China shipping Outlook-1487979738

TRUMP WATCH: SAVING CHINESE JOBS

On Sunday, Trump tweeted his concern for Chinese jobs, vowing that he was working with the Chinese leader to “save Chinese jobs”:

This, as noted by Reuters, is a concession by Trump ahead of the “high stakes” trade talks that will take place next week.

Because of US sanctions on China, the Chinese phone giant ZTE is on the brink of collapse. It recently reported that because it can’t get American chips for its phones, it must shut down, threatening the jobs of its 75,000 employees.

As the New York Times highlighted in its article, it’s more than a matter of losing jobs. ZTE plays a “crucial role in China’s innovation drive” because it is a major maker of telecom equipment that can underpin advanced cellular network grids.

Sanctions therefore would really hurt and cause a “major setback for Chinese ambitions to become self-reliant technologically”.  And this is something American intelligence has warned Congress against, as far back as 2012 – putting in fact ZTE in the same bag as the other Chinese giant Huawei.

Why the Sudden Concern for Chinese Jobs?

So why did Trump do this? For a very simple reason: The sanctions also hurt American companies.

Consider this: American optical components makers who sell to China, such as Acacia Communications Inc. and Oclaro Inc. have seen their stock prices sink on Wall Street following the announcement of the US ban on exports in April – a ban that the US Department of Commerce said would last seven years.

Shares of Acacia which got 30 percent of its total revenue from ZTE in 2017 hit a “record low” while those of Oclaro, which earned 18 percent of its revenue from ZTE in 2017, fell by 17 percent.

A ZTE official has reported that ZTE paid over 2.3 billion to 211 US exporters in 2017. That’s a lot of money. And it concerns big American companies: Qualcomm Inc and Intel Corp that are estimated to provide up to 30 percent of the components that go into ZTE products, from smartphones to telecom grids.

In short, American jobs are also threatened, not just Chinese jobs.

Could Trump be discovering the benefits of globalization? And the dangers of a trade war?


EDITOR’S NOTE: THE OPINIONS EXPRESSED HERE BY IMPAKTER.COM COLUMNISTS ARE THEIR OWN, NOT THOSE OF IMPAKTER.COM.

Featured Image credit: China shipping lines. First salvo of upcoming trade war with China: Trump authorized an inquiry in intellectual property theft August 2017 Source: Geopolitcs alert .com  Creative commons license.

 

 

 

 

 

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  1. Oscar Sparrow

    Insightful as always. Trade is a pragmatic struggle and always will be while our political philosophies evolve at a pace so far behind our technologies and markets. We need to fill in the political space between Nationalism and Globalism with some kind of intelligent consensus. “More of the same” and “wave the flag” are exhausted banners but we just keep waving them.


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