US and EU to tackle 'Made in China' dependency

[Suldaanka]

Quote

Vietnam, Taiwan, Mexico and Europe have been the main beneficiaries as US companies shifted rather than “re-shored” their sources of supply.

 'Made in China' on the nose as push to tame Beijing gathers pace

Donald Trump’s coronavirus fuelled trade wars have started the process of remaking global supply chains with the express purpose of reducing the West's over-reliance on China’s low-cost but highly-skilled manufacturing base.

It's a process that's gathering pace, buoyed by the decoupling of the US and, increasingly, other economies from China and the rising political antagonism between the western powers and Beijing.

Trump’s trade wars, a core element of his “Make America Great Again” platform, have delivered on their core promise. His tariffs may have just been a tax on US companies and had little meaningful impact on China’s economy but what they have done is coerce and incentivise US companies to diversify their supply chains.

Vietnam, Taiwan, Mexico and Europe have been the main beneficiaries as US companies shifted rather than “re-shored” their sources of supply.

The pandemic, which initially shut down China’s manufacturing base, reinforced the risks for multi-nationals of being overly-exposed to one source of supply and, as the pandemic spread, revealed how dependent the rest of the world had become on China for the most basic – and most critical -- of medical supplies and equipment.

China’s increasingly confident challenge to America’s global political and economic hegemony has also spawned another layer of backlash from the West, best encapsulated by the spread of the bans on the use of Huawei’s 5G technology in western wireless networks.

The US, Australia and, most recently, the UK have all excluded Huawei from the roll-outs of the new networks on security grounds. That entails significant cost – Huawei has both the industry-leading 5G technologies and is the low-cost provider by some margin. In the UK, Huawei kit within the existing 4G networks will also have to be removed, at great cost, by 2027.

The US crackdown on other Chinese tech companies and individuals on security grounds are part of a wider pushback by the West to China’s ambitions – encapsulated in its “Made in China 2025” policy – to dominate the technologies of the 21st century.

The increased tensions in the South China Sea, suspicion of the motivations behind the “Belt and Road” initiative, the new security laws in Hong Kong and its treatment of the Uighurs are all part of a swirling mix of responses to China’s increasingly naked and aggressive ambitions.

Had Trump not fractured old Western alliances, assaulted the global institutions and norms that bound them and included US allies in his protectionist “trade wars on everyone” the Western response to what have been dubbed China’s “predatory geo-economics” might have been more cohesive and powerful.

Could Biden change the game?

The prospect of a Joe Biden presidency and a restoration of a more conventional and less erratic White House administration, one more committed to good relations with its post-war allies, could produce a less disjointed collective pushback to China’s expansion.

The Democrats are, if anything, even more hostile to China than the Trump administration, whose policies have waxed and waned according to Trump’s fluctuating moods and personal interactions with Xi Jinping, which have reportedly included a plea for help with his re-election.

Their agenda on China is likely to be more coherent, and involve closer co-operation with US allies – recreating a powerful trans-Atlantic alliance against China’s more aggressive ambitions -- than Trump’s.

They are also more likely to recommit the US to global institutions like the World Trade Organisation and World Health Organisation and – like Australia -- engage more directly in the efforts to reform and modernise them.

The pandemic’s disruption to supply chains has also added an edge to the previous discussions about diversifying and re-shoring supply chains and is producing some significant action.

In Japan, for instance, the Abe government has recently set aside $US2.2 billion to provide incentives for Japanese to “re-shore” activity from China and has offered a smaller amount to companies that relocate production elsewhere.

The US has indicated it is prepared to spend a similar amount to Japan on stimulus packages that would promote the re-shoring of manufacturing activity and jobs. It has spent billions to encourage US companies to produce medical supplies and equipment.

Most Western economies, including Australia, are contemplating creating domestic manufacturing of products like personal protection equipment, medical technology and pharmaceuticals previously sourced from China.

Japan and the US are looking to reduce their overdependence on China for the rare earths critical to many existing and new technologies and defence equipment.

The US, UK , Australia and Canada are offering safe haven to wealthy Hong Kong citizens and countries in the region -- including Japan, Australia and Singapore -- are starting to contemplate how they might displace Hong Kong in its role as a key global financial centre, or at least bolster their standing and weight as regional financial hubs.

Weighing up the costs of decoupling

Until the trade wars, and then the pandemic, China’s dominance of global manufacturing and its emergence as the anchor point for global supply chains was built on its low costs and increasingly skilled capabilities. Its ambition to dominate key 21st century technologies reflects its rising standards of living and labour costs and the demographic challenges looming from three decades of birth control policies.

In the near term, perhaps even in the long term, China’s economy won’t be decoupled from America’s, let alone those of the rest of the Western world.

There would be enormous costs and dislocations for companies to disengage from China and the sheer size and growing affluence of China’s domestic market are too seductive for western companies to ignore.

China’s dominance of manufacturing, however, was already waning even before Trump initiated his trade war. Partly because it was no longer as low cost a jurisdiction as other countries in the region and partly because of a deliberate shift by its authorities away from mercantilism and towards domestic consumption, in a bid to tackle the imbalances in their economy and financial system in ae post-financial crisis environment.

If the US can restore its relationships and regain trust with its former allies, most importantly those in the European Union, it could, however, exploit the legacies of the trade wars, the pandemic, the suspicion of China’s ambitions and its methods for pursuing them to limit its ability to execute its Made in China 2025 and Belt and Road policies.

