Just last month, the video-sharing app TikTok was merely the latest social media craze for millions of Americans.
But that was before President Trump identified the company’s Chinese ownership as a potential national security threat, triggering a corporate scramble complicated by China’s refusal to allow TikTok’s innovative technology to fall into American hands.On Saturday, the president said he had approved a deal in which Oracle and Walmart would partner with TikTok in a new, U.S.-controlled company.
“Whether it's decoupling or putting in massive tariffs like I've been doing already, we’re going to end our reliance on China because we can't rely on China,” he told reporters. “And I don't want them building a military like they're building right now, and they're using our money to build it.”At a lavish White House ceremony in January, Trump crowed that the phase one trade deal would lead to $200 billion in new Chinese purchases of U.S.
Chinese officials, meanwhile, have been courting American executives in recent months, hoping to prevent the U.S. government from inducing a wholesale loss of foreign-owned factories, according to business executives and analysts. Foreign companies employ roughly 25 million Chinese engineers, managers and assembly line workers, according to Nicholas Lardy, an economist with the Peterson Institute for International Economics.
Trade in consumer goods, industrial equipment and agricultural products may raise few national security objections. But selling China advanced computer chips and collaborating with its researchers on artificial intelligence conflicts with the increasingly prevalent view of Beijing as a potential or even likely enemy.“The boundary for U.S.-China confrontation isn’t geographic. It’s through these different regimes: technology, trade, financial services, Internet governance,” said Kennedy.
“You haven’t yet seen a broad-based decoupling,” said Brad Setser, a former Obama administration White House economist. Companies such as Applied Materials, Lam Research and KLA-Tenor, which dominate the global market for chipmaking gear, are reluctant to lose out on China’s massive spending. The administration has shown less self-awareness about shortcomings in the president’s “America First” approach. His limited phase one deal failed to achieve the structural changes in China’s state-directed economy that trade chief Robert E. Lighthizer in 2018 described as the negotiations’ goal.
Some foreign companies may shift a portion of their China-based production elsewhere to make their supply lines more resilient. But China has advantages in scale, trained workforce and infrastructure that alternative locations cannot match.
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