American companies significantly reduced imports of goods from China

According to the US Census Bureau (in addition to the census itself, it collects statistics on the economy, trade and other areas), imports from China to the US fell by almost a quarter in the first five months of the year. This is the result of a growing trend of US companies seeking to reduce their dependence on Chinese suppliers amid rising tensions between the two countries.

As follows from publications The US Census Bureau, in the first five months of 2023, imports of Chinese goods into the country decreased by 24% compared to the same period last year. Experts say this is due to the fact that American companies are stepping up efforts to reduce dependence on Chinese manufacturers, turning to their competitors primarily in Mexico, Vietnam and Thailand. The consequence of this trend was, for example, that China ceased to be the largest trading partner of the United States, giving way to Mexico.

According to The Washington PostUS companies that are actively reshaping their US supply chains include HP, Stanley Black & Decker and Lego. The reasons for companies can be different – from unwillingness to be the victim in the confrontation between the two countries to a much longer-term policy to bring production closer to the end consumer.

In any case, the paper’s experts say, never before in history has China’s role as the center of world production been so threatened.

And this is despite the fact that its main competitors – the same Mexico, Thailand and Vietnam – are inferior to China in terms of resources, scale and well-organized trade infrastructure.

A variety of factors are putting pressure on China’s role as the world’s center of manufacturing and trade. High tariffs imposed on most Chinese imports by the previous administration have reduced orders. The economic strategy of the Chinese authorities, which has made regular pressure and even persecution of private companies, tensions in relations with the United States, have a negative impact on trade relations.

“More confrontational and more hostile attitude of the governments (of China and the United States towards each other.— “b”) is beginning to influence decision-making in the private sector, ”the newspaper quotes Adam Slater, a leading economist at Oxford Economics in London.

According to the company, China accounts for about one in six dollars that Americans spend on imported goods. For comparison, before the pandemic, China accounted for every fourth dollar. Japan also began to buy less from China, whose relations with this country also deteriorated markedly.

In addition to geopolitical, of course, there are other reasons. In particular, experts cite the growth of wages at Chinese factories as one of such reasons, which reduces the competitiveness of Chinese goods. This, among other things, affects investors when making decisions on the construction of new production facilities in the country. As noted, annual spending on the construction of zero-cycle facilities in China fell from $100 billion in 2019 to $50 billion in 2019. As experts say in this regard, the question is not whether this trend will continue, but how much it will expand.

The good news for China is that, according to experts, the current problems will not be able to seriously shake the country’s position as the main producer of goods. China, despite everything, remains the leader of world industrial production with 31% against 17% for the US, which ranks second. In addition, China retains such indisputable advantages as a modern port and railway infrastructure, the presence of numerous large industrial clusters that can quickly adapt to new realities. This, in particular, explains the fact that, unlike the United States and Japan, which reduced imports from China, no such trend is observed in the EU countries.

“Countries like Mexico, India, and Vietnam are, of course, taking advantage of the global trend to reshape supply chains and nibbling off China’s share of global production. However, this will fundamentally not lead to a change in Chinese dominance in the foreseeable future,” said economist Eswar Prashad of Cornell University.

Viktor Buk