The focus of global manufacturing is shifting away from China.
Why it matters: Decades of geopolitics built on economic dependency will be disrupted.
Driving the news: Apple has accelerated plans to move some of its manufacturing outside of China as its business is impacted by strict COVID guidelines, according to a WSJ report over the weekend.
Zoom out: China is also losing ground in the manufacture of other goods.
- The country’s share in global exports of furniture, shoes and clothing accessories has declined since 2016, new data from transit company MDS Transmodal shows, CNBC reports.
- Meanwhile, US-EU trade has surged, and analysts see Mexico and Vietnam as countries that could benefit most from supply chain diversification.
What you say: “Everyone is thinking about moving even if they aren’t acting yet,” Anna-Katrina Shedletsky, founder of Instrumental, a firm that analyzes assembly lines for electronics companies, told the New York Times.
The big picture: Aside from the Chinese government’s unpredictable stance on COVID, business leaders and analysts also expect that future investments in the country will be at risk due to geopolitical tensions and internal demographic shifts.
- Labor, for example, has become more expensive as the country’s population growth has slowed, writes Elisabeth Braw, senior fellow at the American Enterprise Institute.
- Beijing’s aggressiveness towards the West and its ties with Moscow have “made leaders nervous that they might be on the wrong side of the global conflict,” she adds.
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