China has been the manufacturing epicentre of the world over recent decades, playing a vital role in the global supply chain. Its manufacturing output reached US$3.8 trillion in 2020, equivalent to 29% of the world’s total. This dominance is likely to persist in the near term and beyond, as the manufacturing value-add is still expected to grow at a steady pace of 5% per year until 2030.  

However, the risks associated with this heavy reliance have become more pronounced over the past two years. On top of the lingering China-US trade tensions and rising tariffs, the COVID-19 pandemic has induced disruption on an unprecedented scale, exposing vulnerabilities in the global supply chain and many companies are now considering more nearshoring or reshoring to lower their concentration risk. Nonetheless, the trend still has a long way to go, as China still holds significant competitive advantages with its relatively mature infrastructure, high-quality workforce, extensive supply chains, and dense regional production ecosystems. As such, corporates are now more often looking to complement rather than replace their existing production through a ‘China plus one’ strategy.