Decoupling, De-risking, and the Great U.S.-China Disconnect, with Supply Chain Expert Cameron Johnson
Sinica Podcast
Deep Dive
What are the key components of a supply chain ecosystem?
A supply chain ecosystem consists of five key components: government support, educational apparatus and talent, raw materials and processing capabilities, technology, and advanced infrastructure.
Why is it difficult to replicate a supply chain ecosystem like Foxconn's in the U.S.?
Replicating a supply chain ecosystem like Foxconn's requires a cluster of interconnected components, including skilled labor, parts suppliers, and infrastructure, which are not readily available in the U.S. in the same way they are in China.
What were the major factors driving the U.S. to become more conscious of supply chain risks with China?
The major factors include job losses, national security concerns, political issues, the trade deficit, and perceived anti-competitive trade practices by China. These concerns intensified during the Trump administration and continued through the Biden years.
How did the U.S. fare in rebuilding PPE manufacturing capacity during the pandemic?
The U.S. had limited success in rebuilding PPE manufacturing capacity. Despite efforts to encourage local production, many companies faced a lack of demand and government support, leading to bankruptcies and a continued reliance on Chinese imports.
What challenges are the U.S. facing in rebuilding its semiconductor manufacturing capabilities?
The U.S. faces challenges in demand, infrastructure, and ecosystem support. While TSMC is making progress, the broader ecosystem lacks the integrated focus seen in China, where the entire apparatus is aligned towards semiconductor self-sufficiency.
What is the significance of China's EV supply chain ecosystem?
China's EV supply chain ecosystem is highly integrated, with companies like BYD controlling every aspect from battery production to assembly. Local governments also support the ecosystem with infrastructure and preferential policies, making it a global leader in EV manufacturing.
How has de-risking and decoupling affected U.S.-China trade relations?
De-risking and decoupling have led to a shift in supply chains, with many moving to Southeast Asia and Mexico. However, this has not reduced Chinese influence, as Chinese companies and suppliers remain integral to these new ecosystems.
What advice would Cameron Johnson give to the next U.S. administration on dealing with China?
Johnson would advise the next administration to focus on education, increasing student exchanges, and leveraging existing Chinese supply chains rather than trying to rebuild them from scratch. He also emphasizes the need to recognize China's capabilities and avoid underestimating its technological advancements.
Shownotes Transcript