Sunday, June 24, 2018
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The Trans-Pacific See-Saw
Jacob Fattal, Publisher

The United States and China, the world's two top economic and technological giants, continue their see-saw relationship, but with a big difference this year. Since Deng Xiaoping introduced sweeping market and economic reforms 30 years ago, China's GDP has grown at an astonishing rate, most markedly between 1990 and today. Lately, however, the country's business juggernaut has slowed its pace.

Jobs in the industrial sector, such as state-owned coal mines and steel factories, seem to be feeling the first squeeze. In coal and steel alone, the state has announced that it needs to reduce employment by a staggering 1.8 million jobs. In the electronics market, since the entire world depends on products from China, we are watching intently to see how the government handles its growth slowdown.

In the meantime, we continue to watch and encourage the phenomena of reshoring — returning manufacturing to the U.S. from offshore — and onshoring — domestic manufacturing startups that stay in the U.S. The sheen that once appeared on the surface of the economics of manufacturing in China has started to dull. This after 30 years of trans-Pacific manufacturing that has found American OEMs dealing with the myriad frustrations of manufacturing quality or lack thereof, difficulty in communicating with the contract manufacturers on the opposite of the globe, the cost in time and money of shuttling engineers back and forth across the Pacific, the insufferably slow transport time on containerships, loss of intellectual property, and now the rising cost of once cheap Chinese labor. But many companies are so deeply enmeshed in their Chinese manufacturing — Apple comes immediately to mind — that it seems unlikely that they will ever pull out of the Far East.

Yet China still holds special allure for many U.S. and European companies. This issue of U.S.Tech will appear at NEPCON China just as it has for many years. This is a resounding testament to the ongoing interconnection and globalization of the world's electronics manufacturing industry. The U.S. has been adding jobs at an invigorating pace, even as China hits a plateau in its industrial sector. For better or for worse, our markets are incredibly intertwined, and what affects China, affects all of us.  

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