage of the free trade agreements and harmed their firms operating in China. They, therefore, believed that the tariffs were to fight economic aggressions. China retaliated by imposing tariffs on the U.S. products that were to be imported into the country (Liu and Woo., 2018). The imposition of tariffs led to the increased cost of imports in the two countries. The U. S believed that the high tariffs could course China to make a favorable business deal with them. However, the activities by the U. S led to concerns about the trade wars between the two global economies affecting investors (Liu and Woo., 2018). The long-term effects of the trade wars are estimated to be; that the two nations’ economies by allowing the investment between the two countries. However, the business must take actions that ensure they thrive in the short run to avoid possible closures.
In an attempt to make the U.S. ruse again and dominate the market, Trump plotted to directly violate international law, ignoring the economic interest of the other countries. The U.S. ignored the concept of free trade in an attempt to preserve its financial status quo. Technically speaking, the Us forms a great percentage consumer market of goods produced by China. According to recent events, the problem lies in the two leaders who tried to outdo each other to make their countries dominate the world market as the most significant producer of consumer goods and services. The strife between Xi and Trump went ahead to widen the ever-growing tension between the countries. The quest for power resulted in more tariffs being imposed on imports from China, with China retaliating and putting other restrictions on its exports.
Chinese tariffs on US soybeans have resulted in trade-distorting effects to benefit many exporting countries, notably Brazil, which suddenly became a major supplier of soybeans to China. But because the quantum and duration of the tariffs are unclear, Brazilian producers have been reluctant to make investment decisions that could be unprofitable if the tariffs are cancelled. In addition, Brazilian companies operating in sectors that use soybeans as input are bound to lose competitiveness due to rising prices due to Chinese demand for Brazilian soybeans.
The study also highlighted that while exports of some countries will increase, negative global impacts are likely to dominate. A general concern is that trade disputes will have an inevitable impact on the still-fragile global economy. Economic downturns are often accompanied by disturbances in commodity prices, financial markets and currencies, which will significantly affect developing countries. A significant concern is that trade tensions could escalate into currency wars, making it more challenging to repay dollar-denominated debt. Another concern is that more countries could join the fray, and protectionist policies could escalate globally. Since protectionist policies usually hurt vulnerable countries the most, a well-functioning multilateral trading system that can reduce protectionist impulses and maintain market access for developing countries is critical. Finally, in an interconnected global economy, *** for trade giants’ moves will likely have a domino effect beyond target countries and regions. Tariff increases penalize not only the assembler of the product but also the suppliers along the chain. For example, the high volumes of Chinese exports impacted by US tariffs are likely to hit East Asian value chains hardest, with UNCTAD estimating they could contract by about $160 billion.
The trade war caused economic pain on both sides and cut trade flows away from China and the United States. As described by Heather Long in the Washington Post, “US economic growth slowed, business investment froze, and companies didn’t hire as many people. Across the country, too many farmers went bankrupt, and The manufacturing and freight transport sectors have seen no reduction since the last recession. Trump’s actions are one of the biggest tax hikes in years.”
A September 2019 study by Moody’s Analytics found that the trade war had already cost the US economy nearly 300,000 jobs and an estimated 0.3% of real GDP. Other studies in the US GDP cost around 0.7%. A 2019 report by Bloomberg Economics estimated that the trade war would cost the US economy $316 billion by the end of 2020, while recent research by the Federal Reserve Bank of New York and Columbia University found that US companies should be less There was a loss of less than $ 1.7 trillion. The price of their shares is a result of US tariffs imposed on imports from China. Several studies have shown that the US Companies, mainly in the US, have paid for the tariffs, estimated to cost approximately $46 billion. The tariffs forced American companies to accept lower profit margins, cut wages and jobs for American workers, postpone potential wage increases or expansions, and raise prices for American consumers or companies. A spokesman for the American Farm Bureau said that “farmers have lost the vast majority of the $24 billion markets in China” due to the Chinese retaliation.
Meanwhile, the US goods trade deficit with China continued to widen, reaching a record $419.2 billion in 2018. By 2019, the trade deficit narrowed to $345 billion, roughly the same level as in 2016, mainly due to lower trade flows. It should be noted that, while the US along with China The deficit narrowed, his overall trade deficit did not. Trump’s unilateral tariffs on China diverted trade flows from China, resulting in widening US trade deficits with Europe, Mexico, Japan, South Korea and Taiwan.
China also felt economic pain due to the trade war, though not enough to meet the Trump administration’s core demands for major structural reform. Indeed, as the trade war dragged on, Beijing lowered its tariffs for its other trading partners as it allowed the US to reduce its dependence on markets. The final deal that the two sides announced on January 15, 2020, was very similar to what Beijing had put on the table from the outset – increased purchases of goods and better intellectual property protection, currency and Commitment on forced technology transfer. Missing from the deal was any movement to leverage their firms over foreign competitors on the use of subsidies, state-owned enterprises, and China’s industrial policy. Advances in market access outside the financial sector also proved overwhelming. These and other challenges were deferred to the second phase of talks, which Trump recently said was not considered.
