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Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia

Mitsuyo Ando, Kazunobu Hayakawa and Fukunari Kimura

Asian Economic Policy Review, 2024, vol. 19, issue 1, 62-79

Abstract: Supply chain decoupling in the US–China confrontation has generated serious uncertainties for private businesses. This paper focuses on machinery international production networks in East Asia and tries to find quantitative evidence on supply chain decoupling by using international trade statistics, particularly from the viewpoint of middle powers such as Japan. While data on the sectoral level of trade do not show any clear evidence of supply chain decoupling, some specific US export controls indeed affect international transactions when examined at a finely disaggregated level. We econometrically measure the effect of some of the US policies on Japanese exports to China. The recent strengthening of US export controls related to supercomputers and advanced integrated circuits is likely to generate further effects. Nevertheless, the supply chain decoupling seems to end up as a partial one, and a large portion of International Production Networks (IPNs) may remain active. In conclusion, the paper briefly discusses the policy implications of the analysis.

Date: 2024
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https://doi.org/10.1111/aepr.12439

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Asian Economic Policy Review is currently edited by Takatoshi Ito, Akira Kojima, Colin McKenzie and Shujiro Urata

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