The Unlikelihood of a US-China Decoupling
The new U.S. government under the leadership of Joe Biden will implement different domestic and foreign policies. China hopes that it will abandon the idea of decoupling, so that both sides can promote cooperation and exchanges, and work together more closely on the global stage.
In recent years, and particularly since Donald Trump became president of the United States, the concept of “decoupling” has been frequently discussed by scholars and media around the world.
In fact, this is not a new idea. As early as in the 1960s, scholars from Latin America and Africa developed the “dependency theory,” which posited that Third World countries were undeveloped and underdeveloped because of a dependence on advanced countries in the areas of market, capital and technology. In order to break free, these countries should therefore decouple themselves from rich nations by developing their own manufacturing industries through a strategy called “import substitution.”
However, in the 1990s, some advocates of the dependency theory acknowledged that decoupling was unrealistic and perhaps even impossible since mutual dependence and cooperation are highly necessary in the globalized era. The success story of China and the Four Asian Dragons proves that close integration with the global economy is the best way to promote economic development. Latin America’s own reform and opening-up to the outside world also indicates that decoupling is unrealistic.
While the idea of decoupling proposed by the dependency theory is not possible, the U.S. has been trying its best in recent years to decouple itself from China by imposing high tariffs on Chinese exports, and forbidding Huawei and many other Chinese companies from purchasing high-tech products. It has even implemented policies cutting academic and cultural exchanges with China.
Is decoupling between the United States and China likely? And would the U.S. benefit from such a move? The answer to both the questions is a resounding “no.”
First, it must be noted that decoupling is the one-sided wish of the United States, which has grown increasingly uncomfortable with China’s rapid development. In order to contain China, the U.S. believes that decoupling in economic, high-tech and other areas may prove beneficial. However, as a recent article in the Washington Post stated: “The United States and China have an increasingly competitive relationship, but they need each other, too, like conjoined twins. Hasty attempts at separation could harm them both.”
Second, China has no intention of decoupling from the United States or any other country. China understands clearly that, in the age of globalization, mutual dependence and win-win cooperation are important and necessary for all nations. During a press conference at the second session of the 13th National People’s Congress on March 8, 2019, Chinese Foreign Minister Wang Yi said: “Decoupling from China would mean decoupling from opportunities, from the future, and in a sense, even from the world.”
Third, over the past four decades or so, China and the United States have become increasingly intertwined in almost every field. Indeed, both countries have benefited from their close relations and cooperation with one another. U.S. companies have made great profits from the huge Chinese market, while China is now the largest or second largest foreign holder of U.S. Treasury securities. In many other areas, the United States has also profited substantially from its interactions with China. Therefore, in a sense, decoupling would be a double-edged sword.
Fourth, decoupling goes against globalization. The rapid cross-border movement of goods, capital, people and ideas, generates closer cooperation and exchanges between nations, big or small, rich or poor. Globalization is an inevitable trend, despite sometimes there are obstacles in its path. Decoupling would be tantamount to cutting off cooperation and exchanges–which is why it will not work.
Last but not least, decoupling is harmful to the development of global value chains (GVCs), within which every nation has its own place. As the World Bank points out, “Participation in GVCs, the international fragmentation of production, can lead to increased job creation and economic growth… GVCs are a powerful driver of productivity growth, job creation, and increased living standards. Countries that embrace them grow faster, import skills and technology, and boost employment.” Both the U.S. and China are key players in these chains, which makes it almost unimaginable that the world’s two largest economies could part company.
It is believed that the new U.S. government under the leadership of Joe Biden will implement different domestic and foreign policies. China hopes that it will abandon the idea of decoupling, so that both sides can promote cooperation and exchanges, and work together more closely on the global stage.