Table 1: Research Structure
Chapters Chapter Description
One Introduction
Two Literature Review
Three Research Methodology
Four Findings and Data Analysis
Five Conclusion and Recommendations
1.1 Summary of Remaining Chapters
This section presents the summary of the remaining chapters of the study and the captured context in the respective chapters.
1.2 Aims and Research Objectives
1.2.1 aim
This study aims to provide readers with pertinent information about the identification of the possible actions against the underlying trade wars between the Chinese government. This study also aims at unveiling the significant potential steps the firms investing in China could take to manage the impacts of the trades wars and explore how firms could work the effects of the trade wars and rise against the challenge they face due to the trade war.
1.2.2 Research Objectives
To achieve the underlying aim of the research, the following objectives are formulated for successful research.
To develop a conceptual framework from the published literature and critically evaluate the developed conceptual framework.
To critically evaluate the challenges posed to investors in China by the constant trade wars between China and U. S.
To examine the potential steps investing firms could take to manage the impacts of the trade’s wars.
To explore how firms could work the effects of the trade wars and rise against the 1.2.3 challenges they experience.
2.0 LITERATURE REVIEW
In this section, necessary revised and published studies are examined to effectively identify the underlying challenges that befall the firm investors in China due to the trade wars between china and the united states (Brown, 2020). The chapter has also examined how trade wars have affected China’s business in particular and the underlying actions that the company is undertaking during the trade wars. Additionally, the chapter has examined the possible reviews on the suitable solutions that can be taken to limit the consequences of the trade wars on business in China (Xi & Lien, 2020). In this study, the goal is to provide readers with the necessary information to identify possible courses of action to remove the root of trade wars between the Chinese government. This research also aims to remember the potential actions that companies are investing in China to manage the effects of trade wars and explore how businesses can deal with the effects of trade wars and the rise of challenges faced as a result of a trade war.
A large number of the difficulties Chinese firms investing in the US face are longstanding. Firms looking to fare to the US face different headwinds, including divided and conflictingly executed neighborhood administrative necessities, favored treatment for nearby contenders, and the need to restrict items and administrations to meet Chinese customers’ assumptions and prerequisites among others (Burns, 2020).
Notwithstanding the huge advances that the Chinese government is taking to Smooth out administration with the US government, Chinese financial backers in the US keep on grumbling about the extended strategies they are exposed to, particularly in procuring grants and licenses for their films. It is also becoming more difficult to have your firm enrolled in the US for financial backers from china. Moreover, unfamiliar financial backers’ haves kept on revealing how endorsements have kept on being condition on the exotic undertaking’s understanding that permits economies to move innovation conduct research and development between them, satisfy performance requirements relating to exportation or the use of local content, or make valuable, deal-specific commercial concessions.
The Us government has blamed China for seeking mechanical arrangements that break market access for imported merchandise, unfamiliar makers, and unfamiliar administrations suppliers while offering generous government direction, assets, and administrative help to Chinese enterprises (Vlados, 2020). The main recipients of these strategies are state-claimed undertakings, just as other supported homegrown organizations. Commonplace and neighborhood governments can have a possession stake in privately owned businesses, boosting backing of these undertakings.
Licensed innovation (IP) encroachment is boundless in China. It is occupant upon U.S. firms to find ways to ensure and uphold their IP rights. Economic situations have likewise contributed to the continuing difficulties, with work costs riding among American firms turning into a top worries about the Chinese imports. Notwithstanding these longstanding difficulties, Chinese organizations keep on whining about administrative consistence chances, that incorporate lacking opportunity to follow new and extended guidelines (Itakura, 2020). The New pressures in the exchange war between the US and China have additionally continued to make it more hard for organizations to direct business, both because of the effect of duties applied by the two nations, yet in addition because of the aftereffects of financial issues turning out to be more interlaced with public safety challenges (Li & Farrell, 2020). In particular, U.S. organizations report Chinese clients addressing whether American firms can be depended after, hosing U.S. firms’ intensity opposite neighborhood and third market organizations.
The two economies have kept expanding respective rates against one another, and the effect of these activities will decrease the economies’ benefits. As per Past research, the U.S. organizations have coordinated practically all expenses related to the U.S. rate climb, which ought to likely be decreased, to anticipated business benefit. American organizations that fare to China have gotten less productive, either straightforwardly or through their auxiliaries, similar to Chinese levies, making them less aggressive (Bellora & Fontagné, 2020). The exchange war seems to have caused a stoppage in the Chinese economy. The U.S. organizations will probably be brought down, giving organizations that have caused interests in the Chinese market to have a lift.
