Is China changing course on trade? While the tariff war unleashed by Donald Trump is raging, what is certain is that the greatest growth prospects for luxury goods will come from China. In fact «from 1 July the duties imposed on the import from Europe of products such as clothing, accessories, furnishing accessories, will be halved. At the moment, depending on the exact category, the tariffs are between 15,7% and 19%. Reducing them by half means bringing them very close to those that Brussels imposes on China. Those on cars will drop from 25 to 15%». The affirmation comes from Armando Branchini, vice president of Altagamma who presented the forecasts of Bain&Company on luxury in Milan, updating them with respect to the last monitor of last October. Are we therefore moving in the direction of an "orderly trade", a normality of commercial relations?
For Bain & Company, purchases of personal luxury goods in China will rise by 20-22% this year (at constant rates), even if, specified Claudia D'Arpizio, partner of the consultancy firm, "the actual increase will be 8-9%, while the rest will be due mostly to the repatriation of purchases made abroad”. In 2017, Chinese purchases made worldwide accounted for 32% of the total personal luxury goods market. On the other hand, shopping carried out in China weighed only 8% last year. However, Europe risks being the area that will benefit the least from the new commercial trend due to the strong euro: according to Bain's estimates, growth will be between 2 and 4%.
The opening of China, strongly desired by President Xi Jinping to support the 2016-2020 growth plans, is also measured on another front, that of the entry of foreign capital. From 31 May, the benchmark index for emerging markets (MSCI Emerging Markets) will include 234 Chinese stocks that have so far remained out of the reach of foreign investors. Among the most important are the Commercial Bank of China, the China Construction Bank, China's top two banks, and the oil giant PetroChina.
The MSCI Emerging Market Index, launched in 1988 by what was initially Morgan Stanley Capital International (hence the acronym Msci) and is now Msci Inc., includes large and mid-cap stocks from 24 countries across the emerging markets and is the hub for approximately $2.000 trillion of assets under management globally.
With the entry of 234 companies in the benchmark index for emerging markets, Beijing intends to aim at opening up the domestic market to foreign investors. A real change of course compared to the past: up to now the Chinese domestic market has mainly been the privilege of local or qualified investors; now no longer.
