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Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia

Author

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  • Mitsuyo Ando
  • Kazunobu Hayakawa
  • Fukunari Kimura

Abstract

Supply chain decoupling in the US–China confrontation has generated serious uncertainties for private businesses. This paper focuses on machinery international production networks in East Asia and tries to find quantitative evidence on supply chain decoupling by using international trade statistics, particularly from the viewpoint of middle powers such as Japan. While data on the sectoral level of trade do not show any clear evidence of supply chain decoupling, some specific US export controls indeed affect international transactions when examined at a finely disaggregated level. We econometrically measure the effect of some of the US policies on Japanese exports to China. The recent strengthening of US export controls related to supercomputers and advanced integrated circuits is likely to generate further effects. Nevertheless, the supply chain decoupling seems to end up as a partial one, and a large portion of International Production Networks (IPNs) may remain active. In conclusion, the paper briefly discusses the policy implications of the analysis.

Suggested Citation

  • Mitsuyo Ando & Kazunobu Hayakawa & Fukunari Kimura, 2024. "Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 62-79, January.
    • Handle: RePEc:bla:asiapr:v:19:y:2024:i:1:p:62-79
    DOI: 10.1111/aepr.12439
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    References listed on IDEAS

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    1. Mitsuyo Ando & Fukunari Kimura & Kenta Yamanouchi, 2022. "East Asian Production Networks Go Beyond the Gravity Prediction," Asian Economic Papers, MIT Press, vol. 21(2), pages 78-101, Summer.
    2. Fukunari KIMURA, 2006. "International Production and Distribution Networks in East Asia: Eighteen Facts, Mechanics, and Policy Implications," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(2), pages 326-344, December.
    3. Mitsuyo Ando & Fukunari Kimura & Ayako Obashi, 2021. "International Production Networks Are Overcoming COVID-19 Shocks: Evidence from Japan's Machinery Trade," Asian Economic Papers, MIT Press, vol. 20(3), pages 40-72, Fall.
    4. Hayakawa, Kazunobu & Ito, Keiko & Fukao, Kyoji & Deseatnicov, Ivan, 2023. "The impact of the strengthening of export controls on Japanese exports of dual-use goods," International Economics, Elsevier, vol. 174(C), pages 160-179.
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    Citations

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    Cited by:

    1. Naoto JINJI & Keiko ITO & Toshiyuki MATSUURA, 2025. "The impact of US export controls on firms’ export behavior in a third country: Evidence from Japanese customs data," Discussion papers e-25-008, Graduate School of Economics , Kyoto University.
    2. Aoyama Yuko & Song Eunyeong & Wang Shan-yu, 2024. "Geopolitics and geospatial strategies: the rise of regulatory supply chain controls for semiconductor GPN in Japan, South Korea and Taiwan," ZFW – Advances in Economic Geography, De Gruyter, vol. 68(3-4), pages 167-181.
    3. Ma Kai & Qi XU & Muhammad Sibt e Ali & Mohd Abass Bhat & Akhtar Rehman & Laeeq razzak Janjua, 2026. "Digitalization and institutional quality as drivers of global value chains: evidence from ASEAN using CS-ARDL Analysis," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 13(1), pages 1-15, December.
    4. Bonnet Paolo & Ciani Andrea & Zaurino Elena, 2026. "Throwing sand in the chips: unintended effects of export controls," JRC Working Papers in Economics and Finance 2026-02, Joint Research Centre, European Commission.
    5. Huu Nhan DUONG & Jota ISHIKAWA & Katsumasa NISHIDE & S. Ghon RHEE, 2025. "Geopolitical Risk and Corporate Behaviors: Propagation of shocks through global operations," Discussion papers 25029, Research Institute of Economy, Trade and Industry (RIETI).
    6. Sergio Mariotti, 2025. "“Open strategic autonomy” as an industrial policy compass for the EU competitiveness and growth: The good, the bad, or the ugly?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 52(1), pages 1-26, March.
    7. Keiko Ito, 2024. "Comment on “Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 80-81, January.
    8. HAYAKAWA, Kazunobu & KIMURA, Fukunari & YAMANOUCHI, Kenta, 2025. "The trade effects of export control regulations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 77(C).
    9. Liu, Xuemeng & Hassan, Joel & Gao, Hongzhi & Sharma, Revti Raman, 2025. "A typology of de-coupling in international sourcing by MNEs in selective de-globalization," Journal of International Management, Elsevier, vol. 31(6).
    10. BAEK,Youngmin & HAYAKAWA,Kazunobu & PARK,Danbee, 2026. "Firm Responses to Export Controls: Evidence from the Japan–Korea Trade Dispute," IDE Discussion Papers 991, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    11. Takatoshi Ito & Kazumasa Iwata & Colin McKenzie & Shujiro Urata, 2024. "Deglobalization: Editors' Overview," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 1-17, January.
    12. Sébastien Miroudot, 2024. "Comment on “Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 82-83, January.
    13. Ivan DESEATNICOV & Kyoji FUKAO, 2024. "U.S. Export Controls and the Restructuring of Global Values Chains: An analysis of Japanese multinationals’ exits from China," Discussion papers 24082, Research Institute of Economy, Trade and Industry (RIETI).

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