There are ongoing discussions about the need for the West, especially the United States (US) and the European Union (EU) to de-risk and/or decouple from China. These discussions pervade all spheres, including journalistics, think tanks, academia and politics.
In this article, I analyse why decoupling is not a good idea, its dire consequences, and the consequences for the West of being deprived of Chinese high-tech advancements. I emphasise that decoupling is a US agenda for the continuation of its dominance over the globe, and not a European one.
Why is Decoupling a Stupid Idea?
According to the World Bank, China holds 31.6% of the total global manufacturing output. The US follows with 15.9%, and Japan is in third place with 6.5%. The leading EU country is Germany, with 4.8%, in fourth position, and the next European is Italy in 8th place, after Russia, with 1.8%. France comes in 10th place, after Mexico, with 1.6%. This data was published in 2024 and refers to the 2023 manufacturing output. Furthermore, according to Reuters, in September 2024, the German manufacturing sector contracted at the fastest pace ever in a year due to “orders drying up at an alarming rate”, and “it is hard to picture any kind of recovery happening soon.”
With globalization and the liberalization of trade of goods and services, the world has become interdependent. In the case of the US, its economy is increasingly dependent on China for imports (particularly manufacturing supplies and advanced materials), Foreign Direct Investment (FDI) flows, and even the contributions made by Chinese students in living fees and tuition expenses.
An American study has shown that decoupling with China risks all of these value streams, and would constitute losses of over $700 billion in sales and $50 billion in profits for American companies that export to the Chinese market. A similar situation will happen in Europe too.
Consequences of Decoupling
Decoupling from China, given its massive 31.6% share of global manufacturing output, would be extremely disastrous. Here are a few reasons that come to my mind:
Global Supply Chains: China’s integration into global supply chains means it plays a critical role in the production of everything........