China and the US, Intertwined Economically

Much has been made about the state of diplomatic relations between China and the U.S. in the wake of Donald Trump’s election to the presidency. The disputes over Taiwan may rage on, but the fact remains that the two consumer-driven juggernauts are dependent upon one another for markets, demand and economic livelihoods.

How intertwined? Reuters noted earlier this week that each of these countries remains the other’s largest export market, a codependency that has built up in the wake across several decades, since President Richard Nixon visited the country more than 40 years ago.

To illustrate the importance of China to some of the more marquee names across industries in the United States, Reuters stated that Caterpillar depends on China for as much as 20 percent of its top line, with a similar 20 percent tally accruing to auto giant General Motors’ bottom line last year (the total net income, globally, for the firm, as $9.7 billion that year). In terms of vehicle count, roughly a third of the nearly 10 million units GM sold last year went to Chinese customers.

Separately, Starbucks, in recent expansion plans, said that it would boost its store count by almost 50 percent, and with 2,500 stores in China, Howard Schultz, who founded the firm and is stepping down as chairman, stated that the country could eventually be a bigger market for Starbucks than the United States is at present. In another example of retail focus in the region, Walmart has more than 430 stores in China, with an intent to bolster its online presence in the country, while Macy’s is targeting $50 million in sales from China this year. In an online push of its own, Macy’s has a 65 percent stake in an online retailer, JV Fung Retailing Ltd., based in Hong Kong.