Decoupling with China has put US businesses at a disadvantage and Washington should persue “self-interested coordination” when dealing with Beijing , according to the former US Treasury Secretary Henry Paulson said. In an article published in the journal Foreign Affairs last week, Paulson lamented that China-US ties have been in free fall since he left office and warned that the current antagonistic relationship between the two has made the world “a more dangerous and less prosperous place”. Paulson wrote: “In 2023, unlike 2008, nearly every aspect of Chinese-US relations is viewed by both sides through the prism of national security, even matters that were once regarded as positive, such as job-creating investments or co-innovation in breakthrough technologies. “China and the United States are in a headlong descent from a competitive but sometimes cooperative relationship to one that is confrontational in nearly every respect. “As a result, the United States faces the prospect of putting its companies at a disadvantage relative to its allies, limiting its ability to commercialise innovations. It could lose market share in third countries,” he added. Blinken trip unlikely to fix US-China ties but Russia talk promising: analysts Paulson, who headed the Treasury under George W. Bush between 2006 and 2009, warned that the decoupling strategy would not work since even Washington’s closest allies are not following its lead . “This strategy is not working; it hurts the United States as well as China; and over the long term, is likely to hurt Americans more than Chinese people,” he said. “US allies and partners have made no secret of their desire not to isolate or contain Beijing.” China overtook the US as the top trading partner of the European Union in 2020 and the trend is more pronounced in Africa, the Middle East, South and Southeast Asia. “Washington risks pushing against economic gravity,” the former Goldman Sachs chief executive said, pointing to trips or planned trips to Beijing by the leaders of US allies such as Germany, France, Italy and the Philippines. And since Beijing has reversed its Covid-19 restriction policies and reopened internationally, the “less of China” strategy is less likely successful, he added. Paulson suggested in the case of hi-tech industries, some targeted decoupling will be necessary, “but wholesale decoupling makes no sense”. He added: “Washington needs to be tough-minded but fair, open to dialogue but not for its own sake, and prepared for a tough, long slog in pursuing self-interested coordination with China.” He cited areas such as the global economy, the fight against terrorism and climate change and nuclear proliferation as areas for such cooperation. On government-to-government exchanges, Paulson urged Joe Biden’s administration to deepen exchanges with Chinese leaders despite their differences, saying “friendship is no prerequisite for such coordination”. He said that Secretary of State Antony Blinken’s upcoming visit to Beijing was a “good start” and said that his successor as Treasury Secretary Janet Yellen and Fed Reserve chief Jerome Powell should also be speaking to their Chinese counterparts. US-China clash at WTO highlights divisions ahead of visit by Antony Blinken As for China, Paulson argued: “Beijing should not hold hostage cooperation on global issues such as climate change because it is upset about unrelated issues. “Linking different foreign policy issues undermines China’s effort to present itself as a constructive global problem solver.” Last year Beijing suspended inter-military dialogues and talks about tackling climate change and the global drugs trade after former US House speaker Nancy Pelosi’s visit to Taiwan – a trip it regarded as a violation of its sovereignty.