Has China Sent A Clear Signal to President-Elect?

6 months ago John Abercrombe Comments Off on Has China Sent A Clear Signal to President-Elect?

Yes, China appears to be sending a message to President-elect Donald Trump: Good luck competing against us on manufacturing. Mr. Trump does not speak Chinese so these messages are largely ignored.

Mere hours after Trump, Vice President-elect Mike Pence and Carrier announced a deal to keep nearly 1,000 factory jobs in the U.S., a top Chinese newspaper published an analysis piece with the headline: “China would benefit from Trump’s effort to bring manufacturing jobs back to U.S.”
The commentary ran in the “business opinion” section of the Global Times, a newspaper backed by the Communist Party.

“It will be almost impossible for the [U.S.] to restore its glory as a major manufacturing powerhouse under his presidency,” the piece says. The author is a reporter for the Global Times.
If companies like Apple (AAPL, Tech30) move factory jobs back to the U.S. in a “show of patriotism,” it will raise costs dramatically, the reporter argues. That opens the door for Chinese companies like smartphone makers Huawei and Xiaomi to undercut Apple on the world market.

Trump repeatedly promised to bring jobs back to the U.S. from China and Mexico during his campaign. His plan for his first 100 days in office calls for labeling China a “currency manipulator.”
China is likely nervous about how far Trump will go. Trump’s presidency comes at a tough time for China. The country is undergoing a massive shift of its own from manufacturing to a more service and high-tech jobs. China’s government continues to report 6.7% growth, but that is slower than in recent years and there are questions about how reliable that data is.

If China really wanted to undercut Apple or any other U.S. business, it would have tried already.

It’s unclear how much Trump or Chinese leaders can do to change the larger dynamics at play on manufacturing. Many jobs are being lost to robots and automation, and some Chinese companies are starting to open factories in the U.S.
If China really wanted to undercut Apple or any other U.S. business, it would have tried already, argues Derek Scissors, a China expert at the right-leaning American Enterprise Institute.
But Scissors thinks the Global Times article has a point: It will be difficult for Trump to turn back the clock to the glory days of U.S. manufacturing.

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