China | Which economies are to benefit from industry relocation?

Summary

In the aftermath of the COVID-19 pandemic, the trend of industry relocation away from China is gaining momentum, at least in certain sectors. By analyzing China’s trade patterns through the lens of the global supply chain, the note attempts to identify the potential winners.

Key points

• Key points:
• China’s international trade gained market share during the pandemic despite the country imposing a strict “Zero COVID” policy over the same period; due to its position as the world's manufacturing powerhouse.
• The industry relocation can be achieved through two channels: "direct competition channel", for those economies that already conducted head-to-head competition with China; and "supply chain channel", economies that might take advantage of being China's suppliers.
• Asian economies have a significant presence of the supply chains, including Taiwan, Indonesia and India.
• Asian economies account for a large share in the potential beneficiaries list of the relocation, in particular through the “supply chain channel”. Brazil and Chile also play important roles along the supply chains, with relatively lower ranking.

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