China is ASEAN’s largest trading partner and a growing economic force in the Asia-Pacific region. Thousands of miles away, America has a new president, Donald Trump, who is threatening to enact anti-China trade policies and to remove the United States from the Transpacific Partnership. This presentation will explore China’s importance in Asia, as well as how changes in Trump-China trade policies will impact ASEAN.

1. US-China Trade Relations and the Impact on ASEAN
美中贸易关系和对东盟的影响
Antonio Graceffo, PhD, China-MBA (安东尼博士)
School of Economics Shanghai University
Antonio Graceffo
(安东尼博士))

2. Antonio Graceffo
(安东尼博士))
When you see scene like this anywhere in ASEAN which
country’s investment do you think of?

3. Antonio Graceffo
(安东尼博士))
China is important for ASEAN
China is ASEAN’s number one trade partner (ASEAN 2016).
Over the last decade, trade between China and ASEAN has more than tripled.
(Abbate and Rosina 2016)
Cambodia, Laos, Myanmar and Vietnam, as
the least developed economies in ASEAN are
highly dependent on trade with China. The
six more developed economies, enjoy a more
diversified trade base (Abbate, F. and Rosina, S. 2016)

4. Antonio Graceffo
(安东尼博士))
ASEAN–China Free Trade Area (ACTFA) – focuses on preferential trade agreements
Regional Comprehensive Economic Partnership (RCEP)- Excludes many of the US requirements
of governance and regulation
New Development Bank (NDB) – “Provides funding for basic services, emergency assistance,
policy lending, and funding to conflict-affected states.” As well as improving improve electricity,
transport, telecommunications, and water and sewage
Asian Infrastructure Investment Bank (AIIB) – funds infrastructure, regional connectivity, and
economic cooperation”
China-ASEAN Investment Cooperation Fund (“CAF”) - Funds infrastructure projects.
Free Trade Area of the Asia-Pacific (FTAAP) – preferential trade agreements
China has created, or participates in, a number of transnational institutions to
facilitate trade and investment in ASEAN.

5. Antonio Graceffo
(安东尼博士))
China is ASEAN’s largest trading partner.

6. Antonio Graceffo
(安东尼博士))
China is ASEAN’s largest source of FDI.

7. Antonio Graceffo
(安东尼博士))
Since ACFTA began in 2010, ASEAN has been running a trade
deficit with China.
“China has the potential to buoy the ASEAN economies,
but also to create structural imbalances that damage the
region in the long run.” (Salidjanova and Koch-Weser 2015)
Economic dependence on China?
With the exception of Thailand and Malaysia, all of the
ASEAN countries, individually, run a trade deficit with China.

8. Antonio Graceffo
(安东尼博士))
FDI compared to trade is also extremely small at only 10.7%
((Salidjanova and Koch-Weser 2015)
FDI – Although China represents one of the largest FDI sources
for ASEAN, the total volume of Chinese FDI is small, only
account for 2.3% of total FDI in ASEAN. ((Salidjanova and Koch-Weser 2015)

9. Antonio Graceffo
(安东尼博士))
US Foreign Direct Investment (FDI) in ASEAN has increased from $50 billion in
2000 to $226 billion in 2014, which represents more than 30% of total US
investment in Asia US FDI represents 11% of ASEAN’s total FDI
(UNCTAD 2016)
There are over 1,500 US companies in Southeast Asia, more
than any other region in Asia.
The US is also important for ASEAN

10. Antonio Graceffo
(安东尼博士))
The US is ASEAN’s fourth largest trade partner
Singapore is the greatest importer of US goods, followed
by Malaysia, and, Thailand, Indonesia, and Philippines
In 2013, ASEAN was the US fifth largest import partner and
fourth largest export partner (USTR 2016)
Among the ASEAN countries, Malaysia is the greatest
exporter to the US, followed by Thailand and Vietnam.

11. Antonio Graceffo
(安东尼博士))
The electronic industry accounts for the largest share of US
manufacturing in ASEAN
In 2014, 72% of US FDI in ASEAN was in the service
industry and 20% in mining.

12. Antonio Graceffo
(安东尼博士))
Three motivations for US FDI in ASEAN
1. Gain a local production platform,
2. Produce goods for local and regional markets
3. Gain access to raw materials and resources.
Sixty percent of US products produced in ASEAN
are sold outside of the host country and 90% are
sold outside of the US (UNCTAD 2016).

