Page 10 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
studied companies. Willingness to reinvest in China We remain hopeful and determined that these
remains strong. two nations will work out a deal that will eventually
see an end to the tit-for-tat tariffs and harsh rhetoric.
Even after the first phase of Trade Agreement But unless the US and China immediately return to
was reached, an overwhelming majority of surveyed the negotiating table to start Phase Two, a step that
South China companies believed the dispute was China has also indicated is not imminent, Phase
likely to escalate in 2020. Much has changed with One will go down as one of the biggest political
the Novel Coronavirus outbreak. There are signs the and economic failures in a generation. For the sake
world’s supply chain in being overstretched and the of international markets and trade growth, the
possibility of a collapse is not farfetched. In such a negotiations must continue to make progress.
scenario, world recession would not be far behind.
American companies, as well as most companies Progress can still come, but whether a Phase Two
on the planet, depend on this supply chain for will live up to the promises is anyone’s guess. The
various reasons. Many goods assembled in China persistent uncertainty over trade has made it hard
or the US depend on raw material from and parts for companies and investors to make plans with
manufactured in many different countries in the confidence. The world is watching for leadership
world. As it is stated in our White Paper research, from both countries. International trade does not
it will take 2-3 trillion US dollars to replace the accept that an agreement between the US and China
current supply chain. Therefore, it is of paramount can be pushed down the road for another year.
importance that the two major economies of this
supply chain sit down to establish the stabilizer we With best regards,
suggested earlier in this message.
Dr. Harley Seyedin
It’s time to get to work. According to a 16-month President, American Chamber of Commerce in South China
study by Professor Michael Enright of the University Winner of the 2017 Oslo Business for Peace Award (together with
of Hong Kong (former faculty at the Harvard Elon Musk) , awarded by the Award Committee of Nobel Laureates in
Business School) using foreign direct investment Peace and Economics
(FDI) numbers and its multipliers, on the average Visiting Scholar, Jinan University, Guangzhou, PRC
across China one third of China’s GDP and 27 President, Allelon Energy Partners
percent of its employment are created by foreign
invested enterprises (FIEs). This analysis also show
in Shanghai 67 percent of the industrial output
and 90 percent of its high-tech output are created
by FIEs. Considering that China’s 2019 nominal
GDP was reported at around US$14.2 trillion, this
information translates into roughly 4.68 trillion
US dollars of economy generated by FIEs of which
American companies are a substantial part. It has
taken billion of US dollars and much commitment
and resources to create this part of the economy.
While this amount of business is not calculated
as a part of the trade deficit, it creates thousands
upon thousands of high paying jobs back in the US.
Keeping in mind that even growing at a 6 percent
annual rate, China creates over 850 billion additional
US dollars to its economy – an amount larger than
the GDP of Switzerland and just under the entire
GDP of the Netherlands. I suggest that we need to
work with China to capture an even larger piece of
this economy. With Phase One signed, finalizing a
Phase Two deal becomes an absolute necessity.
10
studied companies. Willingness to reinvest in China We remain hopeful and determined that these
remains strong. two nations will work out a deal that will eventually
see an end to the tit-for-tat tariffs and harsh rhetoric.
Even after the first phase of Trade Agreement But unless the US and China immediately return to
was reached, an overwhelming majority of surveyed the negotiating table to start Phase Two, a step that
South China companies believed the dispute was China has also indicated is not imminent, Phase
likely to escalate in 2020. Much has changed with One will go down as one of the biggest political
the Novel Coronavirus outbreak. There are signs the and economic failures in a generation. For the sake
world’s supply chain in being overstretched and the of international markets and trade growth, the
possibility of a collapse is not farfetched. In such a negotiations must continue to make progress.
scenario, world recession would not be far behind.
American companies, as well as most companies Progress can still come, but whether a Phase Two
on the planet, depend on this supply chain for will live up to the promises is anyone’s guess. The
various reasons. Many goods assembled in China persistent uncertainty over trade has made it hard
or the US depend on raw material from and parts for companies and investors to make plans with
manufactured in many different countries in the confidence. The world is watching for leadership
world. As it is stated in our White Paper research, from both countries. International trade does not
it will take 2-3 trillion US dollars to replace the accept that an agreement between the US and China
current supply chain. Therefore, it is of paramount can be pushed down the road for another year.
importance that the two major economies of this
supply chain sit down to establish the stabilizer we With best regards,
suggested earlier in this message.
Dr. Harley Seyedin
It’s time to get to work. According to a 16-month President, American Chamber of Commerce in South China
study by Professor Michael Enright of the University Winner of the 2017 Oslo Business for Peace Award (together with
of Hong Kong (former faculty at the Harvard Elon Musk) , awarded by the Award Committee of Nobel Laureates in
Business School) using foreign direct investment Peace and Economics
(FDI) numbers and its multipliers, on the average Visiting Scholar, Jinan University, Guangzhou, PRC
across China one third of China’s GDP and 27 President, Allelon Energy Partners
percent of its employment are created by foreign
invested enterprises (FIEs). This analysis also show
in Shanghai 67 percent of the industrial output
and 90 percent of its high-tech output are created
by FIEs. Considering that China’s 2019 nominal
GDP was reported at around US$14.2 trillion, this
information translates into roughly 4.68 trillion
US dollars of economy generated by FIEs of which
American companies are a substantial part. It has
taken billion of US dollars and much commitment
and resources to create this part of the economy.
While this amount of business is not calculated
as a part of the trade deficit, it creates thousands
upon thousands of high paying jobs back in the US.
Keeping in mind that even growing at a 6 percent
annual rate, China creates over 850 billion additional
US dollars to its economy – an amount larger than
the GDP of Switzerland and just under the entire
GDP of the Netherlands. I suggest that we need to
work with China to capture an even larger piece of
this economy. With Phase One signed, finalizing a
Phase Two deal becomes an absolute necessity.
10
