Morning Wire

Yellen in China: Decoding the Complexities of Decoupling | Saturday Extra

Jul 8, 2023
David Goldman, a Claremont fellow and deputy editor of Asia Times, dives into Treasury Secretary Janet Yellen's recent four-day visit to China. He discusses the delicate balance of trade and human rights issues amid rising tensions. The conversation touches on the challenges of decoupling from China's supply chains and the risks of military aggression in the Taiwan Strait. Goldman also analyzes potential U.S. strategies in response to Chinese posturing, emphasizing the high stakes of the global power dynamics at play.
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INSIGHT

Yellen's Visit and Trade Tensions

  • Janet Yellen's visit to China has low expectations from the Chinese side, focusing on trade tensions.
  • The main issue is US restrictions on chip technology exports, causing China to retaliate with export controls on gallium and germanium.
INSIGHT

Decoupling Challenges

  • Decoupling from China is proving difficult due to complex, interconnected supply chains.
  • Friend-shoring shifts final assembly, but China often still dominates intermediate and capital goods exports.
INSIGHT

Decoupling Impossibility

  • Decoupling from China is arithmetically impossible in the short term due to the US reliance on imported capital goods.
  • The US needs to import more, including from China, to revitalize its capital goods industry.
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