According to several reports in the Indian media, the Ministers of Trade and Commerce of India, Japan and Australia will hold their first meeting in the near future to launch the tripartite “Supply Chain Resilience Initiative” in an attempt to build on their existing bilateral supply chain networks to find alternatives to reduce dependence on China’s supply chain on a proposal of the Japanese government. Once an understanding is reached on the future (pattern), this so-called “supply chain alliance” initiative will be opened to ASEAN countries also. This move is not only in continuation of the pace of adjustment of the industrial chains initiated in the wake of the global new corona epidemic, but also tied up with intricate geopolitical considerations. Behind it is the invisible hand of the United States trying to get the “four-nation (Quad) grouping” going.
In the post-epidemic era, although the trend of adjustment and reconstruction of the global economic system is inevitable, and political factors will continue to get amplified, economic interests will still be the decisive factor. Regarding adjustments in industrial chains, two different logics entangle politics and business. Under the influence of political logic, politicians consider aspects such as geopolitical games, ideological competition, and national security. As capital gravitates towards profit, the consideration for companies is business logic –cost, profit, risk, and trade-offs between these three factors.
China is the only country in the world that has all the industrial categories in the United Nations Industrial Classification. According to World Bank data, China’s manufacturing value added exceeded that of the United States in 2010, becoming the largest manufacturing country. In 2018, the value added of China’s manufacturing industry accounted for more than 28% of the world’s share. China’s huge potential market, high-quality labor resources, mature supply chain, government policy support, stable and safe social environment, and complete infrastructure are all huge attractions for international capital. The profit maximisation motive makes it difficult for companies to easily change their course and start all over again. Politicians can boast on the stage, but in the end they have to dance to the rhythm of capital and commercial interests. The fundamental driving force for adjustments and changes in the industrial chain is still economic laws, capital attributes and technological progress.
(The author is the Director of the Research Department of the National Institute of Strategic Studies, Tsinghua University)