Will companies really ditch China?

As the coronavirus pandemic has plunged much of the world economy into turmoil, you've probably heard a lot about what might happen to "supply chains," the vast networks of manufacturing and shipping that help create and deliver all those plastic toys, iPhones, cars, pills, pants, yogurt, and N95 face-masks you've been waiting on.

The future of global supply chains is an especially important question for China, the world's manufacturing powerhouse. Some countries and companies now worry about relying too much on any single supplier for consumer and medical goods, let alone one where the government hid the first evidence of what became a global pandemic and sometimes enforces trade and investment rules in seemingly arbitrary ways. The US-China trade war — and the vulnerabilities it reveals for manufacturers — certainly don't help.

So, as foreign companies worry about whether continuing investment in China is a good idea, many countries are offering themselves as attractive alternatives.

Here's a look at three of those alternatives... with one big caveat.

India. Prime Minister Narendra Modi has long sought to boost his country's lagging manufacturing sector. Now New Delhi is redoubling its efforts to lure factories out of China, reaching out to firms directly, easing foreign investors' access to land, and even in some cases loosening labor regulations. India's fast-growing population of young people —workers and consumers — makes for a potentially attractive alternative to aging China. But Modi has a problem. His continued fondness for high tariffs as a way to protect local industry, and his decision to opt out of a major China-led Asian trade pact, limit his country's appeal for other Asian countries. After all, companies may want to leave China, but they still want preferential trade arrangements with the rest of Asia's massive consumer market.

Vietnam. As labor costs in China have risen over the past decade, some manufacturing has already relocated to Southeast Asia. Vietnam, which has streamlined trade and investment rules and concluded a free trade deal with the EU, is one of the biggest winners. In the six years to 2019, it alone absorbed almost half of all US manufacturing that left China, according to a study by Kearney, a consultancy. Now, having managed both the public health and economic aspects of the coronavirus pandemic well, the country is looking to benefit from a further exodus from China. But as some experts have pointed out, the country's relatively small (and aging) population, as well as its own dependency on Chinese imports, may limit its longer term appeal.

US. The Trump administration has seized on the economic fallout of what Trump calls "the China virus" to intensify its calls for American firms to bring manufacturing "back" to the US from China. Trade Representative Robert Lighthizer recently wrote that the age of "lemming-like" offshoring is now over. Data backs up his claims: The "Reshoring Index" in that same Kearney report, which measures the movement of manufacturing from Asia to the United States, found the largest reshoring jump on record in 2019. But making things at home is one thing – making them with human hands is another. As we've written, many companies are looking to automation to bring manufacturing closer to their home markets while also keeping costs down. That lessens the vulnerability of production to pandemics and tariff wars, but it doesn't do much for jobs.

Is China too big to fail? China still has huge advantages. First, rearranging supply chains isn't like changing table settings – it takes time to reorient billions of dollars in investment and infrastructure. Second, and more importantly, China has a billion consumers. It used to be that foreign companies wanted to be in China mainly because it was a cheap place to make things for export. But as China's own population has gotten more affluent (lifting more than 500 million people out of poverty will do that), the country is itself a leading consumer market for European and US firms. That makes decisions to leave the country much harder.

More from GZERO Media

- YouTube

Fifty years after the fall of Saigon (or its liberation, depending on whom you ask), Vietnam has transformed from a war-torn battleground to one of Asia’s fastest-growing economies—and now finds itself caught between two superpowers. Ian Bremmer breaks down how Vietnam went from devastation in the wake of the Vietnam War to becoming a regional economic powerhouse.

Eurasia Group and GZERO Media are seeking a highly creative, detail-oriented Graphic and Animation Designer who lives and breathes news, international affairs, and policy. The ideal candidate has demonstrated experience using visual storytelling—including data visualizations and short-form animations—to make complex geopolitical topics accessible, social-friendly, and engaging across platforms. You will join a dynamic team of researchers, editors, video producers, and writers to elevate our storytelling and thought leadership through innovative multimedia content.

The body of Pope Francis in the coffin exposed in St. Peter's Basilica in Vatican City on April 24, 2025. The funeral will be celebrated on Saturday in St. Peter's Square.
Pasquale Gargano/KONTROLAB/ipa-agency.net/IPA/Sipa USA

While the Catholic world prepares for the funeral of Pope Francis on Saturday – the service begins at 10 a.m. local time, 4 a.m. ET – certain high-profile attendees may also have other things on their mind. Several world leaders will be on hand to pay their respects to the pontiff, but they could also find themselves involved in bilateral talks.

A Ukrainian rescue worker sits atop the rubble of a destroyed residential building during rescue operations, following a Russian missile strike on a residential apartment building block in Kyiv, Ukraine, on April 24, 2025.
Photo by Justin Yau/ Sipa USA
Members of the M23 rebel group stand guard at the opening ceremony of Caisse Generale d'epargne du Congo (CADECO) which will serve as the bank for the city of Goma where all banks have closed since the city was taken by the M23 rebels, in Goma, North Kivu province in the East of the Democratic Republic of Congo, April 7, 2025.
REUTERS/Arlette Bashizi

The Democratic Republic of the Congo and an alliance of militias led by the notorious M23 rebels announced a ceasefire on Thursday after talks in Qatar and, after three years of violence, said they would work toward a permanent truce.

Students shout slogans and burn an effigy to protest the Pahalgam terror attack in Guwahati, Assam, India, on April 24, 2025. On April 22, a devastating terrorist attack occurs in Pahalgam, Jammu and Kashmir, resulting in the deaths of at least 28 tourists.
Photo by David Talukdar/NurPhoto

Prime Minister Narendra Modi has blamed Pakistan for Tuesday’s deadly terrorist attack in Kashmir, and he’s takenaggressive action against its government.

- YouTube

“When things are going fine, nobody really tests the skills and talents of their financial advisor, but this is a moment where really good advice can be extraordinarily powerful,” says Margaret Franklin, CFA Institute's CEO and President. In conversation with GZERO’s Tony Maciulis, Franklin describes the current financial climate as “maximum uncertainty,” rating it a 10 out of 10 on the risk scale.

President Donald Trump at a bilateral meeting with China's President Xi Jinping during the G20 leaders summit in Osaka, Japan, on June 29, 2019.
REUTERS/Kevin Lamarque/File Photo

On Wednesday, Donald Trump said he would deliver a “fair deal” with China and that he’d be “very nice” to the country after meeting with major retailers. But Beijing denies that there are any ongoing talks and has told the US it must cancel its unilateral tariffs before China will broker any negotiations.