Chinese trade diversion will shape Asian commerce

Significance US efforts to friend-shore and ‘de-risk’ supply chains have forced China to reroute trade flows, with India and Vietnam emerging as key low-cost manufacturing hubs. Meanwhile, China has become a major supplier of capital equipment and key components to other countries in Asia. Impacts Local and foreign companies in China will continue to shift manufacturing abroad amid persisting tense China-US relations. India and Vietnam will attract investment in sectors aiding production and exports, including financial services and logistics. China will increasingly focus on producing and supplying high-tech and capital-intensive goods for other regional economies. US export control measures could slow China’s level of technological advancement compared to Taiwan and South Korea.