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The trade dispute between the US and China has dominated the news ever since US President Donald Trump announced his new doctrine of creating a “level playing field” in Davos earlier this year. Yet after months of aggressive rhetoric recently followed by actions (imposition of tariffs), the first positive signs coming out of the trade dispute are now starting to emerge.
Without any big governmental noise, two foreign companies have now quietly been allowed a level of access to the Chinese market to an extent that has never been witnessed before. Within a week Tesla, a US company, and BMW, the German luxury car manufacturer, announced that they would build plants in China without needing a Chinese majority partner. This is a first in Chinese business history, since foreign companies were – until now – required to team up with a local partner. In the past, this partnership would take the form of a joint venture where the foreign company was capped since it could not hold a majority stake.
These developments are a direct consequence of the trade dispute:
Whilst it is very early days and last week’s events are just small steps in the right direction, they suggest that China is not interested in embarking on a full blown trade war. Moreover, they also indicate that, despite all the controversy it has generated, the new US doctrine of creating a more level playing field based on reciprocal trade might have helped to further open the world’s second largest economy to foreigners.
The CIO Weekly Thoughts focus and reflect on key topics which caught Lars Kalbreier's attention during the week. It is basically a free expression of opinion to trigger healthy debates amongst readers and by no means intended to be neither a strategy review nor a buy or sell recommendation.