The adverse consequence of the exchange war-influenced organizations, exchange with China, American worldwide organizations were most likely impacted by their branches. In common conversations to zero in just on U.S (Lu et al., 2020). fares to China and imports from China, there is a lot more noteworthy effect on American organizations and their auxiliaries in China. For instance, while in the U.S. in 2017. Products worth $ 130 billion were sent out to China, while deals to the US by worldwide organizations working in China added up to $ 376 billion around the same time. The enormous two-sided shortfall in 2017 was on the grounds that U.S. fares to China were just a quarter bigger than Chinese fares to the U.S., and all out deals (sends out in addition to global deals of U.S. firms in China, it was $505 billion, only 11 percent of the all-out income of Chinese organizations in the U.S. market ($570 billion) (World bank, 2020). Notwithstanding, 46% of the 3,000 US organizations in our example (with the greater part of the U.S. capitalization) were presented to China through auxiliaries’ import, fare, or deal. All things considered, the organization got 2.3 percent—deals from China.
Furthermore, the effect on American organizations straightforwardly presented to China, the middle class can affect American organizations that are not in exchange with China (Amiti et al., 2020). A portion of these organizations can exploit the exchange war and strains by promoting U.S. levies. We have that normal benefit of homegrown organizations that rival Chinese imports. Other channels influenced different organizations. For instance, expanded exchange strategy vulnerability and diminished interest from organizations reliant upon the Chinese market might affect the productivity of organizations that have not been in direct contact with China. Moreover, their American accomplices, by raising costs, or if they should be imported from China, increment the expenses for brands brought about by diminished import rivalry.
This decline in expected productivity for the organization will probably hurt financial backers because of lower anticipated profit. It will constrain organizations to take care of variation’s expenses and put resources into worldwide organizations and supply chains. We like the channel’s worth because the primary evaluation of the effect of the US-China exchange war and the organization’s normal return warning is utilized to survey the impact of the development of venture returns. Understanding the connection between an undertaking and productivity reports estimates anticipated income and decides if an organization is presented to China’s activities. Not surprisingly, we will utilize changes in stock costs as an intermediary for changes in anticipated profit. We need to ponder what ends uploading prices during the declaration of “average workers” dates, which we call the days when the expression “exchange war” detonated in Google look. We accept that these dangers might emerge because of the organization’s immediate exchanges with China or in a roundabout way through auxiliaries or supply chains.
The positive connection between market-to-book esteems, and speculation is grounded in this examination. The examination lines assessed impacts of the exchange battle on unusual re-visitations of firm-level market-to-book esteem, so it very well may be determined the total speculation impacts of the exchange war. In total, it tends to be tracked down that the U.S.- China exchange war brought down the market capitalization of U.S. recorded firms by $1.7 trillion and will bring down their venture development rate by 1.9 rate focuses before the finish of 2020.
By investigating the details of the late exchanges, the survey finds that consumers in the US are heavily burdened with US operations in China, as their related costs have been transferred to them and brought firms higher prices. However, an investigation similarly follows that Chinese firms have recently begun to save part of the cost of taxes by reducing the cost of exports—the results are complete as a global notice. Conundrum warfare is not limited to the underlying rivals. It also jeopardizes global economic power and future development.
Tests show that US taxes have caused a 25% unfortunate ride, costing the US $ 35 billion in Chinese currency in the US tax retailer market in the first half of 2019. 75% of their fare goes to the US, without major taxes. Hardware and telecommunications facilities have been hit hard, with a $ 15 billion decline in imports from China as China’s exchange prices have dropped by an average of 55%. As the investigation shows, the exchange of commodity prices in areas such as artifacts, furniture, and electrical appliances has further declined sharply.
However, the investigation does not analyze the effect of the recent post-exchange war. It warns that acceleration in the summer of 2019 may add to the current loss. Although it does not consider the impact of Chinese operations on US imports, tests show that the results below will be similar to the huge costs to Chinese consumers, the misfortune of American exports, and the benefits of foreign exchange. While China is losing, different economies are recovering. US taxes in China have caused various players to become very unstable in the US market and have resulted in the regulation of exchanges. Of the US market’s $ 35 billion Chinese disasters, approximately $ 21 billion (or 63%) has been redirected to various countries, while another $ 14 billion has been lost or seized by US manufacturers.
According to the investigation, the US tax on China brought Taiwan (China region). It earned $ 4.2 billion in additional money to the US for the greater part of 2019 by selling many office supplies and books. Mexico has increased its food exports to the eS by $ 3.5 billion, mainly in agridroopral food, transportation, and electrical hardware The European Association has received about $ 2.7 billion due to increased prices in the most efficient resource sectors. Vietnam’s food to the US has grown by $ 2.6 billion, driven by technology and communications technology. All other benefits often came from other countries in Southeast Asia. Commercial reorganization gains in Korea, Canada, and India were modest but at the same time significant, ranging from $ 0.9 billion to $ 1.5 billion.
