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Shock resistance

China's role in reducing uncertainties and maintaining the stability of global supply chains and cooperation is commendable

By SU QINGYI | China Daily Global | Updated: 2024-01-05 07:39
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China's role in reducing uncertainties and maintaining the stability of global supply chains and cooperation is commendable

MA XUEJING/CHINA DAILY

International supply chains are a division of labor model in which multiple countries contribute to the production of one product. Since the 1980s, especially after the Cold War, the world has experienced a golden age of rapid development, with its division of labor deepening continuously. However, the global supply chains are now facing several challenges including limited potential for development, rising trade protectionism and anti-globalization, and increasingly fierce competition among the big powers.

Dealing with global supply chain risks shows the typical feature of maintaining public goods. However, since each country is responsible for a different part of the chains, the benefits it can gain from maintaining the chains vary, and so does its enthusiasm to participate in their maintenance. In addition, the international political landscape also affects countries' willingness to cooperate. The United States is more inclined to engage in alliance-based cooperation. This has led to the formation of different camps in supply chain cooperation, with some camps opposing each other, thereby harming the concerted efforts of the international community.

As the world's largest trading country in goods and an important participant in the international supply chains, China has always been steadfast in maintaining the stability of the international supply chains and promoting their development, effectively assuming its responsibility as a major country. The first China International Supply Chain Expo held in Beijing from Nov 28 to Dec 2 was an example reflecting China's commitment to maintaining stable and smooth industry and supply chains as a major power.

First, China is creating a favorable environment for the development of the international supply chains by actively building an open world economy.

China firmly opposes trade protectionism, any form of decoupling, unilateral sanctions and extreme pressure that hinder the progress of globalization. It has always been an active advocate of the correct direction of economic globalization, continuously providing new opportunities for the world with its new development paradigm, and allowing openness to bring the world a new, bright future. China has always adhered to promoting the implementation of the global development, security and civilization initiatives, and making efforts to uphold peaceful and cooperative development as the main theme of the world, and common security the consensus among all countries. It promotes the joint high-quality growth of the Belt and Road Initiative and makes the Belt and Road construction an important platform for cooperation among countries. China actively engages in the reform and construction of the global governance system, orderly internationalizes the renminbi, and supports multilateral mechanisms such as the World Trade Organization to better play their roles.

As a major power of the digital economy, China has actively participated in global digital governance in recent years, signing multiple agreements containing special chapters on e-commerce and related rules. At the same time, the Regional Comprehensive Economic Partnership, which China has joined in, involves multiple frontier issues in the field of the digital economy and e-commerce, reflecting China's important exploration and beneficial attempts to establish international rules for digital economy governance. China has applied to join agreements such as the Digital Economy Partnership Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. In August 2022, a working group on China's accession to the DEPA was officially established to fully launch the negotiations. These actions undoubtedly help create a favorable environment for the development of the supply chains.

Second, China has been reducing uncertainties for the development of the international supply chain by actively controlling competition among major powers.

President Xi Jinping pointed out that China-US economic and trade relations are mutually beneficial and win-win in essence. It is just business, and their economic and trade issues should not be politicized. Both sides need to make a bigger cake of cooperation. The US should stop abusing and overstretching the concept of national security to suppress Chinese companies. China has always responded to the US-initiated trade war in a well-founded manner, and has constructively handled the economic and trade frictions with the US. On the one hand, China is committed to bilateral consultations with the US to resolve trade disputes through negotiations, reduce the negative impact of the trade war on each other, and ultimately reach a mutually beneficial agreement. On the other hand, the Chinese side has shown its determination to safeguard its national interests, that is, if the US insists on imposing additional tariffs on Chinese products, it will resolutely take countermeasures and simultaneously sue the US for its actions with the WTO's dispute resolution body. After the US introduced measures to increase tariffs, China also released a list of corresponding countermeasures against it. China has always believed that dialogue rather than confrontation can solve economic and trade differences. The first-phase China-US economic and trade agreement proves that their differences on economic and trade issues can only be resolved through negotiations rather than a unilateral tariff war. China's proactive control of competition among major powers can help reduce the uncertainty of supply chain operations.

Third, China has been resisting various shocks to the global supply chains by promoting cooperation.

It has launched an investment facilitation initiative and actively participated in domestic regulatory negotiations on the service trade, e-commerce, and other multiparty talks, providing a solid institutional guarantee for the development of supply chains. China also works together with other members within the WTO framework to maintain the security of key industry chains such as medical supplies and food.

Apart from actively improving ties with the US, China also coordinates its relations with major economies such as the European Union, the Association of Southeast Asian Nations, Japan, India and Brazil. China has always maintained an open attitude toward renewing discussions on the Comprehensive Agreement on Investment between China and the EU, strengthening economic and trade relations with ASEAN, and stabilizing the regional industry chains in East Asia. As to Japan, besides developing and strengthening its economic and trade relations under the RCEP framework, China also hopes to continue to strengthen its economic and trade ties by joining the CPTPP.

Furthermore, China fully utilizes the BRICS cooperation mechanism to enhance coordination with emerging economies such as Russia, India, Brazil and South Africa. These actions by China will undoubtedly consolidate the cohesion of the international community in resisting supply chain shocks.

 

The author is a senior fellow of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, and National Institute for Global Strategy at the CASS. The author contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn

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