[Suldaanka]

Somaliland is positioning itself to take full advantage of the re-alignment of global economy away from China and more into American allied smaller countries of which Taiwan tops the list. 

 

[maakhiri1]

1 hour ago, Suldaanka said:

Somaliland is positioning itself to take full advantage of the re-alignment of global economy away from China and more into American allied smaller countries of which Taiwan tops the list. 

 

Do you realise US AND China are so entertwined and are going to resolve their issues soon?

So SL is betting West  war with China, which is very unlikely what is SL strategy when the current issues are resolved?

Do some maths, how long this realignments will take place ?,all major US companies have their supply and  chain  connected to China. 

You seeing one part, Huawei, of super gaint puzzle 

[Suldaanka]

40 minutes ago, maakhiri1 said:

Do you realise US AND China are so entertwined and are going to resolve their issues soon?

So SL is betting war with China, which is very unlikely what is SL strategy when the current issues are resolved?

Not a war. But containment of China or decoupling of Western economy from over-reliance on Chinese factories.

 

[maakhiri1]

1 hour ago, Suldaanka said:

Not a war. But containment of China or decoupling of Western economy from over-reliance on Chinese factories.

 

Ok, it will take years and depends who wins in November 

Agree one thing certain, status quo continues, the communist nation wil take over the world. 

[Mr X]

The factories are still owned by the same people just in different countries.  Its all a game.

[Suldaanka]

 

4 hours ago, maakhiri1 said:

Ok, it will take years and depends who wins in November 

Agree one thing certain, status quo continues, the communist nation wil take over the world. 

Actually the process has started and Taiwan specially is benefiting already enormously. 

If Somaliland succeeds in convincing the Taiwanese to move some of their mass manufacturing industries from China and to Somaliland where Cheap labour from Ethiopia can be utilised, then that will be a huge win for Somaliland. They also win because the labour costs will much cheaper than China and also location is at the centre of the world, close to Europe, Middle East, South Asia, and Africa.   

 

 

Source: Taiwan emerges as new renewable energy center

Quote "However, the U.S.' recent imposition of tariffs on Chinese imports has led Taiwanese companies and the government to reevaluate its trade strategy. Since the start of the 'tariffs war', nearly $10 billion worth of Taiwanese investments have returned to the homeland from China, and this is only expected to enlarge and exceed $20 billion over the short term. Although Taiwanese officials admit that the island’s economy benefits from these developments, they say they are working on new strategies to turn the trade war between the U.S. and China to their advantage.

Taiwan, in a bid to mitigate labor costs, is also focused on the fourth industrial revolution, or Industry 4.0. Taiwan is becoming a leading light in information technology and specifically with the 'internet of things'. The modern portfolio profile of Taiwanese companies with investments in the U.S., China, Europe and the Far East supports their advantageous market positions through diversification."

[Che -Guevara]

7 hours ago, Suldaanka said:

 

 

If Somaliland succeeds in convincing the Taiwanese to move some of their mass manufacturing industries from China and to Somaliland where Cheap labour from Ethiopia can be utilised, then that will be a huge win for Somaliland. 

 

You want to import cheaper labor from Ethiopia? You might as well give the key to the house. Somethings sound better in theory.

 

[Suldaanka]

3 hours ago, Che -Guevara said:

You want to import cheaper labor from Ethiopia? You might as well give the key to the house. Somethings sound better in theory.

 

There was a time when Afwayne hosted millions of Oromo Refugees in Somaliland. They were called 'Somali Aabo' and even enjoyed more freedoms and rights than the Duriyadda Sheekha.  

So there is a history of hosting large number of Ethiopians in Somaliland. 

This time, they will be on work permit which is renewable and expires. 

 

[Suldaanka]

China containment is in full swing. 

Japan just announced that it will subsidies Japanese companies to leave China. 

Quote "Fifty seven Japanese companies shall get $536 million in government assistance towards helping them move their units to South East Asian countries or other places, a Japanese government release said."

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Japan Announces $536 Million In Subsidies To Help Its Companies Leave China

SWARAJYAMAG.COM

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[Suldaanka]

Dramatic escalation, the US has ordered China to close down its consulate in Houston, Texas. 

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US orders China to close Houston consulate

WWW.BBC.COM

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Unidentified people were filmed burning paper in the consulate's courtyard after the order was made.

 

[Suldaanka]

 

 

 

[Tallaabo]

49 minutes ago, Suldaanka said:

 

 

 

It is certainly clearer now that the US has huge plans for Taiwan.

Pass the Taiwan Defense Act — tell China that America will defend

THEHILL.COM

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The Taiwan Defense Act highlights the intimate and sometimes conflictual relationship between capabilities and...

It was surely not an accident when the US NSA tweeted their support for Taiwan - Somaliland relationship. It is funny how poor Somaliland has suddenly found itself in the front row of what is surely going to be the biggest geopolitical confrontation in human history. May Allah keep us safe. 

[cadnaan1]

qof riyoonaya assaga oo soo jeedo waa waali cas 

Sheekadii marqaaka ayaa halkan ka socoto.

[Tallaabo]

1 minute ago, cadnaan1 said:

qof riyoonaya assaga oo soo jeedo waa waali cas 

Sheekadii marqaaka ayaa halkan ka socoto.

What is your comment about? You make no sense buddy.