Beware the Danger of Economic Decoupling
In June of this year, Apple announced that they would move part of their production of iPads out of China for the first time. At the end of the day, it wasn’t worker suicides and reports of abuse that caused Apple to question its commitment to China, nor was it concern that impeding censorship would make business impossible. Rather, it was the growing geopolitical tension between China and the United States and brutal COVID lockdowns threatening to stall production at factories that brought the tech behemoth to heel.
But Apple hasn’t been alone in its desire to ensure supply chain resilience in an increasingly uncertain world by diversifying its manufacturing out of China. It has joined leagues of other American companies – worried about the sustainability of using China as a manufacturing hub, declining Chinese consumer demand, and the Chinese Communist Party’s (CCP) increasingly restrictionary statist policies making business impossible — that are now in search of friendlier shores. While this development has been extensively covered by various media sources, a question that remains to be explored is whether a supply chain fissure between China and the United States will bring more aggressive rhetoric in both countries against the other.
It is important to understand that economic decoupling is ongoing and has just recently begun, so there has not been enough concrete evidence established to definitively prove the existence of this phenomenon. Rather, I aim to paint a picture of the future impact of a complete supply chain decoupling by using theories that connect events and trends that have already occurred.
As I will argue in this piece, a supply chain fissure will in fact bring harsher rhetoric on both sides through three mechanisms. First, when politicians on both sides announce measures that curtail trade between both countries, they often deploy isolationist rhetoric as a justification. Second, because, especially in China’s case, an economic backsliding caused by deglobalization will force the CCP to deploy anti-American nationalist rhetoric to distract its people from economic woes. And third, because to compensate for losing trade with the United States, China will need to increase its trade ties with African countries, which are predicated on anti-Western solidarity.
To start off with the first mechanism, pronouncements of economic deglobalization are already often accompanied by xenophobic or otherwise aggressive rhetoric, either as tools for explaining deglobalizing policies or for raising political support for such policies. For example, when Trump pushed tariffs on China, perhaps the first sign that our world is deglobalizing, he explicitly stated that he was putting “America First” to build popularity among voters. As deglobalization continues, we can only expect more of such xenophobic justifications in the future.
The second mechanism is more interesting because it is based on the idea that China’s economy is no longer a growing behemoth, as it was perceived for over 30 years. Particularly for China’s export-based economy, ensuing economic decoupling equates with economic stagnation or even decline. China’s economy is already suffering from a shock in consumer demand because of a property crisis. China’s property market was so overheated — and so much of Chinese consumers assets were in the form of property — that consumers have seemingly permanently stopped spending. Add to this toxic mix increasing economic deglobalization in the future — which will prey on the majority of Chinese middle class jobs created through globalization — and disaster will ensue.
To understand why this is and will continue to terrify Beijing, look at China’s current state from the perspective of someone who came of age when China just started to grow rapidly. Imagine being part of the greatest economic miracle in history, finding a solid middle class job at the behest of globalization and investing all your savings into property, only to watch all you have worked for disappear into thin air. Further, imagine your anger at an abusive government which you tolerated only because it gave you a stable income and home, only to let everything you worked for get taken away from you.
Indeed, for the first time since Tiananmen Square, the Chinese people’s bargain with the CCP — to sacrifice all their political rights in exchange for economic growth and a higher standard of living — seems imperiled. And it will only grow more fragile as lackluster economic statistics continue to pile up. Chinese political elites will be terrified at a loss of political legitimacy so they will increasingly find external factors or enemies to blame for their problems. However slight the chance with Beijing’s increasing repression of its population, the very idea of losing a grip on their power will terrify CCP elites who know that the complete loss of political legitimacy in an authoritarian system will entail personal costs for them.
Introduce America in this system as an easy target for placing blame and distracting Chinese citizens from their own problems and one can easily understand why paranoid CCP elites have already started to prioritize rule by “patriots” as a supposed bulwark against “foreign influence.”
But is there more concrete evidence of this?
The third mechanism involves Chinese ties with Africa that have rested and will continue to rely on anti-Western solidarity. In China’s desire to wave imperial restoration as a distraction for its people, in the midst of its economic problems caused by deglobalization, Chinese leaders may double down on commitments to the developing world as a symbolic method of expanding Chinese influence at the expense of American hegemony. And at a time when the U.S. will increasingly uncouple with China, Chinese leaders may look to Africa as an alternative market for their goods. China-Africa trade already reached an all-time high of $254 billion in 2021 and China is set to become the largest trading partner of African countries by 2030, potentially outnumbering Africa’s trade with the entire European Union.
In building economic and political alliances with African countries, China projects itself as an anti-Western alternative that was trampled upon by Western powers, with the complicity of the United States, just as many of its African partners were. When economic decoupling reaches a peak, we can only expect China to double down on this rhetoric to expand its relations with African countries further.
To see where China has invoked this rhetoric in the past, look at the 2015 World Economic Forum. As cited in this paper, at the 2015 forum, China and African countries often associated their traumatized past — as subjects of colonialism and racism by the west — with their current beliefs that they can “go at it alone.” Such appeals rested explicitly on the idea that Africa was a “damaged other” that suffered harms at the hands of the west that could be repeated today. The implication is that China, unlike the United States, was not in league with the colonial powers of the 19th century which plundered Africa; rather, China, since Mao, has repeatedly helped African countries since they first fought their western oppressors, by building infrastructure and monetarily supporting anti-colonial rebels, and still aims to do so today.
Thus, when attempting to create common ground with African countries, China will inevitably exploit anti-American rhetoric. So when China attempts to multiply its alliances in the African continent to counterbalance its economic drift away from the United States, Chinese leaders’ anti-American rhetoric will multiply as well.
So, to answer my initial question: yes, economic decoupling will probably lead to harsher rhetoric on both sides (but especially China). This will occur because the very pronouncements of economic tariffs and other harsh economic stances are accompanied by harsh rhetoric, because Beijing will need to distract its people with enemies in the midst of economic stagnation, and because Chinese leaders will have to use more of the same harsh anti-American rhetoric to strengthen their alliances with African countries.
The greater implication of this phenomenon is that economic decoupling and harsher rhetoric are cyclically linked to each other. The more China and the United States decouple their supply chains from each other, the harsher the rhetoric on both sides will become, which will lead to more economic decoupling, going on until both countries approach the brink of war.
That’s a terrifying implication, but it’s also a prudent one. As harsher rhetoric escalates on both sides, reinforced by this cycle, leaders (especially Chinese leaders) will increasingly find their hands tied. President Xi is already finding that after delivering so much nationalist rhetoric, his hardline nationalist supporters’ tolerance for his jingoism is declining, as seen from the disappointment among many nationalist commentators in China over his “weak” response to Taiwan after Speaker Pelosi’s visit. Similarly, President Biden’s China policy is increasingly mirroring Trump’s despite his initial restraint and anti-right wing populist platform. At some point, for their own credibility, leaders on both sides will inevitably make good on their harsh rhetoric through action and when that happens, there’s no telling how the conflict will escalate.
Zubin Rekhi ‘26 studies in the College of Arts & Sciences. He can be reached at r.zubin@wustl.edu.
Photo courtesy of Curve Securities under the Creative Commons