BEIJING: For years, Chinese companies leveraged favorable exchange rates, cheap labor, thin environmental regulations, and other advantages to attract U.S. capital and technology in exchange for huge profits.
Now, U.S. tax cuts the biggest passed since those during the presidency of Ronald Reagan three decades ago have Beijing in a bind.
Prominent in the new tax policy are generous reductions in the corporate tax and a rationalization of the global tax scheme. Both are expected to draw capital and skilled labor back to the United States.
The reform comes at a time when glaring shortcomings of the Chinese economic model have begun to be broadly felt across the world’s last major communist power long before the legislation passed in the U.S. Senate on Dec. 2, Beijing had heaped severe criticism on the proposed reform.
In April, Chinese state-controlled media slammed the tax cuts, accusing the U.S. leadership of risking a “tax war” and exhorting Washington to “take up its responsibility as a great power.”
