U.S.-China decoupling is underway — however full divorce is ‘nearly not possible,’ says ex-Chinese minister

SINGAPORE — The means of U.S.-China decoupling began even earlier than the coronavirus pandemic — however an entire separation of the world’s two largest economies is “nearly not possible,” in keeping with a former Chinese commerce minister.

Chen Deming, who headed China’s commerce ministry from 2007 to 2013, mentioned the U.S. concentrating on of Chinese corporations — like telecommunications large Huawei — are examples of how decoupling is underway. Washington has restricted Huawei’s access to essential expertise and semiconductors over nationwide safety issues, and has upped the pressure on other Chinese tech firms together with Tencent and ByteDance, making it tougher for them to function within the U.S.

“But I feel an entire decoupling might be very tough and nearly not possible,” Chen mentioned on Monday, in keeping with CNBC translation of his Mandarin-language feedback. He was a part of a panel dialogue moderated by CNBC’s Nancy Hungerford on the digital Singapore Summit.

“We cannot return to the Cold War period, the place there have been two markets on the earth that had no commerce or communication,” he added, referring to the interval after the second world warfare with intense geopolitical tensions between the U.S. and Soviet Union.

Flags of the U.S. and China are positioned forward of a gathering between U.S. Secretary of Agriculture Sonny Perdue and China’s Agriculture Minister Han Changfu on the Ministry of Agriculture in Beijing on June 30, 2017.

Jason Lee | AFP | Getty Images

As ties between the U.S. and China deteriorate additional in current months, President Donald Trump has threatened to divorce the 2 economies. But corporations from the U.S. and different international locations have proven little curiosity in pulling out of China, mentioned Chen, who’s president of the China Association of Enterprises with Foreign Investment.

In truth, there’s been a rise in overseas direct investments into China this yr, in keeping with Chen.

My sense is issues will worsen earlier than they get higher. Multilateralism is at larger danger at this time than it has been in a very long time.

Tharman Shanmugaratnam

Singapore’s senior minister

Tharman Shanmugaratnam, Singapore’s senior minister and coordinating minister for social insurance policies, equally mentioned that it is “very laborious to think about world companies retreating from China.”

“It’s a really giant market and it’s nonetheless a market with important progress,” mentioned Tharman, who spoke throughout a unique session on the summit.

U.S.-China tensions may worsen, however there’s “sufficient area” of the remainder of the world to “proceed to seek out methods to have win-win partnerships” with like-minded international locations, he mentioned. That contains forging nearer ties with the U.S. and with China, he added.

“My sense is issues will worsen earlier than they get higher,” mentioned Tharman. “Multilateralism is at larger danger at this time than it has been in a very long time, larger danger than a yr in the past, two years in the past.”

“But there’s rather a lot that we will do … to strike alliances. Call them plurilateral alliances: Work with whoever’s like-minded to make sure that you keep open and actually changing into much more open,” he added.

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