Preserving “Made in China” in deglobalisation
- 02 September 2020 (3 min read)
Key points
- After decades of rapid growth, the progress of globalisation has slowed since the global financial crisis, with its fate further complicated by rising protectionism, political interference and the COVID-19 outbreak.
- As the biggest beneficiary, China stands to lose the most in the event of deglobalisation. So far, however, evidence of disruptions has been scant, with some indicators showing that China’s market share in trade and manufacturing has in fact risen despite the trade war and pandemic.
- This is not to say that China is immune from any supply chain shifts. Some low-margin businesses have already exited the country in light of rising costs. In contrast, foreign firms seeking to tap China’s vast domestic market and supply chain ecosystem are unlikely to leave easily.
- We think the deglobalisation trend will continue but have varying impacts on different industries. In addition, the reshuffling process could be slow and gradual, hampered by the current pandemic and China raising the cost of exits through its own reforms.
- The propagation of the “China Plus One” model could allow China to maintain some influence over the supply chains spreading to other Asian countries, turning “Made in China” to “Made around China” that ends up expediting regionalisation at a time when globalisation is in retreat.
Not for Retail distribution
This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date.
All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.