13. Antonio Graceffo
(安东尼博士))

14. Antonio Graceffo
(安东尼博士))
The US runs a trade deficit with ASEAN in goods
ASEAN runs a trade deficit with the US in services
(USASEAN 2016)

15. Antonio Graceffo
(安东尼博士))
US-China FDI and Trade
Between 1990 – 2015, US FDI into China totaled
$228 Billion
Chinese FDI into the US totaled $64 Billion (Glenn
2016)
China and the US are each other’s number one trading partner
In 2016, US-China trade totaled $527,580.3 with a US trade deficit of
$319,282.
The United States is still the world’s largest economy, with a
2016 GDP of $18,561,930. China is second, with $11,391,619.

16. China-US Trade
Antonio Graceffo
(安东尼博士))
In 2015, China exports to the US totaled
$481.9 for
US exports to China totaled only $116.2
billion (Amadeo 2016).
The US accounts for a total of 20% of China’s exports (Elliott 2016). And
this number increases almost every year.
The US runs a trade deficit with China
美国是中国第一大出口伙伴，占中国
出口总额的20％（Elliott 2016）。
它几乎每年都增加。
美国与中国发生贸易逆差
2015年，中国对美出口总额4819亿
美元
美国对华出口总额仅为1162亿美元

17. Antonio Graceffo
(安东尼博士))
Valuation of the Chinese currency, the Yuan is not simple, but,
while it is allowed to fluctuate within a narrow band, set by
Beijing, the Yuan is more or less pegged to the US dollar. This is
one of the main reasons why China holds so much US debt.
Purchases and sales of US debt are used to regulate the price of
the Yuan.
US Foreign Debt
As of October, 2016, China is the second
largest foreign holder of US debt, $1.115
trillion (Investopedia 2017)

18. Trump's Anti-China Triumvirate:
Robert Lighthizer - US trade representative
Wilbur Ross – Secretary of Commerce
Peter Navarro - Newly created White House National Trade Council
US-China trade relations are about to get ugly
President Trump has packed his cabinet with advisors
who are pro-Taiwan and anti-China.
Antonio Graceffo
(安东尼博士))
Most notably:

19. Antonio Graceffo
(安东尼博士))
Peter Navarro was my
online professor for at
least two or three of my
courses. The signature
on my
macroeconomics
diploma is his.

20. (安东尼博士))
Donald Trump has removed the US from the Transpacific
Partnership (TPP)
And
He has also vowed to raise a 45% tariff on products imported
from China, As well as a 35% tax on US companies abroad.
We can only speculate about what President Trump plans to do, but
he has said two things which will impact US-China Trade.
Antonio Graceffo
(安东尼博士))
Donald Trump将于2017年1
月20日成为美国总统。没
有人知道他会做什么..
他说他希望美国退出跨太
平洋伙伴关系 (TPP)。他还
表示，他想对所有中国产
品征收45％的贸易关税。

21. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Donald Trump says China is beating the US in trade because Chinese
wages and Chinese currency are too low. Therefore, he wants to raise
a 45% tariff on Chinese products to make them more expensive and
make trade between US and China more even.
他说，中国有一个贸易优势，因为中国的工资和中国
的货币太低。
因此，他想对中国产品征收45％的税，使它们更贵，
使美中贸易更平均。

22. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Lower wages
The average factory worker in US earns
$11.93/hour $1,908/month (Payscale.com)
While the average factory worker in
China earns around 3000 RMB per
month ($463) (Thayer Consulting, 2016)
Chinese products are cheaper than American products on world markets,
including inside of the US. One reasons for this is that Chinese wages are very
low compared to other developed countries.
他说，中国有一个贸易优势，因
为中国的工资和中国的货币太低。
因此，他想对中国产品征收45％
的税，使它们更贵，使美中贸易
更平均。(重复了?)
美国的平均工厂工人每小时得到
11.93美元，每月1,9080美元
（Payscale.com）
中国的平均工厂工人每月约3000
元（463美元）（Thayer
Consulting，2016）

23. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Many economists feel that China’s wages are too low, given how rich China is.
Per capita GDP
(used as average income)
China $7,924.7
Malaysia $9,766.2
Gabon$10,966
A number of countries which are much poorer than China have higher incomes.
许多经济学家认为，考虑到中国的富裕程
度,中国的工资太低。 许多比中国贫穷的
国家收入更高。
人均GDP（用作平均收入）
中国7,924.7美元
马来西亚$ 9,766.2
加蓬$ 10,966
西欧经济最差的国家是希腊，人均GDP为
18,035.6美元
The country in western Europe with the worst economy is
Greece, which has a per capita GDP of $18,035.6 .
(Worldbank 2016)

