The United States and China are competing this week to create a sustainable and resilient supply chain, which is the latest development in their bitter battle to reshape the world trading system around their respective economic interests.
Pete Buttigieg, the US Transportation Secretary, discusses supply chains as he introduces President Joe Biden at the White House on Monday. (Source: Getty Images via AFP)
Supply Chain Methods
On Monday, US President Joe Biden held the first meeting of his supply-chain resilience council in Washington, hours before Beijing was to launch its first international supply chain expo with Tesla, Apple, Intel, and Qualcomm under the tagline “connecting the world for a shared future”. The White House said Biden unveiled 30 additional initiatives “to strengthen supply chains critical to America’s economic and national security”. The measures aim to boost domestic drug production and reduce reliance on “high-risk foreign supplies” of medical products, recalling American concerns during the coronavirus outbreak. They require new expenditures in instruments to manage supply chains by sharing data more efficiently among federal agencies and assessing renewable energy supply threats. Through the Indo-Pacific Economic Framework, the White House has sought friends and partners to offset China’s dominance in crucial minerals.
The 14 Asia-Pacific signatories to the framework, who account for 40% of the world GDP, regulate carbon emissions and data protection. Before Biden and Xi Jinping’s attendance at the San Francisco Asia-Pacific Economic Cooperation summit this month, IPEF was unable to reach a trade agreement. Biden will undoubtedly run against former president Donald Trump in 2024; Trump dominates Republican polling in 2020. Democrats like Biden want to show that he would keep his word to strengthen US supply chains and reduce reliance on China. He has supported domestic manufacturing while serving as president. When the race heats up, Biden might lower expenses. He has upheld Trump’s tariffs on Chinese imports worth more than $200 billion since taking office in 2021. Numerous studies demonstrate that American businesses and consumers have borne these expenses.
Since US imports of Chinese commodities have dropped, American supply chains remain indirectly tied to the Asian giant through third parties like Mexico, a major US exporter that has recently deepened economic links with China. On Monday, Biden said the US “never gives up” and predicted that historians will see “this moment” as “the beginning when America won the competition of the 21st century” in 50 years. Beijing’s supply-chains expo will accommodate 515 firms from 55 countries and regions from November 28 to December 2. According to the Beijing-backed trade body China Council for the Promotion of International Trade, 25% of overseas exhibitors are Americans. The council advertised the Beijing expo as a “testimony to China’s sincerity and readiness to greater opening up and its responsibility as a major country” amid “counter-currents” in economic globalization. In October, Xi warned of “unilateral sanctions, economic coercion, decoupling, and supply-chain disruption” at a conference honoring the 10th anniversary of China’s multibillion-dollar Belt and Road Initiative. Washington has restricted China’s sale of advanced technology since last year to slow Beijing-centered commerce. At Apec, Xi reportedly told Biden he opposed economic decoupling. After their discussion, Biden told American business executives he was “de-risking, not decoupling” from China.
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