CHINAMacroReporter

'Train Wreck: Ultimately companies have to choose.’

Train Wreck Coming for Foreign Companies in China

MUST READ: Bill Reinsch succinctly but brilliantly summarizes the situations in China and the U.S. and between the two.
by

|

Center for Strategic & International Studies (CSIS)

April 6, 2021
'Train Wreck: Ultimately companies have to choose.’
BIG IDEA | ‘Smart companies have already figured out that China is both their best customer and biggest threat.’
‘The private sector, as well as private individuals, are essentially being told by both sides they have to choose. Politics and economics are merging, and there can be no bystanders.’
‘They see what is coming down the tracks at them but do not want to give up the money they are making in China. Unfortunately, they will discover that keeping their heads down won’t do the job, and they will ultimately have to choose.’
‘Decoupling will grow, not because the U.S. government demands it, though it might, but because U.S. companies will find themselves in untenable positions.’

MUST READ: Bill Reinsch succinctly but brilliantly summarizes the situations in China and the U.S. and between the two.

  • And the bind this will put U.S. businesses in.

‘We are approaching an inflection point in the U.S.-China relationship, although the pace is more like a slow-motion train wreck than an impending high speed car crash.'

  • ‘Sadly, the victims will be Western companies.’

‘On the Chinese side, the government’s policies and actions are becoming more difficult to swallow.’

  • ‘Economically, China continues to move away from market reforms, discriminate against foreign businesses, and harass companies that do not toe its rhetorical line.’
  • ‘Politically, it continues to step on other nations’ rights in the South China Sea under the Law of the Sea Treaty; threats against Taiwan escalate, as do threats against third countries that support Taiwan.’
  • ‘Domestically, the Chinese government is busy eliminating the last shreds of Hong Kong’s autonomy, and its repression of the Uyghurs and other minorities continues, as do harsh attacks on anyone who criticizes that.’

‘These actions confirm the view that China believes the United States is a declining power and China a rising one, and it seems determined to move aggressively to take advantage of that, doubling down on repressive policies and harassing anybody who objects—Australia being a recent good example.’

  • ‘As long as Xi Jinping remains in power, which could well be for some time, China’s more aggressive direction is not likely to change.’

‘President Biden, who has little room to maneuver thanks to Congress, seems to share Trump’s dim view of China but says he will differ in tone and strategy.’

‘The Biden strategy is not yet clear, but some elements are beginning to emerge.'

  • ‘First, he intends to consult broadly and deeply with allies and partners in the hope of building coalitions, whose members might differ from issue to issue, to confront China collectively. He will likely spend a year or more doing that, so don’t expect a rush to negotiate.’
  • ‘Existing tariffs will remain, but additional actions will depend more on further Chinese provocations than anything else.’
  • ‘Simultaneously, he is embarking on a broad set of plans to revitalize our innovation capabilities so the country is in a stronger position to address China’s challenges. That will also take time.’

‘Biden’s innovation efforts will succeed. We are good at that, have done it before, and will do it again.’

  • ‘His efforts to get China to moderate its policies will fail. In their view, everything we are asking will undermine the Party’s control of the country, which is the last thing they would ever agree to.’
  • ‘Strengthening our own capabilities and building a coalition will put us in a stronger position once our inability to change their behavior becomes obvious.'

‘China, of course, is not standing around waiting for the United States to confront it. The government is busy pursuing ever more objectionable policies, and it is foreign businesses that are caught in the middle.’

  • ‘Apparel companies are boycotted in China if they do not use Xinjiang cotton and attacked in the United States if they do.’
  • ‘Companies being taken to court in China and forced to license their intellectual property at far less than its value are being threatened with large daily fines if they respond with litigation in Western courts.’
  • ‘Companies are threatened if their maps do not designate Taiwan in an approved manner.’
  • ‘As the use of sanctions against entities or individuals complicit in Chinese human rights violations grows and Chinese counter-retaliation escalates, as it recently has with the European Union, Western companies will inevitably find themselves in a position where no matter what they do they will be violating somebody’s law and policy.’

‘Developments like these presage the train wreck.’

  • ‘The private sector, as well as private individuals, are essentially being told by both sides they have to choose.’
  • ‘Politics and economics are merging, and there can be no bystanders.’
  • ‘Decoupling will grow, not because the U.S. government demands it, though it might, but because U.S. companies will find themselves in untenable positions.’

‘Smart companies have already figured out that China is both their best customer and biggest threat.’

  • ‘They see what is coming down the tracks at them but do not want to give up the money they are making there.’
  • ‘Unfortunately, they will discover that keeping their heads down won’t do the job, and they will ultimately have to choose.’

‘Because the Biden administration appears to want to play the long game, these events will play out in slow motion, and companies may have time to plan an effective strategy, but they should have no illusions about what is going to happen.’

  • ‘The light at the end of the tunnel signals an oncoming train, not the end of their difficulties.’

More

CHINAMacroReporter

February 3, 2021
'Coup a further complication for tricky Myanmar-China ties'
‘Even if China played no role at all in ousting Suu Kyi, Beijing is likely to gain still greater sway over the country.’
keep reading
February 3, 2021
‘Beijing Won’t Let America “Compartmentalize” Climate Change'
‘‘You want China to take action on climate change?" asks Xi Jinping. "Let’s talk about what you’re going to give to get it.’’
keep reading
February 3, 2021
Burma: At the Center of the U.S.-China Competition
In today’s issue: 1. China Lays Out Its Position / 2. The U.S. Lays Out Its Position / 3. Burma: At the Center of the U.S.-China Competition / 4. Burma or Myanmar?
keep reading
April 15, 2021
'TSMC faces pressure to choose a side in US-China tech war'
‘Taiwan Semiconductor Manufacturing Company (TSMC) has maintained its historic position of neutrality, reflected in the company’s strategy of “being everyone’s foundry”.’
keep reading
April 14, 2021
The Belt & Road in the Post-Pandemic World
In this issue of China Macro Commentary, I have focused just on the ‘Digital Silk Road’ and how it supports the business expansion of Chinese tech companies, and on BRI ‘connectivity’ projects: ports (China is involved in 93 around the world) and on the growing China-Europe freight trains traffic (This wasn't covered sufficiently in the Report, so I included a recent article from the Wall Street Journal), plus on the U.S.'s failure to meet the BRI challenge.
keep reading
April 13, 2021
'2021 Annual Threat Assessment of the U.S. Intelligence Community'
‘China increasingly is a near-peer competitor, challenging the United States in multiple arenas—especially economically, militarily, and technologically—and is pushing to change global norms.’
keep reading
April 13, 2021
In Battle With U.S. for Global Sway, China Showers Money on Europe’s Neglected Areas
‘The number of freight trains running between China and Europe topped 12,400 last year, 50% higher than in 2019 and seven times that of 2016, according to Chinese authorities.’
keep reading
April 11, 2021
'Why manufacturing matters to economic superpowers'
‘Whether such reshoring matters for national economies depends very much on the industry.’
keep reading
April 11, 2021
China in Jamie Dimon's Letter to Shareholders
‘China does not have a straight road to becoming the dominant economic power’.
keep reading
April 11, 2021
'Alibaba’s rivals on alert after China’s regulators hand out record fine'
“Everyone with a clear mind won't self-regulate, you just pretend that you do. Who will pay for the loss if you lost your competitive advantage because you self-regulated and others didn't?”
keep reading
April 10, 2021
Alibaba: 'Promote the healthy and sustainable development of the platform economy'
‘From the perspective of the long-term and healthy development of the platform economy, regulation by law and support for development are not contradictory, but are complementary and mutually reinforcing.'
keep reading
April 9, 2021
'The Best Explanation of Biden’s Economic Thinking I’ve Heard'
‘When President Biden’s thinking about the infrastructure investments necessary, a lot of it is in contraposition to what he is seeing China doing in terms of strategic investments.’
keep reading
April 8, 2021
Liu Ge: Competing with China a farfetched guise for US’ infrastructure plan
‘Historically speaking, it seems the only way for the US government to make costly public investments was to create an adversary that is presumed to threaten its security.’
keep reading
April 8, 2021
'Antony Blinken interview: The secretary of state offers a window into Biden's foreign policy decisions'
‘ “Our goal is not to contain China, hold China back, keep it down,” Blinken underlined.’
keep reading
April 8, 2021
'US adds Chinese supercomputing companies to export blacklist'
‘The Biden administration took its first trade action against China on Thursday, adding seven Chinese supercomputing developers to an export blacklist for assisting Chinese military efforts in a move that will likely further escalate frosty tensions between the world's two largest economies.’
keep reading
April 7, 2021
'Remarks by President Biden on the American Jobs Plan'
‘Look, do we think the rest of world is waiting around? Take a look. Do you think China is waiting around to invest in this digital infrastructure or in research and development?’
keep reading
April 7, 2021
China: 'Power Trader'
‘The theory of power trade better explains China’s economic and trade policies than does the theory of free trade or protectionism,’
keep reading
April 6, 2021
'Train Wreck: Ultimately companies have to choose.’
MUST READ: Bill Reinsch succinctly but brilliantly summarizes the situations in China and the U.S. and between the two.
keep reading
April 6, 2021
'Buy American!': Pushing U.S. Companies to Onshore Supply Chains
The debate about how to deal with China commercially ‘has moved in two directions: running faster—improving our innovation capabilities in critical technologies to better compete with China—and slowing China down by restricting its access to U.S. technology.’
keep reading
April 4, 2021
'Why Defending Taiwan is in the U.S. National Interest'
‘As long as Washington assesses that American security is best served by defending forward—an approach that has served the United States well over the past 70 years—Taiwan’s de facto independence will remain a key US interest and driver of American policy in Asia.’
keep reading
April 4, 2021
'Why China Is Going All "Wolf Warrior," All the Time'
‘All this is to say that, living in Beijing as I do, I think the current approach is predictable and consistent with everything else we are seeing in China in the New Era.’
keep reading
April 3, 2021
'With Swarms of Ships, Beijing Tightens Its Grip on South China Sea'
‘Not long ago, China asserted its claims on the South China Sea by building and fortifying artificial islands in waters also claimed by Vietnam, the Philippines and Malaysia.’
keep reading
April 2, 2021
'Genesis Celebrates Launch In China With Dazzling, World Record-breaking Drone Show Over Shanghai's Iconic Skyline'
'The spectacular visuals were coordinated to present the world of Genesis, delivering an audacious storytelling concept while also breaking the Guinness World Records for "The Most Unmanned Aerial Vehicles (UAVs) airborne simultaneously".’
keep reading
April 2, 2021
Mo' Infrastructure, Mo' Problems Copy
‘China’s reliance on building roads, railways and airports to support growth has caused a spike in debt, with some of that money funneled into unnecessary infrastructure and uneconomic boondoggle developments.’
keep reading
April 2, 2021
How Does the U.S. Compare to China?
Two reports from Bloomberg – ‘Biden Starts Infrastructure Bet With U.S. Far Behind China’ and ‘Biden’s Biggest-Ever Investment Plan for U.S. Still Trails China’ – highlight a few of the differences.
keep reading
April 2, 2021
USTR | '2021 National Trade Estimate Report on FOREIGN TRADE BARRIERS'
‘Made in China 2025 seeks to build up Chinese companies in the ten targeted, strategic sectors at the expense of, and to the detriment of, foreign industries and their technologies through a multi-step process over ten years.’
keep reading
April 2, 2021
‘2021 Report Card for America’s Infrastructure’
‘The 2021 Report Card for America’s Infrastructure reveals we’ve made some incremental progress toward restoring our nation’s infrastructure.’ ‘For the first time in 20 years, our infrastructure is out of the D range. America's Infrastructure Scores a C-.’
keep reading
April 2, 2021
'US to make it easier for diplomats to meet Taiwanese officials'
'Plan to loosen restrictions on contacts with Taipei threatens to provoke China.'
keep reading
April 2, 2021
Biden Starts Infrastructure Bet With U.S. Far Behind China
Even though he didn’t rely solely on the China challenge to justify his new American Jobs Plan; devoted to infrastructure and more, President Biden certainly he had China in his sights. Because as Jonathan Hillman, a senior fellow at the Center for Strategic and International Studies, wrote“The United States is entering what could be a decades-long competition in which economic and technological power will matter just as much, if not more, than military might.” “Starting this race with decaying infrastructure is like lining up for a marathon with a broken ankle.”
keep reading
April 2, 2021
President Biden Lays Out His ‘American Jobs’ Plan
‘It has become a cliché in U.S. policy circles that the best China policy is to invest in core U.S. capabilities: education, infrastructure, and research and development,’ writes Evan Medeiros of Georgetown University in ‘How to Craft a Durable China Strategy,’ in Foreign Affairs.
keep reading
April 2, 2021
'China’s Dangerous Double Game in North Korea'
‘Beijing’s North Korea policy is primarily motivated by a desire to counter U.S. power in the Asia-Pacific region and increase Chinese influence on the Korean Peninsula.
keep reading
April 2, 2021
'Japan’s Suga to Be the First Foreign Leader to Meet With Biden'
‘Japan walks a narrow line as it seeks to maintain close ties with its only military ally, the U.S., while avoiding damage to economic ties with its biggest trade partner, China.
keep reading
April 1, 2021
'Convicted in Hong Kong'
‘Everyone in the former British colony understands the message being sent from Hong Kong’s new masters in Beijing:’
keep reading
April 1, 2021
'U.S. dollar at risk as China races ahead on digital yuan'
‘So why should America care about any of this?’
keep reading
April 1, 2021
PRC Foreign Ministry Response to the USTR's 'National Trade Estimate Report'
‘The accusations and slanders made by the US against China's industrial policies are groundless.’
keep reading
March 31, 2021
'Consumer boycotts warn of trouble ahead for Western firms in China'
‘Western executives in China cannot shake an unsettling fear that this time is different.’‘Their lucrative Chinese operations are at rising risk of tumbling into the political chasm that has opened between the West and China.’
keep reading
March 31, 2021
'How the Pandemic is Changing the Belt & Road Initiative'
‘The building of roads, railways, ports, and power plants is giving way to a BRI centered on technology—primarily telecommunications, connectivity, health care, and financial services.’
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.