24. (安东尼博士))
Antonio Graceffo
(安东尼博士))
One reason why Chinese products are cheaper
and wages are lower is because the Chinese
currency is too low.
1 US Dollar equals
6.91 Chinese Yuan
(XE Converter 2017, viewed January 6, 2017)
If the exchange rate were 1 USD = 3.46 Yuan,
The income of Chinese people would double,
but Chinese products would become more
expensive.
Low currency value
中国产品更便宜，工资更低的一个
原因是因为中国的货币很低。
1美元等于6.91元
（XE Converter 2017，阅读1月6
日）
如果汇率是1美元= 3.44元，中国
人的收入会增加一倍，但中国产品
会变得更贵。

25. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Through September, 2016, China was the largest holder of US foreign debt.
The People’s Bank of China, the China Central Bank was holding CNY 3,121
billion of foreign reserves, mostly US Dollars (Trading Economics 2016).
Macroeconomic theory says: If the Chinese government spent this money, it would
increase the number of US Dollars on the world markets, decreasing the value of US
Dollars, and decreasing the number of Yuan, which would make the Yuan go up in value.
Donald trump accuses China of currency manipulation
截至2016年10月，中国人民银行拥有外汇储备31.2亿
元。 大多数外汇储备是美元。
如果中国政府花这笔钱，就会增加世界市场上美元的
数量。 美元的价值会下降。 此外，世界市场的人民
币数量也会减少。 而元的价值会增加。

26. Charges of currency manipulation are not as simple as they seem.
Over the past two years, China has had three major selloffs of US debt. In
August, 2015, they sold $94 Million. In December, 2015, China sold $18 billion of
U.S. Treasury debt. In October 2016, after the Offshore Yuan hit a record low of
more than 6.92 to the US dollar. In December of that year, the government dumped
$41.3 billion in US debt. And yet, in December, the Yuan (domestic RMB) continued
to drop to 6.94.
Antonio Graceffo
(安东尼博士))
China, and many China watchers reject the charges of currency manipulation
say that China is actually doing everything they can to prop up the Yuan. The
argument is that market factors are driving down the price of the Yuan and the
government is not to blame.

27. Whether China is a currency manipulator or not, the problem for US companies
is that the Yuan is extremely low and appears to be trending downward.
Antonio Graceffo
(安东尼博士))
One way of dealing with this issue would be for President-elect
Trump to increase tariffs on Chinese imports in order to bring the
prices in line with American products.

28. "The Trans-Pacific Partnership (TPP) is a 12-nation trade
pact that would cut tariffs and deepen economic ties
between the signatories" (Haas, B. 2016). The trade
agreement, signed in 2016, comprised of 12 member states:
Australia, Brunei, Canada, Chile, Japan, Malaysia,
Mexico, New Zealand, Peru, Singapore, United States, and
Vietnam (but not China) represents 40% of global
commerce (Haas 2016)
Donald Trump has removed the US from
the Transpacific Partnership (TPP)
Antonio Graceffo
(安东尼博士))

29. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Senator Sanders even published a paper entitled
The Trans-Pacific Trade (TPP) Must be Defeated
(Sanders n.d.).
President Trump wanted to leave the TPP because the
TPP commission would make decisions for US workers.
US labor unions wanted the US to leave the TPP ,
because they say the TPP will export American jobs.
US Environmentalists wanted to leave the TPP
because of potential environmental damage.
Obama administration Democratic party
members, such as Senator Bernie Sanders and
Senator Elizabeth Warren, also opposed the
Partnership.
Donald Trump说他希望美国退出跨
太平洋伙伴关系 (TPP)。
唐纳德·特朗普希望美国退出跨太平
洋伙伴关系因为
TPP委员会是为美国工人做出决定。
美国工会希望美国退出跨太平洋伙伴
关系，因为他们说TPP将输出美国工
作。
由于潜在的环境破坏，美国环保人士
希望美国退出跨太平洋伙伴关系。
奥巴马政府民主党成员，如参议员伯
尼·桑德斯和参议员伊丽莎白·沃伦，
也希望美国退出跨太平洋伙伴关系
参议员桑德斯出版了一篇题为“跨太
平 洋 贸 易 （ TPP ） 必 须 击 败 ”
（Sanders n.d.）的文件。

