“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. The latest report from the Reshoring Initiative shows reshoring and FDI manufacturing job announcements continuing to outpace recent records, adding 101,500 jobs in Q1 2023, driven in large part by geopolitical tension and efforts to shore up dependence on an unreliable China.
2. Apple announced a new multibillion-dollar deal with Broadcom to develop 5G radio frequency components in the US. Tim Cook called this a commitment to the “innovative spirit of American manufacturing.” Plus: Apple published its latest supplier list, which shows a readjustment, if a gradual one, away from China – and toward India.
3. South Korea’s Hyundai and LG Energy will invest 4.3 billion USD to produce electric car batteries in Bryan County, Georgia to comply with the Inflation Reduction Act. The plant will have an annual capacity of 30 GWh, enough to power 300,000 electric vehicles.
4. Scott Paul of the Alliance for American Manufacturing argues in the Pittsburgh Post-Gazette that “the federal bureaucracy helps companies flout buy American laws,” with waivers, loose language, and loopholes – and that the regulations need to be tightened.
5. From The Information: “Silicon Valley venture capitalists face pressure to divest from China.” As tensions between the US and China rise, and pressure from investors grow, firms that once staked their reputations on China are seeking to distance themselves from China’s tech scene.
6. China’s benchmark stock index erased all its gains for the year, pushed down by a weaker RMB, developers’ challenges, and concerns about growth and geopolitics. The biggest decliners are the energy and financial sectors; by contrast, other benchmarks in the region are killing it.
7. Morgan Stanley is letting go of at least six managing directors, including some key China bankers, as part of broader job cuts in Asia where dealmaking has been stymied by growing China-US tensions and tepid economic growth.
8. Beijing banned major Chinese companies from buying from Micron Technology, the largest memory-chip maker in the United States. China cited “security risks.” Beijing also summoned the ambassador of Japan, which hosted the G07 summit, to complain about what China described as a “bloc confrontation and Cold War mentality.” And: The US and its Five Eyes allies announced that Chinese hackers are targeting critical infrastructure in parts of the US and Guam using a novel, difficult-to-detect method that further undermines relations between the US and the West.
9. Chinese firms are building new factories overseas – because Western buyers don’t want supply chains or products tied to China. “We wouldn’t have had to build a new factory in Vietnam if we were only considering production capacity. But from a geopolitical point of view, I have to have it in Vietnam.”
(Photo by Pexabay/Pexels)