Speaking at his company’s annual investor day conference in Hangzhou, China, just hours after President Trump unveiled a raft of new tariffs for Chinese imports, the outgoing executive chairman of the Internet giant poured cold water on hopes for a quick resolution.
“It’s going to last long. It’s going to be a mess. Maybe 20 years. I don’t think it will stop in 20 months or 20 days. It’s not about the trade war, it’s about the competition of two countries,” stated Ma, who least week unexpectedly revealed that he will step down next September.
“Short term, business communities in China, U.S., Europe will all be in trouble.…This thing will last long. If you want a short-term solution, there is no solution.”
Ma added that the trade dispute could lead some Chinese companies to leave China in the medium term in a bid to avoid tariffs and that he doesn’t believe a change in the U.S. president would resolve the situation, as there is a need for new trade rules and for the World Trade Organization to be upgraded.
Ma told investors that there had even been some speculation that he was standing down because of the trade war, while others had suggested Beijing had forced him out as it tightens its grip on private businesses. But he stressed there was no truth in either of these theories and in reality his departure is something that he has planned for a decade.
“This is something that you’re not doing for one day, what you want to do, you have to prepare for long time. If you love the company, just like if you love your kid, you can teach him in kindergarten, primary school, no problem,” he said. “Go to the middle school, high school, university, let him go. If you let him go, you really love the company. If you control it, you’re not loving the kids. So I think it’s my responsibility to let the company go.”
Ma, who was a teacher before he started Alibaba in 1999, plans to return to his roots and focus on educational philanthropy after he steps down, passing the reins onto chief executive officer Daniel Zhang will take over the reins next September.
His comments came as the trade war stepped up a gear after Trump followed through with his threats against China and revealed Monday evening that he would unleash tariffs on $200 billion worth of Chinese imports next week, a move retailers fear will curb consumers’ spending power.
A list of products, including handbags and luggage, will be subject to 10 percent levies starting Monday, a move intended to punish China for alleged unfair trade practices. The rate will be pushed up to 25 percent by the end of the year.
It didn’t take long for China to retaliate. Beijing said Tuesday that it would hit back by imposing tariffs on $60 billion worth of U.S. imports, with levies ranging from 5 percent to 10 percent. These will also come into force on Monday.
The trade war could soon get even worse as Trump has threatened to target another $267 billion worth of Chinese imports that he can hit with levies on short notice, if further provoked by China.
If Trump plays this hand, it would push the total amount of tariffs up to $517 billion, meaning every single Chinese product coming into the U.S. would be subject to levies, hurting the fashion sector, which is heavily reliant on China.
But despite it all the markets appeared to take everything in their stride. The Dow Jones Industrial Average closed up 184.84 points, or 0.7 percent, at 26,246.96, while the S&P 500 was up 0.5 percent at 2,904.31. Shares of Alibaba slipped 1.4 percent to $156.65 on the New York Stock Exchange.
Chinese markets opened lower on Tuesday although the impact of new tariffs seemed to have been factored in earlier, and by the end of the day, both the Shanghai Stock Exchange and Hong Kong’s Hang Seng Index had bounced back gaining 1.8 percent and 0.6 percent, respectively.