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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As we enter the homestretch of the US presidential election — which is set to be the most contentious, and possibly contested, in generations — Americans are also voting on 35 seats up for grabs in a battle for the control of the Senate. The 100-member body is currently held 53-47 by the Republican Party, but many individual races are wide open, and the Democrats are confident they can flip the upper chamber of Congress.

Either way, the result will have a profound impact not only on domestic policy, but also on US foreign relations and other issues with global reach. Here are a few areas where what US senators decide reverberates well beyond American shores.

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On September 23, GZERO Media — in partnership with Microsoft and Eurasia Group — gathered global experts to discuss global recovery from the coronavirus pandemic in a livestream panel. Our panel for the discussion Crisis Response & Recovery: Reimagining while Rebuilding, included:

  • Brad Smith, President, Microsoft
  • Ian Bremmer, President and Founder, Eurasia Group & GZERO Media
  • Jeh Johnson, Partner, Paul, Weiss, Rifkind, Wharton & Garrison, LLP and former Secretary of Homeland Security.
  • John Frank, Vice President, UN Affairs at Microsoft
  • Susan Glasser, staff writer and Washington columnist, The New Yorker (moderator)

Special appearances by UN Secretary-General António Guterres, European Central Bank chief Christine Lagarde, and comedian/host Trevor Noah.

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Jon Lieber, who leads Eurasia Group's coverage of political and policy developments in Washington, offers insights on the Supreme Court vacancy:

Will Senate Republicans, who stopped a Supreme Court nomination in 2016, because it was too close to an election, pay a political price for the change in tactics this time around?

Not only do I think they won't pay a political price, I think in many cases, they're going to benefit. Changing the balance of power on the Supreme Court has been a career-long quest for many conservatives and many Republicans. And that's why you've seen so many of them fall in line behind the President's nomination before we even know who it is.

At this point, do Senate Democrats have any hope of stopping President Trump from filling the ninth seat on the Supreme Court?

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In a special GZERO Media livestream on global response and recovery amid the COVID-19 pandemic, Eurasia Group & GZERO Media president Ian Bremmer discussed the difference between Europe's unified approach to economic stimulus and the deeply divided and political nature of the current conversation in the US. While initial stimulus support was bipartisan, there is little chance of Democrats and Republicans coming together again ahead of the November 3 presidential election. "It's red state versus blue state. President Trump's saying that coronavirus isn't so bad if you take the blue states out. He's president of the blue states, you can't take the blue states out," Bremmer told moderator Susan Glasser of The New Yorker.

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Panel: How will the world recover from COVID-19?

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