World Bank Launches 'Decoupling from China' Supply Chain Fund

Global Supply Chains Concentrated in China
Supporting Manufacturing and Processing in Developing Countries
"Fostering Diverse Mineral Value Chains"
Korea to Contribute $3 Million to Fund

The ‘de-China’ supply chain fund, led by the World Bank (WB), has been launched. It is interpreted as an effort to prevent the monopolization of supply chains by specific countries and to support resource-producing countries in processing and manufacturing, thereby counterbalancing China.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho (third from left), attending the International Monetary Fund (IMF) and World Bank (WB) Annual Meetings, is taking a commemorative photo at the launch event of the Supply Chain Strengthening Partnership held at the plenary hall in Marrakech, Morocco, on the 11th (local time). Photo by Ministry of Economy and Finance

On the 11th (local time), the WB held the launch event for the Supply Chain Resilience Partnership (RISE) in Marrakech, Morocco. The event was attended by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, World Bank President Ajay Banga, as well as finance ministers from major countries including Japan, India, and Canada.

The partnership aims to assist low- and middle-income countries not only in mining eco-friendly related resources but also in processing and manufacturing. To this end, a fund is established at the WB, with participating countries contributing. The formed fund will support emerging and developing countries in Asia, Africa, and Central and South America. Korea, Japan, the United Kingdom, Italy, and Canada are participating in the partnership.

The WB and major countries created the processing and manufacturing support fund to prevent supply chain concentration. Until now, the WB has supported resource mining in developing countries through multilateral trust funds. However, there was no support for post-mining processes, leading to dependence on certain countries. In particular, the processing of rare earths and lithium used in electric vehicles (EVs) and the manufacturing of solar panel substrates have been mostly monopolized by China, making practical supply chain diversification difficult, according to many critiques.

There is also an interpretation that the WB fund is a measure targeting China. Although China was not explicitly mentioned, it is the representative country with high monopoly power in manufacturing and processing within the global supply chain. Already, G7 leaders pledged in May at Hiroshima, Japan, to cooperate on resilient supply chain management for key products such as critical minerals, semiconductors, and batteries. At that time, Japan’s Finance Minister Shunichi Suzuki said in an interview with foreign media that while the statement was not specifically aimed at China, G7 countries believe that many supply chains are excessively concentrated in China.

The launch of this fund is expected to accelerate the reorganization of global supply chains. The WB explained, “The partnership will help build resilient economies and foster more sustainable and diversified global mineral value chains,” adding, “It will activate private and public investments in critical minerals and eco-friendly energy manufacturing sectors.”

Korea plans to contribute $3 million to the partnership. Although the partnership was initially discussed mainly among the G7 and the WB, Japan proposed Korea’s participation during the Korea-Japan Deputy Finance Ministers’ meeting in June. Subsequently, Korea decided to join the partnership after reviewing the supply chain stabilization effects through cooperation with the G7 and others.

Deputy Prime Minister Choo emphasized, “The RISE program will create added value by playing an important role in processing and manufacturing,” and added, “It will lead to new growth opportunities for developing countries.”