The Chinese divorce scenario: The US terrifiedly counts the damage

The Chinese divorce scenario: The US terrifiedly counts the damage


The US Chamber of Commerce (USCC) said Chinese firms would lose hundreds of billions of dollars if they cut their investments in China, highlighting the costly costs of a complete disassociation as well as more serious consequences. .

The result of a divorce from China: My two-night and second-night experience
American companies and the economy at large could lose hundreds of billions of dollars if the trade war continues.

Specifically, the Gross Domestic Product (GDP) of the US will be reduced by up to 500 billion USD if US companies reduce direct investment in China by half.

In addition, the application of a 25% tax rate on two-way trade will reduce US GDP by 190 billion USD per year until 2025.

In addition to falling merchandise exports, the USCC estimates that if China’s tourism and education spending in the future halve from pre-pandemic levels, the US would lose between $ 15 and $ 30 billion a year for trade export services. The separation will affect research and development spending in the US to support operations in China, although the impact is harder to quantify, the agency said.

The USCC report also examines the potential disaggregating effects across four industries. They found that losing access to China’s semiconductor market would cost output between $ 54 billion and $ 124 billion and put 100,000 US jobs at risk. The imposition of tariffs could also lead to output losses amounting to $ 38 billion and nearly 100,000 jobs in the chemical industry.

The loss of access to the Chinese market to US commercial aircraft and air services could cost $ 51 billion in annual output, or $ 875 billion in cumulative, by 2038. Besides The loss of market share in the medical device sector will result in a loss of annual revenue of 23.6 billion USD.

The USCC says a “balanced and rational approach” to trade relations with China is in the interests of both the US and the American business community. At the same time, it said it favors a “rules-based” economic order and strongly opposes China’s unfair behavior towards American companies.

The USCC report also pointed out that the Joe Biden administration should weigh the best strategies for dealing with the challenges posed by China. In addition, the United States also needs to work with allies to confront China on a state-led economic model rather than acting unilaterally and not undermining its productivity and innovation.

By increasing state controls, blocking private enterprise, and pursuing high-tech autonomy, China has distanced itself from free-market economic norms, the US report said.

“Our interests lie in a purposeful, not unreasonable separation. This study aims to properly adjust the economic relationship with China,” said Daniel Rosen, lead author of the report. , positive.

The fact that Mr. Biden’s administration has also recognized the need to shake hands with its European allies to attack China, but that ability is increasingly limited in the context of the US also starting the war. tariffs with Europe and the EU are promoting more and more trade agreements with China to access the billion-population market in Asia.

Hai Lam

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