China is becoming a ‘factory to the factories,’ powering global manufacturing in places like Southeast Asia even as U.S. trade declines

China is becoming a “factory to the factories,” ramping up its exports of industrial components like smartphone parts, processors, memory chips and lithium-ion batteries, destined for final assembly in economies like Southeast Asia.

“We may buy fewer ‘Made in China’ goods going forward, but more products will have internal components manufactured in China,” says Jeongmin Seong, a partner at the McKinsey Global Institute (MGI), the consulting firm’s research arm. 

China’s exports of consumer goods declined by 2% last year...