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Decoupling won't do any nation any good

By He Yafei | CHINA DAILY | Updated: 2019-12-14 00:00
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Thanks to its fixation with China as a "major strategic competitor", the US administration's strategy of "decoupling" from China is in vogue in the United States. And the fact that the US-initiated trade war has permeated all aspects of Sino-US relationship means it has created even more uncertainty and unpredictability for the world's most important bilateral relationship in the foreseeable future.

Will the US decoupling strategy work? It's too early to give a definitive answer.

On Nov 21, former US treasury secretary Henry Paulson said in Beijing that he believed "comprehensive decoupling is very dangerous" for the US and the global technology system. And although he indicated that "decoupling of the free flow of goods between the US and China will continue", he expressed hope that the flow of capital and technology would not be affected.

The sinking feeling of running into a "gray rhino" was soon shared by many in the US and the rest of the world.

Not easy to tear apart Sino-US network

Over the last four decades, thanks to economic globalization and their tremendous efforts, China and the US have weaved a highly interdependent and interconnected economic network that is by no means easy to tear apart overnight-not to mention that China is now the largest trading partner of about 130 countries and regions. The bilateral network has been intertwined with a much larger global network of trade, investment and economic cooperation that links upstream and downstream operations throughout the whole global supply chain.

Take key chips for example. The US produces an overwhelming amount of key chips, of which China imports more than 50 percent for the production of modern electronic goods, both for domestic consumption and exports. The pattern of interdependence in this important sector could apply to other sectors, too, making decoupling a "sharp knife cutting both ways".

It is a pity that despite the increasing interdependence of the two economies, those hard-headed advocates for decoupling the two economies in the US, driven by geopolitical anxiety and zero-sum game, are leaving no stones unturned in translating the idea into reality, even though common sense tells us that it will not only hurt China and the US, but also pull the world economy further into a downward spiral.

China has embraced globalization and the current global governance system. It will certainly carry on irrespective of the obstacles that might appear along the path. While China wants the trade war to end, it has no fear of one. As for decoupling, China holds the same stance. Moreover, it believes that wholesale decoupling is impossible unless globalization is totally ditched.

China has unswerving faith in globalization

Why does China have such confidence in globalization and is determined to carry on with it under the current global governance architecture, even ready to play a leading role when necessary, with or without decoupling?

At present, global governance is in tatters as major power relationships nosedive into strategic competition, driven by geopolitical entanglements that undermine the consensus necessary to uphold the system. One thing that stands out among many examples of hubris in global governance is that the US has turned against globalization and the rules-based system by withdrawing from institutions that it believes do not serve its "America first" policy.

The US' isolationism and narrow-minded nationalism is demonstrated in one important case: its withdrawal from the Paris Agreement, a global accord on climate change agreed in Paris at the end of 2015. What we are witnessing today is the decreasing political will of the US and some other countries to provide the global commons necessary for the proper functioning of the global governance architecture.

Proactive participator in global governance

In the 70 years since the founding of the People's Republic of China, the country's approach to global governance has undergone a transformation-from being somewhat passive in the past, with selective engagement, to broad, wide, deep and proactive participation. China has been a signatory to almost all international treaties and regimes, including those on nuclear nonproliferation and climate change, and has joined most international organizations.

Why is China so motivated to not only take part in but also actively promote global governance?

First, China believes that global affairs should be managed based on democratic principles whereby all countries have a voice and ownership in making decisions that affect all. International affairs should not be monopolized by one or two countries or a small group of countries, such as the G7.

Second, China holds that all countries should abide by the rules-based global governance system. In truth, especially for small and medium-sized countries, a just global governance system is essential for them to be treated equally and fairly in international affairs. For almost three decades after 1949, China suffered forced isolation and sanctions by major Western powers. It is therefore determined to uphold the rules-based global governance system that has served all countries well over the past few decades.

Development on G20 agenda

Third, China sees itself as a major power in today's world and shoulders corresponding global responsibilities. Hence, President Xi Jinping's proposal to build, together with other countries, a community with a shared future for mankind. China has also proposed the Belt and Road Initiative and some other new ideas and initiatives to promote global economic cooperation and improve the lot of developing countries. The G20 Summit in Hangzhou, Zhejiang province, in 2016 made great strides in putting development and infrastructure on the G20 agenda.

Fourth, after reviewing the painful lessons of global financial and economic crises, China believes that it is imperative in today's highly interconnected world economy to have regular, in-depth macro policy coordination among economies, especially the major ones, as their individual monetary and fiscal policies can have huge spillover effects around the world. For instance, the US dollar's exchange rates and the US Federal Reserve's decisions on US bond rates have had such an impact on world capital movement that every country watches it closely.

Besides, when we say the global governance system is in tatters, it does not mean the world is doomed or that there is no governance at all. The basic consensus that our world needs a rules-based global governance system is still intact, although it has been dented. What needs to be done urgently is to make concerted global efforts to maintain and consolidate the consensus with necessary reforms, including World Trade Organization reform, which could be a litmus test for the resilience of the global governance system we are trying to defend against an onslaught of populism and protectionism.

Governance system serves US well

There is also a need for the world to continue engaging the US, as China has been trying to do, so it comes to its senses and acknowledges that the existing governance system serves its national interests well.

Bilaterally, China will not go along with decoupling; instead, it will make more efforts to more deeply involve the US political and business communities in discussions and exchanges.

In this connection, China and other major powers, the UN system and regional organizations such as the European Union, the African Union and the Association of Southeast Asian Nations must play their due roles as defenders and promoters, as well as reformers, of the global governance system.

Bigger role in global governance

Going forward, China is expected to play an even bigger role in global policy coordination and economic governance. It is also prepared to continue on a proactive path; and over the years it has proposed many ideas and programs, including the Belt and Road Initiative, the Asian Infrastructure Investment Bank and the (BRICS) New Development Bank to supplement and complement the current international governance system.

China's role and its effectiveness will also depend upon cooperation among major powers and the concerted efforts they make to improve and reform the present system. We should not be too pessimistic, even though the prospect of well-coordinated global governance is rather dim.

LI MIN/CHINA DAILY

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