‘New Trump tariffs will see China’s courts trying many bankruptcy cases’

July 28, 2018 4:30 am0 commentsViews: 75
(Photo courtesy: Finance Brokerage)

(Photo courtesy: Finance Brokerage)

(TibetanReview.net, Jul27, 2018) – Many Chinese companies will go bankrupt if US President Donald Trump goes ahead with his latest plans to impose tariffs on much more imports from China, reported scmp.com Jul 25, citing a Chinese government source. China has made it clear that it will not bow to the US threat, with a spokesman for the Chinese foreign ministry saying Jul 23 that threats and intimidation would never work.

The report said that in an opinion piece published Jul 25 by the official People’s Court Daily, Du Wanhua, deputy director of an advisory committee to the Supreme People’s Court, had said that courts needed to be aware of the potential harm the tariff row could cause.

While noting that it was hard to predict how the ongoing trade war between the world’s two largest economies will develop and to what extent, Du has emphasized, “But one thing is sure: if the US imposes tariffs on Chinese imports following an order of US$60 billion yuan, US$200 billion yuan, or even US$500 billion, many Chinese companies will go bankrupt.”

Du has said the country’s judiciary should quickly familiarise itself with the possible complexities of such cases since they were likely to be different from those they have handled in the past. “Our courts need to look into these possible Chinese corporate bankruptcies as early as possible.”

Du’s point was that any bankruptcy cases created by the trade dispute would be very different from those involving the liquidation of “zombie” companies – a term used for underproductive and outmoded state-owned behemoths – as several of the firms at risk from the ongoing trade war were promising hi-tech companies.

In this connection, it bears noting that Chinese telecoms manufacturer ZTE recently looked to be set for bankruptcy after being blacklisted by Washington. The Shenzhen-based company was banned from sourcing essential components from American suppliers after it was found guilty of breaching US business laws. The restriction was later lifted by President Trump.

The two countries have so far imposed 25 per cent tariffs on US$34 billion worth of each other’s imports, with reciprocal duties on a further US$16 billion of goods expected to take effect soon.

Washington has also threatened to impose 10 per cent tariffs on an additional US$200 billion of Chinese imports, with Beijing saying it would counter with “qualitative and quantitative measures”, the report noted.

Given China’s intransigence, US President Trump said last week that he was prepared to add tariffs to almost all Chinese imports, or about US$500 billion worth of goods based on last year’s trade.

The report noted that while Beijing had not published any forecasts for how the trade dispute might affect China’s export companies, jobs or the economy, the commerce ministry had said it was monitoring the situation “on a continuous basis”.

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