China Prepared for Trade War with US


China plans to spend US$150 billion over a 10-year period on semiconductor design and manufacturing. Photo: Shutterstock

China plans to spend US$150 billion over a 10-year period on semiconductor design and manufacturing. Photo: Shutterstock

In its report “China’s chip policy poses risk to US firms and national security, White House says”, SCMP says that the US worries about China’s industrial policy targeting for leading position in semiconductor. That will give Trump justified reasons for a trade war with China.

China’s “options include subjecting well-known US companies or ones that have large Chinese operations to tax or antitrust inquiries”. “Other possible measures include the launch of anti-dumping investigations and scaling back government purchases of American products, according to the people,” says SCMP.

SCMP quotes Brian Krzanich, chief executive of Intel Corp. as saying, “Lowering the tax rates, making it easier for people to do manufacturing here, that’s what will bring manufacturing back to the US.” According to Krzarnich, US industry leaders do not want a standoff with China.

When this writer worked for a US law firm to help US companies establish joint ventures in China in 1980s, he often heard managers of US industrial firms complain the stringent product responsibilities on US industrial enterprises. That was a major reason why they had to move production to China.

Will Trump be so stupid as to start a trade war with China instead lowering tax and give other domestic incentives to US industries? That will test Trump’s wisdom.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be found at http://www.scmp.com/news/china/economy/article/2060207/chinas-chip-policy-poses-risk-us-firms-and-national-security.

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5 Comments on “China Prepared for Trade War with US”

  1. Handle says:

    China should be worried about other countries undercutting the products they now produce and selling those products at vastly lower prices. And to make it worse for China these other countries are now producing products that have better quality than things coming from China!

    Like

    • chankaiyee2 says:

      China does lag behind. That is why it has to spend $150 billion to catch up. That is the major part of China’s reform for consumption-, innovation- and creation-led growth.

      China need not worry about what you said. Chinese market alone is large enough for its own products.

      Like

    • Tyler reber says:

      No self respecting businessman will accept an order that doesn’t meet contractual standards. If China makes cheap products, it’s because that’s what was asked for.

      No self respecting manufacturer will sacrifice profits to do more than needed.

      Like

    • Steve says:

      Name the countries that is producing similar, better products and undercutting China. I know that India produces excellent curry powder, slippers, singlets and cow dung.

      Like

    • Joseph says:

      The way it is going now, China has moved away from producing Western-specified dodgy industries, now that Western money has lost prominence in China. China is not the first to produce cheap products for the West. There was Japan before China. And Western countries are trying to find substitute for China to produce Western-needed cheap and unreliable products. Bangladesh, for instance, is now producing cheap and unreliable clothings to satisfy Western demands. However the now-tight Western money has press the price and thus labor and material quality even further down, forcing the Bangladeshi to work in unsafe and inhumane conditions, which often cost many Bangladeshi lives such as clothing factory building collapse not to long ago. But that’s not a problem for the West. After all, cheap products are paramount, not the welfare of the producers. Now that Chinese cheap products are being phased out for these ‘undercutting’ countries, already many Westerners miss the cheap low quality Chinese products they scorned so much not too long ago. But none of it matter. Soon, these undercutting countries will learn the crafts of industry to produce far better quality products and they will abandon Western-specified dodgy industries. And what will happen to the West? Nations prosper, but the West will always need the same cheap products. They will find other poor countries to accommodate their dodgy industries, but always with a lot less limited money to offer, they will press the price down again. In the end, when there is no more country willing to produce cheap product for the West, they have to do it themselves. And when that time comes, will the West still have skills for industry, high or low quality? As for right now, many Westerners cannot even boil water without appliances from China or any other ‘undercutting’ countries.

      Like


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