On April 17, Center for International Security and Strategy (CISS) at Tsinghua University held its 10th Weekend Forum on Strategy and Security—Seminar on the Security and Stability of the Global Industrial Chain Due to the Impact of the Covid-19 Pandemic. It was co-chaired by FU Ying, chair of CISS, together with CHEN Xiaogong and YAO Yunzhu, both Academic Committee members of CISS. A panel of over 20 attendees joined the seminar including CISS Academic Committee members, research fellows, and special guests (list attached).

The seminar discussed current and upcoming impact of the Covid-19 pandemic on the global industrial chain and the challenges facing China, and suggested specific countermeasures.

Experts and scholars at the seminar focused on analyzing the characteristics and trends of the adjustments in the global industrial chain and their impact on China from an economic perspective. They believed that the pandemic has severely shaken the normal operation of the global industrial chain, hitting economic globalization harder than ever. The adjustments in the global industrial chain have already begun. Certain offshore outsourcing was replaced by nearshore outsourcing, which involves both Chinese and foreign companies. This has been accelerating since the China-US trade war escalated. The pandemic will prompt major economies to rethink their industrial layout and the security of their supply chains. Chinese companies are motivated to participate more proactively in the global layout. It is becoming more likely that some manufacturing capacity may migrate from China.

Scholars analyzed and pinpointed the likelihood of the United States and other Western countries drawing up policies that encourage companies to move back from overseas. They believe that the motivation behind such policies, for the Trump administration, is to implement its competition strategy against China, whereas countries such as Japan, France, and Germany are considering such policies mainly for diversifying risks and shortening supply chains to improve emergency response capabilities. Once the considerations of national strategy and security overrides those of costs and profits, and once the zero-sum thinking on security overrides the logics of cost-benefit industrial competition, cooperation in the international industrial chain will be fundamentally affected. In assessing the ensuing impact of the pandemic on the global industrial chain, it is also necessary to take into account changes in countries' perceptions and sentiments about China.

Scholars also believed that in view of the high level of specialization in the international division of labor, the interruption of the supply chain caused by the pandemic should be temporary. To identify the impact of the pandemic on the global industrial chain, it is necessary to distinguish levels and perspectives, not to generalize them, nor to confuse the principles of analysis. Conflicts and crises should be resolved with rational and reasonable strategies and methods; strategic conflicts and economic ones should not be equated with one another. China, which enjoys the most inclusive industrial categories in the world and comprehensive cost advantages, must maintain self-confidence. While reopening its economy, China must carry on outbreak prevention and control. It must keep on with reform and opening up, deepen its economic transformation, and speed up technological innovation. China should continue to promote the Belt and Road Initiative and forge regional cooperation in East Asia and Europe more proactively to consolidate regional value chains, to participate more intensively in international division of labor, and to build a modern, future-oriented industrial system, so that it may sustain its core competitiveness in the global industrial chain.

The Weekend Forum on Strategy and Security—CISS’s brand forum—regularly invites Chinese experts and scholars from various fields for discussions on subjects of interest concerning strategy and security. Previous topics include Sino-US relations, international strategy and security situation, the Belt and Road Initiative, China's global image and international communication, etc.