China remains entrenched in US supply chains, even though US companies are doing their best to significantly reduce direct imports from the country. Bloomberg reported this on the basis of documents presented by the US Federal Reserve at the annual Fed symposium in Jackson Hole, USA.
The paper’s authors, Laura Alfaro of Harvard Business School and Davin Chor of Dartmouth Business School, argue that the United States will import fewer goods directly from China between 2017 and 2022 and focus more on Vietnam and Mexico. market, but also note that China exports more to both Vietnam and Mexico. In addition, China is investing more in these countries.
With this, China appears to have found a way to remain an integral part of the US economy. “The indirect supply chain between the United States and China will remain intact,” Alfaro and Chor said. All thanks to China’s economic relations with Vietnam and Mexico. Even as the United States shifts its sights to Vietnam and Mexico, it remains de facto tied to and dependent on China through third parties.
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Yesterday, New York stock markets ended with gains. Investors reacted with relief to the long-awaited speech of Federal Reserve Chairman Jerome Powell. In that speech, he stressed that inflation remains very high and that the Fed will raise interest rates if necessary.
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