Huge staff cuts at Chinese Apple supplier raise the question: Can the China’s businesses withstand a drawn-out trade war?

Xie Yu for South China Morning Post:

O-Film Group, a major supplier of camera and touch-screen components for Apple, has reportedly laid off more than 8,000 staff at its plant in central China, adding to concerns about whether the country’s businesses can withstand a protracted trade war with the United States.

Weighed down by a gloomy market outlook for smartphones, increasingly fierce competition and the affects of trade tariffs, O-Film has seen its profits crash this year… Some financial institutions are already clearing their exposure to the company. A joint stock bank based in south China’s Guangzhou said it was in the process of exiting its investment in O-Film, which was mainly in the form of bonds.

In recent months, state-owned think tanks and bureaucrats have been touring the country to assess whether the domestic economy can withstand a drawn-out dispute with the US… A measure of China’s manufacturing activity shrank for a third straight month in July. The official manufacturing Purchasing Managers’ Index (PMI) came in at 49.7, where a number below 50 represents contraction.

MacDailyNews Take: Increasing pressure in this case could result in a greater degree of balance.

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006

13 Comments

  1. Since China has been caught stealing IP, making counterfeit products and poisoning pet and baby food, it would be best to completely get out of China.
    Let them lose all of America’s manufacturing.

  2. Perhaps the credit easing can mitigate the effect of the tariff tax increase on American corporations and people. But it is unlikely that it will. This large tax increase on the middle class helps offset the deficit being produced on a massive scale in the US as a result of the tax cut for the 1%.

  3. Winning. Winning.
    It takes time for reality to bite and become effective. Patience Grasshopper. Also, the Thomas Sowell quote is delightful to see. I have enjoyed his surgical skill with words to pare almost any argument down to an ultimate yes-or-no choice where even emotion-based individuals can finally arrive at a judgement based on logic and “what works” rather than repeating phrases from their favorite SJW proponents.

  4. “repeating phrases from their favorite SJW proponents.”

    this from someone brainlessly chanting “winning”!

    nobody wins a trade war. even as MDN promotes isolationism, US taxpayers are funding farmers welfare. the corrupt administration is doling out selected tariff exemptions to its political supporters. manufacturing in the US continues to decline with the aging infrastructure. wake up people.

  5. The tariffs are to provide an incentive to Americans to prefer buying USA made products and increase paychecks and employment of their fellow citizens. If you don’t buy the foreign made item then you don’t pay any extra cost. Why don’t you get it? Because you are a party propogandist and you don’t want to. Just admit it and quit the faking.

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