What happened.
“A global pandemic, a major war in Europe — both were risks that seemed almost unimaginable, until they happened,” Financial Times’ Editorial Board wrote last week.
FT Editorial Board :
Now the tensions with China provoked by US House Speaker Nancy Pelosi’s trip to Taiwan last week, coming just months after Russia’s invasion of Ukraine, have forced businesses to confront the possibility that a danger long seen as similarly distant could yet come to pass: a US-China conflict, or something close to it.
Why it matters.
Accelerated decoupling
The risk that China business is “wak[ing] up to” has been stridently debated in Western societies for some time. In another FT op-ed, Leo Lewis framed Pelosi’s Taiwan trip within the overall context of persistent US-China tensions that have hammered commercial ties for years.
Before China’s fighter jets roared and its ballistic missiles screamed into the seas off Taiwan last week, analysts had already begun laying out — from incursion to inaction — what investors could expect next.
Consensus among those forecasters was in short supply, and if anything, there is even less of it now. Both the US and China have spent recent days arguing about the definition and condition of the status quo, but the status quo now feels unambiguously in motion. The safest-looking analytical bet, in that context, is on sharply accelerated economic decoupling between the US and China, but how likely is it to move from the current, highly selective form to a broader split?
Lewis goes on to conclude that decoupling, while happening, is not likely to be accelerated by recent “Taiwan crisis” headlines. But he bases his view on several crumbly pillars of outdated fact - the most problematic of which is that “corporate resistance to accelerated decoupling will be quietly substantial,” because, as Lewis says, “the Chinese market is still the most attractive long-term growth bet.”
Deep sigh. China Boss last year wrote about the exodus of companies from the Middle Kingdom that began when profits started taking a hit from rising wages. In “Yes, manufacturing really is leaving China – and authorities are scrambling to slow down the exodus,” she referenced a number of sources explaining why, and the Financial Times was chief among them.
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