US-China tensions could drive more firms to diversify supply chains to Southeast Asia, AMRO says
- Southeast Asian economies stand to gain further from multinational firms looking to diversify supply chains from China, says a new report from Asean
- Labour-intensive assembly operations and some capital-intensive industries like cars, machinery and electronics are most likely to relocate
More multinational companies could yet reconfigure their China-centred supply chains because of manufacturing disruptions during the coronavirus pandemic, a mood of heightened protectionism and changing geopolitics, a new report said on Wednesday.
That is the claim from the ASEAN+3 Macroeconomic Research Office (AMRO), a regional macroeconomic surveillance unit based in Singapore that represents the 10 members of the Association of Southeast Asian Nations (Asean), plus China, Japan and South Korea.
“More multinational enterprises operating in global value chains that are highly dependent on China will seek to diversify suppliers to build resilience,” it said its annual flagship report.
“Asean economies stand to gain in attracting many of the global value chain-related investments.”
The report adds to analysis in the past two years that foreign investors are rethinking their operations in the world’s second largest economy as tensions between China and the West ratchet up over issues ranging from trade to Hong Kong to the treatment of Uygurs in Xinjiang.