China's vast regulatory system can create headaches for US importers, Hinrich Foundation saysBusiness | 2 Aug 2019 9:05 pm
China will retaliate against the latest round of US tariffs. The only question is what form the retaliation will take, and how hard they will hit, Stephen Olson from the Hinrich Foundation says.
Because the US imports far more Chinese products than China imports from the US (roughly US$540 billion versus about US$120 billion), China cannot match the US dollar for dollar in tariff escalation. This does not mean however that China is out of ammunition. China has the means to harm US business interests in ways that are potentially even more damaging than tariffs.
China’s vast regulatory system can be deployed in a variety of ways to create headaches for US companies, Olson aruges.
The pace of Chinese customs inspection and clearance for US products could suddenly slow to a crawl. Extensive paperwork clarification might become necessary. Surprise health and safety inspections on US facilities in China could be dramatically stepped up and conducted with an unusually high degrees of vigor and thoroughness.
The licensing process for new and existing businesses could become more complex and time consuming. And China’s recent “unreliable entities” list could be implemented in ways that significantly limit commercial opportunities in China for US companies.
These examples don’t even begin to scratch the surface of potential response options China has in its toolbox. Watch carefully for how hard China decides to strike back.