Tesla & JPMorgan Won’t Quit China – Why U.S. Billionaires And Business Leaders Refuse To Decouple From China

Tesla & JPMorgan Won’t Quit China – Why U.S. Billionaires And Business Leaders Refuse To Decouple From China



Some 5 years ago, President Donald Trump launched a trade war with China. The goal was to decouple the U.S. economy from China. In 2020, with the U.S. presidential election approaching, Trump again raised the idea of separating the American and Chinese economies. In both 2016 and 2020 campaigns, China became the easy punching bag of American politicians.



Trump argued that “decouple” – a fancy word to permanently end trade between the two nations – would see Americans saving billions of dollars. He said America will become a manufacturing superpower. He claimed decoupling and tariffs will end America’s reliance on China. Heck, he had even threatened to block companies that outsource jobs to China from receiving federal contracts.



None of those happened. The U.S. trade deficit with China was US$310.3 billion in 2020 before Trump left office in January 2021. China still remains the world’s manufacturing superpower. American consumers and businesses paid the tariffs rather than the Chinese. And American companies continue to outsource jobs to China while Trump could only watch.



His successor, President Joe Biden, eager to look tough on China, has enhanced the decoupling process by restricting high-tech exports and curtailing professional and financial links. Despite the new tech war, the latest U.S. Census Bureau data showed the U.S. trade deficit with China was larger in 2022, while America’s overall trade deficit hit an all-time high of US$1.18 trillion.



Although the value of U.S. imports from China was essentially the same in 2022 as it was in 2017, total U.S. imports increased by about US$900 billion during this period. On paper, it appeared U.S. imports of manufactured goods have increased from Mexico and Vietnam. However, behind the scene, it was China that supplied those goods, before both countries export to the U.S.



In reality, China’s exports to Vietnam have more than doubled since 2017, and its trade surplus nearly tripled by 2022. In the same breath, China’s exports to Mexico increased by nearly 30% in 2022, on top of a 50% increase in 2021. The Chinese have been quietly exporting to the U.S. thru Mexico and Vietnam to create a false impression that the U.S. had found alternatives.



This explains why China’s share of global manufacturing production has continued to increase from 26% in 2017 to 31% in 2021. On the contrary, the U.S. exports to China have been 23% lower than before Trump’s trade war and Biden’s tech war. If the objective of the U.S. decoupling or punitive actions was to weaken China economically, there is no clear evidence of that happening.



Hilariously, Biden administration, along with U.S. allies in the Group of Seven (G-7), has changed their story. After failed to decouple from the Chinese, the Western nations now claim that they are not looking to decouple from China, but to “de-risk and diversify” their relationship with China, whatever that means. Of course, Beijing said there is no difference.



As far as China is concerned, de-risking is just decoupling in disguise, therefore, has condemned Washington’s unhealthy obsession with maintaining its dominant position in the world. De-risking sounds fashionable, but the underlying hostility remains. Regardless whether it was decoupling or de-risking, American billionaires and business leaders knew it was just political bullshit.



Despite Washington’s political rhetoric, Tesla CEO Elon Musk has just paid a visit to China in a deliberate move to send a message that decoupling from China has never been a realistic option for major US businesses. In his meeting with State Councilor and Foreign Minister Qin Gang, Musk compared China to an economic twin of the U.S., with their interests intertwined and inextricable.



Called “Brother Ma”, Musk was given red carpet the moment he arrived in Beijing in his private jet on Tuesday (May 30, 2023). It was his first visit to China in over 3 years since the Covid pandemic. Of course, his first stop included a trip to Tesla’s Shanghai factory and meetings with a number of senior Chinese officials – proof of Musk’s close relationship with Beijing.



Tesla’s Shanghai plant accounted for over half of the company’s global production in 2022, and Musk wanted to expand it. More than 94,000 “Model Y” vehicles were sold in China in the first three months of this year, putting it ahead of the U.S. and Europe. In April, Tesla announced plans for a new factory that will produce its Megapack energy storage system in Shanghai.




Beside Foreign Minister Qin Gang, the Tesla boss also met with Jin Zhuanglong, China’s minister of industry and information technology to discuss about “the development of new energy vehicles and intelligent networked vehicles”. Musk then met with Chen Jining, the Shanghai party secretary, as well as China’s vice premier Ding Xuexiang.



Elon Musk also met with Zeng Yuqun, the chairman of CATL (Contemporary Amperex Technology Ltd.) – the world’s largest electric vehicle battery company and a Tesla supplier. CATL controls about 30% of the world’s EV battery market and Chinese refineries supplied 85% of the world’s battery-ready cobalt, which comes from the Democratic Republic of the Congo (DRC).



Ford Motors recently announced that its licensing CATL’s lithium-iron-phosphate technology for use in a new battery plant it will set up in the U.S. state of Michigan. CATL has also discovered a way to use sodium cells and lithium cells in a single electric car’s battery pack. In July 2021, CATL unveiled the company’s first-generation sodium-ion battery that can charge in 15 minutes to 80% at room temperature.



During his 3-day visit to China, not only Musk praised the Chinese people and China’s technological achievements, but said Tesla opposes “decoupling” and is willing to continue to expand its business in China. The owner of rockets and spacecraft company SpaceX also said that the China space programme is “far more advanced” than most people realize.



But Musk, the world’s richest man with a net worth of US$192 billion, isn’t the only American businessman who has publicly rejected decoupling from China. JPMorgan’s CEO Jamie Dimon said his company will be in China in both good and bad times. The largest bank in the U.S. and the world’s largest bank by market capitalization said it remains committed to doing business in China.



In fact, Dimon doesn’t foresee a decoupling between the West and China. Like Musk, he was in Shanghai for JPMorgan conferences when he predicted that “over time there’ll be less trade” between the U.S. and China, but “it won’t be a decoupling, and the world will go on.” Dimon also said he had “enormous respect for the Chinese people,” acknowledging the country’s “extraordinary” development.



The importance of China to U.S. companies can be seen with a steady flow of visits to the mainland from CEOs from multinational companies like Pfizer, Starbucks, Jardine Matheson, Franklin Templeton and UK chip software giant Arm Ltd. Other CEOs who have recently traveled to China include Apple’s Tim Cook, Intel’s Pat Gelsinger, Nvidia’s Jensen Huang, Nestlé CEO Mark Schneider and Qualcomm’s Cristiano Amon.



Like it or not, all the foreign billionaires and high-profile business leaders have delivered one message – quitting the Chinese market is not an option, and decoupling from China would be disastrous. A survey done by the American Chamber of Commerce in China showed that 66% of American businesses in China would maintain or increase their investments in the country.



European Union Chamber of Commerce in China, meanwhile, said 60% of the business owners surveyed hope to increase their R&D investment in China. Even China-Australia Chamber of Commerce survey found that more than 60% of Australian businesses viewed China as among the top three destinations for global investment – despite so-called China’s economic coercion.



The second largest economy needs no introduction. The Chinese market is worth a jaw-dropping 120 trillion Yuan (US$17 trillion) in 2022. Armed with the massive 1.4 billion consumers, China is a major trade partner for over 140 countries. In truth, the world has become more dependent on China in trade while China has become less dependent on the world.



The brutal truth of Western capitalism was perhaps why Washington has recently changed its tactic from decoupling to de-risking, even though both words have little difference. The West is excellent in putting new wine into old bottles. Criticizing Biden’s chip war, Nvidia CEO Jensen Huang said – “If we are deprived of the Chinese market, we don’t have a contingency. There is no other China, there is only one China.”