“Deglobalization” has entered the narrative zeitgeist. But what’s happening on the ground? This weekly series seeks to answer that question with a round-up of deglobalization developments from the week that’s done.
1. UK shadow Chancellor of the Exchequer Rachel Reeves said this week Britain must cut economic reliance on China. She cited Russia’s invasion of Ukraine as a “wake-up call” re the dangers of dependence on a geopolitical adversary.
2. The European Union sued China in the World Trade Organization over punitive trade restrictions that Beijing imposed on Lithuania last year – in response to that country’s move to support Taiwan. This development underscores Beijing’s effort to weaponize the economic dependencies of a globalized environment. The suit also highlights the growing international tension over competing economic systems and approaches.
3. In another case of weaponized economic ties: Beijing is deepening its embargo on Taiwanese fish in an effort to punish the island’s democratically elected government for expanding ties with the US and its allies. In the six months from May to October, China imported only 56 million USD worth of fish and crustaceans from Taiwan, down from 138 million during the same period last year. Fish represents just one small part of Taiwan’s exports to China. But it is also a product for which Beijing has ready supply of alternatives.
4. TSMC announced this week that it will up its investment in Arizona to 40 billion USD with a second semiconductor chip plant – and that it will produce advanced 4-nanometer chips at its US facilities. The upgrade is in large part a function of pressure from the company’s US customers including Apple, Advanced Micro Devices, and Nvidia.
5. Taiwan’s Foxconn is investing to diversify its supply chain away from China. Last week, the company announced about 60 million USD in new investment into a subsidiary in the Czech Republic; this week, Foxconn invested some 500 million USD in its Indian subsidiary. These moves come on the heels of a workers’ exodus and violent protests at Foxconn’s plant in central China that threw its operations into disarray.
6. It’s not just a semiconductor story: Global Trade Mag reports that rising costs to manufacture in China, supply chain shortages, and congested transportation networks are pushing US companies to consider nearshoring manufacturing – with Mexico becoming an increasingly popular choice. Numbers bear that out: US manufacturing orders in China have dropped 40 percent as the country grapples with COVID-19 lockdowns.
7. Plus, a new Xometry poll produced in concert with Forbes and Zogby finds that nearly two thirds (64%) of surveyed CEOs say they are currently reshoring or nearshoring their operations or planning to.
(Photo by Pexabay/Pexels)
