China still part of the US supply chain, according to paper

US companies cut back on their direct purchases from China, but China’s influence on US supply networks continues. Presented during the Jackson Hole conference was a paper.

Despite the reduction in direct Chinese purchases by US businesses, China continues to have an impact on US supply chains. A paper was presented during the Jackson Hole conference. (Photo: Bloomberg)

China is still a significant component of US supply chains

Even while American businesses have made steps to cut back on direct imports from the Asian nation, China is still a significant component of US supply chains, according to a report presented at the annual Jackson Hole conference of the Federal Reserve Bank of Kansas City on Saturday.

The authors of the paper, Laura Alfaro of Harvard Business School and Davin Chor of Dartmouth College’s Tuck School of Business, found that between 2017 and 2022, the proportion of US imports from China decreased while the proportion of US imports from Vietnam and Mexico increased.

The US government’s actions, which included tariffs and were targeted at separating the US and Chinese economies, caused the shift, but Chinese businesses seem to be finding ways to lessen its effects, particularly through increased exports to and foreign direct investment in Vietnam and Mexico. Report from Hindustan Times.

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US and China continue to have indirect supply-chain connections

According to Alfaro and Chor, the US and China continue to have indirect supply-chain connections; in some ways, thanks to China’s economic relations to Vietnam and Mexico, these connections have even become stronger.

In an article from Bloomberg, although the US may be shifting its imports and sourcing to Mexico and Vietnam, it may de facto still be tied to and dependent on China through third nations, such as Mexico and Vietnam.

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