Although Communist China is not willing to admit the fact of China and US decoupling amid the escalation of trade war and sanctions as a result of Hong Kong pro-democratic protests, its downturn economy is facing the tough reality of at least partial disconnection.
According to statistics from the America side, US exports to China decreased by 16% in the past 8 months while imports also recorded a decline of 13%. Direct investment from China dropped from the top of 46.5 billion US dollars in 2016 to only 5.4 billion US dollars in 2018, a loss of 80%.
US investments in Chinese markets still saw an increase of 1.5% with 6.8 billion dollars, but the increase has been downwards dramatically. The trade war has given rise to re-adjustment and transfer of the supply chain from China and thus adds further pressure on the already weakening domestic economy.
“The Americans seem determined to decouple with China. China has seen it happening, and has realised that it can decouple because its economy is large enough,” Ho Kwon Ping, executive chairman of hotel and resort operator Banyan Tree Holdings, said during a panel discussion at the annual Forbes Global CEO Conference at the Shangri-La Hotel in Singapore last week.
Earlier, China warned of instability in international markets from any “decoupling” of China and the United States, after sources said the Trump administration was considering delisting Chinese companies from U.S. stock exchanges.
The decoupling of the world’s two weightiest economies seems as inescapable as its extent and global impact remains incalculable, as CNBC has reported a month ago.
Xinhua said in a commentary on Monday, “The Chinese economy slowed down in the third quarter, but it is no cause for panic,” and the Chinese economy is resilient enough to withstand external headwinds. But people look the other way round.
Today, decoupling is fact, and no longer an assumption.
By Winnie Troppie