My Take | Like the old mercantilism, decoupling will be just as ruinous for everyone

People of my generation were taught that mercantilism – “beggar thy neighbour” – was foolish and unworkable as a national economic policy, and had historically contributed to war. But just as you think the idea is as dead as a doornail, it has come back with a vengeance. Rechristened as “decoupling”, it now has the added ideological and military aspects, which make it not only more foolish and unworkable, but far more dangerous.

Perhaps the danger is a glass half full. It appears many Europeans, who suffered centuries of war, often under misguided economic policy, have at most paid lip service to decoupling, especially against China.

However, bent on containing China (and perhaps destroying Russia), it has been the pundits and politicians in the Anglo-American sphere who have been most enthusiastic about the “decoupling” battle cry. How ironic that it was the British Empire and later the American imperium that taught and imposed free trade on the rest of the world. Is it now worth turning back the clock just to fight China?

You don’t need a PhD in economics to know it’s counterproductive, and will end up backfiring. Many Western companies are voting with their feet – against it. To be sure, some are withdrawing or scaling back in China, many more are doubling down.

Tesla announced this month it plans to build a factory in Shanghai to produce its Megapack energy storage system, which provides lithium-ion battery packs to help store renewable energy for electricity grids and is a crucial driver for its energy storage and generation business.

Ford, the carmaker, is securing new mainland Chinese partners despite the Inflation Reduction Act of the Joe Biden administration, which offers massive subsidies to US firms, but disqualifies those with foreign business ties, especially those from China.