In recent years, many actions by American politicians have made it clear they’re trying to contain the development of China’s hi-tech industries. The United States in 2022 passed the CHIPS and Science Act, which included terms limiting chipmakers that receive subsidies under the act to conduct normal investment and trade activities in China and restricting China-U.S. sci-tech cooperation. It has also encouraged its allies to cut off the supply of semiconductor chips to China and tried to strangle many Chinese hi-tech companies under the pretext of national security. The U.S. tries to maintain its existing advantage with zero-sum thinking—disrupting international trade, investment and technology exchange. These policies aimed at outcompeting China are weaponizing economic and trade issues and negatively impacting the world economy.
China is the world’s second largest consumer market and largest trader in goods. Its economy is resilient and is continuing to grow. The country is also a main source of global economic growth and a major contributor to the resilience and stability of global industrial and supply chains. For these reasons, decoupling from China means giving up a large share of opportunities for a better future, which will eventually backfire on the U.S.
Rather than helping the U.S. outcompete China, its attempt to decouple from the Chinese market will place an unbearable burden on its own economic development. For example, since the second half of 2022, the U.S. semiconductor industry has shown signs of recession and its sales have shrunk sharply. Marvell, Micron, Intel, AMD and other industrial giants have started massive layoffs. Additionally, according to the U.S. Chamber of Commerce, U.S. investors may lose as much as $25 billion in capital gains every year and one-time GDP losses could reach up to $500 billion if U.S. companies reduce cumulative foreign direct investment in China by 50 percent.
Recently, the U.S. and its allies have begun to soften their rhetoric, replacing “decoupling” with “de-risking,” saying that they will accelerate the reduction of their dependence on China. However, “de-risking” is just another form of decoupling, and the desire to suppress and contain China is still clearly visible.
The International Monetary Fund said fragmentation could make it even more difficult to help many vulnerable emerging and developing economies that have been hard hit by multiple shocks, and could cost the global economy up to 7 percent of GDP. Actions that disrupt global industrial and supply chains deviate from the principles of free trade and violate the law of economic development. Deglobalization is the biggest risk to the world economy.
Recovery requires solidarity
In addition to the lingering impact of COVID-19, intensified trade disputes and geopolitical conflicts continue to weaken international development cooperation and world economic recovery. The World Bank pointed out that the global economy’s “speed limit”—the maximum long-term rate at which it can grow without sparking inflation—is set to slump to a three-decade low by 2030, casting a shadow on the development of all countries, especially emerging markets and developing countries.
The U.S. is the principal creator of this economic risk. In recent years, the failures of its internal governance have led to frequent debt ceiling crises, which not only impact the U.S. economy, but also cause large fluctuations in the global financial market. The increase of the federal debt ceiling is not a magic solution that will completely eliminate the possibility of debt defaults. Instead, it continues to shift the burdens of its crises onto the world, relying on the hegemony of the U.S. dollar.
To address the high inflation caused by its unlimited quantitative easing measures during the pandemic and to avoid domestic economic recession, the U.S. Federal Reserve has resorted to repeated and sharp interest rate hikes, a policy that is triggering currency depreciation, soaring inflation and other economic and social problems in many countries and regions. The turmoil in the U.S. banking industry that led to the collapse of several lenders earlier this year has also affected the stability of the international financial market. As the world’s largest economy, the U.S. has the potential to be a positive force in global economic development, but can also easily become the source of global economic volatility.
China upholds that solidarity and cooperation are the key to overcoming new development challenges facing international community. To get out of the current global economic predicament, it is necessary for all countries to unite and cooperate, oppose decoupling and fragmenting industrial and supply chains, promote mutual benefit and win-win results, and deal with risks and challenges together.
Global unity over hegemony
In order to create a framework for pursuing increased cooperation and solidarity, China has put forward the Global Development Initiative (GDI), Global Security Initiative (GSI) and Global Civilizations Initiative (GCI).
The GSI calls on countries to adapt to the profoundly changing international landscape in the spirit of solidarity, and address the complex and intertwined security challenges with a win-win mindset. It underlines the importance of remaining committed to the vision of common, comprehensive, cooperative and sustainable security; to working together to maintain world peace and security; to respecting the sovereignty and territorial integrity of all countries and to abiding by the purposes and principles of the UN Charter.
Humankind should be viewed as an indivisible security community and the security interests of all countries should be regarded as equal. Dialogue and consultation are effective in resolving differences. Embracing a global governance vision featuring extensive consultation, joint contribution and shared benefits is the way to deal with global issues such as climate change, energy crises and data security. Major countries should resolutely oppose a “new cold war,” abandon zero-sum games, promote coordination and positive interaction with each other, and use their resources to promote development and prosperity for all.
The GDI proposes fostering a development paradigm featuring benefits for all, balance, coordination, inclusiveness, win-win cooperation and common prosperity. To deepen global development partnerships, China joins hands with the international community in opposing decoupling and fragmenting industrial and supply chains, removing development barriers, ensuring free capital and technology flows, and promoting innovation. The initiative calls for respecting and supporting the people of all countries to choose their own development path. It also underscores equal rights, rules and opportunities for all countries by adhering to extensive consultation, joint contribution and shared benefits.
Each country’s journey on the path to modernization is different, and each country’s current level of social development is different. The GCI offers China’s solutions for expanding exchange between world’s civilizations to build international consensus and promote common values. Peace and development have always been the common aspirations of the international community, and fairness, justice, democracy and freedom have always been the common pursuits of the people of all countries. In advancing modernization, China will neither tread the old path of colonization and plunder, nor the crooked path taken by some countries in seeking hegemony once they grow strong.
China pursues peaceful development. It advocates peaceful coexistence among countries on the basis of mutual respect and seeking common ground while reserving differences. Exchange and mutual learning between civilizations will inject impetus into the development and progress of human civilization. –The Daily Mail-Beijing
Review news exchange item
