The Bo’ao leadership forum is currently held in Hainan in South China. Sometimes labelled the Asian equivalent of the Davos meeting in Switzerland, the Bo’ao forum brings together business leaders and officials from Asia to discuss economic and related geopolitical issues.

In the context of the Bo’ao forum, Chinese state newspaper Global Times took the opportunity to discuss an article published in late February in The Economist. The Economist floated the idea of “Altasia”, a global manufacturing base distributed over a multitude of Asian countries. They argued that in the process of increasing decoupling from Chinese high-tech manufacturing, the distribution of supply chains across different Asian countries could be a solution for global business.

The underlying problem that The Economist had identified is that no single country in Asia can fully replace the manufacturing capacity of China, neither with regard to low-skilled labour nor with regard to high-tech manufacturing. Therefore, the argument goes, a redistribution of different production needs across a variety of countries might in the longer term allow for solving the problem of decoupling from China.

Unsurprisingly, the Global Times refuted this argument. The official position as advanced in the newspaper is that China is still an economic heavyweight that is not easily replaceable in Asia and beyond. This is a weighty point and an important consideration for companies and governments worldwide. It is hard to circumvent an economy the size of China.

However, there is one more aspect to take into consideration with regard to the potential shifting of manufacturing supply chains. If businesses consider distributing their manufacturing hubs across Asia because they are concerned about political tensions with China, then they should equally consider the potential political risks to these supply chains once distributed across the region. Global trade is very vulnerable to disruption of peaceful shipping and longer supply chains contain more points of vulnerability. Businesses would do well to not only consider their political risks within China, but they should also keep an eye on the length, complexity and therefore vulnerability to political risks of their supply chains and transport routes.