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American firms’ move into China over past 20 years threatens US ability to lead and compete: report

  • As US business in China focuses more on high-end tech production, the risk rises that America is helping Beijing reach industrial and military goals: report
  • US business communities say China remains a preferred investment destination but the Covid-19 outbreak was a wake-up call on supply chains

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US multinational firms have expanded their businesses into China over the past 20 years but at what cost, asks a US congressional committee report. Photo: AFP

The United States’ ability to be an industrial competitor and long-term tech leader might be eroded by the expansion of its multinational firms into China over the past two decades, a US congressional committee said.

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Amid rising tension between the two powers as they move towards economic decoupling, the US-China Economic and Security Review Commission said in a research report released on Wednesday that Congress should consider measures to preserve the US ability to innovate.
The report analysed US commercial activities in China from 2000, when Beijing was ready to join the World Trade Organisation in opening its market, to 2017 before the protracted US-China trade war began.

“In analysing the evolution of US MNE [multinational enterprise] operations in China from 2000 to 2017, this report finds they may indirectly erode the United States’ domestic industrial competitiveness and technological leadership relative to China,” the report said.

“Additionally, as US MNE activity in China increasingly focuses on the production of high-end technologies, the risk that US firms are unwittingly enabling China to achieve its industrial policy and military development objectives rises,” it said.

Amid the all-out confrontation with Beijing, Washington has continued to bring in measures to restrict Chinese access to US know-how and technological products – wary of the dual use of technology for military as well as civilian purposes – and limit academic exchanges between the two countries.

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