If there is one thing that cannot be restored due to the COVID-19 outbreak, what would it be? One plausible answer would be the China-centered global supply chain. Since its entry to the WTO and the global trading system in 2001, China has played an indispensable role as the world’s manufacturing powerhouse. Even in the course of the U.S.-China trade war, the China-centric supply chain was sustained, albeit some reshoring of production sites to countries such as Vietnam in avoidance of U.S. tariffs levied on ‘made in China’ products. A complete reshoring effect to the U.S. from China had not been clearly visible. But as we witness the second wave of the pandemic originating from Beijing, it is questionable whether the kind of inertia that was built around the logic of benefits by relying on China-centric global supply chains would remain for global enterprises.

Because the virus knows no borders and is constantly mutating, there are no certainties on ending the pandemic, albeit the development of vaccines and medicines for cure in progress. The risks of dependence on mainland China as the primary production site are various: the pandemic laid bare public health risk as well as physical risk in the event of future cluster outbreaks within the nation in recurring cycles, let alone the heightened political risk. The China-centered supply chains would be very hard to break away from for companies with considerable sunk cost after years of heavy investment in China (i.e., continued production of NAND flashes by Samsung Electronics in the semiconductor fab in Xian, China). Nonetheless, the ‘China risk’ revealed by COVID-19 has altered the risk assessments by global companies for good.

Alongside such projections, shrewd maneuvering to go about technological development by policymakers will be required not just in the U.S. but in other major economies, as the Transatlantic trade war centering on digital taxation between the U.S. and the EU looms. As the decoupling process between the U.S. and China will coerce countries to engage in bandwagoning, countries that are not equipped with the technological prowess or the geopolitical savviness will find it challenging to keep pace with the digital transformation. The ‘contactless’ environment that has been bolstered by COVID-19 will promote the creation of AI-oriented platforms and its application to everyday life. Against this backdrop, the elephant in the room would be the varying degrees in regulatory measures on data protection and government surveillance in the absence of a global regulatory regime on AI.