Under President Biden, US national security and industrial strategy have become deeply intertwined. Decoupling across strategic sectors is likely to continue as national security and technology blur. 

US hawkishness on China is in part driven by the domestic political environment. Democrats are keen to match Republican talking points on China, particularly in the run-up to the next presidential election. Current US policy is unlikely to be substantially altered by future presidents. 

China is primarily focused on domestic economic growth in the wake of reopening. But China’s technological self-sufficiency drive, efforts to expand its sphere of influence and its relationship with Russia will keep tensions with the US high. 

Periods of calm in US-China relations will be punctuated by volatility, which is likely to increase in the run-up to the US presidential election. This environment will keep risk premia on Chinese assets volatile, but creates opportunities for on-the-ground investors with deep knowledge of China.