The Future of the Supply Chain in China and Asia

We may expect significant development in the giant market of China, expanding opportunities in the internal geography of the country, with new investments and industrial hubs increasing in the Central, West, and Southern regions of China, each with different speeds, technologies, and expertise. That is why, as the Italian Chamber, we monitor the economic value of trade, the volume of investments, and the number of CICC members in different provinces, prefectures, and cities to share key opportunities for Italian companies interested in this market.

We also need to consider the trends of supply chains in the Far East. Asia is the largest region by territory, demography, and GDP growth, far exceeding the world average, and China is the largest economy and the key industrial hub in the region, promoting regional development. Asia is the biggest market in the world, and its robust economic growth is expected to continue, driving expansion in trade. As a result, the demand for efficient and reliable supply chain networks will remain high, with investments flowing into infrastructure development, transportation, and logistics services. China and Asia remain top destinations for foreign direct investment (FDI), particularly in manufacturing and industrial sectors. China promoted the largest free trade area in the world with the Regional Comprehensive Economic Partnership (RCEP), which combines 15 different countries in East Asia, ASEAN, and the Pacific. Europe-Asia economic relations are strongly linked to this giant free trade market created by RCEP, and Italy-China trade and investments will grow with regional development.

Government policies, economic agreements, and incentives shape the supply chain dynamics of bilateral and multilateral relations between Europe and Asia, as well as between Italy and China. These factors impact the development of specific industrial clusters. For instance, in Jiangsu province, in the prefecture of Suzhou, Italy has its largest manufacturing presence outside of Europe and our chamber has the largest number of member companies out of Shanghai and Beijing. This is related to the relevance of the market but also to local policies that have contributed over the years to creating clusters in many economic segments. Recently, in the city of Verona, Italy, a meeting between the Italian Foreign Minister Antonio Tajani and the Chinese Commerce Minister Wang Wentao focused on increasing bilateral investments. Two days later, the Italian Council of Ministers, upon the proposal of the Minister of Foreign Affairs, approved a bill for the ratification and execution of the new tax treaty between Rome and Beijing. This will boost economic relations and increase bilateral investments with lower taxes for qualified investments. Economic incentives provided by local governments, such as tax incentives and subsidies, for both foreign managers and foreign organizations influence supply chain decisions, promoting specific industries and encouraging new FDI strategies.