China has been reluctantly been shooting back with tariffs at US imports up to now in the Donald Trump trade war. It might be even more reluctant to use the powerful tool of its consumers in the trade war, says political analyst Victor Shih in the Financial Post. But it could, and Apple and Starbucks should prepare, says business analyst Shaun Rein on Fox News.
China has been careful to pose as the good guy in this fight. The spectacle of Beijing unleashing nationalist boycotts on Procter & Gamble Co., Coca-Cola Co. and Apple would make that facade harder to maintain, and give ammunition to the U.S. argument that China’s economy is ultimately a tool of the Party.
The lack of consumer boycotts is “a bit unusual, but consistent with the Chinese rhetoric that China would be a defender of the global trading order,” Victor Shih, an associate professor and expert on China at the University of California, San Diego, said. “The reality is that the status quo allows China to protect many of its industries, so China wants to maintain the status quo.”
Don’t count on that forbearance continuing if tensions escalate. In all, Chinese subsidiaries of U.S. companies had about US$223 billion in revenue in 2015, according to Deutsche Bank AG. Reduce those sales by just 20 per cent – a rather modest target, given what consumer boycotts did to Korean firms last year – and you’ve already done US$45 billion in damage, more than equivalent to the 10 per cent tariff the U.S. is threatening to levy on a further US$400 billion of imports if Beijing doesn’t back down.
Shaun Rein, managing director at the China Market Research Group in Shanghai, told The Post that the Chinese government could stoke anti-American sentiments among consumers, similar to its boycotts last year on South Korea’s Lotte Group, causing dozens of their stores to close.
“If I was Starbucks or Apple,” he said, “I would be scared right now.”
Are you looking for more experts on the emerging trade wars? Do check out this list.