Zürcher Hochschule für Angewandte Wissenschaften

School of Management and Law

Master of Science in Banking and Finance

Fall Semester 2024

Disposition Master’s Thesis
The Impact of Economic Decoupling Between the USA and China on the Swiss Trade
Sector

Submitted by:

Plattenstrasse 18 9606, Bütschwil

Student Registration Nummer

Supervised by:

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Statement of Authorship
I hereby declare that I have written this thesis myself, without the assistance of third par-ties, and
using only the sources indicated. I have disclosed the use of generative AI sys-tems according to
the specifications. I will not provide copies of the thesis to third parties without the written
consent of the head of the program. All rights to the thesis are hereby assigned to Zurich
University of Applied Sciences (ZHAW). The right to be identified as its author remains
unaffected.

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Management Summary

This research explores the impact of economic decoupling between the United States and China
on the Swiss trade sector. Findings reveal a nuanced perspective, with participants viewing
decoupling more as a narrative construct than an immediate reality. While uncertainties exist, the
Swiss trade sector demonstrates resilience, maintaining continuous growth with the U.S. and
China. Factors such as disagreements, conflicts, and the push for Swiss independence in supply
chains are identified as drivers of decoupling.

Trump’s actions have also had a transformative effect, showcasing increased complexities and
tensions along with a trade war. However, the trade volume between the US and China remains
strong and increased. Besides that, all the sanctions imposed discussed Switzerland’s
commitment to neutrality.

Despite all the challenges, no significant effect of the decoupling was perceived with the Swiss
trade sector remaining active. As such, the research suggests a thorough understanding of the
economic relationship between the two superpowers, providing measures for Switzerland to
become more adaptable and resilient.

The significance of this research remains in stressing the multifaceted nature of the decoupling
and giving insights for policymakers, businesses, and individuals in navigating all the
complexities and understanding better the global power dynamics.

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Table of Contents
Statement of Authorship...............................................................................................................2

Management Summary.................................................................................................................3

1. Introduction..................................................................................................................................5

1.1 Background............................................................................................................................6

1.2 Research Aim.........................................................................................................................6

1.3 Research Question..................................................................................................................6

1.4 Research Objectives...............................................................................................................7

1.5 Significance of the Study.......................................................................................................7

1.6 Structure of the thesis.............................................................................................................8

2. Literature Review......................................................................................................................10

2.1 Introduction..........................................................................................................................10

2.2.2 The United States..........................................................................................................11

2.3 The relationship between China and the United States........................................................12

2.3.3 Six dimensions of interdependence...............................................................................14

2.3.4 Experts opinions on deterioration..................................................................................15

2.4 Economic Decoupling..........................................................................................................15

2.5 The effect of USA-China economic decoupling on the world.............................................16

2.6.3 Switzerland's Dilemma: Balancing Support for Ukraine and Sustaining Relations with
China......................................................................................................................................22

2.7 The effect of the decoupling on Switzerland.......................................................................26

2.8.2 Foreign Direct Investment in Switzerland.....................................................................29

2.8.3 Switzerland's Trade Relationship with China...............................................................30

2.8.4 Switzerland’s trade relationship with USA...................................................................30

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 2.10.Conclusion.........................................................................................................................34

3. Methodology..............................................................................................................................35

3.2 Research philosophy and approach......................................................................................35

3.3. Research strategy and inquiry.............................................................................................36

3.4 Participant’s selection..........................................................................................................36

3.5 Analysis Method..................................................................................................................38

3.6 Ethical considerations..........................................................................................................38

4.Results.........................................................................................................................................41

4.2 The impact of Trump’s actions............................................................................................42

4.5 The effect of the decoupling on Switzerland.......................................................................46

4.6 Switzerland’s way in navigating the challenges of the decoupling.....................................47

5. Conclusion and recommendations.............................................................................................50

5.1 Background..........................................................................................................................50

5.2 Recommendations................................................................................................................50

5.3 Limitations and future research............................................................................................51

6. Table of sources.........................................................................................................................54

7. Appendix....................................................................................................................................64

b. First Interview........................................................................................................................67

c. Second Interview....................................................................................................................73

d. Third Interview......................................................................................................................83

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Table of figures

Figure 2 - Imported and exported products Source: Comtrade, 2023...........................................30

Figure 3 - Foreign Trade Values Source: World Trade Organisation (WTO)..............................31

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List of Abbreviations

5G Fifth generation

ASEAN Association of Southeast Asian Nations

BBC British Broadcasting Corporation

CHF Swiss Franc

FDI Foreign Direct Investment

G-20 Group of twenty

GDP Gross Domestic Product

NAFTA North American Free Trade Agreement

RCEP Regional Comprehensive Economic Partnership

S&P Standard & Poor's

SDG Sustainable Development Goals

SIEPR Stanford Institute for Economic Policy Research

UK United Kingdom

US United States

USA United States of America

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 Chapter One
Introduction

The world is undergoing significant changes, driven by technological advancements and

innovative practices across the globe (Mohamed & Lachine, 2003, p.13). While globalization
and interconnectedness have shaped recent years, a concerning trend known as economic
decoupling threatens this ongoing state of affairs. Economic decoupling refers to the reduction of
economic ties between countries, often influenced by geopolitical conflicts, strategic
considerations, or shifts in government policies (Meidan, 2019, p.7). This trend has significant
effects on a global scale, affecting the relationship between countries, while also harming the
global economic stability. International trades are modified and so are the supply chains, causing
markets to no longer move in synchronization with each other. Economic decoupling is generally
defined as a phenomenon that describes a disconnection between a country’s performance and its
underlying economy, which means that economic growth is no longer reliant on specific factors,
reflecting an alteration between economic indicators (Hayes, 2022). Economic decoupling
between two countries is a more complicated concept that involves changes in trade
relationships, policy decisions, and investment transactions, referring to a disconnection and not
only a modification in the interdependence level.

China and the United States, two global superpowers, have exerted profound influence across
multiple dimensions, significantly impacting nations worldwide. However, escalating tensions
between them have led to a gradual economic separation, resulting in far-reaching consequences
for technology, supply chains, international trade, and even global health. This increasing
economic decoupling has spurred concerns on a global scale, particularly for economies like
Switzerland, which have deep-rooted connections with both nations.

Switzerland finds itself in a challenging predicament due to its intricate relationships with the
USA and China. It serves as an illustrative case due to its highly integrated economy and the
presence of numerous foreign companies within its borders. Accordingly, an apprehensive
analysis of the effect employed by this decoupling on the Swiss economy will be conducted.

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1.1 Background

The history of the relationship between the United States and China goes back many decades,
which is a period that is marked by ups and downs, along with significant events shaping the
whole world.
Starting in 1949, the People’s Republic of China was created, and a conflict was created
between China and Taiwan, which made the United States take a stand and recognize Taiwan as
the real government, dividing the relationship with China.
In 1950, China assisted North Korea in the War against the United States, which ended in 1953,
in a settlement along the 38th parallel. Later on, tensions were created before the situation was
eased again in 1958.
In 1964, the first Chinese nuclear bomb testing was conducted, motivated by past U.S. nuclear
threats. Better ties were created many years after the reign of President Nixon. This is when the
Shanghai Communique was signed, involving diplomatic and fruitful relationships.
In 1979, the United States agreed to the One China Policy and admitted that Beijing is the real
government, but without completely cutting ties with Taiwan.
In 1989, relationships got worse with the Tiananmen Square before normalized relationships
appeared. After 2000, China had the biggest US debt and was recognized for its global influence,
having the second-largest global economy (Fitzsimmons, 2021).

Over time, the economic relationship between the United States and China started to deteriorate.
Their rivalry has become a paradigm of international relations, altering the global world based on
many political, military, and economic dimensions. It seems that the old economic competition is
being replaced by endless rivalry (Lippert, Perthes, & und Politik-SWP-Deutsches, 2020). Back
in 2020, President Donald Trump suggested the idea of decoupling viewing that the financial
losses according to him due to such relationship are significant. He also vowed to put tariffs on
every company that deals with China (Reuters, 2020). Moreover, both President Joe Biden and
former President Donald Trump confirm such strategic rivalry. Indeed, Biden stressed the
importance of protecting Taiwan if China decides to attack it, and he has been upgrading its

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military and technological tools to combat this country. As for Trump, he had already started a
trade war, viewing China poses a great risk to his country (Guyer, 2022).

Switzerland, renowned for its skilled workforce, research centers, and industrialized
technological location (SGE, 2023), as well as, for its heavy exports, have had strong ties with
the United States and China. Many Swiss companies were established in both countries with
strong business transactions taking place. Yet, the increasing tension between the two
superpowers has created some risks to the economic situation and future destiny of Switzerland.
Therefore, understanding the impact of this geopolitical shift on the Swiss trade sector is of
paramount importance.

1.2 Research Aim

The main aim of this research is to analyze the results of the economic decoupling between the
United States and China on the Swiss trade sector. This increased complexity brings in many
challenges, as well as, opportunities that this thesis seeks to uncover.

1.3 Research Question

How does the economic decoupling between the USA and China impact the Swiss trade sector?

1.4 Research Objectives

These are the research objectives related to this study:

1. To analyze the economic relationship established between Switzerland, the United States,
and China when it comes to trade and technological cooperation. This will help to
understand the connection that exists between these three countries and their
interdependencies.

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 2. To reveal the strategies that the two superpowers have taken and to showcase how such
changes have affected the economy and operations of Switzerland. Understanding such
strategies and knowing their effects on Switzerland will assist in showing the impact of
economic decoupling on the Swiss trade sector.

3. To provide recommendations for Switzerland to adapt and navigate the challenges

derived from the changing dynamics of U.S.-China relations in its trade sector. Such
recommendations will address the potential consequences of economic decoupling in
Switzerland.

1.5 Significance of the Study

The significance of this study lies in its examination of the impact of economic decoupling
between the United States and China on the Swiss trade sector which is highlighted in the
following points:

- The USA and China are two of the biggest economies in the world. Understanding how
the relationship between these two powerful countries is evolving and how it is affecting
one of the highly integrated economies like Switzerland, which give deeper insights into
larger global trends and will help the reader expect their implications for other countries.

