The global economy has undergone a fundamental shift in the past 30 years. The traditional ‘them’ and ‘us’ way of thinking about economic exchange is outdated. Products are no longer ‘Made in Japan’, or, ‘Made in France’. They are made by inter-connected networks of countries and trade.
China’s rise as a key global player was supported by a number of East and South-east Asian economies. Its export-led development strategy, which saw the country grow at more than 7% annually for over a decade, was fuelled by an integrated trade network. A number of East and South-east Asian countries manufacturing components – intermediate goods – formed supply chains to feed China’s manufacturing base.
Countries such as Vietnam, Mongolia, and Indonesia have now developed strong manufacturing hubs of their own, and have become net exporters in their own right. Hence, China’s rise signals the rise of its regional neighbours, too.
The purpose of this diagram (which you can place your mouse over for more information) is to visualise the global value chains in East and South-east Asia through the mapping of intermediate goods trade among countries in the regions.
Source: UN Comtrade, 2017; The Delma Institute calculations, 2017
Explanatory notes on the diagram
- The circle adds up to 100%, as it represents the total export flows of intermediate goods across East and South-east Asian countries.
- China is the source of 29.5% of the intermediate goods exports among East and South-east Asian countries, and is the main exporter in the region.
- Indonesia (25.9%), Vietnam (16.8%), and Malaysia (14.5%) also account for a large share of the total intermediate goods exports in East and South-east Asia.
- The chord linking Malaysia and Singapore shows trade flows between these two countries. Thus, it is inferred that 13.1% of East and South-east Asian intermediate goods are exported from Malaysia to Singapore while only 0.4% of them are exported from Singapore to Malaysia. That the chord is wider on the Malaysian side means the country exports more to Singapore than the other way around. Therefore, the chord is in dark blue, since Malaysia is the net exporter in that case.
- Vietnam is a net exporter in its bilateral intermediate goods trade with every East and South-east Asian country, including China.
- By contrast, Japan is a net importer of intermediate goods in East and South-east Asia; the country’s trade with this region is an essential step in the making of products it exports throughout the world.
The above examples can be used to explore the diagram, and get other insights on the intermediate goods trade in East and South-east Asia.
(Cover image: Hnvfree/Wikimedia Commons CC BY-SA 4.0)