Dr. Yossi Sheffi of MIT says we shouldn't expect major changes in trade policy with China from a Biden administration, but that collaborating with friendly countries could be more effective than Trump's "go it alone" approach.

Supply Chain Digest Says...   "Anti-China sentiment might be the only thing Democrats and Republicans have in common," Sheffi writes.     What do you say?   Click here to send us your comments       Click here to see reader feedback

Writing in the Wall Street Journal a few days before the election, Sheffi notes that despite all the tariffs, Chinese exports into the US are only down modestly, falling only 3.6% in the first eight months of 2020.

But that number is a bit deceiving, as a many billions of dollars in those US imports were related to combatting the virus pandemic, such as personal protection equipment, compensating for a fall in China's US exports in some product areas related to the tariffs.

One thing that hasn't happened is a mass exodus of US manufacturers away from China sourcing.

Sheffi quotes Secretary of Commerce Wilbur Ross saying in late January, as China was gripped by the coronavirus, that "it does give business yet another thing to consider when they go through their review of their supply chain…So, I think it will help to accelerate the return of jobs to North America."

That hasn't happen, though in recent years makers of labor intensive goods have left China for other low cost countries due to rising Chinese wages.

Sheffi says there are many reasons not to leave China, starting access to its huge market. China has the second-largest economy in the world and consumes about 20% of the world's output.

What's more, "Companies in industries such as the technology and automotive sectors are unlikely to abandon their investments in sophisticated and highly integrated supply based in China any time soon," Sheffi said.

He cites an American Chamber of Commerce survey in March 2020 that found that more than 70% of the companies in China had no plans to relocate manufacturing, their supply chains or sourcing out of China because of the pandemic.

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Will Biden take a more conciliatory approach to trade relations with China, compared to Trump's aggressive policies and rhetoric? Maybe, but more in style than substance, Sheffi says.

"Anti-China sentiment might be the only thing Democrats and Republicans have in common," Sheffi writes. "China may have reason to fear a Biden administration more than the return of their Republican antagonist."

He says a President Biden could work to build a coalition involving the US, the European Union, Japan and other large trading blocs.

"Instead of going it alone - the Achilles heel of the Trump interventions - Mr. Biden could wield the combined buying power of these allies to pressure China into making meaningful changes in sensitive areas such as international property theft," Sheffi notes.

Such changes could profoundly affect Chinese manufacturing and supply chains, Sheffi concludes.

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