BEIJING: A full decoupling from China is economically and, for some countries, politically unfeasible, a recent report by London-based think tank International Institute for Strategic Studies has said.
The report, titled “COVID-19: Global trade and supply chains after the pandemic” and conducted by independent consultant David Ramirez, studied possible trade and supply scenarios after the COVID-19 pandemic.
The pandemic has brought about new consumer habits, business strategies and government emergency measures, which will inevitably affect international trade and supply chains, according to the report.
However, China, which has played the role of “the world’s factory,” will remain a key player, even though “global supply chains will be permanently changed post-pandemic,” Ramirez said in the report.
The consultant listed several reasons why a full decoupling from China is unlikely.
“For one thing, relocation of production and the attendant rebuilding of supply chains is not only extremely complex and time-consuming but also very costly,” said the report.
Another reason is China’s unparalleled large population and broad market.
“Many companies want and need to keep manufacturing on Chinese soil because their physical presence there increases their chances of directly accessing 1.4 billion potential consumers,” the report said.
Moreover, complex geopolitics makes the prospect of a swift decoupling from China further unlikely, as countries in the Asia-Pacific region are reluctant to take sides between China and the United States. – Agencies
