![]() ![]() China’s domestic market for high-value-added industries is the largest in the world and will continue to grow faster, so a U.S. ![]() industries that run positive trade balances with China are high-value-added sectors, while those with biggest deficits, such as apparel, furniture, and electronics assembly, tend to be low-value added. For example, semiconductors, ultra-clean diesel engines, and consumer electronics all demand high levels of R&D spending, and Intel, Cummins, and Apple’s global leadership would collapse if it could not produce and sell in China. ![]() The United States’ strongest tech companies rely on a global scale of sales and operations to stay ahead of foreign rivals. tech industry relies on global sales and operations. But the fundamentals of our globalized economy - and China’s role within it - will not change. Ultimately the pandemic and economic cold war with China will lead to changes in the way the global economy works, such as manufacturing key health care supplies closer to home and more embargoes of strategic technology. So they will resist well-intended calls by others for actions that would shoot the U.S. And they know that reshoring is only a small part of putting more resilience into their supply chains. They know that a U.S.-led deglobalization of commerce will play right into China’s hands, isolating the U.S. and compete with Chinese companies in the long run. They know that deglobalization of supply chains and de-coupling from China will actually reduce their ability to produce in the U.S. Special Trade Representative even wrote a recent op-ed calling for the end of offshoring.īut American multinational corporations know the future will look different than these mid-crisis pronouncements. Coming on the heels of the trade war and Washington’s push to de-couple economically from China, this has brought widespread predictions of deglobalization. The virus exposed the vulnerability of our supply chains, interrupting the flow of critical imports into the U.S., and triggering calls for American multinationals to reshore production. We are still in the midst - perhaps even the early days - of the coronavirus pandemic, but there have been many predictions of how it has permanently changed the world. To get all of HBR’s content delivered to your inbox, sign up for the Daily Alert newsletter. In these difficult times, we’ve made a number of our coronavirus articles free for all readers. ![]()
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