Decoupling from China to Cost West $23.6tn Over 25 Years

A new study has estimated that decoupling from China would cost the West $23.6tn over 25 years. The study, conducted by EY-Parthenon, found that the US, eurozone, and UK would need to invest an extra $23.6tn over 25 years to end their reliance on China in critical industries.

The US share of the bill is estimated at $13.7tn, the eurozone's at $9.1tn, and the UK's at $800bn by 2050. The annual cost of decoupling from China would be around $940bn, roughly doubling the EU's entire budget.

The investment would be needed to protect Western supply chains from Chinese chips and rare earths, and to support the growth of critical industries such as manufacturing and technology. The study's findings highlight the significant cost of reducing reliance on China, and the need for Western governments and businesses to invest in alternative supply chains and industries.

The decoupling effort has been building across Western capitals for months, with a focus on reducing dependence on Chinese chips and rare earths. The study's findings suggest that this effort will require significant investment and resources, but could ultimately help to protect Western supply chains and support the growth of critical industries.