Sino-U.S. "Decoupling" and Its Impact: Risks and Opportunities

Sino-U.S. "Decoupling" and Its Impact: Risks and Opportunities

Zhao Kejin,

Associate Dean and Professor of School of Social Sciences, Tsinghua University

Novel coronavirus pneumonia has accelerated the great changes unseen in a century in the world. Against this background, how to maintain and consolidate the overall situation of world peace and stability is a common strategic issue facing all countries, including China.

I. American "decoupling" and its harm

Since taking office in the White House, U.S. President Trump has hyped up the fallacy of "economic decoupling between the two countries", aiming to cut off the close economic ties between China and the United States, regulate the development of China's high-tech industry and military industry, and even isolate China regarding its participation in the regulatory system reform of the World Trade Organization, so as to block the momentum of China's peaceful development. The tendency of protectionism, bullying and unilateralism in the United States is constantly strengthened, bringing severe challenges to the Sino-U.S. relations and the world.

In recent years, driven by some "deep state" and political figures, the U.S. government has been promoting a step-by-step "decoupling" strategy with China. On November 19, 2018, the Bureau of Industry And Security of the U.S. Department of Commerce proposed an export control framework for China's key technologies and related products to regulate 14 frontier technology domains, including biotechnology, artificial intelligence, data analysis, quantum computing, robotics, brain computer interface, etc. Meantime, under the pretext of national security, the United States wields the big stick of sanctions to exercise "long arm jurisdiction" over Chinese enterprises and individuals. Since May 2019, the U.S. Department of Commerce has consecutively added 150 Chinese companies with global competitiveness to the sanctions list, including Huawei, SinotechDawning, CGN group and its affiliated companies, Dahua Shares, Hikvision, iFLYTEK, Kuangshi Technology, Shangtang Technology, ETU-link Technology, MeiYaBaiKe, Qihoo 360 Technology, Yuncong Technology, etc. On August 5, 2020, the United States announced five major measures to "clean network", including clean carriers, clean stores, clean apps (software), clean cloud and clean cables, and particularly named 7 Chinese technology companies including Huawei, China Mobile and Baidu, etc. so as to ban more applications software from China and further restrict Chinese companies from entering the cloud system of the United States. On August 6th, Trump signed an executive order, which prohibits any American company or individual beginning with September 20th from entering a business deal with ByteDance, the Chinese parent company of the international version of TikTok, or WeChat affiliated to Tencent. The U.S. side has repeatedly abused its national strength to suppress and contain Chinese high-tech enterprises under the pretext of safeguarding national security again and again, and in essence is to maintain its high-tech monopoly position. This violates market principles and international economic and trade rules, seriously threatens the security of global industrial chain and supply chain, and is a typical hegemonic act. The above facts fully show that the United States has locked China as a strategic competitor, promoted the economic decoupling between China and the United States, and made every effort to suppress China's development process, so the strategic competition between China and the United States is inevitable.

The "decoupling" strategy promoted by the United States is not only limited to the economic field, but also a "combined movement" covering "withdrawal", "building a wall" and even "severing relations". First of all, "decoupling" means "withdrawal". In recent years, the United States has consecutively withdrawn from UNESCO, the Paris Agreement, the Universal Postal Organization, the World Health Organization and boycotted the World Trade Organization, and become the "destroyer" of today's international order. Especially after the outbreak of the COVID-19 pandemic, the United States has not played a role as a responsible major country in international anti-pandemic cooperation, instead, has become aggravated and increasingly fierce in the practice of bullying and protectionism, and has repeatedly put pressure on China by "stigmatizing it", pushing the Sino-U.S. cooperation to a difficult position. Second, "decoupling" means "building walls". Although the U.S. government is also well aware that China and the United States cannot completely cut off the international supply chain, the U.S. promotes precise decoupling at the cost of others but also unfavorable to its own interests, including building a wall for technology, cutting off the supply of goods, restricting exchanges, etc. National security, high-tech competition and ideological competition are the key points for the United States to promote the decoupling strategy. Finally, "decoupling" means "disengagement". The United States has taken measures to restrict diplomatic exchanges between China and the United States, especially forced a closure of the Chinese Consulate General in Houston, recalled its ambassador to China in advance, and actively upgraded the so-called "U.S.-Taiwan Relations" to a new “level”, and constantly challenged China's diplomatic bottom line.

Promoting "decoupling" has become an important strategy of U.S. diplomacy toward China. "Decoupling theory" is originally an important part of the "dependency theory" of Latin American countries, the core of which is that the unreasonable international division of labor structure and unfair international order are the root causes of the underdevelopment of Latin American countries, and hopes to achieve independence through decoupling. Obviously, the U.S. proposal to decouple at present is not just to decouple from China's economy, but to shirk its international responsibility and strive to maintain the U.S. hegemony. Therefore, if we look at the decoupling theory in the overall situation of the relations between the United States and the world as well as the U.S. foreign strategy, we will find that the U.S. decoupling strategy is actually aimed to overthrow the international order since World War II, shirk the international responsibility committed by the United States, and then defend the U.S. hegemonic interests. For the United States, "decoupling" and "withdrawing" have the same strategic objectives, the core reason of which is that the United States has overloaded its hegemony and shouldered too many international responsibilities. The difference between the two is that "decoupling" is to maintain and consolidate its technological and economic advantages (strong base), "withdrawing" is to shirk its responsibility for international institutions and is unwilling to provide public goods (solid foundation), which harms not only the Sino-U.S. relations and more importantly undermines the current international order.

