The COVID-19 pandemic is changing China’s participation in global value chains, according to a webinar in mid-August.

At the China Society of World Economics’ International Trade Forum (2020), scholars also shed light on how to respond to these changes.

In the global production network, as products have been increasingly crossing borders in various production stages, the risk of rupture and uncertainty in the supply chain when subjected to external shocks is also increasing, said Dong Yan, a research fellow from the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. The global spread of the pandemic has led to intensified doubts about this production model from all walks of life, triggering various forms of trade protectionism in many countries, such as speeding up capital withdrawal and launching export controls.

In the medium and long term, the Asia-Pacific industrial chain will tend toward simplification and domestication. In order to control industrial chain risks, Asia-Pacific countries and regions may further reduce their dependence on China, Dong warned.

It is necessary to focus on key industrial chains, especially those industries with a high degree of trade dependence, and actively seek upstream and downstream alternative markets for them to ensure a stable industrial chain, said Yu Zhen, deputy dean of the Economics and Management School at Wuhan University.

Yu suggested strengthening policy support for related enterprises in terms of capital and raw materials, especially for small and medium-sized enterprises.

In the view of Li Xiao, dean of the School of Economics at Jilin University, in the medium and long term, China should pay more attention to expanding domestic demand, further opening up the financial industry, and actively promoting international economic coordination.

Zhang Jianhua, dean of the School of Economics at Huazhong University of Science and Technology, suggested promoting the deep integration of domestic value chains and global value chains. China should continue to make full use of its advantages as a trade center and trade hub in the international industrial division of labor, and it should facilitate a new development pattern featuring both domestic and international cycles that can withstand the impact of global value chain reconstruction in a multilateral framework.

To upgrade China’s position in the global industrial chain, Yu suggested intensifying R&D in high-tech industries, improving the structure of China’s industrial chain and reducing the degree of dependence of key technologies on other countries.

It is imperative to improve the independent innovation capacities of enterprises and enhance their international competitive advantages, Zhang said. At present, new technologies represented by 5G, artificial intelligence, big data, cloud computing and the internet of things are triggering a new round of technological industrial revolution. China should give full play to the forward-looking and guiding role of industrial policies and technological innovation policies, and cultivate new innovation mechanisms and innovation entities that are compatible with them.

Zhang also suggested achieving a high level of opening up and effectively promoting international trade cooperation. By adjusting the country’s export subsidy and tax refund policies, optimizing the import structure, facilitating customs clearance and reducing the institutional cost of imports, the country will attract more advanced international brands and technologies to its market while enhancing the global competitiveness of domestic brands.

In addition, Zhang said that China should also actively participate in global governance and maintain a multilateral joint governance system for global trade.