WSJ: US/West Decoupling from China, Battle for Business Alignment

The WSJ had an interesting opinion article over the weekend on US foreign policy on China under the Biden administration in relation to the Trump policies and longer term challenges, particularly with US businesspeople and conflicts of interests between American values and access to the China market.

For those without a WSJ subscription, the author states that US / Western business interests want to steer away from the ideological  conflict yet this is inevitable.  The result is a binary choice: help China or the US,/West, especially when options for diplomatic/government compromise/ influence are waning - pressure on the business community will escalate.  Therefore, business pressure on government to moderate policy would be more acute, and given the lobbying and money in politics - influential.

The opinion piece highlights a new battlefield that is forming and that is decoupling of economic dependency and supply chains.  The US interests are a "selective or strategic" decoupling from China's manufacturing, which seems to be in the Biden and bipartisan Congressional direction.  The counter is China's push to reinforce the dependency and make it tougher to decouple, as seen by pressure on the Australian government to back down on policies using economic pressure.  Decoupling involves diversification of manufacturing to other nations, particularly in key industries.  Both US and China leaders see economic dependency being the most important leverage outside of military action.

This often creates a conflict of interests with national interests and values (particularly the home market of global companies) and shareholder interest for businesses.  This will be a key battleground in the boardrooms that lead to national strategic interests.  Will be interesting how business leaders navigate, particularly since in Western society companies have acted more on shareholder interests, individualism, and opportunism above national / collective interests.  There is reason to believe this is a losing proposition for the West unless there is a shift in self interests.  

How important do you think supply chain decoupling is to leverage between China and the West?  

Has the markets price in the related geopolitical risk both supply chain and China market penetration?  

Would there be a further stratification of the interests and strategy between global and national companies, with the more S&P 500 types less reliant on foreign market access and thus accelerating decoupling with fewer roadblocks?

We've seen how China influences companies outside its borders, what can Western governments do or cannot do? 

How does popular opinion and the influences (media, politicians, etc) and populism affect?  For instance, recent poll has public opinion (thus consumer) increase in unfavorable views towards China over the past year.  While potentially  coincidental with the pandemic and Trump's rhetoric, seems also a lever towards the decoupling strategy.  Anyways, 4D chess perhaps.

I think this decoupling front will be the most impactful topic in the near and medium term future regarding the West and China, and something you should learn more about as it is likely to affect decisions at levels not seen before.

Comments (10)

Mar 28, 2021 - 1:32am
Nightman Cometh, what's your opinion? Comment below:

I'm so spooked about US/China relations because I just listened to an audiobook (I am illiterate) about the US and CN going to war over some shit in the South China Sea.

Mar 28, 2021 - 1:49am
odog808, what's your opinion? Comment below:

Nightman Cometh

I'm so spooked about US/China relations because I just listened to an audiobook (I am illiterate) about the US and CN going to war over some shit in the South China Sea.

It's not likely you're illiterate. Maybe disinterested.

Have compassion as well as ambition and you’ll go far in life
  • 1
Mar 28, 2021 - 1:51am
Nightman Cometh, what's your opinion? Comment below:

Nah it was very interesting--my description was not good lol. I just haven't read in so long that I struggle to actually sit down and power through a book. I am kind of a selectively hyper person, so just sitting and staring at a page, not doing anything else, can be almost exhausting for me. Audiobooks were actually a really great discovery for me during COVID because I love to hear good stories and learn about new things.

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Mar 28, 2021 - 7:12am
Anonymous Monkey, what's your opinion? Comment below:

Which China are we speaking about, the people's republic or legitimate China (housed on Taiwan at the moment)?

Mar 28, 2021 - 10:27am
odog808, what's your opinion? Comment below:

The Peep's

Have compassion as well as ambition and you’ll go far in life
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Mar 28, 2021 - 11:18am
odog808, what's your opinion? Comment below:

Pio nono

Which China are we speaking about, the people's republic or legitimate China (housed on Taiwan at the moment)?

I get paid to connect the dots on trends.  Regardless of one's feelings which side is good or bad, I don't care as much as long as you get a choice to what system you want to live under. In a broader sense, there is collateral damage that is and will impact Asians living in the West, with the ratcheting up of the decoupling wave rhetoric.  The more I think of it Western governments are limited on how they can do market control.  However public opinion / consumers have a growing power to sway multinational companies to change supply chains and enact costs.  This will continue.  Who knew cancel culture could be used to accelerate decoupling. Complicated, isn't it. 

One way to mitigate: Asian Americans and Asians in general are an important demographic to keep aligned with the West.  A counter narrative of boosting the importance of AAPI's and Asian allies should be reinforced.  Although too complicated a message for some who prey on AAPI's, the community will feel the support and it is in the national interest.  But expect decoupling to create some alienation of AAPI's, a longer trend unfortunately, as part of the collateral damage that should be mitigated.  I care more about that and you should too at the moment.  I believe the decoupling wave will mature prior to a war (which I hope never happens and at the moment don't think will happen like WWIII).

Have compassion as well as ambition and you’ll go far in life
  • 5
Mar 28, 2021 - 12:03pm
PeterMBA2018, what's your opinion? Comment below:

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