In addition to the war on the exchange, China’s currency development has been lagging for a long time. It is difficult to pinpoint the exact amount of China’s current financial crisis due to the current exchange war or droop. However, taxes had undoubtedly added to the further development since the long-term start of 2018, when the financial crisis began, Chinese economists say. The Chinese government has several devices available to illuminate a certain part of the exchange wars – a government-focused, such as late cases on organizations and businesses to help reduce this scourge. Public officials have similarly made their money slip to ensure that Chinese products are less expensivObjectivese more attractive, to exchange with colleagues worldwide. Another instrument accessible to the focal government, specialists say, is kneading official information emerging from Beijing. The authority joblessness rate in China, for example, has floated somewhere in the range of 4.3% and 3.6% for almost 20 years. An absence of variance past a rating point for such a timeframe is profoundly uncommon.
3.0 RESEARCH METHODOLOGY
In this section, the methods of approach to data collections are elaborately explained. The area underlines the usage of secondary data and their group. Additionally, the procedures of data collection and the tools of collecting data are factored in. the research is quantitative, will use secondary sources to acquire data for the subject of the analysis. Most specifically, the data would be obtained from journals, magazines and previously done researches. This chapter presents the research methodology employed in this study. It also explains and justifies the methodology employed in this study. This chapter also explains how primary and secondary data are collected. In addition, it explains the procedure for analyzing the collected data. Further, it explains the overall search procedure of this study.
3.0 The Rationale of the Research
The US-China trade war saw an unprecedented episode of reciprocal tariff increases between the world’s two largest economies. The purpose of this study is to analyze the underlying issues that triggered the trade tension between the US and China, as have been witnessed over the past years. Political and trade wars have been expected between nations as nations strive to dominate the global market in production. When this strife is not checked, the economic tensions can result in negative consequences that will affect the individual economies and the global economies. The trade war between the US and China is the object of research in this study. The launching of the trade wars by president Donald Trump primarily aimed at pressuring Beijing to implement specific significant changes to aspects of its economic system that facilitated unfair Chinese trade practices, including forced technology transfer, limited market access, intellectual property theft, and even subsidies to state-owned enterprises. The US government argued that unilateral tariffs would shrink the US trade deficit with China and cause companies to bring manufacturing jobs back to the United States. The existence of this conflict has, however, imparted the business investors seeking to operate in China. The research, therefore, primarily aims to undercover the reasonable possible steps that firm investors could undertake to score much higher than the challenges that face them. The study would evaluate the challenges they face and demonstrate the conceptual framework to the existing literature seeking to scrutinize possible solutions to such challenges.
The trade war has had a profound effect on the economies of both nations. It has encouraged high labor costs, high consumer costs, and financial challenges for farmers in the US. In China, the exchange war added to the log jam with the rapid development of economic and mechanical yields, successfully reduced. The study aims to unveil the economic impacts the trade war has had on the two economies and other economies globally. Many American corporations have relocated reserve chains elsewhere in Asia, fearing that the exchange war will wipe out the US-China financial deficit. The exchange battle has also caused financial damage in various countries; however, some benefited from the increased integration as nature moved to them. The purpose of this research is to highlight the weakness of economic exchange systems. Governments throughout the planet have found ways to deal with part of the damage caused by this financial crisis. Therefore, this research will explore how the trade war has affected the exportation and importation of consumer goods between these two countries.
Trade wars between economies have been prevalent due to the financial struggle that comes with solid defense. The study purposes to highlight how trade restrictions are detrimental and the economic impact and political tensions that can be realized due to imposing unrealistic quotas and tariffs. Economies that propose or perform tasks or other restrictions on exchanges against each other by looking at barriers to exchange created by another party are responsible for triggering this tension. If taxes are a prohibitive function, such disputes are known as Customs wars, costly wars, or levy wars; as a setback, the last world can likewise create jobs. Extended assurance enables both countries’ yields to move forward in their respective areas. The study highlights how these tensions, if not checked, can result in a full-blown civil war, as evidenced by the trade war between the US and China
3.1 Data Collection strategy
The collection of data data was done from various forms of secondary sources which include journals, magazines, Internet materials, and many others. All these mentioned materials were necessary in finding the relevant information concerning the impacts of trade wars within China. Therefore, the collection of data and highly relied on the research conducted by previous scholars concerning the impact of trade war in China. This research study also made use of the primary data which is directly collected from the respondents. The primary data from the respondents was collected using Questionnaire. The Questionnaire technique in data collection was very critical since it provides platform for the researcher to ask relevant questions where the participants will provide their answers.
3.2 Sample strategy
A sample of 100 respondents was used to carry out data analysis concerning the impact of trade war in China. This sample of participants consisted individuals from different demographic factors. The sample of participants consists individuals from different age groups, gender, social class, education level and other related factors.
3.3 Data Analysis
This study involved both the quantitative and qualitative methods in data analysis. The qualitative approach of the data analysis involved the use of the of philosophies from the secondary materials where journos were mainly applied. The data analysis of this research study also made use of the Quantitative method which makes use of the numerical analysis of the collected data. Some of the Quantitative analysis techniques include the descriptive statistics, frequency tables, Pearson’s correlation, and many other. The data analysis of this project also made use of the data visualization which makes of the charts and graphs.
