By Sau Fong O’Fallon
During Donald Trump’s first term, many prominent U.S. companies expressed strong support for China; however, this may change in his upcoming term, as the allure of China’s market appears to be tarnished.
According to Stu Woo of WSJ:
During Donald Trump’s first term, U.S. companies argued that a trade war with China was bad for Americans.
Businesses including Apple, Nike and small retailers said raising tariffs on imports from China would raise prices for consumers. Farmers and other businesses that exported to China warned about retaliatory tariffs from Beijing.
Now, as Trump prepares for his second administration, American companies have largely gone silent about the importance of the U.S.-China relationship. That is because American businesses no longer see China as the land of opportunity.
The promise of China’s market has faded as its once-booming economy hits trouble. And Beijing and Washington have implemented policies that make it harder for American businesses to succeed in the land of 1.4 billion people.
“U.S. companies are more wary about doing business in China,” said Anja Manuel, the executive director of the Aspen Security Forum and a consultant for American companies doing business abroad. “You see that across all industries.”
In 2023, China trailed only Mexico and Canada as a buyer of U.S. products. American exports to China totaled $147.8 billion that year, according to the U.S. Census Bureau.
Still, that was down about 4% from the previous year. The U.S. trade deficit in goods with China—the figure that looms large in Trump’s mind—was $245 billion in the first 10 months of 2024, according to the Census Bureau.
While many U.S. companies still have big stakes in China, others have scaled back. The American Chamber of Commerce in China, which represents more than 800 mainly U.S. companies in the country, said its members have gone to other countries for new investments.
The big problem is China’s economy, the world’s second-biggest after the U.S. For decades, it grew at nearly 10% annually. It was on track to gain 5% in 2024, but economists say that target will be tougher to hit in 2025.
U.S. companies used to put up with the difficulties of doing business in China, including potential loss of intellectual property and pressure from state-owned companies, because of the growth potential.
Not only is there hesitancy among U.S. businesses, but in early 2024, a European business group indicated that uncertainty and “draconian regulations” have significantly heightened risks for foreign companies operating in China.
The risks associated with doing business in China may also affect Hong Kong. Since China has increasingly disregarded the Sino-British Joint Declaration treaty of 1984, which was intended to maintain Hong Kong’s lifestyle and autonomy from 1997 to 2047, doing business in Hong Kong is now viewed as “risky.” Sebastien Lai, the son of imprisoned Hong Kong media mogul Jimmy Lai, warned, “Hong Kong is a litmus test for how China views the world… If they aren’t willing to respect those freedoms in Hong Kong, then the long arm of China extends basically everywhere.”
https://www.rfa.org/english/news/china/hk-sebastian-lai-05112023162626.html
