• AXA IM
  • AXA IM Talk on Asia & China Market: Why China is still the world’s factory, and upgraded
Investment Institute
Macroeconomic Research

AXA IM Talk on Asia & China Market: Why China is still the world’s factory, and upgraded

  • 26 July 2021 (5 min read)

This month AXA IM’s Emerging Asia Economist, Shirley Shen, shares her latest research and insights on how China manages to upgrade its supply chain status against both trade war and the pandemic.


Please find the full script below:

Welcome to our monthly video, my name is Shirley Shen. I’m the Emerging Asia economist here at AXA Investment Managers.

We recently analysed China’s supply chain position in global trade, and how the “world’s factory” is able to maintain competitive by turning adversities into advantages.

The onset of the COVID pandemic and Sino-US trade war have disrupted supply chains and posed threats to China’s status as the world’s factory and top exporter.

However, what actually transpired in the past few years has been the opposite – China has not only maintained the status quo, but in fact also gained further market share in global manufacturing and trade.

China’s successful defense against the trade war and COVID-19 reflects the incredible resilience of its supply chain system. So the question is, where does this growing resilience come from?

In recent years, we have seen a clear and dramatic upgrade in China’s production system, which has moved up the value-chain from cost-based competition to skills-and-technology-based. This is also manifested in the type of products it sells to the rest of the world, which is increasingly more in the high-skilled sector.

Inevitably, this rapid emergence of China as a manufacturing and export powerhouse has reshaped the landscape of global trade and production network.

Our study shows that developed economies, led by Japan and, to a lesser extent, the US – have lost market share to China in the medium and high-skilled segments.

Meanwhile, due to rising wage and other costs, China’s loss at the low-value end of the production process have benefited other emerging economies, such as Vietnam.

Therefore, a reshuffling of the global production ecosystem has occurred, as China deepens its integration into the global economy.

Thank you for watching and stay safe. 

    Disclaimer

    This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and that past performance is no guarantee of future returns, investors may not get back the amount originally invested. Investors should not make any investment decision based on this material alone. 

    Some of the services listed on this Website may not be available for offer to retail investors.

    This Website has not been reviewed by the SFC. © 2022 AXA Investment Managers. All rights reserved.