Decoupling
Topic: Globalisation and MNCs · NCERT: Beyond NCERT
Meaning
Decoupling is the deliberate separation of trade, investment and technology links between major economies, especially the US and China. Governments do it for strategic and security reasons, not only economic ones. The tools include tariffs, export controls on chips, and subsidies to make key goods at home. Decoupling is one sign of today's more fragmented world economy.
Example
The US has used tariffs from the 2018 trade war, controls on chip exports to China, and the CHIPS and Science Act (2022). These steps are meant to cut its dependence on China for semiconductors.
Don't confuse with
- De-risking: reducing dependence on one country for critical supplies without cutting ties completely. The term was used by Ursula von der Leyen in March 2023 and adopted by the G7 at Hiroshima in May 2023.