Reference News Network August 14 report: The UK's Financial Times website published an article titled "Strategic Interdependence is Reshaping the Global Economy; Cost and Efficiency Alone Are Not Enough to Drive U.S.-China Trade Relations" on August 12. The author is John Waldron, President of Goldman Sachs in the United States. The following is a compilation:
In recent months, U.S.-China trade tensions have eased somewhat. However, through conversations with business leaders and government officials from both countries, I have become increasingly clear that the economic relationship between the two countries has undergone fundamental changes. Geopolitical factors, security considerations, and supply chain resilience are now profoundly influencing economic decisions, just as cost and efficiency once did.
Globalization has not disappeared, and comparative advantage will continue to play a significant role in shaping trade patterns. After decades of investment, substantive decoupling is unrealistic. However, relying solely on low-cost production, just-in-time inventory, and seamless direct supply chains is no longer sufficient to drive trade relations.
Business leaders now weigh these advantages against issues that were hardly noticed a decade ago: What is the impact on national security? Are we exposing our operational platforms too much to cyber risks? How flexible are we in dealing with unforeseen geopolitical tensions?
In practice, this means that American companies now need to be more selective when investing in China than ever before. The relationship between the two countries is evolving into a clear strategic interdependence.
The next stage of globalization is more complex and challenging. Multinational companies that previously focused on efficiency are now shifting their strategic focus to resilience and diversification. Companies are increasingly placing security considerations above cost considerations. Inventory levels are increasing, efficiency is decreasing. Costs are higher, and geopolitical scrutiny is stricter.
Although the current focus is mainly on trade, capital flows are also becoming more dispersed. Western investors are reducing investments, especially in sensitive areas such as technology, primarily to hedge against geopolitical risks.
At the same time, China's domestic economy is also developing. It is rapidly advancing in advanced manufacturing, and it is clearly committed to consolidating its position as a global technology leader.
Doing business in China today means balancing many structural complexities that were not previously factors for companies.
Companies are investing in flexibility: diversifying locations, building local compliance strategies, etc.
This is a world of strategic interdependence. The focus is not on cutting global connections, but rather redefining them around new variables. I have found that successful companies are those that have more refined information analysis capabilities, more comprehensive functions, and a deep understanding of local conditions.
The U.S.-China relationship remains the most important relationship of our era. Businesses need to accept complexity and adapt to this new situation. (Translation/ Zheng Guoyi)
Original article: https://www.toutiao.com/article/7538384128471794230/
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