THREAD: The shock that the novel coronavirus has brought to the global supply chain is a technical issue, rather than one about “decoupling”:
new.cf40.org.cn/uploads/202006…
#supplychain #COVID19
Economic relation between China and the US has lasted for over 4 decades and there have been large amounts of investments into it on both two sides, and there is some ground to compare China-US relationship to a marriage.
It would be quite difficult for the two sides to divide their “marital properties”. A “divorce” would therefore be extremely expensive. The decoupling will cost a lot, not only for China but also for businesses as well as the economic and financial community in the US.
From a technical perspective, the longer the supply chain is and the more specialized the division of labor, the better it can help improve productivity, but at the same time, risks will also be increased.
Theoretically, it should be possible to determine through research the optimal arrangement of supply chain, that is, the optimal combination of output and risk under a series of constraints, and thereby maximize efficiency.
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