Jack Ma: US-China trade war will kill jobs, opportunities and hope
Jack Ma says with Chinese consumers already a driving force of global trade, America – once a bastion of free and open markets – will miss out on lucrative opportunities by adopting a protectionist stance
American economic policy for the past 30 years encouraged US companies to outsource labour-intensive manufacturing to China and other Asian countries while retaining the most valuable parts of American ingenuity: innovation, technology and brand.
China embraced this American-led globalisation because it was also the best path for China’s development as an emerging economy. To raise living standards for 1.3 billion people, the Chinese government promoted foreign investment and built the economy on the strength of its large and increasingly skilled labour force. As a result, China became the world’s largest exporter, with a significant trade surplus. American consumers benefited from low prices and American corporations made giant profits.
While countries like South Korea and China collect revenue from selling components and assembling the final product, Americans make almost all of the profits. Apple’s US$48 billion of profits in its 2017 fiscal year will not make it into the balance-of-trade calculation.
Under a symbiotic US-China relationship, America became a pre-eminent technology leader, and its brands are today the envy of the world. China improved the standard of living of its citizens with a tenfold increase in per capita gross domestic product over the past 20 years.
But US-China trade relations in the next 20 years will look very different from the past two decades. The benefits of globalisation since joining the World Trade Organisation in 2001 have opened China’s mind to the idea of open markets.
It is therefore ironic that the US administration is waging a trade war at a time when the largest potential consumer market in the world is open for business. Is America going to forfeit this opportunity?
The US has been a consistent defender of free and open markets, but this time it is resorting to protectionism that will not improve American competitiveness. Any country seeking to increase exports would do better to focus on developing good products and channels to access foreign markets rather than putting up trade barriers.
This trade war will hurt millions of American small businesses and farmers. I feel for these men and women, because I met many of them when I toured the US last year to host our “Gateway” trade showcase in Detroit.
Small-business owners and farmers travelled from all over the country to learn how Alibaba could connect them to the massive Chinese consumer market. Those attending Gateway saw what the future could hold for their business. I saw the entrepreneurial gleam in their eyes.
Through our digital-commerce platforms, where more than 500 million Chinese consumers shop, Alibaba will continue to help American small businesses and farmers access the China market.
If we encounter trade barriers, we will have to work harder. While we may face setbacks in the current protectionist environment, I remain confident and look forward to the next 20 years.
Jack Ma is founder and executive chairman of Alibaba Group, which owns the South China Morning Post