While the trend
toward greater separation between the U.S. and China is not indicative of the
end of globalization; rather, it is an example of how globalization will be
"reorganized" through such means as specific restrictions to sectors,
new routes for supply-chains and new arrangements of regions and institutions.
In other words, while global economic interconnectivity may be diminishing at
some levels, it is not necessarily being destroyed – merely being redirected or
"filtered" via new forms of governance, public policy interventions
and strategic decision-making by firms and through new alliances formed by
governments. This article builds upon Gopinath's (2012) arguments regarding the
nature of both convergent and divergent trends within globalization and upon
those developed by Riveras & Harrison (2016). A three-tiered conceptual
framework, focusing on: the degree of policy intervention into each respective
sector; the degree of substitutability of Chinese upstream input supplies; and
the sensitivity of technologies used to generate products to spillovers created
by competitors.
Three key propositions frame the argument. Decoupling
does not occur uniformly across all sectors of the economy; the separation
between the U.S. and China can remain apparent in terms of visible separation
even as significant dependence on China exists in many sectors due to reliance
on China for upstream components; when separation occurs among select sectors,
then trade, investment and institutional linkages can arise in new locations
and among different actors. Such claims are supported by evidence related to
dependence on imports from critical sectors, trade diversion, changes in
foreign direct investment flows and dependence on supply chains involving third
country suppliers. Ultimately, this study seeks to explain why separation is
occurring but to what extent; why China's responses have been mixed and
limited; and why multinational corporations will require customized
sector-by-sector strategies for coping with the changing dynamics of
globalization and cannot rely on developing a single "decoupling" plan.
The fundamental claim made here is clear: decoupling represents a
reorganization of globalization, not its termination.
