Guo-Chen Wang, an Assistant Research Fellow at the China Economic Research Institute of the Chung-Hua Institution for Economic Research (CIER), stated that measures to de-risk trade, technology, and finance between the United States and China are intensifying. He suggested that by 2026, we may witness more pronounced signs of a “hard decoupling” between the two nations. The United States is reducing its dependence on Chinese supply chains through export controls and tariff policies, while China is decreasing the proportion of US dollar settlements by reducing its holdings of US Treasury bonds and promoting the internationalization of the digital renminbi. The pace of economic divergence between the two sides is clearly accelerating.
Assistant Research Fellow Guo-Chen Wang pointed out that adjustments to US-China supply chains will put pressure on China, including slowing capital flows, heightened foreign investor concerns, and weakened industrial investment. Amid the ongoing wait-and-see sentiment among global investors, foreign capital withdrawal and decreased corporate self-financing may pose persistent challenges for China’s financial system.
China’s high-speed rail system and local government infrastructure debt continue to climb, with fiscal pressures becoming increasingly severe. If the Chinese Communist Party continues to rely on administrative interventions in economic operations, it may further distort market mechanisms and amplify existing structural risks. The CIER assesses that China’s future economic direction will depend on whether it can find a new balance among reform, opening up, and marketization, thereby avoiding deeper impacts from the US-China decoupling trend.
Author: CIER Editorial Team
Date: December 3, 2025