By John Romeo
For the past few years, business leaders and policymakers have been talking about de-risking and decoupling from China. Companies have rerouted supply chains and put “China+1” strategies in motion, effectively redrawing the map of global trade. At least on paper.
Peel back the layers and the reality looks very different.
Companies’ dependence on China hasn’t vanished; in many cases, it has deepened. When you trace global manufacturing beyond the first tier of suppliers, the dependencies multiply — sometimes by as much as 150 times, according to Marsh McLennan’s supply chain mapping tool Sentrisk. By combining manufacturing leadership with a dominant role as supplier of critical materials like pharmaceutical ingredients and rare earth minerals, China remains the backbone of global production. For all the rhetoric about resilience, major economies are still intertwined at a molecular level.
The issue goes well beyond just supply chains. While the AI industry in the West devotes significant resources to consumer use cases, like improving shopping experiences, China focuses on industrial efficiency, robotics, and military applications. With an arsenal of hypersonic missiles and an ability to arm satellites, China is ahead of the United States on more things than many care to admit, leading in 57 of 64 critical technologies, up from just three 20 years ago, according to the Australian Strategic Policy Institute. The truth is, we can’t decouple — and perhaps we shouldn’t try to.
That’s what makes the recent thaw between Washington and Beijing — symbolized by President Donald Trump’s “Dear Friend” remark to Xi Jinping — so significant. It’s not just political theater; it’s an acknowledgment of mutual dependence. Both leaders seem to recognize that neither side is willing to lose, and that is good news. It lowers the temperature, reduces the risk of miscalculation, and creates space — however narrow — for pragmatic engagement.
For business leaders, this moment poses a different kind of challenge. The question is no longer whether to disengage, but how to engage wisely. How do you balance resilience with opportunity? How much de-risking is prudent when your largest supplier may soon be your fiercest innovation competitor — or your most valuable partner?
The global economy has entered an era of selective interdependence in which national interests and global realities must coexist, and business strategy increasingly becomes foreign policy by another name. Navigating that complexity will demand clarity, courage, and, above all, agility.
As you read this month’s pieces, I encourage you to think about where interdependence shows up in your own world. Where are you truly exposed — and where might cooperation, not retreat, offer the greater return?
John Romeo is CEO of the Oliver Wyman Forum
Since the dawn of the Steam Age, every industrial era has brought untold economic progress, and unanticipated costs to society and the planet. Steam power drove the first industrial revolution but also led to dangerous working conditions in mills and child labor. The internet put a wealth of information and consumer options at the fingertips of billions even as it fueled misinformation and strained mental health.
Today, artificial intelligence, robotics, and more sophisticated green technologies are spurring a Fifth Industrial Revolution. For this revolution to benefit everyone and avoid harmful costs, business and policy leaders need to ensure that human decision-making, sustainable practices, and resilient systems are included alongside AI and other advanced technologies. Such an approach can enhance human productivity and creativity and boost global GDP by $1 trillion, or nearly 1%, according to an Oliver Wyman Forum analysis.
Given the huge opportunity for business and the planet, the Oliver Wyman Forum and the University of California, Berkeley are introducing the Industry 5.0 Index. It ranks 92 countries on their ability to use new technologies for societal wellbeing as well as productivity and profits.
Existing global benchmarks focus largely on competitiveness and innovation. The IMD’s World Competitiveness Ranking measures countries’ structural foundations for creating successful economies while the World Intellectual Property Organization’s Global Innovation Index identifies economies that best drive technological breakthroughs and lead in their adoption.
Our index builds on both and identifies the countries best positioned to lead in shaping a holistic model of progress.
We measure their preparedness on three main pillars: ensuring workforces benefit from the adoption of new technologies; promoting environmental protection; and strengthening resiliency to shocks such as cyber risks and supply chain disruptions.
Finland is the overall leader of the index thanks to a holistic approach tackling those three pillars. Its Innovation and Skills program allocates roughly $3.6 billion to fund research, new technologies, and regional and corporate innovation while supporting policies related to climate. It also has partnered with Sweden to bolster supply chain resilience with measures like shared emergency stockpiles.
Make tech integration more human
Human-machine collaboration is a core element of Industry 5.0 and a key paradigm shift from past industrial eras. Companies and countries that put AI at the center of upskilling initiatives can enhance workers’ abilities and boost competitiveness.
Sweden leads in the Talent sub-index thanks to heavy investments in professional upskilling opportunities that feature AI. A roughly $700 million plan from the Swedish government will invest in initiatives that center on health, life sciences, AI, and graduate schools for AI-related topics.
