“Foreign companies have for years been shifting production away from China as relations between Washington and Beijing deteriorated. But now even Chinese players — from major manufacturers to small businesses — are finding reasons to set up shop in the U.S. Leo Chan, executive director of the Midwest USA Chinese Chamber of Commerce, helps companies establish or expand manufacturing activities in Ohio. He says he has more than a dozen projects in the pipeline, almost half of which manufacture parts for electric vehicles. The rest, he said, supply consumer goods and industrial products to U.S. clients. Chan mostly attributes the uptick to political tensions. Trade between the U.S. and China reached a record high $690.6 billion last year, according to the U.S. Bureau of Economic Analysis. The U.S. mainly imported smartphones, automatic digital processing machines, toys and games, with China increasing its imports of soybeans and other foods from the previous year. This came despite constant talks of decoupling from China.” “Washington has been increasingly cracking down on China’s tech sector, placing restrictions on where Chinese companies can buy land in the U.S., and putting TikTok’s operations under scrutiny over fears the app is feeding data to Beijing. Meanwhile, China has added U.S. defense companies Lockheed Martin and Raytheon Missiles & Defense to its ‘unreliable entities list,’ though it has also extended tariff exemptions. But Chinese companies still want to be closer to their customers. He said he welcomed six Chinese delegations last year compared with two in 2021. Some companies, he said, are very eager to set up shop immediately, touring existing facilities that they could turn into their own factories in a few months. John Ling, managing director of LinVest and a veteran broker for Chinese factories, shared a similar observation. ‘I have never seen anything like what I’m seeing now. A lot of Chinese companies have started looking in this direction,’ said Ling.” “A desire to be closer to customers and avoid geopolitical crossfire are not the only factors nudging Chinese manufacturers stateside. One is the unpredictability of government policy in China. Three years of mass lockdowns and other crippling restrictions were followed by a sudden and chaotic end to the policy late last year that left companies reeling. On top of that, Ling said manufacturing costs in China have gone up ‘tremendously’ while the number of business restrictions and regulations have also been rising. Washington has also implemented policies to protect certain industries, such as blocking some imports of solar panels from China. This means that if a company does not have a plant in the U.S., it has ‘zero chance to serve this market,’ according to Ling. Similar thinking is playing out in EV batteries, a segment where Chinese companies dominate. The recently enacted Inflation Reduction Act will funnel $369 billion into programs to battle climate change.”