II. Why does the U.S. "decoupling" strategy lock on China?

Fundamentally speaking, in recent years, the US government's actions of "decoupling", "withdrawing ", "abolishing treaties" and "building wall" are consistent in strategic logic, i.e. all aimed at destroying the existing international order and rules and serving to maintain and consolidate the U.S. hegemony. However, the reason why the "decoupling" strategy of the United States is locked on China is that the changes in Sino-U.S. relations reflect the fundamental changes in the nature of today's world and are part of the general problems of today's world. Since the beginning of the 21st century, the world has increasingly presented a new development pattern of "one body, two wings" and "one earth, two systems", which has had a profound impact on the country-to-country relations.

The so-called "one body, two wings" means that under the promotion of economic globalization, the development of the vast majority of countries presents a dual cycle pattern of domestic development and international development. However, different countries have different positions in economic globalization, which determines the imbalance between international development and domestic development. In contrast, the development pattern of the United States is that its international development is more important than domestic development, which leads to the problems of "hollow industry" and over reliance on global supply chain. While China's development pattern is that its domestic development is more important than international development, which leads to the problem that China's domestic development relies too much on international sales market, capital market and technology market. Therefore, in the face of the imbalance between domestic development and international development, the U.S. strategic response is to "withdraw" and "decouple", while China's strategic response is to more actively participate in and promote the process of economic globalization, leading to the most concentrated contradictions in the strategic position and direction between the two sides of the Sino-U.S. relations, which is one of the root causes of the Sino-U.S. strategic interest competition.

The so-called "one globe, two systems" means that in a "global village", there are frictions of different countries' social systems. How to adjust the frictions has become a problem faced by different countries' economic and social actors. In the process of economic globalization, the socialist system with Chinese characteristics and the capitalist system with American characteristics are two typical systems with obvious differences. However, the two different systems jointly govern the two largest economies in the world, which not only affects the immediate interests of nearly 2 billion people in China and the United States, but also affects the whole world welfare and security. In recent years, the bullying and protectionism of the United States have become more obvious, and utilized domestic rules "long arm jurisdiction" over international affairs, which led to a huge external impact on the domestic rules of the United States, and China has naturally has been hit the hardest.

It is not difficult to see that the deep reason why the United States has focused on China as a "decoupling" target lies in the nature of changes in the world today. The United States does not want to have a showdown with China by locking on China, but to restructure the world order, and maintain and consolidate the hegemonic position of the United States. In this sense, in the face of the strategic adjustment of the existing hegemonic power, the change of the balance of strength between China and the United States not only makes China face the "rising dilemma" of major power politics, but also encounter the "catch-up trap" of major power economic growth. Under the background of "one body, two wings" and "one globe, two systems" in today's world, even if other countries are in a similar position to China, they will certainly become the targets of "decoupling" and "stigmatizing" of the United States.

III. How should China turn crisis into opportunity and pull through？

The fact that the United States pushes for the "decoupling" with China is a major risk for China and will have a huge impact on the great rejuvenation of the Chinese nation. At least in the short term, it is a threshold that China cannot get around, cannot avoid and must cross over. However, under certain conditions, the "decoupling" between China and the United States could also turn into opportunities. As long as China implements precise policies and effective measures, it can turn the crisis into opportunity and pull through.

First, we should seize the opportunity of strategic substitution. No matter which field the United States chooses for precise "decoupling", as long as China makes a good strategic replacement, it can tide over a crisis. At moment, China emphasizes to accelerate the new development pattern with domestic circulation as the mainstay and international and domestic duel circulation. How to establish an alternative development strategy in promoting the new development pattern of duel circulation is an important topic of risk management and control. Of course, to promote strategic substitution is not to shut down the country, but to combine the international capital chain including American transnational capital with China's huge market and supply chain, so as to make it a powerful force to promote the development of economic globalization and provide a new "ballast" and "stabilizer" for Sino-U.S. relations.

Second, we should seize the opportunity of strategic transfer. As the United States cuts off the channels of high-tech, economic, social and people-to-people exchanges, the flow of people, logistics, information and capital from China may be transferred to countries in Europe and Asia. China needs to create conditions for strategic transfer, guide strategic transfer in an orderly way, and strengthen the global cooperative partnership with countries and regions such as Europe, Russia, Japan, South Korea, ASEAN, Middle East, Africa, Latin America and others. It especially needs to aim at the short board and focus on strengthening cooperation with developed countries such as France, Germany, Italy, Britain, Japan and others in the process of promoting strategic transfer, and to speed up readjustment of the distribution of China's international interests to meet the needs of Sino-U.S. strategic competition.

Third, we should seize the opportunity of strategic catch-up. As the U.S. "decoupling" strategy imposes strict export control on China and the strictest control in the field of high and new technology, China needs to further strengthen its independent innovation strategy, aim at some key areas and carry out concentrated scientific and technological research. It is necessary to carry forward the spirit of "two bombs and one satellite", to speed up the construction of key laboratories relying on colleges and universities, and focus on breakthroughs of major key technologies. Meantime, we should learn from the experience of Lawrence National Laboratory and Los Alamos National Laboratory to build a "national team" with strong international competitiveness, actively plan the strategic catch-up, and build a global science and technology innovation center with international leading ability, which is the fundamental solution to the U.S. "decoupling" strategy.