U.S. Companies Preparing for Long-Term 'Confrontational Relationship' With China
October 21 2019 - 4:51PM
Dow Jones News
By Mark Maurer
BOSTON -- U.S. companies are preparing for tensions with China
to extend far beyond the status of the continuing trade
discussions, an executive for the U.S.-China Business Council said
Monday.
"When we talk to companies, there's a realization that no matter
what happens with this trade deal, we're going down a trajectory of
a much more confrontational relationship with China that's very
unlikely to shift in the opposite direction in the future," Jacob
Parker, vice president of China operations for the council, said
during a panel at a conference organized by the Association of
Financial Professionals. The council represents about 220 U.S.
companies that conduct business in China.
Businesses are making arrangements to diversify their
supply-chain investments away from the China market and enacting
other structural changes to account for that, Mr. Parker said. It
could take about three to five years to build up the supply chain
elsewhere, he added.
The U.S. and China reached a truce in trade negotiations this
month, with the U.S. agreeing to put off a round of tariff
increases originally scheduled for October. China agreed to
increase purchases of U.S. agricultural products. No formal
agreement was signed last week, pending further discussions of
details.
The long-term effects of the tariff dispute could affect some
companies' financial positions and credit ratings as well as the
loss of long-term supply contracts, said Ted Pokorski, the director
of treasury at Regal Beloit Corp., a Beloit, Wis.-based maker of
electric motors, who also spoke on the panel.
A survey of U.S.-China Business Council members in August said
that optimism about China is at a historic low, adding that more
businesses are halting their investment in the country and only a
slight majority of companies expect their revenue in China to rise
next year.
Write to Mark Maurer at mark.maurer@wsj.com
(END) Dow Jones Newswires
October 21, 2019 16:36 ET (20:36 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.