Sino File | US-China decoupling would spell the end of globalisation and China’s growth story

In the past couple of decades, nothing has been as prominent in remaking the global economy and reshaping global geopolitics as China’s rise and globalisation. China’s accession into the World Trade Organisation in 2001 – the landmark inception of the world’s most populous nation into the global capitalist system – drove both China’s explosive growth and economic globalisation.

In the past year, however, a completely different theme has come to the foreground: decoupling. Many in Washington fear or suggest that China and the United States, the world’s two largest economies, might go their separate ways, due to fundamental divergences in their philosophy on economics, governance and politics.

The idea, reportedly put forward by China hawks in the Trump administration, including trade adviser Peter Navarro, gathered steam this year as negotiators repeatedly failed to reach a comprehensive solution despite marathon US-China trade talks.

Indeed, decoupling has already started. US multinationals have begun to relocate some manufacturing operations out of China or sought alternative suppliers as trade tensions rise. US Congress is working on a host of regulations to restrict bilateral economic and technology exchanges. In retaliation, Beijing has redoubled its efforts in areas of high-end manufacturing traditionally dependent on US imports, such as semiconductors.

Decoupling has also affected both nations’ trading partners, with their declining orders hitting export-oriented economies such as Japan, South Korea and Taiwan.