Global value chains (GVCs) are entering a new phase. Political tensions, the digital revolution, and a push for resilient, sustainable supply lines are steering trade away from fragmented manufacturing hubs toward service-led, knowledge-intensive networks. At the heart of this ‘re-globalization’ is China, leveraging digital tools, open markets, and global links to evolve from a manufacturing powerhouse into a central node for services.
From Fragmentation to Service Integration
Decades of hyper-globalization built highly segmented production networks. Yet the COVID-19 pandemic and geopolitical “de-risking” strategies have spotlighted vulnerabilities and fueled a shift toward regional and service-centric models. By 2025, an estimated 70–80 percent of companies will diversify their supply chains, according to industry reports. China has used service exports—rising to $160 billion in the first four months of 2025, including $83 billion in knowledge-intensive services—to bridge divides and foster more resilient partnerships.
Digital Innovation and Open Markets
Digital upgrades to the China–Europe Railway Express illustrate the trend. Partnerships with firms like Germany’s DB Schenker have integrated 5G and AI to streamline cross-border logistics across 40+ countries, cutting costs by around 20 percent. Platforms such as Alibaba Cloud saw revenues climb 26 percent in Southeast Asia and the Middle East, empowering local digital transformations. Meanwhile, China’s digital economy now exceeds 10 percent of GDP, and it leads in generative AI patents worldwide.
Driving Inclusive Growth
China’s service advances are spilling over globally. Smart logistics at Peru’s Chancay Port boosted efficiency by about 20 percent, and BYD’s EV charging networks in Europe underpin a “green globalization” standard. Through frameworks like RCEP and the Belt and Road Initiative, China is deepening regional ties and attracting over 70 percent of foreign direct investment into services, promoting sustainable growth and shared prosperity.
Challenges and the Path Forward
Domestic slowdowns, inequality, and geopolitical bottlenecks remain hurdles. China has earmarked roughly $800 billion in 2025 special bonds for innovation, including services. Looking ahead to 2030, services are set to dominate GVCs. The emerging “China model”—rooted in market-driven innovation, entrepreneurial dynamism, and international collaboration—offers a blueprint for greener, more inclusive value chains and a fairer global economic order.
As GVCs evolve, service-led integration and digital ecosystems will shape the next chapter of globalization, unlocking new opportunities for countries and regions eager to build resilient, sustainable futures.
Reference(s):
China's service-led narrative in global value chain restructuring
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