Decoupling Chimerica: Consequences for the European Union

The People's Republic of China experienced a tremendous economic development within the last four decades. The increased economic power and political weight of China are challenging the USA and EU. Furthermore, the strategies used by China for its own development, e.g. broad-based industry policy with distortive subsidization, forced technology transfer or investment restrictions, are perceived as unfair, especially in the US, but to a large extent also in the EU. This development in combination with the trade imbalances are resulting in the current conflict between China and the US. The term decoupling was introduced to describe the cutting off of economic ties between China and the US as a consequence of the conflict. Accordingly, we analyze in this article whether a decoupling is going on. [...]