Is China's decoupling from the US ‘inevitable’ due to the trade war?
- The speed and extent of the divorce will depend on negotiations
- Author encourages US to pursue Anglophonic trade alliances with other liberal economies in Pacific Rim
Decoupling of the United States and Chinese economies is “inevitable”, and the US should pursue an Anglophonic alliance to soften the blow, the author of a new book on China’s economic rise said on Friday.
The speed and extent of the decoupling will depend on negotiations between the world’s two superpowers, but it is already under way, with the shifting of US companies’ supply chains out of China and into other, cheaper Asian manufacturing hubs.
Stewart Paterson, a partner at fund management company Tiburon Partners and the author of China, Trade and Power, said that in future trading blocs could be based on ideology and could be similar in structure to the Five Eyes security grouping, an intelligence alliance consisting of Australia, Canada, New Zealand the UK and US, formed after the Second World War.
“I think an element of decoupling is inevitable,” Paterson said at the book’s launch in Hong Kong. “What is fairly certain is that the [Chinese Communist Party] is not prepared to give up control of the commanding heights of the Chinese economy. When you read [US Trade Representative Robert] Lighthizer’s criticisms of China, going back a decade at least, he would take a view that I would share, that a trade economy like this produces unfair outcomes,” he said.
Decoupling would involve disentangling complex supply chains established over many years. Most of these were set up after China’s accession to the World Trade Organisation (WTO) in 2001 opened the floodgates for western companies to established low-cost manufacturing bases there.