President Trump goes vocal on the US-China decoupling

Summary

• The United States President Donald Trump raised an idea of decoupling the US and Chinese economies.
• China officials hit back saying the US is a bully and it needs to be opposed.
• Experts believe that the decoupling is impractical as the economies are intertwined.

The US elections are due in a few months, and President Donald Trump stated separating the US and Chinese economies. The president suggested the idea of decoupling the United States and Chinese economies, highlighting that the US would not experience any monetary loss if the world's two biggest economies part ways and discontinue the business.

On 7 September 2020, during the Labour Day press conference at the White House, Trump communicated to the media that he finds the word decouple interesting. During the media interaction, he also vowed to bring back jobs to America from China. He said that Americans would not lose billions of dollars if the US stops doing business with China. This route is called decoupling.

Trump is acting tough on China as a critical deliverable of his campaign for re-election, which will be held on 3 November 2020.

During the press conference, Trump announced his opponent, Joe Biden, of being soft towards Beijing. Currently, Biden is leading most of the opinion polls. He said that if Biden wins, China will win and China will eventually own the United States.

Also Read: Trump to take action on Chinese software in coming days

Biden also criticised Trump's Phase 1 trade deal with China, stating it is "unenforceable". Biden continued saying the trade deal is "full of vague, weak, and recycled commitments from Beijing." Apart from taking stringent actions on China, Trump vowed that when re-elected, his administration would forbid contracts with companies that outsource to China. He emphasised on holding Beijing accountable for the coronavirus pandemic which initiated in China and spread in most parts of the world.

In order to turn America into the manufacturing superpower of the world, Trump plans on ending the country's dependence on China. Trump said that, whether by decoupling or by enforcing massive tariffs which he has already done, his administration will ensure ending reliance on China. Trump says that the US cannot rely on China. Trump further said that the companies that desert America and create jobs in China and other countries would also face tariffs.

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China hits back at the US

The US-China tensions are rising day after day as each state accuses each other of various allegations. Recently Chinese tech giant ByteDance was under pressure to sell its video-sharing app TikTok to Microsoft. Now weeks after watching the story unfold, Beijing has struck back at the US using export controls, as a choice of weapon. The list of controlled exports of Middle Kingdom’s has been extended by Chinese authorities to include algorithms, TikTok’s main asset.

Chinese authorities are keen on avoiding the on-going tension between the two countries before the November elections. But China's moves suggest that not just the United States but also China is moving to decouple its technology sector.

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According to Gavekal Dragonomics/Macrobond data, other emerging countries present a broader export marketfor China. Belt and Road Initiative and trade-based policies have let China explore markets in Africa and the Middle East. The rise of digital yuan is making it easier for China to increase its exports to other countries than the US.

In recent times, the Trump administration is emphasising on blocking tech companies like Huawei and famous Chinese apps like TikTok and Wechat, stating they pose threats to national security. Recently a Chinese researcher was also arrested in similar allegations. After which China has claimed that the US government is bullying them and it should be rejected and opposed. China's State Councillor Wang Yi suggested Chinese companies to not create any backdoor as the company's secret access to its data and network. The US government accused tech giant Huawei of having a backdoor in its equipment.

Also read: Chinese Arrest Escalates the US-China Tensions, TikTok Ban Also on the Cards

Conclusion:

The United States Treasury Secretary Steven Mnuchin expressed back in June that a decoupling of both countries' economies would result in the US companies not being allowed to compete on a fair and level basis in China's economy. Other officials and analysts have stated that the US and China economies are intertwined, making this move impractical. But they believe Washington will continue to pressure Beijing to level the playing field.

Also read: Trump Cuts US ties with ByteDance and Tencent