Economics

Substitution effect of Asian economies on China's industrial and supply chains: from the perspective of global production network

L. Xing, S. Jiang, et al.

This research conducted by Lizhi Xing, Shuo Jiang, Simeng Yin, and Fangke Liu delves into how the Altasia region could disrupt China's industrial dominance. By employing a multi-regional input-output model, the findings reveal that enhanced trade within Altasia may accelerate the relocation of China's supply chains, especially in sectors reliant on resources and labor, while highlighting China's ongoing strengths in capital-intensive industries.

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Abstract

This paper investigates the potential displacement of China's industrial and supply chains by a group of fourteen Asian economies (Altasia) using a multi-regional input-output (MRIO) model. The findings suggest that Altasia, due to strong industrial complementarity among its members, poses a greater substitution threat than ASEAN alone. Counterfactual modeling indicates that reduced trade barriers within Altasia could accelerate the relocation of China's industrial and supply chains, particularly in resource- and labor-intensive sectors. While Altasia weakens China's influence, profitability, and risk robustness in global supply chains, China maintains significant competitive advantages in capital- and technology-intensive sectors.

Publisher

HUMANITIES AND SOCIAL SCIENCES COMMUNICATIONS

Published On

Sep 30, 2024

Authors

Lizhi Xing, Shuo Jiang, Simeng Yin, Fangke Liu

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