Report

US - China economic distancing in the era of great power rivalry and COVID-19

Publisher
International trade Manufacturing Relations with China Advanced manufacturing Supply chain United States of America China
Description

Despite much attention focused on the disruptive economic approaches of the Donald Trump administration towards China, it is the latter which remains far more restrictive, self-regarding and predatory when it comes to policies regarding industry, market access, innovation and the exchange of people and ideas. The Chinese Communist Party has long sought to strike an unequal and unfair bargain with the United States and other countries when it comes to participation in the global economic system.

This is the context in which the determination in the United States to diversifydisentangle and even decouple supply and value chains from China takes place — a sentiment which is growing stronger and becoming more broad-based as the United States becomes the new epicentre for COVID-19. Furthermore, this sentiment will remain even if there is a new president in the White House in 2021.

This raises complex questions about what these three Ds mean: what is feasible, probable and unlikely when it comes to economic separation between these two countries.

This report argues that lowering reliance on China as the central hub for the manufacture of parts and assembly of products for many traditional and current generation merchandise products will be difficult or impossible to shift. In this context, shifts out of China will only be gradual.

However, the list of strategic or critical products and sectors identified by the administration will continue to expand. This will be complemented by legislation and/or meaningful government policy to increase US self-reliance in these areas.

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