Dec 5, 2022 - Economy

China loses grip on global manufacturing

illustration of a truck with China in its side mirror

Illustration: Natalie Peeples/Axios

Global manufacturing’s center of gravity is moving away from China.

Why it matters: Decades of geopolitics built on economic dependence stand to be impacted.

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

Zoom out: China’s been losing ground in the manufacturing of other goods as well. 

  • The country’s share of global exports of furniture, footwear and clothing accessories has fallen since 2016, recent data from transport economics firm MDS Transmodal shows, as reported by CNBC.
  • Meanwhile, trade between the U.S. and E.U. has risen sharply, and analysts view Mexico and Vietnam as countries that could benefit the most from diversifying supply chains.

What they’re saying: "Everyone is thinking about moving, even if they’re not acting yet,” Anna-Katrina Shedletsky, founder of Instrumental, a firm that analyzes assembly lines for 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 changes.

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

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