Chinese internet giant Jack Ma, founder of Alibaba Group, met with President-elect Donald Trump today to discuss the further expansion of his company in the United States.
Alibaba, a Chinese software company that listed on the NYSE in 2014, is seeking to target its American network toward 1 million small businesses, primarily in the American midwest. By connecting these American producers to Chinese consumers, the potential for regular US citizens to finally start turning around the trade deficit with China emerges. The prospect of job growth, a stimulus to American manufacturing, and a positive story in US-China relations are are worthy of celebration indeed.
However, as with most headlines that drive a narrative in mainstream media, one must take a second to critically evaluate the potential negative ramifications that only become apparent after everyone’s stopped paying attention. In this case, it is the realization that although this will help create American jobs, it is in no manner of the same type of quality jobs that Trump’s Carrier deal or auto deals provide. Alibaba pays no benefits, offers no job security, and will directly compete with similar American companies. Amazon and Jeff Bezos are no allies of the Trump administration, but they also provide hundreds of thousands of real American jobs. Alibaba will never be more than an ancillary revenue channel for the vast majority of the 1 million American businesses that it targets.
Donald Trump has made a great deal today in facilitating the creation of a great number of American jobs. However, now it’s up to our new trade czar Peter Navarro, US regulators, and the general public to ensure that the Alibaba expansion does not turn into a new chapter in our trade imbalance. Trade networks flow both ways, and it’s up to us to make sure we use this new avenue that is about to open up positively. American producers need to actively embrace the Chinese market as a target for high quality American exports, and American consumers be wary of using this channel to import Chinese products when local alternatives are available, contribute to Chinese labor abuse, and add to the US trade deficit.
Disclosure: I hold minor positions in both Alibaba Group and Amazon Inc.