Washington’s trade protectionism will be bad for US companies: expert
On July 6, the US government announced that US stakeholders can apply for an exclusion from tariffs for one year. Many people may wonder why the US made the decision was made just hours after its tight policy on Chinese imports.
The reason might be simple, as 59% of the products listed are produced by multinational companies in China, and more than 70% of them are processed by US companies. The US government cannot afford the losses of these indispensable parts in the global industrial chain, said Wei Jianguo, a former vice minister of China’s Ministry of Commerce (MOC).
The effectiveness of the exemption is still a question mark. Some tourist products, such as trolley cases, wallets, and backpacks are included on the list. These goods are a $31-billion-worth market, 87% of which come from China. This is why people like Jonathan Gold, vice president of National Retail Federation, fiercely opposes the trade war, as he cannot find a large amount of alternatives for these goods in other countries, said Wei, who is also the vice president of Chinese Center for International Economic Exchanges.
Wei pointed out that many US high-tech companies have maintained intimate strategic partnerships with China’s related industrial programs. The US government has pushed these companies into a dilemma, which will force them to follow Tesla to establish a headquarters and production bases in China.
If the Trump administration puts $200-billion in additional tariffs on Chinese goods, it will trigger more objections from American companies, as they do not want to lose China’s potential high-consumption market or make cooperation difficult, Wei noted.
In recent years, US companies’ rate of return on investment has declined in China, which is interpreted by the US government and the public as “unfair trade” despite the fact that US companies also experience such phenomenon in other countries such as Australia and Japan. It is normal for a company to obtain high profit margins at its entry and then gradually decline to a stable level, according to Wei.
The newly established foreign-invested enterprises in the first half of this year increased by 96.6% year-on-year, and growth in the double-digits is expected to be maintained for the next five years, according to the data released by the MOC.
China should adhere to opening-up and defend free trade and the multilateral trade system, especially at a time when trade protectionism is on the rise, Wei emphasized.
（People’s Daily/Global Times）
