China Manufacturing Dwindles As U.S. Gains

Upcoming 1H2023 data shows U.S. reshoring and FDI job announcements are exceeding the impressive pace of 2022 with upwards of 390k jobs announced/year. In contrast to the upward trend in job announcements and construction investment in the U.S., China is seeing a parallel downward trend in economic activity, trade and openness, illustrating a systemic U.S. shift away from globalization in general and China in particular. The articles below cover the details and breadth of these developments. We continue to focus on China because reshoring from China has the optimal combination of size ($537 billion 2022 exports to the U.S.); vulnerability (25% Section 301 tariffs); and national and corporate urgency (ongoing geopolitical risks).

Developments Propel Shift Out of China

China approves sweeping expansion of anti-espionage law

A new foreign policy law provides a clearer legal premise for China to take “countermeasures” against Western actions it deems as threatening its national and economic security, adding to the already heightened and murky risks of doing business in China. From Washington, the National Counterintelligence and Security Center is warning businesses of Beijing’s increasing power over, and control of, U.S. companies with operations in China. See also the CNBC documentary China's Corporate Spy War.

It’s Getting Riskier to Do Business in China

The WSJ writes that Western companies may find their capital and people trapped if Beijing starts a war over Taiwan.

U.S. recommends Americans reconsider traveling to China due to arbitrary law enforcement and exit bans

China’s Aging Population Is a Major Concern. But Its Youth May Be an Even Bigger Problem

There are not enough laborers and too many highly educated workers with no jobs. RI comment: In the U.S. about 30% of university degree holders are in jobs that do not require a degree while we have shortages of manufacturing workforce.

China’s $23 Trillion Local Debt Mess Is About to Get Worse

The massive debt implies an inevitable slowing of economic growth.

Where are China’s exports going?

Less and less to the U.S., the latest trade data confirms.

Xi Jinping Chokes Off Crucial Engine of China’s Economy

Very good article on the collapse in foreign direct investment (FDI).

Germany adopts its first comprehensive Strategy on China

“China’s economic strategy aims to make it less dependent on other countries while making international production chains more dependent on China.” Recognizing that asymmetry is step one. Step two is devising a plan to counter it. RI comment: Our Competitiveness Toolkit will counter China and strengthen the U.S.

04/09/2023