Global Value Chain Restructuring: Challenges, Opportunities and Strategies for China

Dai Xiang1* and Zhang Yu2

1 School of Economics, Nanjing Audit University, Nanjing, China

2 School of Economics, Nanjing University, Nanjing, China

Abstract: Global value chains (GVCs) have entered a new stage of restructuringcharacterized by trends towards localization, regionalization and diversification. Thesetrends can be attributed to the evolution of the international division, irrational responsesto crisis shocks, and trade protectionism. In this context, China’s industrial and supplychain upgrades face both opportunities and challenges which require navigating theadverse effects of industrial re-shoring, unfair technology competition, and changes in theglobal industrial layout. Yet, such challenges may create pressures for China to accelerateinnovation, overcome the low-end lock-up effect by creating regional value chains, andbroaden international cooperation. China needs to explore an effective strategy to defuserisks and seize opportunities. On one hand, China should influence the restructuring ofGVCs evolution and strengthen its supply chains by playing an active role in economicglobalization and the international division. On the other hand, China should proactivelyrespond to GVCs restructuring amid rising trade protectionism, defuse risks from tradeprotectionism by opening wider to the outside world, and strive to upgrade industrial andsupply chains while enhancing the security and stability of their nation.

Keywords: global value chains, localization, regionalization, diversification

JEL Classification Code: F00

DOI: 10.19602/j.chinaeconomist.2021.09.05