Russian Economist: Global Companies Plan to Leave China

Russian economist Dmitry Migunov revealed, in "Izvestia",, a Russian wide-circulated newspaper, how realistic the withdrawal of major international companies from China.

Migunov added that those giant companies would move to work in other countries, stressing that the interdependence between the US and China economies has been continuously eroding with the intensification of the trade war.

Dozens of companies announced their intention to transfer their production from China to other countries, mainly to South and East Asia. It should be noted that such a transfer has been brewing for a long time, but the trade war between China and the United States has accelerated the process.

The main factor is the steady rise in wages in Chinese factories and the standard of living.

Of course, so far the incomes of workers in China are far from the Americans, Japanese and Western Europeans, but they are in question compared to Eastern Europe, and significantly higher than in most countries in Latin America.

Thus, global companies today have to search for alternatives to reduce the wage burden. Nevertheless, it is clearly premature to say that China, as the world's hinged industrial base, is doomed. This is because transferring production even for modern "semi-nomadic" companies is not easy, it is painful.

In addition, in modern conditions, the People's Republic of China has several advantages.

First, over the past decades, China has achieved and improved production culture, through the accumulation of experience of workers and managers.

The second major trump card for China is the technological chains that have been built in the country over decades with the active participation of American, European and Asian companies.

Third, China, the second largest economy in the world with a giant domestic market still has good potential for further growth.

Consequently, what could have been done relatively easily in the year 2000 will be very difficult in the year 2020.

Although some foreign companies will scale down their business in China due to political pressure, it is not possible to imagine their full exit in the foreseeable future.

This means that there will be an element of interconnection between the world's largest economies, despite officials' threatening statements.

Days earlier, China responded to Trump's threat again to cut ties with it, by asserting that any steps by Washington in this way would not be in the interests of the United States.

Chinese Foreign Ministry spokesman said during a press briefing that the unilateral disengagement between the two countries and changing economic laws in the United States is neither a realistic nor a wise choice.

The spokesman warned that such a move by the Trump administration will not solve the problems existing in the United States, but rather harm the Americans.

This came in response to Trump's announcement that the option of "fully disengaging" with Beijing is still on the table in his administration, against the backdrop of allegations made in the new book of the former National Security Adviser at the White House, John Bolton, that Trump asked China to help him win.

The already strained relations between Washington and Beijing have witnessed a significant escalation in the past months, as the Trump administration directed sharp criticism to the Chinese authorities, blaming it for the loss of control of the novel Coronavirus and covering up the pandemic in its early stages.

According to Washington this led to the spread of the deadly virus in the world is widespread.

Washington also repeatedly criticized the Chinese governments policies in various fields, mainly human rights, against the backdrop of the Beijing governments plans to adopt new national security legislation.

Trump from time to time renewed his threats to cut ties with Beijing, stressing that his country would maintain "the option of a full disengagement policy with China.