What it means for Asia as supply chains make security the top priority

Name: Can globalisation survive coronavirus or will the pandemic kill it?
Uploaded: 2020-08-16T06:30:08.000Z
Duration: 4 min 58 s
Description: Can globalisation survive coronavirus or will the pandemic kill it?

As states and companies build redundancies and diversify to lower risks, China’s dominance as a global supplier will weaken in the longer term, while manufacturers in Thailand, Vietnam, Taiwan and Malaysia stand to benefit the most

Reading Time:3 minutes

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A Tianjin Wanda Tyre Group factory employee in Hebei, China. The company exports to countries such as US and Japan. Moody’s says the impact of reshoring on China will be limited. Photo: Reuters

Anthony Rowley

Published: 2:30pm, 16 Aug 2020Updated: 10:26pm, 16 Aug 2020

Many people have predicted that the world will be different post Covid-19, citing as reasons the teleworking revolution and other socio-economic changes taking place. But the whole landscape of business and industry could be altered in key respects.

Just how different it will be is only becoming apparent as detailed analyses of the longer-term impact of Covid-19 and accompanying geopolitical shifts begin to appear. The economic significance for China and other Asian nations in particular will be considerable.

It is not just the aftershocks of the pandemic that will alter the economic landscape. A combination of Trump’s trade wars, rising tensions between the United States and China and the consequent polarisation of economic activity, plus rising security concerns will also be determining factors.

The structure of global production and supply chains could change fundamentally, causing shifts in infrastructure links and human interchange. It will be not so much a brave new world as a more defensive one, with localised production matching more protectionist attitudes.

In 2011, then president of the Asian Development Bank Haruhiko Kuroda was one of the first to signal concerns about supply chains after the Fukushima earthquake showed how vulnerable they are to disruption. But the threats facing these links now – political, security and logistical – are much greater.

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Can globalisation survive coronavirus or will the pandemic kill it?

As World Economic Forum noted, the “coronavirus crisis has revealed the fragility of the modern supply chain”, and an “urgent need to design smarter, stronger and more diverse supply chains has been one of the main lessons of this crisis”.

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