You hear a lot about “de-China-ization” — the push by U.S. businesses and by Washington, D.C. to rely less on China as tensions with Beijing mount. To help you understand deglobalization, the reversal of global trade’s decades-long surge, and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
Two major factors are driving the shift to depend less on China:
- Tariffs imposed on certain Chinese goods by the Trump administration starting in 2018 and kept in place by the Biden administration.
- The pandemic, which caused a surge in imports of medical gear and consumer goods from China, but also severely crimped supply chains for the many businesses that relied on Chinese goods.
After peaking at 22% of all U.S. imports in 2015 and reaching its top share of global exports, China now accounts for less than 13.5% of American imports from abroad. Global data show that its share of worldwide exports also slipped over that period. As the world exits the pandemic and painful inflation strains consumers everywhere, demand for Chinese-made goods has suffered badly.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can see this move away from China playing out in several U.S. industries, such as electronics where imports from China fell by $25 billion between 2018 and 2022 as imports from the rest of the world soared and domestic output rose by $51 billion. This is also true with manufacturing, as more of it moves to Mexico to serve the U.S. market, along with a recent bump in domestic production, as companies rush to cash in on subsidies for U.S. facilities to make semiconductors and electric car batteries. Apparel production is moving to cheaper, friendlier Southeast Asian nations. There’s also growing momentum to cut off China from U.S. technology.
The White House has built on the Trump-era tariffs by sanctioning Chinese firms working in fields like supercomputing, drones, aerospace and surveillance. Exports of U.S. semiconductors to China are down by more than half, due to export controls.
And yet, there’s no easy way to simply walk away from China. While it’s down from its zenith as a global manufacturing powerhouse, China remains deeply embedded in many global supply chains, including those that make valuable or strategic goods. Some types of Chinese imports are soaring, like electric vehicle batteries: U.S. imports doubled in 2021, doubled again in 2022 and are up 58% in 2023.
Car manufacturers and suppliers are racing to build domestic battery factories. But for now, and likely for a while yet, China will have a powerful cost advantage. And then there are rare earth elements, the specialty materials that are needed for a range of advanced products, from powerful electric motors to fighter jets. China continues to dominate in global rare earth processing, arguably powerful leverage in a high-tech world.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
- Huawei's Chip Breakthrough Triggers U.S. Scrutiny: The Kiplinger Letter
- Falling Prices in China Could Be a Boon For the U.S.: Kiplinger Economic Forecasts
- China’s Economy Slows, Shows No Clear Signs of Improvement: Kiplinger Economic Forecasts
- Investments In U.S.-Made Drone Technology Are Gaining Strength — The Kiplinger Letter
-
How to Buy StocksNot everyone knows how to buy stocks, even as investing in the stock market becomes more and more popular. This four-step plan can help.
-
One Key Rule for Understanding 2023 RMDs
RMDs Required minimum distribution (RMD) rules can be confusing, but there is a guideline that can help.
-
FDA Approves Zepbound, the Latest Weight-Loss Drug: The Kiplinger Letter
The Kiplinger Letter Eli Lily’s Zepbound will undercut its rivals’ pricing but still costs over $1,000 a month.
-
More Signs of Belt-Tightening and a Slowing Economy: The Kiplinger Letter
The Kiplinger Letter Although fewer banks are tightening lending standards, more businesses and households are feeling the squeeze.
-
Small Businesses Hit Extra Hard by Rising Interest Rates: The Kiplinger Letter
The Kiplinger Letter On average, small business owners are paying interest rates in the range of 9.1%, per the NFIB.
-
The Recent Uptick In Global Trade Won’t Last: The Kiplinger Letter
The Kiplinger Letter Global trade continues to fall as economic growth around the world cools.
-
Consumers Have $1 Trillion More Savings Post-Pandemic: The Kiplinger Letter
The Kiplinger Letter GDP data show Americans have more savings than they did pre-pandemic.
-
Once-Booming Gun Sales Have Slumped: The Kiplinger Letter
The Kiplinger Letter Since 2022, FBI background checks, a close proxy for gun purchases, have slumped.
-
GOP Lawmakers Demand SALT Deduction Cap Increase: Tax Letter
Tax Letter Republicans from high-tax states are clamoring for the SALT deduction cap to rise from its $10,000 limit.
-
The Battle for Net Neutrality Rules Rages On: The Kiplinger Letter
The Kiplinger Letter Advocates remain hopeful new net neutrality rules will survive, while the telecom industry and business groups seek to prevent FCC action.
