US companies buying from China amid tense relations


The Census Bureau reports that US imports from China were down 24% in the first five months of this year, compared to the same period a year earlier. Companies are intensifying efforts to reduce their dependence on Chinese suppliers, such as Search HP, Stanley Black & Decker, and Search Lego, to avoid the risk of being trapped between rival superpowers or to produce goods as part of a long-term strategy to close the gap with customers.

US tariffs on nearly two-thirds of Chinese goods imposed during the Trump administration have cut into new orders, leading to increased wages for sugar factory workers. According to a Washington Post report, Chinese President Xi Jinping’s state-centric economic strategy, a related crackdown on private companies, and a cautious approach towards the Biden administration have further cooled commercial relations.

Nearly 1 in every 6 dollars Americans spend on imports is on Chinese products, down from about 1 in 4 before the pandemic, according to Oxford data. Japan is also buying less than China, but according to the Washington Post, European countries such as Germany and France are pouting in a big way. Meanwhile, foreign investors are building fewer new sugar factories, suggesting that other Asian countries will continue to increase their share of US imports at China’s expense.

According to Oxford statistics, annual spending on new or “greenfield” sites in China dropped from nearly US$100 billion in 2010 to US$50 billion in 2019 and reached just US$18 billion last year. One difficulty in analyzing changing trade flows is the behaviour of Chinese manufacturers. As the Washington Post reports, some Chinese companies have also moved out of China to avoid US tariffs, while others send small amounts of their products to third countries for final processing, obscuring their Chinese origins. As a result, some products made by Chinese companies in factories in China now come into the United States from Chinese factories in Mexico or Vietnam.

Despite the $54 billion drop in US imports from China, there are no signs of the end of China’s rampage. US imports from Mexico are almost US$10 billion higher than in the same period last year, and the income of the people of Vietnam has decreased by about 9 billion US dollars. The Biden administration is taking a positive stance on US-China trade, trying to reassure the Chinese government that the United States is “risk-free” in commercial relations by only moving vital supply lines to the United States or allied countries.

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