Decoupling reliance on China has been a difficult to sell to U.S. business leaders

https://www.npr.org/2023/06/01/1179378177/decoupling-reliance-on-china-has-been-a-difficult-to-sell-to-u-s-business-leader

Heard on Morning Edition  June 1, 2023

U.S.-China relations continue to sour. NPR's A Martinez talks to Yale University senior fellow Stephen Roach, who outlines a roadmap for relations with China in his book: Accidental Conflict.

A MARTÍNEZ, HOST:

Relations between the United States and China, the world's biggest economies, are at their worst in decades, but reducing American reliance on China has been a tough sell with some U.S. business leaders. During a visit to Shanghai this week, billionaire Tesla CEO Elon Musk said the interests of the two countries are, quote, "intertwined like conjoined twins." We turn now to Yale University's Stephen Roach. He outlines a new roadmap for this relationship in his book, "Accidental Conflict: America, China, And The Clash Of False Narratives."

Stephen, I was looking at the art of the cover of your book, five pairs of red and blue arms intertwined. It kind of reminded me of Musk's quote, "intertwined like conjoined twins." Do you see any way for the U.S. to break its dependency on China economically?

STEPHEN ROACH: No, I don't. Without a trade war, a tech war and now a cold war possibly getting even hotter, I think that what's really missing here is an architecture for engagement, how we talk to the Chinese, how we deal with issues like trade, economics, innovation, human rights, climate, cyber, global health. We don't have an existing framework of engagement. And we need a new one, and I just wrote an article about that over the weekend.

MARTÍNEZ: If self-reliance then, Stephen, is a fantasy, how about less reliance on China?

ROACH: Well, we're trying to be cute here. We have given a new word to what pure self-reliance or decoupling would mean. We call it de-risking. But that's like your previous presenter just said, they renamed UFOs UAPs. It's the same concept. When you take a component that you used to get from China and you get it from Vietnam, that has decoupled that supply chain linkage. Don't kid yourself and try to call it de-risking.

MARTÍNEZ: Does this go back to Richard Nixon's visit to China in 1972? I mean, it thawed relations. It opened up China to U.S. trade, but is that where all this kind of got its start?

ROACH: Well, that visit in 1972, Nixon and Kissinger, is the sort of the dawn of creation of the modern relationship. But ever since then, the relationship has been managed on a very personal basis between leaders. And that reflects, I think, a delicate interplay between personalities, egos, and domestic politics. We need a deeper, more institutionalized relationship, and my proposal tries to achieve that.

MARTÍNEZ: How much does China rely economically on the U.S. 'cause it seems like it's kind of on par with how much the U.S. relies on China?

ROACH: It's a two-way dependency or a codependency. China relies on us for our large and deep market of consumer demand. They're an export-led economy, and they need that. But we rely on them for the cheap goods they give us to make ends meet for consumers. They're a huge buyer of our treasuries, and they're the third-largest and most rapidly growing U.S. export market. So we both need each other.

MARTÍNEZ: So considering we both need each other, as you say, Stephen, could that serve as a, say, deterrent for aggression either way?

ROACH: Well, it has historically. Economics and trade has long been the anchor of the U.S.-China relationship that has served the purpose of limiting confrontation in other areas. But now both countries and their leaders are more focused on security rather than economic and trade, and that is, you know, more of a worrisome, confrontational structure to their relationship.

MARTÍNEZ: You know, I mentioned Elon Musk's visit earlier. He's a high-profile name, so that visit was going to get a lot of attention. But when, say, high-profile brands such as the NBA - when the NBA invests billions of dollars in the Chinese market, does that give us more of a clue of how tough the U.S. can really get in opposing policies from China?

ROACH: Over the years, U.S. businesses have really recognized the dual benefits of investing in China. They get more efficient production, offshore production solutions from their offshoring, and they also get the opportunity to tap the world's richest and deepest market. But those advantages are now slipping away as we focus on security.

MARTÍNEZ: Stephen Roach is a senior fellow at Yale's Law School's China Center. Stephen, thanks.

ROACH: Thank you.