6. Given recent on-shoring tendency, is the West, or more specifically the U.S., aspiring to be a manufacturing economy?
The U.S. is a major manufacturing economy, though its share of manufacturing as a percentage of total economic activity or versus China’s share does not seem large. Nevertheless, it is true Washington wants more manufacturing to be done “at home” for national security, job “quality,” and other reasons. While U.S. manufacturers are highly productive in many areas, there are other areas where reshoring will be infeasible due to cost factors, the absence of suitable domestic supply chains, or regulatory hurdles. Consequently, China will remain the manufacturing locale of choice. What does not seem to be recognized is that there are geographic areas or industrial sectors in the U.S. where China could bolster U.S. manufacturing, with gains also accruing to Chinese firms in terms of market access, the acquisition of know- how, and branding. Chinese investors need to realize that the Committee on Foreign Investment in the United States, better known as CFIUS, and even Washington’s heated political environment do not prima facie constitute insurmountable barriers to such FDI, assuming that it avoids sensitive sectors like, for illustrative purposes, semiconductor equipment manufacturing.
7. Is there any way or areas to return to status quo ante in U.S.-China trade, investment and other economic relations?
If we are talking about the numbers, it is conceivable that trade or FDI flows could return to pre-Covid or pre-Donald Trump presidency levels. There is very little possibility, though, of the background political milieu returning to its earlier form because the attitudes and capabilities of China and the U.S. as well as American and Chinese companies have changed notably. Moreover, the world is not the same as in 2019 or 2015--U.S.-China frictions over the BRI, export controls, investment policies, tariffs, and global economic institutions, among others, have emerged or intensified. Besides, important international economic actors like the European Union, India, or Brazil no longer view China or the U.S. in the same way as before. The slim potential for a return to the economic “status quo” is discouraging. One hopes, nonetheless, that policymakers will try to put the economic relationship on a better or, at least, more stable path.
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