The State of U.S.-China Relations: H1 2022 Report

Key Takeaways

• U.S. and Chinese adults want improved bilateral relations. Adults on both sides of the Pacific forecast that bilateral tensions will escalate for the foreseeable future. But strong public interest in improving U.S.-China relations will help guard against the worst excesses of bilateral competition: a cold war characterized by a return to economic autarky, or a hot one marked by direct military conflict.
• Political developments in late 2022 will provide a nearterm opening for tariff relief, and companies should seize it. A majority of U.S. adults and a plurality of Chinese adults believe bilateral tariffs have contributed to rising prices, and sizable shares continue to buy fewer goods as a result. Amid historically elevated U.S. inflation and a wavering Chinese economy, Presidents Biden and Xi will face heightened political incentives to respond to these dynamics by scaling back tariffs ahead of the U.S. midterm elections and the Chinese Communist Party’s 20th National Congress, both in late 2022.
• Consumer appetite for “made in” goods is strong, but price hesitancy will limit market opportunities. Majorities of U.S. and Chinese consumers say they intentionally purchase “made in” goods sold in their respective countries at least some of the time and are willing to pay a premium for them. But among those willing to pay a premium, only around one-quarter say they would pay more than 10% extra.
• U.S. multinationals stand to gain more from reshoring stateside than their Chinese counterparts, while reshoring to China makes less sense for both. Higher shares of U.S. adults are willing to pay more for reshored goods produced by American multinationals than Chinese ones, and most U.S. consumers are unwilling to pay more for reshored goods produced by Chinese companies. In China, the share of consumers willing to pay more for reshored goods is smaller on average, and Chinese consumers exhibit similar price hesitancy.
• American multinationals’ responses to political pressures involving China go largely unnoticed by U.S. consumers. U.S. multinationals facing reputational risks stemming from their business operations in China can rest easy for the moment: U.S. consumers aren’t paying much attention and don’t especially care how companies respond.