The US-China Podcast
Should the U.S. Decouple from China?
Jun 24, 2024
Clark Packard, an expert on international trade, dives into the complexities of U.S.-China economic relations. He discusses the motivations behind America’s push to decouple, focusing on national security concerns like cyber threats and intellectual property issues. Packard also highlights the potential economic repercussions for everyday Americans, such as rising prices and impacts on farmers. Additionally, he argues that while reducing trade is feasible, a complete decoupling may be unrealistic, shedding light on the intertwined fates of these two global giants.
09:47
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Quick takeaways
- The push for decoupling stems mainly from U.S. national security concerns, overshadowing economic priorities and specific industry vulnerabilities.
- While complete decoupling from China seems improbable, significant reductions in trade and investment are anticipated in high-tech sectors.
Deep dives
Understanding Decoupling and De-Risking
Decoupling refers to the process of severing trade and investment ties between nations, which can be understood in terms of hard decoupling and sectoral decoupling. Hard decoupling means fully breaking these ties, while sectoral decoupling focuses on avoiding trade in specific industries, like cutting-edge semiconductors. De-risking, on the other hand, is a more gradual approach that seeks to minimize reliance on a single supplier due to economic or geopolitical risks. For example, the European Union has actively sought alternative natural gas suppliers following reduced reliance on Russian gas, showcasing a strategic shift in trade relationships.
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