Supply Chain Expo: China Criticizes West's De-Risking Strategy

Facts

• At the opening ceremony of the first China International Supply Chain Expo on Tuesday, Chinese Premier Li Qiang said that the PRC opposes protectionism and intends to strengthen 'industrial supply chain partnerships with all countries.'¹
• Li made these remarks in response to recommendations made over the past year by the US and the EU to 'de-risk' their supply chains, lessen their reliance on China in specific industries, and cut off Chinese companies from some cutting-edge semiconductors.²
• Due to the escalating geopolitical tensions between Beijing and the West, and the PRC's faltering economy, corporations are reportedly moving away from China and sourcing more goods from Southeast Asia, Eastern Europe, and Mexico.³
• Arguing that China was 'a firm defender and builder' of global industrial and supply chain cooperation, Li proposed all parties should 'unequivocally' oppose 'all forms of decoupling and disruption of industrial and supply chains.'⁴
• The expo comes after US and European greenfield investment into the PRC in 2022 fell below $20B from $120B in 2018. In contrast, foreign direct investment into India increased by $65B between 2021 and 2022 — a 400% rise.¹
• More than 1.1K officials from over 90 countries and international organizations and 515 Chinese and foreign companies — including at least 20% from the US — are attending the five-day expo, which, per Li, seeks 'to build more resilient, efficient, and dynamic global industrial and supply chains.'⁵

Sources: ¹Reuters, ²US News & World Report, ³Asia Financial, ⁴VOA and ⁵Global Times.

Narratives

• Pro-China narrative, as provided by CGTN. Beijing is working feverishly to offset the US and EU's de-risking initiatives and show international investors that China is a safe place to be. Due to the geopolitical difficulties surrounding Taiwan, Washington and Brussels have advised companies to locate their operations outside China. This policy is depressing both the value of the yuan and China's recovery from the pandemic. Beijing's ability to persuade international investors to come back is crucial to its future.
• Anti-China narrative, as provided by BBC News. While they're still present in China, foreign investors are pulling money from the country faster than they're putting it in. Many businesses, including Apple Inc., have experienced supply chain interruptions due to China's strict pandemic lockdowns, forcing them to diversify their supply chains by moving some production to India. Investing in China also comes with geopolitical risk, the threat of slower economic growth, and uncertainty regarding domestic policies.

Predictions