30. The US runs a trade deficit with nearly all of the TPP members.
Most TPP members charge higher tariffs on US exports than we charge on
their imports
Many TPP countries have barriers preventing American companies from
investing in certain sectors.
TPP partners have state-owned banks, and grant unfair trade subsidies to
their state-owned enterprises.
Antonio Graceffo
(安东尼博士))
The US leaving the TPP creates opportunity for China, whether to
fill the vacant seat in the TPP, or through promoting the RECP
(Campbell 2016)
Reasons for leaving the TPP

31. (安东尼博士))
Antonio Graceffo
(安东尼博士))
China proposed forming the Regional
Economic Comprehensive Partnership (RECP),
RECP includes the ten Asian countries: Brunei,
Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand,
and Vietnam, plus 6 states with whom ASEAN
has standing free trade agreements: China,
Japan, India, South Korea, Australia New
Zealand (Carlson 2016).
The US leaving the TPP would benefit China
美国退出TPP将有利于中国
中国提议成立区域经济全面伙伴关系
（RECP），RECP包括十个亚洲国家：
文莱，柬埔寨，印度尼西亚，老挝，
马来西亚，缅甸，菲律宾，新加坡，
泰国和越南，加上东盟有6个国家 贸易
协议：中国，日本，印度，韩国，澳
大利亚新西兰（Carlson 2016）。 美
国离开TPP为中国创造机会，无论是填
补TPP中的空缺席位，还是通过推广
RECP（Campbell 2016）

32. (安东尼博士))
Antonio Graceffo
(安东尼博士))
A third option for Beijing is to promote the Free Trading Area of the Asia
Pacific (FTAAP). Chinese President Xijinping has also called on his
trading partners to increase the FTAAP (Carlson 2016).
The Free Trading Area of the Asia Pacific (FTAAP).
北京的第三个选择是促进亚太自由贸易区（FTAAP）。
中国总统习近平也呼吁他的贸易伙伴增加FTAAP
（Carlson 2016）。

33. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Donald Trump has stated that he would levy a 45% tariff on Chinese goods.
Some argue that this tariff would be in violation of WTO agreements (Reuters 2016).
Donald Trump’s Proposed Tariffs on Chinese goods
唐纳德·特朗普对中国商品的建议关税
唐纳德·特朗普表示，他将对中国商品征收45％的
关税。 一些人认为，这种关税将违反WTO协议
（路透社2016）。
Trump says that China’s unfair trade practices are already
a violation of the WTO.

34. (安东尼博士))
Antonio Graceffo
(安东尼博士))
If the US raises tariffs against Chinese products, China could raise tariffs against
US products. American airplane manufacturers, automakers and makers of
farm machinery, and US soybean exporters (Bradsherbov 2016 and Smith et. al. 2016).
Economists argue that a trade war could start
Although a trade war would most likely hurt the surplus country, China,
more, it would also hurt the US.
经济学家认为贸易战争可以开始
如果美国提高对中国产品的关税，中国可以提高对美国产品的关税。 美
国飞机制造商，汽车制造商和农业机械制造商，以及美国大豆出口商
（Bradsherbov 2016和Smith等人2016）。

35. (安东尼博士))
Antonio Graceffo
(安东尼博士))
US consumer goods manufacturers, such as Nike or Apple, could simply relocate
their China-based manufacturing facilities to Indonesia or Vietnam (Smith et. al.
2016). But even if they relocate, the jobs will not return to the US.
因为中国有贸易顺差，贸易战争很可能伤害中国，
超过美国。 但贸易战争也会伤害美国。
美国消费品公司，如耐克或苹果，可能将他们在中
国的制造设施迁移到印度尼西亚或越南（Smith等人
2016）。 但即使他们搬迁，工作也不会回到美国。。
And these US companies would lose their China markets.

36. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Moody’s ran a simulation to see what the effects of the Trump-China
Tariff would be. In the short run, it hurt the Chinese economy, but
in the long run, it caused a recession in the US, and eventually
crippled the global economy. The Trump tariff was compared to
when President Herbert Hoover increased tariffs in 1929, with the
Smoot-Hawley Act, which experts feel is what drove the US and the
world deeper into The Great Depression (Schmitz 2016).
穆迪的计算机模拟确定，贸易关税将在短期内伤害中国经济。
但从长远来看，这将导致美国经济衰退。 它最终会削弱全球经
济。
一些专家说，特朗普的关税类似于美国总统赫伯特·胡佛在1929
年增加关税。专家认为这种关税恶化了1929年的经济大萧条
（Schmitz 2016）

