Doing Business with China and Decoupling: Recommendations for Global Strategy

In the last several years, the effort to reduce dependence on China supply networks and in general to lead western countries’ trade away from China has gained momentum. This effort largely led by the U.S. has been a result of supply chain uncertainty post COVID and growing geopolitical tensions between the two countries. China’s increasing global ambitions under President Xi Jinping, including territorial claims in the South China Sea and Taiwan have changed the view of China as a reliable global factory and trading partner to a major threat to U.S. power. U.S. policymakers view of China evolved from a source of low-cost production and large marketplace into considering China as a rising non-democratic superpower with global hegemonic ambitions. This paper offers a review of the importance of China’s trade leading to today’s increasing decoupling efforts and potential strategies for western firms doing business there.