- This research will be useful for researchers, policy makers, business people, and any
individuals living or interested in knowing about the economic situation in Switzerland.
The results of this study will help them in making constructive decisions when it comes
to investing in the future of this country or trading with it.

- Switzerland's close ties to both the USA and China make this study more impressive.
Showing the complexities that arise from the economic decoupling will allow the
audience to better assess the risk that can be created in similar countries like Switzerland
which are also connected to these two big countries.

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 - Giving recommendations for Switzerland on how to adapt to changing dynamics in U.S.-
China relations can be useful for other nations that may be facing the same complexities
or undergoing the same challenges as this country. Such recommendations will guide
them on how to protect themselves and manage their geopolitical situation effectively.
These recommendations can also serve as a guide for the formulation of future strategies
that can help promote economic stability, resilience, development, and growth.

- This study helps also in comprehending how economic decoupling can affect specific
sectors of the economy. Future research can be derived from this study to go into other
sectors and encompass international economics and geopolitics.

Overall, this research is not only significant for Switzerland but also for other nations and has
broader implications.

1.6 Structure of the thesis

The structure of the thesis will consist of the following sections as shown below:

Introduction
This section gives a brief overview of the global economic environment and the phenomenon of
economic decoupling. It also showcases how economic decoupling is happening between the
United States and China and how it is affecting Switzerland. This section also explores some
information about the relationship between the two superpowers, stressing the tension that is
taking place right now. Moreover, this section presents the research aim, the research objectives,
and the main research question related to this thesis.

Literature Review
This section assembles peer-reviewed and reliable sources from the internet that will assist the
researcher in answering the main research question as well as the research objectives. This

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section is the theoretical foundation for this thesis and through it, the research gap can be easily
addressed.

Methodology
The methodology part consists of many sub-sections which are: the research philosophy and
strategy, the research approach and inquiry, the participant's section, the analysis method, and the
ethical considerations. It describes as a result various aspects of the research process.

Findings and Discussion

This part showcases the research results based on the qualitative data assembled through the
online interviews. Through this section, the three research objectives will be addressed and a
comparison with the information found in the literature review will also be discussed. This
section will involve the analysis of useful data to get a better understanding of the research topic.
This section shows a detailed explanation of the results found through the interview integrating
theoretical and practical applications. It also shows the alignment between the data and the
research questions.

Conclusion and recommendations

This is the last section of the thesis where the findings of the research paper are summarized and
the main research question and objectives are addressed again. Some recommendations are given
and some conclusions are drawn based on the research findings for organizations in Switzerland
serving in the trade sectors. The end of this section involves the limitations of this study and the
future research that can be conducted.

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 Chapter two
Literature Review

2.1 Introduction
Accompanying the rapid evolution in the business landscape is another evolution in international
economics where economic relationships are changing between nations, driven mainly by
economic decoupling. Such reduction in economic ties is imposing many challenges and creating
turbulence in how business transactions should be conducted. Economic decoupling which is
known as a lack of interdependency, is due to many internal and external factors and creates
many changes in the supply chain, international transactions, and global business activities
(Hayes, 2022).

This literature review aims to study the effect of economic decoupling, shedding light on
Switzerland’s trade sector. As a result, many themes will be explored to assist the researcher in
answering the main research question and addressing the main research objectives. These themes
will discuss economic decoupling, the relationship between the two superpowers United States
and China, the economic results, the economic situation of Switzerland, the trade sector’s
impacts, and other valuable information. As such, this literature review will give deep insights
into all these elements and the effect of the economic decoupling of the two big countries on
Switzerland.

2.2 Countries Background

2.2.1 China
China is considered the most populous country in the world, with a history that goes back to
4000 years. The country has become a major global player in recent decades and has witnessed
significant economic growth.
Under the reign of President Xi Jinping, the economy has undergone many transformations,
operating under the control of the Communist Party. Other historical events that have shaped the
destiny of this country are the creation of the People’s Republic of China in 1949, the Great Leap

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Forward in 1962, and the Cultural Revolution in 1976. Other reforms include the Belt and Road
Initiative in 2013 (BBC, 2023).
The country went from its poverty state to its current powerful global influence, through market
reforms, foreign investments, and trade relationships. This shift which allowed China to become
one of the most advanced global economies, is affected by global pressures, demographic
challenges, and changes in consumption and trade patterns (BBC, 2019).

2.2.2 The United States

The United States is a country that originated from a revolution against British Rule, with a
constitution that goes back to 1787, creating the basis of the federal system. With a population
that exceeds 300 million, the United States is known for its global presence, and strong media
existence. The country’s major milestones are numerous, such as the Civil War, the Great
Depression, World War II, and the civil rights events. The election of Joe Biden in 2021, and the
Supreme Court’s ruling in 2022, have played significant roles in transforming the country (BBC,
2023).
The United States is considered the largest global economy after China, despite the decrease in
GDP recently, driven mainly by the emergence of the COVID-19 pandemic, where a deficit of -
9.25% was noticed in 2021. Inflation was around 8.1% in 2022, and the unemployed rate which
was 3.7% in 2022 is expected to reach 5.4% in 2024. The main sectors that exist in this country
are agriculture, manufacturing, finance, technology, and services (Santander, 2023).

2.2.3 Switzerland
Switzerland is a mountainous country situated in Europe and is considered one of the richest
countries in the world. The company joined 2002 the United Nations and has many international
relations and close engagement with its neighbors. A few of the most significant events that took
place in this country are the Old Swiss Confederacy in 1291, the Burgundian Wars, the
Napoleonic era, the establishment of the Federal Council in 1848, and others. With a population
that exceeds 8.6 million, the country’s city Zurich is considered the largest city and financial
center (BBC, 2019).

Switzerland has a powerful economy, holding one of the highest GDP levels in the world, where
the service sector forms more than half of the contribution, followed by the industry, and the
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agriculture. Almost all of the Swiss businesses are small and medium enterprises, and the
company invests over CHF 22 billion in research and development (EDA, 2022).

2.3 The relationship between China and the United States

2.3.1 Historical Overview

The relationship between China and the United States has always been a complex relationship
characterized by instability, unpredictability, uncertainty, and ongoing tensions. This strange
connection has evolved throughout the years, with many contrasting events such as moments of
cooperation, followed by moments of competition and conflicts, which makes studying such
connections very impressive.

The relationship between the United States and China goes back to 1949 and even before and is
characterized by a combination of tensions and collaborative acts. In 1949, the Republic of China
was created, with a limited relationship with the USA. The tension intensified in 1950 when the
Korean War emerged, and in 1954 at the First Taiwan Strait Crisis. In 1959, the USA
condemned China for supporting Tibetan rebels. Yet, better relationships started to appear in
1969 and improved in 1971 with the Ping-Pong Diplomacy where the U.S. Secretary of State
visited China and gained a permanent place in the Security Council. The official relations started
in 1979 with many agreements following. Yet, in 1989, the U.S. cut off its relations due to the
Chinese restrictions in Tiananmen Square, and some improvements happened after that before
tension started to arise again in 1999. In 2000, President Clinton declared the US-China
Relations Act, and trade started to improve. Yet, tensions again started to intensify, before
making China the largest foreign creditor to the U.S. in 2008. After that, China’s power
intensified with growing influence and the US trade deficit reached its peak in 2012, followed by
subsequent increases in tensions. Such tensions increased in 2018, and troubles emerged after the
COVID-19 pandemic (Council on Foreign Relations, 2023).

2.3.2 The Trump Era

During the Trump administration, the way the United States perceives its relationship with
China changed a lot. Starting in 2017, when Trump was nominated as president, an amicable

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relationship between China and its president was established before experiencing dramatic
transformation later on. Many meetings were held and friendly connections were created. Yet,
with problems like trade imbalance and intellectual property disagreements, Trump became more
aggressive. In 2018, he announced that China was his competitor and created a trade war, adding
some tariffs and putting restrictions on any business exchange or import/export activities with
Chinese parties. Within time, things got worse. He increased the money spent on military
actions, putting around $7.1 billion for Pacific defense in 2020, which exceeded his planned
budget by $2 billion. Overall, the presidency of Trump was characterized by big tensions, and by
high competition level, viewing China as an economic and political threat, straining the relations
between these two big superpowers (Pilipey, 2020).

What happened is that after the ceremony where Donald J. Trump became the 45th President of
the United States, a new era in U.S.-China relations started, being characterized by a high
competition level and a higher demand for equitable and fair trade relationships, resulting in a
trade war between the two nations (Wei, 2019, p.520). Indeed, Donald Trump has always been
convinced, even before being elected as president, that liberalized trade with China would hurt
his country. This indicates that for him having an interdependence with China is not beneficial
which pushed him to come up with administrative policies and other rules to reduce tariffs,
which made Chinese products more expensive for US companies. Sensitive technologies were
restricted from being imported from China, and close attention was given to the Chinese
investments being made (Johnson, & Gramer, 2020 ).

In 2018, the Trump administration asked China about many demands related to trade such as the
reduction of trade imbalance by $100 billion in the first year, and the same amount in the
following year. Subsidies and the copying of American technologies were not allowed anymore,
while the protection of American ideas was requested. Taxes were asked to be lowered, and
American companies were asked to continue operating in China. Such demands were seen as
unrealistic and harmful to the global trading system (Wolf, 2018).
Due to all these tensions and the complexity of the relationship between these two countries, the
term “Chimerica” which was invented by the historian Niall Ferguson and economist Moritz
Schularik, became “dead”. Such death was accompanied by a new cold war between the two

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nations, which threatens to change the flow of global events and transform globalization from a
positive force to a challenging force with many negative implications for all countries (Riecke,
2020, p.3).

Several outcomes were created due to the Trump administration’s policy experiment on China as
highlighted below (Hass, 2020):

- The Trump administration has limited somehow the power that China has on a global
level, knocking this country off and pushing not only the United States but also other
countries around the world to let go of their attachment to Chinese production, especially
when it comes to high-technology equipment.

