Blog Post

The Indo-Pacific Economic Framework and US-China Relations

Tue, Aug 9, 2022

by Laura Tyson and Harry Broadman


The eagerness driving the Biden administration’s launch of its Indo-Pacific Economic Framework (IPEF) is perfectly understandable: the U.S. needs to raise its game and systematically tap into some of the fastest growing economies in the world. Indeed, the countries participating in developing the IPEF are states that have “good bones”:  rapidly rising incomes; a workforce that is young, well-educated, and eager to hone their skills; and governments who understand that “rule of law” begets investment.  

But the Administration’s hope that the IPEF will sway these countries’ economic allegiance, as well as that of the firms who operate in the region (whether or not they fly the American flag), away from China is predicated on a false assumption.   It would seem to be based on a misunderstanding of how modern tiered supply chains work and on the central role China plays in these supply chains throughout Asia. While the IPEF is important to restoring America’s credibility in the Indo-Pacific regional economy, it is naive to think it will “rewrite the status quo” of China’s strong economic influence in the region.