3.4 Ethical issues
There are several ethical issues which were encountered especially during the direct collection of data from the respondents. Therefore, as a researcher there is a number of ethical considerations which were put into place. One of the considerations of on the type of questions. Personal questions were avoided within the Questionnaire sheet to prevent the triggering of the participants’ personal lives. This research also reinforced on the factor to do with the confidentiality of the information collected. The consent of the information collected from the respondents was guaranteed during the research process.
3.5 Research Hypothesis
3.5.1 Null Hypothesis
The current trade wars between China and U.S. affects the workability of the business investors in China and pose the greatest challenge to the success of the working.
3.6 Structure of the Dissertation
This study will extensively discuss five chapters. These sections include an introduction, literature review, research methodology, findings and data analysis, and conclusion and recommendation. The sections will offer a well-examined plan of events that are closely associated with the current trade wars and the underlying challenges it poses to the business investors in China.
3.7 Source of Data
3.7.1 Secondary Data
Secondary data collection is a research strategy that uses existing quantitative or qualitative data to investigate new questions or verify previous studies. In other words, secondary data is pre-existing data that can investigate a new research issue or verify a previous study. It includes both quantitative and qualitative data. Therefore, this study uses secondary data to serve the purpose and research objectives. Berg (2006) and Heaton (2004) acknowledge that secondary data provide knowledge/information about the initial study so that the researcher can become familiar with the primary study.
Similarly, Chong and Li (2019) highlight that it is important to know the context of fieldwork exercises. For this study, the researcher used various published books and articles regarding economic trade wars. A critical review of these published books and articles was necessary to list the current factors that influence business start-up decisions of ethnic economies. For this purpose, the study uses Google Scholar and Professional Source Complete to collect articles on trade wars. The study used various reports published on the effects of trade wars between nations. The first research objective was achieved using secondary data, and an initial conceptual framework was also developed.
3.7.2 Primary Data
Primary data are previously unknown data and were directly obtained by the researcher for a particular research project. In other words, the primary data for a particular study was collected by the researcher to answer a particular research question. To do this, along with secondary data, this study conducts primary research to collect primary data. This study proceeds to examine the research philosophy, the primary data gathering approach.
4.0 FINDINGS AND DATA ANALYSIS
There are three research approaches including quantitative, qualitative and mixed methods. First, quantitative research findings are obtained by statistical methods or other processes of quantification. On the other hand, qualitative researchers in qualitative data collection are interested in understanding the meaning created by people how people make sense of their world and experiences. In other words, quantitative data involves collecting numerical data that can be analyzed using statistical or mathematical methods. In contrast, qualitative data includes people’s attitudes and beliefs and how they see the world. A qualitative research approach has been proposed for this research as qualitative research incorporates phenomenological philosophy and an inductive research approach.
Furthermore, qualitative data provides a deeper and richer representation of people’s attitudes, beliefs and experiences. Therefore, using qualitative data, this study examines the motives, drivers and attitudes of ethnic minority entrepreneurial business start-up decisions on George Street, Aberdeen. It also examines the challenges faced by ethnic entrepreneurs while starting a business. In conclusion, this study evaluates the impact of social capital and social networks on ethnic entrepreneurs using qualitative data. For this purpose, this study conducted 15 interviews of ethnic minority entrepreneurs on George Street to understand their experience of entrepreneurial activities. Some of the studies published in Chapter Two used qualitative research methodology to examine ethnic minority business start-up effects.
This section of the study presents the findings of qualitative data analysis. The results are concisely helpful in structuring the conceptual framework and drawing a conclusive recommendation and inferences seen from the data. This section discusses the challenges arising from trade wars and their resolution actions in detail. A trade war is a financial conflict that comes with strong defense. Countries offer or perform acts or other sanctions on exchanges against each other by observing barriers to exchange created by another party. If taxes are a prohibitive act, such disputes are known as customs wars, costly wars, or levy wars; As a shock, the past world can likewise create jobs. The extended assurance enables the yields of both countries to advance in their respective sectors. Trade wars can turn into a full-blown civil war, evidenced by the trade war between China and the United States.
The Sino-United States trade war is an ongoing economical dispute between China and the United States. In the US, President Donald Trump began imposing taxes and other trade barriers on China in January 2018, forcing it to reverse “unfair trade practices” and theft of intellectual property by the US. Earlier, Trump officials said these practices could contribute to the decline in US-China trade. The Chinese government will demand the transfer of American technology to China. The government has accused the Trump administration of defending nationalism and taking appropriate action in response to US trade measures. After that, the trade war in 2019 was extended to January 15, 2020, so that the two sides could reach an agreement in the first phase, but tensions remained (BBC News, 2019). By the end of Trump’s presidency, a major trade war was very successful. Since the mid-1980s, it has been fighting to end the US trade deficit and set prices to boost domestic production, saying the country was becoming its trading partner; The introduction of the bill made up a large part of his presidential campaign. Most economists agree that the lack of trade is a major problem for the US economy. Almost all economists who responded to a poll conducted by the Associated Press and Reuters also said Trump’s allegations would cause serious damage to the US economy. Some economists are looking for other ways to reduce China’s trade deficit.
