The changing role of China in global value chains: Effects of the COVID-19 pandemic and geopolitical tensions

The implementation of China's "reform and opening-up" policy paved the way for leveraging the country's comparative advantage in labor costs and its abundant pool of low-skilled workers to attract foreign investments and transform the country from isolation to become an integral part of the global economy. China gradually deepened its embeddedness in global value chains (GVCs) and ultimately emerged as the leading trading partner to most of the developed countries, however a shift in global sentiment and a fundamentally wavered belief in trade liberalization – initially triggered by the aftermath of the 2008 financial crisis, subsequently amplified by geopolitical tensions, protectionist policies, national security concerns and the COVID-19 pandemic – set back the pace of globalization and specifically raised concerns about the inherent risks associated with the significant reliance on China – as well as on the geographically spread production networks in general – when it comes to global production. The aim of the paper is to examine how the aforementioned events of the past decade and the lately arising call for increased resilience affected China's role and weight in global production, as well as to identify trends in the dynamics of the country's GVC participation through the combination of qualitative and quantitative methods.

Keywords: GVC, China, pandemic, decoupling, resilience