Calls for the U.S. to economically disband from China have inundated the White House following the discovery of China’s ongoing surveillance missions, but some experts are saying that economic independence is “not going to do it.”
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“The last time I reported from China in person was June 2019. We visited Weiwei headquarters in Shenzhen, and the buzzword even back then was decoupling. Calls were growing louder for an economic separation between these two world powers. But now, years later, the latest data just in shows trade between the U.S. and China is at a record with the experts telling us that for these companies, cutting ties is much easier said than done,” Connell McShane explained on “Varney & Co.”
Political relations with China have hit a new low, but from an economic standpoint, business is “booming,” McShane said, Monday.
William Reinsch of the Center of Strategic and International Studies weighed in on the issue, saying that he believes that the U.S. is making strides to decouple from China, but said the effects of doing so do take a “long time” to surmount.
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“I think we are, it just takes a long time and you don’t see it immediately. Even if they don’t leave China, they build alternative supply chains somewhere else. That’s all going on. But it takes a lot of time, and they’re not all going to do it,” Reinsch explained.
Reinsch said that, despite the threat China increasingly poses to many American companies, it likely remains the U.S.’s best customer.
The former undersecretary of commerce, Frank Lavin, warned that those who are selling consumer products are “not going to pull out.”
“If you’re Nike, it’s a fabulous year there. And you’re not going to pull out. But, if you’re Nike, you might be putting a disproportionate effort into India, or other markets, just as a way of sort of hedging your China exposure,” the Export Now founder and CEO Frank Lavin said.
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Long term, Lavin says India, Indonesia, and Vietnam will be the relative winners following the economic shift. Bolstering Lavin’s claim, Vietnam was the U.S.’s only top ten trading partner to advance in the rankings last year, jumping from 10th to 8th.
“These experts say this idea of decoupling from China, that’s probably a misnomer. It’s really a diversification, and that is going to take time,” McShane concluded.
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