- Not only the United States was becoming aggressive, but also China which took
decisions to limit its relationship with this country and other US companies, and become
less responsive, as well as, less caring. It decreased its attachment to US products,
becoming more independent, and investing more in other areas outside the USA.

- Chinese influence was indeed affected by the actions of Trump during his administration,
but so did the US influence. American prosperity was limited, and cooperation between
the two parties diminished, which impacted U.S. economic interests, and restrained the
US growth.

- Going back in time and fixing the relationship between the two countries became harder
after the Trump administration where there was a change in public opinion with intensive
critiques of China.

Overall, The Trump administration was very disruptive for China, and also for the United States,
affecting the security, prosperity, and bilateral relationships between the two countries in an
unprecedented way.

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2.3.3 Six dimensions of interdependence
Six dimensions highlight the interdependence between the two countries which are listed below
(Nye, 2020, p.9):
- Trade: USA is more dependent on Chinese goods with 19 percent received in exports.

- Foreign Direct Investment: The U.S. has invested $269 billion in China, while China has
invested $145 billion in the U.S. However, there is a reduction in investment which refers
to decoupling.

- Technology: Many concerns were raised especially after China declared the “Made in
China 2025”, increased its reliance on Artificial Intelligence with a plan to become a
leader in 2030, and became more influential.

- Capital Markets: There is a deep relationship between China and the USA when it comes
to capital markets that amounts to over $5 trillion, which makes decoupling a bad choice
for both countries.

- Currency Markets: China has not taken yet the necessary steps to make its currency more
globally recognized and is still trying to catch up with the US currency which has gained
more popularity and power.

- Education, Research, and Talent: When it comes to this field, decoupling is evident with
many policy changes arising and changing the fact that millions of Chinese individuals
were enrolled in American Universities.

2.3.4 Experts opinions on deterioration

At the 2023 SIEPR Economic Summit, experts discussed the reason behind the deterioration of
the connection between these two superpowers. These experts stated that every country has its
perspective which makes it hard for it to understand the other country and its needs. As a result, a
situation like a cold war emerged, characterized by restrictions and sanctions. Such tensions may
be due to the conviction of the Chinese leader in power rather than the economy which makes
them underestimate the benefits of international cooperation. Another reason behind this tension

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is that the United States is somehow admitting that Taiwan is an interdependent country which
accelerates Chinese anger (Crawford, 2023).

2.4 Economic Decoupling

The concept of economic decoupling represents an interesting idea that is gaining increasing
popularity and is known for its wide-range implications on worldwide countries and global
economies (Pesce, 2017).

Economic decoupling represents the idea that emerging market business cycles are becoming
less attached to cycles in advanced economies. This is due to an increase in their domestic
demand which makes them less dependent on exports to grow. It is also due to more robust
economic policies that allow them to mitigate the effect of external economic fluctuations (Wälti,
2012, p.3407). This concept is also defined as the realization of economic growth with a shift in
the way natural resources are used. As such, there is an alteration between economic activity and
resource consumption, where economic growth is independent of the increase or decrease in the
use of resources (Bithas, & Kalimeris, 2018, p.348). This definition highlights the complexity of
this process which is multifaceted and has many dimensions. It also underscores that this concept
is not only about shifting trade ties, but also about how a country internally uses its resources,
produces items, and modifies its supply chain.

Economic decoupling is a threat to the peace of the world and global tranquility (Al Ubaydi,
2022). This concept reveals that big economies are becoming disengaged from their adversaries,
as a way to gain an advantage over them. Disengaging which is highlighted by a reduction in
trade and investment, may push countries to fight against each other and cut off any remaining
ties, which may create war. As a result, long-term conflicts may result, antipathy is fostered, and
hatred increases. The article gives an example about the European Union that transformed years
of conflicts into moments of peace, that could be threatened by economic decoupling (Al-
Ubaydli, 2022).

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2.5 The effect of USA-China economic decoupling on the world

2.5.1 Global Economic Landscape Modification: China's Ascendance and U.S. Isolation
The economic decoupling between the United States and China has many implications that go
beyond these two countries to affect the whole world and shape the economic order.
The global economic landscape is being modified with China playing a more significant role in
worldwide economic integration compared to the United States. The “America First” policies
also contributed to making the USA more isolated and distancing itself from the China-led Belt
and Road Initiative. The article also pinpoints that the trade tensions between the two countries
can lead to a global recession, where the drawbacks in these economies can increase global
uncertainties, reduce growth, and decrease integration, creating adverse and negative effects that
hinder any business improvement (Steinbock, 2018, p.2).

2.5.2 Consequences of USA-China Economic Decoupling: Technology, Security, and

Innovation Challenges
Moreover, global savings will be reduced with less capital flowing freely across borders and less
global investments if the decoupling continues, which will certainly increase financial
uncertainty. This will be accompanied by a reduction in international investment and in the
opportunities created for economies to prosper and for countries to work together towards
growth (García-Herrero & Tan, 2020, p.15).

One significant example of the decoupling is the case of Huawei. This famous Chinese High-
tech company has been facing many restrictions from the US and was placed on the “listed
entity” blacklist. As a result, business transactions with this company were limited and sales to
Huawei were reduced, making the company unable to source items from US companies.
Huawei’s operations were restricted, and more restrictions were added by the US when the
company was caught secretly using some of the US parts. Some of those restrictions involved
cutting off the US chip availability. Within this context, Huawei’s capacity to directly sell to
consumers was affected, and the ability to create 5G network infrastructure was reduced,
especially in Western Nations. Viewing all these changes, Huawei fought and tried to create its
software and replace it with the cooperation of other Chinese companies Google Play (Capie,

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Hamilton-Hart, & Young, 2020, p.31).

Several aspects also related to the effects of the USA-China decoupling on the world as listed
below (Triolo, 2019):
- Decoupling means harming a relationship between two big countries that has lasted for almost
three decades which will certainly affect all the global industries such as the technology,
aviation, or telecom industries
- Global security can be affected by the decoupling making countries unable to cooperate as
before and unable to manage the use of emerging technologies in the best possible way
- Communication channels will be disturbed and sensitivity between countries will arise,
decreasing the safety level in the world
- Cybersecurity risks may increase with many conflicts arising all over the world over
technological resources, and to achieve political and economic goals
- Pressure will increase where countries may feel confused about supporting one superpower
and standing against the other, which may result in affected business relationships and troubles
with business partnerships and collaborations
- Innovation will decrease on a global level, decreasing business creativity, as well as, the
sharing of knowledge, resources, and ideas
Another demonstration that the decoupling between the two countries poses a large threat is that
technology won’t stay as beneficial as it is with lower standards and practices if the decoupling
continues. This will affect almost all industries, especially the telecommunication and electronics
industries. Moreover, China has been gaining increased global influence in the past decades due
to its large population and economic strengths. Decoupling will affect how the world will
manage its economies and will weaken international forums like the G-20. Instability will reign
and the global economy will go down. Even climate change will be affected if decoupling
happens since all the collective efforts that were created to fight this environmental issue will
weaken, and China may not align its climate-related actions with other countries, which
intensifies the challenge (Broadman, 2019).

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2.6 Switzerland’s relationship with USA and China

2.6.1 Switzerland's economic landscape

Switzerland, a highly developed European nation, holds a robust base of economic relationships
with countries around the world, including the two superpowers China and the United States. As
such, examining its relationship with these two countries is crucial to better understand the
situation of this European country, its development, its economic situation, its future, and its
global position.

Switzerland is a high-income economy and a powerhouse that focuses on banking and finance.
Its real GDP in the past years has been around $618 billion and has experienced growth
throughout the years. Despite the high public debt level, Switzerland holds many strengths and
exports heavily in pharmaceuticals and manufacturing. It also has a low employment rate, with a
reliance on the service sector, and many credit ratings from S&P, Fitch, and other agencies.
Overall, it is characterized by its high stability level, high income situation, high exports, and
high prosperity (CIA, 2023).

As the following table shows, the Imports of this country have reached CHF 341 005 million
which represents the number of goods and services brought to the country in 2022. The exports
reached CHF 382 668 million, representing the total number of goods and services that went
from Switzerland to the rest of the world in 2022. This means that Switzerland has a net trade
balance of CHF 41 663 million in 2022, exporting more than importing goods and services,
which is a sign of a positive and strong economy, that was able to create a surplus and create
economic, as well as, financial stability (BFS, 2023).

Table 1 - Switzerland Import/Export 2022

Swiss foreign trade in CHF million 2022

Import 341 005

Export 382 668

23
 Net trade balance 41 663

Source: BFS – 2023

The following image showcases the Swiss foreign trade for the year 2022, revealing that among
the main key trading partners are the USA and China, with the USA holding the first place in
terms of exports and the second place in terms of imports. This highlights the strong economic
ties and trade relationships between the three countries, showing the high economic integration
between them (BFS, 2023).

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Table 2 - Swiss Foreing Trade 2022

Source: BFS, 2023

Looking at the year 2023, Switzerland’s economic outlook has been said to be marked by a
slowdown in growth with a rate of 0.7% compared to 2.1% in 2022 with increasing prices.
25
Inflation is expected to be 2.4% with the unemployment rate rising to 2.3% (Jaberg, Pluss, Allen,
2022). While such signs may lead in some cases to recession, domestic consumption will reduce
such risk. When it comes to the financial sector, some challenges may be faced, accompanied by
some opportunities in other sectors such as the Swiss watchmaking industry. This indicates that
the Swiss economy will be facing a combination of challenges and opportunities in 2023 (Jaberg,
Pluss, Allen, 2022).

2.6.2 Switzerland-China relationship

Switzerland have had a fruitful relationship with China since the 1980s with strong economic
ties serving as a cornerstone for their connection. Being the third most important trading partner
for China in Europe, Switzerland signed in 2014 a free trade agreement to gain some
opportunities in the Chinese Market. Yet, with time, tensions emerged especially when it comes
to human rights which created many objections between the two countries. This made
Switzerland struggle to match its economic interests with China and to express freely its human
rights concerns. Moreover, the European Union’s relationship with China was getting tougher
which increased the pressure on Switzerland, affecting the way it was planning to deal with
China. Hence, being as neutral as it was when dealing with China was no longer an option for
Switzerland (Rutz, 2022).

