Supply Lines: Biden’s repair work

Supply Lines
Bloomberg

When President Donald Trump was elected in 2016 and took his "America First" campaign into government, the world was replete with pundits declaring the end of the western-led order and globalization. Four years on, there are still plenty of thinkers who see reasons for gloom. But the reality is also that the liberal order, to use its other name, looks remarkably resilient, albeit a little wounded.

Joe Biden's job, as we write in the new issue of Bloomberg Businessweek, is to repair the damage. He's the genial grandfather sent in to clean up the mess. But if you think he's going to be building it back to the way it was, you should think again.

As Jake Sullivan, one of Biden's closest policy advisers wrote in a 2018 Foreign Affairs article titled "The World After Trump," just because an order has proved its durability doesn't mean it doesn't need some bigger overhauls. "The system's resilience should not be the end to a comforting story,'' Sullivan writes. "It should be the starting point of a badly needed effort to reinforce and update the international order and address the real threats to its long-term viability."

What exactly that means remains to be seen. But here are three things to chew on, based on what Biden advisers told us:

  • Dealing with China and its economic rise will color everything. As veteran trade warrior Wendy Cutler, who now leads the Asia Society Policy Institute, told us: "We're going to be looking more and more through the lens of China as we pursue trade policy. When we choose negotiating partners, when we choose issues that we want to focus on, when we think of restrictions, it is all going to be through the lens of China."
  • Manufacturing isn't going away as an American obsession. Biden made that clear during the campaign, and his trade-transition team named this week is replete with people with a background in manufacturing or the labor movement. Jason Miller, the head of the team, once looked after manufacturing policy on the National Economic Council during the Obama administration, at a time when it had set a goal of doubling U.S. manufacturing exports.
  • America's allies will need to be patient. Trade is not going to be anywhere near the top priority of a Biden administration. A pandemic and U.S. economy with 10 million fewer people working than at the start of the year will be the focus. It may also be April or May or longer before Biden has a trade team fully in place.

Shawn Donnan and Jenny Leonard in Washington

Charted Territory

Confrontations in trade, technology and geopolitics are threatening to spill over into the financial system, with the U.S. pondering sanctions against Chinese banks and China weighing the possibility of selling down its U.S. Treasury holdings. Tensions might be high, but Bloomberg Economics' mapping of China's financial links with the rest of the world suggests the chances of decoupling are low.

Today's Must Reads

  • Big alliance | Fifteen Asia-Pacific nations including China aim to clinch the world's largest free-trade agreement this weekend, the culmination of Beijing's decade-long quest for greater economic integration with a region that encompasses nearly a third of the global gross domestic product.
  • The long game | By 2035, China will have overtaken the U.S. to become the world's biggest economy and perhaps its most powerful political actor, according to new projections from Bloomberg Economics.
  • Systems failure | Logistics chiefs warned trade between Great Britain and Northern Ireland is at risk of disruption at year end because key IT systems aren't ready as Brexit talks drag on. Meanwhile, the U.K. government is intensifying talks with industry as it seeks to avert year-end disruptions.
  • Stalled shipments | At least 20 giant bulk carriers are anchored off the Chinese port of Jingtang and unable to offload millions of tons of Australian coal, the latest casualty of the growing diplomatic row between Canberra and Beijing.
  • Living in hope | Prime Minister Justin Trudeau said the incoming Biden administration offers Canada the chance of a return to a more harmonious relationship with its southern neighbor and largest trading partner.
  • Nigeria approves | Africa's largest economy will commit to a continent-wide free-trade pact that could become the world's biggest market, adding legitimacy to the deal months before first commerce is set to begin.
  • Crop curbs coming | Russia laid out plans to limit grain exports in the final third of the season, a move to safeguard food supplies but which will cover a shorter period than expected.

Save the Date

Next week, the Bloomberg New Economy will convene business and world leaders to address the world's most significant changes and challenges from green energy solutions to a post-pandemic recovery.

Register now to join our global town hall, Nov. 16-19: neweconomyforum.com

On the Bloomberg Terminal

  • Xi's nightmare | Bloomberg Economics' estimates suggest a bilateral breakdown between China and the U.S. — ending the flow of trade and technology that boosts growth potential — would lower China's GDP expansion to 3.5% in 2030, down from a forecast of 4.5% if relations remain broadly unchanged.
  • Big questions | Bloomberg Economics explores critical questions facing the incoming U.S. administration, like: how to reorient relations with China and what happens to growth in the two biggest economies if decoupling continues.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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