90 Miles From Tyranny

Friday, April 10, 2020

Hey Joe, Where You Goin' With That... Note In Your Hand...

New Data Shows U.S. Companies Are Definitely Leaving China

U.S. companies are leaving China thanks to the trade war. They’ll leave even more thanks to the pandemic.

Sorry, Davos Man. Your China-led globalization is going out of style like bell bottoms.

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. Manufacturing imports from China were the hardest hit.

Last year saw companies actively rethinking their supply chain, either convincing their Chinese partners to relocate to southeast Asia to avoid tariffs, or by opting out of sourcing from China altogether.

"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," says Patrick Van den Bossche, Kearney partner and co-author of the 19-page report.

The main beneficiaries of this are the smaller southeast Asian nations, led by Vietnam. And thanks to the passing of the U.S. Mexico Canada Agreement, Mexico, for all its problems with drug cartels, has become a favorite spot for sourcing.

In 2020, the trade war seemed to be on pause. Sadly, it gave way to a global pandemic that emanated from the Hubei province in China. The new SARS coronavirus has literally closed the economies of the Western world and created a public relations nightmare for China.

Not only that, companies were unable to get supply online in February and early March due to factory closures there, stalling business in the U.S.

Once China got up and running, the U.S. was hit between the eyes with the deadly COVID-19 disease caused by the rapidly spreading new SARS. Even if China was fully healed, the U.S was stuck in sick bay.

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.

Kearney predicts companies “will be compelled to go much further in rethinking their sourcing strategies, (and) their entire...

Critics are letting their disdain for the president blind them to geopolitical realities.

When a new coronavirus emerged in China and began spreading around the world, including in the United States, President Donald Trump’s many critics in the American foreign-policy establishment were quick to identify him as part of the problem. Trump had campaigned on an “America first” foreign policy, which after his victory was enshrined in the official National Security Strategy that his administration published in 2017. At the time, I served in the administration and orchestrated the writing of that document. In the years since, Trump has been criticized for supposedly overturning the post–World War II order and rejecting the role the United States has long played in the world. Amid a global pandemic, he’s being accused—on this site and elsewhere—of alienating allies, undercutting multinational cooperation, and causing America to fight the coronavirus alone.

And yet even as the current emergency has proved him right in fundamental ways—about China specifically and foreign policy more generally—many respectable people in the United States are letting their disdain for the president blind them to what is really going on in the world. Far from discrediting Trump’s point of view, the COVID-19 crisis reveals what his strategy asserted: that the world is a competitive arena in which great power rivals like China seek advantage, that the state remains the irreplaceable agent of international power and effective action, that international institutions have limited capacity to transform the behavior and preferences of states.

China, America’s most powerful rival, has played a particularly harmful role in the current crisis, which began on its soil. Initially, that country’s lack of transparency prevented prompt action that might have contained the virus. In Wuhan, the epicenter of the outbreak, Chinese officials initially punished citizens for “spreading rumors” about the disease. The lab in Shanghai that first published the genome of the virus on open platforms was shut down the next day for “rectification,” as the Hong Kong-based South China Morning Post reported in February. Apparently at the behest of officials at the Wuhan health commission, news reports indicate, visiting teams of experts from elsewhere in China were prevented from speaking freely to doctors in the infectious-disease wards. Some experts had suspected human-to-human transmission, but their inquiries were rebuffed. “They didn’t tell us the truth,” one team member said of the local authorities, “and from what we now know of the real situation then, they were lying” to us.

Now China’s propagandists are competing to create a narrative that obscures the origins of the crisis and that blames the United States for the virus. This irresponsible behavior and lack of transparency revealed what Trump’s National Security Strategy had identified early on: that “contrary to our hopes, China expanded its power at the expense of others.” Instead of becoming a “responsible stakeholder”—a term George W. Bush’s administration used to describe the role it hoped Beijing would play following China’s entry into the World Trade Organization in 2001—the Chinese Communist Party used the advantages of WTO membership to advance a political and economic system at odds with America’s free and open society. Previous National Security Strategy documents had tiptoed around China’s adversarial conduct, as if calling out that country as a competitor—as the 2017 document unequivocally did—was somehow impolite.

But at some point, an American administration needed to shift the conversation away from hopes for an imagined future China to the realities of the Communist Party’s conduct—which is hardly a secret. For the decade and a half prior to 2017, Republican and Democratic leaders publicly worried about China’s unwillingness to play by the rules, but were reluctant to deal head on with China’s authoritarian government and statist...

Eric Yuan, CEO of Zoom Video Technologies, acknowledged in a live-streamed broadcast on April 8 that the company had made “missteps” in the face of surge of users working from home during the coronavirus pandemic, including routing traffic through China, raising security and privacy concerns.

It is more likely that ZOOM is a Trojan horse unleashed into America's corporate boardrooms to gain intelligence, sources, strategies and future plans of American companies.

This is part of China's all out war on America. Don't use Zoom for sensitive information you would not want an enemy to know...