The econometric probe took five years’ worth of data on the intermediate goods trade – the components of modern supply chains, rather than entry-level data on finished merchandise exports that other established sources often resort to – and made some surprising discoveries:

Asia’s supply chain trade is growing and diversifying, even as the US and China decouple.
Decoupling remains largely a US-China phenomenon, and to a lesser extent, a China-Japan one.
Companies are indeed moving to reduce risk and diversify supply chains, but China’s importance as an exporter of componentry has increased in major trading economies, not fallen.
Supply chain growth has gravitated to 'hotspots' Vietnam, Indonesia, Taiwan, Australia, and India.
China's reliance on Taiwan for intermediate goods (mostly chips) has risen, not fallen. The geopolitical risks are real, and to some extent separate, but the economic relationship points to the natural bond. There's a lesson in here for Xi, if his people are bothering to pick up on it.

In short, supply chains aren't shrinking. They'll likely keep growing, though in different ways than they used to, even in the shadow of geopolitical tensions and new rounds of industrial policies worldwide.

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