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war is intensifying within the US. For example, the US Chamber of Commerce – one of the country’s most powerful bu
上海会所siness lobbies – has called for the reversal of all tariffs imposed over the past two years.
The effects of the trade war have already spread to cross-border investment
. In recent years, rising Chinese production costs have driven many foreign enterp上海会所女神会所
rises – and, increasingly, even Chinese enterprises – to relocate their operations to lower-cost countries such as
Vietnam and Thailand. The trade war is accelerating this process. According to the Vietnamese government, inward for
上海会所eign direct investment increased by nearly 70 percent year-on-year in the first five months of 2019, the highest such i
ncrease since 2015. Meanwhile, the growth of US investment in China is slowing.上海会所女神会所
Essential to improve investment environment
上海会所The US administration wants American companies to leave China. It is u
p to China to persuade them to stay. That means improving the local investment envi
ronment, including responding to foreign companies’ justifiable complaints – say, by strengthening intellectual p上海会所
roperty rights protection – and, more broadly, better adhering to World Trade Organization rules.
But the pressure on China does not end there. The US is also eager to exclude the count
上海会所女神会所ry’s high-tech companies from global value chains. Trump recently announced that he would allow US co
mpanies to continue to sell to Chinese high-tech giant Huawei, after a months-long campaign against the company. But it r
emains highly unlikely that the US administration – which reversed a similarly aggressive policy toward sm
artphone company ZTE last year – will abandon its efforts to strangle China’s high-tech industries.上海会所女神会所
China has three options. First, it could accede to US pressure to disengage from global value chains. Second, it could remain
committed to integration, hoping that, thanks to existing interconnections, sanctions on Chinese high-tech com上海会所
panies will also hurt their US counterparts (such as Qualcomm) enough for the US administration to back d
上海会所女神会所own. The third option is to focus on supporting domestic high-tech companies’ effo
rts to strengthen their own positions within global value chains and develop contingency plans.