Talk of Decoupling Is Mostly Just That

The battle between Washington and Beijing over tech curbs hasn't hit trade flows broadly

- Daniel Flatley, with Alex Tanzi and James Mayger

Trade between the US and China is on track to break records, which is hard evidence that, despite the heated national security rhetoric in Washington and talk of "decoupling" in policy circles, the world's top two economies remain firmly intertwined.

US government data through November suggest that two-way imports and exports in 2022 will be the highest ever recorded, or at least come very close, when the final report comes out on Feb. 7. Beijing's own just-published full-year figures showed bilateral commerce of about $760 billion.

There are some caveats. Trade between the countries slowed toward the end of the year, when US import demand cooled and China struggled to manage its Covid-19 restrictions. Also, the data aren't adjusted for inflation, which means higher dollar figures may not translate into more goods shipped. Still, they're striking numbers in an era when tough-on-China is the closest American politics come to bipartisan consensus. The data illustrate the degree to which the countries depend on each other, even as Washington seeks to hold back China's technological advance and Beijing tries to counter Washington's global influence.

There's been a slight warming trend in relations, including the first face-to-face meeting in November between Presidents Joe Biden and Xi Jinping, and plans for more high-level connections, including a visit to China this year by Secretary of State Antony Blinken. But the points of conflict will be tough to resolve. Those include Beijing's territorial claims in the South China Sea and its stated goal of seeing Taiwan reunified with the mainland one day, as well as Washington's aggressive drive to restrict Beijing's access to technology.