What would the US “de-coupling” with China really look like?

What would the US “de-coupling” with China really look like?

Last week, Washington and Beijing struck a deal to pause their costly trade war. The US held off on new tariffs and reduced levies on some other Chinese goods, and China promised to buy more US goods and protect intellectual property rights better.

But don't let the trade truce fool you: powerful political forces are continuing to push the two countries apart, politically, economically, and technologically – a process that's been called "decoupling".


But what does decoupling really mean? And why should you care?

What's Decoupling? For decades, the two countries have had a basic bargain: the US invents, China builds, everybody wins.

But there's a growing view among politicians in the US that, rightly or wrongly, this bargain is bad one. Sure, it's given Americans access to cheaper imported consumer goods, they say, but it's also cost millions of US manufacturing jobs and strengthened a strategic adversary that doesn't share American values. At the same time, there are national security concerns about Chinese firms with ties to the government supplying technology to US critical infrastructure, including the 5G data networks that will power the next phase of the digital revolution.

So advocates of "decoupling" want to tear up this bargain and disengage with China. They want to use tariffs to pressure US companies into moving their plants out of China, and they seek to cut off China's access to advanced US technologies. They also want to make it harder for Chinese computer scientists to study in the US.

"Ok, but how does this affect me?"

It depends who you are, and how far decoupling goes. Here's a view from few different perspectives.

You're a student who just dropped your iPhone in the toilet. Already an expensive mistake. But if decoupling gets so bad that the iPhone is no longer made in China, the cost of a new one will almost certainly go up. You'll pine for the days when an iPhone X cost only $1,000.

You're a recently graduated Chinese PhD in computer science. A few years ago you'd already be applying to US universities of companies, but now you've started looking at A.I. post-docs in Canada and Europe instead.

You're a country like, say, Brazil – You want your economy to have good access to ultra-fast 5G data networks that will power more efficient cities and factories, and driverless cars. And China's Huawei is the world's biggest and cheapest supplier of 5G tech. But you are under huge pressure from the US, a major economic and regional partner, not to do a deal with Beijing and to buy from Western competitors instead. It's tough to have both ways -- which technology will your government choose?

You're Xi Jinping. Mastering A.I. and big data are the key to growing your economy while maintaining the Communist Party's grip on power. And given the bipartisan US backlash against China, you can see the writing on the wall. So you recently raised $29 billion to pump into China's domestic semiconductor industry to try to break its dependence on the US for this critical technology. If the US wants to decouple, so be it.

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Normally, such a drastic slowdown would have put the ruling Communist Party in a tizzy. But this time, Xi Jinping knows this is the price he must pay for his big plans to curb rising inequality and boost the middle class at the expense of the CCP's traditional economic mantra: high growth above all else.

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In recent years, the populist-nationalist governments of former Communist bloc members Hungary and Poland have flouted some of those rules in order to boost their own popularity with citizens suspicious of the EU's liberal values on issues like immigration and minority rights. In response, the EU has scolded these "illiberal" governments and threatened forceful action – so far without much effect.

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Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:

What is the legacy of Colin Powell?

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Ian Bremmer's Quick Take:

Happy Monday, everybody. And a Quick Take for you. I wanted to talk a bit about Taiwan. I'll tell you, I've talked about it in the media over the last couple of weeks and almost every questioner has been trying to prod me towards, "are we heading to war?" Then I was with some friends at the Trilateral Commission on Friday. I like that group a lot. It's one of these groups that a lot of conspiracy theorists pretend secretly run the world, like the Bilderbergers and the Council on Foreign Relations. Now having attended all three, I can tell you, if they do run the world, they are not inviting me into the rooms where they're making those decisions. If they are doing that, they're also doing a lousy job of it.

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Colin Powell's legacy

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