The recent one-million job promise from China’s premier e-commerce company may ring hollow in the long run.
Alibaba Executive Chairman Jack Ma told President-elect Donald Trump earlier this week that his company will facilitate the growth of American businesses by creating one million U.S. jobs; however, the current state of the U.S.-China bilateral relationship is not very conducive to completing such a monumental task.
While Ma did not provide any real details, Alibaba does not appear to have plans to construct new factories, set up new operations centers, or pursue new investment opportunities. It looks like he simply intends to move existing trade onto the Alibaba e-commerce platform.
The shift would benefit Alibaba, but it would probably have a limited impact on job creation.
“He’s basically saying, ‘Route your trade through me’,” Dr. Derek Scissors, a resident scholar at the American Enterprise Institute, told the Daily Caller News Foundation.
Ma has been trying for about two years to sell more American goods to Chinese consumers on the Alibaba e-commerce platform, and promises like the one recently made to Trump have been made before.
“We want to help U.S entrepreneurs, small business owners, and brands and companies of all sizes sell their goods to the growing Chinese consumer class. Chinese consumers will get to buy the American products they want. This, in turn, will help create American jobs and increase U.S. exports,” Ma explained in a 2015 op-ed outlining his business strategy.
The American trade presence on Alibaba’s platform is relatively small right now. Around 7,000 U.S. brands sold approximately $15 billion in goods to Chinese consumers in 2016, Alibaba spokesperson Rico Ngai told CNN Money. For Alibaba to effectively create one million U.S. jobs, the company would need to see a 142-fold increase in business.
While Ma has been working to achieve his goals for a few years, the U.S. has been trying to increase its exports to China for two decades with limited success.
“If it were so easy that one guy could do it, it would have happened a long time ago,” Scissors told TheDCNF.
Some observers suggest that the booming Chinese e-commerce industry, the expanding Chinese middle class, and the demand for foreign products are creating an environment suitable for Alibaba to fulfill its commitments to the incoming administration.
China’s e-commerce industry is predicted to be worth $840 billion by 2021, with cross-border trade surpassing $150 billion by 2020, and while China is much poorer than the U.S., its version of a middle class is estimated to be about 300 million strong.
At the moment, though, Alibaba’s aspirations contradict trade and U.S. export trends.
U.S. exports to China have been falling in recent years.
China has not demonstrated a strong interest in purchasing U.S. goods, excluding a handful of prominent brands. Furthermore, as China’s economic growth slows, consumers are less inclined to purchase American products, which are becoming more expensive as China’s currency depreciates due to mounting pressure resulting from the strengthening of the dollar.
Additionally, Trump’s previous threats to slap high tariffs on Chinese exports, assuming he follows through on these promises, are unlikely to make China particularly receptive to American products.
The current situation would make it very difficult for Alibaba to expand business and create one million U.S. jobs.
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