Strategic Decoupling: How Great Power Competition Reshapes Domestic Economic Policy in the United States and China.

Abstract

The core idea of this research is that states react to great-power competitions using institutionally dependent paths: the U.S. uses regulatory tools such as export controls, investment screening, and targeted subsidies based on its fragmented, legally mediated-governance structure; whereas, China uses state-driven tools such as central planning directives, State-Owned Enterprise (SOE) mandates, and Policy Bank lending driven by its hierarchical Party-State structure This research utilizes a qualitative comparative case study model to compare how the U.S. and China have developed different forms of domestic economic policy in reaction to competing interests of being a global superpower. A comparative case study model is an ideal method of study for this research question because it provides a detailed exploration of the causal mechanisms which link geo-political pressure to the outcome of the policy. The results show how these institutionally dependent paths produce two separate decoupling pathways despite having common security goals. Finally, the author concludes that strategic decoupling will create two parallel technology ecosystems, alter global supply chains and undermine the rules-based international order, leading to significant implications for the nature of twenty-first-century global governance. This paper demonstrates that understanding the institutional basis of divergence is essential to predict the trajectory of decoupling. The U.S. and China are making decisions about differing sets of policy choices; they are operating under differing governance structures that dictate what policy options exist, how those options can be implemented and how those options evolve over time.