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France Thought It Could Reverse Globalization, but It’s Still Bleeding Jobs

PARIS — In recent months, Fabrice Chabance has had plenty to keep him awake at night. Two foreign-owned factories in Saint-Florent-sur-Cher, a region of 11,000 people where he is a political leader, have announced plans to move parts of their production lines to countries with lower labor costs.Nearly 200 jobs will be lost, a grim blow to his small industrial community in the Loire Valley. Despite efforts by President Emmanuel Macron to lure manufacturing back to France, Mr. Chabance has few illusions that the globalization that has swept jobs away will be reversed any time soon.“It’s a catastrophe,” said Mr. …

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Biden’s China Policy? A Balancing Act for a Toxic Relationship

WASHINGTON — In addition to a deadly pandemic and a weakened economy, President-elect Joseph R. Biden Jr. will inherit one more challenge when he takes office in January: a toxic relationship with the world’s second-largest economy.

President Trump has placed tariffs on hundreds of billions of dollars of products from China, imposed sanctions on Chinese companies and restricted Chinese businesses from buying American technology — a multiyear onslaught aimed at forcing Beijing to change its trade practices and as punishment for its authoritarian ways. He shows no sign of letting up in his final days in office: On Thursday, Mr. Trump issued an executive order barring investments in Chinese firms with military ties.

The hard choices for Mr. Biden will include deciding whether to maintain tariffs on about $360 billion worth of Chinese imports, which have raised costs for American businesses and consumers, or whether to relax those levies in exchange for concessions on economic issues, or other fronts, like climate change.

Mr. Biden will need to walk a careful line. He and his advisers view many of Mr. Trump’s measures, which were aimed at severing ties between the Chinese and American economies, as clumsy, costly and unstrategic. They say they want to take a smarter approach that combines working with the Chinese on some issues like global warming and the pandemic, while competing with them on technological leadership and confronting them on other issues like military expansionism, human rights violations or unfair trade.

But even if it departs from Mr. Trump’s punishing approach, the Biden administration will be eager to maintain leverage over China to accomplish its own policy goals. And the new administration will face pressure from lawmakers in both parties who view China as a national security threat and have introduced legislation aimed at penalizing Beijing for its human rights abuses, global influence operations and economic practices.

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Credit…Amr Alfiky/The New York Times

“This is likely going to be a period of continuing uncertainty on the U.S.-China front,” said Myron Brilliant, the executive vice president of the U.S. Chamber of Commerce. “There is no question that President Trump has adopted a tough stance on China, and this probably doesn’t give President-elect Biden a lot of political flexibility early on, but we expect a significant departure in tone, style and process.”

Mr. Biden has given few details about his plans for U.S.-China relations, other than saying he wants to recruit American allies such as Europe and Japan to pressure China to make economic reforms, like protecting intellectual property. He has pledged to devote more resources to enhancing American manufacturing capacity, infrastructure and technological development, to ensure the United States retains an edge over China even as it invests huge sums in fields like telecommunications, artificial intelligence and semiconductors.

But Mr. Biden will face pressure from both parties not to revert to the approach that he and many of his predecessors had earlier embraced in trying to transform China’s economic practices by bringing it into the global economy.

Like many Democrats and Republicans in the 1990s and early 2000s, Mr. Biden argued that integrating China into the global trading system would force Beijing to play by international rules, to the benefit of American workers. In 2000, he voted to grant China permanent normal trading relations, which paved the way for China’s entry into the World Trade Organization and deeper global economic ties.

In 2016, Mr. Trump won the presidency in part by loudly rejecting that approach, arguing that the United States needed to isolate, not integrate, Beijing.

Two decades later, Mr. Biden acknowledges that China exploited the international system, and he has called for a more aggressive approach. Mr. Biden has said the United States must get “tough with China,” and referred to Xi Jinping, the Chinese leader, as a “thug.”

