The Bank of Korea published an issue note by Min Jae Park, Sunyoung Jung and Eun Chong Jeon finding that global economic links are being reorganized through connector countries rather than severed by geopolitical fragmentation. United Nations voting data show that most countries have moved closer to the United States on political and security issues since 2017, while their economic and development alignment has shifted in different directions. Vietnam, India and Mexico illustrate how economies can align more closely with the United States geopolitically while retaining strong links to China centered production networks. For Korea, production networks in the Association of Southeast Asian Nations, particularly Vietnam, increasingly connect domestic value added to final demand in both the United States and China. Between 2016 and 2022, the share of Korean value added exported to Vietnam and ultimately absorbed by U.S. final demand rose from 11.1% to 18.5%, while the share absorbed by Chinese demand increased from 7.3% to 13.9%. Among indirect routes to U.S. demand, the share passing through the ASEAN-5 increased from 4.9% to 8.3%, while the share through China fell from 10.7% to 6.8%. The note cautions that these networks can also transmit shocks. Tighter U.S. rules of origin, anti-circumvention investigations or disruptions in ASEAN could affect Korean firms and demand for Korean intermediate goods. It calls for monitoring these indirect exposures and diversifying production bases and supply routes.
2026-09-22Bank of Korea
Bank of Korea publishes analysis finding connector countries are sustaining trade and reshaping Korea’s supply chain exposure
Bank of Korea analysis finds that connector countries such as Vietnam are preserving global trade links by bridging U.S. markets and China centered production networks. ASEAN routes now carry a larger share of Korean value added to U.S. demand, while Korea’s links to Chinese demand remain substantial. The note calls for supply chain diversification to manage exposure to U.S. trade measures and disruptions in third countries.