“Decoupling and breaking the chain” will not work, and deepening cooperation is the way out (Zhong Sheng)

“People’s Daily”, February 2, 2023

The economies of China and the United States are deeply integrated, and they cannot be decoupled, nor can they break the chain. As the world’s two largest economies, China and the United States should deepen cooperation to promote the development of bilateral relations.

In recent years, the United States has been obsessed with delaying or even interrupting China’s development process through “decoupling and breaking chains”. In terms of economy and trade, the U.S. has imposed tariffs on Chinese goods exported to the U.S. and has maintained so far. It not only restricts Chinese companies from investing in the U.S. for political purposes, but also continues to encourage restrictions on U.S. companies’ investment in China. In terms of technology, the U.S. not only suppresses Chinese high-tech politically Enterprises have also abused export controls to coerce and induce some countries to form small circles to contain China. The U.S. approach seriously undermines market rules and the international economic and trade order, threatens the stability of the global industrial and supply chains, and jeopardizes the recovery and development of the world economy.

It is unrealistic to decouple the economy from China. Sino-US economic and trade cooperation is a mutually beneficial and win-win relationship based on comparative advantages and market choices, with a highly complementary structure and deeply integrated interests. Mutual benefits and win-win results give Sino-US economic and trade cooperation a strong endogenous driving force. In the past two years, the trade volume between China and the United States has repeatedly hit new highs, breaking through 750 billion U.S. dollars in 2021 and reaching nearly 760 billion U.S. dollars in 2022, much higher than the 583.7 billion U.S. dollars in 2017. Bloomberg pointed out that this phenomenon is worth thinking about. “Although the talk of decoupling between China and the United States has prevailed in the past few years, this is not the case in reality.” China has a complete set of industries and good infrastructure. It has a population of more than 1.4 billion, a middle-income group of more than 400 million, and the world’s largest market size and huge consumption potential. The huge attractiveness of the Chinese market has made it a general consensus in the business community that investing in China is investing in the future. The US’s attempt to transfer the industrial chain out of China is not in the interests of US companies. The 2022 American Business in China white paper by the American Chamber of Commerce in China shows that China is still the preferred market for American companies, and 83% of companies have no plans to transfer manufacturing or procurement out of China.

Forcibly decoupling will only do more harm than good. Goldberg, a professor of economics at Yale University in the United States, wrote that the United States seems to have forgotten the fact that it has benefited a lot from China in the past few decades, and has adopted a series of measures against China. The idea is wrong that the rise of China does not necessarily mean the decline of the United States.” The United States sticks to the zero-sum game thinking, insists on provoking a trade war, and artificially “builds walls and barriers”, which will only harm others and benefit itself. Relevant studies have long shown that most of the costs of the trade war unilaterally provoked by the United States are borne by American companies and consumers. According to a report released by the American Chamber of Commerce, decoupling with China seriously threatens the interests of the United States in trade, investment, service and industry. American investors may lose 25 billion U.S. dollars in capital gains every year due to decoupling, and the U.S. gross domestic product will lose as much as $500 billion. A U.S. semiconductor company predicts that the new round of export controls to China will result in billions of dollars in lost revenue and reduce the research and development funds it can use to maintain global competitiveness. Former U.S. Treasury Secretary Summers believes that if the U.S. decides to pursue a policy of suppressing China’s economic growth in the name of national security, “it will be a huge and egregious mistake.”

Facts have repeatedly shown that China and the United States cannot be decoupled and the chain cannot be broken. The U.S. is pushing for “decoupling” with China, even at the expense of itself and its allies. This approach violates economic laws and is an irrational and unsustainable choice. Economic globalization is an objective requirement and an irresistible historical trend for the development of productive forces. Even in the face of US containment and suppression, China has maintained its status as the world’s largest trader in goods for six consecutive years, with an average of more than 73 million yuan of goods entering and leaving between China and other countries in the world every minute. The United States’ “decoupling” with China will not change the reality of economic globalization, but will only hand over opportunities for cooperation with China to other countries. China has the world’s most complete industrial system and the largest potential domestic demand market, and has the basic conditions for the internal circulation of the economy of a major country. This is the strong guarantee and the greatest confidence to deal with containment and suppression. “Decoupling and breaking chains” cannot stop China’s continuous progress in innovation indicators, nor can it stop the process of China’s high-quality economic development.

In order to contain and suppress China, the United States is pursuing unilateralism and protectionism, which is harmful to the world economy. A recent comment on the Australian East Asia Forum website pointed out that the U.S. policy looks very much like a crude protectionist industrial policy, and the U.S. has now become a “total destroyer” of the international trading system. Georgieva, managing director of the International Monetary Fund, warned that the long-term cost of severe trade fragmentation would be as much as 7% of global output; if technology decoupling was added, the losses for some countries could be as high as 30% of GDP. 12%. Iweala, Director-General of the World Trade Organization, also stated that “decoupling and broken chains” is not conducive to the development of the world economy and international trade. Singapore’s former deputy foreign minister Bilahari Kausikam believes that both the United States and China are “vital and irreplaceable” parts of the global system, and that if the worst fears of decoupling materialize, it will be a serious threat to both countries and the global economy. The price will be very high.

The deep economic integration of China and the United States can benefit from each other’s development. As the world’s two largest economies, China and the United States should deepen cooperation to promote the development of bilateral relations. Both parties should respect each other, benefit each other, focus on the overall situation, and provide a good atmosphere and stable relationship for cooperation between the two parties.

Original at http://paper.people.com.cn/rmrb/html/2023-02/02/nw.D110000renmrb_20230202_2-03.htm