China hits back at West’s de-risking strategy at supply chain expo
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Mr Li Qiang said China will continue to create an international and rule of law-based business environment.
PHOTO: REUTERS
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BEIJING - China opposes protectionism and wants to strengthen supply chains with all countries, Premier Li Qiang said on Nov 28, as a growing number of nations voice concern about how much their supply chains depend on the world’s second-largest economy.
Mr Li’s comments come amid calls over the past year from the United States and the European Union to reduce their dependence on China in certain sectors and “de-risk” their supply chains, as well as efforts to cut off Chinese enterprises from some advanced semiconductors.
“We are willing to build closer production and industrial supply chain partnerships with all countries,” Mr Li told the first China International Supply Chain Expo, adding that the international community needs to be “more wary of the challenges and risks brought about by protectionism and uncontrolled globalisation”.
Recent geopolitical tensions, from Russia’s war in Ukraine to concerns over a future Chinese invasion of Taiwan, have led a growing number of foreign businesses to opt against expanding their supply chains in China, instead directing investment to countries including India, Mexico and Vietnam that enjoy better ties with the US, a strategy known as China-plus-one.
The expo, organised by the state-run China Council for the Promotion of International Trade (CCPIT), is Beijing’s latest bid to increase foreign investment in the country, which has dropped to historic lows.
The value of announced US and European greenfield investment into China dropped to less than US$20 billion (S$27 billion) in 2022, from a peak of US$120 billion in 2018, according to Rhodium Group, while investment into India shot up by some US$65 billion, or 400 per cent, between 2021 and 2022.
Despite this decrease, China remains an attractive option: A survey conducted by HSBC Bank at the China International Import Expo in November showed 45 per cent of firms expect to expand their supply chains in China over the next year.
Mr Dan Marks, research fellow for energy security at the Royal United Services Institute think-tank, said: “I think there is a lot of hyperbole around this. And I’m not sure whether the (de-risking) measures the EU or US are considering match the scale of the risk.”
An apparent improvement in US-Sino ties, after Chinese President Xi Jinping recently met US President Joe Biden and participated in the Asia-Pacific Economic Cooperation (Apec) summit, should also help reinforce China’s position as a key manufacturing hub.
Mr Zhang Shaogang, a CCPIT official who was part of the Chinese delegation at the Apec summit, said last week that 20 per cent of the foreign firms exhibiting at the supply chain expo were US-based, and included Amazon, Apple, Tesla and Intel.
“We wholeheartedly hope US businesses can... while actively realising their own development, also positively promote the healthy, stable and long-term development of US-China relations,” he said. REUTERS
