Can the US and China truly avoid economic decoupling?

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The US and China Are Unlikely to Achieve Complete Economic Decoupling

US Treasury Undersecretary Jay Shambaugh has stated that complete economic decoupling between the United States and China would be "disastrous" and "nearly impossible to achieve." While the US administration is considering new restrictions on outbound investments and has seen legislative support for increased oversight of US companies' investments in Chinese technology sectors like semiconductors and AI, these measures are explicitly distinguished from full decoupling. Instead, these actions are framed as targeted national security measures and efforts to build diversified supply chains, rather than a complete severing of economic ties.
Targeted Actions and Supply Chain Diversification Are Not Decoupling

Shambaugh clarified that neither specific national security-focused actions nor initiatives to create more varied supply chains constitute economic decoupling. These strategies are being employed to protect US national security interests and ensure a more resilient economic landscape. The administration aims for a fair economic relationship that benefits both nations and supports American workers and businesses, rather than a complete economic separation.
US Concerns Over Chinese Economic Practices Persist

The US maintains objections to certain Chinese economic practices, including what it terms "non-market" economic policies and excessive government subsidies that disadvantage US companies. Furthermore, concerns have been raised regarding China's use of "economic coercion," where it leverages trade restrictions to penalize countries for their diplomatic actions. These issues contribute to the complex economic relationship between the two nations.
US Considering New Investment Restrictions

The Biden administration is reportedly evaluating new regulations that would impose restrictions on private investment flowing from the US into China and other nations deemed to be of concern. This is complemented by legislative efforts in the Senate, which has backed a bill requiring US companies to inform federal agencies about proposed investments in sensitive Chinese technologies, such as artificial intelligence and semiconductors. These moves indicate a continued focus on managing economic ties with China through specific, targeted measures.

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Can the US and China truly avoid economic decoupling?

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