August 21, 2018

In a Trade War, China Might Boycott U.S. Goods. That Could Backfire.

William Zarit, the chairman of the American Chamber of Commerce in China, said a boycott “is one of the many tools that the Chinese have in their toolbox.”

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“Because of the structure of the government and the political power of the party, they can call for a boycott and get a pretty good response,” Mr. Zarit said. “So that concerns me.”

Taicang, a 90-minute drive from Shanghai, underscores how interdependent the two economies are.

Some of the biggest names in corporate America, like Honeywell and Exxon Mobil, have converged on this city of close to a million people. Its economy is growing faster than the country’s as a whole. It is richer than Shanghai on a per-capita basis. Last year, Taicang topped a list of China’s 10 happiest “county-level cities” for the second year in a row.

In a sprawling factory, Procter Gamble makes its Head Shoulders, Pantene and Vidal Sassoon shampoos and then distributes them along with other cosmetics and skin care products. When the factory opened, the company said it would provide 1,500 jobs for Chinese workers. Across town is a 200,000-square-meter Nike logistics center, which that company has also said would employ 1,500 people.

In total, 42 American factories are in the Taicang economic development zone, with a total annual output value of about $4.7 billion, the government of the much larger city of Suzhou, which administers Taicang, said in February.

The influx of money can be seen in the relative affluence of the Procter Gamble employees, most of whom drive Japanese-made cars to work. One female employee, surnamed Li, said workers were confident that what they made in the factory would appeal to Chinese consumers, who she said were rational about what they bought.

Analysts say Beijing is aware of the importance of American companies to China’s economy. Ernan Cui, a consumer analyst at the research firm Gavekal Dragonomics, said a boycott could have many victims.

“Due to the integration of the economies, whatever China does to the U.S. will end up hurting itself,” Ms. Cui said.

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Article source: https://www.nytimes.com/2018/04/19/business/china-trade-us-boycott.html?partner=rss&emc=rss

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