So Are We Ready to Decouple from China Now?!

Golfman25

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Sep 12, 2009
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Since we started doing business and allowing them to dominate our manufacturing supply chain, we have had to deal with several virus incidents which originated in China. Every time it's said well reduce our dependence, blah, blah, blah. Will this be the time we actually make it happen?
 
Are we coupled?

As far as I can tell there really is no "they" or "them" in China sourcing. It is "us". If you, the consumer, would like to reduce trade with, and "dependency" on, China you need to stop buying items that are made in China. It's quite simple.

I think we don't give ourselves enough credit as consumers. Convince the entirety of the USA to buy only USA made clothing...the results would be measurable and swift. But we're not willing to do that.

Is it 20% of our total imports come from China, 5% of our debt held by China? Pretty close I think. I'm not sure that qualifies as fully coupled. Maybe more than "just friends" but we're surely not co-habitating :)
 
I can beat that, 100% of Tsingtao Beer imports come from China. Troubling statistics indeed :)

Still 20% +/- of our total imports come from China though, ehh? I don't think the OP was talking about specific commodities or items. He was being a bit more holistic in his view of global sourcing...I think.

Let me clear it up. China has blanked us up the arse with these viruses, among other things. When are we going to say "stop, that hurts."
 
Are we coupled?

As far as I can tell there really is no "they" or "them" in China sourcing. It is "us". If you, the consumer, would like to reduce trade with, and "dependency" on, China you need to stop buying items that are made in China. It's quite simple.

I think we don't give ourselves enough credit as consumers. Convince the entirety of the USA to buy only USA made clothing...the results would be measurable and swift. But we're not willing to do that.

Is it 20% of our total imports come from China, 5% of our debt held by China? Pretty close I think. I'm not sure that qualifies as fully coupled. Maybe more than "just friends" but we're surely not co-habitating :)

The last time I looked at the container throughput stats for North America, the US import to export ratio of loaded containers was about 2.3 to 1. The empty container ratio is as you’d expect 1 to 1. That made air America’s largest export. The bulk of the loaded container imports originated in Asia as evidenced by the concentration of vessels involved in us trade with capacities greater than 14,000 Teu being centered in Asia. Actually the entirety of the Super Post Panamax container vessels are employed in either Asia Europe, or Asia North America (USA mostly) routes.

Container traffic is certainly not the entirety of our imports and exports, but it is pretty much all of our consumer goods, or components for consumer goods, e.g. auto parts, etc. so just working off the back of a napkin, I’d guess direct Chinese imports probably account for 50% of our imports, and indirect Chinese products (goods made by Chinese companies in other countries) account for another 10%. This is based on container volume and not freight value. Keep in mind my view is largely based on having worked with container carrier’s terminal operations developing traffic patterns, so the more subtle aspects of value have left out.

I do know that as of December the Chinese held 13% going on 14% of the US Government bonds in circulation and were the single largest holder of same.
 
N
Are we coupled?

As far as I can tell there really is no "they" or "them" in China sourcing. It is "us". If you, the consumer, would like to reduce trade with, and "dependency" on, China you need to stop buying items that are made in China. It's quite simple.

I think we don't give ourselves enough credit as consumers. Convince the entirety of the USA to buy only USA made clothing...the results would be measurable and swift. But we're not willing to do that.

Is it 20% of our total imports come from China, 5% of our debt held by China? Pretty close I think. I'm not sure that qualifies as fully coupled. Maybe more than "just friends" but we're surely not co-habitating :)
Not quite - The reason much of our critical needs here in the US are manufactured outside of the US is our domestic manufacturing capability is crippled due to the cost of doing business here; domestic manufacturing has been taxed and restricted by state and federal agencies to the point they can't compete. There is hard evidence in recent months that as state and federal burdens are lifted manufacturing has been returning. The consumer will seek the best value and the manufacturers will drive to the lowest cost regardless of where they make the stuff; this is capitalism 101. Also note that as corporate tax reduces production and sales increase and state and federal revenue increases quite beyond the revenue gained from taxing the corporations. The greater revenue is garnered from payroll taxes, greater personal spending due to higher employment and the revenue simply moving money across the markets.
 
The last time I looked at the container throughput stats for North America, the US import to export ratio of loaded containers was about 2.3 to 1. The empty container ratio is as you’d expect 1 to 1. That made air America’s largest export. The bulk of the loaded container imports originated in Asia as evidenced by the concentration of vessels involved in us trade with capacities greater than 14,000 Teu being centered in Asia. Actually the entirety of the Super Post Panamax container vessels are employed in either Asia Europe, or Asia North America (USA mostly) routes.

Container traffic is certainly not the entirety of our imports and exports, but it is pretty much all of our consumer goods, or components for consumer goods, e.g. auto parts, etc. so just working off the back of a napkin, I’d guess direct Chinese imports probably account for 50% of our imports, and indirect Chinese products (goods made by Chinese companies in other countries) account for another 10%. This is based on container volume and not freight value. Keep in mind my view is largely based on having worked with container carrier’s terminal operations developing traffic patterns, so the more subtle aspects of value have left out.

