The effort by the U.S. to decouple from China will have a serious impact on knowledge generation across the globe and could threaten long-term growth in Asia, according to the World Bank.
The Financial Times reported that the bank said, “bilateral restrictions on technology flows and collaboration between large countries could reduce the global availability of knowledge.”
The U.S. and China have been locked in a trade war since the Trump administration and tension between Washington and Beijing has only increased since the Ukraine War. The paper noted that President Joe Biden has enacted hawkish policies towards China, including tariffs and export controls that are aimed at cutting off Chinese companies to “critical technologies.”
Wang Wen, the executive dean of the Chongyang Institute for Financial Studies, Renmin University, told the Global Times, the state-operated newspaper, that the U.S. effort to contain China’s tech development has failed.
“From the ‘trade war’ to the ‘tech war’ that the US initiated toward China, I have not seen one good private company that collapsed under the crackdown,” he said.
He said Chinese companies have learned to become nimble and Huawei’s experience has “actually encouraged China’s private companies to bravely move forward.”
The World Bank noted that the decoupling has hurt corporate innovation in both the U.S. and China and threatens economic growth in all of Asia.
Aaditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific, told the paper: “Once you move away from open, integrated markets which are governed by predictable trade rules, to protectionism, trade division [and] politically influenced choices, you introduce uncertainty, which is nobody’s advantage.”
TRENDPOST: It should be noted that despite the public animosity between China and the U.S., trade between the two countries totaled $690.6 billion in 2022, which is the highest ever. Imports from China into the U.S. rose to $536.8 billion and exports from the U.S. hit $153.8 billion.
“I think it’s an important indication of the difficulties of actually decoupling,” Deborah Elms, the founder of Asian Trade Centre, told the BBC. “Even if governments, firms and consumers wanted to separate, the economics make it difficult to deliver products in a decoupled world at a price that firms and consumers are willing to pay.”
The U.S. and EU plan to use the sanctions imposed against Russia as a blueprint for future sanctions against Beijing if it decides to move on Taiwan. Diplomats told The New York Times that European countries do not embrace the idea of completely abandoning China and would prefer not to pick sides.
Wang Yi, China’s foreign-policy chief, told the Munich Security Conference last month that European countries need to think for themselves and not follow the U.S. blindly, especially given the Ukraine War.
He said, “Think calmly, especially for friends in Europe, about what efforts should be made to stop the warfare, what framework should there be to bring lasting peace to Europe; what role should Europe play to manifest its strategic autonomy.”
He warned against “some forces” that do not want peace to materialize in Ukraine.
“They don’t care about the life and death of Ukrainians or the harm on Europe. They might have strategic goals larger than Ukraine itself,” he said.