ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter

Trump's new China blacklist does nothing to help US economy

Beijing plays same game with outrage at NBA, Apple and more

| China
Donald Trump hosts a Keep America Great rally in New Mexico on Sep. 16: the U.S. President is doing little to build economic muscle at home.   © Reuters

With U.S. President Donald Trump's tariffs exacting considerable pain on China, news Friday of a "very substantial phase one deal" on trade seemed a moment to pop the champagne corks.

It is grand, for example, that China, Trump claims, will buy between $40 billion and $50 billion of U.S. farm products. Great, too, that his White House will not proceed with next week's increase in taxes on $250 billion of Chinese to 30% from 25%.

That is, until you search for specifics of this "deal," of which there are none. That it is a "preliminary" agreement "in principle" seems reason to put the champagne back on ice. The really contentious issues remain outstanding: intellectual property rights, China access for corporate America; subsidies for state-run enterprises; and what happens with the rest of Trump's tariffs.

Left out, too, is how to handle Trump's newest trade-policy toy: Washington's "entity list" of foreign companies with which Americans are banned from doing business. Trump has been upping the pressure by increasing -- at bewildering speed - the number of blacklisted mainland names. So far, more than 100 Chinese companies have been benched.

Washington is zoning in on specialists in artificial intelligence, digital surveillance and machine learning, like Hikvision (video systems), Megvii Technology (facial recognition) and SenseTime (AI software), ostensibly because of human rights violations. The Commerce Department claims to be punishing companies implicated in Beijing's repression of Uighurs and other largely Muslim minorities in the autonomous region of Xinjiang.

That seems a pretext, though. History probably will not be kind to the Trump administration's legacy on human rights; for example, Trump reportedly told China's President Xi Jinping he would stay quiet about Hong Kong's pro-democracy protests in exchange for a good U.S.-China trade deal.

Instead, Trump's sudden fixation on blacklisting Chinese companies raises questions about how this dangerous trade-war game is being played -- and how it might end.

Trump's 18-month-long drive against China is chaotic. If he sought a unified assault on China, he would rejoin the Trans-Pacific Partnership. The 12-member TPP, as originally planned, would have taken on President Xi with the force of 40% of global gross domestic product.

His go-it-alone strategy now has the U.S. picking off Chinese names that might help Xi realize his "Made in China 2025" ambitions to upgrade the country's manufacturing capabilities. What, though, does it get America in the long run?

You slow down a bunch of mainland startups. You threaten to delist Chinese companies trading on U.S. exchanges, sending shudders through e-commerce giant Alibaba. You hint at restrictions for American investment in China, an idea that might normally draw an International Monetary Fund rebuke. These are not tactics to make American competitiveness great again.

Tariffs on hundreds of billions of dollars of Chinese goods have not pulled factories back to the U.S. Those jobs are going to Vietnam, the Philippines and Thailand. Engaging in hand-to-hand combat with Xi does nothing to increase U.S. productivity, improve crumbling infrastructure or reduce a national debt topping $22 trillion. Nor does it refocus Silicon Valley on disruption rather than selling internet ads.

Trump seems happy to forfeit the renewable energy boom. As he brings back coal and browbeats Detroit to make less fuel-efficient cars, China is investing big in leading the future of solar panels, batteries and electric vehicles. Trump may win a few short-term victories, but he is doing little to build economic muscle at home.

The U.S. is not the only country which can attack foreign companies.

The National Basketball Association faced hostile fire from China after Daryl Morey, general manager of the Houston Rockets, tweeted in support of Hong Kong's protesters. He quickly deleted the tweet, but Chinese state TV started removing basketball matches from its schedule.

The NBA fouled in its initial response, prompting Morey to apologize, but finally sided with free speech. Its pushback marks the most prominent defiance Beijing has experienced since 2010, when Google, arguably America's premier internet company, left China. This dilemma is forcing corporate boards to confront a touchy question: is tapping China's 1.4 billion-person market worth selling your soul?

Apple seemed to say yes last week. It removed a mapping app that Hong Kong protesters employ to track police movements. Apple has lots of company in bowing to China. If groveling were an Olympic sport, GAP, Delta, Marriott, Mercedes-Benz, Nike, Versace and many others would all be medal contenders.

Swiss bank UBS faced fallout when one of its analysts mentioned "Chinese pigs" in a discussion about mainland pork prices. Companies risk backlash for mentioning "Taiwan" as a separate country on websites. Disney's beloved Winnie the Pooh character -- which netizens have said resembles Xi -- is banned on Chinese social media.

Not all U.S. companies are intimidated. The creators of foul-mouthed cartoon series "South Park," which had run an episode about China's treatment of prisoners, criticized the NBA for "welcom[ing] the Chinese censors into our homes and into our hearts."

"Xi doesn't look just like Winnie the Pooh at all," quipped Trey Parker and Matt Stone.

China's hypersensitivity is at odds with its status as a global superpower. Rather than exuding confidence on the world stage -- and growing a thicker skin -- Beijing is indulging a victimhood mindset that smacks more of weakness than strength.

Trump, too, of course. His trade war and blacklists seem driven more by fear and grievance than courage. And given the policy chaos that dominates this White House, Friday's fuzzy "deal" could easily be subsumed by Trumpian assaults in Asian supply chains to come.

One thing is for certain, though: while Trump beats up on Chinese companies, and Xi beats up on American companies, both need a new game plan if they want to see real, sustainable economic progress.

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more