October 3, 2025

U.S. – China Strategic Rivalry: Decoupling from China Won’t Be Easy

Key Points

Decoupling from China poses substantial challenges for both the U.S. and China, with costs affecting their economies deeply.
Economic decoupling could severely impact U.S. and international investments in China's extensive supply chain.
The significant investments by Western companies in China highlight the risks of divesting from such a vast market.
A complete relocation of industries away from China is impractical due to the scale of existing investments and market share.

Abstract

Given the increased rivalry between the two countries and growing hostilities over many issues the countries cannot reconcile. U.S. and China will continue the path of reducing their dependence on each other in critical industries though this would involve higher costs to both sides. Economic decoupling has the potential to significantly impact both counties. The scale of investment by U.S. and other international firms in Chinese supply chain and distribution are so extensive, a wholesale relocation is not feasible. Many U.S. and Western companies are in China to compete for a share of the huge Chinese market. Divesting from China will have a significant and long-lasting impact on their bottom line.

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Cite This Study

Shooshtari et al. (Mon,) studied this question.

synapsesocial.com/papers/68e03505f0e39f13e7fa3e55 https://doi.org/https://doi.org/10.20429/amtp.2024.06

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