The export data from Switzerland to China from 1990 to 2022, showcases that there was a
growth in such activity between the two countries where exports went from 415 million in 1990
to around 40 billion in 2022, which is a significant improvement. The biggest progress happened
in 2017 and after that, when exports increased remarkably and almost doubled. This showcases
that Swiss products and services became more appealing to Chinese people and companies,
creating an increase in demand in the Swiss industry. Yet, the fluctuations that were happening
through the years, with up and down values, indicate high market sensitivity (BFS, 2023).
As for the import data from Switzerland to China, going from 1990 to 2022, an increase was
noticed from 419 million to 20.6 billion, showing the improvement in the trade relationship
between the two nations. This happened mainly after 2022, showing the increase in demand for
Swiss products and the great reliance on the two countries' products and services. This positive
economic relationship brings many opportunities and improves trade relations (BFS, 2023).

26
Despite the challenges, the economic relationship between the two countries was characterized
by a diplomatic relation covering many aspects such as education, environment, finance, science,
and others have been almost always maintained. Trade in goods and services was thriving with
China being the biggest trading partner in Asia for Switzerland. It was also a partner in research
and innovation with companies like Swissnex China creating fruitful projects. The cultural
exchange was also flourishing, along with financial dialogues since 2013 with the assistance of
the People's Bank of China and the State Secretariat for International Financial Matters.
Moreover, in 2019, the two countries signed a third-party market cooperation, improving the
economic collaboration (EDA, 2023).

2.6.3 Switzerland's Dilemma: Balancing Support for Ukraine and Sustaining Relations with
China
Switzerland wants to keep a good relationship with China. The Swiss Federal Council admitted
back in 2021, that China is an important trading partner for the country. As such, Switzerland
will take many steps such as making its own decisions when it comes to the values it believes in
and to China. Moreover, it will encourage China to expand and will cooperate with it based on
many issues. Overall, it will keep a balanced approach focusing on peace and security, where
trade, investment, and protection of intellectual property are guaranteed. Another step is the
cooperation towards the United Nations 2030 Agenda, where issues such as environmental
protection, nature preservation, and climate change are promoted (The Federal Council, 2021).

On February 24, 2022, Russia started its invasion of Ukraine, with several explosions being
heard in the morning, spreading fear, panic, and anxiety in the hearts of the citizens. Ukraine was
outgunned and outnumbered which has put the country under severe pressure, and made it
unable to defend itself. One of the reasons as argued by the BBC behind this invasion is the
geographical location of Ukraine, which is positioned between Russia and other countries such
as Poland and Romania, making it an attractive country for battles. Another reason is Russia’s
resistance to Ukraine’s attempts to take part in the European Union. Global leaders such as UK
Prime Minister Boris Johnson and US President Joe Biden condemned the invasion, which holds
significant global impacts, affecting worldwide economies, and altering energy prices and car
costs (BBC, 2022).

27
Within this context, Switzerland started supporting Ukraine and helping it to address the
consequences of the war and to minimize the damage. At the end of 2022, Switzerland provided
$100 million in aid to Ukraine to mitigate the negative effects of the winter on the people of
Ukraine. This aid involves providing the country with drinking water and reinforcing its
infrastructure. This has helped around 24 million people who have become vulnerable and
helpless. Besides that, Switzerland called on the international community to take immediate
action and stand beside Ukraine to help it face this dilemma (CNN, 2022).

Switzerland's support for Ukraine has raised concerns about its relationship with China. There's a
fear that aiding Ukraine could damage Switzerland's ties with Chinese companies and impact
Swiss-Chinese business relations. This concern is particularly acute for major Swiss banks,
which worry that wealthy Chinese clients might withdraw their funds from the country. The
apprehension stems from Switzerland's recent imposition of penalties and financial restrictions
on certain countries, notably in response to Russia's invasion of Ukraine. The Asian market is a
significant source of profitability for Swiss banks, and losing Chinese business would be a blow
to their wealth. Consequently, Swiss banks are no longer certain about retaining their Chinese
clients, especially given the possibility that China could expect Switzerland to impose penalties
on it, as it did with Russia (Jones & Walker, 2023).

However, the situation is more nuanced. Switzerland has declined to join the European Union or
impose sanctions on China. Some opinions suggest that Switzerland's decision not to
communicate these actions publicly may be seen as prioritizing economic interests over human
rights concerns, while others argue that Switzerland is keen to avoid angering China. This
contradiction has created significant pressure on Switzerland, especially as China seeks to
become a member of the United Nations Human Rights Council. Failure to impose sanctions on
China could potentially harm Switzerland's reputation as a trusted international partner (Pasino,
2023).

In an interview with External Link in the NZZamSonntag, the ambassador of China in

Switzerland, called Wang Shihting, claimed that imposing the European Union sanctions by

28
Switzerland will deteriorate the relationship between the two countries, especially since the
European Union has imposed in the past sanctions due to alleged human rights abuses.
Switzerland has a strong relationship with China, and has created many trade agreements with
them (SwissInfo, 2022).

Overall, Switzerland is finding itself in a confusing situation between supporting Ukraine’s

humanitarian needs and keeping its strong economic relationship with China. Such a decision
will result in altering outcomes, shaping the international position of Switzerland and its role in
the worldwide economies.

2.6.4 Switzerland – USA relationship

Moving to the United States of America, strong roots were established in the 16th century
between the two countries. Swiss immigrants contributed to the advancement of America,
specifically in Pennsylvania and the Carolinas. Besides that, Switzerland has assisted in
resolving international conflicts between the US, Iran, Cuba, and other countries (Boer, 2023).
Besides that, Switzerland has had a diplomatic relationship with the country that goes back to
1853. Switzerland, which is a country that gives humanitarian aid on a universal level, has been
representing U.S. interests in Iran. Both of them have signed many agreements such as the
Political Cooperation Framework and Trade and Investment Cooperation Forum. Swiss
investment is largely conducted in the USA which is considered the biggest foreign investor in
the country. Besides the various trade agreements, Switzerland also participates in the Visa
Waiver Program and has an embassy in Washington, D.C. (State, 2022).

The export data between Switzerland and the USA from 1990 to 2022 shows a strong trade
relationship between the two countries, where Swiss exports went from 6.98 billion in 1990 to
62.4 billion in 20022, showing how important the USA is as an export destination. While there
were some fluctuations, exports went significantly higher starting in the 2000s showing higher
demand for Swiss products, and the proliferation of the Swiss market (BFS, 2023).

As for the import data between Switzerland and the USA, some fluctuations happened through
the years, yet, these imports show a growth from 5.5 billion to 37.5 billion, especially after 2017.

29
This showcases that the USA goods are found attractive by Swiss people, meeting and even
exceeding their needs. This also reveals a stable trade relationship, explaining that the USA is a
key trading partner (BFS, 2023).

2.6.5 The RCEP

In November 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed
between 15 Asia-Pacific (APAC) countries and became official in January 2022. This agreement
was created to expand trade, deepen economic integrations, and boost growth in a time of
deglobalization. This agreement is expected to make a positive change in almost all the sectors in
the region and is forecasted to hold 35% of the global GDP shares by 2030 due to its fast growth
as shown in the below figure (Zhu, 2022).

30
Table 3 - THE RCEP, the world's largest FTA, covers about 30% of both global GDP and
global population

Source: IMF, Swiss Re Institute

31
RCEP differs from other deals in that it concerns mainly Asia and aims to benefit Asian
countries by eliminating barriers and boosting supply chain transactions. It is expected that more
than 500,000 jobs will be created and economies will grow. Yet, despite receiving approval from
the Japanese government, at least six of the ten ASEAN members need to approve and three of
the five dialogue partners must also give their confirmation such as China. This agreement is
expected not only to boost regional economic advancement but also to affect international
relations, such as the World Trade Organization by altering global trade negotiations and shaping
trade agendas (World Economic Forum, 2021).

Viewing that China is one of the most influential members of the RCEP, it will get the chance to
expand its operations into Asian countries and establish trade agreements with them, gaining
additional economic power and influence. How will such transformation impact China’s
relationship with the United States, and will it affect its dependency on Switzerland’s imports?

The Regional Comprehensive Economic Partnership (RCEP) has positive, as well as, negative
aspects for Swiss companies.

One of the positive aspects is the improvement of the business environment, where new
opportunities can be created. Another positive aspect is transparency and compliance where
standardized rules can promote such concepts. As for the negative aspects, RCEP reduces tariffs
in many countries which puts Switzerland at a big disadvantage. The competitive advantage of
the country can also be affected by several government procurements such as the move towards
higher liberalization (Ziltener, 2020, p.7).

When it comes to the negative aspects, here are some common factors (Flach, et al, 2021):

- The RCEP might lead to trade diversion effects which means that some countries like
India, the United States, Argentina, Brazil, Uruguay, and Paraguay can suffer from lower
demands

- The participants in the RCEP are very heterogeneous. Some of countries are rich
countries, others are emerging countries with emerging economies, and some are poor nations.

32
- While other agreements such as the Comprehensive Economic and Trade Agreement were
able to reduce tariffs by 99%, the RCEP is described as being less ambitious with the ability to
reduce tariffs up to 90% only.

- India is a huge country with a flourishing economy and plenty of resources. Excluding
India from the agreement means a great loss and an obstacle that stands against the success of the
RCEP.

- The extensive trade within the RCEP countries means that other countries that are not
members may suffer from a reduction in their trade which would certainly affect their countries’
economies.

The following figure shows the main trading partners of RCEP countries, where the whole world
is divided into RCEP countries, EU28 and NAFTA, and finally the result of the world (Flach, et
al, 2021).

