Think It’s Too Hard to Decouple From China? Think Again
China was supposed to be the promised land for American business — the lucrative, indispensable market of the future. But, as U.S.-China tensions escalate and calls grow louder for their two economies to decouple, CEOs across the U.S. are confronting a prospect that only a couple years ago would have seemed unthinkable: China may no longer be a reliable source of profits and production.
Sure, a nation with 1.4 billion increasingly wealthy shoppers and reliable supply chains isn’t so easily replaced. Companies will find it hard to hire skilled workers and replicate the networks of suppliers they enjoy in China. Many will hold onto their mainland factories to produce for the local market, regardless of global trade tensions.
But, a far greater degree of decoupling seems likely, even inevitable. It’ll take work to find alternatives to China — but then again, China took work, too.
Politicians on both sides of the Pacific are already taking steps to disentangle the world’s two largest economies, at least to some extent. The Trump administration, for instance, has curtailed American exports of certain technology to China, while Congress is moving to restrict Chinese access to U.S. capital markets.