The trade war between China and the U.S. is close to a
resolution, but other countries are beginning to decrease their need for
Chinese factory goods, due to tariffs and trade tensions, and in order to “diversify”
their supply chains. Many see the dependence of the U.S. on Chinese products as
something that could create vulnerability in the future, like the idea of
decoupling. It mentioned that China may not oppose decoupling due to the inability
to end “low-skilled, polluting manufacturing jobs and move higher up in the
value chain.” The article also gave an overview of China’s rise in manufacturing
development over the past two decades. China now seeks to focus on high-tech
and innovative industries, but is aware that if their economy slows, it could
lead to instability or job losses. A 2018 UBS survey of chief financial
officers at export-oriented manufacturers in China found that about a third had
at least shifted some production out of China and that this year another third has
been predicted to do so again. Many companies outside of China are shifting their
production to the United States. Even Hasbro, a large producer of toys, has a
plan “to be 60 percent out of China” by next year and hopes to move much of its’
production to the U.S. Despite the U.S. and China on the verge of ending the
trade war, these shifts have already begun, and it will be interesting to see
the repercussions, if any, China will have to deal with.
2 comments:
Though the scope of the United States, companies switching their production from China to the US has potential for significant economic growth. This increase in investment will only expand domestic operations, thus creating more jobs. However, China has the capability to produce the same goods for a lesser amount. It will be interesting to see China's reaction to this potential loss of business. They may have to lessen tariffs if they don't want a loss of jobs in their economy.
Along the lines of Jared's comment I believe it will be interesting to see how American consumers react to this shift as well. Will they appreciate USA made products enough to pay the higher prices that will certainly follow. Maybe they will, but in my opinion I do not believe they will accept higher prices.
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