Global value chains in a brave new world of geopolitics

Global value chains (GVCs) tightened economic interdependence and contributed to development in industrialized and industrializing states. Yet GVCs are progressively perceived as underpinning a country’s economic prowess and its ability to leverage technologies into military hardware and software, thus embodying hard and soft power. Providing a framework for understanding the domestic sources of this protectionist shift, the article analyzes the evolving GVC topography under the US-China trade and technology war. It finds that GVCs remained resilient to geopolitical and pandemic shocks until Russia’s assault on Ukraine, the deepest blow to the the ante-bellum GVC structure. China’s policy of maximizing GVC self-reliance under Xi Jinping triggered reactions by the US and allies. The battle over GVCs is far from over, its scope remains undefined, and its effects hard to estimate. Whether or not this battle enhances hard power, it also unleashes tradeoffs between hard and soft power.