The trade war had a profound effect on the economies of both countries. This has encouraged high labor costs, high consumer costs, and financial challenges for farmers in the US. In China, the exchange war and the rapid growth of economic and mechanical yields in log jams were successfully reduced. Many US corporations have moved reserve chains elsewhere in Asia, fearing an exchange war will wipe out US-China financial losses. Exchange fighting has also caused financial damage in various countries; However, some people benefited from the increased integration as nature moved to them. It has also exposed the weakness of economic exchanges. Governments across the planet have found ways to deal with part of the damage caused by this financial crisis. While China’s change of its exchange strategies has received widespread support for the fairness of the Trump administration, its use of taxation and the negative effects of exchange rates has been widely criticized. Among American businesses, American corporations and agribusinesses have acted in opposition to the end of the war. However, most farmers continue to support Trump, who offers them significant financial support.
The start of the exchange battle by President Donald Trump essentially points to Beijing, forcing it to execute obvious significant changes to parts of its economic structure that work without a line. Chinese exchanges are in the works, including restricted innovation moves, restricted market access, protected innovation theft, and even appropriations of state-claimed ventures. The US government argued that the unilateral levy would reduce US import/export imbalances with China and cause organizations to move productive businesses back to the US. Despite the presence of this controversy, financial business supporters trying to operate in China have been revered. Exploration, therefore, is primarily meant to covert sensible potential advances that firm financial backers can embrace to score much higher than the difficulties they face. The study assesses the challenges that face and demonstrates the theoretical method for current writing, examining possible answers to these challenges. The study researches the important causes of this dispute, authentic confirmation of the exchange battle between the US and China. It primarily attempts to resolve the impact of this dispute on the required large-scale factors using supporting time-series information on selected Asian economies, including India. The study used different relapse procedures to assess how free factors could explain progression in the dependent variable for both China and the US. Accurate results suggest that an increase in weighted levy rates will significantly reduce the GDP ratio for China and the US.
• The effects of the trade war can be traced back to 2018, when China forced the first of three retaliatory taxes on American goods. Before that time, automobile deals in the high-duty and low-tax sectors increased a little over 1% each year. After July 2018, the development of deals fell into two types of areas. However, they fell by 2.7% in high-levy districts and 0.5% in low-levy districts. A formal, measurable examination confirms these findings and recommends that a one-point direct expansion in the openness of the Chinese retaliatory levy leads to a one-point decline in the growth of new automobile deals. Issues with China can also be resolved through a two-way economic agreement. Certainly, their overall mistrust of exchange progress may hinder their efforts to take on China, which may be better off with others in an organized manner.
President Trump has imposed some harsh strategies against China, even if they do not succeed. Trump once declared that he was most adept at countering China and declared that previous US organizations have been weak in this way. As seen above, it is not entirely clear, and we may not discover what works as progress in China until future organization. Trump’s strategies may be extreme, yet there is no proof that they will work.
Related exchange talks had begun before President Trump took office. The preliminary result was a 100-day activity plan, the result of which was announced in May 2017. The arrangement covered issues, for example, the acquisition of American rural goods by China and the introduction of China’s economic governance market. Nevertheless, the arrangement’s restrictive consequences and economic effects were long before the rapid acceleration of the exchange war overwhelmed them. The Trump Organization sent a Part 301 exam in 2017 in connection with some Chinese exchange rehearsals. After an eight-month search, the USTR found that China’s laws and strategies harmed US economic interests:
• China uses joint effort requirements, unfamiliar enterprise boundaries, and regulatory surveys, and the US.
• China denies permission to US organizations and the ability to set market-based terms in other technology-related arrangements;
• China coordinates and acts inappropriately with a systematic interest in US organizations and resources to create large-scale innovation steps;
• China to receive Denied Access to Commercially Valuable Business Data Leads and supports digital disruptions in business PC organizations.
As a response to these practices, President Trump announced the inconvenience of tariffs on Chinese imports. In response, China struggled with its duties. From that point on, various parties have continued to increase rates and items included. This composing US item shipped to China currently attracts a general duty of 21.1 percent (as opposed to the usual 6.7 percent applicable to items from various countries). Similarly, Chinese goods are subject to a 21 percent duty on the normal in the US market.
