On July 13, 2023, the U.S. House Select Committee on China held its hearing themed: Risk Business: Growing Peril for American Companies in China. During the hearing, three senior experts familiar with the Communist Party of China (CCP) ‘s commercial black box operations testified and gave solid, first-hand evidence of the dangerous risk and harm faced by the United States in the U.S.-China business cooperation.
The three witnesses highlighted for U.S. lawmakers the devious nature of China’s so-called “private enterprises” and “Sino-U.S. joint ventures,” that is: all companies in China are controlled by the CCP. There is no actual “private enterprise” in China, and the only purpose of cooperation between the CCP and foreign companies is to master U.S. technology and then replace it.
Perilous risk: The CCP has complete control over your life
One of the three witnesses, Desmond Shum, a Chinese businessman, former member of the Beijing Chinese People’s Political Consultative Conference (CPPCC), and author of the book Red Roulettee, pointed out three issues that he experienced to illustrate the nature of doing business in the Chinese Communist regime. Desmond is currently in exile in the United Kingdom.
First, when he worked in his father’s company in his early years, his father’s food products exported to China suffered setbacks. His father told him this was not a market problem but a problem of Sino-U.S. relations. Desmond said, “The CCP sees American companies as hostages for its purposes.”
Second, Desmond invested in a telecommunications company in 1997 while working for an American private equity firm. He saw the rapid rise of Chinese-owned Huawei, backed by the CCP. At the same time, he saw the efforts of AT&T to enter the Chinese telecommunications market. Their efforts were on foot of the CCP’s promise to allow foreign telecom companies to enter the Chinese market when it wanted to gain membership in the influential World Trade Organization (WTO).
“More than two decades have passed, but no foreign telecommunications company has operated in China. The CCP’s promise to open up China’s domestic market has never been fulfilled. My lesson from here is that; there is no level playing field in China. When the CCP likes you, you prosper; you perish when the CCP doesn’t like you.”
Desmond also talked about what happened before and after he published Red Roulette. When he was about to publish the book in 2021 that exposes the CCP’s manipulation of the entire Chinese economy and plundering of national resources, his ex-wife, who had disappeared for four years when she was unexpectedly arrested and detained without charge, suddenly contacted him to inform him that the CCP is trying to ban Desmond from publishing his books.
“The moral of the story is that; in China, political power is above all else. There are no legal principles. On the contrary, China is ruled by ‘law,’ and the CCP is above the law. Xi Jinping is the modern emperor above the CCP and the State. This is the truth about China.”
Third, Desmond advised American companies or individuals not to invest in China.
“The boom years of rapid growth are gone, China’s political environment is changing rapidly, and all enterprises have become precarious. China is never a market to take long-term risks; it’s a casino… Investors who stay in the market for too long eventually lose everything.”
He stressed the importance of safeguarding U.S. economic interests while competing with China to U.S. lawmakers. “In this fight, a clear distinction must be made between corporate and national interests.”
Don’t fall for the CCP trap: they have no concept of win-win
“The myth that what’s good for American business is what’s good for America is no longer true. In a democracy, elected officials should be the true guardians of national interests and the long-term well-being of the people. Remembering this when you hear corporate executives advocating re-engagement and reconciliation is critical. In this competition with the CCP, I believe economic interests are national. To defend U.S. economic interests and U.S. leadership in the global economy is to defend the economic order of the democratic world.”
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