World Economy

US workers may have to change social media use as firms adapt to China's rules, analyst says

Key Points
  • In recent weeks, Beijing has forced the removal of a CEO and stopped broadcasts of NBA basketball over a clash of views about the Hong Kong protests.
  • James Pethokoukis of the American Enterprise Institute that US firms and its employees may have to change the way they work if they want to sell in or to China.
  • Pethokoukis adds that some people and brands may be asked to issue a cultural boycott on China.

U.S. firms with a presence in China may soon be forced to change how they operate and employees could be asked to restrict how they use personal social media, according to one analyst.

China flexed its economic might against the U.S. National Basketball Association (NBA) on Tuesday by suspending broadcast arrangements after the Houston Rockets general manager tweeted support for anti-government protests in Hong Kong.

Beijing's power over international companies was also highlighted back in August when Cathay Pacific CEO Rupert Hogg stepped down after one of the airline's pilots was found to have taken part in the protests.

With this latest swipe back at corporate business, China has underlined how sensitive it is to criticism and reinforced the strict rules it wants to be followed by overseas firms wanting to earn money in the country.

Speaking to CNBC'S Street Signs Tuesday, James Pethokoukis, an economic policy analyst at the American Enterprise Institute, said U.S. firms in China would face increasingly difficult choices.

"Perhaps in how employees use social media but more importantly about how to do business in China," he said, before adding that a cultural boycott by overseas entertainment, similar to what was seen in South Africa in the 1980s, was also a possible outcome.

"I can easily see how there will be increasing pressure on the NBA or Hollywood to limit or change how it does business in China," said Pethokoukis.

"Perhaps no more red carpet or premieres in Shanghai as long as there are crackdowns in Hong Kong and internment of Uighurs in western China," he added.

Trade war "here to stay"

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'This trade war is not going away,' analyst says

Pethokoukis said the recent exchanges involving corporations was feeding an atmosphere that meant any sort of meaningful trade deal between the U.S. and China looked hard to achieve.

"I think the debate has moved beyond that. I think you are talking about a long-term clash. Not necessarily militarily but very heightened tension for the foreseeable future," he said

The analyst added that U.S. lawmakers on both sides were now openly advocating a tough stance against China and people needed to accept that the trade war was here to stay.

"I don't see how there can be a deal that is going return sort of the pre-Trump status quo with very low tariffs and just treating China like it is on the long road to becoming a liberal democracy."