Map Center Header

Greater China Exchange Update

Denver South is a global business hub and our team closely follows global trends and updates. In his latest blog installment, our Greater China Exchange Coordinator provides an update on trade regulations in China. Guest Blog by Sean Doherty Greater China Exchange Coordinator, Denver South Economic Development Partnership

Guns v.s. Butter; Missiles v.s. Lobsters

Since the advent of ships and other container forms of transportation, people have been filling crates with all manners of products to trade. From spices to seafood, and furs to fitness gear, trade between regions has greatly elevated worldwide standards of living. Recognizing this, sovereign governments have actively sought to form treaties and trade groups to encourage exchange between nations. There are, however, occasional disagreements in the political realm that spill over into the business arena and distort the natural tendency for market activity to occur. So what happens when trade is inhibited?

The answer to that question can be seen currently playing out across the economy of South Korea. After South Korea approved the stationing of an advanced US missile defense system on their soil, the government of China retaliated by banning all Chinese tourist trips to South Korea, in effect cutting off access for their people, and their money, to enter the country. China’s reported objection is that the “…high-power radar can be used to spy on its own military.” The result of the political move was felt immediately, with Chinese airlines severely reducing flights into the country, and Chinese cruises diverting stopovers away from those South Korean tourist ports. Where this really hurts South Korea is in the retail sector. According to Inside Retail, Chinese tourists to South Korea “…account for half of all foreign travellers,” and “…were big spenders who spent at least US$2,000 per person buying things.” China’s reactionary move provides a clear indication of their willingness to wield economic leverage towards their policy interests. The implication is that further military posturing in the region could lead to other punitive policies, which, if directed against the US economy, would no doubt be detrimental to an already shaky recovery. The implicit threat comes at a time when trade flowing from the US to China is abundant, particularly in the arena of seafood. For example, lobsters—once unknown in the orient—are now being buoyed by a steadily increasing appetite for the crustaceans. The numbers reported by ABC News made waves throughout the industry; “Last year, China imported more than $108 million in lobsters from America, surpassing the previous high of about $90.2 million.” Looking at the weight of those shipments, that’s almost 2 ounces of lobster for every man, woman, and child in China, an increase of 7% over the previous year total. Yet the source of that trade is not guaranteed and could dry up with a simple pen stroke from

China’s reactionary move provides a clear indication of their willingness to wield economic leverage towards their policy interests. The implication is that further military posturing in the region could lead to other punitive policies, which, if directed against the US economy, would no doubt be detrimental to an already shaky recovery. The implicit threat comes at a time when trade flowing from the US to China is abundant, particularly in the arena of seafood. For example, lobsters—once unknown in the orient—are now being buoyed by a steadily increasing appetite for the crustaceans. The numbers reported by ABC News made waves throughout the industry; “Last year, China imported more than $108 million in lobsters from America, surpassing the previous high of about $90.2 million.” Looking at the weight of those shipments, that’s almost 2 ounces of lobster for every man, woman, and child in China, an increase of 7% over the previous year total. Yet the source of that trade is not guaranteed and could dry up with a simple pen stroke from Beijing, if the government determines doing so would be advantageous to their goals. Fortunately, President Trump’s first meeting with his Chinese counterpart President Xi Jinping concluded on a positive note that “…could be followed by a series of agreements,” conjectures The Telegraph. And that’s good news, not just for lobsters bound for China, but trade in general. After all,

Fortunately, President Trump’s first meeting with his Chinese counterpart President Xi Jinping concluded on a positive note that “…could be followed by a series of agreements,” conjectures The Telegraph. And that’s good news, not just for lobsters bound for China, but trade in general. After all, trade makes the world go round.

Sean Doherty is a Colorado native and graduate of Metropolitan State University, living and working in Hong Kong, Shanghai, and Nanjing, China. Sean represents the Denver South Economic Development Partnership as the Greater China Exchange Coordinator, focused on fostering the exchange of ideas, strategies, and talent between China and the metro-Denver area. In 2016, Sean was selected as a Jiangsu Province Youth Friendship Ambassador. He can be reached at KairosHappens@gmail.com

CONTACT