Gordon Chang Issues Warning About China's Capacity To Open Up To U.S. Business

Forbes Breaking News

On "Forbes Newsroom," author and U.S.-China relations expert Gordon Chang discussed where U.S.-China trade will probably end up.

Transcript

00:00I want to read what President Trump posted on Truth Social regarding the talks.

00:05He said that they were a, quote, total reset negotiated in a friendly but constructive manner.

00:11We want to see for the good of both China and the U.S. an opening up of China to American business.

00:16You're a student of history here.

00:18Do you think that we will realistically see China open up to American business?

00:24No, I really don't think so.

00:25You know, it was a point that if this were going to happen, it would have happened when China joined the World Trade Organization in 2001.

00:36But for various reasons, it didn't happen.

00:39And it's just because the communist system really is resistant to foreign business.

00:45And sometimes, you know, in the history of China, we have seen the regime open up, especially starting in 1978.

00:55with the beginning of the reform era, but not under Xi Jinping, who has a very different vision of China.

01:02His vision is much closer to 1950s China.

01:05His hero is Mao Zedong.

01:07And we are seeing Xi Jinping, I think, move China in that direction.

01:11He doesn't have the power to fully push China there, but that's where he can and where he does have the power.

01:19That's what he's doing.

01:19So I don't think that President Trump's vision for China is the same as Xi Jinping's.

01:26If China is so resistant to foreign business, what then are you looking out for the next 90 days?

01:32Do you think that the United States can really have meaningful negotiations with China then?

01:38Well, we'll have meaningful negotiations, but I don't think they're going to produce a meaningful result, especially not within 90 days.

01:46And I think that China will just try to delay.

01:49Remember, China, with 90 days, basically its export factories are going to be producing for Christmas.

01:56This is great for China.

01:59And it really relieves a lot of the pressure that we have seen on the export sector.

02:04But I think China is going to say, well, you know, at the end of the 90 days, we really need to have another 90 days.

02:12So I'm going to see I see them trying to delay this.

02:16I don't know what Trump will do in terms of a request for another delay.

02:21He would just just have to wait.

02:24But remember, on TikTok, we actually have something on TikTok.

02:27Trump gave an extension on his first day in office, and then he extended the extension.

02:32And so probably Xi Jinping is thinking that he can TikTok the United States on the trade talks as well.

02:39Do you think that the United States and the team negotiating for the United States,

02:43do you think they're missing anything when it comes to China that perhaps you have some knowledge on?

02:49Well, no, they've got far more knowledge than I do.

02:54I have a very different outlook on China and a very different view of where it's going.

03:02So but I don't know any more than they do by any means,

03:06because they've been involved in these discussions for quite some time.

03:09And I'm just an outside observer.

03:12What then, as an outside observer that has plenty of expertise in this area,

03:17are you looking out for in this 90 day period?

03:19I'm actually looking to see what Apple will do.

03:25You know, it's very interesting that on the first of this month,

03:28Tim Cook said that during the current quarter,

03:32that most of the production of iPhones for the U.S. market will come from India.

03:37And he said the production for other devices, such as iPads, will come from Vietnam.

03:42That, to me, is really startling, because Apple has the most difficult to move supply chain.

03:49And if Apple can make that statement, then, you know, basically anybody can move their supply chains.

03:55So I'll be watching what companies actually start to do during this 90 days.

04:01Because although, you know, companies may say, well, if the U.S. and China are going to settle things,

04:05I don't think they are, for the reasons we just discussed.

04:09And I think that they're going to try, companies are going to try to protect their supply chains

04:14by making sure they're not as reliant on China.

04:17Because if they do, if they still remain reliant on China,

04:21they can get to a point where they don't have a business,

04:24because they can't bring products into the U.S.

04:26So just as a matter of business necessity,

04:30we'll be looking at how companies rearrange their supply chains.

04:35Is China concerned hearing that, hearing Apple saying,

04:39we're moving our supply chains,

04:41thinking that other companies might take a cue from Apple

04:44and move their supply chains out of China?

04:45I mean, how concerned, how big of a concern should that be for China?

04:50Oh, I think China is very concerned about that.

04:52You know, we've seen China try to do its best to keep Apple inside China.

04:58And, you know, there's a lot of turbulence now between Pakistan and India.

05:05I don't know, but I would just say this might not be a coincidence.

05:10We know that China has tried to tar India's image as a place for manufacturing.

05:17They've done that for years and years.

05:18Right now, I'm sure that people in Beijing

05:23are extremely concerned about Tim Cook's announcement.

05:27Well, there is certainly a lot to look out for,

05:29especially in this 90-day temporary pause.

05:33And Gordon Chang, I always appreciate your perspective.

05:35I hope you can come back on and join me

05:37as we see more developments play out.

05:39Thank you so much for the time.

05:41Well, thank you so much, Brittany.

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