In case you hadn’t noticed, relations between the U.S. and China have been abysmal. But if the pandemic has taught us anything, it is that both countries are well aware neither can afford to lose the other as a trading partner, treat the other as an adversary – or risk the crippling cost of an altercation.

Even if one of them appears to have sent a spy balloon over the U.S. just in time for Valentine’s Day – which was swiftly shot down.

So, amid a lot of diplomatic feints, America is undertaking the delicate process of “de-risking” – after discarding the “decoupling” language that turned off some of its European allies – by imposing investment and technology restrictions on China while, simultaneously, making nice noises and talking reassuringly about keeping that trade conveyor belt humming.

The shift in recent months, however, has been dramatic, with the latest trade data showing China’s exports to the U.S. plummeting by 23.7 percent in June to $42.7 billion, marking a six-month low, according to the U.S. Census Bureau, which tracks foreign trade balances. Demand for goods from China has weakened globally, as central banks boosted interest rates to cool inflation, putting its economy on the defensive as it struggles to regain traction, post-Covid.

Source: The Daily Upside