Indicators of a New Power Structure

International trade used to be global, as the label “the global supply chain” indicates, but it is turning into a regional supply chain. No other place demonstrates this phenomenon as clearly as Asia. Asia's share of intraregional trade was 57.3 per cent in 2016, up from an average of 55.9 per cent between 2010 and 2015. It has been a general pattern, when analysing global trade, that trade among emerging markets and developing economies has been increasing, while that among industrialized countries has been in decline. What may be termed south–south trade had increased from 8 per cent of global trade in 1995 to 20 per cent in 2016. In contrast, north–north trade has fallen from 55 per cent in 1995 to 33 per cent today.

At first glance this may not seem much. But if the trend continues, and all signs indicate that it will, it is going to turn the tables of the global trade structure. It shows that whilst Asia in the past produced for consumption in the United States and Europe, it is now producing for consumption in Asia. From a logistics and transport point of view, the supply chain is becoming more compact, which will have repercussions on international transport, mainly sea transport, and in particular on container lines, which will need to adjust after decades of investment in global transport.

The global value chain is replacing the global supply chain as an indicator of the complexity of global trade. One example is that fifteen thousand components come together to make up a modern car. More than two-thirds of international trade—including the supply of smartphones, cars, TVs and computers—takes place within such global value chains. It allows each country to specialize in a particular role or phase of the chain. China, for example, exports many technological products, but it has in fact moved into the role of an assembler of components from many other countries, including the United States, sitting at the end of many global value chains.