Phantom decoupling: geoeconomic hydraulics and the rewiring of US–China interdependence

Contemporary discourse frames the US–China trade war as a ‘de-risking’ strategy intended to restrict market access and shield domestic industries. This article challenges such territorial statecraft, arguing it produces ‘Phantom Decoupling’ – a structural illusion where visible trade redirections mask persistent value dependencies. Grounded explicitly in the dynamic theory of Global Production Networks (GPN), the study conceptualises capital's adaptive resistance as ‘Geoeconomic Hydraulics’. Driven by the corporate muscle memory of network plasticity, this systemic dynamic ensures border-based barriers divert rather than rupture ties. To expose this opacity, a novel Decoupling Gap Index (DGI) and a three-step detection strategy are constructed. Utilising OECD TiVA data, the analysis reveals decoupling as a statistical artifact maintained by intermediary proxy nodes. Empirical evidence from the electronics sector demonstrates that Vietnam’s export boom (343%) is synchronised with Chinese intermediate inflows (133%) but accompanied by a decline in domestic value capture (−4.1%). This trajectory reflects a potential ‘assembly trap’ highlighting the structural risk of ‘Industrial Serfdom’: a condition where emerging economies, despite active geopolitical ‘hedging’, function as logistical conduits rather than ascending sovereign producers. The article concludes that the epistemological map-territory error between Westphalian regulation and relational production renders state-led decoupling ineffective, deepening systemic subordination.