HMM: The Case for “Avalanche Decoupling” From China.

Punishing Beijing for unprovoked aggression would be essential to maintaining U.S. credibility and leverage, but it would have to be balanced with U.S. interests. These include preserving macroeconomic and financial stability, dollar hegemony, and a functional and rules-based international trading system, as well as breaking U.S. and allied dependence on the Chinese market. Even in an extreme crisis scenario—for example, if Beijing attacked U.S. bases in East Asia during an invasion of Taiwan—attempting a total and immediate economic decoupling from China would be a costly and dangerous gamble. It would subordinate all other U.S. interests to a punishment strategy that might not even work.

But there is another option. Rather than threatening economic Armageddon if China crossed U.S. redlines in East Asia, Washington could offer an affirmative vision for how the international economic system can evolve to protect the vital interests of the United States, its allies, and third countries. This vision should include a U.S.-led allied agenda to protect economic security in peacetime, as well as a contingency plan to broaden and accelerate that program during and after a potential crisis of Chinese aggression.

The plan is “avalanche decoupling.” If Beijing crossed one of Washington’s redlines, the United States could work with its allies to manage the resulting global financial crisis, reshore critical supply chains away from China as fast as possible, and trigger a ratcheting trade policy to unlink noncritical supply chains over the longer term. The plan would also initiate the creation of an Economic Security Cooperation Board, a new institution with membership open to all countries except rogue states such as Iran, North Korea, Russia, and of course China.

Certainly, something to consider. The post-WWII rules-based system has largely served us well but inviting in countries — like Communist China and Putin-era Russia — who had no interest in playing by those rules was a mistake Western elites should pay dearly for, but won’t.