On March 5, 2023, the two sessions of the Communist Party of China were held, and the police stood guard at the southern end of Tiananmen Square. (Greg Baker/AFP)
[The Epoch Times, April 04, 2023](Comprehensive report by Epoch Times reporter Chen Ting) American economist Milton Ezrati pointed out that the CCP is eager to expand its power and wants to use every lever of power as soon as possible. This approach has instead damaged the economy, making a large number of companies ready to leave China.
He stressed that the “decoupling” that the US government has been talking about has clearly started and “mainly for market reasons, not coercion by the US or any other Western government”.
Ezrati wrote in Forbes on Monday (April 3) that (Link), the CCP leadership has “shown an almost teenage impatience” in recent years. This kind of “un-Chinese” (un-Chinese) behavior that is contrary to Chinese culture has shaken the economic foundation of support for the CCP.
When China began its economic rise in the late 1970s, Ezrati said, the main attraction was the ability to provide cheap, well-educated labor to Western and Japanese companies.
“Even when China first joined the World Trade Organization (WTO) in 2000, its average annual salary was only slightly higher than 3% of the same level in the United States.” The article pointed out that such advantages have brought a lot of investment from the West and Japan.
But as the economy has developed, Chinese wages have risen much faster than wages in other developed countries.
“By 2021, the last year for which complete data are available, average wages in China will reach almost one-third of the equivalent level in the United States,” the article reads.
At this time, the increasingly tough policies of the CCP have made the economy less attractive. For example, during the COVID-19 pandemic, Beijing blocked the export of critical supplies such as surgical masks. This behavior has prompted Western and Japanese companies to reassess the reliability of sourcing in China. Since then, the CCP’s strict zero-clearing policy has further strengthened these concerns.
Ezrati said that while cheap labor and reliability have been lost, dissatisfaction with the CCP’s policies has continued to accumulate among Western and Japanese companies. For example, Beijing requires any company doing business in China to share technology and trade secrets with Chinese partners, or to blatantly steal intellectual property.
However, the Chinese government still “shows no signs of changing these practices” in the face of discontent from the international community.
Ezrati also pointed out that “Beijing has also increasingly resorted to other bullying and retaliatory actions. Despite the legitimate claims of Japan and the Philippines, Beijing has ignored the findings of the International Court of Justice and has been in the South China Sea and the East China Sea. Maintain a naval presence.”
In addition, the CCP has frequently threatened to use force against Taiwan and has used formal and informal means to retaliate against South Korean business interests for the installation of the THAAD anti-missile system by the South Korean government. Chinese authorities have also cut off wine sales in Australia to punish the country for questioning the origins of the COVID-19 pandemic. And similar retaliatory actions were taken against Ericsson in Sweden, Lotte in South Korea, and all manufacturing in Lithuania because of trade with Taiwan.
Ezrati noted that as the U.S., Europe and Japan begin to respond to China’s bullying and retaliatory actions, businesses are starting to worry about being drawn into a diplomatic row.
In several recent surveys by foreign chambers of commerce, there has been a marked change in business attitudes.
Tony Danker, director general of the Confederation of British Business and Industry (CBI), said every company he spoke to was rethinking supply chains.
“Every company I’m talking to right now is rethinking their supply chain,” he said, “because they anticipate that our politicians will inevitably accelerate toward a decoupled world from China.”
“The only predictable thing in China is its unpredictability, which is bad for the business environment,” said Bettina Schoen-Behanzin, chairwoman of the Shanghai branch of the European Chamber of Commerce in China.
According to a report by Willis Towers Watson, a multinational insurance brokerage company, as many as 95% of multinational companies are concerned about the risks of doing business in China, up from 62% just two years ago.
Ezrati noted that a long list of high-profile companies have moved on, or are seriously considering doing so.
Apple has scheduled AirPod Pro 2 production in Vietnam. Samsung is preparing to move out of production capacity in China. Volvo has resisted building a new factory in China and will build one in Slovakia, and Adidas and other shoe and clothing makers have already begun moving production to Vietnam and elsewhere. Japanese companies began to bring some of their production back home from China.
“The list goes on and on,” Ezrati wrote.
Responsible Editor: Ye Ziwei#
