It is an old joke among international business people that in China, a win-win deal means that China wins twice. This was never entirely true, of course. If it was, so many corporate supply chains and investment projects would not run through the country. But cratering relations between China and the US have left global businesses confronting lose-lose propositions.
In the past few months, the two sides have exchanged blame and conspiracy theories over Covid-19. The US Senate passed a bill that could force some Chinese companies to drop their US listings. The commerce department has tightened rules against Chinese telecoms champion Huawei, leading China to consider retaliation. Security legislation imposed on Hong Kong has threatened that city’s status as the main commercial link between China and the world.
This is not just a problem for US and Chinese companies. The new controls on Huawei, for example, are a threat to all global chipmakers that supply the company — they all depend on US chipmaking tools. Mercedes and BMW export cars from the US to China. The list goes on, and companies are scared. “While we are nowhere close to the same level of hostility yet, we have seen how the US punishes European companies who deal with Iran and Russia,” says Joerg Wuttke, president of the EU chamber of commerce in Shanghai.