A delivery driver wearing a face mask rides an electric bicycle along a street in Beijing’s central business district on July 16, 2020.
Wang Zhao | AFP | Getty Images
SINGAPORE – The cost of “decoupling” the US and China would be high, but that doesn’t mean Beijing won̵
“There is a real danger that China and … much of the rest of the world will develop separate financial systems for paying international debts and payments for trade,” said Robert Daly, director of the Kissinger Institute on China and Wilson Center The United States .
China could also develop various technological systems, he told CNBC’s Street Signs Asia on Wednesday. “When that happens, when you have mutually exclusive financial, economic, and technological and digital systems, then you are really going to be talking about decoupling and China will be doing it on its own to a significant extent.”
This can happen even though Beijing knows the cost of decoupling would be high for China, the US and the rest of the world. China does not welcome decoupling but will not “back down in the face of it,” he said.
Daly said US President Donald Trump made “maximalist, extreme threats” during his tenure but usually “pulled back” after considering the consequences.
“There are certain people in the White House who want to technologically decouple themselves from China and don’t want to provide it with chips that could help build China’s overall power,” said Daly. “But they don’t want to bankrupt Qualcomm, they don’t want to harm American farmers who have already been subsidized by American taxpayers with more than $ 28 billion because of the trade war.”
Still, he describes the decoupling as “more than just campaign rhetoric” from the Trump administration.
“I think it has that function,” he said. “It’s a way of convincing American voters that he, President Trump, is looking for them and is tougher on China than (Democratic presidential candidate) Biden.”
According to Reuters, Trump told supporters at a rally on Tuesday that “Joe Biden’s agenda is being made in China” while his own “agenda is being made in the US.” He also called Biden a “globalist sell-out”.
But beyond politics, there is “really deep suspicion of being too closely associated with China,” especially when it comes to rare earths, technology, and medical or pharmaceutical devices, he said. At least partial decoupling in some of these sectors is a “very real” possibility.
The Americans want to be more self-sufficient and certainly not tied to China, he added.
“That wish is real, it continues and will continue in some form, even under President Biden, if we get one.”