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Containing the Collateral Damage of America’s China Policy

Despite US assurances, the Biden administration’s export restrictions could undermine much of China’s civilian economy and push China toward military intervention in Taiwan. To foster cooperation on issues such as climate change and fentanyl, the US must find ways to minimize the negative spillovers of its current policies.

NEW YORK – The United States’ recent restrictions on Chinese exports and direct investment in China are likely to cause substantial collateral damage to the Chinese economy, raising the risk of conflict. But if China and the US can agree on the concept of a special economic zone (SEZ), such as Hainan Island, the collateral damage and geopolitical risk may be mitigated substantially.