top of page

US-China Ties: Navigating a "Small Yard, High Fence" Approach

A delicate balancing act between collaboration and competition characterises the key juncture in the relationship between the United States and China. Washington has emphasised the necessity of "de-risking, not decoupling" from China's economy despite mounting global worries.

Analysts and Chinese officials, however, are still dubious about the real goals of this strategy. Recent events, like the creation of a collaborative mechanism to handle trade and technological restraints, demonstrate how complicated the situation is.

During a recent visit to China, US Commerce Secretary Gina Raimondo reaffirmed that the US does not wish to separate from or impede China's economic growth. She emphasised that having a stable economic relationship with China is a priority for the US. Raimondo made it plain, nevertheless, that issues pertaining to national security would not be negotiable, particularly when it came to issues involving export restrictions.

The US, on the other hand, has come under harsh criticism from the Chinese Ministry of Foreign Affairs for allegedly "containing" China completely through trade sanctions, tariffs, technology limitations, and regulatory framework. China sees these steps as an effort to stifle its development, creating the possibility of a new Cold War. Chinese leaders have repeatedly opposed any attempts to cut off their nation from international supply networks, believing that such actions would harm the world economy.

Chinese investments, notably in semiconductors and artificial intelligence, are likely to face further restrictions as a result of the United States' apparent intensification of its "small yard, high fence" strategy. Given that Chinese developments in these domains are essential to the country's technological strength and continued development, this strategy raises questions.

The "yard" and "fence" limits can be set in a way that suits the US because of their ambiguity. By taking this tactic, the US can maintain control over the details while giving the Chinese participants the impression that the strategy is real.

The phrase "de-risking" has come under debate. Many Chinese analysts contend that it is a disguised form of decoupling, despite the fact that the US employs it to address concerns about trade and national security.

Without describing what kinds of risks are involved, they assert that the US is telling the rest of the world that doing business with China is risky.

Experts and economists believe that what at first glance appear to be limited de-risking steps by the US may, in the near run, result in a broader decoupling. The emphasis on limiting access to high-tech, high-growth industries may have an impact on China's future economic expansion.

The US using national security concerns to stifle China's expansion is the main source of the tensions. If trade and investment debates are to advance, this problem must be solved. Although both nations are aware of how important these concerns are, they have a lot of trouble coming to an agreement.

As long as national security concerns are there, it will be difficult to strike a balance between cooperation and competitiveness in trade and investment debates. Cooperation and communication will be essential in this "small yard, high fence" situation.


bottom of page