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China Leadership Monitor




The U.S.-China trade war has had a huge impact on the supply chains in China, accelerating their relocation that had already begun due to rising taxes, costs of labor, and other input factors. The exodus reported in the past year is only the tip of the iceberg, as more serious effects will not become apparent immediately. A major effect of the relocation on China is job losses, which may reach as many as 5 million in the coming years. Given the unlikeliness of a quick end to the trade war and the reluctance of the Chinese Communist Party (CCP) to make structural changes, the long-term prospects for supply chains in China are not promising because not only will existing firms gradually reduce their exposure to political and economic uncertainties, but also potential newcomers are likely to avoid China. Although the CCP rolled out some policies that may help alleviate the shock, it has yet to come up with specific policies to effectively address the problem.


© 2019, with funding by the Smith Richardson Foundation.

Included with the kind written permission of the publisher.


0000-0002-7296-084X (Li)

Original Publication Citation

Li, S. (2019). The relocation of supply chains from China and the impact on the Chinese economy. China Leadership Monitor.