- China and West will have less integrated economies than in the past
- Even if general integration remains fairly high, integration and especially dependency will be reduced in strategic areas relevant to national security and resilience
- Because of limited state capacity, this will probably happen slowly - look for winners in particular niche sectors, not trade-exposed losers (because trade may not decline much)
Who benefits:
- Western suppliers of components in security/resilience-relevant supply chains that today are largely made in China (or at least overseas)
Things to investigate:
- What happens during the first phase of decoupling while significant parts of the value chain are still intertwined, and exposure to China for these companies may be high?
- For example, MP Materials is the most obvious US rare earths company — but doesn't yet have processing equipment in the US, so it ships metals to China for processing, and 100% of its revenue comes from Chinese customers
Industrial Security Policy: New Missions for DoD, SBA and CFIUS