US inflation
Import prices are sales tax, and consumers add to the cost. The question is, how much? The simplest assumption is that consumers will bear 100% of the cost of the increased prices. For example, if the US has a GDP of $20 trillion and imposes a 10% tax on $200 billion of imported goods, US consumers would see a 0.1% increase in average prices. The good news for consumers is to ignore the assumption that some of the impacts on consumer prices will be offset by lower-income companies’ profits in the United States and China. In addition, the trade war severely affects China’s renminbi and use of large emerging market currencies. Emerging market currencies translate into lower import costs for US consumers, minus part of the tax impact. Therefore, we estimate that about half of the consumer impact from higher prices will be imported elsewhere.
corporate profits
If 100% of the impact of a trade dispute comes from business profits, 10% of assets worth $200 billion could reduce the profitability of American companies by as much as 0.05% of GDP. Since the company’s profit after tax is about 9% of GDP, this would mean that business profit would decrease by about 0.5% or 0.6%. If the tax rate fell to 25%, US corporate profits could drop by 1.25-1.5% if lower profit margins completely outweighed the effects of trade disputes. However, some costs may be passed on to consumers.
In addition, another negative impact of the trade war would be on Chinese businesses, which could mitigate some of the impacts by reducing their profit margins. Finally, if the value of China’s currency falls (and it already has) and some of its currency depreciates, it could hurt the profitability of US companies. Thus, we estimate that US companies will somehow bear about half the cost of taxes. With a low-profit margin.
Compared to corporate profits, the effect of inflation is slim, which explains why American funds are. Many large US companies that control the NASDAQ 100 have limited access to Chinese markets and are not affected by China’s retaliatory moves. Similarly, many smaller US caps focus on the domestic market, and their supply lines are not affected as badly as the larger firms that control the Dow and S&P.
federal revenue
After-tax cuts and spending cuts, the federal deficit was more than 4% this year from 2.2% of GDP in 2016 and could reach 5.0-6.0% in 2019. However, some revenue generated directly from inflation can be deducted. Taxes from corporate taxes unless a trade dispute reduces corporate profits. In addition, if the trade war reduces job creation or wage growth, it could reduce personal tax collection and income. By our estimates, imposing a 10% tax on $200 billion worth of Chinese goods would yield tax revenues of about 0.1% of GDP. A 25% tax would bring about 0.2%. This revenue would slightly reduce the federal budget deficit but would not be enough to stop the rapid growth of the federal deficit.
Duties have essentially been reduced to a two-way exchange. However, the reduction in trade with China does not mean that the situation is returning to the US. All things being equal, imports from China have been replaced with imports from different countries. China has fallen from the US’s largest exchange partner to third place, outperforming Mexico and Canada. In mid-2019, there was some hope that an arrangement could be made on specific issues. Nonetheless, discussions broke out at the May 2019 rendezvous, with the Trump Organization blaming China for the retreat. From that point forward, negotiations have centered around a small subset of issues, as it became difficult to determine all the problems without a moment’s delay. On October 11, 2019, the USTR announced an arrangement at a fundamental level on “Stage One” bargaining, and the final deal was reported in December, with a reality sheet giving general details. The agreement was to be endorsed in January, with content valid for some time since then. The phase one deal includes China’s obligation to buy US labor and products, licensed innovation insurance and innovation moves, agricultural non-tariff barriers, cash issues, China’s economic governance market, and a question negotiation.
On the off chance that their tremendous exchange activities have just designated China, they would have done a better job, and matters of Chinese exchange practices could be looked at seriously. However, Trump has forced and compromised many countries, including close allies. Broadly speaking, the Trump Organization has sent five examinations identified by the impact of imports on the public safety of steel and aluminum, which has forced levies on a wide range of nations, including China. The study recommends that perhaps its concern about China is not as urgent as it sometimes seems and that issues with China can be resolved through mutual economic agreement. His overall vigilance about exchange progress may affect his efforts to take on China, which may be better done in a planned method with others.
China’s industrial policy, subsidies, and data regulations are some of the issues under severe criticism in the United States. It is not clear whether all of them will be picked up or agreed upon. Both sides stay away on most of them, and any stalemate in negotiations could result in higher fees and other punitive actions by both sides.
5.0 CONCLUSION AND RECOMMENDATION
This section will elaborate, form a comprehensive account of the findings discussed and the data analysis, and make appropriate recommendations based on the analysis. It seeks to address potential challenges arising from trade wars between China and the United Nations. In addition, this chapter also includes implications for the difficulties faced by strong investors as a result of the trade wars between the Chinese and the United States government.
Although there are solid arguments for free international trade and the possibility of a trade war that could be particularly problematic, many participants seem unhappy. Research says part of the explanation can be found in the temporal distribution of protections. The study addresses the reasonable level of import prices. The two most important issues in favor of international free trade are that they provide great diversity to consumers, and secondly, they do so at a low cost. Different countries produce different types of the same commodity. International trade enables consumers to enjoy a wide range of products without having to produce them at home. In addition to greater diversity, international trade allows countries to concentrate and concentrate their production in certain areas. This performance makes sense if other countries are better at producing certain products or the many resources needed to produce them. In this case, the technology increases productivity globally and thus reduces operating costs in all countries. However, it is not fundamental to ensure that free trade will prevail as each country has an incentive to increase imports. The reason is that there are two opposing effects of import tax. On the other hand, imports are more expensive, which is harmful to consumers.