Congress is also relatively unified on taking a tough stance on China. Hundreds of China-related bills are circulating, including several bipartisan efforts that echo Mr. Biden’s emphasis on competing with China by investing in American industries like quantum computing and artificial intelligence.

Mr. Biden’s first moves on China could also be dictated by Mr. Trump’s last months. Many trade experts say they are concerned Mr. Trump, who has promised to make China “pay” for not doing enough to contain the coronavirus, could amp up his economic fight. Several of Mr. Trump’s aides are bitter at China for its role as the source of the coronavirus, which they see as a major contributor to Mr. Trump’s loss, people familiar with their thinking say.

One area of focus is the trade deal that Mr. Trump signed with Chinese officials in January. While China has largely kept commitments to open up its markets to American companies and Mr. Trump’s advisers have continued to defend the pact, Beijing has fallen far behind schedule in its promise to buy an additional $200 billion of goods and services by the end of next year.

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Credit…Pete Marovich for The New York Times

Mr. Trump’s most likely path will be to leave the deal intact, said Chris Rogers, a global trade and logistics analyst at Panjiva. But he wouldn’t rule out “a scorched-earth policy where China is declared to be in violation of its Phase 1 trade deal commitments and there’s a return to tariff escalation. President-elect Biden will be left holding the pieces if the deal is broken,” Mr. Rogers said.

And the president shows no signs of backing off a confrontational approach in other areas. On Nov. 20, his administration is expected to begin economic talks with Taiwan that are likely to rankle Beijing. His advisers are considering other measures to punish China in the coming weeks, including sanctions related to China’s security crackdowns in Hong Kong and Xinjiang, where the Chinese government has carried out mass detentions and harsh policing of ethnic minorities.

“We are worried that he’s going to do some rash things that aren’t going to make sense for the future of the country or global stability,” said Rufus Yerxa, the president of the National Foreign Trade Council, which represents major multinational companies. “Given the history of President Trump’s use of executive authority, we’re taking nothing for granted in these next few months.”

Still, “most of what he could do is through executive orders and executive actions, which can be reversed by a Biden administration,” Mr. Yerxa added.

Whether Mr. Biden opts to roll back Mr. Trump’s more punitive measures will depend, at least in part, on China’s future behavior, including whether it pursues more aggressive incursions into the South China Sea, Taiwan and Hong Kong, people close to his campaign say.

Beijing has recently endorsed a policy of greater technological self-reliance and a stronger military to protect itself from a more antagonistic United States, and moved ahead with cementing other economic partnerships. On Sunday, China signed the Regional Comprehensive Economic Partnership, a pan-Asian trade pact that includes Japan, South Korea, Australia, New Zealand, Thailand, Vietnam and other countries, and will help cement China’s image as the dominant economic power in the region.

Mr. Biden’s appointments for trade and foreign policy posts could help determine his approach toward China, though it remains unclear whom he might nominate for such critical jobs as secretary of state and commerce and the United States trade representative.

Similar to Mr. Biden himself, many of Mr. Biden’s closest advisers have a moderate track record on trade and China, believing they can work with Chinese leaders on some issues even as they challenge them on others. But several of his national security advisers are more skeptical of China.

No matter the path, business groups, economists and others are hoping for a coherent strategy that does not result in the type of economic brinkmanship Mr. Trump appeared to thrive on.

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Credit…Tom Brenner for The New York Times

While Democrats and Republicans have credited Mr. Trump with drawing attention to China’s security threats, and its unfair economic practices like intellectual property theft, his dealings with China have also been transactional and inconsistent. In an attempt to secure a trade deal, Mr. Trump lavished praise on Mr. Xi, delayed sanctions against China’s human rights violations for months, and pardoned the Chinese company ZTE for running afoul of U.S. law. And he has employed racist and xenophobic rhetoric, like calling the coronavirus the “kung flu,” that has fueled attacks on people of Asian descent around the country.

