Why China's Aviation Trade Restrictions Will Fail

(MENAFN- Baystreet) To“save face” and to counter the U.S. trade tariffs, China needed to restrict exports of aviation and aerospace equipment. Just as tariffs against China's electric vehicles and solar panels are for national security, China did the same.

Starting on July 1, 2024, aerospace and aircraft engines face restrictions. This will include tools, molds, and superplastic, along with software and technology. China's Commerce Ministry, General Administration of Customs, and Central Military Commission announced the new rules last week on Thursday. The country previously exported around $1 billion out of over $7.2 billion in goods.

Markets did not react. Lockheed Martin (LMT), RTX (RTX), and GE Aerospace (GE) are some of the stocks that investors should continue to accumulate for the long term. The manufacturing de-coupling out of China will continue for years to come.

More recently, China's factory indicator fell in May 2024. Its economy continues to weaken as Western firms shift their business outside of the country. Nearby Asian Pacific countries will benefit.

Investors should continue to be wary of holding positions in Chinese firms. Alibaba (BABA), JD (JD), Baidu (BIDU), Xpeng (XPEV), Li Auto (LI), and Bilibili (BILI) are examples of firms that have the most downside risks.
BYD (BYDDF), New Oriental Education (EDU), and DIDI Global (DIDIY) are exceptions. They are not directly hurt by the latest tariffs.

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