U.S. policy on China hurting businesses, insiders say

Margaret Wong, a businesswoman in Sacramento, California, said she has been forced to look for countries other than China to manufacture her products, but has had little luck so far in terms of efficiency. "I'm not going to give up on China. ... Section 232 is really killing us," she said.

Section 232 of the Trade Expansion Act of 1962 authorizes the president of the United States to adjust, through tariffs or other means, the imports of goods or materials from other countries if the quantities or circumstances surrounding those imports are deemed a threat to national security

In 2018, then U.S. president Donald Trump imposed a 25 percent tariff on steel and aluminum imports from China under Section 232. President Joe Biden has kept the tariff in place.

"Our profit margins are down because of the tariff.... Why is inflation so high? Because of the 25 percent import duty," Wong said.

She shared her grievances during the annual conference of the Committee of 100 in San Jose, California, where industry insiders discussed how the U.S. government's China policy is affecting trade and economy.

"Due to the rising costs, a lot of my clients are saying that they don't want to buy (made in China) products. But no other place can replace China. We've been actively looking at 'Made in Mexico' (products), but it (the business strategy) has not been as efficient as I expected," she said.

Emphasizing the efficiency of China's manufacturing infrastructure, Wong said: "When you make a call (in China), you always get something — you get materials, you get engineers fast. But, if you are (doing business) in Vietnam, it takes forever to get something."

Wong founded McWong International Inc in 1984 and has since then created several companies from manufacturing, electronics and environmental engineering. She has also been engaged in cross-border investment between the U.S. and China in the lighting industry.

She said her 38 years of doing business with China has taught her that "global trade is a must in this world" and that "we need to depend on global trade".

"A number of my Chinese suppliers are actually investing in the United States — not just investing money as foreign direct investment — they want to manufacture 'Made in America' products," Wong said. "They are going to move the money, the talents and the resources and have (products) made in the United States."

Wong sees it as a win-win situation, and said politics should not be allowed to "interfere with the economic interests".

However, Chinese investment in the U.S. has dramatically declined over the past few years, and the interest of Chinese investors has dampened, according to Catherine Pan, a partner at Dorsey &Whitney LLP.

Citing her own experiences during the recently held 2023 SelectUSA Investment Summit, an event that aims to attract investors from around the world to the U.S., Pan said the delegation size from China was drastically reduced compared with a few years ago.

According to Pan, there are three U.S. laws that need attention — the Inflation Reduction Act, the CHIPS and Science Act and the Infrastructure Investment and Jobs Act — because they will be "the economic development engines for the next few decades".

"These three Acts intentionally shut out Chinese investors," she said. "The CHIPS and Science Act is (meant) to protect the American semiconductor industry, especially supercomputers and chip fabrication. The Inflation Reduction Act has the 'foreign entity of concerns' provision to make sure Chinese investors cannot participate in tax incentives or credits for electric vehicles, EV batteries and renewable energy industry."

Given the current geopolitical tensions, the U.S.-China FDI will probably continue to decline, Pan added.