OPED By Vaishali Basu Sharma
In a first-ever nations-level exhibition focusing on supply chains, Beijing hosts an international conference, “China International Supply Chain Expo (CISCE).” The expo covers five significant themes: Smart cars, green agriculture, clean energy, digital technology, and health.
It showcased new products and services from all over the world, with 515 Chinese and international exhibitors from 55 countries and regions. Among the 134 international participants, a notable 1/5th are American, including big names like Apple, Amazon, Tesla, FedEx, and ExxonMobil.
But, crucially, the expo is being seen as Beijing’s answer to Washington’s “de-risking” approach in the face of several multinationals exploring supply chain relocations to avoid fallouts of the China-US tech rivalry.
On the one hand, the expo shows China is self-sufficient in certain areas, especially in the electric vehicle and clean energy industries, with Chinese companies like CATL already dominating Global production of EV batteries. It also tries to demonstrate that it remains the ‘go-to’ place for foreign companies to maximize profits.
Tesla, for example, is showing how its Shanghai factory produces a new car every 40 seconds as a testament to China’s supply chain prowess. While the expo is trying to demonstrate China’s supply chain resilience, it is more important for Beijing to bid for new connections.
But beyond self-sufficiency, China is sending a clear message that it wants to work with the world. In his speech at the opening ceremony of China’s first global supply chain expo, Chinese Premier Li Qiang warned that uncontrolled globalization, rising protectionism, public health crisis, and geopolitical conflicts are the main risk factors for global supply chains.
He also took a stand against de-risking, a move pushed by the United States and the European Union to reduce company dependence on China, especially in high-technology areas. Disruptions in supply chains in recent years have brought the importance of diversification to the forefront.
While this typically has to do with mitigating risk due to geopolitics, it also has to do with countries, including the United States, being unprepared for the pandemic and waking up to the reality that stocks for essential and strategic goods were not at levels where they should be.
While previously cost and efficiency used to be the driving force for supply chains, now we are seeing risk mitigation becoming more and more critical despite the fact that this may mean higher costs.
This China International Supply Chain Expo comes about at a time when we see the twin phenomena of globalization along with increased protectionism. For instance, during and post-pandemic, on one hand, some countries responded to concerns about supply chains by opening the markets and providing incentives for foreign direct investment; on the other hand, there were countries that kept their borders closed, keeping their medical supplies within their own nations.
The reality is that global supply chains have begun to unravel movement in terms of US engagement with Asia, principally in semiconductors, has already started. For some time now, US companies have become more wary than they’ve been in a long time about doing business in China. This sentiment is reflected in China’s annual survey AmCham,, in which most of its more than 900 members no longer regard China as a top-three investment priority.
This latest expo follows close to a six-day China International Import Expo (CIIE) held in Shanghai in October. The Shanghai Expo was also widely used by Beijing to highlight its consumer market and fight against decoupling efforts, with the event previously attended by individual firms, trade organizations, and regional officials.
In an effort to position itself as a champion of globalization, the supply chain expo being hosted by Beijing is a message directed primarily to foreign companies that China is open for business to portray that it is still the manufacturing hub of the world.
China is pushing to convince these companies that China is opening its market and improving the business environment. This is indeed going to be a heavy lift because there are a lot of concerns in boardrooms, particularly in the US and Europe, that companies need to diversify and not be overly reliant on China for not only its market but also inputs for their supply chains.
- Vaishali Basu Sharma is an analyst of strategic and economic affairs. She has worked as a consultant with India’s National Security Council Secretariat (NSCS) for nearly a decade. She is presently associated with the New Delhi-based think tank Policy Perspectives Foundation.
- The author can be reached at postvaishali (at) gmail (dot) com.
