Will "Friendly Outsourcing" by the US Treasury Secretary "Seduce" Foreign Companies Away from China?

On July 19, US Treasury Secretary Janet Yellen visited Seoul, South Korea, on the last leg of her Asia tour. Yellen, speaking after visiting South Korean tech giant LG, called on South Korea and other "trusted allies" to strengthen trade ties with the United States, advocating less reliance on Chinese supply chains.

Direct News: The US Treasury Secretary threw out "friendly outsourcing" in South Korea and claimed to reduce dependence on Chinese resources, markets, and industrial chains. Will foreign companies withdraw from China?

Special commentator Chen Bing: Yellen's "friendship outsourcing" is often seen as encouraging foreign companies to move out of China. The 13 countries in the Asia-Pacific region that are part of the recently announced "Indo-Pacific Economic Framework," including 7 Southeast Asian nations, are considered to be the United States' "Friendly Shore" from the standpoint of its "Indo-Pacific Strategy."

The "Indo-Pacific Economic Framework" aims to try to transfer some industries in China, especially those controlled by foreign companies, to other countries. However, the practice after the Sino-US trade war has proved that some companies that have moved out have returned to China and the Guangdong-Hong Kong-Macao Greater Bay Area. Why is it because other countries and regions do not have a complete supply chain and corresponding professional support?

The United States now attaches political color to the outsourcing industry, not according to market rules, and it is bound to miscalculate. If we look at the purpose of Yellen's trip to Asia, we know that it is just a way to threaten China. She traveled to Asia to persuade Asian countries to support the United States and try to set a maximum price for Russian oil. With the military conflict between Russia and Ukraine and sanctions against Russia by Europe and the United States, Asia has replaced Europe as the largest buyer of Russian oil. Without the support of China and India, it would not be possible to cap the price of Russian oil. This price-limiting policy was first proposed by Yellen, and now she wants to overlord it.

However, many American economists have predicted that setting a price for Russian oil is an impossible task that does not conform to market rules. China and other Asian countries have not responded, and suggested that persuading peace, promoting talks, and ending the war are the only cures. So the United States used "friendship outsourcing" to coerce China. At the same time, it also used "friendship outsourcing" to make a big pie for its Asian allies, urging them to support the US price limit policy. That is to say, as long as Asian countries support US policies, they will benefit from industrial outsourcing and industrial transfer in the future.

Of course, Asian countries also know that the "Indo-Pacific Economic Framework" is not a trade agreement, and there is no preferential treatment for market access. Even if some industries are transferred from China to the country, they have to rely on their own marketing and there is no guarantee that they will enter the US market. It can be said that "friendship" does not exist, and neither does "outsourcing," but it is just empty talk of the United States threatening China. I'm sure that "Friendly Shore Outsourcing" will not lure foreign companies out of China. All kinds of companies ultimately decide their investment directions and industrial projects based on market laws, not the geopolitical mobilization of the United States.

Wang Yi spoke on the phone with the French President's foreign affairs adviser, hoping that France would play the role of a major country and promote the development of China-EU relations. Will China-EU relations improve now that the European economy is showing obvious signs of recession?

Special commentator Chen Bing: China-EU relations will be stable and friendly until the end of 2020. However, under the disruption of the Biden administration, Europe's attitude towards China has changed, linking human rights with the economy, and China-EU relations have begun to decline. Regarding the military conflict between Russia and Ukraine, China's more fair position has also made some European countries unhappy. Europe and the United States are unanimously opposed to Russia's aid to Ukraine. But now, Europe is experiencing a "double barbecue."  One is the barbecue in hot weather, and the other is the barbecue with energy shortages and soaring prices. Extreme economic sanctions imposed by the United States and Europe on Russia have started to devour the European economy, and even the public's need for air conditioning cannot be met due to high oil and natural gas prices and insufficient electricity generation.

The most urgent thing is that the European economy is facing a recession crisis. Some Europeans have begun to complain that Europe has been sacrificed by the United States, and have re-evaluated the Russian-Ukrainian war and are not very supportive. China has long pointed out that sanctions will not solve any problems, but will only make the situation more tense and complicated.

Europe is now in the throes of sanctions and other trauma. Therefore, it is still possible for China-EU relations to improve, as long as Europe abandons ideological prejudice and as long as European countries want to solve the economic difficulties they are facing. In addition, after Europe reduces its dependence on Russia for energy, it needs the same amount of energy supply, but the United States cannot guarantee it. What should we do? Convert to new energy sources, such as solar energy, wind energy, etc. China ranks among the top in the world in terms of new energy technology and materials, not only of high quality but also of strong supply capacity. If Europe wants to speed up the transition to new energy, it will inevitably need a lot of Chinese technology and products, which provides an opportunity for China-EU cooperation.

I think that it may take some time for European politicians to change their minds, but it is still the general trend for China and Europe to have good relations and jointly boost each other's economies.

Author: Chen Bing, special commentator for Shenzhen Satellite TV's "Live Hong Kong, Macao, and Taiwan"