“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. South Korean chipmaker SK Hynix may be finding itself caught in geopolitical crosshairs. Its chips were found inside Huawei’s new Mate 60 Pro smartphone, despite SK Hynix saying it had suspended business with the Chinese firm since US sanctions took force. Shares in SK Hynix slumped over 4% earlier in the month on fears of potential US penalties for undermining Washington’s sanctions. But those losses have since been erased.
2. Japanese medical equipment makers are looking to shift more high-end production to China. Beijing is pushing for more domestic production of medical equipment, and major hospitals’ procurement practices are increasingly prioritizing Chinese-made machines. “There will be more cases where we won’t even be able to participate in bidding if our products are still made in Japan,” the head of one Japanese medical equipment maker told Nikkei Asia.
3. Meanwhile, Japan is working on a strategy to counter economic coercion from China, Nikkei Asia reports. The effort will include collaborating with other countries and industries that have suffered from unilateral action from China—think Australia after it called for an investigation into Covid origins, and Taiwan for maintaining its independence. This comes after Japan’s creation in 2021 of a new cabinet-level position overseeing economic security. Tokyo’s newest minister of economic security is seen as a security hawk.
4. Western sanctions on Russia are boosting demand for China-made cars. And the Chinese automotive industry expects that demand bump to continue so long as sanctions are in force, according to Reuters’ reporting on comments made by an executive at the China Association of Auto Manufacturers.
5. A US Congressional delegation headed to Wall Street this week to make the case that America should curb investments in China. As the Wall Street Journal put it, “the outreach got a sometimes-cool reception.” Mike Gallagher, chairman of the House Select Committee on the Chinese Communist Party, diagnosed the reason for the snub: “They put on their golden blindfolds and chase a yield that never comes.”
6. Separately, the Select Committee on China issued its first ever subpoena last week, Politico reports. It is ordering a Chinese-owned lab in California to turn over documents and records. The lab, named Prestige Biotech and Universal Meditech Inc., produced Covid tests, and was shut down in March after authorities found numerous code violations.
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