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US economic war against China to have 'gargantuan' fallout: Economist magazine

Xinhua | Updated: 2020-08-17 15:41
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The messenger app WeChat and short-video app TikTok are seen near China and US flags in this illustration picture taken Aug 7, 2020. [Photo/Agencies]

NEW YORK - The fallout of "an escalation in the economic war" between the United States and China "could be gargantuan," according to a recent article of the Economist magazine.

Citing an estimate by Deutsche Bank, the article said "lost revenues in China, the expense of moving factories out of the country and compliance with the Chinese and American technospheres' diverging standards could cost global technology firms $3.5 trillion over the next five years."

"A large chunk of that burden" would fall on US firms, added the article published Saturday.

The article cited a tech entrepreneur from the Chinese mainland stranded in the United States due to COVID-19, who said that his US partners "remain keen to do business" but his lawyers warned him of "two to three years of tension."

"No foreign entity in America is fully safe" after the "arbitrary" TikTok case, he was quoted as saying.

US companies have "robust and growing businesses in China," the article said, citing examples that General Motors "sells more cars in China than in America," and that a research firm estimates Tesla may produce between 25-40 percent of its electric cars in China in 2021.

The article also referred to a recent survey by the US-China Business Council, a trade group representing more than 200 US companies that do business with China, which showed that more of its members "now consider China a top strategic priority and top-five priority than did in 2019," and that "few plan to decamp from China."

As China takes up more than 25 percent of global sales in a wide range of sectors including electronic components and internet retail, "the biggest victim of decoupling would be America's tech giants, many of which rely heavily" on Chinese demand and suppliers, it noted.

If US President Donald Trump's executive order forces US companies to stop business activities with Chinese tech firm Tencent, parent company of messaging and social media app WeChat, then Apple "will be forced to block" the app's Chinese version Weixin, said the article.

"If that happens, Chinese smartphone users would choose Weixin over iPhones," it said, citing an Apple analyst to say that "a harsh ban could lead to a global decline in iPhone sales of as much as 25-30 percent."

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