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Global value chain reshuffling: From tight coupling to loose coupling?

As the focus shifts from efficiency to resilience in global supply chains, what does this mean for China?

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Kristy Hsu

Director, Taiwan ASEAN Studies Center, Chung-Hua Institution for Economic Research,

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Global value chains have become a defining characteristic of modern trade flows. Since its entry into the World Trade Organisation in 2001, China has played an increasingly central role in supply chains globally. But a US-led trade war combined with the reduction of global trade flows during the COVID-19 pandemic has pushed companies to rethink the design and nature of their value chains.

Efficiency (and the resulting 'tight coupling') is beginning to be trumped by resilience (and an ensuing 'loose coupling') in building up global supply chains. Companies are diversifying their global sourcing. Will this lead to a reduction in China's role in global supply chains? Will the costs of production rise?