Region/Countries: Asia, China Industry: Multiple Sectors Date: July 2018

Why this is important to Wisconsin businesses: The situation is complicated, and one new measure being considered could improve the investment climate.

China has raised the tax rate for imported U.S. automobiles from 15 to 40 percent, a large increase that is expected to discourage U.S. exports of automobiles to China and eventually influence overall trade between Wisconsin and China.

Meanwhile, pig farmers in Central China's Henan province are reducing soybean pulp consumption in response to its rising price amid trade tensions between China and the U.S. Since the start of tariffs and counter-tariffs in early July, China has implemented 25 percent additional tariffs on a range of U.S. products, including soybeans. According to data released by China’s Ministry of Agriculture and Rural Affairs, in the first week of July, the average price of soybean pulp was 3.7 percent higher than the same week the prior year. Wisconsin is a major producer of soybeans, and the current policy’s effect on Wisconsin remains to be seen, but is expected to decrease China’s purchases of imported soybeans to some extent.

At the end of July, China's Ministry of Commerce asked for the public to weigh in on a revised measure concerning foreign investors making strategic investments in Chinese-listed companies. If the proposed policy is enacted, the A shares acquired by foreign investors through investments would be tradable after 12 months instead of three years as the current regulation states. This change would symbolize China relaxing its grip over foreign strategic investment, and thus increased opportunities for Wisconsin investors.

The current situation between the U.S. and China is complicated, and the future is unpredictable, but trade between Wisconsin and China is still relatively strong and promising for future growth.