China Tensions Are Reshaping Global Business

Two recent research essays by business school students examine the evolving relationship between Western economies and China from complementary angles: one at the level of multinational corporate strategy, the other at the level of global trade dynamics. Together, they offer a grounded picture of an economic relationship that is being reshaped under pressure. 

The dual circulation strategy

Adrien Zantman’s study addresses a practical question facing many executives: can Western multinational corporations still succeed in mainland China? Drawing on macroeconomic data, policy analysis, interviews, and case studies, his work points to a clear shift in the balance of power. “Western companies are not being pushed out, but they are undeniably losing ground,” he writes. Over the past decade, foreign firms’ market share has declined as domestic competitors have strengthened, supported by policy frameworks that increasingly favor local players. 

Central to this transformation is China’s “Dual Circulation Strategy,” which prioritizes domestic demand and technological self-sufficiency while maintaining selective openness to foreign firms. This strategy does not exclude Western companies outright, but it raises the bar for participation. According to Zantman, sectors such as green technology, healthcare, and consumer services continue to offer opportunities, especially for firms able to align closely with national priorities and adapt their operating models accordingly. 

Geopolitical tensions further complicate the environment. Trade disputes, regulatory changes, and technology restrictions, particularly between the United States and China, have disrupted supply chains and introduced new uncertainty. These developments have tangible effects on corporate decision-making, forcing firms to reassess risk exposure, sourcing strategies, and long-term commitments in the Chinese market. 

Yet the research does not support a narrative of wholesale retreat. Zantman highlights several Western firms that continue to perform strongly in China, including Tesla and L’Oréal. Their success, he argues, reflects a set of identifiable practices: alignment with government priorities, investment in local research and development, adaptation of products to local preferences, and strong digital capabilities. “Doing business in China today requires more than ambition. It demands adaptation,” he concludes. The implication is that access to China is increasingly conditional on strategic alignment and operational flexibility. 

Are China and the USA Decoupling? 

Where Zantman focuses on firm-level adaptation, Thomas Nobileau’s research examines the broader macroeconomic question of whether the United States and China are truly “decoupling.” His analysis begins with a simple observation: despite widespread political rhetoric, trade volumes between the two countries remain substantial, even after years of tariffs and restrictions. 

However, aggregate figures mask important structural changes. Nobileau finds that decoupling is not uniform but concentrated in specific sectors. Imports of Chinese electronics and computer products into the United States, once central to bilateral trade, have declined significantly, while other sectors have remained stable or even expanded. This sectoral variation complicates any simple narrative of economic separation. 

Fragmenting Trade Patterns 

In parallel, both countries are diversifying their trade relationships. The United States has strengthened ties with partners such as Mexico, Canada, and the European Union, while China has expanded its economic engagement with ASEAN countries, particularly Vietnam, Malaysia, and Indonesia. This shift reflects a redistribution of economic linkages across multiple partners rather than a clean break. 

Crucially, Nobileau finds no evidence that a single alternative axis of economic integration is replacing the U.S.-China relationship. Instead, global trade patterns are becoming more fragmented. Supply chains are increasingly regional and less dependent on any one country. “We’re not witnessing the end of globalization, but rather its evolution,” he writes. 

This evolution introduces both resilience and complexity. Diversification can reduce vulnerability to shocks concentrated in a single geography, while increasing the number of relationships firms and governments must manage. For Nobileau, the key takeaway is analytical rather than prescriptive: “Decoupling is real, but it’s messy. It’s not a retreat into isolation, but a recalibration of interdependence.” 

Read together, the two studies converge on a similar conclusion. Neither supports the idea of a complete economic separation between China and the West. Instead, both describe a system in transition. At the firm level, this transition takes the form of stricter conditions for operating in China, requiring deeper localization and alignment. At the global level, it appears as a reconfiguration of trade flows, with sector-specific shifts and increasing diversification. 

In both cases, the emphasis is on change rather than rupture. Zantman shows that Western firms can still succeed in China, but only by adapting to a more selective and competitive environment. Nobileau demonstrates that U.S.-China economic ties remain significant, even as their structure evolves. Together, their findings suggest that the current moment is less about disengagement than about the reorganization of markets, supply chains, and corporate strategies. 

Author bios 

Adrien Zantman is a graduate of HEC Paris and the CEMS Master in International Management, with a focus on corporate strategy and geoeconomics. He conducted part of his research at Tsinghua University in Beijing, examining how Western companies navigate the challenges of operating in China in the context of U.S.-China economic tensions. 

Thomas Nobileau graduated from HEC Paris in 2026 with a Master’s degree in Economics & Finance. He currently works as a consultant at Capgemini Invent in the Strategy & Transformation practice.