How high tensions between China and the U.S. are impacting American companies

High U.S.-China tensions are causing American companies to carefully navigate their dealings with this major global economy player.

Details: Commerce Secretary Gina Raimondo is set to visit China amid worsening trade tensions and a slowing Chinese economy.
* Her visit comes at a time when the Trump administration’s tariffs and China’s disruptive “zero-COVID” policy have already strained U.S.) companies’ perceptions of China.
* Companies like Apple faced disruptions to their operations due to China’s COVID measures, and the lifting of these restrictions hasn’t fully quelled the negative sentiment.

Impacting Policies: Tit-for-tat measures between the U.S. and China are increasing uncertainty for U.S businesses.
* The U.S. banned the export of certain microchips to China, which then imposed restrictions on two rare elements used in hi-tech manufacturing.
* More recently, the U.S. placed investment restrictions on certain Chinese companies, citing national security concerns. They are prohibited from investing in artificial intelligence and quantum computing — technologies with potential military applications.
* China’s expanded counterespionage law also leaves U.S. companies, especially those collecting a lot of customer data, vulnerable.

Impacted sectors: U.S. companies, uncertainty around what sectors and products are “safe” is leading to them reevaluating traditional investments and supply chain locations.
* Companies have reportedly been encouraged to shift manufacturing parts operations to countries like India and Vietnam.
* According to a recent survey by the American Chamber of Commerce in China, 74% of companies are not considering relocating manufacturing or sourcing outside of China.

Market Potential: Despite a troubled economy, China remains an appealing market, attracting U.S. officials and business executives.
* The likes of Tesla’s Elon Musk, Apple’s Tim Cook, and JPMorgan Chase CEO Jamie Dimon have visited China.
* Gabriela Santos, a global strategist at J.P. Morgan Asset Management projects a potential addition of 300 million people to China’s middle class over the next decade, highlighting the size and potential of the market.
* U.S. companies like Procter & Gamble, Disney, and Starbucks see an opportunity in catering to Chinese consumers.

View original article on NPR

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