How a US-China economic decoupling could help other nations
What's the story
A recent study has shown that a complete economic decoupling between the US and China could actually be beneficial for many other countries. The research was conducted by a pair of Chinese researchers from Guangdong province, who used a quantitative trade model to examine the potential global impact of such a scenario. The findings were published in the peer-reviewed South China Journal of Economics.
Economic impact
Countries in Southeast Asia may gain economically
The quantitative trade model, a data-driven economic framework that predicts how trade changes affect economies, was used to simulate the effects of a complete US-China decoupling.
The researchers found that countries in Southeast Asia and other parts of the world could see an increase in their overall economic welfare.
This is because these nations would partially take over trade and production activities previously handled through US-China cooperation during global supply chain restructuring.
Economic fragility
Gains could quickly turn into losses
However, the study also highlighted that these spillover benefits would be fragile.
If the countries enjoying these initial welfare gains were to cut their own economic ties with China, they could quickly turn into losses.
This caveat underscores the complex interdependencies of global trade relations and how quickly they can change in response to policy decisions.