March 18, 2021
The Trump Administration and China had what only could be summarized as a…bumpy…relationship. In the aftermath of President Biden’s victory, it was natural to wonder what tact the Biden Administration would take on the world’s other economic superpower.
The recent executive order demanding review of key US supply chains and the President’s warning of “repercussions” on China for human rights abuses indicate at least some of above referenced “bumpy” relationship may continue.
Supply Chain Executive Order – Reduce Reliance on Foreign Suppliers: Issued on February 24, the Executive Order on America’s Supply Chains requires a 100-day review of global produces and shippers for computer chips, EV-batteries, pharmaceuticals, and other rare minerals used in phones and other electronics. Additionally, the order will examine six individual sectors: defense, public health, information technology, transportation, energy, and food production.
The intent of the review is to determine whether there is an over reliance on foreign suppliers. Although China is not expressly mentioned, its basically all over the EO. Also unclear is how exactly problems with the supply chain would be fixed if they are discovered.
Multi-national companies which participate in the sectors covered by the executive order should be prepared. While the White House has not detailed any specific remedies, a source told Politico that, nothing is off the table to address identified weak spots.
“Repercussions” for China for Xinjiang Human Rights Abuses: President Biden spoke out strongly at a CNN town hall against China’s accused human rights violations in the Xinjiang region of the country, noting “There will be repercussions for China.”
The strong tone from President Biden, where he also pledged to “reassert the [US’s] role as spokespersons for human rights,” indicate he may continue some of the hardline rhetoric on China used by the previous administration.Multinational companies are to some extent likely already used to managing the volatility resulting from the rocky US-China relationship. For the interim time, companies should continue to expect much of the same.