America and China: At war in every sense of the word except military. And it will have world-wide implications…

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Note the place of China as top producer, consumer and importer of commodities.

https://www.scmp.com/comment/opinion/article/3082360/why-us-china-decoupling-dangerous-mistake-and-tantamount-self-harm

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China’s leadership has made it clear to its people that the world will become more dangerous and they must be prepared for hard times.

Beijing’s relatively small stimulus response to Covid-19 suggests it wants to save its economic policy ammunition for a bigger battle.

Zhang Lin

Published: 6:00pm, 31 May, 2020

Hong Kong is known as China’s gateway to the international capital market and the largest offshore yuan market, but Beijing is ready to trade losses on the financial and economic front for potential gain on a fortified national security fence.

All this points to the suggestion that Beijing is preparing for the possibility of decoupling from the US, even if it doesn’t necessarily want to.

The threat of a new Cold War is clouding the world. The theme of life for one or two generations of people on both sides of the Pacific may shift from growth and prosperity to struggle and confrontation.

China and the US have yet to collide totally, but that moment is drawing near.

Read the article here:

https://www.scmp.com/economy/china-economy/article/3086867/beijing-preparing-decouple-us?utm_term=Autofeed&utm_medium=Social&utm_content=article&utm_source=Twitter#Echobox=1590920980

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Nikkei Asian Review

US pushes China decoupling, wiping billions off Apple and Boeing

Huawei ban sets up game of chicken between world’s biggest economies

https://asia.nikkei.com/Economy/Trade-war/US-pushes-China-decoupling-wiping-billions-off-Apple-and-Boeing

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Excerpts:

Foreign Policy

The Great Decoupling

Washington is pressing for a post-pandemic decoupling from China. But the last big economic split brought on two world wars and a depression. What’s in store this time?

BY KEITH JOHNSONROBBIE GRAMER
MAY 14, 2020, 5:48 PM

The U.S. ambassador on the spot in an Asian economic powerhouse put it bluntly in a cable to the secretary of state in Washington: Don’t cut them off. Give them some “economic elbow-room,” or they’ll be forced to carve out an economic empire of their own by force. But Washington was in the grip of economic nationalists battling a historic economic downturn. The White House, consequently, was deaf to the Ambassador Joseph Grew’s pleas from Tokyo in 1935.

Within a few years, the United States ramped up economic pressure on Japan, culminating in a trade and oil embargo. Six years after Grew wrote his dispatch, the two countries were engaged in total war.

Today, American policymakers are consumed by the economic and geopolitical confrontation with another Asian heavyweight. And, as in the 1930s, economic decoupling is all the rage.

The threat of a great decoupling is a potentially historic break, an interruption perhaps only comparable to the sudden sundering of the first huge wave of globalization in 1914, when deeply intertwined economies such as Britain and Germany, and later the United States, threw themselves into a barrage of self-destruction and economic nationalism that didn’t stop for 30 years. This time, though, decoupling is driven not by war but by peacetime populist urges, exacerbated by a global coronavirus pandemic that has shaken decades of faith in the wisdom of international supply chains and the virtues of a global economy.

The only real question is how far the decoupling will go. U.S. President Donald Trump made one of his sharpest threats to date amid growing tensions with China in an interview with Fox News on Thursday. “We could cut off the whole relationship,” he said—a prospect that, while unlikely if not practically impossible, would send historic shockwaves through the global economy.

https://foreignpolicy.com/2020/05/14/china-us-pandemic-economy-tensions-trump-coronavirus-covid-new-cold-war-economics-the-great-decoupling/

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Excerpts from:

Marketplace

Prospect of U.S.-China ‘decoupling’ grows amid shortages of medical goods

Scott Tong
Apr 17, 2020

Half a year ago, the notion of the United States and China splitting into separate economic spheres struck U.S. multinational executives based in China as highly unlikely.

Today, that’s changed. A new survey of executives at American corporations with long histories in the China market finds 44% responding that U.S.-China economic “decoupling” is “impossible.” That’s down from 66% last fall, suggesting “great potential” for such decoupling, according to the survey from AmCham China, AmCham Shanghai and PwC China.

The survey comes amid increasing calls to bring the manufacturing of essential medical goods — safety gear, pharmaceuticals, devices such as ventilators — back to the U.S. Many items in short supply — masks, safety gowns, raw materials for pharmaceuticals such as penicillin and ibuprofen — come primarily from the same country: China. These concerns were stirred, in part, as some Chinese factories shut down because of the virus. In other instances, the plants sold goods to other countries or to citizens at home.

“One of the learnings from the public’s point of view is that in many ways all roads go back to China,” said Benjamin Shobert, senior associate for international health at the National Bureau of Asian Research. “Given the political realities, the public health realities, now we’re asking ourselves this question of how much of this manufacturing infrastructure are we comfortable having be dependent on China?”

It’s a familiar question. American officials have expressed anxiety about global supply-chain vulnerability in other sectors: semiconductors, 5G telecommunications gear and critical minerals for weapons and advanced batteries. The U.S. government has blocked Chinese acquisitions in key industries, including oil, semiconductors and social media.

On the Chinese side, Beijing’s Made in China 2025 plan is explicitly designed to reduce the nation’s dependence on foreign technology. In addition, the Chinese government has curtailed private sector financial investments in the United States.

“China’s government, nervous about capital outflows as a sign of financial risk and instability, [closed] their own door on their own companies going abroad,” said Daniel Rosen, founding partner of the Rhodium Group consultancy.

Given the pandemic, Rosen expects more calls to bring manufacturing home to the U.S. But that could be expensive because of its higher labor costs. And in some sectors, there may be a shortage of skilled labor. So Rosen suggests less drastic steps.

“Smarter stockpiling, diversification of global supply chain activity so they are not all concentrated in one country are additional strategies that need to be thought through,” he said. “Not just reshoring.”

https://www.marketplace.org/2020/04/17/us-china-decoupling-gains-steam-amid-medical-supply-shortage/

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