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Jon Talton: For America and China, breaking up is hard to do

Jon Talton, The Seattle Times on

Published in Business News

I am suspicious of hot takes on the pandemic. They're usually headlined, "COVID-19 will change (fill in the blank) forever."

Most of these predicted apocalypses involve things I like: downtowns, transit, sit-down dining and brick-and-mortar retail shopping. But as Chinese statesman Zhou Enlai is reputed to have said about the consequences of the 1789 French Revolution (or the 1968 French student revolt), "It's too early to say." After all, the much deadlier 1918 influenza pandemic didn't change everything.

So I propose to write a cold take on how the pandemic might be the inflection point into a much different relationship between the United States and China. At its most extreme, it might accelerate the decoupling of the world's two largest economies.

This would have profound consequences, not least for Washington state. China is our largest merchandise export customer.

"There are many things we could do," President Donald Trump said recently about China on Fox Business. "We could cut off the whole relationship."

U.S. Trade Representative Robert Lighthizer this month decried the globalization policies that had sent jobs offshore, particularly to China.

 

He wrote in a New York Times op-ed that Trump's message to American companies was simple: "If you want certainty, bring your plants back to America. If you want the benefits of being a U.S. company, and the protection of the U.S. legal system, then bring back the jobs."

Lighthizer, a longtime hawk against the U.S.-China status quo, said that thanks to Trump's tariffs, "the offshoring frenzy started to abate."

Perhaps.

U.S. manufacturing employment has remained near modern lows. Chinese foreign direct investment (FDI) in U.S. companies fell from a high of more than $46 billion in 2016 to $4.8 billion this past year. But American FDI in China was more than $14 billion in 2019, consistent with levels of the past decade.

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