“The Trump administration never did lay out a coherent, comprehensive, engaged trade strategy,” said Thea M. Lee, an economist and the president of the Economic Policy Institute. “It was much more scattershot: Throw up a tariff here, do a deal with China, disparate elements that didn’t seem to talk to each other.”

“But there are a lot of tools in that toolbox, and I would like to see the Biden administration be thoughtful and strategic about how to use them,” Ms. Lee said.

Some experts are urging Mr. Biden to take a more nuanced approach. In a report to be published on Monday, 29 China specialists and other experts, some with close ties to Mr. Biden’s advisers, urge American policymakers to better compete with China by strengthening U.S. research and innovation, preserving the openness of American universities and the economy, and taking a more targeted approach to Chinese security threats.

The working group, organized by the 21st Century China Center at the University of California, San Diego, argues that the United States has allowed its technological leadership over China to erode through a lack of funding in research and development, and overreacted to threats from China in a way that has damaged America’s own economic prospects, including severing economic ties with China, and turning away Chinese students and researchers.

Peter Cowhey, the dean of the School of Global Policy & Strategy at the University of California, San Diego, and chairman of the working group, said its primary takeaway was that the United States “must invest and reorganize the U.S. innovation system across the board, including basic research and development and specialized manufacturing capabilities.”

“It’s a lot easier to manage risks with China if we are in an overall robust period of leadership,” he added.

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Harley Davidson to Leave India After Poor Sales

NEW DELHI — Bhupender Singh crouched over a fuel tank inside a Harley-Davidson showroom. A row of motorcycles gleamed in the afternoon sun; one metallic red, another with a black matte finish and a slightly taller variant in blue.

The motorcycles were not for sale, but for repair. The dealership’s front door was locked. Harley-Davidson, the proudly American company, is giving up on India because of weak sales, after more than a decade of pursuing a huge but ultimately frustrating place to do business.

“It’s all over now,” said Mr. Singh, a service representative. “There are no bikes to sell anymore.”

The closure has dealt a blow to India’s ambitions to lure manufacturers, a campaign modeled on China’s success called “Make in India.” It has set back Harley-Davidson’s efforts to expand its popularity overseas. And it strands a small but devoted group of Harley devotees who are wondering how they will keep their prized rides rumbling.

“It’s like losing someone in your family,” said Sandeep Bharadwaj, the chief executive of a bus manufacturing firm, who spent more than $40,000 on his Fat Boy motorcycle. “We had a mental assurance that they were physically present and they could help us with spare parts.”

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Credit…Rebecca Conway for The New York Times

Companies looking for the next boom have long eyed India, a country of 1.3 billion people with an aspirational middle class. Setting up shop there, however, remains difficult. Roads and rails are inadequate in many areas. Land policies flummox construction. India’s red tape is infamous.

With his “Make in India” campaign, Prime Minister Narendra Modi vowed to reduce bureaucratic hurdles, invest in infrastructure and take other steps to draw high-end manufacturing jobs and design work.

Even before the pandemic, the campaign had been disappointing. Manufacturing contributes less to India’s economic output than it did a decade ago. The government has struggled to build an ecosystem for manufacturers, including infrastructure and industrial parks. Small suppliers who might help a big manufacturer flesh out a supply chain have a hard time getting credit.

“Harley came to produce for your market,” said C.P. Chandrashekhar, an economist and former professor at the Jawaharlal Nehru University in New Delhi. “If they’re not happy, they’ll just get up and leave.”

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Credit…Rebecca Conway for The New York Times

A spokesman for the Ministry of Commerce in New Delhi said that the government is trying to reduce the red tape for companies.

Despite the difficulties, any foreign manufacturer interested in India has to explore setting up shop here. The country has some of the steepest trade barriers among the world’s large nations. President Trump has repeatedly cited the high duties on Harley-Davidson bikes in his trade negotiations with New Delhi.

India dropped the tariffs on Harley motorcycles from 75 percent to 50 percent in 2018. Still, the government charges an additional 31 percent tax on two-wheelers, one of the highest in the world.

