Paulson Urges US and China to Manage Competition, Avoid Dysfunctional Decoupling
Quick Look
- Former US Treasury Secretary Henry Paulson advised Washington and Beijing to manage their strategic competition to prevent conflict, warning that distrust is a greater risk than trade imbalances.
- Speaking in Beijing, he emphasized the need for 'guard rails' amidst intense rivalry.
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Why It Matters
Former US Treasury Secretary Henry Paulson spoke at a lunch in Beijing hosted by the Centre for China and Globalisation. He addressed the escalating strategic competition between the US and China, warning of the risks of deepening distrust and 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.
Open Questions
- What specific 'guard rails' can be implemented to manage US-China competition?
- How will the current level of distrust impact future diplomatic and economic interactions?
- What are the potential consequences of 'dysfunctional decoupling' for the global economy?
