Internal Challenges to Hamper China’s Trade Deal with US
Business, Markets

Internal Challenges to Hamper China’s Trade Deal with US 

As China and US are working closely to make the new trade deal a reality, there is a strong internal resistance building up in China against the deal. Experts predict that the nature of the deal is such that it is bound to create issues of political and economic consensus within the country.

The challenge that lies ahead of Xi Jinping’s government is to convince delegates at the annual political congress, including delegates from major Chinese corporations both private and state-owned, which may turn out to be a difficult task.

The trade deal components have a high possibility of affecting State Owned Enterprises that are the base of the Communist Party base. As these corporations believe in subsidies and monopoly status, there is a strong resistance that has been building up against the trade deal.

State Owned Enterprises constitute an important segment of the political arena in China as they are involved in key sectors like energy, mining, banking and manufacturing. Hence, dissent or resistance from these enterprises can have a major impact on the execution of the trade deal.

With China going through the timely churning in the face of the trade deal, the Huawei controversy and a gradually declining economy, President Xi will be under political radar during the two-week sessions that is to be attended by around 5,000 delegates.

As per Zhiqun Zhu, chair of the department of international relations at Bucknell University, “The Chinese government will face resistance from SOEs and coastal provinces with dynamic trade with the US and other countries.”

The components of the US trade deal include not just provisions to buy more US products but also to move ahead towards bringing structural changes which is to demolish the preferential treatment given to the internal enterprises against foreign investors.

Since the components of the trade deal are to have far reaching implications on the State Owned Enterprises, oppositions are natural to rise.

Provincial leaders from more developed provinces and cities like Shanghai, Guangzhou have already started expressing concerns over negativity that will follow among internal enterprises post the trade deal.

The final decision is to be taken by the Chinese President that is to determine the whole sole execution of the trade deal despite the internal resistance but the internal challenges can have political implications for the government for sure.

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