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Economics Gazette

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November 20, 2019

China may lose more than the United States from the ongoing trade war

China-USAChina may lose more than the United States from the ongoing trade war that extend beyond the technology sector. This is because the big US technology companies operating in China are already been under pressure from President Donald Trump to bring their production back to the US and create more jobs in its economy. If this happens, it will lead to job losses in China.

Earlier this week, Trump introduced a list of goods on which will impose duties as as part of his efforts to cope the unfair commercial practices. Among the products are robots, information technology, communication technologies and others.

One of the examples is Apple. The technology giant gets parts for its smartphones from a number of companies such as South Korea’s Samsung Electronics and SK Hynix. These components are assembled by companies like the Taiwanese Foxconn. But much of this process is happening in China.

Nearly half of Apple’s phones have been manufactured by Foxconn’s factory in central China. The article adds that there are 94 product lines at the factory, which employ 350,000 workers. So if Apple and Foxconn decide to eventually transfer their production to the US, this will result in the loss of hundreds of thousands of jobs in the Asian country.

By January, Apple announced investments to support the US economy. It is predicted that the company will bring 350 billion USD to the US economy and create about 20,000 jobs in the next five years. It will also support innovation among local producers.

Beyond Apple, the Trump administration can offer tax concessions and other incentives to encourage more US technology companies to return operations to the country. In theory, this will encourage the local economy, while import duties will put pressure on China.

Beijing still needs the jobs that many US companies offer on their territory. These are value-added items that help promote purchasing power and the expansion of China’s middle class.

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