33
Figure 1 - RCEP main trading partners
Source: UN Comtrade; Gaulier and Zignago (2010); authors‘ illustration.

2.7 The effect of the decoupling on Switzerland

Decoupling between the United States and China is a phenomenon with several dimensions, that
is affecting international relations and shaping the global business landscape. Viewing the
complexities of this process, and analyzing the effect of this phenomenon on Switzerland, which
has a unique position and a close relationship with both countries, would be interesting.
With the growing separation between the two countries, Switzerland can no longer pursue its
traditional method of neutrality and economic pragmatism. Creating a balance between the two
countries is becoming harder and finding ways to diversify the supply chain is one of the
purposes of this country to reduce its attachment to China. Being described in a position of
“hedging zone”, Switzerland will have to make difficult choices (Grano, & Weber, 2023, p.107).

The Center for Security Studies has discussed several implications for the US-China tech
decoupling on Switzerland. Starting with global trade and investment, Switzerland’s reliance on
this field means that the decoupling may reduce the competitiveness of the country and affect its
supply chain processes. Moreover, with an increase in regulatory hurdles, and with new
restrictions on investments, Swiss companies may feel more pressure, especially from
Washington and the European government which criticize China’s technological ambitions
(Center for Security Studies Strategic Trends, 2023).
Even though Switzerland is not one of the most advanced countries in the world, it would also
be affected in terms of resilience.

2.8 Trade relationships between Switzerland, USA, and China

2.8.1 Overview of Switzerland’s trade profile

Trade by definition involves the exchange of goods and services between parties, companies, or
even countries. Trade involves many industries like tourism for example where several

34
individuals engage in economic activities. This act goes back to the old barter systems before
involving free trade, represented by several agreements like NAFTA (Market Business News,
2023).

Switzerland is known for its open economy where foreign trade is around 131% of its GDP. The
main exports in this country consist of various products such as machines, electronics, metals,
jewelry, and many others. Europe alone forms around 71.2% of total exports for this country that
has a trade surplus (Lloyds Bank Trade, 2023).

The following figure reveals that around $400.1 billion of products were exported in 2022, with
Gold and human blood, as well as, mixed and unmixed medicaments forming the main exported
products.
When it comes to imported products, around $356 billion of products were imported in 2022,
with Gold having the highest percentage of 27.8%, and medicaments whether mixed or unmixed
having 8.9% of the total (Lloyds bank trade, 2023).

35
Figure 2 - Imported and exported products
Source: Comtrade, 2023

36
The World Trade Organization has revealed that
Switzerland has witnessed an increase in the number of imported goods going from $269834
million in 2017 to $324069 million in 2021. As for the export of goods, also an increase has been
noticed going from $299603 in 2017 to $380194 in 2021.
Moving to the imports of services and export of services, another increase has also been noticed
moving from $103250 million in 2017 to $142347 million in 2021 in terms of imports, and from
$120236 million in 2017 to $134785 million in 201 in exports (Llyods Bank trade, 2023), as
shown in the below figure.

Figure 3 - Foreign Trade Values

Source: World Trade Organisation (WTO)

These values demonstrate that Switzerland has had active economic trading transactions, with
significant growth throughout the years. The increase in both import and export figures reveals
Switzerland’s strong existence in the international markets with a diversified portfolio where
valuable commodities exist such as Gold, and medicaments. As a result, Switzerland is a strong
player in the global economy, with significant growth, diversity, and competitiveness, in both
goods and services traded.

37
2.8.2 Foreign Direct Investment in Switzerland
In terms of foreign direct investment, Swiss companies reduced their ownership stakes in 2021,
by bringing back a large portion of their foreign subsidiaries. Withdrawals exceeded investments
in the communication and transportation sectors, and banks reduced their investments due to
many losses incurred. Moreover, Swiss Companies increased their investments in Asia, mainly
in finance and holding companies ( SNB BNS, 2021, p.11).

The trade relationships involving Switzerland, the USA, and China are known for their high
engagement, high transaction levels, and various activities. Each relationship has its unique
aspects and its implications on a domestic, as well as, international level.

2.8.3 Switzerland's Trade Relationship with China

Switzerland has two major trading partners, the United States and China, with the United States
having a strong presence in the country, characterized by over 100,000 workers and substantial
direct investment. Switzerland's appeal for international business and product viability is
enhanced by its diverse, multilingual, and multicultural market (International Trade
Administration, 2022).

Indeed, in 2013, Switzerland signed a trade agreement with China, being the first European
country to make such an agreement with this country. Along with this agreement, was another
one related to labor and employment, and others related to products meeting certain standards,
environmental protection, and others. Such agreements liberated more the relationship between
these two countries, reducing taxes, and protecting ideas and businesses. Cooperation was also
boosted, with better chances for investment (Eda, 2023).

Moreover, China exported around $17 billion in goods in 2021 to Switzerland, mainly
computers, broadcasting equipment, and office machine parts. In its turn, Switzerland exported
$33.1 billion worth of goods to China with the main products being gold, blood stuff, watches,
and vaccines. In the summer of 2023, there was a noticeable decrease in the total trade volume,
where China’s exports went from $17 billion to $432 million. As for Switzerland’s exports, they
went from $33 billion to $3.66 billion. This indicates a weakened trade relationship. Moreover,
China had in August 2023 a negative trade balance with Switzerland, which indicated also an

38
imbalance in the trade connection between the two countries, and a weakening in the partnership.
Even the export and import changed between the two categories, showing an alteration in trade
dynamics, where railway cargo containers, and nitrogen heterocyclic compounds’ exchange
became obvious (The Observatory of Economic Complexity website, 2023).

2.8.4 Switzerland’s trade relationship with the USA

Moving to the USA, the foreign direct investment position of the United States in Switzerland
witnessed an increase from 2000 to 2017, with some fluctuations after that with a value of USD
212 billion in 2022 (Statista, 2023).

In 2021, it exported goods for around $22 billion to Switzerland mainly gold products, while
Switzerland exported around $51 billion to the USA, mainly packaged medicaments. This
indicates a trade deficit. Moreover, according to the Economic Complexity Index (ECI),
Switzerland appears to be a more complex economy with an ECI of 1.94 compared to 1.46 in the
USA. When it comes to service trade, the United States exported around $40 billion to
Switzerland such as financial services, and other business services, while Switzerland exported
$14 billion to the USA. In the year 2023, a negative trade balance of $1.74 billion, with a
significant decrease in exports. Overall, the data suggests that Switzerland has had a trade
surplus with the United States and the whole trade relationship has changed over time. While the
United States was excelling with specific product categories, Switzerland had also a competitive
advantage with other products (Observatory of Economic Complexity website, 2023).

Moreover, Switzerland is a great location for U.S. companies to do business. However, there
may be some challenges as shown below (International Trade Administration, 2022):

- The Swiss government offers extensive support for farmers which makes it hard for US
agricultural products to compete. What makes it harder are the rules, restrictions, and
tariffs imposed on American farmers.

- The largest groceries in Switzerland promote local products and avoid genetically
modified food which makes it hard for U.S products to be sold.

- Data protection laws are strict in Switzerland, affecting how data is transferred between
it and the United States, which have implications for trade relationships

39
The Swiss-American Chamber of Commerce group, which works with Accenture Research,
assembled information from Swiss companies, revealing some lines behind the relationship
between the two countries. While the USA is one of the top export markets for the country,
showing an increase in the share of exports in many industries such as the pharmaceuticals and
chemical industries, some challenges persist, suspending growth such as in the case of machines,
appliances, and electronics sectors, as shown in the below image (AmCham, 2021).

Table 4 - Swiss Export in the U.S. by type of good

40
Source: Swiss custom administration data

Besides that, the instability in the U.S. government plans makes it hard for Swiss companies to
trust them and act freely in making decisions. This has made Swiss companies search for ways to
decrease their dependence on the US in several regions, as a way to mitigate risk.

When asked about the future, the Swiss companies expressed their positive future outlook where
they expect more money to be generated and more investments to be made. They enjoy dealing
with Americans who are friendly and caring. They also enjoy being in a country that opens new
ways for businesses to grow and that holds a powerful global influence. Moreover, they added
that they respect all the rules of the country and find them easy to follow, with easy negotiations
with dealers on prices and terms, unlike the European situation. As for customers, they perceive
them as loyal, open-minded, and active. Yet, they also think that up to five years from now,
profit may go down due to cost increases (Amcham, 2023).

2.9 Strategies for Adapting to Changing U.S.-China Relations

In the current dynamic business environment, where the tension between the United States and
China is increasing, significant implications for countries may result. Navigating the challenges
that arise from such tensions and adapting to the shifts necessitates the creation of strategic and
innovative approaches to minimize any damage and mitigate any risk.
One country that has taken many steps to navigate the rivalry between the United States and
China is Cambodia. This country relied on smart diplomacy, trying to maintain close ties with
both countries and benefit from its relationship with them. It also tried to diversify its businesses
by dealing with other countries and creating new partnerships to avoid reliance on one country.
Moreover, it started supporting international rules like the ones imposed by Japan, taking a
different approach. As such, Cambodia is adapting its strategies to save itself from problems and
maintain peace (United States Institute of Peace, 2023).

The Gulf States have also taken several steps. Starting with partner diversification, these states
started looking for international partners to reduce their reliance on the United States. They are
also drawing some long-term plans to diminish the role of the United States in the area and make

41
some noticeable changes in the business landscape. Some of the countries they are looking
forward to cooperating more with are the United Kingdom, Japan, Korea, and others. While
lessening the power of the United States is one of the Gulf States' goals, maintaining its
relationship with China, with ongoing activities such as trade, investment, and infrastructure
projects is essential since China has been a partner for a long time and since its power is
increasing globally. Moreover, the Gulf States have been involved with China’s Maritime Silk
Road Initiative and share a common ambition with this country. As such, dealing with China
represents many opportunities for economic development, yet, may also entail some challenges
such as alterations in political power or shifts in technologies, etc. Overall, the Gulf States is
becoming more adaptable to the situation between the USA and China, taking into consideration
the geopolitical and economic factors, while also creating approaches to minimize any potential
risk (Kuo, 2021).

