The Impact of US-China Decoupling Policies on the Reconfiguration of US- and China-Based Global Value Chains - An Analysis of the ICT Industry

The US and China are central actors in international trade. In recent years, trade tensions between these two nations have escalated, particularly within technology-intensive sectors. It is crucial to conduct a deep analysis of the impact of US-China decoupling policies on the value adding activities, the gains in value-added, and the positions within the value chains for both countries, and for other nations involved in global value chains (GVCs).

This study the value-added dissemination at each stage within the information and communication technology (ICT) industry. Firts, the connotations of the decoupling policies of China and the US are defined through the lenses of Global Value Chain (GVC) theory and Hegemonic Stability Theory (HST). Second, empirical analyses are conducted to investigate the value-added gains, value-added ratios, and the reconfiguration of value chain positions within the ICT industry in both the US- and China-based GVCs, pre- and early-decoupling. Finally, the study interprets the impact of US-China decoupling policies on the GVCs reconfiguration, employing GVC theory and HST, and presents the propositions accordingly.

The ICIO data from 2016 to 2020 are collected and collated using the OECD's analytical AMNE database. The relevant sample data are then subjected to GVC network topology analysis, GVC curves analysis, and robustness tests utilizing RStudio. The findings indicate that the ICT firms in both US- and China-based GVCs experience an increase in value-added gains, a decrease in value-added rates, and an advancement in their GVCs positions. Additionally, industrialized third-party economies in US-allied countries, such as Taiwan, Japan, and France, show corresponding increases in value-added gains. The study concludes that China's policies related to independent innovation and cybersecurity, along with US policies on export control and investment restrictions, significantly impact the value-added performance of GVCs and the relative positioning of GVCs in the ICT industry. These findings illustrate specific changes in value-added gain changes among GVC-participating countries, thereby enhancing the understanding of the particular impacts of the US-China decoupling policies. Consequently, this study provides the insights for policymakers in China and the US and offers a theoretical framework for strategic development for firms in the ICT industry across the US and China and related countries.