[I-bank focus]China seen to reciprocate US trade actions

    The US Trade Representative (USTR) announced it will confront China's discriminatory technology licensing practices through the World Trade Organization. ANZ Research said the direct damage to the Chinese economy will be small.
  In 2017, the US imports from China totalled US$506bn. According to the announcement, the value to be covered by the tariff list will be US$60bn. However, the parts supplied by China is small, because the rest are made up of parts and components (eg semi-conductors) imported from the rest of Asia, notably Taiwan and Korea.
  The research house believes the value-add contribution by China to be just 20-30% or US$15bn, equivalent to around 0.1% of China's GDP last year. In addition, the imposition of tariff will not reduce the demand for these products entirely.
  However, ANZ thinks China will react to the US bilaterally through reciprocal responses.
  ANZ believes that Chinese authorities will stand firm as an advocate for globalisation but will respond to the US's announcement on a bilateral basis. But it will not devalue its currency.
  The research house said the pressure from the US will push China to upgrade its economy, and the ideal point of focus is to shift its employment structure from manufacturing to domestic services.
  Although the face value of the US tariff will be small, President Trump may push other countries to take sides, resulting in a divided world. The scale of the trade war would be broadened. This is the biggest risk lying ahead.