By Barry White
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I’ve been living and working in China for about six years and most of my customers work in manufacturing. It seems that the only corporations being affected are U.S. corporations (in other words, factories that actually belong to the U.S.). So this trade war is really doing more harm to the U.S.
Trump is basically targeting U.S. infrastructure in China since he seems to think these manufacturing jobs should go back to the U.S. However, the actual U.S. corporations know and understand it would be suicide. American factory workers are more expensive than Chinese workers and China is way ahead in automation as well. It’s just cheaper to manufacture in China. Plus, the Chinese population, who constitutes almost 20% of the world population, is a major consumer of these goods, which helps U.S. corporations who don’t need to import since they are literally located in China. If they leave, they lose… a lot.
Nevertheless, production at these U.S. factories have gone down as a result. I suppose it would also affect their profit margins. So it’s hurting U.S. factories in China, and the body corporate back in the U.S. must be fuming at the mouth at Trump. I’ve heard from my customers that some of these corporations are looking at places like Vietnam, Cambodia, etc. to keep the cost of manufacturing low enough to still be able to compete. So the jobs are not going back to the U.S. Furthermore, most of the manufacturing plants in those other countries are also controlled by China. So the money is still going to China.
Another solution some U.S. manufacturers are apparently looking at is to use these other countries and places like Hong Kong or Taiwan as channels to keep exporting the exact same goods out of China, kind of like a back alley detour. Since the tariffs don’t apply to Hong Kong, Taiwan or neighbouring countries, these places can be used as ports from where they can export, negating the entire purpose of Trump’s tariffs. So in other words, the trade deficit can be artificially split by China to look like it went down while it really never did.
It might work. Trump just wants to look good.
So I have to be honest. This whole trade war has almost no impact on the Chinese side. Chinese and European manufacturers in China are largely unaffected. Even Google’s decision to ban Huawei form using some of their Android OS functions are having no impact here. Not a single phone in China uses Google Services or Play Store anyway since China already banned Google in 2012. Huawei phones in China mostly use EMUI, which is based on Android. They also have their own app store, and since I’m English and can’t use it, I basically download apps from Google Play, install it on my Huawei phone, and it works just fine. Probably because Android is Open Source anyway. Anyone can download it and modify it if they want.