China responded to Nancy Pelosi's visit by holding live-fire exercises around Taiwan © Photo by Annabelle Chih/Getty Images
China responded to Nancy Pelosi's visit by holding live-fire exercises around Taiwan © Photo by Annabelle Chih/Getty Images

US calls for ‘friendshoring’ of supply chains in Asia

3 August 2022

The US is trying to form closer ties with Asian manufacturing hubs in what has widely been seen as a move to divert manufacturing away from China. 

US treasury secretary Janet Yellen called for closer trade cooperation among countries such as the US, Japan and South Korea after visiting a South Korean battery facility.

Yellen said “unreliable countries” were a threat to the smooth running of supply chains and said friendshoring would help control inflation.

“By working with key allies like Korea to develop stronger supply chains for key components like EV batteries or semiconductors, we can make both of our economies stronger and help ease the blockages that have led to higher prices and delays for American workers and businesses,” she said.

Yellen advocated limited networks to trade essential goods, bypassing the supply chain risks posed by sourcing from “unfriendly” countries.

She did not name China as an unfriendly country, but a US official recently said the US should try to avoid giving countries such as Russia and China – which were “threats to the global economic order” – “unwanted” geopolitical leverage.

“Recent shocks to the global economy have refocused global attention on the importance of economic resilience and addressing supply chain vulnerabilities,” Yellen said. 

“Working with allies and partners through ‘friendshoring’ is an important element of strengthening economic resilience while sustaining the dynamism and productivity growth that comes with economic integration.”

Yellen added friendshoring was about “deepening relationships and diversifying our supply chains with a greater number of trusted trading partners to lower risks for our economy and theirs”.

On a trip to Taiwan, US House of Representatives speaker Nancy Pelosi upped the rhetoric by committing to defend the island state in case of a Chinese invasion.

She said: “It’s really important for the message to be clear. The US is committed to the security of Taiwan. It’s about our shared values of democracy and freedom and how Taiwan has been an example to the world.” 

China responded to her visit by holding multiple live-fire exercises around Taiwan – which the island said amounted to an illegal blockade.

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