Monday, June 11, 2018

Eye for an Eye: US Firms Wary of PRC Stimulus

Many countries including China have expressed wariness over "Buy American" provisions in the US stimulus package. I guess it's time we looked at the other side of the coin. Unfortunately, many American firms are now complaining that China's own stimulus package is opaque in detailing how government contracts are awarded, possibly putting foreign firms at a disadvantage. Is this by design? Don't rule out the possibility that the PRC stimulus effort may be a lot of vaporware in the smoke and mirrors sense. From Reuters:

U.S. companies are concerned that they are not getting a fair chance at contracts linked to China's 4 trillion yuan ($585 billion) stimulus package, a leading U.S. business group said on Friday.

For its part, Beijing has strongly criticized the 'Buy American' provisions of the U.S. stimulus package finalized in February, saying it is opposed to any rise in protectionist measures in the wake of the global economic slowdown.

But Myron Brilliant, senior vice president of the U.S. Chamber of Commerce, said that China's own stimulus package lacked clarity in terms of how foreign firms can bid for contracts on infrastructure projects.

"We are very concerned that the stimulus package may have a significant local bias," Brilliant told reporters in Beijing. There is certainly a perception in the foreign business community that a lot of these contracts are going to domestic providers. And there is, I think, a legitimate concern that there isn't a fair and transparent way for the foreign business community to invest in these projects and to contribute."
I hate to say it but, tough. After Paulson's largely forgotten gestures at opening up the Chinese market in certain areas for American business, I hardly think that now is the best time to renew such efforts. Plus, you need to factor in Obama's more combative rhetoric towards China.

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