Decoupling China and the United States’ economic ties would not be easy as many American enterprises are not willing to withdraw from China.
According to a Nikkei Asian Review article published on September 12, instead of leaving China, some American companies like Tesla are doubling down on their investments in the country.
“Only a specific slice of American companies are moving factories out of China, much less returning home. Some, including electric-car builder Tesla, are even revving up their production engines on the mainland, despite U.S. President Donald Trump’s trade war aimed at bringing American manufacturing back,” reads the article.
The Nikkei Asian Review also quoted from a Goldman Sachs report saying that “a majority of companies in semiconductor equipment and materials, as well as health care, are actually expanding Chinese production.”
“While tariffs did cause rerouting of commodities trade and relocating of consumer electronics production from China to ASEAN countries, we have seen limited evidence of broad-based reshoring of manufacturing activity back to the U.S.,” quotes the article.
According to the China Business Report 2020 published by the American Chamber of Commerce in Shanghai and excerpted by CNN, “some 92 percent of respondents said they were committed to remaining in the country [China].”
The Nikkei Asian Review also surveyed 220 large and medium-sized Japanese non-financial enterprises and concluded that 80 percent of them weren’t considering leaving the Chinese market.
Tesla CEO Elon Musk pointed out in July that his big Shanghai factory is continuing to do more and more internally, and by locally sourcing components it’s making “a massive difference to the cost of the vehicle.”
Goldman Sachs analysts said “the huge domestic market, complete industrial supply chains, and good infrastructure are most attractive to foreign manufacturing investments,” according to a Nikkei Asian Review article.
University of Massachusetts Amherst assistant professor Isabella Weber said in her article published by the Guardian that “as a result of the massive costs involved, the business community is in fact largely reluctant to follow politicians’ calls to pull out of China.”
Weber said that “global challenges, from the pandemic to climate breakdown, continue to mount and require Sino-American collaboration” and “devising workable strategies of reconciliation is an urgent task on both sides.”
