The decoupling of US and China has only just begun

When a familiar and comfortable situation changes dramatically, the human instinct is to believe that things will soon get back to normal. The idea that life may have changed permanently is too unsettling to deal with. We are seeing this mentality with Covid-19. We are also witnessing it as business responds to the downward spiral in US-Chinese relations.

After 40 years of ever deeper economic integration between the United States and China, it is hard to imagine a real severance of ties. Many executives believe that politicians in Washington and Beijing will patch up their differences when they realise the true implications of "decoupling" the world's two largest economies. The hope is that a trade deal will stabilise things, even if it has to wait until after the US presidential election.

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A version of this article appeared in the print edition of The Straits Times on August 19, 2020, with the headline 'The decoupling of US and China has only just begun'. Print Edition | Subscribe