Over the past two weeks, politicians In the past two weeks, politicians from three of the world's four largest economies have discussed or announced plans to withdraw their businesses from China.

 

On April 21, EU Trade Commissioner Phil Hogan said the bloc would seek to "reduce trade dependence" after the epidemic, Politico reported.

Last week, Japan spent more than 240 billion yen (about US $ 2.2 billion) to support Japanese companies to relocate their factories in the country or to diversify their production facilities by relocating to Southeast Asia.

 

The move comes after US National Economic Council chief Larry Kudlow said Washington should pay the costs for US companies to bring production out of China to the United States.

 

"I want immediate subsidies for industries such as factories, equipment, intellectual property, innovation, infrastructure," Kudlow told Fox News.

American, Japanese and European companies have already moved production out of China because of rising labor costs and the effects of the US-China trade war, but pandemic pressure will now accelerate this process when see the world's excessive reliance on China, especially medical devices, according to the South China Morning Post.

 

For example, the Premier Medical Company identifies 22 types of protective equipment and 30 "essential essential drugs that need to be manufactured in the US". The American Manufacturers Union said the idea of "detachment" and bringing production back home was "becoming increasingly popular".

 

For China, relations with the US are not good, but relations with Japan are thawing. Therefore, the US $ 2.2 billion package to withdraw Tokyo's business "caused great controversy in Chinese politics".

 

Li Xunlei, chief economist at Zhongtai Securities and adviser to the Chinese government, said the tone from countries is not a direct threat, but will be a long-term challenge for China. 

 

"The virus disruption forces foreign companies to look for domestic suppliers, and the lack of protective gear makes the people of developed countries regret having moved all production abroad," Li said. South China Morning Post.

 

Seventy percent of the protective masks currently in use in the US are made in China. China had the first Covid-19 epidemic, but it was also the first to contain the epidemic, allowing it to sell billions of masks to countries in need. But there are frequent cases of Chinese complaints and quality disputes.

The desire to reduce dependence on medical equipment in China will also raise wider concerns about Beijing's military, economic and diplomatic power. A series of bills are being proposed in the US to curb this influence.

A bill proposed by Florida Sen. Marco Rubio, Republican, will require the United States to reduce its supply chain dependence on China. This bill has the support of three Democratic senators. Today, tougher with China is the rare topic that the two US parties shake hands.

"Unfortunately, a new pandemic is needed to see the consequences of moving our industrial facilities to countries like China," Rubio said in a statement.

Another bill last month from Republican Senator Tom Cotton, Arkansas, will ban federal support for Chinese drugs or drug ingredients, and impose strict rules on labeling of exporting countries. land.

Leaving China - public opinion support
President Trump's use of the National Defense Production Law, forcing US companies to produce goods that support anti-epidemic, will also lead to permanent domestic production of some items, according to analysts.

The Reshoring Index 2019, published by consulting firm Kearney this month, reflects the trend of moving production back to the US, showing that the epidemic is forcing companies to rethink supply chains.

But it is unlikely that companies will return to the US significantly. Instead, the United States is making a major shift in its supply, to Mexico and other Asian countries, especially Vietnam, which has filled the gap in the context of reduced imports from China to the US.

As for medical devices, the US government will certainly have a program to bring production back home, a policy widely supported.

But other items may not be sure. 70% of members of the American Chamber of Commerce (AmCham) in Shanghai said they did not consider moving the supply chain from China because of the virus. Many companies want to stay to continue selling to the huge market in the country of 1.4 billion people. Many parties will probably open factories elsewhere, but keep their base in China.

"Moving a company from China to the US will not be as simple as carrying a suitcase up and away," said Ker Gibbs, president of Shanghai AmCham.
He said that although the US has incentive subsidies, there is no market reason for them to do so.