The evolving geopolitics of economic interdependence between the US and China
Published 02 August 2022
A combination of intensifying domestic pressures and increasing external turbulence is heightening the need for self-reliance for both the United States and China. Even so, the strategic rivals will likely find it far more challenging to unwind their interdependence. Bilateral relations are poised to deteriorate, and that will shape but not dictate Asia’s economic evolution.
The US and China were perhaps the two greatest beneficiaries of the phase of globalization that dated from roughly the mid-1970s to the 2008-2009 global financial crisis. That roughly 35-year period witnessed the dismantling of trade barriers in numerous developing countries, the expansion of global supply chains, and a growing ratio between the values of goods trade to global output.
However, mounting economic challenges at home, systemic shocks including the coronavirus pandemic and Russia’s invasion of Ukraine, and the intensification of bilateral strategic frictions have collectively compelled each country to focus more on strengthening internal economic resilience. While these two powers are scarcely withdrawing from globalization, they are increasingly sensitive to the nexus of macroeconomic volatility and geopolitical upheaval. The evolution of their respective dispositions and the shifting strategic balance between them will have the greatest impact on Asia, where their strategic competition is most pronounced.
This essay is supported by the Hinrich Foundation, and is part of the Asia Policy 17.3 issue, published by the National Bureau of Asian Research.
© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).