U.S. trade war fears ripple through China's 'workshop of the world'

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Unlike last year, when U. President Donald Trump sounded protectionist warnings that were largely dismissed as bluster, Chau and other factory bosses across China say the risks from this trade spat are now far more tangible. As a result they warn of a possible wave of small factory closures, a shift of some production away from China, and the use of questionable practices to dodge increased tariffs.

The region has been dubbed the "workshop of the world" and accounts for around a quarter after 1450 global trade was increasingly controlled by fear China's exports. As hundreds of computer-controlled lathes hummed around him, fashioning slender aluminum, steel and brass rods into intricate parts, Chau pointed out a car valve, the size of a thumb - used in car braking systems assembled in U. Of the 1, or so metal parts made in Chau's plant, including needles for espresso machines to puncture coffee capsules, he says around could be hit by the proposed U.

Chau says he's now considering building a warehouse in Malaysia, Vietnam or Thailand, where he could ship his goods for re-export, or he talks of setting up a small factory in a Southeast Asian country to avoid the increased tariffs altogether. China's reliance on exports as an economic driver has declined over the past decade, with total exports as a percentage of Gross Domestic Product dropping to 18 percent in from 35 percent inaccording to research by Credit Suisse.

But at a more micro level, at the heart of China's vast industrial supply chains, the tariffs stand to exacerbate the pain of already struggling plants. Many have already been buffeted by an appreciating currency, soaring wage costs, and labor shortages as a younger generation shuns a life on the factory floor.

The Trump threat has been a further sideswipe for many exporters and soured sentiment, even as the full implications are unclear. In interviews with six other Chinese manufacturers of LED lighting products, another affected sector, four expect some closures of Chinese factories, particularly those making more generic products like bulbs and LED panels.

Places like Dongguan, with large clusters of grittier industrial plants, are especially vulnerable. Dongguan's economic growth of 8. So everyone is just monitoring things and no one knows what will happen next," said Chau from the precision metal parts factory. Under a so-called harmonized system of after 1450 global trade was increasingly controlled by fear - Chinese products are now coded specifically so that the same product after 1450 global trade was increasingly controlled by fear face higher U.

He said some U. Such a practice could technically be illegal. More broadly, should the retaliatory trade moves escalate, and the U. Ye Xiaqing, with the China Household Electrical Appliance Association, told Reuters that so far, only 5 percent of household appliance exports to the U. Submit Search Magnifiying glass search icon. Search Submit Search Magnifiying glass search icon.

We just have to go with the flow. He's already pissed off enough people there.

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Stars like Nicole Kidman and John Travolta were on hand as the company's chairman, Wang Jianlin, boldly announced that the new studio in the east coast city of Qingdao would help make China a "global cultural powerhouse". Five years later, the Oriental Movie Metropolis is set to open its doors but the mutual courtship between China and Hollywood is looking less rosy. Walking the red carpet at the Qingdao studio launch Saturday will be Chinese comic actor Huang Bo — a big name locally — while Hollywood A-listers are expected to stay away.

Wang's own ambitions are also looking more modest. Wanda last year sold its interest in the studio to a Chinese rival, maintaining just a management role in the venture, whose fortunes look increasingly unclear as the American film industry sours on China. A handful of U. A trade war between Beijing and Washington is also looming.

Negotiations over improved market access for U. Reports earlier this year had suggested China was ready to open up the market. Wang controls the U. Industry sources said Huahua had encountered liquidity problems amid a Chinese crackdown on "irrational" overseas deals and its domestic partners had also pulled out of the deal.

Waisbren said Hollywood had looked to Chinese investors to offload some financing risk, but many realized making a return in film wasn't so easy. Wanda sold off the Qingdao studio to a rival property developer, Sunac China Holdings Ltd, amid a sweeping sell-down of assets to raise funds. Wanda retains management control of the complex. China is also tightening its grip on its film market. A recent regulatory reshuffle handed control over censorship and approvals to the Communist Party's powerful publicity department last month.

China's quota system allows 34 imported movies, while overseas producers get a 25 percent share of box office takings - less than in other international markets. Since a handful more have been allowed in via a "cultural exchange" channel.

Foreign producers and distributors would also sometimes get approvals shortly before release dates, limiting the time for marketing. Hollywood blockbusters once ruled in China, but are losing steam. North American movies have taken around a quarter of the box office in China so far this year, down from over 45 percent in , according to data from the box office tracker EntGroup. This shift could hit Wanda's Qingdao studio, which had hoped to benefit from soaring demand from overseas producers looking to add China elements to their films to help boost box office takings in China.

Last year, a movie about a Chinese hero beating western mercenaries in Africa broke China's box-office record, while Hollywood offerings like "Star Wars: The Last Jedi" failed to ignite when released in China earlier this year.

Hollywood films that focus on action figures or superheroes no longer provide a magic formula in China, said Kevin Niu, a U. With the aid of Hollywood know-how and bigger budgets, local movies, once ridiculed for weak special effects and storylines, are gaining momentum as they find ways to play on these domestic themes and improve production quality.

Bremble said Chinese cinemagoers were willing to splash out on tickets for domestic films now because they look increasingly like big international movies. Submit Search Magnifiying glass search icon.

Search Submit Search Magnifiying glass search icon. News Entertainment China's Hollywood romance sours amid trade war, debt fears China's Hollywood romance sours amid trade war, debt fears Friday, April 27, 2: