American companies aren't leaving China
Tom Fowdy

Editor's Note: Tom Fowdy is a British political and international relations analyst and a graduate of Durham and Oxford universities. He writes on topics pertaining to China, the DPRK, Britain, and the United States. The article reflects the author's opinions and not necessarily the views of CGTN.

As Donald Trump has escalated his trade war, he claimed that American companies are leaving China "in droves." When he escalated the conflict last week, he further "hereby ordered" U.S. businesses to leave the country, a move which even though he had no authority to pursue, certainly rattled markets. In light of this hyperbole by the President, how are American companies responding to the hostile environment created by the White House in practice? Are they really packing up, leaving China and searching for alternative supply chains?

The answer might surprise you. Whilst certain big firms such as Google have announced an interest in relocating some operations to Vietnam, as well as even Chinese companies themselves, a recent survey by the China-U.S. business council members found that 87 percent of respondents had no plans to move their work out of the country, with only three percent saying that the trade war had made their businesses unprofitable. Thus, the survey concluded: "The majority of American companies surveyed remain committed to the China market and a few are currently divesting existing operations." The chairman of the council Craig Allen noted, "Our members are in China for the long term, none of them are anticipating orders to leave" – punching a blow to the President's claims.

Gigafactory of electric car maker Tesla Inc. is under construction in Shanghai, July 28, 2019. /VCG Photo

Gigafactory of electric car maker Tesla Inc. is under construction in Shanghai, July 28, 2019. /VCG Photo

Once again, Trump is misleading the American public. Whilst he has paraded a one-sided, hysterical and falsified narrative of China "ripping off the United States" and boasting of a "successful" trade war, the President has persistently neglected to inform the public of the true nature of China-U.S. business ties. 

Far from China over-exporting at America's expense, the reality is that U.S. companies have found enormous opportunity in China's far larger and lucrative domestic market with the report noting that less than a quarter invested in China to "export to the United States." In this light, even as Trump burns opportunities at home, American investment in China is simply not going to go away.

Trump repeatedly portrays U.S.-China business in a zero-sum binary light of two countries competing with each other. Either "America wins" or "China wins." He offers no space to the idea that both countries can benefit from each other. In doing so, he has claimed that American companies are losing because of exports from China and when in that country, they gain insufficient market access. This has been built into a larger narrative that China-U.S. relations come entirely at Washington's expense, thus as he repeatedly states: "China is ripping us off" and in turn has claimed that the application of tariffs will fix that balance.

However, far from the "manufacturer versus consumer" binary, what Trump never tells the public is that China has a domestic market too, and that American companies overwhelmingly profit from it. With a population of 1.4 billion, China has more consumers than the U.S. could ever have, a total of which is growing year after year and has not yet reached its full potential. 

Customers shop wine at a newly opened Costco store in Shanghai, August 29, 2019. /VCG Photo

Customers shop wine at a newly opened Costco store in Shanghai, August 29, 2019. /VCG Photo

These consumers buy American products. For example, as Hu Xijin, chief editor of Global Times, pointed out on Twitter: "China is the number one market for General Motors, how could Trump possibly expect them to just leave?" On another note, one just has to look at the reactions to the new Costco store opening in Shanghai too, which was forced to close early due to overwhelming numbers of shoppers. Similarly, Tesla is building its new factory in China. Why are they choosing China above the U.S.?

Because as a general rule, American businesses recognize that the Chinese market is far more lucrative than the market back home and no amount of tariffs or threats are going to change that, therefore as a general rule they are staying committed to the country, comfortably. As the National Business Council survey notes, only a quarter of American businesses in the country are engaged in exports-related activities to the United States. This is a far a cry from the one-sided dichotomy that Trump presents to his country that China is profiting at America's expense and that everything revolves around export manufacturing, when it doesn't. 

Thus, accordingly, his claim that American companies are leaving China in droves is also inherently false. In an ironic twist, if he did get his way and all U.S. companies were forced to leave, it would wipe billions off the profit margins of all Washington's leading companies, sinking markets, culling all investment at home and plunging the economy into a certain recession.

So that begs the question, just when will the administration be honest about the true nature of China-U.S. business ties? And when will they come to the recognition that this trade war is the ultimate act of self-harm, which in the long run will hurt America first and foremost?

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