China
ASEAN supply chain links with China and the perils of decoupling
Author: Ken Heydon, LSE
China’s global value chain (GVC) links with ASEAN are both less dominant and more beneficial than they appear at first sight. But there are major challenges ahead for ASEAN. With ASEAN public opinion seeking more alignment with the United States and less with China, ASEAN’s GVC dependence on China might be seen as a cause for concern.
Over the past three decades, ASEAN trade links with the United States, the European Union and Japan have weakened relative to those with China. Moreover, dependence on China has been more in backward linkages (where China’s share of foreign value added exports incorporated in ASEAN exports has risen from 5 per cent to 17 per cent) than in forward links (where China’s share of ASEAN value added exports incorporated in other countries’ exports has risen from 4 per cent to just 12 per cent).
But this account needs nuance. ASEAN’s links with the United States, the European Union and Japan are not as weak as they appear. And the links with China are highly beneficial to ASEAN.
The relatively weaker trade links between ASEAN and the United States, European Union and Japan have been largely compensated by increased market-seeking and efficiency-seeking investment and production, within ASEAN, of affiliates of these countries. ASEAN’s GVC links beyond China have been transformed rather than weakened. It is precisely the presence of these globally oriented, transnational affiliates that helps explain ASEAN’s strong, and otherwise surprising, forward linkages with, in particular, the European Union.
When intra-EU trade — Europe’s regional value chain — is taken into account, the European Union accounts for a greater (albeit declining) share of ASEAN exports incorporated into other countries’ exports (28 per cent) than China (12 per cent). ASEAN, through its forward linkages, is more integrated with the EU GVC than with that of China — particularly in technologically advanced sectors like electronics.
But the most important corrective to an alarmist narrative of ASEAN GVC bonds with China is that backward links with China are fostering development within ASEAN. It is thus the scarcity of these backward linkages, and correspondingly limited access to foreign value added, for ASEAN small and medium-sized enterprises (SMEs) that helps explain why SMEs play a disproportionately minor role in ASEAN exports. ASEAN SMEs have had less exposure to ‘learning by importing’.
But backward links are not equally shared throughout ASEAN. Malaysia, Singapore, Thailand and Vietnam are developing a manufacturing base with strong backward links (foreign value added makes up 60 per cent of ASEAN vehicle exports). Brunei, Indonesia, Laos and Myanmar remain dependent on natural resource activities with weak backward links (foreign value added makes up just 5 per cent of Indonesia’s agribusiness exports).
This means that policy settings will need to differ by country. Nevertheless, all ASEAN states will face three common GVC challenges: an increase in the importance of inwards investment relative to trade, more focus on domestic demand in dynamic partner economies and the persistence of GVC vulnerability to disruption. China will be central to all these challenges.
It can be expected that as China moves to counter its demographic ageing and rising domestic costs it will increasingly follow the path already taken by the United States, European Union and Japan in favouring investment over trade in its GVC links with ASEAN. China’s FDI in Southeast Asia grew fourfold between 2010–2018. Given the sovereignty concerns associated with inward FDI, this shift will need to involve a change in China’s ‘tendency to downplay the autonomous agency’ of developing neighbours.
Equally critical will be ASEAN’s own policy settings to maximise gains from investment inflows, including through stronger environmental safeguards, technological upgrading and greater domestic regulatory coherence.
ASEAN’s second GVC challenge will be a shift in the relative importance of final consumption (rather than onward export) within partner economies with expanding domestic markets. This again will call for adaptability in ASEAN as it shifts product design towards, in particular, China’s domestic consumers as opposed to China’s overseas customers — consistent with China’s domestically oriented Dual Circulation Strategy.
The third GVC challenge facing ASEAN is persistent vulnerability to disruption. This will call for flexibility and resilience, whether by removing…
Business
China’s Travel Surge: Expanded Visa Exemptions Enhance Tourism and Business Prospects, Improving Access for Travelers and Strengthening Global Connectivity – Travel And Tour World
China has improved travel access by expanding visa exemptions, attracting millions of international visitors and fostering cultural exchanges, while enhancing global connectivity and positively shifting perceptions of the country.
The Shift in China’s Travel Landscape
China is experiencing a travel boom driven by a significant reduction in visa restrictions. Starting December 1, 2023, travelers from 38 countries, including major European nations, can visit visa-free for up to 30 days. This change reflects China’s commitment to enhance global mobility and revitalize its tourism industry post-pandemic. As a result, international arrivals increased to over 8.1 million by the third quarter of 2024, marking a 48.8% rise from the previous year.
Exploring Beyond Traditional Destinations
The new access has prompted travelers to seek immersive experiences, venturing beyond iconic sites like the Forbidden City. Tourists increasingly explore local cultures and markets, enhancing their understanding of daily life in China. Guides have adapted, offering tours that include cultural hotspots and local culinary experiences, thereby enriching the overall visitor journey and promoting authentic engagement.
Broader Implications for Global Connectivity
China’s visa-free initiatives foster greater international connectivity and cooperation in trade. As foreign travelers find it easier to engage with Chinese businesses, reciprocal visa easings may follow globally. The improved perceptions of safety and hospitality, highlighted through social media, contribute to a renewed interest in China’s diverse cultural landscape and its potential as a primary travel destination.
China
China-Denmark Trade and Investment: Key Developments and Emerging Opportunities
China’s investments in Denmark enhance collaboration in renewable energy, green technology, and digital infrastructure, aligning with both nations’ sustainable development goals. Their partnership, solidified by joint programs, underscores mutual economic interests and complementary strengths in green innovation and manufacturing.
As both countries share a commitment to sustainable development, China’s increasing investments in Denmark are driving innovation in renewable energy, green technology, and digital infrastructure. This partnership is further strengthened by Denmark’s expertise in wind energy and environmental solutions, aligning well with China’s goals to transition to a greener and more digitally advanced economy.
The growing trade and investment relationship between China and Denmark not only reflects mutual economic interests but also highlights the complementary strengths of each nation. Denmark’s high-tech manufacturing, environmental engineering, and green energy solutions are vital to meeting China’s evolving demands, while China’s large-scale market and industrial capacity offer vast opportunities for Danish enterprises. Together, these nations are paving the way for continued progress in sustainability, technological innovation, and economic growth.
In 2017, the two countries took a further step to solidify their relationship by establishing a Joint Work Programme for 2017-2020. The program acted as a blueprint for bilateral cooperation, encouraging strategic dialogues and joint ventures between the two nations in key areas such as trade, investment, environmental sustainability, and technology
The partnership was further reinforced in November 2021, when the Foreign Ministers of China and Denmark announced the commitment to a new phase of cooperation through the Green China-Denmark Joint Work Programme. The agreement emphasizes the acceleration of green technologies, renewable energy, positioning Denmark’s expertise in clean energy and green innovation as a crucial asset in China’s drive toward a greener economy.
Over the past five years, China’s exports to Denmark have shown consistent growth, further strengthening the economic ties between the two nations. This trend underscores their mutual commitment to expanding commercial relations and unlocking the potential for deeper cooperation.
China’s growing importance to Denmark, both as a market and as a supplier of production inputs, is evident in the economic integration over the last three decades. Today, China is Denmark’s fourth-largest export market, after the United States, Germany, and Sweden.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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China
Joe Biden in Africa: US president has ignored the continent for his entire term – why he’s visiting Angola
Joe Biden, having largely overlooked Africa during his presidency, is visiting Angola to address key issues and strengthen diplomatic ties, signaling a renewed focus on the continent.
Joe Biden in Africa: US president has ignored the continent for his entire term – why he’s visiting Angola
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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