How US-China codependency led to a trade war

Stephen Roach, Senior Research Fellow at the Jackson Institute for Global Affairs and School of Management, Yale University, has presented his second book, Unbalanced: The Codependency of America and China, during the 11th Gaidar Forum held at the Russian Presidential Academy.

One of the most highly regarded Wall Street economists, Stephen Roach formerly chaired Morgan Stanley Asia and was the firm’s Chief Economist for the bulk of his 30-year career at Morgan Stanley. Prior to joining Morgan Stanley in 1982, Roach served on the research staff of the Federal Reserve Board.

At the beginning of his story about how the idea of ​​writing the book originated, Roach recalled the events of 1997-1998. The Asian market showed incredible growth, and then a crisis came about that spilled over to many other countries including Russia, Brazil and the United States. Our expert group was very much concerned about this situation. I had a gut feeling that China would hold the key to the end game of this crisis, so I started going there every other month, he said.

Roach was convinced that China would emerge from the Asian financial crisis as a stronger country than Japan – the regional leader at that time. And so it happened. It was then that Roach began closely watching the development of the Chinese economy, and in 2010, quitting Morgan Stanley for Yale University, he combined the US and Chinese economics in one training course.

In my book, which I wrote in 2014 (it was published in Russia in 2019), I decided to use the concept of codependency to describe the dysfunctional relationship between the two countries, a term from psychology. This is a situation where two partners draw more from each other than from their own inner strength. This is an addiction. As partner feedback tends to grow in importance, the relationship becomes highly reactive and fraught, with mounting tensions, frustration and anger, Stephen Roach explained.

This is how he made the leap from the psychology of codependency to the economics of codependency – because he traced some striking similarities. The friction that inevitably occurs among the codependent partners in a human relationship, has led to a trade war in the case of two countries. The Chinese economy had to change, he explained. From the exporter of cheap goods to the United States, it moved on to stimulate domestic consumption, and from importing innovations, to developing its own. China believes that such changes are critical to long-term growth. This change has naturally affected the relationship and ultimately led to the trade war that we are witnessing now and that I predicted in my book six years ago, he added.

This situation is described in detail in the Bad Dream chapter. The nightmare has become reality, Stephen Roach added. The book also focuses on the main conflicts that led to tensions between the two countries, including disputes over intellectual property rights, the dramatic differences in their leadership styles at the highest level, the role of the internet, the recent cybercrime disputes, and much more.

11th Gaidar Forum Organizers:

The Russian Presidential Academy of National Economy and Public Administration (RANEPA);
The Gaidar Institute for Economic Policy (Gaidar Institute);
The Association of Innovative Regions of Russia (AIRR).

Forum partners:

General partners: Gazprom, Gazprombank. Strategic partners: Coca-Cola, Mastercard, Russian Railways, Pharmstandard group, Johnson & Johnson, Sanofi, Novartis Group, MSD, ACIG Group, EF Education First. Partners: Prosveshcheniye Group, EY, Huawei, RVC, Russian Agricultural Bank.

General information partners: Rossiya 24 TV Chanel, TASS, RBC, Business FM; strategic information partners: Kommersant Publishing House, Interfax, Rossiyskaya Gazeta, Invest Foresight online business magazine, RIA FederalPress; main information partners:,,,, Profile; international partners: RT, Thomson Reuters, Sputnik, EFE, Cision, Pan Pacific Agency; information partners: Snob media project, PRIME economic news agency, RNS, Expert magazine, Parlamentskaya Gazeta,, Radio Ekho Moskvy, PRO Business TV channel, FINAM.RU agency, Davydov.Index, Strategia magazine, Ekonomika i Zhizn newspaper, ECONS.ONLINE website, Gosudarstvennaya Sluzhba magazine, TV BRICS.