China is expected to combat "Trump tariffs" by lowering the price evaluation of domestically manufactured products and reducing the influence of US items on home soil.
China To Now Prioritize Domestic Products For Government Use, Impacting US Firms Such As Intel, NVIDIA & Many More
It looks like the upcoming US-China trade war will witness a radical shift in policies, especially prices, given that both parties are committed to taking measures that would ultimately thwart the development and prosperity of the nations involved. With Donald Trump officially becoming the President-elect, news around his "tariff policy" has spread all over the internet, and it looks like China will adopt a similar strategy, according to a new report by DigiTimes Asia, where the local government plans on "bolstering" in-house production.
It is now disclosed that the Ministry of Finance in China has provided a proposal allowing the People's Republic of China to give a 20% price discount for domestically produced for official use. This means that all goods produced in China will see a 20% discount in price evaluation, but the critical point to note here is that this is only applicable to government purchases, so the local consumer industry won't have an effect, which is undoubtedly the right step towards promoting in-house production.
The domestic products being considered for government procurement will need to meet three requirements, according to the document.
First, the product must be produced in China, which means transformation of attributes from raw materials to components and products within the Chinese territory, excluding labeling and simple packaging. Second, the production cost of components manufactured within the Chinese territory for a product must reach a certain level, which will be dynamically adjusted according to specific products.
Third, on the basis of the first two requirements, for specific products, key components and key production processes should be completed within the Chinese territory.
Another interesting fact is that this policy applies only to industrial production and won't affect other consumer industries. This means that this decision targets US companies such as Intel, AMD, and NVIDIA, which have a well-established consumer base in China. Domestic companies getting such an incentive will surely boost production and innovation, ultimately restricting the influence of US products in China and acting as a counter to Trump's "tariff" policy.
While Chinese companies still need to catch up to the technological superiority compared to counterparts in the US, decent progress is still being made. Firms such as Huawei, SMIC, and Xiaomi have made significant progress over the past few years, and in some segments, reaching equivalence to that of US products, so it is safe to say that China's in-house production will upscale moving into the future, which questions on whether the tariff policy by Trump will work at all.
In the midst of political differences, the consumer segment will be bothered by such decisions the most, and ultimately, the price will have to be paid by the end user.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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