China’s New Trade Strategy: Threatening U.S. Companies

Arthur Dong ^ | August 13, 2018 | Arthur Dong

[Zhang Fei]

Starting August 23, an additional $16 billion dollars of exports from China to the U.S. will be subject to a 25% tariff, as the trade war between the two nations continues unabated. In preparation for these tariffs, China signaled that it would impose an equivalent amount of tariffs on U.S. imports. With both sides far apart, China has searched for alternative strategies to force a resolution of the deteriorating trade situation.

Earlier this month, an article published in the People’s Daily, an official newspaper of China’s ruling Community Party, signaled China’s intention to weaponize American corporations operating in the country. Using strongly phrased language, the piece identifies Apple as a poster child of American success built on the backs of Chinese workers and Chinese consumer demand. The article urges Beijing to address this imbalance by demanding that Apple to share a greater portion of its profits with China.

Up to this point, China has been careful to avoid nationalist appeals in the ongoing trade debate. The People’s Daily article signals a significant change in sentiment. By threatening companies like Apple, Beijing can pressure them to vocally oppose the Trump administration’s aggressive trade actions against China and to push Washington to resolve the worsening trade conflict.

In the past, China has pulled the nationalist card in disputes with other nations such as South Korea and Japan. In China’s tightly controlled media environment, the slightest expression of unfairness in a news outlet can stir the passions of the crowd, resulting in boycotts, protests, and even violence against foreign entities. The article targeting Apple suggests that Chinese policymakers may sweep other American companies into the debate as tensions rise.

United Technologies, Caterpillar, General Electric, Johnson & Johnson, Microsoft, IBM, Disney, Cargill, General Motors, Ford, and Procter & Gamble all have significant production capacity

[Zhang Fei]

Oops. Typo. The article is from Fortune, for which Arthur Dong is a contributor.

[House Atreides]

Apple is, I’m reasonably sure, putting together contingency plans with Foxconn to move assembly operations out of China on short notice. That would not be easy and can’t be done overnight but it can be done.

[JPJones]

“United Technologies, Caterpillar, General Electric, Johnson & Johnson, Microsoft, IBM, Disney, Cargill, General Motors, Ford, and Procter & Gamble all have significant production capacity...”

So move back to the US.

Problem solved.

[Almondjoy]

Our companies make decisions based on what’s based for them, unlike in China where it’s government based control. Apple may talk here but they will find somewhere else to build the phones, cheaper than here, and more friendly than China.

[PGR88]

Its a very good window on China’s thinking.

For them, every company or organization is an arm of the state and a tool of strategic power. Because in China - everything is ultimately tied to the State.

Yes, the USA uses corporations in the service of government and strategic aims as well, but we start with the premise they are completely independent actors.

[Harmless Teddy Bear]

Confucius say… he who lies down with dogs, soon have fleas.

Perhaps Apple should put on a collar.

[Zhang Fei]

[Our companies make decisions based on what’s based for them, unlike in China where it’s government based control.]

---

Their corporate execs do what’s good for their companies, too. But then the Party arrests their CEO’s and confiscates their wealth. Which has the effect desired of getting everyone to think about the Party’s interests first and foremost. Or else. This is just the state-owned companies. The privately-owned companies are worse off. That’s why so many fairly well-off people are emigrating. It probably rankles that the Party always has the Sword of Democles dangling over their necks.

In theory, Chinese entrepreneurs own property. In practice, the Party can take it away any time it wants, for any reason or none whatsoever, although it will manufacture an excuse for its arbitrary seizures and censor any commentary that contradicts or critiques its actions. This lack of secure property rights will eventually do a number on China’s economy, well before it catches up to the West.

[LibWhacker]

If they do this, kick ALL Chinese citizens who are students and faculty (so-called) out of our country pronto, but most of whom are actually just spies and intellectual property thieves. Get them out! America first! Reserve those university seats for smart American kids. Subsidize those kids instead of Chinese spies and thieves! We'll see how well that backward culture can keep up if we do not permit, actually subsidize, nine million of them to infiltrate our country. My guess: About as well as the Soviets did it.

[Bommer]

Easily fixed. Layoff all Chinese workers and plunge the entire nation into a resession. Let’s see the commies control a few billion pissed off layer off workers. F’em!

[ifinnegan]

Not new. SOP.

Panic has made them less circumspect.

[ifinnegan]

“For them, every company or organization is an arm of the state and a tool of strategic power. Because in China - everything is ultimately tied to the State.”

Yes. Exactly.

It’s National Socialism.

[To-Whose-Benefit?]

Kill the Federal Consumption (Corp Income)Tax Completely, get it off the books, and they’ll all come running home.

[Roccus]

China’s New Trade Strategy: Threatening U.S. Companies

Taking lessons from "the resistance" I see

[roadcat]

Perhaps Apple should put on a collar.

Apple has no production infrastructure in China, nor have they any employees there except sales staff. They can easily shift production anywhere in the world, and do have production facilities elsewhere including a heavy presence in the USA.

Perhaps you mean “United Technologies, Caterpillar, General Electric, Johnson & Johnson, Microsoft, IBM, Disney, Cargill, General Motors, Ford, and Procter & Gamble...

etc. among hundreds of other US companies that are heavily reliant on Chinese labor.

[MadMax, the Grinning Reaper]

Time for American businesses to “Get the hell out of Red China” before they are “Castroized”.

[Truthoverpower]

Good Destroy Apple 🍎 I’d LOVE TO SEE IT

[prophetic]

Nationalizing foreign companies is always in the playboy for these dictators.

Remember that to do any business in china, the company built there must be 51% chinese owned. And it's just a matter of time before they copy or steal the company secrets & tech and claim it as their own.

[prophetic]

While china don’t yet have the technical spy assets in space like the usa, their spying is done via the massive human resources on via students, tourists, journalists, etc. They call it Spying via 1000 grains of sand and they have a huge system of hundreds of thousands to collect & analyze their info.

[prophetic]

So will the contingency plans include several tons of Thermite and/or high explosives to prevent critical manufacturing equipment, servers and data from falling into the Chinese hands?

If these companies have any sense at all, these plans should be ready within 24 hrs and prepared to hit the Kill Switch aka The Self Destruct Button.

One very strategic item they badly covet is our jet engines technology as that would give them a huge boost as they still have a ways to go in their jet engines designs.