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CHINADAILY Editorial

Exploiting of pandemic to promote reshoring recklessly shortsighted: China Daily editorial

chinadaily.com.cn | Updated: 2020-04-13 20:31
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The top economic adviser to the White House Larry Kudlow has proposed that the US government cover the expenses of US companies relocating from China when responding to a media question on how the United States can end its reliance on manufacturing in China.

White House National Economic Council Director Larry Kudlow speaks during a "small business relief update" video conference call event with banking executives to discuss the US government's rescue program for businesses hurt by the coronavirus pandemic, in the Roosevelt Room at the White House in Washington, US, April 7, 2020. [Photo/Agencies]

Kudlow's advice is not feasible, as it underestimates the power of the invisible hand of the market and suggests that the debt-ridden federal government can single-handedly reset the supply chains that have been established over many years.

Its absurdity is familiar as it simply repackages, with presumably an intended incentive to reshore, the US administration's criticism of US companies investing in China, to which it falsely attributes many of the problems afflicting US manufacturing.

It does not take any special acuity to appreciate that such calls are politically driven and aimed at decoupling the Chinese and US economies as part of a wider agenda to contain China.

Yet it is technological advances that are now underpinning globalization in a system of complex supply chains and transnational research and development endeavors in which China is a key node.

There are good reasons why China has maintained its status as a global destination for foreign direct investment after cheap labor and resources were no longer its main advantages. It has complete industry chains, skilled workers, developed infrastructure, a constantly improving business environment and strong support for both basic and applied research.

As the first major economy that has proved its ability to put the pandemic under control at home, China has resumed production and is once again open for business. Were it not for the global division of labor, the world would be suffering even more during the pandemic.

As many developed countries, including the US, have yet to see the turning point in the pandemic from their social distancing and stay-at-home efforts to control the pandemic, China has offered their companies, particularly those producing masks, ventilators, medicines and other essential life and medical supplies, a safe production haven.

If all its production eggs had been put in the US basket, as Kudlow and other US politicians have called for, the US would be in even worse straits than it is now.

Instead of being set up as a new stage for the countries to lock horns again, the pandemic should provide them with motivation to maintain the positive momentum that was marked by the hard-won trade deal they signed in January.

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