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US-China trade war
EconomyChina Economy

China’s exports may be targeted as US, EU consider tough rules of origin: economist

But Beijing’s manufacturing ecosystem gives it powerful tools to retaliate, according to economist Zhang Yuyan

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Chinese economist Zhang Yuyan, seated far right, said new rules of origin from the US and EU could redefine global trade patterns. Photo: Edmond So
Alice LiandSylvia Ma
China should prepare for stricter US and EU regulations on global rules of origin – as signalled in the recent trade deal between the Western economic powers – with the changes potentially weighing on its export sector by redefining global trade patterns, according to a Chinese economist.

“Trump’s current measures are temporary – tariffs can be imposed today and rolled back or even eliminated tomorrow. The real question for us is what the future global trade framework looks like,” said Zhang Yuyan, an academician at the Chinese Academy of Social Sciences.

Zhang said Western countries could introduce a more granular approach to rules of origin – the criteria used to determine where a product comes from, often for tariff purposes – turning it into a central pillar in shaping future trade.

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“This is very important … The current rules of origin are relatively coarse,” Zhang said on Tuesday at the International Forum on China’s Economy and Policy in Hong Kong.

“China needs to be prepared for the likelihood that these rules could be directed at it,” he added, noting that about 60 to 70 per cent of the country’s exports are intermediate goods – often processed in third countries, complicating tariff enforcement.
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A shift to more detailed value-added calculations along supply chains could lay the foundations for a more targeted tariff system, Zhang said.

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