This paper provides evidence on the sourcing of Chinese inputs by Italian, Spanish and German firms, and analyses whether their ease of substitution affects firms' decisions to implement measures aimed at reducing the risk of supply disruptions.
In all the countries considered, firms that rely on hard-to-substitute Chinese inputs are more likely to expect a negative impact on their business if geopolitical tensions with China escalate. These firms are also more likely to implement measures aimed at reducing the risk of supply disruptions than firms purchasing Chinese inputs that are easier to substitute.
