China is becoming an increasingly important part of Asian supply chains for intermediate or semi-finished goods, according to Asian Development Bank (ADB) chief economist Albert Park.
The country’s share of intermediate goods in intraregional trade in Asia had been increasing over time, Park said in an interview with Chinese state news agency Xinhua.
"There is a lot of intermediate goods trade among countries in the Asia-Pacific [region], and China's share of intermediate goods has been increasing over time. So, China is definitely still a key part of the supply chain relationships in the region," Park was quoted as saying.
According to the ABD’s Asian Economic Integration Report 2023, which was released earlier this year, China contributed 37.6% of the region's total trade growth in goods in 2022.
The report said that regional trade integration continues to deepen, but it found stronger supply chain links in primary and low-technology sectors than in high-technology and business services.
This presents an opportunity for the region, Park suggested.
"I think under the Regional Comprehensive Economic Partnership (RCEP) [free-trade] agreement, the supply chain relationships and the complexity of the supply chain relationship should increase over time," he said.
Park also said China’s economic weight was largely responsible for the growth of intraregional trade in Asia over the last three decades – at the same time as it had stagnated in Europe and North America.
RCEP signatories are Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
US initiatives such as the Indo-Pacific Economic Framework (IPEF) trade agreement are widely believed to be aimed at trying to lessen China’s influence in global supply chains. However, countries such as Vietnam, which are positioning themselves to benefit from reconfiguration of global supply chains, remain highly dependent on China for the supply of intermediate goods.
"Something unique about the Asia-Pacific [region] is a commitment of a lot of governments in the region to be part of an open multilateral trading system and to integrate their economy with other economies of the region," Park added.
He estimated that China would see GDP growth of around 5% this year.
Earlier this month, ADB president Masatsugu Asakawa called for regional cooperation to tackle climate change and supply chain disruptions.
“The threats confronting us today are quite different from those of three decades ago,” he said. “It is crucial that we work collectively to tackle these challenges, the most pressing of which are climate change, food and energy security, and trade and supply chain disruptions.”