Decoupling China as a Supplier May Be Impossible

(AmericanProsperity.com) – A new survey by Allianz Trade said that China remains a critical global supplier and that decoupling the country could be very difficult or impossible to do. European countries have looked into derisking or decoupling China, but this could pose difficulty especially as Spain and France are both increasing their supply chain footprint there.

The report stated that “European companies are clearly less worried than U.S. firms.” The poll surveyed more than three thousand companies in China, France, Germany, Poland, Spain, the United Kingdom, the United States, and Italy.

One-third of the respondents said that they planned to increase their China footprint, and eleven percent stated that they planned on cutting down. Said the report, “China remains the world’s critical supplier, from which a full decoupling seems difficult, if not impossible.”

In China, there is a positive outlook for companies that are looking to expand to other countries as they expect at least a ten percent increase. Francoise Huang, senior economist for Asia Pacific at Allianz Trade said, “Chinese exporters are more optimistic than other countries in the survey.”

“Last year was a bad year for overall exports, we had a global trade recession. So that’s why we think respondents in our survey are particularly optimistic,” he continued.

Diversification of exports is inevitable, but now many companies are moving out of China and focusing more on ASEAN. A little under fifty percent of U.S. exporters manufacture in China but have been looking into alternatives.

According to the Allianz Trade report, “Relocating within the same region and nearshoring seem to be the preferred trends.”

The two biggest concerns here are the Russia-Ukraine war affecting supply chains and the trade war between China and the U.S.

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