We investigate whether public procurement plays a role in steering corporate America to restructure GVC to reduce China-related risk and enhance its resilience. First, by conducting DID analysis before and after 2018, we find that U.S. listed companies with supplier and customer ties to China are penalized by a lower frequency and value of federal government contracts granted. Second, utilizing the local projection approach, we detect a striking pattern of a decreasing dependence on Chinese suppliers and an increasing reliance on U.S. domestic suppliers by U.S. public-contractor listed companies. U.S. companies are, however, more tolerant of second-tier Chinese suppliers. Public-contractor firms that faced China-related GVC risk in the previous period, engaged in the upstream industries and are mature firms display a more salient delink with China and a pattern of reshoring. Our analysis does not detect significant patterns of nearshoring and ally-shoring for U.S. public-contractor listed firms.

scoco@ceibs.edu