Q1). How does tariff affect the global trade with China?
Trade tariff is basically a tax that is levied on goods that are imported in a country. Tariffs are widely known to be a severe economic policy that a country can put into act. It therefore means that such tariff policy at international level must affect a country like China in a negative way. One of the major known global trade tariffs affecting China is the tariff enacted by the US towards some products from China. Tariff can be used by a country to generate revenue, protect the local infant industries and domestic employment. Tariff could also be used by a country as a means of retaliating or bullying another country. China has not been taking the trade tariffs imposed on its product and as a means to show their displeasure, they have also enacted some tariffs towards some American products (Yglasias, 2018). Tariff therefore creates a tense business relation between countries and it eventually hinders the economic progress of such countries that impose tariffs on each other.
Q2). A. Legal environments in China
The legal environment of business is the effectual codes of conduct that states the legal perimeters for the business activities. Legal environment are usually required for the smooth operation of business because most businesses tend to cover many legal realms that are determined by all the involved stakeholders. Even though China has had a progressive economy from the late 1970s with a per capita GDP that has increase in fourfold, it still lacks a well-developed legal system for business environment (Jindal et al. 2006). There is therefore the doubt concerning the protection of property and the patent rights of businesses. It thus becomes the onus of the foreign business partners that intends to begin their operations in China to come up with means that they can use to efficiently control the hazards that might arise due lack of such legal frameworks.
B. Is China's domestic company favored? Do they have any advantage? Why?
China favors its domestic companies and they therefore have advantages over the foreign entrants (Lopez, 2011). Chinese government support to its domestic companies means that they find it easier over the foreign companies in the process of getting project bidding, they find it easier to open up their branches with no legal restrictions, the incentives they get from the government means their overhead and running costs are relatively lower compared to the foreign company with no such favors.
Q3). China's legal relationship with Hong Kong. Why does this benefit trade? What types of companies benefit?
China has a good mutual legal relationship with Hong Kong. Hong Kong acts like a city under its own government but it is provided with the national defense from China. A good political relation between nations usually brings about foreign aid (Najafi and ASkari, 2012). The foreign aids could be in the form of grants, loans, humanitarian aid, economic and military aid. Such aids usually empower the economic growth of the recipient country and at the same time serve the political and economic ideologies of the donor.
Companies that benefit under such good relations are usually the multinational companies or those companies that export between such countries with good mutual relations. Good relation eliminates trade barriers like tariffs, quotas, and embargoes and any other rules and regulations that might hinder foreign entrant companies from making profits.
Works Cited
Jindal, Vikram, Lai, Eileen " Takubo, Shu. “Business and the Legal Environment: Lessons from China”, 2006, https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/2115/Business_and_the_Legal_Environment.pdf
Assessed Oct. 1, 2018.
Seth, Shobhit. “Trump’s China Tariffs: What’s at Stake for the US?” May 16, 2018 https://www.investopedia.com/investing/trumps-china-tariffs-whats-stake-us/ Assessed Oct. 1, 2018.
Yglesias, Mathew.“The impact of Trump’s trade wars, explained”, July 9, 2018, https://www.vox.com/2018/7/9/17540484/trade-war-china-impact-tariffs Assessed Oct. 1, 2018.
Lopez, Linette. (2011). The 10 Biggest Problems With Doing Business In China, Oct.24, 2011, https://www.businessinsider.com/the-us-china-business-council-report-on-the-top-ten-issues-with-doing-business-in-china-2011-10?IR=T Assessed Oct. 2, 2018.
