Improve ease of doing business to cut global supply chains' dependence on China
Mint, quoting a commerce ministry statement. The global narrative on the risk high dependence on Chinese imports represents to global supply chains started with the US red-flagging it, especially for times of emergencies such as during the covid-19 pandemic when any disruptions could have ramifications across the world.
But even before that, the US had embarked on a trade war with China, imposing high tariffs on nearly 60% of imports from the country in the last five years. And yet, as the US itself is seeing the hard way, reducing these dependencies hasn’t been easy, given that China is integral to global supply chains.
The realization in fact is reflected in the evolving US vocabulary: What was initially supposed to have been a policy for “decoupling" with China has now become one of reducing “dependence". An analysis of US trade data published by the World Bank this month is instructive.
The publication, ‘Is US trade policy reshaping global supply chains?’, finds that, “While the US-China decoupling in bilateral trade is real, supply chains remain intertwined with China." Here’s what happened: between 2017 and 2022, China’s share of US imports fell from 22% to 16% due to the US tariff policy, and the imports from China were replaced with imports from large developing countries. However, the countries replacing China in the US imports basket aren’t decoupled from China.
They are in fact “deeply integrated into China’s supply chains and are experiencing faster import from China, especially in strategic industries." What this shows is, the paper concludes, that to replace China on the export side (for imports into the US), countries must embrace China’s supply chains. The end result is that despite significant reshaping
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