China is increasingly seen as a stabilizing force in the fragile global supply chain through its ongoing efforts to enhance regional connectivity and promote openness. Amid rising protectionism and unilateralism, these efforts are vital, experts said at the Boao Forum for Asia (BFA) Annual Conference 2023 in south China’s Hainan Province.
Attendees at the BFA highlighted that with global supply chains at a critical point of restructuring, stronger connectivity among countries, especially in the Global South, has never been more urgent to fend off tariff impacts.
Akylbek Zhaparov, former chairman of the Cabinet of Ministers of the Kyrgyz Republic, emphasized the importance of supply chain stability amid a volatile global landscape. “In a world filled with uncertainty, maintaining stable supply chains is crucial,” he said during a sub-forum at the BFA.
While discussing the role of infrastructure investment in global supply chains, Zhaparov cited the China-Kyrgyzstan-Uzbekistan railway project as a prime example. As a flagship Belt and Road Initiative (BRI) project, this transport corridor is expected to offer landlocked Central Asian nations access to the sea by connecting to China’s railway network once operational.
“This project will significantly reduce our reliance on traditional trade routes, allowing us to better mitigate potential disruptions in global supply chains,” Zhaparov remarked.
Similarly, Yasiru Bandara Ranaraja, founding director of Belt & Road Initiative Sri Lanka (BRISL), highlighted the success of the BRI framework in decentralizing trade routes in and out of Asia. “After years of efforts, countries under the BRI framework have developed key trade routes linking the most important trade hubs in the region,” Ranaraja said.
Data confirms the outcomes of Asia’s deepened integration. According to a report released at the BFA, Asia remains at the heart of global value chains, with China continuing to be the center of gravity of global manufacturing value chains. In 2023, Asia contributed 41.17 percent to global trade in intermediate goods, far surpassing the European Union’s 25.5 percent share, the report noted.
This achievement is a testament to China’s unwavering commitment to opening up, creating substantial opportunities for the rest of the world. China has implemented measures to expand openness in sectors such as value-added telecommunications and healthcare, completely removing foreign investment access restrictions in manufacturing, and reducing nationwide foreign investment access restrictions from 31 to 29 items.
As of January 2023, China had inked 23 free trade agreements with 30 countries or regions, continuously expanding and enhancing the content and quality of these agreements.
In addition, China has been working to push forward the implementation of the Regional Comprehensive Economic Partnership (RCEP), a mega-trade pact covering about 2.3 billion people. It is now seen as an important anchor for global free trade.
Temir Porras, managing director of Global Sovereign Advisory, said in an interview that China offers the world a free trade promotion framework that stands in stark contrast to the stance of certain countries that threaten global economic stability by starting trade wars and raising tariffs.
“China is offering the rest of the world a stable framework that allows emerging economies and fragile economies to rely on a solid partnership, and one which does not seek to dictate terms,” he said.
These efforts have made China an attractive destination for foreign enterprises, many of which continue to expand their presence in the country.
“It’s natural for us to build factories and conduct production in China,” said Ueda Toshihiro, executive officer of Japanese material manufacturer AGC Inc. “With its vast global customer base, China is a key manufacturing hub where our company has seen significant growth and opportunity.”
Similarly, Marc Horn, executive vice president of Merck and president of Merck China, expressed confidence in China’s long-term prospects and vowed to continue engagement with the country. The German tech giant plans to further tap into the country’s vast talent pool and leverage local innovation, he noted.
As China solidifies its position in the global supply chain, conference participants also called for further evolution. Denis Depoux, global managing director of Roland Berger, said China should transition from a “Made in China” to a “Designed in China” model.
With Chinese companies gaining international recognition, Depoux suggested they should focus more on investing abroad and cooperating with host countries, thereby establishing themselves as true multinational corporations with global competitiveness.
