Measuring Global Supply Chain Vulnerabilities Using Trade Network Analysis Method

ABSTRACT

With the trade network analysis method and bilateral country-product level trade data of 2017-2020, this paper reveals the overall characteristics and intrinsic vulnerabilities of China S global supply chains. Our research finds that first, most global supply-chain-vulnerable products are from technology-intensive sectors. For advanced economies, their supply chain vulnerabilities are primarily exposed to political and economic alliances. In comparison, developing economies are more dependent on regional communities. Second, China has a significant export advantage with over 80% of highly vulnerable intermediate inputs relying on imports of high-end electrical, mechanical and chemical products from advanced economies or their multinational companies. China also relies on developing economies for the import of some resource products. Third, during the trade frictions from 2018 to 2019 and the subsequent COVID-19 pandemic, there was a significant reduction in the supply chain vulnerabilities of China and the US for critical products compared with other products, which reflects a shift in the layout of critical product supply chains to ensure not just efficiency but security. China should address supply chain vulnerabilities by bolstering supply-side weaknesses, diversifying import sources, and promoting international coordination and cooperation.