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China fights US ‘de-risking’ with first-ever supply chain expo

The inaugural China International Supply Chain Expo is set to kick off in Beijing on November 28, as the world’s second-largest economy seeks to protect its key role in global manufacturing amid intensified trade restrictions imposed by the United States and its allies.

The five-day event, which is themed “connecting the world for a shared future”, aims to “help Chinese firms participate more deeply in the global industrial division of labour” and “promote the building of resilient global supply chains”, said Ren Hongbin, chairman of the state-backed China Council for the Promotion of International Trade (CCPIT), the expo’s organiser.

The exhibition will take up more than 100,000 square metres (1.08 million sq ft) of floor area, and feature five major sectors: smart cars, green agriculture, clean energy, digital technology and healthy living.

It is expected to attract more than 300 exhibitors, including 30 per cent from overseas, according to CCPIT spokesman Nie Wenhui. US companies form the largest cohort among foreign firms that have already signed up for the event, according to a report by state-run media Global Times citing a CCPIT statement.

The event comes as China’s importance as a global sourcing hub comes under threat from US “de-risking” efforts – Washington’s now-preferred term to describe its approach towards Beijing.

While the White House has repeatedly denied that the US wants to completely cut trade with China, the idea of reducing interdependency has been floating around since 2018, when then US president Donald Trump’s administration slapped tariffs on a wide range of Chinese goods.

Many of those tariffs remain in place, but the trade war has gradually transformed into a tech war, with Trump adding Huawei Technologies Co to a trade blacklist in 2019, banning the Chinese telecoms equipment giant from buying products and services from US companies without Washington’s approval.

The administration of Trump’s successor President Joe Biden expanded US export controls last October, barring Chinese firms from buying advanced semiconductor manufacturing equipment.

Under US pressure, Washington’s allies have followed with similar curbs that could further sideline China from the global chip supply chain and hinder its goal of achieving technological self-sufficiency.

Starting July, Tokyo will require Japanese suppliers to obtain licences before selling 23 types of chip tools to overseas clients. The Netherlands said earlier this year it would introduce export restrictions on semiconductor technology before summer.

Under US trade restrictions, sales of chip-making equipment to companies in China fell 23 per cent year on year in the first quarter, while global chip equipment sales increased 9 per cent as countries such as the US boost domestic semiconductor production, according to the latest data from SEMI, a global industry association.

Growing geopolitical tensions, along with rising labour costs and three years of Covid-19 restrictions in China, have also pushed global businesses to relocate manufacturing from China to other countries in Asia, particularly India and Vietnam.

Apple removed eight mainland Chinese suppliers but added only five from the country in its latest financial year, while its production sites in India increased to 14 in 2022 from 11 in 2021, the iPhone maker’s latest supplier list showed. South China Morning Post

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