Alibaba Group Holding Co-founder and Executive Chairman Jack Ma reiterated that so-called New Manufacturing will be an important growth driver of China’s economy, and called on manufacturers to embrace the internet of things (IoT), cloud computing and big data or risk getting left behind. New Manufacturing, a term coined by Ma after his previous invention of New Retail, involves integrating the internet, data, artificial intelligence (AI), cloud computing and the internet of things (IoT) into the manufacturing process, which has in the past relied on industrial machines to churn out mass-produced products. Only by embracing and incorporating these new technologies can the manufacturing industry keep up with changing consumption trends, according to Ma.

“In the future 10 to 15 years, all the pain points that the manufacturing industry will face will be far more than those today,” said Ma, speaking at Alibaba’s Computing Conference 2018 in Hangzhou. “The manufacturing industry is not disappearing. It will only disappear if manufacturing technology does not keep up: you cannot succeed if you don’t use these new technologies.” However, he acknowledged that while New Manufacturing will be essential in the future, it is still in its nascent stage today, akin to a blind man driving a car. “You don’t know yet who your customers are,” Ma said.

Ma’s comments come after Alibaba said at its investor day event that its New Retail strategy, where online and offline retail experiences are integrated, is beginning to pay off, citing early success with its Hema supermarket chain. Alibaba is also looking to help small and medium enterprises optimize their operations, including making supply chain operations more efficient, such as predicting the type of goods to stock.

Ma, who has announced he will be stepping down as Executive Chairman of Alibaba Group in 12 months’ time, emphasized that in the data era, as more data is generated, customization will be key. Instead of creating in five minutes 2,000 pieces of clothing that are exactly the same, the challenge will be to create 2,000 different pieces within the same amount of time. He emphasized that the manufacturing and service sectors in China are not separate, but reliant on each other. New Manufacturing will be an integration of both sectors, which will in turn drive China’s economy forward, the South China Morning Post reports.

The German government is taking steps to counter a surge in Chinese bids for stakes in German technology companies, including the creation of a billion euro fund that could rescue such firms in financial trouble. Senior officials are also working on changes to foreign trade regulations to ensure that key technologies remain in German hands. These would include government reviews of foreign acquisitions of stakes in companies below the current 25% threshold, and expanding which types of purchases must be examined. “This is an issue that we are working on very intensely,” said the source, who was not authorized to speak publicly. The German government was galvanized into action by the surprise takeover of robotics firm Kuka by China’s Midea in 2016 and the purchase earlier this year of a 9.7% stake in Daimler by Chinese carmaker Geely.

Chinese companies completed 30 acquisitions in Germany last year, nearly double the number for 2016, and Chinese proposals accounted for 40% of the 165 reviews of foreign takeover plans in the last three years, the source said. “China is working diligently to close technology gaps and dominate the world market with new technologies,” he added. Chinese firms, some state-owned, were particularly interested in German companies with special know-how, start-ups in the area of new technologies, and companies active in critical infrastructure fields. As a last resort, the government also wants to set up a fund that could help companies if no private investors could be found to replace a possible Chinese bidder, or if guarantees by the state development bank KfW were not sufficient. “We are talking about a billion euros that would be available as a last resort,” the source said, adding that the money could also be used proactively to support development of key technologies by German firms, the South China Morning Post reports.

The battle for wealthy Chinese is moving online, with luxury brands especially hungry to win over millennials through offers on everything from limited edition fashions to white-glove delivery services. Moncler, Christian Dior, Hermes and Tiffany & Co are among those to try to grab a share of China’s USD73 billion annual luxury market. It is composed of 50 million people and growing – the largest number of wealthy people of any country in the world. They tend to be younger – and more tech savvy – than their global counterparts. The experiments to woo over this wealthy cohort are truly in their early stages. And with only a small fraction of Chinese at this point buying their luxury goods online, the battling can only get more fierce.