Harley-Davidson decided to put bikes together inside the country. The Milwaukee-based company sent knockdown kits — packages of parts to be assembled — for low-powered models, like the Street 750, to its factory outside New Delhi. The signature, higher-end motorcycles were still being shipped from the United States.

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Credit…Rebecca Conway for The New York Times

But sales dropped after an initial surge, and the India operation suffered from executive turnover. Harley-Davidson sold a total of 2,470 bikes in India in the 12 months that ended in March, almost half the number it reached five years ago, according to the Society of Indian Automobile Manufacturers, a nonprofit representing automotive manufacturers.

The company’s motorcycles also remained out of reach for many. Harley’s top model exceeds $88,000 in Delhi after taxes and licensing fees. That is 41 times India’s average yearly income, according to the World Bank.

People in India overwhelmingly prefer cheaper, lighter bikes that are easy to maneuver along the country’s potholed, traffic-choked roads. The most expensive bike from Hero MotoCorp, one of the country’s biggest manufacturers of motorcycles and scooters, costs around $1,500.

Harley-Davidson’s moves in India are part of a broader restructuring. Harley’s average customer is aging fast. Its sales have been stagnant and profitability has declined.

Under Jochen Zeitz, its new president and chief executive, the company is downsizing dealerships, restricting production to a handful of models and scrapping discounts to portray the bikes as an exclusive luxury item.

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Credit…Rebecca Conway for The New York Times

“That’s always a tricky proposition because customers can get turned off,” said Stephen Brown, a Chicago-based senior director at Fitch Ratings, a credit ratings agency. “It’s a delicate balance that they’re walking right now.”

The Harley name will not disappear from India entirely. The company said last month that it struck a deal to “sell and service” its motorcycles through Hero, the local company, which it said would also “develop and sell” motorcycles under the Harley brand. With the closure of its own factory, the fate of the Street 750, Harley’s most-popular bike in India, is not clear. Harley is also laying off about 70 workers.

India’s Harley enthusiasts are wondering what it means to them.

In 2014, Gaurav Gulati, a longtime Harley rider, was enticed by the company’s managing director in India to open a dealership in New Delhi.

Mr. Gulati wanted to go big. He scoured the city for an ideal spot and settled on an abandoned warehouse that he would transform into a chic Harley store with a cafe, a workshop, garage, lockers and even a shower for riders. By the time his outlet opened two years later, two of the company’s bosses in India had come and gone.

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Credit…Rebecca Conway for The New York Times

Mr. Gulati is one of 33 dealers who said they invested nearly $27 million in their dealerships, with some expanding as recently as February. He is sitting on a $1.2 million investment, which he made partly from his own savings and partly after borrowing from banks. He is still paying about $20,000 in monthly rent.

Neither Harley nor its new India partner, Hero MotoCorp, have approached Mr. Gulati to continue the term for his dealership, he said. His dealership agreement expires at the end of the year.

“I am devastated,” said Mr. Gulati, as he gazed at the outer wall of his store, which he decorated with red old-style bricks and graffiti. “It’s a mental torture. Where did I put my trust and faith? What am I going to do?”

Despite all of this, some of Harley’s die-hard fans in India are not giving up.

On a recent morning, Preetam Thakoor, a real-estate developer, and other riders from his Harley club took their bikes for a weekend ride. They rode in full gear, wearing American flag bandannas, dog tags and custom-made jackets emblazoned with their initials.

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Credit…Rebecca Conway for The New York Times

“It’s not about the machine,” said Mr. Thakoor, who bought the popular Street 750 model in 2014. “It’s the whole community, the bond that makes it special.”

Four years ago, Mr. Thakoor rode from India’s northernmost corner in Kashmir to its southernmost tip, Kanyakumari, a journey of more than 1,700 miles.

