Newsletter: China’s Trade War Tightrope: Deals, Democracy, and Decline
China’s US deal flops, Hong Kong silenced, PMI 49.7, freight drops 15%, Lidl flees China. 5 trade war tales ...
Dear Readers,
China’s fighting to keep its global clout in a fierce trade war, but cracks at home and abroad are widening. This week’s five stories walk you through Beijing’s battles—a shaky U.S. trade deal, Hong Kong’s crushed democracy, faltering industries, and missteps in shipping and supply chains. Let’s dive in.Trump calls it a “historic” trade deal, cutting tariffs to 30% and securing rare earths, but China labels it a vague “framework” with export controls still choking supplies. Both sides spin tales to hide economic strain.
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US-China tariff war: a "deal"! What "deal"?
Last week, US President Donald Trump announced an agreement with China in the trade dispute, which was reached after two days of negotiations in London at the beginning of June. This follows the escalation caused by Trump's "Liberation Day" announcement in April, when he raised tariffs on Chinese imports to up to 145%, to which China responded with coun…
While China plays global diplomat, it tightens the screws at home. Hong Kong’s last pro-democracy party dissolves under Beijing’s security law, with voter turnout at 27.3%, marking the end of the city’s free voice.
China Wins: Last Opposition in Hong Kong Gives Up
Hong Kong is increasingly becoming a city without its own voice. The principle of "one country, two systems", which guaranteed the special administrative region freedom when the crown colony was returned to China, now only exists on paper.
Domestic industries feel the trade war’s bite. The NBS PMI at 49.7 signals stagnation, despite Caixin’s 50.4 uptick. Job cuts, falling prices, and U.S. tariffs crush margins, exposing a fragile recovery.
US Tariffs Weight On Industry In China: Growth Remains Weak
The Caixin Purchasing Managers' Index for June published today shows a surprisingly positive picture of Chinese industry. At 50.4 points, it is just in expansion territory. However, at 49.7 points, the official PMI of the National Bureau of Statistics (NBS) remains below the growth threshold of 50.0 for the fourth month in a row. While the Caixin index …
Global trade stumbles too. Shipping firms bet on a tariff-driven boom, but an 18% import rise and 15% rate drop reveal a “phantom peak.” China’s 3.1% container growth lags as Vietnam reroutes goods.
Phantom peak: expensive miscalculation by shipping companies in world trade
Following the tariff pause that the Trump administration announced with China in May as part of the Swiss negotiations, shipping companies expected an early peak season. They put all their eggs in one basket. At the beginning of June, alliances such as Maersk, Hapag-Lloyd and MSC introduced peak season surcharges (PSS) and general rate increases (GRI) f…
Retailers like Lidl shift to Vietnam and Malaysia to dodge China’s 30% tariffs, but Chinese goods still sneak through transshipment, showing Beijing’s lingering grip on global supply chains.
Lidl expands its Asian network: Dependence on China decreases
Lidl is expanding its sourcing activities in South East Asia. New shipping routes of the Schwarz Group, to which the discounter belongs, indicate this. Lidl is adding routes from Ho Chi Minh City in Vietnam and Port Klang in Malaysia to its existing liner services. The discounter is thus reducing its dependence on China and diversifying its supply chain…
The finish line? China’s pushing for trade wins and control, but Hong Kong’s silence, industrial woes, and trade missteps show a weakening grip. Can Beijing hold on?
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Until next week, stay informed and take care.