PResident Biden is meeting with advisers this week to discuss reducing U.S. tariffs on goods from China that were signed into law by former President Trump, reports Bloomberg. This reduction could reduce the cost of certain goods for American consumers and potentially have an impact on inflation, while providing opportunities for China, which is currently easing its fiscal policy.
Currently, tariffs exist on approximately $300 billion worth of goods from China due to duties put in place by Trump in July 2018. Supporters of the cuts include US Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo, although Raimondo only wants the household goods duties removed to protect other US industries.
Tariff cuts on Chinese imports “could help bring down the prices of things that people buy that are expensive,” Yellen said last month.
Source of images: Bloomberg
The tariffs are set to expire this month and Biden would remain undecided. The international bank Barclays has expressed doubts that even a complete elimination of tariffs would have a significant impact on inflation in the United States.
Meanwhile in China, the central bank continues to relax and COVID-19 measures were recently scaled back. IPO applications in China are at levels not seen in three years, and the total number of IPO applications is now around 1,000, reported Reuters. The second half of 2022 is expected to be busy in the Chinese IPO market; for the first half, China was the world’s largest fundraiser for IPOs, with about $35 billion; the number was 16 billion in the United States
“There is a trend among private pre-IPO companies that previously looked quite definitively to list overseas in Hong Kong or the United States – some of them are now looking more seriously at mainland listings. “said an IPO lawyer from Shanghai. FinancialTimes.
Investing in the Chinese economy with A-shares
For investors seeking exposure to China and potential growth in the second half but want to avoid the impacts of the delisting threat in the United States, investing in the Chinese A-share market might be an option to consider. The A-share market was historically only accessible to Chinese residents and consists of mainland Chinese companies that trade on the two local Chinese stock exchanges, the Shenzhen Stock Exchange and the Shanghai Stock Exchange.
The KraneShares Bosera MSCI China A Share ETF (KBA) invests in China A-shares, particularly those in the MSCI China A 50 Connect Index.
This fund aims to capture 50 large-cap companies that have the most cash and are listed on Stock Connect while providing risk management through futures contracts for eligible A-shares listed on Stock Connect. The index uses a balanced sector weighting methodology to provide exposure to the breadth of the Chinese economy.
Stakes in KBA include Contemporary Amperex Technology, a Chinese battery maker, at 9.88%; Kweichow Moutai, a major alcohol producer in China, at 8.01%; and Longi Green Energy Technology Co., a solar energy technology company, at 6.33%.
KBA has an expense ratio of 0.56% with fee waivers expiring on August 1, 2022.
For more news, insights and strategy, visit the China News Channel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.