“Among international customers, Chinese ones are more digitally driven today,” said Remo Ruffini, Chairman and CEO of Moncler. “Technology related to consumption in China has made giant steps in recent years. Our challenge is of course to have a leading role with all these technological changes to create a new digital e-commerce experience.” Moncler now has a virtual store on social media platform WeChat, where customers can order the brand’s signature down jackets and other luxury items whose eye-popping price tags are in fact part of their appeal. It is also setting up a “pop up” store on Tmall, the e-commerce site of Alibaba Group, The online push aims to complement, rather than replace physical luxury stores. Moncler now has 27 stores in mainland China, seven in Hong Kong, one in Macao and three in Taiwan.

Luxury consumers are comparatively younger in China than their European and U.S. counterparts, according to a report by Martin Roll, which means they tend to be online junkies. More than 80% of mainland Chinese luxury consumers are between the ages of 25 and 44 – and they love to travel and buy abroad, where prices tend to be much lower and counterfeit goods less a problem than back home. Half of Chinese consumers aged 20-49 have done online luxury shopping, according to London-based market researcher Mintel Group, as reported by the South China Morning Post.

U.S. President Donald Trump has announced his decision to impose a 10% tariff on an additional USD200 billion of Chinese imports starting on September 24, on top of the 25% tariffs already in force on USD50 billion of Chinese imports. The tariff rate on the latest batch of goods will rise to 25% on January 1, 2019. The new tariffs would apply to more than 1,000 products, including smartphones, televisions, toys, and a range of other products. Some products, such as smartwatches, were left off the list. These penalties could drive up the cost of a range of products ahead of the crucial holiday shopping season. These tariffs are paid by U.S. companies that import the products, though they often pass the costs along to U.S. consumers in the form of higher prices.

China retaliated by announcing it will impose tariffs on USD60 billion of U.S. imports, effective on September 24. Trump said that in case China retaliated, he would immediately pursue phase three, which is tariffs on approximately USD267 billion of additional imports. This move would subject all Chinese imports of roughly USD500 billion to tariffs. The U.S. president blamed “unfair policies and practices” for the escalation. “For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies. We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices,” Trump said.

President Trump has accused China of a number of unfair trade practices. He wants China to buy more American products, open up China to more U.S. investment, and stop what he calls “stealing U.S. intellectual property”, among other accusations.

Even as President Trump imposes new tariffs, Treasury Secretary Steven Mnuchin was planning to restart talks with Chinese leaders soon, but they have previously announced they would not negotiate with a gun pointed at their heads. President Trump tweeted: ““We are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home.” The U.S. ran a USD233.5 billion deficit in goods trade with China during the first seven months of the year, an 8% increase compared with the same period in 2017. Corporate executives increasingly believe the trade dispute can only be resolved by direct talks between Trump and Chinese President Xi Jinping. The two leaders may see each other at the United Nations General Assembly in New York later this month and are expected to meet on the sidelines of the G20 summit in Buenos Aires in November, the South China Morning Post reports.

China is putting off accepting license applications from American companies in financial services and other industries until Washington makes progress toward a settlement of the ongoing trade war, Jacob Parker, Vice President for China operations at the U.S.-China Business Council (USCBC) said. The license delay applies to industries Beijing has promised to open to foreign competitors, such as banking, securities, insurance and asset management. Chinese authorities denied that licenses were delayed and emphasized that U.S. companies were still welcome in China. Economists have warned that Beijing might also target service industries such as engineering or logistics, in which the United States runs a trade surplus with China.

Chinese Vice Premier Hu Chunhua has called for a rejection of protectionism and said unilateral trade policies by some countries posed a “most serious hazard” to the world economy. “Some countries’ protectionist and unilateral measures are gravely undermining the rules-based multilateral trading regime, posing a most serious hazard to the world economy. We must categorically reject protectionism and unilateralism, firmly support multilateralism, and uphold the world economy and multilateral trading regime,” he said during a visit to Hanoi.

More than 60 U.S. industry groups launched a coalition, Americans for Free Trade, to oppose the imposition of tariffs. The business coalition includes groups representing some of the nation’s largest companies as well as representatives of almost every sector.

