MICHAEL LUCCI: US Multinationals Must Exit China

President Trump first called upon American businesses to find an alternative to China in August 2019. Few executives listened. Since then, China’s global behavior has ranged from thuggish to explicitly war-like, including covid duplicity, underwriting Russia’s invasion of Ukraine, fueling America’s fentanyl crisis, and preparing to invade Taiwan.

Trump’s 2019 call has been completely validated. Now, with a temporary reprieve in renewed U.S.-China trade tensions, investors should be asking U.S. multinational companies a serious question: Why in the world are you still dependent upon China?

American industry must execute its own Operation Warp Speed to rapidly extricate all sensitive supply chains from China. Time is of the essence, as responsible fiduciaries long ago reached the inescapable conclusion that China is not a reliable jurisdiction for multinational companies.

America’s economic opening with China was supposed to make China more like us. Instead, it strengthened the Communist Party at our expense and corroded global institutions. China began shattering global norms from the moment they entered the World Trade Organization in 2001, quickly dismissing intellectual property (IP) laws, ignoring trade rules, and leveraging state control to thwart competition and subsidize economic attacks upon America. China’s cheating accelerated while reciprocity was always delayed, allowing China to accumulate massive trade surpluses. The prospect of Chinese market access has been repeatedly dangled to keep U.S. businesses submissive.

Since President Trump’s 2019 warning, everything has gotten worse. China signed a trade deal with President Trump on January 15th, 2020, then immediately reneged, falling well short of the new purchases they promised. The CCP continued to pillage $225 billion to $600 billion of U.S. intellectual property per year. As Bret Boyd argues in a recent op ed, China’s IP theft and industrial subsidies are part of a “deliberate and strategic” attempt by Beijing to skip research costs, deindustrialize global competitors, and ultimately undermine the manufacturing capacity (and thus defense production) of rivals.

The CCP’s global malfeasance took center-stage during the covid pandemic. Mounting evidence supports the conclusion that China lied about a lab leak that caused the catastrophic outbreak, then took extraordinary lengths to cover up its malfeasance. In violation of international law, China – with full knowledge of its lethality – delayed notifying the World Health Organization of the Wuhan contagion, all while travelers departed Wuhan for global destinations.

During the pandemic’s early stages, the CCP directed its companies operating overseas to exfiltrate to China as much medical and personal protective equipment as they could obtain. It also nationalized its local production – sweeping up American companies operating in China, including

General Motors and 3M – to produce medical supplies while denying export licenses to send medical products to America.

Once the covid chaos cleared, accountability was likely on the way for the CCP. But in early 2022, China blessed Russia’s invasion of Ukraine and has since funded and supplied Russia’s war machine. Kaja Kallas, the E.U.’s top diplomat, describes China as the “main sponsor” or Russia’s war, and recently noted that 80% of dual-use (civilian and military) goods enter Russia from China. The CCP has also dialed-up shipments of nitrocellulose, a key component in munitions, and Iskander missiles that have targeted Ukrainian cities.

China is also sowing chaos across the Middle East, implicitly backing the murderous Hamas terrorists. Social media platforms under Beijing’s sway have directed a disinformation campaign against the Jewish state in hopes of weakening the West’s support for Israel and thus undermining American interests. China’s leaders have liaised with Hamas’ leaders about the conflict. Furthermore, large quantities of Chinese-made assault rifles, grenade launchers, sophisticated explosives and high-tech military equipment have reportedly been captured in Hamas warehouses.

Equally, if not more disturbing, is that Chinese companies stand accused by the United States of providing Iranian-backed Houthis with satellite imagery and dual-use components to help them target American ships in the Red Sea. According to U.S. intelligence sources, the Houthis have spared China-flagged ships in exchange for this assistance.

And since Russia’s 2022 invasion of Ukraine, Chinese Communist Party leader Xi Jinping has been openly preparing to blockade and invade Taiwan. The PLA is hurtling toward conflict, from nearly constant invasion drills, to combat readiness measures, to crafting legal frameworks designed to justify an invasion. INDOPACOM Commander Samuel Paparo describes China’s drills as rehearsals for forced annexation.

If that’s not enough, two consecutive State Departments have found China to be engaged in genocide against minority groups, and the House Select Committee on the Chinese Communist Party found China’s government to be the “prime mover” in America’s fentanyl crisis.

President Trump’s tariff reprieve is unearned grace for most companies still dependent upon China. They should have exited long ago. U.S. multinationals must finally see the writing on the wall and accelerate their departure from China.

Michael Lucci is the Founder and CEO of State Armor, a 501(c)(3) non-profit advocating for state solutions to the global threats posed by the CCP.

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