The US and China have been clearly in a standoff, sparring over tariffs and technologies. This has resulted in supply chain reshuffle for some industr

From China-made to China-created

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2021-05-28 08:30:12

The US and China have been clearly in a standoff, sparring over tariffs and technologies. This has resulted in supply chain reshuffle for some industries. US president Joe Biden signed an executive order on February 24, 2021 mandating a review of critical product supply chains in the US with the aim of bringing manufacturing back the US and rebuilding localized supply chains. Taiwan-based manufacturers caught between the two giants may not afford to choose sides, but they can still find room for survival.

Since 2017, the US Department of Commerce has implemented export control on more than 500 Chinese enterprises and rejected 34 Chinese acquisitions of US companies. The US Department of Justice has charged 63 individuals for espionage and participation in China's Operation Fox Hunt. The US Department of Defense has named 35 high-tech firms as entities owned by, controlled by, or affiliated with China's government, military, or defense industry. The US Department of the Treasury requires that US citizens must divest their holdings of Chinese military-affiliated companies by November 11, 2021. It also has sanctioned 231 Chinese individuals and entities, including 36 Chinese and Hong Kong officials.

What are implications of the US government's actions against China? Western countries slapped economic sanctions against China after the 1989 Tiananmen crackdown on democracy, hitting hard China's economy and society at that time. China had to undertake a series of reform measures to weather the crisis. China's economic growth registered at 2.3% in 2020, the lowest since the start of China's reform and opening up in 1977. It may seem that China sustained impact from the trade conflict, tech war and COVID-19. However, many research institutions expect China's economic growth to rebound to the range between 7.0% and 9.0% in 2021. This indicates that China's economy made up of immense manufacturing, finance, digital economy, real estate and service sectors still has the potential to maintain high growth, which is quite different from the weakness it experienced in 1989.