Communist China is facing the real possibility that its mishandling and deliberate misrepresentation of the Wuhan Coronavirus is going to cost them a pretty big slice of their export pie.
A compilation of 3 surveys found that up to 30%, or $750 billion of China’s $2.5 trillion in exports, might be relocated.
And U.S.-based firms weren’t the only ones looking to move: 85 percent of North Asian firms and 60 percent of Chinese manufacturers also said they were planning to move at least some production from the mainland, where COVID-19 was first identified late last year.
“There could be a sizable rebalance, as China’s share of world exports has jumped 10 percentage points since the early 2000s, to about 14 percent, much higher than the U.S., Germany, and Japan,” wrote Swiss lender UBS Keith Parker.
In the U.S., “of the firms surveyed, 92 percent of healthcare companies, and 89 percent of consumer staple firms have already moved capacity out of China or are planning to do so. Technology (80 percent) and consumer discretionary (76 percent) producers were also more likely to leave than industrials (69 percent) and materials (57 percent) manufacturers.”
82% of American companies said they were planning to bring production home, while also considering setting up shop in Canada (38%) and/or Japan (29%).
Meanwhile, circumstances in the huge Communist state may have gotten considerably worse overnight. They just raised their “emergency warning” to its second-highest level; because of COVID outbreaks in Beijing. Sixty percent of fights to that capital city have been canceled.
Even well before he was elected, Donald Trump had been pushing to bring manufacturing supply chains back home from China. As president he’s made it a big priority and incentivized companies via the 2017 Tax Cuts and Jobs Act, to relocate to the U.S.A.
As White House economic advisor Larry Kudlow said, “We welcome any American companies in Hong Kong or China mainland. We will do what we can for full expensing and pay the cost of moving if they return their supply chains and their production to the United States.”
China’s continued mismanagement of the pandemic crisis it created may wind up giving President Trump and the United States a winning hand.