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The Year Ahead 2020

English

The Myth of Global Decoupling

The possibility of a protracted conflict between the world’s two largest economies, whatever its cause, should not be taken lightly. Nevertheless, even assuming a permanent fracture between the US and China, the $87 trillion global economy is unlikely to split into two blocs in 2020 and beyond.

NEW HAVEN – Talk of decoupling – a profound and lasting split in the world order – entered public debate in 2019, an alarming manifestation of the mounting conflict between the United States and China. Escalating tit-for-tat tariffs are only the tip of the iceberg. Geostrategic security concerns, early skirmishes in a “tech war,” the related fear of two parallel Internets, a nationalistic US president with an overt distaste for “globalism,” and a history of military clashes between rising and incumbent powers all raise the specter of a new Iron Curtain reminiscent of the Cold War.

Historians have been quick to point out that the mounting tensions between the US and China lack the ideological component that many believe was the defining characteristic of the first Cold War. That may be true, but so what? The possibility of a protracted conflict between the world’s two largest economies, whatever its cause, should not be taken lightly.

Nevertheless, even if there is a permanent fracture between the US and China, the $87 trillion global economy is unlikely to split into two blocs in 2020 and beyond. The reason is simple: bilateral action cannot divide a tightly linked multilateral trade system.

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