China's top corporate executives are divided about how to handle investments in United States under the forthcoming Donald Trump presidency. Opinions being voiced are as diverse as chocolate and poison. Some prefer collaboration with the new administration, while other business leaders advocate retaliation if Trump takes adverse actions against the country's interests. The first chief executive officer to take a stand was Wang Jianlin, China's richest businessman and owner of the biggest theater chain in the U.S. (AMC Theaters). Wang has threatened to withdraw his $10 billion in U.S. investments if Washington imposes curbs on Chinese businesses. China's state-run media have also been advocating strong adverse action if Washington acts against Chinese business and political interests. Chinese auto glass tycoon Cao Dewang takes the opposite view, saying he will shift part of his business and create jobs in the U.S. Cao complained of the high and "deadly" rate of taxation in China and was immediately dammed by thousands of people in Chinese social media as a "traitor." Government agencies reacted by saying that taxes were not really very high compared with those in the U.S., and one agency promised help to lower manufacturing costs. Some business analysts are not convinced about Cao's reasons for continuing to invest in the U.S. "If Cao Dewang, who supplies tons of U.S.-based automobile facilities with auto glass, is moving a facility to the American Midwest, there are a lot of other factors involved besides taxes," said Jeffery Towson, a Peking University professor and author. "Companies rarely move major operations solely for tax reasons. They factor in things like required expertise, infrastructure, labor costs, transportation issues, energy costs, regulations and such." Ma's offer The debate took an interesting turn on Monday when Trump, who has promised punitive action against China for "stealing" American jobs, held a 40-minute meeting — the first with a Chinese CEO since the election — with Jack Ma, head of Chinese giant Alibaba Group. Alibaba officials confirmed Ma has offered to create 1 million American jobs by selling goods manufactured by small businesses in the U.S. Midwest in China and Southeast Asia through his online shopping platform. An important question is whether the Alibaba chief was speaking for himself or representing, in an implicit manner, Beijing's interest in softening Trump's stance toward China as a whole. The Communist Party newspaper, Global Times, ran a commentary on Tuesday indicating an official hand might have been involved. "The Chinese side must have maintained communication with Trump's transition team. But Ma is the first Chinese mainlander that met with Trump in public, and perhaps one of the few Chinese entrepreneurs that Trump is keen to meet, given the possible boom Ma can bring to the American job market," it said. Ma's promise to create 1 million American jobs in five years is about 20 times higher than the offer made by Masayoshi Son, the CEO of Japanese tech giant SoftBank. Son pledged to infuse funds to create 50,000 jobs. Interestingly, Trump's response to Ma was subdued compared with the excitement he showed after meeting Son in December. Trump told reporters after the meeting that he and Ma would "do some great things." Zhang Zhouping, chief analyst at the China E-commerce Association, said Ma "is using jobs as a bargaining chip in exchange for better treatment and favorable polices in the U.S." Calling for retaliation During the election campaign, Trump promised to create barriers against Chinese investments in the U.S., impose a 45 percent tax on Chinese imports and declare China a currency manipulator. China's official media have been asking the government to be prepared for retaliation if Trump implements those promises. The Global Times also exhorted the government to "take revenge" against the U.S. if it persisted in treating Taiwan as an independent country. But business experts say it would not be easy for Beijing to retaliate by curbing the flow of investments, because there is a lot at stake for Chinese companies. "I doubt that the Chinese government would focus its actions on Chinese business investment in the United states," Barry Bosworth, a senior fellow at the Brookings Institution, a Washington policy research group, told VOA. "The primary form of any retaliation for trade restrictions would be to raise taxes on the purchase of U.S. capital goods in China in favor of Europe and Japan," Bosworth said. "A good example would be the substitution of the Airbus for Boeing aircraft. China is now one of the world's largest markets, and while the U.S. does not directly export much to China, U.S. firms have a very large stake in the country." Nor is it easy for Chinese business to avoid the U.S. market. In fact, many Chinese businessmen intrigued by Trump's promise to slash taxes to 15 percent believe it might make the U.S. a more attractive investment destination than China, said Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies in Washington. "Chinese companies invest in the U.S. for a variety of other reasons: acquisition of technology and management skills, being close to a target market, finding a stable safe haven for funds relative to China's slowing and volatile markets, and avoiding tariffs and non-tariff barriers," Kennedy told VOA. There are signs China is trying to adjust to the reality of a harsh Trump administration and find ways to soften his stance by offering enhanced Chinese investments that would create more American jobs. China is also in competition with businesses from other countries, notably Japan, which may be equally eager to expand in the U.S. market if there is tax reduction.
About The Author
When US Firms Move to Mexico, Some Workers Win, Some Lose
December 8, 2016
Oil Business Seen With Edge as Trump, Congress Tackle Tax Reform
January 4, 2017