[KITA News] U.S.-China trade conflict has serious damage on British econom

                                                 

U.S.-China trade conflict has serious damage on British econom

“U.S.-China trade conflict poses serious damage on British economy…

Must promote AI and quantum computing”

 

“U.S.-China trade conflict has serious damage on British economy…

Must promote AI and quantum computing”

 

The Times reports internal government analysis…

“U.K. is a mid-sized economy,

And must avoid comprehensive subsidies”

 

 

The Times reported on May 29 (local time) that as the subsidy war between the U.S. and China intensified, the British government was concerned about the serious damage that could be afflicted on the U.K. economy.

 

The Times reported that last year, the U.S. announced the Inflation Reduction Act, which contained plans for payment of subsidies to environmentally-friendly entities, and that subsequently it had acquired an internal government report which stated the need for government intervention in the U.S. as well.

 

This report circulated only among a few, including the Prime Minister, Finance Minister, Chancellor of the Exchequer, and cabinet ministers, reported the Times.

 

According to the Times, this report made the assessment that the U.S. Inflation Reduction Act reveals a determination to protect its core industries from China even if the U.K. is sacrificed due to protectionism.

 

In addition, if the subsidy war becomes full-fledged, the British economy would suffer the greatest, compared to the U.S. or E.U., said the report.

 

The U.K. is a mid-sized economy outside the major trade blocs, and would not be in a position to implement large-scale intervention policies. This is because the U.K. did not have the financial capability or economic prowess as in the case of the global superpowers.

 

The report made the recommendation that, rather than the government taking a comprehensive approach towards subsidy policies, comparative advantage should be promoted in areas such as AI and Quantum Computing, and used as a lever in the future trade war.

 

The report warned that British companies rely on China for 40% of their silicon chips, and due to U.S. export control, they might be forced out of the China supply chain. In addition, it added that if the U.K. were to launch the semiconductor industry anew, it would require government support amounting to several tens of billions of pounds.

 

The Times reported that Prime Minister Sunak was holding strong against the demands of the business sector to intervene in the economy.

 

British manufacturers estimate that in order to keep in step with U.S. subsidy payouts in the case of products such as semiconductors, at least 100 billion pounds would be required.

Recently, three former Ministers of Business, Energy and Industrial Strategy have criticized the government for its failure to present an effective industrial strategy.

 

However, Prime Minister Sunak plans to meet with U.S. President Joe Biden in Washington D.C. next week and discuss the impact of U.S. subsidy policy on British companies.

 

On the other hand, the Times stated in an editorial that it was appropriate to provide tax deductions instead of direct subsidies in professional, knowledge-intensive industries such as bioengineering, graphic design, robot-engineering, green technology.

 

(Provided by Yonhap News)

By - KITA.Net (http://kita.org/about/newsView.do?id=&no=2791&searchWrd=&pageIndex=1)