37. (安东尼博士))
Antonio Graceffo
(安东尼博士))
Currently, The Office of the United States Trade Representative
(2016) sets US exports to China at more than $161 billion. Fears
are that if a trade war escalated US exports to China would stop.
And this number could increase with a free trade agreement.
Experts against a China tariff
Schuman (2016) reporting for Bloomberg.com, suggested
that Trump’s best China strategy would be to arrange a free
trade agreement.
China has a tremendous population with an economy
growing at the rate of around 6% per year. China now
represents an extremely attractive market of more than 1.3
billion consumers with a per capita GDP of over $7,000 per
year, according to the World Bank (2016).
有的专家建议不要对
中国进口增加关税
Schuman (2016)
reporting for
Bloomberg.com,他
建议特朗普最好的中
国战略是安排自由贸
易协定。中国人口众
多。
经济增长率超过6％。
现在，中国是一个非
常有吸引力的市场。
中国有13亿消费者，
每年人均GDP超过
7000美元，根据世
界银行（2016）。

38. In December, 2016, The U.S. Federal Reserve Open Market Committee
(FOMC) increased the interest rate by 0.25%.
Antonio Graceffo
(安东尼博士))
Increase capital flight – Possibly increased private Chinese investment in the US
The Dollar will continue to rise
The Yuan will continue to drop
Chinese foreign investment may slow down.
Chinese companies borrowing in US Dollars will decrease
Chinese non-performing loans will increase
Servicing foreign debt will become more difficult for Chinese firms.
Chinese products will become even cheaper in the US.
US exports will become even more expensive in China.
The impact on the Chinese economy

39. Author’s recommendation: The US and China could
come to the negotiation table and see if a compromise
could be reached by which the US leader would feel
the playing field was fair, after which, a free trade or
expanded freed trade agreement could be reached.
Antonio Graceffo
(安东尼博士))
Conclusion
The US leaving the Transpacific Partnership (TPP)
may benefit China, either through China filling the US
seat in the TPP, or leading the the Regional Economic
Comprehensive Partnership (RECP), or the Free
Trading Area of the Asia Pacific (FTAAP).
The US levying a 45% tariff against Chinese imports
would probably hurt China worse than the US, but in
the long run, it would hurt both countries, and in an
extreme scenario, it could destroy the world economy.
结论
美国离开太平洋伙伴关系（TPP）将
使中国通过填补美国在TPP中的席位，
或领导区域经济综合伙伴关系（RECP）
或亚太自由贸易区（FTAAP），而受
益。
美国对中国进口征收45％的关税可能
与美国相比会更加伤害中国，但从长
远来看，它会伤害两国，在极端情况
下，它可能摧毁世界经济。
作者的建议：美国和中国可以进入谈
判桌，看看是否可以达成妥协，美国
领导人认为公平竞争的领域之后，可
以达成自由贸易或扩大的自由贸易协
定。

40. Antonio Graceffo
(安东尼博士))
1. The Fed rate hike is going to wreak havoc with the Chinese economy
and drive the Chinese currency down even further
2. Foreign goods exported to China will become more expensive.
3. Start looking for other export markets
4. Imports from China will become cheaper.
5. Raw materials imported from China will be cheaper.
6. Chinese FDI will most likely decrease
7. Private investment in foreign markets, particularly US dollar
denominated currencies (Such as in Cambodia)
What this all means for ASEAN

41. No matter what happens.
Trade war, no trade war
War, no war
China will remain an increasingly important
economic partner for ASEAN
And you will increase your opportunities by
speaking Chinese
LEARN CHINESE !!!
Antonio Graceffo
(安东尼博士))

42. 1. Increased Chinese capital flight -If you sell real-estate or investments make
sure you are positioned in such a way that Chinese people would know about
you.
3. If taxes and tariffs are increased on US firms in China, they will relocate.
Some may come here.
4. Opportunity – Prepare to sell goods and services to Chinese and US firms
relocating.
5. If you invest in debt markets, Chinese nonperforming debt from state
owned enterprises will be sold cheaply.
Antonio Graceffo
(安东尼博士))
Oportunities

43. Dr. Antonio Graceffo, PhD, China MBA (安东尼博士)
School of Economics Shanghai University
Contact: antonio_garecffo@hotmail.com
Linkedin:
https://www.linkedin.com/in/antoniograceffo
Antonio Graceffo (安东尼博士)
谢谢大家听我的报告