Shennan Microelectronics Management discusses the current Sino-US trade friction event

Release time:

2018-04-12

Recently, the frictions between China and the United States have become hot topics. As a result, the import business of many of our companies has also been pushed to the cusp. In this regard, the leaders of Shennan Microelectronics also discussed the company’s various countermeasures in the future together with everyone. In the absence of declining performance, it is necessary to strengthen learning and develop new ideas. At the meeting, everyone also published a lot of ideas. The proposal was made rigorously and happily.

At the same time, with regard to the trade imbalance between China and the United States, the world's two largest economies, the current situation is still more complicated and there may be new changes. Shennan Microelectronics will always pay attention. At the meeting, everyone learned and discussed the following points:

The first is that this is a structural issue. China is at the end of the Asian industrial chain and will import components from Japan, South Korea and Taiwan Province of China, and export finished products to the United States after processing. The Chinese surplus to the United States actually reflects the surplus of the entire East Asian industrial chain to the United States. Therefore, we should look at the trade balance issue from a multilateral perspective.

The second is that this is a macro issue. If we look at the equality of national accounts, the left side of the equation is the current account, the right side of the equation is the government deficit, investment, and private savings. Now that the US fiscal deficit is expanding, the bigger the fiscal deficit, the bigger the current account deficit. U.S. investment is increasing, the savings rate is declining, and the current account deficit will also widen. According to this identity, the US trade deficit is more difficult to solve.

      Third, if you look at trade, you can't just look at trade in goods but also look at trade in services. The United States has a comparative advantage in trade in services. China's trade deficit with the United States has grown rapidly. The average annual growth rate in the past decade has been close to 20%. Last year, the deficit exceeded US$38 billion. After the financial sector is further opened up, the United States can also make better use of its comparative advantage, so the trade in goods and services adds up and the trade relationship between the two countries is more balanced.

     Fourth, we need to look at U.S. multinational companies. They sell a lot of products in China and their profits are high, but they are all done through the commercial presence of these multinational companies in China.

     When we look at the trade imbalance between China and the United States, we need to carefully analyze and recognize that this is a structural issue and a long-term issue.

     In the future work, Shennan Microelectronics will, as always, proceed cautiously on the ice, always pay attention to international developments and adjust the company's development layout.