Chronic. Geopolitical tensions between Washington and Beijing are reflected in measures by the United States to reduce its economic dependence on China and to block the diffusion of the most sensitive technologies to this country. They are not without serious consequences for the economic partners of these two countries, particularly Asian ones (“ Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia “, Mitsuyo Ando, Kazunobu Hayakawa, Fukunari Kimura, Asian Economic Policy ReviewAugust 2023).
These measures have tightened over time: additional customs fees on Chinese imports, control of American exports to China, restrictions on foreign companies that sell products containing American components, etc.
Directly targeting Chinese companies like Huawei, they aim less to protect American companies from the possible effects of disruptions in their value chains than to hinder those of their Chinese competitors. But their implications go well beyond these objectives, given the level of integration of value chains in sectors like electronics.
Indeed, the “factory of the world” is not limited to China: the whole of East Asia is dominated by the task-by-task international division of labor strategies of Japanese, Korean and Taiwanese multinationals. American policy, guided by national security considerations, generates great uncertainties for these companies from allied countries, both for their investment strategy and for the supply of components essential to their production.
However, economists do not always have adequate sources to accurately measure all of these effects at the microeconomic level. Above all, there is a gap between the announcement effects and reality: governments do not reveal all the exceptions from which certain companies benefit.
Greater transparency
This is why the three Japanese economists combine in their study several types of bilateral international trade data (imports and exports) at more or less aggregated levels. While sector-level trade data cannot yet identify massive decoupling effects across value chains, several specific U.S. export control measures affect international trade transactions at a more disaggregated level. This is, for example, the case for the most advanced semiconductors. Japanese, Korean and Taiwanese companies, leaders in these technologies, are directly concerned.
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