When it comes to Switzerland, an article titled “US-China “Tech Decoupling”: A Swiss

Perspective” (Fischer, 2022), has discussed some strategies and recommendations as shown
below:
- Regarding the technology supply chains, Switzerland should become more resilient,
identifying technological tools that guarantee security and bring more value. This will
help in assessing vulnerabilities and in the creation of effective steps to navigate
challenges.

- Switzerland should keep on investing in tech ecosystems by collaborating with other

nations and investing in universities and startups to stay ahead of the game

-Switzerland should play the role of middleman between the USA and China when it
comes to technology and work on projects that involve food security, clean energy, and
water shortages. This will help in making the science and technology sector thrive.

- Switzerland should increase the cooperation between its various departments to create
more effective plans to know better how to navigate the challenges of the decoupling and
to better manage economic relations.

42
2.10.Conclusion
Ultimately, this literature review gives a comprehensive overview of the situation surrounding
the economic decoupling between the United States and China. It also analyzes in many parts the
relationships of this decoupling with Switzerland’s economic situation. The relationship between
these two superpowers, the effect of this decoupling on the world, the position of Switzerland
regarding this rivalry, the strategies taken by other countries, and other topics were discussed.

Yet, it is worth noting that while this literature review addresses somehow the research question
and the research objectives, there is still a significant gap in answering such questions and
knowing exactly how the USA and China decoupling impact the Swiss trade sector. Much
information was found about the general implications on a universal level. Yet, having a specific
examination is still unclear, and having a focused analysis is still needed, taking into account the
changing dynamics, rules, regulations, and approaches that Switzerland must have to navigate
the challenges of this economic decoupling. As a result, future research is still needed to provide
a clear picture of the effect of the USA-China decoupling on the Swiss trade sector.

43
 Chapter Three
Methodology

3.1 Introduction
In the pursuit of understanding the profound impact of economic decoupling between the United
States and China on Switzerland's trade sector, an effective methodology is needed. This section
involves a detailed insight into the research philosophy and approach, the research strategy and
inquiry, participant selection, analysis method, and ethical considerations.

3.2 Research philosophy and approach

In conducting this research on the impact of economic decoupling between the United States and
China on Switzerland's trade sector, the following research philosophy and approach has been
selected:
The research philosophy that will be adopted is interpretivism. Indeed, this method revolves
around the subjective interpretation of an event, showing the important role that humans play in
shaping reality and transforming social truths. This approach highlights human cognition, their
various opinions, their future outlooks, and the life experiences that inform their understanding
(Alharahsheh & Pius, 2020, p.42). In this thesis, economic decoupling is not regarded as an
objective matter, rather, it is a socially constructed event that is due to many external factors. By
choosing interpretivism, subjective realities will be explored through the opinions of
stakeholders related to Switzerland's trade sector. Through this method, the way economic
decoupling is perceived and experienced by participants will be revealed.

As for the research approach, it will be a tool that complements the interpretivism. As such, a
qualitative research approach will be chosen. Information will be assembled through interviews

44
that will be conducted with experts in the field. Open-ended questions will be used. This method
is convenient and flexible, giving rich details about the main topic and revealing part of people’s
behavior regarding this matter (Harvey-Jordan and Long, 2001, p.1). Characterized by its depth,
it is the perfect method to discuss and study economic decoupling since it allows the research to
explore the multifaceted implications of this trend in Switzerland, as well as, to reveal the
challenges that lie behind such happening. As such, patterns, themes, and insights will be shown
to give a comprehensive view of the effect of economic decoupling on specific sectors in
Switzerland.

Overall, the choice of the research philosophy of interpretivism and qualitative research
approach showcases the researcher's determination to understand the effect of economic
decoupling from the viewpoints of the participants in the study to give valuable insights into its
effects on Switzerland's trade sector.

3.3. Research strategy and inquiry

The research strategy and inquiry in this study are essential components that guide the overall
framework and approach to investigating the impact of economic decoupling between the United
States and China on Switzerland's trade sector.

In this study, a qualitative research approach will be used which consists of online interviews
that will be conducted with five participants. Such a method highlights the overlooked aspects of
the human experience, uncovering some personal experiences, making a difference in practice,
and dealing with some of the big questions in life (Smythe and Giddings, 2007, p.39).

There are many advantages to the use of qualitative research which involves a detailed
description and interpretation of the feelings of the candidates, a holistic understanding of human
experience, a subjective collection of data that is derived from a direct interaction with
participants, and a demonstration of cultural influences (Rahman, 2020, p.104).

Moreover, qualitative methods are adjustable tools that can be changed during the research
process where different questions can be asked and greater adaptability is offered, which allows

45
the researcher to better understand the topic and learn more about it along the way (Fossey,
Harvey, & McDermott, Davidson, 2002, P.723).

Each interview will last for around half an hour and will involve twelve questions. A recording
of the interviews will be maintained and saved until the whole research process is done after
getting the approval of the participants. These interviews will uncover the participant's
viewpoints, assumptions, and challenges. From their discussion, a list of recommendations will
be derived for Switzerland to adapt and navigate the challenges derived from the changing
dynamics of U.S.-China relations in its trade sector which addressed the third objective of the
study.

3.4 Participant’s selection

Selecting the right participants for the qualitative interview for this study is an essential step to
better understand the effect of economic decoupling between the United States and China on
Switzerland's trade sector. As such, purposive sampling will be used which is a technique that
involves the selection of individuals who have a deep knowledge of the research question and
who can provide a deep understanding of the impact of economic decoupling on Switzerland
(Palinkas, Horwitz, Green, Wisdom, Duan, & Hoagwood, 2015, p.3).
Here are a few of the factors that should be taken into consideration in the selection of the
participants:
- Participants should have an experience in the sector that this thesis aims to study. They
should also have a great knowledge of international trade, economics, geopolitics, and
other subjects. Such knowledge will ensure that the information that will be gained from
the interview will be valuable. Business managers, economic specialists, trade analysts,
and other persons will be suitable candidates.

- Participants should be working or at least have a great knowledge of organizations

established in Switzerland, as well as of the economic situation this country is going
through. Such organizations should be preferably in the domain of technology,
international trade, or government agencies.

46
 - Diversity also enriches the findings of the study. As such, it is requested that participants
should be chosen from different backgrounds, based on their age, years of experience,
working field, gender, etc. This will guarantee that the viewpoints obtained will be varied
and will add more depth to the data collected.

- Participants should be willing to participate in this study and answer the full six questions
of the interview. Being committed and giving their honest opinion is integral for the
success of the research.

To recruit participants, a list of potential participants was compiled and an e-mail was sent to the
participants where an ethical participation sheet will be also attached. This email contains all the
necessary information related to the research objectives, and the research question, and serves as
an invitation for the participants to take part in this process. Once the participants had approved
to participate, a scheduled online interview was decided at a mutually convenient time. Then the
interviews were conducted, ensuring an open atmosphere for discussion. All interviews were
recorded to be analyzed later on.

Overall, participant selection is an essential step to ensure the authenticity and reliability of the
research process. By effectively choosing the participants, valuable insights will be obtained
related to the impact of economic decoupling on Switzerland's trade sector.
Here is a table representing the list of participants that were chosen for the interview:

Name of the participant Description

Mr. Nico Luchsinger - Over 15 years of experience,
Executive
- Director at the Asia Society
Switzerland

Dr. Peter Raskin - Over 25 years of experience

- CEO and partner of Bergos bank.

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 Anonymous - Over 15 years of experience
- Executive assistant to the vice
president at DOW

Rob Llewellyn - Over 15 years of experience

- He used to work as global head of
trade credit and political risk at Swiss
Re. Currently, CEO and CO of Zenik
Solution Gmbh
Danting Liu - Over 15 years of experience,
- Deputy COO/CFO of a private bank in
Zurich

These participants hold more than 10 years of experience which highlights the immense
knowledge they have and they can contribute to the findings of the research. Besides that, they
hold managerial positions in reputable companies which indicate the effective role they play in
the business world and in Switzerland particularly. Choosing them from various backgrounds
and from different companies gives fresh and new perspectives.

3.5 Analysis Method

To get a deep insight into the impact of economic decoupling between the United States and
China on Switzerland, the analysis method that will be chosen is a qualitative analysis of the data
collected through the online interviews which is known as thematic analysis.
Thematic analysis is a qualitative research method that involves themes or patterns. It
emphasizes implicit as well as explicit ideas and allows for a systematic examination of the
dataset, which gives more credibility to the research (Alhojailan, 2012).

In addition, this method is simple, and flexible According to Braun and Clarke, thematic analysis
involves several steps. At the beginning, the researcher starts familiarizing himself with the data.
Then the data is organized and initial codes are generated. Next, from these codes themes are

48
derived and organized into a thematic map. The next step involved the revision of these themes
to check their homogeneity and to refine them. Finally, a report is produced to convey the themes
and the messages behind them (Javadi, and Zarea, 2016, p.38).

3.6 Ethical considerations

Ethical considerations are a vital component of any research endeavor as they provide
comprehensive information about the study and ensure the complete protection of participants.
All individuals who are invited or express interest in participating in this study must review and
formally acknowledge the ethical participation sheet, which will be sent to them via email.
Interviews will not commence until participants have provided their full approval of this sheet.

Here is the ethical participation sheet

The Impact of Economic Decoupling Between the USA and China on Switzerland's Trade Sector

Dear Participant,
We would like first to express our deep thankfulness for considering participating in our research
study. Your input is extremely valuable and will assist us in better understanding the Impact of
Economic Decoupling Between the USA and China on Switzerland. Before you decide to
participate or not, kindly read the below ethical participation sheet and sign it in case of
approval.

The purpose of this study is to understand the effects of economic decoupling between the
United States and China on Switzerland's trade sector. To do that, online interviews will be
conducted to collect qualitative data.

All information provided by the participants will be kept confidential and the name of the
participants won’t appear in the whole process. Privacy is one of the main concerns of this
research process.

