The Global Impact of China’s Consumer Class
Consumer chauvinism is developing in China and the United States
The coronavirus pandemic is raising distrust among consumers in China and the United States of each other’s goods as momentum for separation between the world’s two largest economies intensifies.
A recent survey conducted on Deutsche Bank’s dbDIG platform found that 41% of Americans will no longer buy goods «Made in China», and 35% of Chinese will avoid buying products «Made in USA».
While most consumers are not prepared to completely avoid each other’s products, the survey results point to a rise in commercial nationalism and a growing distaste for globalization as both economies emerge from the coronavirus crisis. Apjit Walia, analyst at Deutsche Bank.
American distrust of Chinese goods has increased thanks to comments from American officials, in particular the president Donald Trump, who blamed China for the pandemic and raised doubts about Beijing’s trustworthiness.
After the US elections in less than six months, analysts believe Trump will keep China at gunpoint to divert attention from how his administration is fighting the virus, and as a result damages the economy..
«The temper and emotions are tense in both groups, and politicians are well aware of this, which complicates the situation, since in the United States it is an election», – Valia said.
55% of Americans surveyed said they do not think China can be trusted to fulfill its commitments to buy American goods in the first phase of a trade deal signed in January..
China’s integration into global processes and multilateral trade since its accession to the World Trade Organization in 2001 has helped lift billions of its citizens out of poverty and help the country become the world’s second largest economy..
An abundance of cheap labor and world-class infrastructure made China «world factory», and American consumers have benefited from the supply of inexpensive goods made in China.
But rising domestic costs and a two-year trade war with the US began to erode China’s position in some global value chains even before the coronavirus pandemic, raising concerns about overconfidence in the country, especially with regard to the production of vital supplies of medical equipment, pharmaceuticals and technology..
Businesses are facing pressure from shareholders, regulators and governments to localize supply chains and make them more resilient to future shocks, analysts say.
«China rose surprisingly quickly, which caused concern in Western countries as their position in the global economy deteriorated as a result.», – said Marie Owens Thomsen (Marie Owens Thomsen), Head of Investment Intelligence Indosuez Wealth Management.
In the past decade, China has become a less reliable engine of global growth as its growth pattern has shifted towards domestic consumer spending. This, in turn, sparked a nationalist push to support national brands..
Sulmaan Khan, Professor of International History and Chinese International Relations at the Fletcher School at Tufts University, said China’s assertive diplomacy to defend national security has heightened mistrust of his business.
«You really want a strong defense budget. But you don’t want to spend so much that it will ruin the rest of the economy, and then the whole country simply does not function properly.», – he said.
Khan added that China’s support for nationalist sentiment could also be counterproductive..
«Nationalism is very dangerous because you cannot tell people when to stop if these thoughts are already in their heads.», – he said.
«The problem is, you usually don’t know when the backlash will occur until it’s too late.», – said Khan.