China supply chain disruptions

Until the COVID-19 emergency, China has been the world's workshop. Now, 75% of US companies report that Coronavirus has disrupted their supply chains (ISM, 2020). The result is clear: many companies are now probably regretting their reliance on one single country (and namely China) for purchasing manufacturing inputs, with substantial consequences on supply chain management and international trade.

The analysis begins by introducing the problem and describing Chinese exports, continuing with an overview of the share of imports from China in different countries and sectors, aiming at identifying the most hit geographies and industries. A description of the survey conducted by the Institute for Supply Management (ISM) follows to contribute to determining the dimensions of the phenomenon. Historical similar examples are reviewed. Consequences, also regarding the US-China delicate trade relationship, are addressed, together with a summary of potential countries that would benefit from a regional supply chain diversification. Implications from an asset management perspective, along with potentially profitable investment strategies, are assessed.