Core Viewpoint - The relationship between China and the United States is evolving into a clear strategic interdependence, reshaping the global economy and requiring companies to embrace complexity and adapt to new dynamics [1][5][9]. Group 1: Changes in Economic Relations - Recent months have seen a de-escalation in U.S.-China trade tensions, but fundamental changes in economic relations are evident, with geopolitical, security, and supply chain resilience now influencing economic decisions as profoundly as cost and efficiency did in the past [5]. - The share of Chinese imports in the U.S. has decreased from a historical high of 22% in 2017 to 13.4% in 2024, while Vietnam's share has doubled, and Mexico has become the largest trading partner of the U.S. [6]. - Foreign direct investment (FDI) inflows into China have dropped over 90% in the past four years, reaching a 30-year low, as Western investors reduce investments, particularly in sensitive sectors like technology [6][8]. Group 2: Strategic Shifts in Business Operations - Companies are now prioritizing resilience and diversification over efficiency, leading to increased spending on supply availability and security, resulting in deeper inventories and higher costs [5][6]. - The current focus on trade is accompanied by a fragmentation of capital flows, with a notable shift towards a "China for China" strategy among companies [6][8]. - Businesses operating in China must navigate structural complexities such as regulatory uncertainty, data localization requirements, national security reviews, and capital controls, necessitating a more cautious and strategic approach to capital deployment [8]. Group 3: Future Outlook and Recommendations - The Chinese economy is advancing in advanced manufacturing and is committed to solidifying its global technological leadership, yet foreign direct investment remains low [8]. - Chinese outbound investment to the U.S. has decreased by over 95% from its peak in 2016, with capital increasingly directed towards Southeast Asia, the Middle East, and Latin America [8]. - Successful companies will be those that possess refined intelligence, flexible business models, and a deep understanding of local conditions in this strategically interdependent world [8][9].