8月28日早间英文播报：'Made in China' cannot easily be replaced

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[Photo byLi Min/China Daily]

Nation boasts important technologicaladvantages, according to top experts

Consumersin the United States and other Western countries face rising prices as a resultof Chinese companies being isolated from global supply chains, according toleading experts.

Theaggressive trade policy being pursued by the US administration, particularly inrelation to the technology sector, is likely to backfire, pushing up the priceof many goods, especially those in the consumer electronics sector, the expertssaid.

Theeconomist Stephen Roach, senior fellow at Yale University's Jackson Institutefor Global Affairs, said US companies are likely to source components fromhigher-cost producers.

"Theresult is the functional equivalent of a tax hike for US consumers," hesaid.

RichardMartin, managing director of IMA Asia, the influential peer group forum forregional CEOs, said attempting to cut China out of supply chains is destined tofail and will also result in rising costs.

He saidsome US-bound production is being moved from the Chinese mainland to Vietnam,Taiwan, India and Indonesia, but invariably all these locations then importcomponents and materials from the mainland.

"Ultimately,it is not really decoupling the US and China, just forcing trade diversion,which raises the cost for the US," Martin added.

There isevidence that since the US unilaterally imposed tariffs on Chinese goods in2018, global supply chains have felt the impact.

Lastyear, Chinese exports of a basket of 1,200 products accounted for 22 percent ofthe global total, down by 3 percentage points from the previous year, accordingto a study by law firm Baker McKenzie and economics consultancy Silk RoadAssociates.

However,the focus this year has been on the technology sector. On Aug 17, the USadministration said it aimed to cut off supplies of foreign semiconductors toChinese telecommunications giant Huawei and 38 of its affiliated companies,escalating a move made initially in May.

Theannouncement caused consternation among US semiconductor manufacturers thatrely on sales to China.

"Thesebroad restrictions on commercial chip sales will bring significant disruptionto the US semiconductor industry," said John Neuffer, president and CEO ofthe US Semiconductor Industry Association.

To add tothe confusion, US President Donald Trump this month ordered a ban on WeChat,the Chinese messaging, social media and mobile payment app, being available onApple devices.

Thedecision could have disastrous implications for Apple, which derives 20 percentof its sales from China. WeChat, owned by Tencent Holdings, is a vital platformfor many US retailers and gaming companies. It is still not clear where or howsuch a ban would be applied.

Meanwhile,China is boosting its semiconductor industry in the hope of becoming a playerin advanced chips, with the State Council announcing that some manufacturerswill be exempt from corporate tax for up to 10 years.

AbishurPrakash, a geopolitical futurist at the Center for Innovating the Future, astrategic consultancy company based in Toronto, Canada, said recent events havebeen very confusing for many companies in the technology sector, but he thinksit will be difficult to extricate China from supply chains.

"Whilecompanies move supply chains－frommanufacturing to parts－to SoutheastAsia, these factories are not producing the most-critical components. In theshort term, companies will remain dependent on China," he said.

However,Prakash is concerned that the world of technology is becoming polarized.

"Boththe US and China realize that dependency on each other, from a tech point ofview, isn't going to work. The US doesn't want Chinese technology such asTikTok (the video-sharing service also at the center of a US-China dispute) orHuawei's 5G, and China doesn't want to be dependent on US technology such as chips,software and servers," he said.

Prakashbelieves that companies faced with this situation will increasingly begin tolook for neutral destinations to source products.

"It'snot about economic benefits, it's about business. By moving supply chains,companies are ensuring that their lucrative products aren't hindered bygeopolitics," he said.

Roach,from Yale University, the author of Unbalanced: The Codependency of America andChina, said the US' aggressiveness in trying to block China out of supplychains belies its own weak economic position.

Theformer Asia chairman of investment bank Morgan Stanley, where he was also chiefeconomist, said, "For the US, with its massive shortfall of domesticsavings, there can be no decoupling in the broad sense from the rest of theworld.

"Withthe savings shortfall going from bad to worse in the face of the COVID-relatedexplosion of federal budget deficits, the current account and trade deficitwill rise dramatically.

"Politically-inspireddecoupling with China will simply shift the Chinese piece of America's overallmultilateral trade deficit, which it had with 102 nations in 2019, to anotherproducer. This is akin to rearranging the deck chairs on the Titanic."

EdwardTse, an expert on the Chinese technology sector and author of China'sDisruptors: How Alibaba, Xiaomi, Tencent and Other Companies are Changing theRules of Business, said despite the pressure from the US, China remains highlyresilient.

He citedthe rapid recovery from the coronavirus pandemic by Asian supply chains, manyof which are centered on China.

"EastAsian countries have handled the COVID-19 pandemic better than most othernations, particularly the US. We can also see manufacturing supply chainsbeginning to recover," he said.

Tse, thefounder and CEO of management consultancy Gao Feng Advisory, said the scale andsophistication of Chinese supply chains are often overlooked in the currentdebate.

"Chinacan do things that other countries simply cannot do. When external customers wantinnovative new products, they want people who can quickly do design,prototyping and can manufacture quickly in batches. The Chinese are very goodin doing that. They are very entrepreneurial and what you have in China is avery dynamic process," he said.

AidanYao, senior emerging Asia economist at Axa Investment Managers in Hong Kong,said that while the US has turned up the heat on supply chains, the pandemichas hit companies so hard that they will be unwilling to make any drasticchanges.

He arguesthat it costs money to switch production, and many companies are now so low oncash that they cannot make major investment decisions.

"Evenif some companies wanted to move out of China, investment plans have beensignificantly scaled back because of the pandemic," he said.

Yao alsobelieves many companies have fostered such strong supply networks in China thatit will be difficult for them to move.

"Chinadidn't become the world's factory overnight. It was 30 or 40 years in themaking, and there are reasons why multinationals have put their supply chainsin China. It is not because they necessarily love China－they are there for sound commercial and economicrationalities. None of these have changed."

ThomasLuedi, a partner based in Shanghai for Bain and Co, the management consultancy,said that no matter the politics, many companies will avoid making rash moves.

He saidthat in recent years companies have tended to pursue a China-Plus-One strategyin constructing their supply chains, which could involve having a productionplant in China and another in Southeast Asia.

"Companiesdo this in a strategic manner. There is no sudden closing of plants in Chinaand haphazard opening of other ones in new countries. Companies who do this, infact, don't tend to close their China operations at all. It is all part oftheir long-term planning," he said.

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记者：AndrewMoody

播报：CorrieKnight

原文链接：

http://www.chinadaily.com.cn/a/202008/27/WS5f46e54da310675eafc55b4c.html