49
Participating in this research means engaging in an interview where the participant will be asked
six open-ended questions and will be allowed to share his experience and insight with the
researcher. The interview will be recorded and will be used for research purposes only.
However, the participation is voluntary and any participant can withdraw from the study at any
time he wants.

As such, if you agree to participate in this research study, you will be given your informed
consent, indicating that you have the full willingness and that you are fully aware of all the
details related to this study.

Your responses will be kept confidential, and your identity will be always protected.
The main aim of this research is to arrive at a better understanding of the impact of economic
decoupling and may offer recommendations for Switzerland's trade sector.

If you have any questions or concerns about the research or your participation, please feel free to
contact us.

If you agree to participate, please sign below.

Thank you for your cooperation

Sincerely,

3.7 Conclusion
In conclusion, the method that was chosen for this study to examine the impact of economic
decoupling between the United States and China on Switzerland's trade sector reflects an
effective method that represents interpretivism as the research philosophy. The research
approach adopted is a qualitative method, for more subjective interpretation, highlighted by the
use of online interviews with a purposive sampling method to ensure the chosen participants
possess the relevant expertise and diverse backgrounds.

50
Thematic analysis will be employed to derive insights from the data collected. Ethical
considerations are also considered to showcase the commitment of the researcher to participant
confidentiality, and other necessary information that ensures full protection and appropriateness.

Chapter four
Results

To examine the impact of economic decoupling between the USA and China on the Swiss Trade
Sector, five participants took part in the interview process. Participants were chosen from
different backgrounds, each holding a specific role, and working at a different company, with
various knowledge about the issue of the economic decoupling, and its implications on the
world, and most importantly on Switzerland.

As a result, this chapter discusses the findings from these interviews based on specific themes
which cover topics such as the economic decoupling, the relationship between China,
Switzerland, and the United States, the effect of USA-China economic decoupling, Switzerland’s
relationship with USA and China, the effect of the decoupling on Switzerland, the trade
relationships between Switzerland, USA, and China, and the strategies for adapting to changing
U.S.-China Relations. Here are the findings of these interviews:

4.1 Key factors driving the decoupling between USA and China and their effect
Despite the trade restrictions and the potential effect of the decoupling on some Swiss
companies, the term “decoupling” has been perceived by the first participant as a narrative and
not a reflection of the real reality. This concept has not yet had a direct effect on the Swiss
economy, with some limited results. It has only created some uncertainties among these
companies, which may result in future repercussions that may not be predictable. This aligns
with the literature review part that discusses the effect of the decoupling on the world, where it
was revealed that the whole global economic landscape has been altered due to the decoupling,

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with no direct effect on a certain country, with the term being a part of the narrative that does not
highlight the broader complexity of the issue.

The second participant regards this decoupling as a political conflict and not a real economic
fight. He points out that some risks may arise due to the high dependence of Switzerland on
China in most of its supply chain processes. Shifting from dependency to independence is thus
important as discussed in the literature review on the consequences of decoupling, particularly in
terms of technology, security, and innovation challenges. Another important issue is that moving
away from China should be carefully studied in a way that cheaper products from cheaper
suppliers are provided, so that the business cost won’t be raised, affecting the economy as a
whole.

The third participant went on to describe the U.S. inflation and its effect not only on Switzerland
but on the whole European nations. The emergence of the COVID-19 pandemic was also
mentioned which created some supply handhallenges, which over 30 years of dependency on
China for production. Amidst these transformations, the third participant noted that Swiss
companies started to prioritize localized production, altering as a result their supply chain, and
finding ways to mitigate risks that arise from their dependency on China. Their main focus is to
come up with products with better quality and to improve their employees’ conditions, while also
boosting the European economy.

The fourth participant categorized the factors into direct and indirect effects. For him, the direct
implications of this decoupling start with the trade disruptions which highlight difficulties and
import transactions due to several restrictions. Currency fluctuation follows where the
appreciation of the Swiss Franc can alter the competitiveness level in the exports. Following
these two implications comes commodity trading where sanctions may affect Switzerland’s
position as a hub in commodities. After that comes the instability in financial markets where
Switzerland may be impacted by the significant level of uncertainty in financial outcomes. As for
the indirect consequences, global uncertainty is one concern where the future is unpredictable
which affects the productivity level. Besides that, any regulatory changes may affect the flow of
business operations and the way contracts are created. As for the government, changes in global

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governance may also affect Switzerland. These direct and indirect consequences mirror the
literature review's identification of consequences like global economic recession, reduced
growth, and increased global uncertainties.
The fifth participant also discussed the factors related to the decoupling of the USA and China,
such as the sway of US sanctions in the financial realm. The US currency holds a global
influence, so countries like Switzerland follow the US sanctions. Besides that, the participant
mentioned that the emergence of the COVID-19 pandemic has affected the Chinese economy,
affecting its relationship with other countries including the US.
Top of Form

4.2 The impact of Trump’s actions

Trump has revolutionized the way the United States interacts with the outside world specifically
with China and Switzerland. This has been discussed in the literature where there was a shift
from an amicable relationship to increased tension and a trade war. In discussing these impacts,
Huawei, as mentioned by Mr. Luschsinger, which is a famous Chinese tech company, has
experienced a decrease in its revenues and a loss of its strong customer base in the West,
particularly in the smartphone sales, mainly because of its inability to access the U.S. technology
and the Android platform. This has also resulted in a broader sense of affecting the Western
telecom operators, such as the ones operating in Switzerland. These findings confirm the
information in the literature review where it was found that Huawei’s capacity to sell to
consumers was affected, as well as the US chips availability and the ability to create 5G network
infrastructure. Yet, despite these negative impacts, the overall trade volume between the U.S. and
China has increased, which highlights that some sectors were affected while others were not.
Yet, determining the exact reason behind this change is somehow difficult due to the complex
economic relationship between the two parties.

Mr. Raskin expressed clear disapproval of Trump's actions, deeming them inappropriate and
attributing a notable impact on the trade relationship with Switzerland. Characterizing the trade
consequences as a conflict between the two systems, the participant advocates for a more
intelligent and strategic approach to navigate the complexities. There's an underlying concern
about the potential divergence between the two major powers, with a fear that Europe might lean

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towards aligning with China. Such divergence aligns with the discussion in the literature review
about the relationship between the U.S. and China and the challenges in fixing the relationship
between the two countries, leading to a change in public opinion with intensive critiques of
China. Moreover, the mention of blacklisting adds a layer of complexity to the situation. The
participant concludes by emphasizing the imperative of distancing from dependency on China,
highlighting the need for a more diversified and independent trade strategy. This concern
parallels the findings in the literature review that speak about the economic challenges faced
during Trump’s presidency and the disorder caused.

When it comes to the third participant who is anonymous, he expressed his doubt about the
significant impact of Trump’s actions on the trade relationship between Switzerland and China.
The Swiss Franc stayed strong during his term and any negative effect may have been attributed
to the effect of the pandemic on the disruptions in the supply chain and on the import/export
activities. Besides that, the COVID-19 pandemic has also contributed to an increase in property
values where consumers changed their spending habits. As such, the participant downplayed the
challenges brought by Trump, attributing the reasons to more broader implications. This
confirms the literature review that said that the Trump era affected China’s power but also
influenced other countries that had to revise their relationship with China.

Mr. Rob talked about the economic challenges that were created out of Trump’s presidency, such
as the sanctions imposed and the economic difficulties faced. For example, one significant effect
is the U.S. taking a step back from controlling the world, such as spreading peace all over the
countries, regulating some global issues, and keeping the U.S. currency as strong as it was
before. This step may highlight destabilization, specifically in the Middle East where there is a
power struggle. Moreover, the fourth participant expressed his worries that if Trump gets elected
again, more problems may be caused on an international scale, making the relationship between
the United States and others worse than before. He is also concerned that the position of the
United States as a powerful economy won’t stay the same with deteriorations in its relationship
with China. This confirms the literature review that pointed out the complexity of the situation
and focused on the challenges of creating fair relationships and minimizing the negative
implications. Many disruptions happened during this era with outcomes that included limited

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Chinese influence on a global level and decreased cooperation between the two parties.

Mr. Liu has also touched upon the effects of Trump’s actions in the context of the relationship
between the US, China, and Switzerland. He suggested that the trade war that started during
Trump’s administration did not affect Switzerland. Some taxes were put between the U.S. and
China, yet, the global and broader impact is not observed.

4.3 The sanctions imposed by the United States

When discussing the sanctions imposed by the United States along with the European Union, in
the context of their relationship with China, Mr. Nico mentioned the issue of the treatment of
Uyghurs in Xinjiang. He explained that some sanctions targeted Chinese officials, while others
have had a broader effect on the whole country. Switzerland did not adopt these sanctions, which
may have lessened the impact on the economic relationships. As such, the participant concluded
that specific sanctions are different from broader sanctions, and may not be as severe as the
sanctions imposed on Russia and Iran.

Mr. Raskin expressed that Switzerland’s commitment to neutrality made it not sign the same
sanctions as other countries. It wants to stay neutral and avoid entering into conflicts or
economic wars. For example, in the case of Ukraine, Switzerland sanctioned Russia despite its
neutrality, which showcases that it prioritizes principles over economic gains. As such,
Switzerland’s approach is a mix of political and economic situations, revealing the challenges of
the matter.

The third participant did not mention anything about the sanctions imposed by the USA.
However, he has said, “I don't think there is any conflict between the US and China, that will not
happen. They wouldn't sanction them”. In this quote, he reflects on his belief that no military
action would take place between the two superpowers and no sanctions would be imposed on
China. He is suggesting that despite all the challenges between these two superpowers, a military
conflict is unlikely to happen. These tensions just like the Experts have revealed in the 2023
SIEPR Economic Summit, may arise firstly from the diverse perspectives each country has.

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Another reason as they expressed is the deep belief of the Chinese leader in power and not only
in economic prosperity.
Mr. Rob has underscored the various impacts of the US sanctions on Switzerland indirectly by
focusing on trade disruptions, financial market volatility, and issues in maintaining neutrality. He
expressed his concerns about Swiss exports and imports, and its ability to navigate diplomatic
relationships.

