If you have not seen it yet, you will want to read the front-page Wall Street Journal article by
Anjani Trivedi, that was published earlier this week under the headline
"China to World: We Don't Need Your Factories Anymore." Between eye-catching data - like the figures in today's featured quote - and a focus on a few individual companies, Ms. Trivedi lays out the elements of a phenomenon that will change the way the world talks about China and about trade.
A company that features prominently in her story is GMM Nonstick Coatings (GMM) which makes, well, nonstick coatings, for "cookie sheets, frying pans, and grills." GMM's headquarters are in the United States, but it has significant operations in China. It is those China operations that Ms. Trivedi focuses on, particularly the shift in who is supplying the raw materials GMM needs to make those coatings. It used to be largely U.S. and European firms, but increasingly now GMM's suppliers are Chinese. Sharing figures from Ravin Gandhi, a GMM co-founder, Ms. Trivedi explains that "More than 70 percent of GMM's 200 vendors are now based locally [in China], compared with 40% five years ago."
Just an anecdote? Not really. Ms. Trivedi makes a convincing case that this is an enormous phenomenon affecting global trade flows and national trade balances. The U.S. trade deficit with China has been exacerbated by cuts in China's demand for U.S. imports, with an analogous development across the globe. "Exports to China," she writes, "which had risen nearly every year since 1990, fell 14% last year, the largest annual drop since the 1960s."