I do know that as of December the Chinese held 13% going on 14% of the US Government bonds in circulation and were the single largest holder of same.

Can we rely on the government for nothing if not reliable trade data?

https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china

21% total imports. I don’t recall where I found the debt number but what I saw was dramatically lower than 10%.

Good times.
 
There is some evidence that as the standards of living increase in China and their associated labor costs are also increasing. This means that production costs are going up. Some producers are shifting their production our to China to other areas like Vietnam, Philippines, and Thailand. This is the case in my industry (printers, copiers, and related office equipment).

Don't ask me for specific evidence; this is what I'm seeing as my company moves production locations. Its been happening for several years.
 
I don't think there is any doubt that Corona will have an ongoing crippling effect on the Chinese economy. Add in the tariff war and US corporations will look to decouple with China not due to US nationalism but that the Chinese supply chain is no longer reliable. XI has a long term plan for China dominance of the world. He does not think in terms of 2, 4 or 6 year election cycles like the dipshits that run our government The Chinese are intent on bringing the US to its knees in 25-50 years. We have the best chance now to beat them back economically. The Chinese people put up with the current regime because of the growth rate they have enjoyed. There is a tremendous amount of unrest under the surface that could foment quickly given the right spark. Let's find a way to light it up.
 
There is some evidence that as the standards of living increase in China and their associated labor costs are also increasing. This means that production costs are going up. Some producers are shifting their production our to China to other areas like Vietnam, Philippines, and Thailand. This is the case in my industry (printers, copiers, and related office equipment).

Don't ask me for specific evidence; this is what I'm seeing as my company moves production locations. Its been happening for several years.

Agreed. Manufacturers have been keeping an eye on total cost from China for a number of years now. But the real action started (if you're a USA-based manufacturer) with the tariff escalation that began in 2018. The real kicker (unintended consequence?) of the tariff war with China was that it forced some (many?) manufacturers to increase their local production within China. Counter-tariffs were/are a real problem from USA based manufacturers that sell substantially back into China.

Like Trump or hate Trump, the tariff policies created under his administration targeting China will make for one hell of a thesis on foreign policy when the dust settles. For those that wanted to understand the intent, and not the media version of it, you'd find it was to stop the theft of intellectual property and technology. It wasn't just a money grab...
 
Devils advocate (and I'd love American manufacturing only) but what would a 65" LED TV cost if built in the USA? Could we even be close?
 
I don't think there is any doubt that Corona will have an ongoing crippling effect on the Chinese economy. Add in the tariff war and US corporations will look to decouple with China not due to US nationalism but that the Chinese supply chain is no longer reliable. XI has a long term plan for China dominance of the world. He does not think in terms of 2, 4 or 6 year election cycles like the dipshits that run our government The Chinese are intent on bringing the US to its knees in 25-50 years. We have the best chance now to beat them back economically. The Chinese people put up with the current regime because of the growth rate they have enjoyed. There is a tremendous amount of unrest under the surface that could foment quickly given the right spark. Let's find a way to light it up.
They have been talking about "unrest" in these hell hole places for my lifetime. Rarely anything happens and when it does it just turns it into a bigger chit hole.
 
I don't think there is any doubt that Corona will have an ongoing crippling effect on the Chinese economy. Add in the tariff war and US corporations will look to decouple with China not due to US nationalism but that the Chinese supply chain is no longer reliable. XI has a long term plan for China dominance of the world. He does not think in terms of 2, 4 or 6 year election cycles like the dipshits that run our government The Chinese are intent on bringing the US to its knees in 25-50 years. We have the best chance now to beat them back economically. The Chinese people put up with the current regime because of the growth rate they have enjoyed. There is a tremendous amount of unrest under the surface that could foment quickly given the right spark. Let's find a way to light it up.

What's really interesting, in addition to your unrest comment, is when you look at the debt structure maintained by China vs a developed nation like the USA. Future stability as it relates to personal debt, corporate debt and government debt makes for a very interesting economics presentation. Their position is much more precarious than ours (allegedly, per some economists). Even during a global meltdown such as what we've got going on right now.
 
Devils advocate (and I'd love American manufacturing only) but what would a 65" LED TV cost if built in the USA? Could we even be close?
Yes. TV production is highly automated. Very few bodies, thus wage costs are a min. no matter where you produce.

Years ago we did a comparison with a customer. We were cheaper on a totally automated process. Things we had to touch -- more expensive.
 
Devils advocate (and I'd love American manufacturing only) but what would a 65" LED TV cost if built in the USA? Could we even be close?

With enough automation and oil trading at...say....$150 a barrel, yeah, I think we could get within 20%. Maybe...but would we be willing to pay it is the better question.
 
Yes. TV production is highly automated. Very few bodies, thus wage costs are a min. no matter where you produce.

Years ago we did a comparison with a customer. We were cheaper on a totally automated process. Things we had to touch -- more expensive.

Yeah. We need gas prices to go very high (expensive freight) and higher cost of living in developing nations to really even things out for those things we can't automate...
 

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