China is losing its grip on global manufacturing

The center of gravity of the global manufacturing industry is moving away from China.

Why is this important: Decades of geopolitics based on economic dependence are in danger of being affected.

Driving the news: Apple has accelerated plans to move some of its production out of China as its business is impacted by strict COVID policies, according to a WSJ report over the weekend.

Zoom out: China also lost ground in the manufacture of other goods.

  • The country’s share of global exports of furniture, footwear and clothing accessories has fallen since 2016, according to recent data from transportation economics firm MDS Transmodal, as reported by CNBC.
  • Meanwhile, trade between the United States and the EU has increased sharply, and analysts see Mexico and Vietnam as the countries that could benefit the most from diversification of supply chains.

What they say : “Everyone is thinking about moving, even if they’re not taking action yet,” Anna-Katrina Shedletsky, founder of Instrumental, a company that analyzes the assembly lines of electronics companies, told The New York Times.

The big picture: Beyond the Chinese government’s unpredictable stance on COVID, business leaders and analysts also expect future investments in the country to be at risk due to geopolitical tensions and internal demographic shifts.

  • Labor, for example, has become more expensive as the country’s population growth has slowed, writes Elisabeth Braw, senior fellow at the American Enterprise Institute.
  • Beijing’s aggressiveness towards the West and its ties to Moscow have “left leaders nervous that they could be caught on the wrong side of the global conflict”, she adds.

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