You're asking for decentralization. There's a reason you often get centralization in industries: higher productivity due to network effects and/or economies of scale. Even within China this is true, as some areas are particularly known for manufacturing (or specific types of manufacturing).
Spreading things out sound good until you realize it's doubled your costs or halved your productivity.
But I think we're missing an important point here: moving production to low cost environments just moves costs from business costs into external costs, putting them on society.
As for productivity, I think that's an issue that could be addressed but people generally avoid the answer to the why question.
> moving production to low cost environments just moves costs from business costs into external costs
[Citation needed]
Of course that can happen, but it's hardly guaranteed. If a company in the US moves a call center to a lower cost city, that's hardly foisting externalities onto anybody.
> people generally avoid the answer to the why question.
Typically when people say cryptic things like that it's because they hold some unhinged opinion, eg "Yes, schools in urban centers perform worse but nobody wants to answer the real 'why' question. Personally I think the black community...devolves into racist rant held up by racist 'science'".
So OP, you want to defend your honor by making transparent what you intentionally left opaque here?
Spreading things out sound good until you realize it's doubled your costs or halved your productivity.