[The Epoch Times, August 14, 2022](The Epoch Times columnist Anders Corr wrote / Qu Zhizhuo compiled) The history of the decoupling of the international community from the CCP dates back to the Cold War, but it has been updated and is accelerating. Decoupling, which has recently restarted in US tech, is now moving to the world‘s most important economies such as Europe and Asia. A year ago, the idea was seen as grotesque, denounced by Beijing’s propaganda apparatus as “Cold War mentality,” but now the mainstream media is getting excited about it.
In May, the Financial Times quoted Michael Shoebridge of the Australian Strategic Policy Institute as saying: “Decoupling is real and ongoing. Growth. The European Union has joined the U.S. to begin decoupling from China. The common strategic challenge to us from Russia and China is uniting Europe with the Indo-Pacific.”
Shubridge predicts that decoupling will extend to the energy sector and advises companies to ensure that their supply chains move from hostile to friendly countries.
Many companies are taking his advice, as well as that of the Biden administration, which the Biden administration calls “support for friends.”
The idea has a long history. In 2020, it’s called “ally support.”
In 1993, the United States and Canada dubbed it the “National Technology and Industrial Base” (NTIB), allowing the import and export of sensitive military items between the two countries, and later the United Kingdom and Australia.
The Trump administration has identified weaknesses in the NTIB and has sought to strengthen the U.S. industrial base by imposing tariffs on China. Alex Gray, a former National Security Council chief of staff, said, “The Trump administration understands the impact of reliance on foreign countries such as China and Russia for critical components and materials on national strategy and the defense industry. .”
“These industrial base weaknesses, many of which were revealed under President Trump’s Executive Order 13806 (Assessing the Health of the U.S. Defense Industrial Base), require Washington to exploit,” Gray wrote in an email. the strengths of our allies and partners, and respond positively.”
“Tools like the NTIB are useful for filling gaps in the industrial base, while also being a burden-sharing mechanism for the U.S. and its allies to address major powers like China and Russia trying to change the international landscape.”
Following Trump’s tariffs, the Biden administration has sometimes proposed that businesses voluntarily, sometimes legislate, expand NTIB to a wider range of goods. Bipartisan trade pressure on multiple administrations is internationalizing and showing no signs of abating.
Tony Danker, director general of the Confederation of British Industry, was quoted by the Financial Times on July 29 as saying: “Every company I interviewed at the moment is rethinking their supply chain. …because they expect that our politicians will inevitably accelerate towards a world decoupled from China.”
demand side decoupling
Decoupling is severing economic ties with a country, but necessarily involves replacing them with other elastic ties. In addition to friendly support, it can include strategies such as “onshore” or “nearby support” to bring production locations closer to target consumers.
The process of decoupling the demand and supply sides of computer chips (also known as semiconductors) can be seen from two recent US laws.
First, the Uyghur Forced Labor Prevention Act banned most of the polysilicon needed for chips, most directly affecting the demand side.
Second, the Chips and Science Act of 2022 would strongly influence the supply side by subsidizing U.S. chip manufacturing.
The Uyghur Forced Labor Prevention Act was passed in 2021 and will be implemented this summer. It bans goods from China’s Xinjiang region if they are made with forced labor. This includes a ban on assembling products made with Xinjiang materials in any country.
Xinjiang previously produced 40 percent of the world‘s polysilicon (used in chips and solar panel production), 20 percent of cotton and 20 percent of calcium carbide (used in acetylene gas).
The bill’s expanded reach helps push for decoupling from China, not just in the U.S., but globally. No company in any country wants to produce goods from raw materials that are banned in the world‘s largest market.
supply side decoupling
The second part of the decoupling is its supply side. Decoupling will be very painful and politically difficult if an alternative supply is not found.
On July 28 this year, the U.S. Congress passed the “Chip and Science Act of 2022,” which will invest $52.7 billion in building U.S. computer chip factories (called “fabs”) and domestic semiconductor innovation.
“Supporters say it will help ease supply chain woes for Americans buying cars and appliances that rely on chips,” according to the Wall Street Journal, “though it may take years to see the bill. real benefits.”
Besides being too little, too late, the bill is not enough to prevent China from stealing or otherwise benefiting. But this is a start, other protections can be implemented later (they are best implemented).
The subsidies for U.S. chips are part of a larger $280 billion bill that includes support for a range of U.S. technologies, including lasers, nuclear physics and clean energy.
Leveraged global decoupling
The United States has also encouraged other countries to decouple from the CCP through the Indo Pacific Economic Framework for Prosperity (IPEF). Unlike the Trans-Pacific Partnership (TPP), IPEF is a trade forum, not a formal free trade agreement.
IPEF is a “paradigm shift,” according to Robert D. Atkinson, who wrote in his early July book “Foreign Policy” that the IPEF seeks to use the empowerment of other The country’s access to the U.S. economy is used as leverage against the CCP, not as leverage.
The 14 members of IPEF are among the largest economies in Asia, including Australia, India, Japan and South Korea, but also Asian countries that the US wants to withdraw from the Chinese market, such as Brunei, Fiji, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
But unlike the TPP, the U.S. has not given these countries access to its economic markets without a second thought. Instead, the IPEF is a negotiating forum that, in addition to improving TPP requirements such as labor and environmental regulations, will be used to help encourage third countries to economically isolate and weaken Beijing until the Chinese Communist Party improves its human rights and stops threatening its neighbors’ territories and Maritime Exclusive Economic Zone.
The same strategy adopted by Washington (giving other countries access to the US market) could be used against Moscow and other particularly aggressive dictators. The threat of secondary sanctions against countries violating sanctions on Russia, Iran and North Korea is an example.
The CCP has been the most difficult of the rogue regimes to decouple because of its massive economy (10 times bigger than Russia) and its depth of integration into global supply chains.
But thankfully, international moves to decouple from China are accelerating and will increase demand for American and allied jobs, innovation, technological development, and the diversity and resilience of our industrial ecosystem.
The U.S. and allied economies will grow, as will the government revenue needed to fund our military defenses against Beijing. Moreover, decoupling would weaken and deter Beijing’s aggression against countries like Japan, Taiwan, and the Philippines, and slow the CCP’s attempts to globalize their dictatorship.
About the Author:
Anders Corr holds a BA in Political Science from Yale University (2001) and a PhD in Government from Harvard University (2008). He is the publisher of the Journal of Political Risk and a trustee of Cole Analytics. He has conducted extensive research in North America, Europe and Asia. He wrote The Concentration of Power (2021) and No Trespassing, and edited Great Powers, Grand Strategies.
The original “Decoupling From China Accelerates” was published in The Epoch Times
This article represents the views of the author alone and does not necessarily reflect the position of The Epoch Times.
Responsible editor: Gao Jing