Foreign media: The current Sino-US economic and trade agreement is becoming more and more important and has become a highlight in bilateral relations
China Daily reported on July 25th. Circuit News Agency reported on the 25th that since the beginning of this year, the spearhead of tension in Sino-US relations has expanded from economic, trade, and technological fields to the epidemic, the South China Sea, and Hong Kong. With the increasingly tough attitude of both parties, the first phase agreement reached before has become a rare highlight in bilateral relations. However, as the Sino-US situation escalates and enters a confrontation mode, it will inevitably affect many areas and even economic and trade agreements. The article pointed out that the closure of consulates between China and the United States has greatly deteriorated bilateral relations, and confrontation in the diplomatic field will have a wide range of effects.
Bloomberg reported on the 24th that Gao Luyi, head of the Asian Economics Department of Oxford Economics, believes that the reason why China and the United States adhere to the economic and trade agreement is that the economic officials of both sides have adopted a more pragmatic attitude in consideration of the economic consequences. The worse the overall relationship between China and the United States, the more important the economic and trade agreement, because the two sides have conducted relatively constructive interactions and discussions in this area, thus providing a narrow way to maintain the dialogue between the world's two largest economies.
The trade war and the epidemic did not promote the return of U.S. manufacturing
The New York Times published an article on the 23rd, arguing that the trade war and the epidemic did not promote the return of US manufacturing. The article pointed out that with the intensification of the trade war, US factory output has been declining throughout 2019, and this year’s decline has been even greater, indicating that the new US factories have not experienced prosperity. Economists believe that the trade war actually burdened most American factories because the trade war caused the price of parts and components to rise and triggered foreign retaliation.
The US International Development Finance Corporation newly established by the Trump administration may provide tens of billions of dollars to help the production of protective equipment and generic drugs return. The government is also considering other tax incentives and "return subsidies" to attract factories to move back to the United States. But there is almost no data to show that the manufacturing industry has returned in large quantities or created a "blue collar boom." Despite Trump's criticisms of global supply chains, the economic incentives brought about by outsourcing still prevail. Some companies have left China because of rising Chinese wages and the deterioration of Sino-US relations in areas such as security and technology. However, the departure of more companies from China does not necessarily represent the victory of American workers.
Chris Roger, a global trade and logistics analyst at research firm Panjiva, said that for many companies, making supply chains more resilient actually means spreading production around the world instead of focusing on the United States. China has a rapidly growing consumer market, and suppliers of consumer goods, fast food and automobiles continue to expand in China. China is also the place with the highest concentration of factories in the world, and some companies have difficulty finding factories or skilled workers outside of China. Data from the Rhodium Group show that despite the trade war, US foreign direct investment in China continued to rise in 2019. Some executives believe that investment in China allows them to hire more workers in the United States.