Amidst the confluence of profound changes unseen in a century, the rise of anti-globalization sentiment and other factors, the “tug of war” in the global industrial and supply chains is becoming increasingly tense. Improving the resilience and security of China’s industrial and supply chains is a proactive response to global changes and a key part of the strategic adjustment.

Restructuring industrial chains

As global production systems change, China’s industrial and supply chains face the risk of manufacturing relocation. In this era of uncertainty, multinational corporations will inevitably revisit their functions and roles in economic globalization, potentially sacrificing efficiency or profits to ensure production stability. As a result, global industrial and supply chains are likely to become shortened, regionalized and geographically diversified. This will disrupt and restructure multinational enterprises’ original supply chains, especially breaking the long-term economic external circulation model formed in China. To address this impact on economic development, it is crucial to increase the resilience and security of industrial and supply chains.

Boosting resilience

It is essential to accurately grasp the connotations of the industrial and supply chains. The essence of industrial and supply chains is the extension of the value chain theory to different perspectives. The industrial chain is the chain-like relationship and spatial layout between various industries, enterprises, or entities that are related from upstream and downstream in terms of supply and demand, technology, and value. It covers the entire process of product or service provision and represents the unity of industrial organization, production process, and value realization. From the perspective of logistics supply, the supply chain describes the chain-like relationship and spatiotemporal distribution pattern between enterprises or entities based on upstream, midstream, and downstream relationships, which is the dynamic implementation of industrial chain logistics. The value chain focuses on describing the chain-like relationships and distribution patterns between value links from the perspective of production value appreciation, which is the value realization of the industrial and supply chains.

In addition, the connotations of the resilience of the industrial and supply chains should be accurately grasped. This encompasses four aspects: added value rate, stability, synergy, and control. Among them, the value-added rate refers to the domestic self-sufficiency rate of key links and core components in the industrial and supply chains, as well as the value-added ability of domestic industries embedded in various links of the global industrial chain. Stability refers to the ability to maintain the stable operation of the industrial and supply chains. Synergy refers to the combined efficiency of the upstream and downstream segments of industrial and supply chains. Control refers to the irreplaceability of the domestic industrial and supply chains in the global division of labor system, that is, the governance ability of the country in the global industrial and supply chains.

Going forward

To enhance China’s industrial and supply chains, several steps can be taken. Firstly, the advantages of a new system for mobilizing resources nationwide should be leveraged, breakthroughs in key core technologies in the manufacturing industry made, and the value-added rate of the industrial and supply chains enhanced.

Secondly, the building of a unified national market should be accelerated to fully leverage China’s advantages in large-scale domestic demand and enhance the stability of the industrial and supply chains.

Thirdly, the digitization and green development of industries should be promoted and the synergy of the industrial and supply chains enhanced.

Fourthly, the advantages of opening-up and cooperation platforms should be effectively utilized to enhance the control over the industrial and supply chains with a higher standard of opening-up to the outside world.

Duan Wei is from the Nanjing University Business School. Wang Bing is from the Yangtze IDEI at Nanjing University.