China’s unrivalled supply chains still have weak links – why 5 years could fix them
While China’s manufacturing resilience remains formidable, vulnerabilities in high-end technologies, geopolitical tensions suggest that there are still chokepoints
As China drafts its 15th five-year plan – the next entry in a line of expansive blueprints that have set the tone for the country’s development over more than seven decades – we examine how these documents inform and reflect high-level policy priorities, what to expect in the coming iteration and how fine-tuning supply chains would work to China’s advantage.
On paper, when Apple unveiled its latest flagship smartphone earlier this month, all US-bound models of the iPhone 17 were said to be produced in India – a headline-grabbing announcement that reportedly reflected fraught China-US trade ties while amping up the decoupling rhetoric.
Yet, a “made-in-India” iPhone often only means that the final screws are tightened there, while the guts of the device – including batteries, displays and camera modules – still flow from a Chinese supply chain that is second to none, Patrick McGee, author of Apple in China: The Capture of the World’s Greatest Company, said in a media interview in May.
This highlights China’s manufacturing ecosystem, which, after decades of refinement, has cemented itself as the world’s most complete and resilient across numerous industries – an achievement that is often a point of national pride.
As Beijing mulls the country’s 15th five-year plan – a development blueprint that will shape its policy trajectory for the rest of the decade, over what looks to remain a period of domestic economic transformation and heightened external uncertainty – analysts expect policymakers to solidify what the nation has achieved in terms of supply-chain resilience and to move further up the value chain while addressing more chokepoints in hi-tech areas.
“China has very successfully expanded its production and manufacturing capabilities, particularly in the downstream and midstream segments of the tech industry, including semiconductor fabrication,” said Nick Marro, principal economist for Asia and lead for global trade at the Economist Intelligence Unit (EIU). “But when it comes to upstream processes, it is still very reliant on overseas partners.
“These are things that China has long identified as strategic priorities but [in which it] has really struggled to make breakthroughs, just given the dominance of existing incumbents.”
In the past five years, China has taken considerable strides after making supply‐chain strength and security a central plank of its economic strategy. The 14th five-year plan (2021-2025) explicitly called for “accelerating the development of a modern industrial system” and “developing a more secure and reliable industrial and supply chain”.