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GTAP Resource #6856

"Analysis of the economic impact of decoupling between China and the United States"
by He, Jianwu and Shantong Li

The US national strategy towards China has shifted from "focusing on cooperation" to "focusing on competition and even confrontation." In October 2022, the U.S. government's National Security Strategy clearly stated that "The PRC is the only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it." This shift means that for U.S. policymakers, China has completely changed from a "collaborator" to a "threat," and that "decoupling" between China and the United States is increasingly likely to become a reality. What’s the impact of this trend on China, the United States and the world is the main question studied in this report.
The report will design two decoupling scenarios, namely "partial decoupling" and "full decoupling".
"Partial decoupling" mainly refers to the "decoupling" of the United States from China in the areas of "key and emerging technologies" (here referring to the "communication equipment, computers and other electronic equipment" industries).
"Comprehensive decoupling" mainly refers to the "decoupling" of the United States from China in all fields. In different scenarios, we will also consider whether U.S. allies take similar steps.
To quantify the economic impact of decoupling, the report uses the Global Computable General Equilibrium Model (ENVISAGE) developed by the World Bank. The model divides the world into 21 countries and regions (including China, the United States, Germany, France, the United Kingdom, Japan, Russia, India, South Korea, Canada, Australia, etc.), and divides all production activities into 27 sectors. On this basis, the model is used to simulate the scenarios set above, and the economic impact of decoupling on China, the United States and the world is reflected by comparing the differences between the decoupling scenario and the non- decoupling scenario. Finally, some policy implications are put forward on this basis.

Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Not published
Date: 2023
Created: Li, S. (4/11/2023)
Updated: Batta, G. (6/13/2023)
Visits: 565
- Non-Tariff barriers
- Supply chains
- Asia (East)
- North America

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