China seeks to change economic landscape as Donald Trump escalates US decoupling risks

President Xi Jinping made two strategic decisions this week that could redefine China’s economic landscape in the coming decades as risks of decoupling from the United States continue to rise.

China should first focus its domestic economic efforts on activities in “central cities and city clusters”, a major shift from the traditional idea of even distribution across big and small cities.

Xi also called for an upgrading of China’s industrial supply networks to forge value chains that are “autonomous, controllable, safe and effective” by taking advantage of the country’s extensive manufacturing apparatus and a vast national industrial production system that is able to produce virtually everything from Christmas tree decorations to aircraft carriers.

“China is the world's largest manufacturer and is the only country in the world possessing all industrial sectors. Industry and technological collaboration between upstream and downstream enterprises is needed to build innovation-based and high value-added industrial chains,” read a statement following a meeting of the Central Financial and Economic Affairs Commission on Monday, published by the official Xinhua News Agency.

While the statement from the commission, China’s supreme economic policy decision making body, did not mention the US or the trade war directly, the meeting chaired by Xi came only days after US President Donald Trump publicly called upon American businesses to find alternatives to China, a development that could threaten its place in many global value chains.