Keeping score in the ongoing US-China trade war is difficult, but Larry Fink thinks Beijing is suffering at least on one front: A number of important companies are moving their supply chains out of Chinese territory.
Nobody knows where the trade war will go, how long it will last, or what its ultimate impact will be. BlackRock CEO Fink, though, says that a lot of companies aren’t waiting to find out, so they are beating feet to nearby places.
“The trend in China continues to be downward,” the head of the world’s largest asset manager said during a TV interview. “China knows they need to find ways to stimulate more of their domestic economy.”
Indeed, China just announced that its latest economic growth had slowed a bit, to 6.2% in the second quarter, a near three-decade low. That’s down from 6.4% in the previous quarter.
“We’re hearing from CEOs that more and more supply chains are moving out of China right now,” Fink told CNBC Friday. “People are not waiting, companies are not waiting to see what the outcome is.”
Some 50 multinationals are shifting production out of China to Vietnam and other Southeast Asian nations. Malaysia, with its expertise in chip making, should benefit. The departees include Apple, Dell, and Nintendo. Others, such as HP, Microsoft, and Amazon, are eyeing the exit.
President Donald Trump has imposed 25% tariffs on $200 billion worth of Chinese imports to the US, and holds out the threat of placing additional levies on $325 billion more.
The trade conflict has been going on for almost a year. Right now, there’s another temporary truce as both sides eye restarting negotiations. Treasury Secretary Steven Mnuchin, White House trade adviser Peter Navarro, and US Trade Representative Robert Lighthizer intend to travel to Beijing soon.
China has been looking to move away from its role as an export powerhouse and gain a more consumer-focused environment. That is still a work in progress, however. “I think long term,” Fink said, “China knows they need to find ways to stimulate more of their domestic economy.”