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China decoupling creating whimper, not bang, in Asia, ratings agency says

S&P Global Ratings has said attempts to diversify supply chains away from China have had limited impact in Asia to date

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The impact of decoupling efforts targeted at China appears to be limited so far, according to a top credit rating agency. Photo: AFP
Sylvia Ma
China’s role in global exports is not expected to diminish drastically, despite high-profile attempts to decouple supply chains – and there will be fewer Asian beneficiaries from this process than is often assumed, according to a top credit rating agency.

“Trends in exports and inward foreign direct investment (FDI) show that, overall, the role of Asian economies – including China – in global supply chains is changing only modestly,” said S&P Global Ratings in a report on Tuesday.

US-led efforts to diversify distribution of goods away from China have escalated in recent years, with trade tensions on the rise in major Western markets and other Asian suppliers like India and Vietnam entering the limelight.

While China’s share of imports in developed markets like the US and Japan have fallen over the last six years, exporters’ gains in emerging markets have kept its overall global market share slightly higher, according to S&P.

The report credits China’s resilient market share to the rise of “normal” exports by increasingly competitive domestic firms – contrasted with “processing exports”, where imported components are assembled in China and the finished goods are shipped on to third countries.

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“Exports of Chinese-brand capital goods, electric vehicles, smartphones and home appliances have expanded rapidly in recent years,” it said.

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