The Trump administration's vague plan to impose tariffs on up to $60 billion a year in Chinese imports has Chinese companies speculating about whether their products will appear on Washington's list. But analysts say the tariffs hide a broader White House goal of undermining a high-level Chinese strategy known as Made in China 2025, which aims to build a group of Chinese companies into world leaders in industries such as robotics, semiconductors, aircraft manufacturing and computer applications. The strategy aims to build a group of Chinese companies into world leaders in industries such as robotics, semiconductors, aircraft manufacturing and computer applications.
A key point of Beijing's development program is to help Chinese companies emerge as global leaders in their respective industries by partnering with foreign companies or acquiring technology overseas. Those companies are precisely the ones the U.S. is expected to target with its actions.
The planned U.S. tariffs and investment restrictions are meant to hit China in response to what the U.S. sees as unfair technology and intellectual property practices," Louis Kuijs, director of the Asian economics department at Oxford Economics, said in a report. "
"The most important of these seems to be making technology move more slowly to China." Christopher Lee, chief China corporate ratings specialist at S&P Global, said.
The Office of the U.S. Trade Representative has listed "aerospace, information and communications technology, and machinery" as industries that will be subject to tariffs. More details are expected in early April, but the White House has already named a number of Chinese companies in a 200-page report as examples of how "unfair" competition from China is costing the United States. According to the U.S. report, the companies that pose the biggest threat to the U.S. include:
Midea Group
Home appliance maker Midea, though not a state-owned company, is a key player in China's plans to build a globally competitive robotics industry. Kuka, one of the top robotics groups in Germany.
The U.S. government sees Midea as an example of a private Chinese conglomerate that appears to be carrying out some aspects of Beijing's aforementioned development policies. Midea has received hundreds of millions of dollars in loans from several policy banks to support its acquisition program.
China Exim Bank, one of the underwriting institutions, said that "the implementation of the project will help optimize the layout of China's robotics industry, promote the automation of multi-industry production, and upgrade China's smart manufacturing technology," according to the US Trade Office.
ChemChina
Early in 2016, state-owned ChemChina caught the world's attention when it announced it would spend $44 billion to buy Syngenta of Switzerland, one of the world's largest pesticide and seed groups. The deal fits with Beijing's policy of controlling a range of technologies to ensure food security and modernize agriculture.
The U.S. trade office has noted that the deal, backed in part by state-owned banks, puts "4,000 employees, 33 research sites, and 31 manufacturing and supply sites" in the United States under the control of a conglomerate beholden to Beijing.
The acquisition also puts U.S. pesticide makers such as DowDuPont and Monsanto in direct competition with Beijing, making ChemChina's global reach a major target for U.S. tariffs.
China Railway Corporation (CRRC Corp)
CRRC and other Chinese state-owned railroad groups are the main beneficiaries of joint ventures with global industry leaders like Bombardier and Siemens. China CNR is now the world's largest manufacturer of railroad rolling stock.
In addition to supplying China's rapidly expanding high-speed rail and subway systems, CSR has also entered the U.S. market in recent years, picking up contracts to supply subway trains for Boston, Chicago, Los Angeles and Philadelphia.
CRC has so far exported products from China, but the company's first U.S. plant in Springfield, Massachusetts, will soon begin production. CNR said the plant is a "win-win" example of U.S.-China cooperation.
The White House listed Chinese railroad products as a target for tariffs, but the U.S. trade office's report did not mention CSR by name.
Commercial Aviation Corporation of China (Comac) and Aviation Industry Corporation of China (Avic)
These two Chinese state-owned aircraft manufacturing groups are trying to break the monopoly of Boeing and Airbus in the airliner market and turn China into an aviation manufacturing powerhouse.
Commercial Aviation Corporation of China's (COMAC) C919 airliner, which is meant to compete with the Boeing 737 and Airbus A320, is still in the early stages of testing, and will take several years before it is put into mass production. But analysts believe the C919 will eventually be able to take market share away from those two dominant players, especially in China.
CAIC holds a stake in COMAC. The two companies have propelled themselves through a series of acquisitions of U.S. aircraft and avionics equipment companies. The Office of the U.S. Trade Representative has emphasized those acquisitions in its investigations into China's unfair trade practices. Both companies have considered acquiring Canadian jet maker Bombardier in part or whole.
Commercial Aircraft Corporation of China (COMAC) has relied on partnerships with companies including General Electric (GE), Honeywell, Rockwell? Rockwell Collins and other U.S. companies to supply key components for the C919, including engines, wheels and avionics.
Tsinghua Unigroup
Few of China's government-backed investors have been as aggressive as Tsinghua Unigroup in chasing semiconductor assets around the world. The group, which is controlled by Beijing-based Tsinghua University, was founded with the mission of bringing foreign semiconductor technology to China through acquisitions. The U.S. Trade Office report noted that Tsinghua has received funding from the National Integrated Circuit Industry Investment Fund (National IC Fund), which is directly controlled by China's Ministry of Industry and Information Technology.
There have been several attempts by Tsinghua Ziguang to directly acquire high-quality U.S. assets. In 2015, for example, the group offered to buy a 15 percent stake in U.S.-based Western Digital for $3.8 billion. But Tsinghua Ziguang withdrew the deal after U.S. regulators launched an investigation.
But the Tsinghua Ziguang-backed group has also launched a number of smaller funds aimed at similar buyout deals. Another entity that appeared in the U.S. Trade Office report, Hua Capital, used funds from Tsinghua Ziguang to acquire OmniVision, a U.S. digital imaging company.
Big Genetics (BGI)
As the world's largest genomics research and development organization, BGI has attracted round after round of investment from private equity firms willing to pay a premium. Sequoia Capital is one of UWG's major investors.
In 2013, UWG acquired Complete Genomics, a U.S.-based genome sequencing company that has sequenced more than 20,000 human genomes.
Washington is concerned about the interest of the Chinese government and the ****productive party in UWG. The report noted that UWG has received a large loan from the China Development Bank, a policy bank, and said that while the shareholding structure is privately owned, UWG has "clear links to the government.