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America's decoupling from China: A perspective from stock markets

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  • Kerry Liu

Abstract

America's decoupling‐from‐China debate started after July 2018, reached its peak in August 2020, and is likely to continue even if it may not be a high priority for the Biden administration. Many studies have examined various aspects of this issue, especially the potential economic impacts on the US economy. Unlike previous research, this study looks at the response of stock markets. Using Google Trends data, this study created a weekly dataset from January 2020 to June 2021 to measure investor sentiment towards the US decoupling from China. Employing the generalised autoregressive conditional heteroskedasticity (GARCH) models, the study finds that concern over decoupling is associated with significant variations in stock market prices. From this we can infer that the overall effects of decoupling on the US economy are likely to be considerable.

Suggested Citation

  • Kerry Liu, 2023. "America's decoupling from China: A perspective from stock markets," Economic Affairs, Wiley Blackwell, vol. 43(1), pages 32-52, February.
    • Handle: RePEc:bla:ecaffa:v:43:y:2023:i:1:p:32-52
    DOI: 10.1111/ecaf.12556
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