Can China be Trusted?

@alvinong1276 asked a good question a couple of weeks ago but with my recent travels and other commitments, I haven't really had much time to respond in a video, although I did respond to the question. So, welcome to another of my takes on China, this time from a rest day in the Henan city of Zhengzhou.

Alvin asked:

Hi Jerry, One argument that I am hearing from US media is that China is unfair in its trade practices that is why many countries have grievances files against China. Is there truth to this?

My response is simple - No, there is not any truth in this. However, the accusations are very strong and, as with all accusations, it's often a case of pointing the finger at China to deflect from the reality at home. However, given all we're seeing in media and all the allegations flying out of the White House about China violating agreements, it's probably a good time to put this one right.

First of all, China hasn't violated any Agreements out of the Swiss meeting they had with the USA. Rare Earth extracts are what's not being mentioned because it would cause a panic in the weapons industry and the people who are invested in it - if I were investing in the US weapons industry, I'd get my money out of there really fast because it's going downhill soon and that's what makes the White House panic - rare earth extracts are almost 100% sourced in China and China has written a law to restrict them to licence holders - that means weapons manufacturers won't be getting them anymore. There is not only a law, but China has introduced stricter controls, set up a department to reduce instances of smuggling and false applications and basically made these important elements only available for peaceful purposes. No wonder Trump is panicking!

China has trade disputes of course but these are normal, often business to business and not government to government - Australia in particular epitomises this theory because during Covid China stopped taking their coal, wine and lobsters. Australia's media accused China of unfair practices and again, it was not true, media lied to the public and quite deliberately so.

Coal was, and it's been proven by Andrew Wilkie, one of their politicians, who tabled the truth in Parliament, dirty, they were selling coal that had a test report of a certain grade and when analysed in China was found to be a different, inferior grade - the media never told us about this and the truth didn't come out until well after the events where China were wrongly portrayed as aggressive.

Lobsters were coming into China without the correct paperwork to demonstrate they were lead free - lead in shellfish and crustaceans is a very big problem, if the lobsters are farmed or harvested in a region, such as Whyalla, where there is a very large lead smelter, there may be lead in the water, so all lobsters entering China need to be certified lead free, and Australia wasn't doing that. Again, this didn't come out until after the matter was resolved, everyone just accused China of being harsh, when in fact they were protecting their investments and the people who consume products.

The other one was Wine and under WTO regulations wine can't be exported at different prices to what they are sold locally, some wines coming into China were absolute trash being dumped by the wine industry onto an immature market in China and others were high quality brands such as Penfold's Grange, which was being sold to wealthy Chinese at three times the market price - in other words the Australians were ripping off both ends of the market.

China is indeed very strict on what is imported, it takes years to get certification to import food or livestock but once the certification is achieved, China is a lucrative market. It's also a highly protective market, it applies rules stringently and adheres to contracts - of course this is not to say that there aren't some Chinese business people who can't be trusted, that's the same everywhere, if you apply normal due diligence to deal with China, you will get great business and have trusted, long term cooperation.

If you seek evidence of this, go to any one of the 8,169 US corporations that operate in China and check out their annual reports. As far as I know there are 140 US fortune 500 companies, and all of them operate in China - these people know the environment in which they operate and if it was a hostile environment, they would not work there, or invest so heavily. Their annual reports, almost completely, report that China is their largest business market and the one place that most of them are predicting greater investment and involvement - even Apple, which has indeed moved a lot of stuff out of China for enhanced savings is not moving everything out and is, despite what Media says about it, planning on more investments in China. In fact, Tim Cook of Apple is often in China and admits it's their most important market, not just in terms of phone sales, which, despite declining, are still huge, but also in terms of systems and App designs**, this was reported as recently as this week.

In March this year, over 40 leading US business investors were here meeting with Xi Jinping and attending conferences in Hainan Island, Guangzhou, Beijing and Shanghai - these people won't come if the investment climate isn't good. The Canton Fair had record numbers of businesses attending and many orders were made there - if China was a hostile place to do business, there would not be so many people, and so many countries willing to do that business.

China is the leading trading partner of 140 countries in the world, it is the second biggest trading partner of the Eu, the largest of ASEAN, and the Eurasian Economic Union. It's a strategic partner of many, it has enhanced cooperation with many, it has Free Trade Agreements with many. So, why wouldn't companies and countries want to do business with China. It's provided debt relief and restructuring to the developing world in so many cases, they can't all be listed in a short video, the myth of the debt trap is exactly that, a myth - in fact, let me correct that, it's not a myth at all, it's true of the West and in particular, France, Britain and the US, all countries that have exploited underdeveloped nations and trapped them with debt.

What we read in the media and what business leaders read in their privately commissioned reports are very different thing. If you focus only on Western media, you will only hear or see isolated tales of individual problems, if you read Academic, Business and even personal reports (some written by yours truly for international businesses) you will find the realistic picture - like any country where you do business there will be cultural, interpretational and personal differences but legal and contractual protections in China are very strong.

I think that will answer the question that many people who focus on media have, but the people who know, and the people who need to know, won't focus on media, they will find out for themselves by specially commissioning reports from people they trust.

Thanks once again for watching my take on China and I'll see you from the road again soon.

* https://custommapposter.com/articles/how-many-american-companies-are-in-china/1781

^ https://english.www.gov.cn/news/202503/29/content_WS67e72bc4c6d0868f4e8f14b5.html

** https://www.chinadaily.com.cn/a/202506/06/WS68429ea4a310a04af22c3a26.html