And at this point, there isn’t much of it despite the new diplomatic rhetoric from Washington.
The larger question is whether China will buy into this new narrative at a time when it seriously believes that a ‘technology blockade’ is underway solely to contain its rise as a global power. From here it is about a targeted strategy, rather than a wholesale approach.Īll this sits well from the US perspective. What isn’t is everything hi-tech from AI to semiconductors, to drones and biotechnology. So, low-value Chinese goods and services are pretty much on the table. The de-risking narrative is also supported by others such as the European Commission and Germany, who are now also focusing on reducing ‘one-sided dependencies,’ keeping their security in mind. The role played by US businesses in opening up US and China relations, following the 1971-72 Nixon-Kissinger ‘ping-pong’ diplomacy with Mao was large. They are looking to find alternatives suitable to their future expansion. So, American companies are not deserting the Chinese market in hordes. Now, it is extremely difficult to fill the chasm and bring manufacturing back to the US. Which means Washington and its kettle of China hawks will have to learn to live with this reality.Īt the foundation of this shifting narrative lie deep business interests built over several decades that Sullivan indicated had hollowed out the US’s industrial base. So, the big question: How quickly can the US shift its sourcing to other countries? Answer: Not very quickly. China was the US’s third biggest trading partner - and the biggest source of imports.
The US trade deficit grew by 8.3% y-o-y to touch $382.9 billion in 2022 with imports of Chinese goods hitting $536.8 billion and exports, $13.8 billion. Beijing retaliated, targeting some $100 billion of mainly agricultural goods from the US. The previous record was $658.8 billion in 2018, the year when the two countries became embroiled in a trade war after president Donald Trump imposed tariffs on $300 billion worth of Chinese goods. Trade in goods hit a new record in 2022, rising by 2.5% y-o-y to touch $690.6 billion. There is an understanding that throwing everything off the plate at once won’t be helpful, so best to remain, in the words of US National Security Advisor Jake Sullivan, ‘narrowly focused on technology’.īilateral trade has, indeed, continued to bloom.The US realises it isn’t easy for its economy to get off the China wagon when bilateral trade has continued to boom, despite trade sanctions.
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