The Art of a China Deal

[Randy W]

This looks like a good article, although I haven't gotten very far through it yet. The author seems a little bit too opinionated for my taste, but definitely seems to know what he's talking about.

 

The author

James McGregor is an American author, journalist, and businessman who has lived in China for more than 25 years. He is Chairman of APCO Worldwide, Greater China, and a professional speaker and commentator who specializes in China business, politics, and society.

 

 

The web site - see http://www.chinafile.com/about

 

 

http://www.chinafile.com/sites/default/files/styles/large/public/assets/images/article/featured/33796_sm.jpg?itok=Nr0eG_sn

 

The Art of a China Deal

Reciprocity and the Trump Pacific Partnership

 

 

Dealing with President Trump will not be a novelty for Chinese leaders. The country is littered with eccentric and egotistical real estate billionaires. In fact, Trump has much in common with China’s leaders. The Chinese leadership is also outwardly bold and confident but inwardly paranoid and insecure. Like Trump, they create and repeat “alternative facts” until they are considered truths. Like Trump, they allow no insult or slight to escape retribution. Unlike Trump’s, Chinese retaliation is not a 6:00 a.m. Twitter tantrum but a well-studied and carefully targeted response that will deliver maximum punishment.

Trump will also discover that China is ahead in the “great” game. China has focused on “Making China Great Again” for the past four decades. While China concentrates on the industries needed for 2030 and beyond, Trump’s China trade policies are better suited for the 1950s. China is concentrating on dominating advanced manufacturing, with its semiconductors and robotics, as well as aerospace, biopharma, new materials, advanced medical devices, and beyond. Trump’s trade team is saddled with a back-to-the-future agenda that concentrates on preserving heavy industry through tariff barriers and currency complaints.

By killing the Trans-Pacific Partnership (TPP) without an alternative plan or vision, Trump has left our Asian allies twisting in the wind, with little choice but to sign on to the Chinese value proposition of providing money, infrastructure, and market access in return for settling in under China’s economic and security umbrella.

If Trump now plows ahead with trade remedies focused on yesterday’s problems, as his threatened 45 percent tariffs on Chinese exports and focus on Chinese currency are, American business and their global supply chains and sales channels will be hammered.

Instead, Trump should focus on three things in resetting U.S.-China trade and business relations. First, all discussions and agreements should be based on true reciprocity. We can’t do it there, you can’t do it here.

. . .

Trump will need to thoroughly think through his China trade policy as U.S. multinationals present a ripe target for Chinese redress. China is often the largest or fastest—or both—growing market for U.S. companies in industries ranging from aviation to telecommunications to silicon chips to automobiles to food and agriculture. China’s creative retribution skills were on full display when the European Union imposed tariffs on Chinese solar panels a few years ago. China responded by going after Europe’s nearly $1 billion in wine exports to China. The solar panel dispute was quickly resolved.

More than 50 percent of Chinese exports are produced by foreign-funded factories. Foreign firms account for 70 percent of high-tech exports. And China was responsible for nearly 40 percent of global growth last year. So Trump’s plan for 45 percent tariffs on Chinese exports to the U.S. could knee-cap leading American companies and roil the U.S. stock market.