On the other hand, the exchange rate is adjusted on the imported price as per the reduced export price. Commercial economists say the result is trade. However, this indicator is only applicable if the country can increase its import prices in addition to its trading partners. If its trading partners also increase their import prices, the commercial trade effect is reduced, leading only to higher import prices. In this climate of the trade war, all the countries involved are losing out on greater productivity and higher consumer prices. It is often argued that commercial warfare, the threat of retaliation, maybe defensive. Even if the president wants to protect his country from competition from China by raising import tariffs, he cannot do so because China will retaliate, and the two countries will lose a trade war. This article says that although this is a combination, it may not be true of the major workers found in the trade war. As a result, we are committed to supporting security – although there is retaliation.
5.1 Recommendation
1. The first 1st treaty of Jan. 15, 2020, commits China to purchase U.S. agricultural, industrial and energy products worth $ 200 billion and frees market access to U.S. financial services providers. Due to the economic downturn caused by COVID-19, China will not meet the targets set by the end of 2021. However, as its economy recovers, it needs U.S. goods and services. Similarly, the United States needs foreign encouragement to develop its economy. The extension of the first phase agreement for at least one year benefits both countries. After that, by the end of 2021, data on the size and tracking of trade inequality between the two countries could determine whether the Agreement required further extension or extension or whether it had served its purpose.
2. Conflict over-investment in the outgoing and exit portfolio has become commonplace in the U.S.-China Trade War. China bans U.S. regulators from inspecting auditing firms in China and forbidding those firms from disclosing internal audit documents. In August 2020, the Trump Treasury demanded that the U.S. The Public Accounting Oversight Board has reached a review of Chinese companies – otherwise, those companies would have been excluded from the American security exchange. However, some of them are partially owned by state-owned enterprises, and the CCP is wary of disclosing everything to everyone. In May, the Senate passed the Holding Foreign Companies Accountable Act (section 945), and the House is ready to do so: the security of any company that fails to show no ownership or control of the foreign government, or PCAOB has not been able to audit for three straight years, will be banned from U.S. exchanges . It is in the interest of both countries that the U.S. The Securities and Exchange Commission and the China Securities Regulatory Commission co-operate with the audit procedures and standards. China cannot grow into a pillar in a polar bear country if its companies are excluded from the world’s largest, most liquid financial market. American investors will pour money into overseas markets if they smell the growing growth in Chinese stocks that they can afford in the United States. The SEC and CSRC must agree to treat Chinese non-SOEs the same as any other foreign supplier and place warning labels on SOE securities issued to a portion representing their unqualified financial statements.
3. The First Phase Agreement covers the intellectual property issues of the twentieth century U.S. Complaining about them, such as tightening measures to strengthen patents, trademarks, copyrights and trade secrets made by China. It also forces China to abandon de jure or facto operations so that foreign investors can transfer technology to local J.V. partners. However, this Agreement fails to cover current topics not covered by the WTO Convention on Trade-Related Rights and Intellectual Property Rights.
4. Made in China is also important in the trade war and has been China’s stock policy, which supports state-owned enterprises to implement those policies. The CCP formulates industrial policy with operational approval from the State Council and the National People’s Congress. That modality does not deserve great power. The American pattern is similarly attractive. The US implements trade policies through small advance consultations or information shared with other countries. There is a need for slight unilateralism on both sides. Basic counselling should be the accommodation. Only the United States or China can control or control the world trading system. However, they can reform trade rules to benefit both through a ‘Bilateral Preliminary Consultative Group’. Members of the BEC Group should be senior branch executives and decision-makers responsible for promoting and enforcing business rules and policies.
5. The trade war does not end until the tariffs are paid. That means Waves One should be abolished. So, again, there should be a Thai retaliation fee and a non-tax barrier.
6. Since the US Went with China, each would worry that the other would deliberately not take all five steps. Therefore, they would need to overcome passivity through phase six simultaneously but independently. America’s great American involvement in the Asia-Pacific region means China has a strong position to explore. In China, Phase Six should continue expanding and deepening its integration in the same region through the Regional Comprehensive Economic Partnership signed with the Belt and Road Initiative on November 15, 2020. China’s greater involvement in the Western world means less dependence on US markets. The US tax rate and coverage price on Chinese products constantly change as trade disputes between the world’s two major economies escalate. To help investors assess the macroeconomic impact of the trade war, we’re putting together a back-end economic analysis. As with any similar approach, it has far more simplistic assumptions and will not fully capture the complex reality of the economic impact of the conflict but will be used to assess the impact on inflation, corporate profits, federal funds, and China’s GDP will be useful for it will provide a framework for monetary and financial policies and cash flows, as the case may be. There are many opportunities to consider second and third orders.
6.0 References
Amiti, M., Kong, S, H., & Weinstein. (2020). The effect of the US-China trade war on our investment (no. w27114) National Bureau of Economic Research
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Amiti, M., Kong, S. H., & Weinstein, D. (2020). The effect of the us-china trade war on us investment (No. w27114). National Bureau of Economic Research.
