RIETI Report February 27, 2026

Geopolitical risk and supply chain diversification

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Dear Readers,

Welcome to RIETI Report. This bi-weekly newsletter will keep you updated with the recent columns, event information and research results by RIETI fellows and other leading economists in Japan and around the world.

In this edition, we are featuring topics related to a new era of geoeconomic fragmentation. While firm-level responses to today’s geopolitical shifts remain less understood, recent analysis by RIETI Senior Fellow Dr. Hongyong Zhang and his co-authors shows that Japanese multinational corporations are shifting toward more diversified networks across ASEAN without large-scale decoupling or reshoring. This suggests that globalization is not reversing but is instead moving away from single-country dependence toward multi-node regional networks.

We hope you will enjoy it. If you have any feedback, we would love to hear from you (news-info@rieti.go.jp).
Editors of RIETI Report (Facebook: @en.RIETI / X: @RIETIenglish / URL: https://www.rieti.go.jp/en/)

This month's featured article

Geopolitical risk and supply chain diversification

DOAN Thi Thanh HaEconomist at Economic Research Institute For Asean And East Asia (ERIA)

ITO AseiAssociate professor at the Institute of Social Science, the University of Tokyo

LUO ChangyuanProfessor, Institute of World Economy at Fudan University

ZHANG HongyongSenior Fellow, RIETI

Geopolitical risks are reshaping global production, yet little is known about how firms reallocate their supply chains in response. Using parent-affiliate matched data on Japanese multinational corporations (MNCs) from 2009–2022, this column shows that firms respond to rising geopolitical risk by diversifying production from China to ASEAN, rather than engaging in full decoupling or reshoring. The findings highlight a shift toward supply chain resilience through regional diversification.

>>> Read the full article
https://www.rieti.go.jp/en/columns/v01_0236.html

Related Papers

Geopolitical Risk and Supply Chain Diversification: Evidence from Japanese multinational firms
DOAN Thi Thanh Ha (Economic Research Institute for ASEAN and East Asia (ERIA)) / ITO Asei (University of Tokyo) / LUO Changyuan (Fudan University) / ZHANG Hongyong (Senior Fellow, RIETI)
https://www.rieti.go.jp/en/publications/summary/25120003.html

Offshoring Bias in Productivity Estimates: Evidence from Japanese customs data
FUKAO Kyoji (Chairman, RIETI) / HORIE Tetsushi (Nihon University / Policy Research Institute, Ministry of Finance) / INUI Tomohiko (Faculty Fellow, RIETI) / KAWAKUBO Takafumi (Fellow (Specially Appointed), RIETI) / KIM Young Gak (Senshu University / Policy Research Institute, Ministry of Finance) / KWON Hyeog Ug (Faculty Fellow, RIETI) / ZHANG Hongyong (Senior Fellow, RIETI)
https://www.rieti.go.jp/en/publications/summary/25120027.html

Responses of Australian Importers to the 2018-2019 US-China Trade War: Decoupling from China?
YAMASHITA Nobuaki (Aoyama Gakuin University / Australian National University / Swinburne University of Technology) / Shiro ARMSTRONG (Non-Resident Fellow, RIETI)
https://www.rieti.go.jp/en/publications/summary/25120010.html

Evaluation of the Impacts of Trade Restrictions between China and Japan
TAKEDA Shiro (Kyoto Sangyo University) / HIGASHIDA Keisaku (Kwansei Gakuin University) / YOMOGIDA Morihiro (Sophia University)
https://www.rieti.go.jp/en/publications/summary/24090006.html

Related Articles

Decoupling proceeding amid lingering U.S.-China tensions—Rising Concerns about the Impact on Japanese Companies
Chi Hung KWAN (Consulting Fellow, RIETI)
https://www.rieti.go.jp/en/china/23051601.html

Challenges for Japan’s Trade Policy: Rebuilding a Rules-Based International Order & Resilient Supply Chains with the Global South
KAWASE Tsuyoshi (Faculty Fellow, RIETI) / OBA Mie (Professor, Faculty of Law, Kanagawa University) / INOMATA Satoshi (Doctor, Chief Senior Researcher, Institute of Developing Economies, JETRO)
Moderator: TOYODA Masakazu (Chairman & CEO, Japan Economic Foundation)
https://www.rieti.go.jp/en/papers/contribution/kawase/14.html

Related Events

[10th RIETI-ANU Symposium]
Asia’s Response to Great Power Disruption and Global Economic Disorder (Summary)
https://www.rieti.go.jp/en/events/25101601/summary.html

[RIETI-USC Seminar]
Economic Security, US-Japan Cooperation and the Future of Globalized Production (Summary)
https://www.rieti.go.jp/en/events/24112201/summary.html

RIETI Research Papers List

[Discussion Papers]
https://www.rieti.go.jp/en/publications/act_dp.html

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