SHANGHAI ¨C In terms of geopolitical impact, nothing could be more important than the United States¡¯ shift from strategic cooperation to strategic competition with China.
This change has darkened many observers¡¯ views of China¡¯s economic prospects, as indicated by a Bruegel report released late last year. The assumption, it seems, is that China has no choice but to retreat from its successful development path and embark on a less prosperous path toward self-reliance, with the state exercising complete control over the economy to hedge against geopolitical shocks. But China¡¯s efforts to bolster its self-sufficiency in some areas are a reasonable response to external pressures ¡ª and they hardly spell doom for its economic model or prospects.
In recent years, the U.S. has ramped up its effort to ¡°contain¡± China¡¯s rise. Beyond employing tariffs and nontariff barriers on imports from China, it has been limiting Chinese investment, such as by blocking Chinese companies from acquiring firms in some high-tech sectors in the U.S. It has also continued to add Chinese firms to its so-called Entity List, thereby restricting their access to U.S.-controlled critical technologies like semiconductors, barred U.S. capital from entering some of China¡¯s strategic industries, and forced Chinese companies off U.S. stock exchanges.
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