Group 1 - The research commissioned by the Hong Kong Trade Development Council highlights the impact of geopolitical tensions, evolving trade policies, environmental pressures, and technological advancements on supply chain reforms, significantly affecting the global economy [1] - Companies are actively adjusting their operational models, emphasizing both resilience and cost control, while redefining Asia's role in the new supply chain landscape [1] - Sean Randolph from the Bay Area Council Economic Institute notes that global companies are accelerating strategies such as reshoring, nearshoring, and establishing backup supply routes, leading to regionalization of supply chains [1] Group 2 - The latest US-China trade agreement indicates that from November 10, 2025, to November 10, 2026, Chinese exports to the US will face a 20% tariff, which positions Chinese suppliers competitively against Southeast Asian counterparts [2] - Mainland companies are proactively enhancing supply chain diversification, with Hong Kong emerging as a key supply chain management hub due to regional economic integration and new supply chain networks [2] - The research shows that Hong Kong plays a dual role as a super connector and value-added entity, crucial for mainland companies expanding overseas and for global firms entering the Chinese market [2]

Core Insights - The U.S. imports from China have significantly declined, with China dropping to the third position in U.S. imports, behind Mexico and Canada, due to ongoing trade tensions and tariffs [2][4][11] - The trade war initiated in 2018 has led to a 17.9% decrease in Chinese exports to the U.S., with the share of Chinese imports in total U.S. imports falling from 22% in 2017 to 16% in 2024 [4][11] - Mexico's imports to the U.S. have increased, driven by automotive parts and electronics, with a 6% rise in 2024, while Canadian imports remain stable, primarily in energy and raw materials [5][9] U.S. Import Dynamics - In 2024, the U.S. imported $50.585 billion from Mexico and $42.121 billion from Canada, while imports from China totaled $46.262 billion [2] - The first half of 2024 saw China’s imports lagging behind Mexico and Canada, with figures of $168.6 billion for China compared to $195 billion for Mexico and $176 billion for Canada [2] Trade War Impact - The trade war has resulted in a significant shift in supply chains, with U.S. companies seeking alternatives to Chinese suppliers, leading to a rise in imports from neighboring countries [4][11] - The "China +1" strategy has emerged, where U.S. companies source components from Mexico, effectively bypassing tariffs on Chinese goods [7] Sector-Specific Trends - Mexico's rise in U.S. imports is attributed to U.S. automakers relocating production to Mexico, with a notable increase in Chinese exports to Mexico by over 20% in 2024 [7] - Canada remains a stable trade partner, supplying 63% of U.S. imported crude oil, with total trade exceeding $80 billion [9] China's Export Challenges - China's exports to the U.S. fell by 8.3% in the first half of 2024, with a more severe drop of 12.4% in dollar terms, reflecting broader economic challenges and reduced demand from developed countries [11][13] - The overall export growth rate for China has slowed to around 5%, significantly below expectations, as U.S. companies prefer sourcing from countries like Vietnam and India [11][17] Strategic Shifts - In response to declining exports, China is diversifying its trade relationships, with record trade volumes with Russia and increased exports to Brazil and African nations [13][17] - High-tech exports from China are on the rise, with a focus on electric vehicles and self-developed technologies, indicating a shift from low-end manufacturing to innovation [17] Long-term Implications - The changes in trade dynamics present a mixed outlook for the U.S., with increased supply chain resilience but higher costs leading to inflationary pressures [15] - For China, the trade challenges are prompting a strategic pivot towards high-value exports and technological advancement, moving away from reliance on low-end manufacturing [17]

Core Insights - Despite the U.S. government's tariffs and push for supply chain relocation, most American companies in China continue to deepen their market presence, indicating that the trade war has not triggered a large-scale corporate retreat from China [1][2] - The report highlights that 48% of surveyed American companies advocate for the complete removal of tariffs and non-tariff barriers against Chinese goods, reflecting the significant uncertainty foreign firms face due to fluctuations in bilateral trade relations [1][2] Group 1: Market Dynamics - The resilience and comprehensive advantages of the Chinese economy create a strong attraction for global capital, supported by a large population and an expanding middle-income group that drives consumption upgrades [1][3] - China's complete industrial chain, developed infrastructure, and abundant human resources enable companies to achieve seamless integration from R&D to market at higher efficiency and lower costs [1][3] Group 2: Business Environment - Continuous reforms and opening-up measures in China have improved the business environment, with 71% of surveyed companies expecting to achieve profitability in 2024 [2] - 48% of companies perceive a significant improvement in the transparency of China's regulatory environment, with a 13 percentage point increase from the previous year [2] Group 3: U.S. Corporate Sentiment - U.S. companies are increasingly questioning the effectiveness of tariff policies, recognizing that the costs are ultimately borne by American businesses and consumers, which undermines their product competitiveness [2][3] - The automotive sector is projected to incur significant losses due to tariffs, with an estimated $2.25 billion loss in Q2 2025 and an annual loss of $7 billion [2] Group 4: Global Supply Chain - The U.S. push for "manufacturing return" policies has had limited success, as modern manufacturing relies on specialized networks and ecosystems that cannot simply be replicated by relocating production [3] - The consensus is growing that no other economy can replace China's role in the foreseeable future, as China is not only the "world's factory" but also a key market and global innovation center [3] Group 5: Economic Globalization - Attempts to alter the direction of economic globalization through protectionism are ultimately futile, as China's commitment to market openness and cooperative development continues to strengthen [4]

