Korean Media: The US Has Pushed China to the Top of the Supply Chain!
On October 18, the Korean media outlet JoongAng Ilbo published an article stating that the US's "de-risking" strategy has not removed China from its supply chain, but instead has pushed China to the top of the supply chain.
As the assembly business seeking low labor costs moves to neighboring countries, China has become the core supplier of components, materials, and machinery supporting the sharp increase in Southeast Asian exports. As of 2024, the amount of Chinese products imported by ASEAN exceeded those imported by the US and EU, with most being intermediate materials and machinery. In other words, China has become the "factory behind the factory."
There are three factors driving this change. First, geopolitical tensions and tariffs have prompted China's trade to shift toward emerging markets, with ASEAN serving both as the final market and a gateway to Western consumers. Second, rising wages in China have moved labor-intensive production processes to countries like Vietnam and Indonesia. Third, China's focus in advanced manufacturing has shifted from finished products to high-value-added components and equipment.
Examples in specific industries are evident. Electronics in Vietnam and Malaysia use Chinese circuit boards and batteries, while solar cell components manufactured in ASEAN depend on Chinese wafers and equipment. The garment industry in Bangladesh uses Chinese fabrics and yarns, and even Vietnamese furniture uses Chinese components for assembly. In the automotive and electric vehicle sectors, Chinese companies are supplying parts, establishing local factories, and promoting battery, motor, and software standards.
Additionally, there is a reverse flow. Resource-rich Indonesia refines nickel locally and then exports it to China. Chinese-invested smelters, in turn, supply stainless steel and battery components to China.
This structure benefits both sides. China maintains high-value manufacturing, exports through third countries, avoids tariffs, and absorbs excess capacity. ASEAN accelerates industrialization through cheap materials, machinery, and investment, expanding employment and the market. Global consumers benefit from cheaper products.
The current challenge is to retain profits and reduce vulnerabilities. Asian countries must cultivate local suppliers, diversify inputs, and utilize reasonable local procurement regulations. China must shift towards high-value intermediate products. The US must also recognize that merely relocating assembly plants cannot reduce dependence on China.
Original: www.toutiao.com/article/1846319988001867/
Statement: This article represents the views of the author himself.