May 01, 2020

Global Supply Chains, Economic Decoupling, and U.S.-China Relations, Part 2: The View from the People’s Republic of China

By Sagatom Saha and Ashley Feng

Introduction: The World As Beijing Sees It

U.S. economic policy is not the only force at play threatening to disrupt the deep economic ties between the People’s Republic of China (PRC) and the United States (as discussed in part 1 of this article series). Chinese officials have also been driving a wedge. From the launch of the National and Medium- and Long-Term Program for Science and Technology Development (PRC State Council, 2005) to Made in China 2025 (PRC State Council, 2017), China has consistently pushed for self-sufficiency in specific sectors, limiting foreign exposure where possible . As the Trump Administration has adopted a more confrontational trade posture with China, introducing trade and investment restrictions, Beijing’s plans have only been accelerated.

However, the additional forces driving apart the world’s two largest economies are secular economic trends. The PRC faces a shrinking, shifting workforce that threatens to undercut its global manufacturing status, and a looming middle-income trap that encourages Beijing to compete with Washington in high-value-add sectors. Looking forward, the economic shock from the COVID-19 pandemic will likely make the United States and the PRC further averse to interdependence, if the pandemic has a lasting impact into the future.

Read the full article in The Jamestown Foundation's China Brief.

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