A Positive Domino Effect

As the novel coronavirus disease (COVID-19) spreads around the world, the global supply chain is undergoing severe disruption with far-reaching effects. For example, when Chinese manufacturers temporarily stopped making auto parts, it affected the automobile industries in Japan and the Republic of Korea (ROK).

Wang Xiaosong, a research fellow with the National Academy of Development and Strategy of Renmin University of China, calls it the domino effect. With globalization, if the production of an item involves multiple stages, they can be done in different countries by one or more companies. This is how a global supply chain is formed, creating more job opportunities and boosting income. “However, it also means countries no longer rise or fall alone,” Wang told . “The global economy becomes like a game of dominoes, where a slight movement by one will affect the entire lot. China has integrated into the global value chain and is a hub of the Asian production chain. Therefore China’s capacity gap amid the pandemic may have a ripple effect on the global production system.”