“The United States isn’t qualified to speak to China from a position of strength,” were the words of American relationship specialist and high-ranking Politburo member Yang Jiechi at the 2021 US-China talks in Alaska. Jiechi’s statement embodies Beijing’s view that China is a fellow superpower to the US and is vying for dominance. China's meteoric rise to become the world's second-largest economy in 2010, its growing importance as a trading partner globally, and its spiralling circle of influence, supports this view.
The world’s two economic superpowers have become increasingly intertwined. For example, China’s share of US goods imports expanded from 9.8% in 2001 to 18.1% in 2019, and imports of services rose from 3.3% to 8.1% during the same period. Despite growing trade, the relationship between Beijing and Washington might be at the most strained it has been, and both governments are attempting to “decouple”. President Biden’s campaign focused on “Made in America,” prioritising reducing reliance on Chinese supply lines. Meanwhile, President Xi has touted “Dual Circulation” that emphasises increased self-reliance in critical industries, such as food and technology. With both countries looking to decouple partially, what do investors need to know about the US-China relationship?
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