Hudson Lockett

Is China choking off its private companies? After more than a decade of increasingly centralised rule under President Xi Jinping, the answer seems clear. The private sector is on the wane due to stringent regulation and policies favouring government-run enterprises over profit-focused entrepreneurs.

Trump has threatened to raise tariffs on all Chinese exports to 60%. Donald Trump | Image: AP Advertisement

Robert Lighthizer. Mike Walz. Marco Rubio. These renowned China hawks are not the names Beijing wants popping up in President-elect Donald Trump’s early cabinet appointments. Markets agree, as the yuan has fallen about 2% against the dollar since Trump’s victory at the polls. Downward pressure will mount if he follows through on threats to raise American tariffs on imports from China to as much as 60%.

The Chinese yuan has fallen about 2% since the election of Donald Trump as president of the United States on Nov. 6. Yuan | Image: Unsplash

Economists had expected Donald Trump’s new tariffs would be reined in by common sense, they were wrong. On Monday evening, the U.S. president-elect pledged across-the-board tariffs of 25% on Mexico and Canada, blaming America’s neighbours for failing to halt flows of illicit drugs and undocumented immigrants across their borders. He also promised a fresh 10% tariff on China, a developer of the chemical ingredients of fentanyl, until flows of the opioid are halted.

Donald Trump on Nov. 25 pledged to impose additional 10% tariffs on Chinese products and 25% tariffs on imports from Mexico and Canada.

The battle for control of Japan’s Seven & i is being cheered in Tokyo as evidence of improving efficiencies of the world’s third-largest economy. Officials can hasten a virtuous circle of dealmaking if they make the right next moves.

Chinese leaders are discussing the possibility of letting their currency weaken to blunt the impact of potential U.S. trade tariffs, Reuters reported last week, citing sources. A weaker yuan could pummel currencies across Asia but there could be a silver lining for Governor Kazuo Ueda at the Bank of Japan which meets on Wednesday to decide whether to raise interest rates for the third time this year.

In 1987 Southland Corporation, the Dallas-based operator of 7-Eleven then facing rumours of a Canadian takeover attempt, announced plans to move the company into private hands—namely those of its founding family. Now the Ito clan behind the American chain’s current Japanese parent could end up listing those convenience store operations in their own bid to maintain control. It's an imperfect solution to a pressing problem.

The bull case for China's stocks is on its face compelling: firms in the People's Republic are undervalued and often enjoy higher cash flow and profitability relative to global peers. Some of the largest and most popular among global investors, such as tech group Tencent and battery maker Contemporary Amperex Technology (CATL) , just closed out 2024 with double-digit gains fuelled by hopes Beijing will finally take more substantial measures to boost sluggish growth.