Cooperation is the only way for the United States to ease the supply crisis

SHI YU / CHINA DAILY

The supply chain crisis that has hit the United States is expected to continue until 2022. The crisis has already resulted in the highest inflation in the United States in 30 years, which has exacerbated the supply chain problem. ‘supply.

The COVID-19 pandemic has dramatically reduced global production and disrupted supply chains. As a result, supply chains were overloaded when demand exploded with the normalization of economic activities.

The pandemic has eclipsed global supply and production, and the United States can hardly solve the problem of global supply without global cooperation. What has complicated America’s problems is the supply chain bottleneck caused by inadequate U.S. domestic policies and measures.

First, the United States did not react in time to the supply shortage because its economic system is more rigid than expected. The blockage in supply was such that at Long Beach, one of the busiest ports in the United States, container stacks dropped from two to four in October.

This prompted the Joe Biden administration to ask the ports of Los Angeles, another of the busiest ports in the United States, and Long Beach to operate 24/7 in October, then negotiated with companies. retail and logistics companies such as Walmart and FedEx to work longer and faster. to clear the cargo from the ports. Yet the ports of Los Angeles and Long Beach operated only 16 hours a day while most ports in Asia operate 24 hours a day.

No wonder congestion at US ports remains a problem, albeit on a smaller scale, due to the shortage of truck drivers and rising warehouse and logistics costs. Additionally, production is lagging behind as spare parts and accessories are stranded outside the United States due to the supply chain crisis.

Second, the interference of the US administration has undermined the efficiency of global supply chains. The United States is heavily dependent on economic globalization and has a key role to play in the international division of labor; it is also the largest final consumer market in the world.

The previous US administration encouraged relocation (the process of returning the production and manufacture of goods to a company’s home country) and industry localization. However, industry localization measures have not been able to proportionately boost productivity. Costs rose and, according to the Institute for Supply Management, US manufacturers had to wait up to 92 days in September for parts and raw materials due to supply congestion.

Third, American protectionism has hampered not only the world trading system, but also the interests of the United States. In particular, the former Donald Trump administration has repeatedly increased tariffs on Chinese products and imposed strict controls on the export of Chinese products and services.

Developed economies, for example, particularly the United States, have benefited from efficient, low-labor production bases overseas that produce a wide range of inexpensive but quality products. These production bases have also helped the United States control inflation and increase consumption.

The supply chain crisis, including port congestion, since the end of last year has delayed the delivery of raw materials and finished products. This led to a shortage of finished products in the market, forcing the prices of goods to rise sharply, which affected the lives of ordinary people. Rising inflation has also made festival celebrations like Thanksgiving more expensive. It is also likely to make Christmas celebrations much more expensive.

The United States can overcome the crisis in the supply chain by deepening its cooperation with other countries. And if it is sincere to restore global supply chains to their normal state and boost economic recovery as it claims, it should strengthen cooperation with global suppliers.

In particular, the United States should abandon its decoupling efforts and take the path of equitable cooperation and mutual respect, for what it encounters are the inevitable results of the international division of labor, not the effects of economic success of other countries, especially the success of China. .

US Trade Representative Katherine Tai said on October 4, “We need to take a new holistic and pragmatic approach in our relationship with China that can truly advance our strategic and economic goals, both short and long term.” .

If she thinks what she says, the United States must engage in personal reflection and reconsider its position in global supply chains and Sino-U.S. Trade, and strike a balance between economic resilience and efficiency.

The United States should also realize that a single country cannot localize the supply of goods and services, as this will lead to lower economic efficiency and inefficient allocation of resources, so it should follow the theory. comparative advantage and continue to cooperate with other countries, in order to maintain its competitiveness in the world market.

The author is an associate researcher at the Institute of American Studies, Chinese Academy of Social Sciences.

The opinions expressed here are those of the author and do not necessarily represent the views of China Daily and the China Daily website.

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