Trump's Hotels In China Could Be A Conflict For The President-Elect

Donald Trump has business interests around the globe. There's talk about whether foreign powers will distinguish between President Trump and businessman Trump. We examine the case of China.

STEVE INSKEEP, HOST:

The Constitution prohibits a president from receiving favors or financial gain from foreign powers, which has never been much of an issue until now. Donald Trump, the president-elect, has business interests around the globe. He faces calls in this country to separate his personal and public affairs, but as president-elect has acknowledged already talking business and politics in the same conversation. Let's talk about what this means when it comes to China. For that, we go to NPR's Rob Schmitz, who is in Shanghai, China's business capital. Hi, Rob.

ROB SCHMITZ, BYLINE: Good morning, Steve.

INSKEEP: How far back does Trump's business history in China go?

SCHMITZ: Well, Trump has had his eye on China's fast growing property market since 2008. That was the year he signed a deal with Evergrande Real Estate Group. That's one of China's largest developers. And their plan was to build an office tower in Guangzhou, a city near Hong Kong. The deal was going to be worth hundreds of millions of dollars, but it fell apart when Evergrande pulled out after the global recession hit China.

INSKEEP: OK, bad timing there. Did anything else work?

SCHMITZ: Well, like many prospective business deals here in China, his business deals follow the sort of familiar one-step-forward-two-steps-back approach. In 2012, Trump's hotel business opened its first Asia office down the street from me here in Shanghai. They hired a CEO to manage operations, and a year later they signed a deal with China's State Grid Corporation. That's the company that provides electricity to nearly all of China. The deal was to build what was called a, quote, unquote, "major development in Beijing worth a billion dollars."

But that deal was scrapped when Chinese authorities opened a corruption investigation into State Grid, alleging it had illegally used public land for the project. When we called the CEO for Trump's hotel business here in Shanghai, he told NPR that he no longer works at the company. And a visit to its office showed that Trump's Asia branch has been closed for some time. Despite all of that, on October 20 just a few weeks prior to the election, Trump Hotel Collection CEO Eric Danziger showed up to a hospitality conference in Hong Kong, and that's where he told the Hong Kong newspaper that Trump Hotel Collection plans to build 20 to 30 Trump Hotels in major Chinese cities in the coming years.

INSKEEP: Rob, when you talk about huge Chinese companies with names like State Grid, are those effectively Chinese government-owned entities? Is Trump doing business with the government of China here?

SCHMITZ: Yes. Like many business owners from the United States or anywhere else coming into China, it's difficult to avoid doing business with state-owned enterprises because they do effectively control much of the market. And so even the land - you know, Trump is a real estate developer - even the land in China is all owned by the state. So it's almost impossible not to have any of your business connected to the state in some way or another.

INSKEEP: And it's also been reported by The New York Times that he owes hundreds of millions of dollars in loans to the Bank of China. Is that also state-owned?

SCHMITZ: Yes, of course. That is one of the big banks of China, and he owes that for a building that was built in Manhattan.

INSKEEP: OK, so given everything you've said, Rob Schmitz, how might it affect China's relations with this incoming president, particularly since, so far he's declined to draw a bright line between his business and public affairs?

SCHMITZ: Well, I mean, the fact that the incoming president of the largest economy on the planet has expressed an interest in building two dozen hotels on state-owned land in China puts China's leadership in a potentially powerful position with President-Elect Trump. If, for example, Trump as president labels China a currency manipulator, as he's promised to do on his first day of office, and if he makes good on his promise to impose tariffs on Chinese imports, it's very possible, if not probable, that China's government would block Trump's business interests inside their country.

If, on the other hand, he pushes forward policies that are favorable to the Chinese government, that could easily clear the way for those 20 to 30 Trump Hotels his company wants to build in China. Either way, this threatens to put China in a more powerful position in its negotiations with the president of the United States. And it puts the U.S. interests that as president he will vow to fight for at potential risk.

INSKEEP: That's NPR's Rob Schmitz in Shanghai. Rob, thanks very much.

SCHMITZ: Thanks, Steve.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.