Trade War, Sinosure

Trade War, Sinosure

As trade war deepens, a state-owned insurer in China helps soften the blow

As trade war deepens, a state-owned insurer in China helps soften the blow

12.9.2019

As trade war deepens, a state-owned insurer in China helps soften the blow

As the U.S.-China trade war intensifies, an insurance company run by the Chinese government is stepping in to support Chinese exporters, providing ...

China Export & Credit Insurance Corp, known as Sinosure, has aggressively increased its insurance of Chinese exporters since last year, according to company sources and public data.

The government-led aid is being carefully watched by trade experts who say the practice may run afoul of World Trade Organization (WTO) commitments or be challenged by the administration of U.S. President Donald Trump, who has railed against what he says are China's unfair trade practices.

Sinosure's business has expanded amid trade war: https://fingfx.thomsonreuters.com/gfx/buzzifr/14/6086/6086/Sinosure'sper cent20businessper cent20hasper cent20expandedper cent20amidper cent20tradeper cent20war.png

The insurance policies help cushion companies from the risk of export deals collapsing because of elevated duties on goods flowing between the world's No.1 and No.2 economies.

Payouts are poised to climb further this year with tariffs rising, according the company's internal estimates.

The payments stem from what one Sinosure official said was a growing number of U.S. buyers of Chinese goods who were unwilling or unable to pay higher prices for shipped goods. That has left some cargoes stranded at U.S. ports, and Chinese exporters on the hook.

For its part, the Trump administration has provided billions of dollars in subsidies to American farmers affected by Chinese tariffs as it too seeks to cushion the impact of the trade war.

Sinosure did not respond to Reuters' requests for information about its push to support smaller exporters, but recent figures - some public and others disclosed to Reuters - provide an insight.

Sinosure's payouts surged to record high: https://fingfx.thomsonreuters.com/gfx/buzzifr/14/6092/6092/Sinosure'sper cent20paidoutsper cent20surgedper cent20toper cent20recordper cent20high.png

Other cities and regions have also partnered with Sinosure subsidize or refund premiums for smaller exporters exposed to the U.S. tariffs, a Sinosure source said.

"Another increase in tariffs is just a tweet away," he said, referring to U.S. President Donald Trump's preferred method of communication.

(Reporting by Cheng Leng in BEIJING, Samuel Shen and Engen Tham in SHANGHAI; Editing by John Ruwitch and Lincoln Feast.)

Read more: CNA

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