The Evolving Geopolitics of Economic Interdependence between the United States and China: Reflections on a Deteriorating Great-Power Relationship

executive summary:This essay explores why the U.S. and China have both come to adopt a more cautious view of globalization as their strategic frictions have intensified.main argument The U.S. and China were perhaps the two greatest beneficiaries of the phase of globalization that dated from roughly the mid-1970s to the 2008–9 global financial crisis. Now, however, each country assesses that a combination of intensifying domestic pressures and increasing external turbulence—in significant part the result of growing strategic frictions between the two states—is heightening the need for self-reliance. U.S.-China relations are poised to continue deteriorating as Washington and Beijing both take a dimmer view of their economic entanglement. That deterioration will shape but not dictate Asia's economic evolution.policy implications • The U.S. and China are both increasingly likely to see their economic interdependence not as a source of stability but as a vector of vulnerability.• Even so, the rhetoric around decoupling presently outpaces the reality; the U.S. and China will likely find it far more challenging to unwind their interdependence than they would like.• The extent to which the Indo-Pacific Economic Framework succeeds in shoring up U.S. economic competitiveness will be a crucial litmus test of Washington's staying power in Asia.