US-China rivalry: How companies can adjust to geopolitical shift as decoupling accelerates

Name: Banning 92 million Communist Party members from America ‘ridiculous’, Beijing says
Uploaded: 2020-07-22T09:01:10.000Z
Duration: 3 min 1 s
Description: Banning 92 million Communist Party members from America ‘ridiculous’, Beijing says

Companies can count on the rules and dispute resolution mechanisms of free-trade agreements, take advantage of Western funding agencies such as the DFC and seek global forums such as Apec to keep conversations going

Reading Time:3 minutes

Why you can trust SCMP

With the US and China locked into narratives about each other, decoupling can only accelerate. Photo: Shutterstock

James CarousoandPenny Tucker

Published: 5:01pm, 22 Jul 2020Updated: 10:17pm, 22 Jul 2020

No matter which candidate is successful in the November US elections, the geopolitical contest between the United States and China is likely to continue. Whatever the merits of the arguments of each nation’s political elite, they are both locked into a narrative about the other that has widespread support among most segments of their populations.

This means the decoupling of the global economy is likely not only to continue, but to accelerate. We already see Huawei banned from the British telecommunications system, only months after the government said it had no problem with the Chinese company being part of its 5G roll-out. There is more talk of the TikTok app being banned in the US.

Taiwanese semiconductor companies are rapidly reshoring from mainland China, and Japan is devoting billions of dollars towards moving the production lines of its corporations out of China. Beijing will continue to favour, subsidise and promote globally its national companies in ways that often violate the rules of the World Trade Organisation.

For companies with an international footprint – or with hopes of achieving that goal – what does this geopolitical paradigm shift mean? What are the opportunities and risks to consider?

03:01

Banning 92 million Communist Party members from America ‘ridiculous’, Beijing says

First, trade agreements matter. With the WTO in disarray, companies may still depend on the rules and dispute resolution mechanisms of free-trade agreements. While the web of such agreements can be daunting to understand, such pacts as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) bring together 11 countries representing more than 13 per cent of the global economy and provide a broad range of tariff reductions and market access concessions.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x