Commentary

China to move production capacity offshore

7 Aug 2015
Description

As a new key plank in its economic statecraft, China has determined that it will shift much of its labour-intensive industry offshore to relieve saturated domestic markets, allow the manufacturers to avail themselves of cheaper labour in Southeast Asia, Latin America and Africa, bring the factories closer to their markets, and expand China’s economic footprint globally. The offshore enterprises will be organised into industrial zones so as to establish ‘complete industrial chains’. This movement offshore will also be intimately tied to the broader Chinese regional initiatives of the Silk Road Economic Belt and 21st century Maritime Silk Road, the Asian Infrastructure Investment Bank and the further internationalisation of the Renminbi. Chinese influence on the receiving countries will be nothing short of enormous. Local industrial policies and structures will be subject to unprecedented external influence, while control over markets, labour and export policies will see profound change. Dependency on China in these countries—both economic and political—will likely grow.

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Published year only: 
2015
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