Global Supply Chain Reallocation and Shift under Triple Crises: A U.S.-China Perspective

2025-08-09

AI Summary

This study examines the compound impact of U.S.–China trade tensions, the COVID-19 pandemic, and the Russia–Ukraine conflict on bilateral trade and global value chain (GVC) participation and positioning. Method: We develop an innovative three-dimensional analytical framework—“participation intensity–functional positioning–post-shock recoupling capacity”—to assess supply chain resilience, integrating monthly bilateral trade data with multiregional input–output tables and employing a multi-period event study approach coupled with structural decomposition analysis (SDA). Results: Findings reveal China’s persistent upstream deepening in GVCs; the U.S. “China+1” strategy has not substantially reduced its structural dependence on Chinese supply chains; and ASEAN has emerged as a pivotal intermediate hub, significantly strengthening Asia–Europe supply chain linkages. The study advances theoretical understanding of GVC reconfiguration mechanisms under multiple crises and provides empirical foundations for building systemic resilience.

Technology Category

• Game Theory and Economic Paradigms: Coordination and Collaboration
• Planning, Routing, and Scheduling: Scheduling under Uncertainty
• Constraint Satisfaction and Optimization: Satisfiability Modulo Theories

Application Category

• Social Networks and Social Media: Social media analysis through the lenses of networks
• Graph Algorithms and Modeling for the Web: Foundation models and LLMs for Web-related graphs
• Responsible Web: Measurement, analysis, and circumvention of Web censorship

Abstract

US-China trade tensions, the COVID-19 pandemic, and the Russia-Ukraine conflict have disrupted and reshaped global supply chains. Existing studies caution that these tensions may not meaningfully reduce U.S. dependence on China-linked supply chains. This study examines the drivers of this unmet reallocation under overlapping geopolitical and public health disruptions. It investigates how these shocks jointly reconfigured bilateral trade and global value chain (GVC) participation and positioning among the U.S., China, and major trading partners during 2016-2023. Using monthly bilateral trade data across all sectors and multi-regional input-output tables for GVC decomposition, we combine a multi-period event-study with structural analysis to evaluate trade-flow disruptions and shifts in participation and functional positioning within GVCs. We find that China's exports remained robust, expanded across global markets, and sustained a rise in GVC participation, becoming more embedded in upstream segments through increased intermediate shipments to Asia and Europe. Meanwhile, U.S. imports increasingly shifted toward "China+1" partners, especially ASEAN, whose trade structures remain closely tied to Chinese upstream supply chains. These strengthening triangular relationships reveal how global reallocation and GVCs have evolved around the U.S. and China across successive shocks. Based on the evidence, we propose a supply chain resilience framework defined by three interacting dimensions: the level of GVC participation, the functional position within the value chain, and a country's capacity to re-couple in the post-shock landscape, conditioned by market diversification, economic complexity, and institutional capability. These findings carry significant implications for trade policy and industrial strategy in an era of geopolitical and geoeconomic fragmentation.

Problem

• Examining drivers of unmet supply chain reallocation under geopolitical and health crises
• Analyzing how trade shocks reshape US-China bilateral trade and GVC positioning
• Proposing a resilience framework for GVC participation and post-shock adaptation

Innovation

• Multi-period event-study with structural analysis
• GVC decomposition using input-output tables
• Supply chain resilience framework proposal