Like a bad situationship that keeps dragging on, US companies want to break it off with China.
What happened: GoerTek, a major Apple supplier, invested millions into a new production plant in Vietnam and is weighing an Indian expansion as it looks to leave China. According to the company’s chairman, partners like Apple are not-so-subtly nudging them to jump ship.
Why it matters: Apple is more invested in China than perhaps any other Western company, so experts previously thought it would take years to move even a fraction of its production somewhere else. GoerTek’s move is the first sign that the shift may happen much quicker.
Why it’s happening: Tensions between China and the West were running high before the spy balloon mania, and now, the potential for policy headaches has only increased. Plus, last year’s Covid lockdowns highlighted the risks of supply chains that are over-reliant on China.
- And soon, China might not even present the benefit of the world’s largest labour force, as India is set to usurp the title of the most-populous nation any day now.
- US companies are feeling pretty meh towards China. One survey found China was a top priority for near-term investment plans for 45% of firms, down from 59% in 2019.
Yes, but: Reports of China’s death as the world’s factory floor may be premature. Chinese factory activity expanded at its fastest pace in over a decade last month. Even if China is “no longer viable” as the world’s factory, as some claim, it’s still currently open for business.