Daily US Times: The Republican and Democratic National Conventions are typically an opportunity for US voters to get a sense of what their next president’s domestic policies might look like. But this year the leaders also provided a key insight for China Inc as it navigates its rocky relationship with the US.
Several insiders at Chinese technology firms have told the BBC that a Joe Biden presidency would be more appealing than another four more years of President Trump – who is considered as “unpredictable”.
And while they think a Biden administration would still be tough on China, it would be based more on fact and reason rather than politicking and rhetoric.
One thing is clear though: Chinese companies believe that whoever is in the White House the tough stance on China is here to stay.
Here are three things that are worrying companies in the mainland the most about the next US administration – and what they’re doing to protect themselves:
Decoupling
This word gets used a lot these days. Trump administration and the President himself talk about it in tweets and in press statements in relation to China.
Decoupling basically means undoing more than three decades’ worth of US business relations with Beijing.
Everything is on the cards: from forcing Chinese-owned companies that operate in the US – like TikTok and Tencent – to swap their Chinese owners for American ones to getting American factories to pull their supply chains out of the mainland.
According to Solomon Yue, vice chairman and chief executive of the Republicans Overseas lobby group, said that under a Trump administration “decoupling will be accelerated”.
He said: “The reason is because there’s a genuine national security concern about our technology being stolen.”
But decoupling isn’t that simple.
While the United States has had some success in forcing American companies to stop doing business with Chinese tech giants like Huawei, it is pushing Chinese firms to develop self-sufficiency in some key industries, like artificial intelligence and chip-making.
A strategist working for a Chinese tech firm told to the BBC: “There’s a realisation that you can never really trust the US again. That’s got Chinese companies thinking what they need to do to protect their interests.”
Delisting
As part of its focus on China, the current US administration has come up with a set of recommendations for Chinese firms listed in the US, setting a January 2022 deadline to comply with new rules on auditing.
according to the recommendations, if they don’t, they risk being banned.
While a Biden administration may not necessarily push through with the exact same ban like the Trump administration, analysts say the scrutiny and tone of these recommendations are likely to stay.
Tariq Dennison, a Hong Kong-based investment adviser at GFM Asset Management, said: “A Democrat, whether in the White House, Senate or Congress, would have little reason to roll back Trump’s toughness on China without some concession in return.”
“One thing both parties seem to agree on in 2020 is to blame China for any of America’s problems that can’t be easily blamed on the other party. That’s not going to change anytime soon,” he said.
While fears of being delisted aren’t high on the list of concerns for Chinese companies that are already listed in the United States, it’s enough to sway the decisions of companies that are looking to float in the future.
For example, take Ant Group, the mammoth Chinese digital financial services group that this week filed for an IPO.
Affiliated to the Alibaba Group, which is listed in Hong Kong and the US, it chose Hong Kong and Shanghai in which to sell its shares instead of the US.
Increasingly other Chinese companies are likely to follow suit, as tensions between China and the US get worse.
Deglobalisation
Over the last 30 years, China has been one of the biggest beneficiaries of globalisation. It has helped hundreds of millions of Chinese afford a standard and better quality life, the bedrock upon which President Xi Jinping’s Chinese Dream is based.
But that’s precisely what President Donald Trump says needs to change: his administration argues that Beijing has become richer while the US has become poorer.
During Mr Trump’s term, deglobalisation – where trade is less free and borders are less open – has become a trend. And it’s something that Beijing knows won’t change even after the election.
“The fundamental adjustment of the US’ strategic mind-set over China is real”, reads the latest op-ed in The Global Times, the Communist Party’s mouthpiece. ‘This has to a large extent reset the China-US relationship.”
One of the natural consequences of globalisation was arguably a safer world.
When you’re doing business with one another, possibilities are you’re not going to want to get in a fight – or at least not open conflict. The reset of the China-US relationship is dangerous – not just for the US and China – but for the rest of us too.
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