The cost of going it “alone”

Recent developments in Hong Kong and along the border with India are putting further strain on China’s relations with the rest of the world and accelerating the process of decoupling. This will make it harder for Chinese firms to “go global” and make inroads overseas, a key ingredient in the success of other East Asian economies that have reached high income status. Foreign pressure is also encouraging China’s leadership to double down on state-led industrial policy which risks diverting resources away from more productive uses.