Production centre: Workers at an electric minivan factory in Ningbo. Among the Group of 20 economies, most saw their trade dependence on China rise between 2017 and 2021. — Bloomberg
BEIJING: Global trade dependence on Asia, including China, remains stable, and the country will not lose its status as the world’s most important manufacturing hub, despite certain US moves that have been disrupting global industrial and supply chains, according to senior industry experts.
Their comments emerged after a report published at the Boao forum for Asia annual conference 2023 forum on Tuesday that global dependence on Asian trade in goods remained stable, and the trade dependence among Asian economies, including China, remained at a relatively high level.
The highest level of dependence – 21% – was found among Asean countries.
Japan and South Korea’s dependence on China was over 20%, and the dependence of the Asean and CPTPP countries on China was close to 20%, the report said, based on data till 2021.
The CPTPP refers to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free trade agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Among the Group of 20 economies, most saw their trade dependence on China rise between 2017 and 2021, with only the United States and France seeing a decline in their trade dependence on China, the report said.
“It is actually good for China that some labour-intensive industries would move away, as it would help the country’s industries to upgrade to a higher level,” said Yao Yang, dean of the National School of Development at Peking University.
Yao said China would not likely lose its status as the world’s largest manufacturing hub for at least 10 to 20 years.
“With some labour-intensive industries shifting to some Asean economies and developing countries, it is geopolitically beneficial for China as a whole, as these economies are more integrated into China’s manufacturing ecosystem.”
According to a report at the forum, Asia has a significant advantage in producing competitive products in global value chains.
Of the top 22 intermediate products from Asian factories in terms of export value, 21 have shown a significant rise in exports, with electronic component products, such as integrated circuits, growing the fastest, at a growth rate of up to 28.8% in 2021, the report said.China was still a dominant player in the trade of intermediate goods in Asia.
Among the 22 most traded intermediates, China led in 20 of them, it said.
Fabrizio Ferri, head of Asia-Pacific region of Fincantieri, one of the world’s largest shipbuilding groups, said China faced some difficulties like disruptions in industrial and supply chains.
“But China would still be a major production centre,” he said.
“If we have to move to South-East Asia, it is more because we want to get close to the market and our consumers there.”
However, Zhu Shihui, chairman of Green Thin Film Technology, an advanced material firm with its products widely applied in semiconductors, said many US-based clients (manufacturers) asked Green Thin to prepare a “plan B”, due to geopolitical reasons.
“We are expected to establish a wholly owned enterprise in the coming three years. If the situation turns bad, we may move production facilities overseas but still remain a research and development centre in China,” he said.
Zhu said some provincial-level governments in China have already helped small and medium enterprises to establish industrial parks in Vietnam and Mexico to help them lower costs and avoid impact from potential political events.
Zhang Yuyan, director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said in an interview with China Daily on Tuesday that a significant change over the past three years has been that Western countries like the US have begun to pursue so-called “friend shoring”, or manufacturing in, and sourcing from, countries with shared values.
“Leveraging political power to intervene in the free functioning of industrial and supply chains is a very big threat to the long-term and stable growth of the entire global economy,” Zhang said. — China Daily/ANN
