Stewards of China Railway Kunming Bureau Group in Kunming, Yunnan Province, China, on June 2, 2022. A landmark project under the Belt and Road Initiative, the railway connects Kunming with Vientiane, Laos. (Photo by Wang Guansen/Xinhua via Getty Images)

Many China watchers have concluded that recent Chinese economic strategies have been an inevitable response to the Trump administration’s decoupling policies. According to these experts, if the United States seeks to decouple from China to strengthen its economy and perhaps weaken China’s, Beijing will craft its own response. Hudson Senior Fellow John Lee explains in a recent report what these experts get wrong.

Key Insights

1. China Sought Economic Decoupling First

China has tirelessly pursued its version of decoupling vis-à-vis the US since long before Donald Trump entered the White House. Beijing might not have ever used the term decoupling, but Chinese decoupling policies partly persuaded the Trump administration to craft its decoupling policies, which the Biden administration has largely adopted.

2. China Wants to Dominate the Asian Economy in Critical Sectors

China has been explicitly pursuing economic decoupling from US and allied economies on Chinese terms for at least a decade. While Washington seeks to decouple some aspects of its economic activity from China, Beijing seeks to dominate vast segments of the Asian economy and to decouple these segments from the US. This is the Chinese strategy and threat that the US vastly underappreciates. The most important segments are the high-tech and high-value sectors. These sectors are where competition is the most consequential and where decoupling on US terms needs to occur.

3. China Has Vulnerabilities, While the US and Its Allies Have Opportunities

China faces increasingly serious problems and obstacles regarding its decoupling strategy. Many of these arise out of structural weaknesses inherent in its political economy. So the US and its allies have considerable leverage and powerful options to ensure that they achieve decoupling from China on their preferred terms. The first steps are to understand (1) China’s actions and the motives behind them; (2) China’s strengths, weaknesses, and vulnerabilities; and (3) how the US and its allies can craft an evolving approach that better plays to their individual and collective strengths and advantages.

Quotes may be edited for clarity and length. 

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