The private sector also is investing in Swedish talent: A computing and AI firm announced plans to build an institute to offer AI-related upskilling, while a major tech company committed $3.2 billion to cloud and AI infrastructure and AI training for 250,000 Swedes.
Use sustainability as an engine for growth
New technologies can unlock profit pools for businesses and governments. Integrating tools like AI to optimize energy or waste efficiencies can lower costs for businesses. And transitioning to a circular economy — in which the lives of products and resources are extended and reused — can save costs for industries.
The Netherlands leads the Sustainability sub-index thanks to large investments in clean energy and circular economy transitions. The Dutch government recently announced a 10-year, $40 billion climate and transition fund to support sustainable electricity, hydrogen and heating networks, and two new nuclear reactors. A separate fund will invest about $721 million to retrain 49,000 workers from fossil-fuel-dependent sectors for jobs in renewable or climate-neutral industries. The first of these projects trains workers to use concrete printers to recycle demolished building materials.
View resiliance as a new ROI driver
In an era marked by global uncertainties, economies need de-risked supply chains, reliable national infrastructure, and critical services like robust cybersecurity to outperform volatile markets.
South Korea leads the Resilience sub-index thanks to its efforts to bolster supply chain and cybersecurity preparedness. The government plans to invest nearly $40 billion by 2027 to expand domestic production, diversify imports, and strengthen key technologies. Additionally, $34 billion in financial support will be provided to companies involved in strategic technologies such as chips and autos. And recently, Korea created a new interagency body to address national security threats posed by AI.
Retailers have never had more data on their customers. That’s both a blessing and a curse: The volume of information can yield a wealth of useful insights but comes with heightened complexity and pressure to make the right decisions. To deliver on expectations, savvy companies are now enlisting AI agents that can help cut through the noise, according to Oliver Wyman.
AI agents autonomously perform complex data analysis, saving merchants time and effort by making everyday decisions on pricing, promotions, and other sales issues, escalating them only when human judgment is needed. Because pricing adjustments affect promotional programs, for example, agents could simulate both together so the company can better understand trade-offs and predict outcomes.
The technology also increases the speed and frequency with which merchants can make changes to product offerings, resulting in real-time sales insights that spare managers the need to laboriously pore over reports. Generative AI-enabled conversational reporting allows teams to conduct assessments in plain language, highlighting underperforming vendors or products and suggesting better options.
Personalization is another important application. The most sophisticated agentic AI implementations make it far easier for businesses to personalize offers, pricing, and experiences at scale. Marketing copy can likewise be personalized for true relevance using algorithms and generative AI.
As much as the technology has advanced, though, seasoned merchant judgment remains irreplaceable. There are valid brand and trust considerations with broader use of generative AI, so the right balance and transparency matter. But with savvy planning and proper safeguards, companies can spend more time on bold portfolio and supplier moves — and less time wading through data or guessing on outcomes.
A selection of smart reads on business, technology, geopolitics, culture, and beyond.
- Welcome To Our New Era. What Do We Call It? We’ve long since left the Cold War era, and even the post-Cold War, behind but our terminology has lagged. To better understand today’s world of fragmenting markets, shifting alliances, accelerating technological innovation, and climate change, it might help to name it. Welcome to the Polycene.
- The Military-Narrational Complex. We operate in a world in which the teller of the best story triumphs over the one who reasons most clearly. Little wonder, then, that competing stories tempt people and nations into war.
- Can AI Boards Outperform Human Ones? Researchers at the University of Pennsylvania’s Wharton School and the global business school INSEAD compared the performance of human directors with AI agents in a simulated board meeting. Their findings: The bots scored higher than the humans, particularly in airing dissenting views and reaching clear decisions.
- What The Bond Market Has To Say About Generative AI. Long-term US Treasury yields have fallen by an “economically large” amount after 15 major model releases in 2023 and 2024, potentially signaling that investors don’t believe AI will have a widespread positive impact on living standards, according to research by professors at the Massachusetts Institute of Technology.
- How AGI Became The Most Consequential Conspiracy Theory Of Our Time. AGI, or artificial general intelligence, is the most important narrative in tech, and to some extent, in the global economy. What if it’s just a techno-utopian fever dream?
- It’s Cool To Have No Followers Now. As social media has become more manipulable and automated by artificial intelligence, it may be that the best social profile is a low one.
Every month, we highlight key data points drawn from more than four years of consumer research.
