D I P L O M AT I C A | CHINA-U.S. RELATIONS
The U.S. and China: The great decoupling Is the U.S. effort to “reshore” its supply chain reality or ruse?
Fen Hampson
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here are few signs that U.S.-China trade and security tensions are abating under the Biden administration, amid heightened fears that the COVID pandemic has exposed critical vulnerabilities in global supply chains and is contributing to rising inflation. There is also a lot of chatter in Western capitals about “decoupling” from China, particularly as
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political and diplomatic relations worsen over Hong Kong, Taiwan and China’s treatment of its Uyghur population. But such discussions about “decoupling” are not confined to the West. China, too, has its own decoupling narrative, which is being driven by President Xi Jinping, its powerful and authoritarian leader. But what does “decoupling” actually mean? And is it feasible given the extraordinary and unprecedented levels of economic interdependence we see today in the global economy in the third decade of the 21st Century. Definitional Quandaries
If you turn to the dictionary for an explanation, decoupling is defined as separating previously linked systems so that they
can operate independently from one other. In the traditional study of economics, it means separating negative “externalities” such as pollution or other kinds of environmental “bads” from the production of economic goods and services, usually via the imposition of fines or some kind of taxation mechanism (carbon taxes, for example.) In the context of U.S.-China relations today, decoupling has acquired a variety of different meanings, which are only tangentially related to the original dictionary definition. The term is sometimes used interchangeably with the concept of “reshoring” supply chains by, for example, relocating the production of essential products, such as medical equipment, to the United States (or Canada) where WINTER-SPRING 2022 | JAN-JUNE
WHITE HOUSEI
Trade and security tensions between China and the U.S. were exacerbated by former U.S. president Donald Trump, pictured here with Chinese President Xi Jinping, and they show few signs of abating under President Joe Biden.