Core Viewpoint - The efforts by the Trump administration to encourage American companies to leave China have largely backfired, with many choosing to remain in China due to the risks associated with shifting production [1][2]. Group 1: Company Decisions - Many American companies operating in China view staying put as the least risky option amid rising tariffs and uncertain future trade policies [1]. - Companies are currently facing a dilemma of paying tariffs while dealing with potential price increases for consumers [1]. - The "China +1" strategy has reportedly failed, leading to either market exits or closures for many mid-to-low-end American enterprises [3]. Group 2: Trade Relations and Tariffs - The U.S. government has pressured other countries to cut off the "transshipment" of Chinese products, imposing a 40% tariff on transshipped goods [2]. - The imposition of "reciprocal tariffs" by the Trump administration has negatively impacted alternative manufacturing centers like Vietnam, Cambodia, and Indonesia, bringing their tariff rates close to those of China [2]. - The uncertainty surrounding trade negotiations has led companies reliant on Chinese components to delay any decisions on relocating production [2].

Core Points - The U.S. government announced a 46% reciprocal tariff on Vietnam, which has raised concerns among Chinese businesses operating in Vietnam, although the implementation has been postponed for 90 days [1][4][12] - Vietnamese companies are actively seeking to diversify their supply chains and explore new trade partnerships, particularly with Europe and other developing countries, in response to the trade tensions [6][40] - The potential impact of the tariffs could significantly harm Vietnam's export-driven economy, as exports to the U.S. account for approximately 30% of Vietnam's total exports and 25% of its GDP [8][11][12] Group 1: Business Operations and Strategies - Chinese companies in Vietnam, such as those in the packaging industry, are currently not making drastic changes to their production plans despite the tariff announcement [4][16] - Companies are preparing for potential impacts by expediting shipments and negotiating with clients to mitigate losses [12][15][30] - The Vietnamese government is engaging in negotiations with the U.S. to reduce the proposed tariffs and has expressed willingness to lower tariffs on U.S. goods to zero [17][19][20] Group 2: Economic Impact and Trade Relations - The tariffs could lead to a 3.5% reduction in Vietnam's economic output by 2026 under optimistic scenarios, effectively halving the country's growth rate [12][21] - Vietnam's export economy, particularly in sectors like ceramics and agricultural products, is heavily reliant on the U.S. market, with some local industries facing increased tariffs on their exports [13][14][15] - The Vietnamese government is taking steps to strengthen its trade relationships with both the U.S. and China, aiming to maintain a balance in its foreign relations [40][41] Group 3: Investment Trends - Chinese investment in Vietnam has surged, with registered investments reaching $4.47 billion in 2023, a 77.6% increase from the previous year [22] - The focus of Chinese investments is shifting from traditional manufacturing to high-tech and renewable energy sectors, indicating a diversification of investment strategies [22][23] - The presence of Chinese companies in Vietnam is expected to continue growing, as they seek to mitigate risks associated with U.S.-China trade tensions [29][44]

Group 1 - China's response to the US's tariff increase is a significant and historic move, imposing a 34% tariff on all imports from the US, affecting approximately $162 billion in imports [1][4][7] - The rapid and substantial reaction from China indicates that it was well-prepared for this situation, with sufficient tools and measures in place to counteract US actions [3][11] - The US stock market experienced a dramatic decline, with major indices dropping over 5.5%, marking the largest single-day drop since 2000, resulting in a market value loss of nearly $6.5 trillion [4][5][6] Group 2 - The current geopolitical climate has shifted, with China feeling more confident and equipped compared to previous years, allowing for a stronger stance against US tariffs [7][21] - The imposition of tariffs by the US is seen as a broad attack on all trade partners, which could disrupt the global trade system and lead to increased protectionism [14][15][18] - The potential for a global trade war is rising, with warnings that similar situations in the past have escalated into armed conflicts [19][20] Group 3 - The impact of the tariffs is expected to be severe, particularly for companies reliant on exports to the US, with some facing effective tax rates as high as 81.5% on their products [32][34] - Companies are considering relocating production bases to mitigate the effects of the tariffs, indicating a significant shift in global supply chains [36][37] - The uncertainty created by these tariffs necessitates that businesses adopt flexible strategies and increase redundancy to navigate the challenging environment [35][37]