China Thinks They Shouldn’t Put All Their Chips In One Basket?

China is now trying a new strategy on the tail end of the tariff war with the United States. They are surveying smaller Chinese cities to construct chip factories, in lieu of purchasing American made computer goods. Apparently, their motive is to, not form any kind of alliance that helps with the trade deficit. They want to stop purchasing U.S. made chips. This has led to China seeking out new suppliers for chips, as well as producing the chips themselves. This will rock the semiconductor businesses of the world.

We ask ourselves, is this the most brutal form of capitalism coming from a communist nation? What is this? China is more capitalistic than it is communist! Now, last month the Chinese tech giant Huawei was placed on a U.S. government blacklist.

This Chinese company relies on certain US made components and software-especially from US suppliers such as Google and Microsoft! This has created an artificial supply/demand and is the result of the tariff backlash problem. The Chinese manufacturers are rushing to create chips on their homeland, instead of negotiating with the US upfront and ethical. There is a 90-day reprieve in the business blacklist for now. However, a past policy such as this, has resulted in ZTE being significantly hurt by the loss of the American supplier’s history repeats itself? There is an inference that the US semiconductor chips might be priced too high, with China on the brink of producing a lower-priced chip, often with lower quality? The fact is Apple has priced their chips too high for the African market. Now, might be the time to reconsider. Can we lower our chip prices in Africa to counteract the Chinese market?

Trump has been reconsidering the ban on selling American chips to the Chinese tech giants. This will allow Huawei to buy U.S. made manufactured products. Talks are still ongoing between President Trump and Chinese President XiJinping. Both leaders have agreed not to structure any more new tariffs on each other’s products. The thoughts about Huawei, the Chinese tech behemoth are quieted down at the moment. The focus is to allow American companies to sell products to them; although, we still must be vigilant insofar as they might be a security risk. The advice is probably to continue with eyes wide open until the trade negotiations are resolved.

One positive thing for America is Chinese President Xi mentioned China would be buying agricultural products from the US. This is a good thing for our American farmers. Another thing is that Trump vowed in return no restrictions as of yet, on Chinese students entering American schools! Trump wants Chinese students studying at our universities and schools to be treated fairly.

Moreover, many experts agreed that so far no escalation in the trade war has occurred. This is a good thing. So far, there has been no backlash since the G20 summit meeting.

The U.S. is merely seeking a fair ethical deal in economic trade. The truth is both nations benefit from dealing fairly, and both lose when there is a confrontation. Lastly, there is the thinking that the global economy could suffer by these trade wars and tariffs. The International Monetary Fund is projecting a dip in global economic output by .5% by 2020 because of these tariffs. It is always an optimistic stance when both nations negotiate. The two mega-nations need to resolve the trade war and solve it quickly.