Paulson Urges US and China to Manage Competition, Avoid Dysfunctional Decoupling

‘We have to be careful that decoupling does not become dysfunctional,’ he tells a lunch gathering in Beijing

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Cao Jiaxuanin Beijing

Published: 7:00pm, 11 Jun 2026

Former US Treasury secretary Henry Paulson has urged Washington and Beijing to manage their escalating strategic competition to prevent it spiralling into broader conflict, warning that deepening distrust now poses a greater risk than trade imbalances.

The US-China relationship was “the most consequential” in the world, requiring careful stewardship as rivalry sharpened across trade, technology and security, he said. “We have to be careful that the decoupling does not become dysfunctional.”

Paulson – who as treasury secretary led the US side of the US-China Strategic Economic Dialogue during the presidencies of George W. Bush and Hu Jintao – was speaking at a lunch in Beijing hosted by the Centre for China and Globalisation on Wednesday.

The former Goldman Sachs chief executive, now chairman of the Paulson Institute, stressed that while intense competition was inevitable, it must be managed. “The trick is going to be, while we’re intensely competing, that we have guard rails.”

Paulson’s remarks followed May’s closely watched Beijing summit between President Xi Jinping and his US counterpart Donald Trump, who brought with him 17 American CEOs. The two-day visit was the first time a US president had travelled to China in nine years.