Peterson Institute Economist Assesses, U.S. Economy Will Lose by Decoupling from China

Dec. 8, 2019 (EIRNS)—Most countries are expanding their economic ties with China, Peterson Institute senior researcher Nicholas Lardy told a Dec. 7 New York conference organized by the China Institute, Xinhua reported. Foreign direct investment (FDI) to China continues to grow strongly, according to Lardy: “Thousands and thousands of new foreign firms are being established every month,” because they see the Chinese economy as a strong market. In the January-August 2019 period, total FDI expanded 6.9% year on year to about $85.36 billion—notable especially because global FDI flows have declined for three consecutive years. Xinhua reported that “the United States has never been a big investor in China, [and] Lardy pointed out that most of China’s foreign investments come from other places. ‘If there is decoupling, it’s going to be decoupling of the United States from the rest of the world, because other countries are not decoupling from China,’ Lardy said.”

Speaking at the same forum, Wei Shangjin, professor of finance and economics at Columbia University and former chief economist of the Asian Development Bank, “said that the two economies are well integrated with each other,” Xinhua reported. “Economic decoupling from China means that the United States would see an increase of costs and loss in competitiveness, Wei said.”