The eve of Apple and Tesla’s destruction in China

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American CEOs rarely outwit Beijing

American CEOs who succumb to the lure of China ‘s sweatshops, pollution havens and government subsidies inevitably lose not just their souls. They eventually surrender their companies.

Apple CEO Tim Cook and Tesla chief executive Elon Musk are just the latest in a long line of dupes now learning this harsh lesson — a lesson they should have learned long ago from former General Electric CEO Jeff Immelt.  

In 2001, China joined the World Trade Organization and immediately began to bludgeon blue-collar America with its weapons of job destruction — theft of intellectual property, currency manipulation, massive government subsidies, state-owned enterprises, etc. Mr. Immelt took over the reins of GE that same year from the venerable Jack Welch and soon began offshoring GE production. 

It was a big bet many American CEOs were making on China along with Mr. Immelt. But it was truly a sucker’s bet bound to go bust. 

As a matter of mercantilist government policy — it’s all there in state documents for any CEO to read — China uses its honey pot of cheap labor, lax environmental regulations, and massive land, energy and other government subsidies to lure foreign capital and companies. China ’s quid pro quo, quite against WTO rules, is the forced transfer of an American company’s technology to nascent Chinese competitors in exchange for access to Chinese markets. 

Implicit in the bargain is this paradigm of assumed inevitability: Once a Chinese competitor is sufficiently endowed with American technology, it will not only compete against that American company in Chinese markets. It will also challenge American companies in lucrative markets around the world.  

Nor will this inevitable clash be fair. China uses any means necessary to give its national champions a leg up on — and often a kick to the groin to — any American competitor foolish or greedy enough to produce on motherland soil.  

Like GE before it, Apple and Tesla now have this grim mercantilist reality. Because Mr. Cook and Mr. Musk each directed the offshoring of the vast bulk of Apple’s and Tesla’s production to China, the companies are at the mercy of a merciless dictator in Xi Jinping.

By Peter Navarro

Read Full Article on WashingtonTimes.com

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