Global Production and the Current Geopolitical Moment

Federico Jensen

Publikation: AndetUdgivelser på nettet - Net-publikationFormidling


The global production system is changing. In particular, doubt has been cast on China’s role as the “factory of the world.” The US government has been attempting to rebalance the US global trade equilibrium and its position in global supply chains and global trade since the Obama administration. In 2017, Trump’s “trade war” notably changed the geopolitical relationship between China and the US by shifting the risk-reward calculations of firms manufacturing in China. Under President Biden, with the passing of the CHIPS Act and the IRA (Inflation Reduction Act), the economic incentives for firms to rethink their business strategies has grown amid renewed geopolitical tensions. The use of sanctions, export bans, and other regulatory means to disrupt trade are now commonplace between the US and China. At the same time, the geopolitical conflict is affecting the trade policies of all other global players (such as the EU), which also need to react to a more uncertain environment.[1] Although much has already been said about the end of China’s time as a key manufacturing hub, this piece attempts to nuance the way we view how geopolitical tensions are affecting firms’ decisions regarding production in China. In so doing, this piece will argue that China’s position in global production is still secure, due to the lack of alternatives and the difficulties of relocating manufacturing. Nonetheless, real changes to trade relationships between China and the rest of the world are underway, and rather than leading to a retreat of globalization, they are indicative of a reconfiguration.
Publikationsdato1 sep. 2023
UdgiverSASE - Society for the Advancement of Socio-Economics
StatusUdgivet - 1 sep. 2023