White House hurting US firms' interests

Editor's Note: US President Donald Trump has ordered American enterprises to pull out of China, claiming that the International Emergency Economic Powers Act enables him to do so. Is it possible for US companies to withdraw from China? Two experts share their views on the issue with China Daily's Liu Jianna. Excerpts follow:

Washington ignoring US firms' interests

The United States passed the IEEPA in 1977 to safeguard US hegemony and fight "enemies". The act gives the US president the power to bypass the Congress and the US judiciary to curb transactions between countries or enterprises, freeze assets of individuals and companies, and impose financial sanctions on entities that it believes pose a threat to its national security. The IEEPA has been used against countries including Russia and Iran. And the sanctions against Huawei, too, reflect the use of the act.

The US president is using the IEEPA to put "maximum pressure" on China to get the upper hand in the trade war it has launched against China, as the US economy is facing downward pressure due to the US administration's unilateral and protectionist moves. Contrary to what the US administration had hoped, manufacturing in the US has not picked up pace. Instead, the US manufacturing sector contracted in August for the first time in a decade with the HIS Markit Manufacturing Purchasing Managers' Index dropping to 49.9. These are part of the largely disappointing economic indicators in the US.

Perhaps this is what has prompted the US administration to use industry and capital to try and bring China to its knees.

As a country heavily dependent on the spillover effects of the know-how and technologies of transnational corporations, China could suffer a big blow if the US succeeds in gradually shifting part of the global industrial chain from China. Which, in turn, could make it difficult for China to catch up with the global high-tech powers.

However, China can turn this seeming crisis into an opportunity, because more and more Chinese enterprises have become disillusioned with the US and are prepared to meet the challenge, for instance, by increasing investments in research and development and searching for alternatives.

In fact, China has maintained a good momentum in attracting foreign capital, particularly in the high-tech field, this year, with investments from Germany, the Republic of Korea and the European Union growing 100.8 percent, 88.1 percent and 29.5 percent from January to May.

More important, the qualitative opening up of the Chinese market, marked by Monday's announcement that a third batch of free trade zones will be established, will help boost China's economic vitality. As Vice-Premier Liu He said, being committed to building a more favorable business climate, China still welcomes transnational companies, US companies included.

Indeed, by using the "America first" policy, the US administration has not only declared a trade war against China and other major economies, but also targeted US-based multinational companies which gain immensely from economic globalization. The fact is, the US will disrupt the whole industrial and supply chains if it sticks to the "America first" policy.

It appears the US president has misunderstood the true meaning of "America first" by putting the interests of the government before the interests of US citizens and companies.

Zhang Monan, deputy director of and a research fellow at the Institute of European and American Studies, China Center for International Economic Exchanges

White House turning US into a planned economy

The US president aims to up the ante in the trade conflict with China by ordering US enterprises to withdraw from China, something his predecessor, Barack Obama, also intended to do but eventually refrained from doing after realizing it was impossible for all US enterprises to pull out of China.

That the global industrial chain is not under the command of the US commander-in-chief is a fact lost on the US leader. No wonder Brookings Institute scholar David Dollar said the White House is trying to transform the US into a planned economy.

The US leader's earlier move, although indirect, to bring American companies operating in China back to the US by lowering the corporate tax rate from 35 percent to 21 percent met with failure. Why? Because the tax rate is only one of the factors that enterprises take into consideration before deciding whether or not to relocate to a low-tax economy. Today, the industrial chain is so intrinsically globalized that it cannot be changed, let alone removed, at the whim of one leader.

Also, since most of the major US companies are not state-owned, they are not likely to heed the US leader's call if his demands run contrary to their real interests. After all, the US leader has no power to order companies to return to the US as the IEEPA only applies to situations when national security is under serious threat－and the trade conflict the US has triggered is certainly not a national security risk.

Tao Wenzhao, a researcher in US studies at the Chinese Academy of Social Sciences

The views don't necessarily represent those of China Daily.