Forbes magazine reports that United States manufacturers are, in fact, pulling their operations from China amid concerns that the country lied about the origins of the novel coronavirus, COVID-19, and hid key information from the U.S. and other countries about the true impact of the virus, including the country’s death count.
An initial exodus of manufacturing, the report says, began because of an impending trade war, and because of a lack of cooperation by Chinese authorities in resolving what the White House labeled a “trade imbalance.” Experts now expect the exodus to continue because of the pandemic.
“Global manufacturing consulting firm Kearney released its seventh annual Reshoring Index on Tuesday, showing what it called a ‘dramatic reversal’ of a five-year trend as domestic U.S. manufacturing in 2019 commanded a significantly greater share versus 14 Asian exporters tracked in the study,” Forbes reported Saturday. “Manufacturing imports from China were the hardest hit.”
Companies have been pulling back because of increased tariffs on Chinese-made goods, preferring instead to make those same products in countries with a better current trade relationship with the Trump administration, particularly countries in North America, many of whom just inked a new trade agreement with the White House. Those countries in southeast Asia with similar manufacturing capacity to China but friendlier governments, like Vietnam, have also benefitted. Vietnam absorbed 46% of the manufacturing moved from China.
The cost of manufacturing in China has risen significantly in the last year, and with relations now further souring, costs will only go up.
“Three decades ago, U.S. producers began manufacturing and sourcing in China for one reason: costs. The trade war brought a second dimension more fully into the equation―risk―as tariffs and the threat of disrupted China imports prompted companies to weigh surety of supply more fully alongside costs. COVID-19 brings a third dimension more fully into the mix, and arguably to the fore: resilience―the ability to foresee and adapt to unforeseen systemic shocks,” one expert told the financial news magazine.
“The full extent of the societal and economic trauma the coronavirus pandemic may cause is unknown still, the Kearney report’s authors wrote. But whatever the outcome, a return to status quo China trade pre-pandemic is unlikely,” the outlet says, adding thatfor manufacturers, concerned now about the next pandemic, diversifying their options makes business sense.
Following American manufacturing is American government. Several Members of Congress announced last week that they plan to author a bill requiring critical items for American health, like personal protective equipment, and non-prescription medications like ibuprofen, be made domestically to prevent a shortage in the event of another pandemic.
Sen. Josh Hawley (R-MO) has been leading that charge, telling Fox News earlier this month that Congress and the American government must “rethink” their entire relationship with the Asian powerhouse nation.
“These same people, the Washington elites, the Wall Street types, and the media establishment have all pushed for closer ties with China for decades,” Hawley told Fox News. “They are the same people who have been telling us this will be great for America and the world if we integrate our economy with China’s. It will be great if we have a global economy where we send jobs overseas. It won’t really matter. As it turns out they’ve been wrong about all of that. They’ve been wrong about this whole bargain.”
“It’s been terrible for America and now we are living with the results,” Hawley added. “So I think this is — we are finally waking up to it, or at least the D.C. elite are finally waking up to the wages of the bargain that they struck and it’s time to fundamentally rethink our relationship with China and the world. It’s time to start putting American workers at the front and not kowtowing any longer to the Chinese government.”