In the middle of that ride, he ran out of cash after Mr. Modi announced a sudden ban on high-value Indian bank notes, part of a national effort to stamp out corruption and get more Indians to use digital currency. A fellow Harley rider flew down from Mumbai to the southern city of Chennai to deliver him cash.

That camaraderie, is “a feeling you can’t describe in words,” said Mr. Thakoor.

It is not clear whether he can continue with his passion. Indian riders and dealers will have to find sources for crucial machinery: batteries, accelerator cables, silencers.

“There’s no jugaad in this case,” said Mr. Thakoor, referring to the Indian way of finding inexpensive solutions to big problems.

Harley, he said, “should’ve been here.”

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Credit…Rebecca Conway for The New York Times

Vindu Goel contributed reporting.

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Apple Suspends iPhone Maker Pegatron Over China Labor Abuses

Apple said on Monday that it had placed a key assembler of its iPhones on probation after the Taiwanese company was found to have concealed violations of labor rules for students employed at its factories in China.

For years, Apple has worked, and at times struggled, to uphold labor standards across its vast electronics supply chain in China. The company said it had made the decision because the Taiwanese company, Pegatron, had violated its code of conduct by allowing student laborers to work night shifts and overtime and do work unrelated to their fields of study, and had then falsified documents to cover it up.

“The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms,” Apple said in a statement.

To meet grueling deadlines, factories in China sometimes recruit labor from local technical schools. Strict guidelines are supposed to limit how long and when such employees can work, but in practice, rules are often ignored and other abuses are common. In some cases, students have said they were forced to do monotonous assembly work rather than the more technical tasks they were studying.

Pegatron, a major assembler of the iPhone that has factories across China, has been accused of a number of labor and environmental abuses over the years. Apple said it would not give the contractor any new business until it took corrective measures, and noted that a Pegatron executive in charge of the student employment program had already been fired.

The rebuke, rare for such a high-profile supplier, underscored a challenge facing Apple as it seeks to address abuses in its supply chain, which sprawls across hundreds of factories across China and increasingly the world. While Apple can make or break the smaller companies that make the innards of its iPhones and put them together, few have the scale to assemble large numbers of phones quickly, leaving Apple reliant on assemblers like Pegatron and its larger Taiwanese rival, Foxconn.

Apple occasionally drops suppliers or puts them on probation. In its 2019 supplier responsibility report, the company said it had removed 20 manufacturing facilities from its supply chain because of violations over the years. In general, however, it said it works with suppliers for 90 days to ensure corrective actions are taken.

In a statement, a Pegatron spokeswoman said that upon discovering the violations, the company immediately removed the student workers from production lines and worked to “make appropriate arrangements for them to return to their homes or schools with proper compensation alongside all necessary support and care.”

She added that the company was undertaking an audit to ensure its labor standards were upheld.

The probation, which will not affect current production of the iPhone, comes at a busy time for Apple suppliers, who regularly add staff and increase worker hours to meet huge orders of iPhones ahead of the product’s annual holiday release schedule. While workers once sought out the relatively well-paid shift jobs at the citysize factories that produce the iPhone, new employment opportunities closer to home, like jobs in food and package delivery, have made it harder to attract short-term workers during times of high labor demand.

In the past, worker shortages have led companies like Pegatron and Foxconn to break rules to ensure they have enough staff. Foxconn has used child labor, while Pegatron relied on ruthless agents who hold workers’ salaries and sometimes their identification cards, preventing them from leaving the factories. Wider concern about the harsh conditions in Apple’s supply chain spread in 2010, when a rash of suicides at Foxconn’s plants prompted Apple to institute further checks and oversight.

The suspension for Pegatron, while probably temporary, could further open the door for Luxshare, a smaller Chinese manufacturer that has been working to expand its role in the Apple supply chain. This year, Luxshare bought an iPhone production factory in China from the Taiwanese company Wistron, which was widely read as an attempt to elbow into the business dominated by Foxconn and Pegatron.