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.