Facing the trade war with the U.S., China strengthened its relations with Russia as President Xi jinping attended the fourth Eastern Economic Forum in Vladivostok and held talks with his Russian counterpart Vladimir Putin.

The economy in Guangdong is starting to suffer badly. Its purchasing managers’ index (PMI) shows the province’s manufacturing industry contracted in August for the first time in 29 months, with new orders falling to a 30-month low and new export orders declining for the third straight month. Some companies have already moved to Vietnam to take advantage of lower costs. South Korea’s Samsung Electronics, for instance, is cutting its smartphone production in China, while at the same time strengthening its production lines in Vietnam and India, targeting rising demand in these fast-growing markets as well as making them production bases for exports to the global market.

The European Union Chamber of Commerce in China surveyed its member companies to better understand how the recently escalated tariffs on a variety of products traded between the U.S. and China affected European firms doing business in China. Responses were collected from 193 respondents across a wide variety of industries. This survey ended on September 3, and thus does not reflect any potential changes that may occur after that date. At the time of publishing, the Trump Administration had not yet decided to move forward with the addition of another USD200 billion worth of products imported from China to the current levies.

The U.S.-China trade war is causing significant disruptions to global supply chains and is seriously impacting companies that are neither Chinese nor American. Respectively, 53.9% and 42.9% of respondents viewed the American and Chinese tariffs negatively, which is more than ten times the number that viewed them positively.

Negative views of both country’s tariffs are common among European businesses in China. However, 53.9% of members viewed the U.S. tariffs on Chinese goods negatively, roughly 12 percentage points higher than the number that reported negative views of the Chinese tariffs levied on American imports. As there are far more goods produced in China for export to the U.S. than there are produced in the U.S. for export to China, a higher proportion is expected. However, the high rate of negative views on either side of the trade war is emblematic of the degree of interconnectivity in the global economy.

Neutral views are common. This reflects the reality that many European firms in China produce for the Chinese market, and that many of those firms rely on local suppliers or suppliers in countries other than the U.S. Positive effects from tariffs imposed by either the U.S. or China were rare, and diffuse across sectors. There were no clear patterns for which industries were more likely to see the tariffs positively.

When asked what measures companies were taking to respond to the tariffs, roughly the same number of members reported that they are relocating out of the U.S. or China respectively, indicating that neither side is ‘winning’, as both are equally prone to losing companies as a result.
The most common response was inaction and continued monitoring of the situation. However, the second and third most common responses were to hold up on investment/capital expenditure and/or to hold up on business expansion efforts. Due to some overlap in these two responses, a total of 17% of respondents that might have otherwise contributed further towards growth are opting not to do so due to the looming uncertainty caused by the trade war, according to a briefing paper by the European Chamber.

The American Chamber of Commerce in China and the American Chamber of Commerce in Shanghai also jointly released a study on the impact of the tariffs imposed by China and the U.S. on each other since July. Close to two-thirds of respondents said the tariffs are having a negative impact. The survey said 63.6% reported the initial U.S. tariffs on USD50 billion in Chinese goods are affecting their business operations. When asked about the implementation of the possible additional U.S. and Chinese tariffs, the proportion of members who cited a negative impact jumped to 74.3% and 67.6%, respectively. The percentage reporting a “strong negative impact” doubled from 21.5% to 47.2% for the U.S. tariffs. Over 430 companies responded to the survey, the China Daily reports.

The European Union and China must urgently strengthen relations to “alleviate the disruption” to the global economy, Nicolas Chapuis, the new EU Ambassador to China, said. He also called for progress in discussions between China and the EU about reform of the World Trade Organization (WTO), ongoing negotiation of a China-EU investment treaty and an agreement on protecting the intellectual property of European and Chinese products. “In this shifting of the global situation, Europe must bring, with China, the building blocks of stability and prosperity,” said Chapuis at a press conference in Beijing. “This is not only important to the EU and China, it is crucial to the rest of the world, he added. Chapuis said it was normal for two big economies to have “frictions and tensions” but the EU remained open to Chinese investments. “We do not want less Chinese investment; we want more,” he said.