INVESTMENT OUTLOOK FOR 2023 - 25 - CHINA CHI LO Senior market strategist APAC Deglobalisation in the context of ‘China decoupling’ ‘Decouple-from-China’ has been a market issue since the Sino-US trade war started in 2018, with some large developed countries pushing for reshoring their global production. This has led to concern about deglobalisation, or the breaking- up of supply chains and decelerating cross-border trade and investment. These developments have shaken the argument for investing in Asia, including China, which lies at the heart of many global supply chains. Restrictions on technology transfers, among other trade-disrupting measures, are currently the biggest uncertainty for Asia; a third of its exports involve electronic and other tech products. The Covid-19 crisis aggravated the concern over the outlook for manufacturing in Asia – disrupting global supply chains and creating shortages of everything from building materials and car parts to semiconductors. Asia’s supply chains shifting Though these worries have driven some large companies to cut their sourcing from or manufacturing operations in Asia and to shift them elsewhere, we see no large- scale decoupling from either the region or from China. Firstly, defying expectations that the trade war and the pandemic would crimp Sino- US bilateral trade, trade actually rose from an annualised USD 620 billion in June 2018 to USD 801 billion in August 2022. This was partly because US shipments to