The Wuhan Virus and the Imperative of Hard Decoupling

From American Interest:

Should the fallout from the Wuhan Virus prove to be as damaging as it looks like it might be, the first casualty should be China’s quest to become the premier manufacturing center for the world. Few corporations will want to again risk being caught in a situation where their entire supply chain has been locked into one country—much less a palpably hostile dictatorship. The subsequent era will, I hope, be one of strategic reconsolidation, with a special focus on onshoring critical supply chains that have been moved to China. Even the siren song of potentially-vast consumer markets in China may end up being more than offset by the trauma we are about to face.

As the dust settles, the United States should be taking a hard look at streamlining our federal and state regulatory framework, tax structure, and all other outstanding obstacles in order to encourage U.S. businesses to come back home. If, once this crisis is over, we do not have at least a blueprint for rebuilding America’s manufacturing base and restoring our ability to provide critical supplies to the country regardless of the actions of our adversary, a decisive opportunity will have been squandered. Such a plan ought to be accompanied by other measures, including ending China’s unfettered access to our research centers and universities, putting restrictions on technology exports to, and manufacturing in, China going forward, and using the Committee on Foreign Investment in the United States (CFIUS) more aggressively to prevent Chinese takeover of key industries and corporations.

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