Decoupling US-China Supply Chains ‘Runs Counter’ to Economic Law: Beijing

China-U.S. economic and trade relations “are essentially mutually beneficial,” said a Chinese Foreign Affairs Ministry spokesperson when asked Friday about remarks by U.S. Trade Representative Katherine Tai that the Biden administration wants to reengage Beijing in new rounds of trade talks and hold China accountable for its commitments under the January 2020 phase one trade agreement (see 2110040025). “There is no winner in a trade war,” said the spokesperson.

The U.S. needs to have “really honest conversations with China about all of the elements of the phase one agreement,” Tai told a Center for Strategic and International Studies conference last Monday. “These are commitments that China made,” she said. “There are commitments that businesses and workers in certain sectors have looked to, and we will have to address where this relationship goes from this starting point.”

Tai sidestepped questions at the conference about whether the administration will prioritize decoupling the U.S. and Chinese supply chains as a remedy for Beijing’s allegedly unfair trading practices. “There’s a lot of talk about decoupling,” she said, adding she doubts there exists a “common definition” of decoupling.

To those who argue that the U.S. and China need to stop trading with each other, Tai said: “I don’t think that’s a realistic outcome in terms of our global economy.” One of the administration’s goals is seeking “a kind of recoupling” in its trade relationship with Beijing in which the U.S. occupies “strong and robust positions within the supply chain and that there’s a trade that’s happening as opposed to a dependency,” she said.

The Chinese think “the formation and development of global industrial and supply chains is the result of both market law and choices of the business community,” responded the ministry spokesperson. “Artificial” decoupling of supply chains “runs counter to the law of the economy and objective reality,” he said.

Cooperation and dialogue, not decoupling or confrontation, “is the strong aspiration of various sectors in both China and the U.S., including the business community,” said the spokesperson. “The U.S. should heed these calls and do more things conducive to the sound and steady development of China-U.S. economic and trade ties.” Tai’s office didn’t comment.

China “attaches importance” to “positive remarks” President Joe Biden recently made on U.S.-Chinese relations, said the spokesperson. “China has noticed that the U.S. side said it has no intention of containing China's development, and does not seek a new Cold War.” Beijing hopes Washington would adopt a “rational and pragmatic China policy,” he said.