US companies need to keep business in China

The president of the US-China Business Council said US companies must continue to do business in China if they want to be global business leaders.

"First and foremost, some 10 percent of American exports go to China, supporting an employment of over 1 million of our fellow citizens in 2021," Craig Allen, the council's president, said on Tuesday. "In addition, Chinese companies employ another 160,000 American citizens in the US. Chinese companies like Fuyao Glass are excellent supporters of their local communities and our local economy."

In a virtual discussion hosted by the US Heartland China Association, Allen explained why China matters to the US heartland region, pointing out that China's economy has enormous scale that is the size of Europe.

"If we do not compete in this market, our companies will lose the benefit of the scale which in the business world is tantamount to losing competitiveness. So, in brief, if American companies want to be global business leaders, they also need to be in the Chinese market," he said.

As China has contributed about 30 percent of global GDP growth in the last 25 years, many of the newly emerged middle-class Chinese consumers buy US products and services. "And they appreciate the United States and want to send their children to American colleges and universities," Allen said.

He also said the rest of the world is happy doing business with China and benefits from the growth opportunities that China provides.

"If the Europeans and Japanese are doing business there, generating huge profits while American companies are prohibited from doing so. It will have enormous long-term impact," he said.

Allen acknowledged that while it is possible for the US to decouple with China, the cost of doing so is that "we will become much poorer as a society as our competitors around the world become much richer, and that's not acceptable".

The pain from decoupling will not be equally felt. Allen said people with lower incomes have benefited from inexpensive imports. They, and those who produce on farms and in manufacturing facilities, would lose the most with decoupling.

Vicious cycle

Given the many benefits the US accrues from trade with China, Allen said it is in the US' interest "to de-risk our decoupling".

"Ultimately, the question becomes how do we garnish the benefit of interconnection with China, while managing the risk of interdependence," he said.

Allen believes that advocating on behalf of US companies doing business with China is a patriotic enterprise, and it is important to actively defend US corporate interests in China despite the fact that "we have such a complex relationship".

Allen said he is also worried about the current state of US-China ties.

"Neither side trusts each other. Both are taking measures they consider to be defensive, but the other side looks as hostile," he said. "This vicious cycle, if left unchallenged, could have very dangerous consequences."