Mr. Liu said that Switzerland follows the U.S. sanctions, derived partially from the power
behind the U.S. dollar and not adhering to these sanctions may cause problems in the banking
sectors and operations.

4.4 Russian sanctions

Moving to the impact of the Russian sanctions imposed by Switzerland, Mr. Nico said that there
is a significant impact of these sanctions which led to frozen assets of Russians in Swiss banks.
Chinese investors have feared that such sanctions may be imposed on them too, and this would
affect their relationship with the banks, although it is not clear if this has caused money
withdrawal no. This confirms the findings in the literature review that reveal the fear of the
Chinese and the risk that the Swiss-China relationship will be affected and that wealthy Chinese
people may think of withdrawing their money. Yet, what was clear was shifts in investment
patterns and a reduction in Foreign Direct Investment (FDI) in both directions. However, there is
no evident sign that any bad event will happen soon and despite all the existing risks, there is no
significant harm caused. The dramatic changes and negative consequences that would occur only
in an imminent crisis will lead to heavy sanctions.

Mr. Raskin said that there was a significant reaction among Chinese individuals, since after
Switzerland imposed sanctions on Russia, these individuals started to think of moving away,
perceiving Switzerland as not as safe as it used to be before. This happened in the Hong Kong
crisis when the Chinese people feared Switzerland’s sanctions. Besides that, many Chinese
clients moved away to Singapore which was regarded by them as safer. This has caused a big
debate in the Swiss press, losing trust in the country as added by the participant who saw that
neutrality should still stand against aggressors.

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The third participant said that Switzerland should not take risks and put sanctions on Chinese
people, just like it did with Russians. China has many billionaires who have invested huge
amounts of money in Geneva and Zurich. Losing such huge investments would result in big
financial and economic losses for Switzerland. Sanctioning Russia has to do with the war that
happened with Ukraine. Butry with China is different.

Mr. Rob said that he has had many concerns about Switzerland letting go of its neutrality by
blacklisting some Russian accounts and freezing them due to the war that has happened. Many
Chinese investors have been afraid that the same would happen to them in the future, especially
after pressure from the United States. Yet, according to the participant, such sanctions do not
mean that the transfer of funds to and from Swiss banks should stop. Moreover, holding the
Russian nationality does not mean the individual would be subjected to sanctions. The Chinese
sanctions may be different from the Russian ones, arising from personal conflicts between China
and others. These sanctions may not become as significant unless China engages in actions that
go against the norms.

Mr. Liu discussed the sanctions imposed on Russia on a broad scale, which is mainly derived
from the conflict between Russia and Ukraine. These sanctions are followed as expressed by the
participants not only by Switzerland and the European Union but also by the whole world. Mr.
Liu talked about the increase in gas prices due to these sanctions. Such process plays a critical
role in the economy, affecting many industries and affecting the living standards of people. The
prices as pointed out by Mr. Daunting elevated at lightning speed affecting the energy market
and the natural gas, as well as, the economic transactions all over the world.

Yet, despite the price increase, Switzerland was able to manage itself and has demonstrated a
good level of resilience, not being affected by these unexpected changes. The resilience is
attributed to its position as a strong economic power which has been evident in the literature
review that stated that Switzerland is considered among the richest countries in the world,
holding one of the highest GDPs in the world, and investing over CHF 22 billion in research and

57
development. Besides that, the participant mentioned that Switzerland’s strong connection with
the global economy recovered the power to recover from any adverse effects.
4.5 The effect of the decoupling on Switzerland
According to the discussion with Mr. Nico, it can be inferred that the effect of the decoupling on
Switzerland is somehow limited. He emphasized that the decoupling between the U.S. and China
is a geopolitical decision and a narrative rather than a concrete reality. There is no significant
decoupling to affect Switzerland. The only evident event is the increased uncertainty that has
been circulating across Swiss businesses. Mr, Nico has also pointed out that Switzerland has
always maintained uncertainties, but due to the Russia-Ukraine war, some elements of
uncertainties may happen.

The interview with Dr. Raskin said that the decoupling between the United States and China has
had significant effects on Switzerland. He stressed the political aspect of this decoupling stating
that a conflict between different countries was created, and the Swiss supply chain may be
disturbed with great dependence on China which makes Switzerland need to diversify its
suppliers.

As a result, Dr. Raskin suggested that Switzerland is navigating challenges through

diversification strategies and risk management in its trade relationships. He also mentioned that it
should align with the Western world more, and specifically with Europe and the United States.
Finally, he expressed his opinion that Switzerland can recover such as through these
partnerships.

The third participant said that Switzerland is struggling due to the global consequences of the
economic decoupling. One factor affecting it is the inflationary pressures from the US. Another
factor is the supply chain challenges with particular reliance on China. This participant said that
quality and local production are important to surpass any challenges.

Mr. Rob was asked about the impact of international relations, particularly the United States and
China relationships, on the Swiss economy. His answer revolved around the trade relationships,

58
economic factors, and political developments affecting Switzerland in the short, as well as, long
term.

He said also that there is a continuous growth in trade between Switzerland, the USA, and
China. This has been confirmed by the literature review with high import/export activities as
shown in the figures and numbers revealed in the studies, showing continuous growth in trade
between the three countries. Moreover, the literature review spokes about Switzerland's strong
economic ties with both the United States and China, highlighting the significant role of these
nations in Swiss foreign trade.

However, according to Mr. Rob, there are many concerns derived from such activities, where
fear of sanctions may be aggravated, and where the monitoring of long-term bond yields and
investor sentiment are essential to mitigate some risks. The participant has also spoken about the
complex Swiss-American relationships, where Swiss laws are being changed to meet American
needs, which may affect Swiss bank accounts. While the literature review does not focus mainly
on these concerns, but it gives a deep insight into the importance of monitoring economic
indicators for risk mitigation.

When asked about the challenges of doing business in the insurance industry and with a focus
on the Chinese market, and in working in Switzerland, as well as, in dealing with the Chinese
companies, Mr. Rob discussed many challenges. He mentioned ownership caps for foreign
investors, many restrictions imposed on the business type that foreign companies can engage in,
control over some business areas, and some strict requirements. There are also many regulatory
approvals, restrictions on market entry, limitations on how products are produced, requirements
for some capital, some security concerns, taxation, and other issues.

Mr. Liu has revealed that there is no significant effect on the economic decoupling between the
United States and China on Switzerland. The neutrality that Switzerland has and its ability to
navigate all the challenges that happened before and that are still happening limit such impact.
What also limits it is that Switzerland is following the U.S. sanctions. According to the
participant, not only the impact on Switzerland is minimal but also on the whole world.

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Switzerland alone can manage its economy and knows how to deal with these two superpowers
to create stability in the trade sector. Moreover, Switzerland won’t have to take a stand or choose
which country to pick. Besides that, the participant shed light on the evolving dynamics of
Chinese investments in Switzerland and the Swiss companies opening in China. Any changes
that had or may occur are related to the labor market in China and not really to the relationship
between the United States and China.

4.6 Switzerland’s way of Navigating the Challenges of decoupling

Amidst all the challenges faced by Switzerland and all the transformations that have been
happening to this country, the participants expressed various viewpoints on how Switzerland
should behave and how it should navigate such difficulties.

Mr. Nico expressed uncertainty about Switzerland's ability to keep balance within all that is
happening with the United States and China. Such a task is not easy especially since both
countries are pressuring Switzerland which may impose risks especially if the country has to take
one side. It is not simple to cut ties, viewing that Switzerland depends partially on its economy in
both countries. Besides that, Switzerland is somehow tied to Europe which means it must align
with European policies in some situations. Failing to do that may add additional pressure on
Switzerland. So which side to choose is a hard choice and maybe balancing the relationships may
be the best choice.

Lastly, Mr. Nico expressed his uncertainty about the relationship between Switzerland and the
US. However, the US always wants other countries, including Switzerland, to support it against
China, which has put pressure on some countries to take sides or adopt specific positions. This
may be an issue, but this does not eliminate the historical importance of the US trade relationship
where a shift away from such a relationship would not be preferable.

Mr. Raskin said that Switzerland is perfect at making contracts and agreements with other
countries. In the past few decades, it has been actively attracting Chinese businesses. Yet, after
the Trump administration and the several conflicts between some countries and China, staying

60
active may not be viable anymore. Switzerland as such should create its system and make fruitful
relationships wisely, to maintain a strong position for itself in the business world.

Yet, if Switzerland had to choose between these two superpowers, the participant said that it
should choose to be with America and Europe. Supporting China, Russia, and Iran is not
advisable, viewing Switzerland as a European country. Going against Europe is not
recommended, especially since dependence on Europe is inescapable.

The third participant said that Switzerland as it is known by everyone is committed to neutrality.
He believes that this neutrality shall be kept, which is evident by Switzerland’s rejection of
choosing to isolate itself from the European Union and stay independent. This has been
confirmed in the literature review that talks about Switzerland’s reluctance to join the European
Union. As such, Switzerland is playing a diplomatic role and is investing efforts to stay in a good
relationship with both the United States and China. It acknowledges the importance of both
countries and the significance of the connection it has with them. While there is a moderate
conflict between the USA and China, such conflict would escalate and go to a global scale and
instability may reign in Europe, especially after the war between Russia and Ukraine. This may
create a scenario similar to World War Three and global unrest may dominate, with more
conflicts between countries such as Gaza, Palestine, and Israel. Yet, the participant added that
Switzerland should continue to stay neutral despite all external forces, and should avoid taking
sides between the two superpowers, staying indifferent to all global conflicts. Yet, if a decision
were to be made, Switzerland would think of choosing America due to its location in central
Europe which is a region surrounded by countries that support the United States.

As for Mr. Rob, when asked about which side Switzerland should be, he answered that it should
choose the United States, especially since China may be facing challenges in the future and many
economic difficulties. As such, the long-term viability of countries should be carefully studied by
Switzerland to ensure the right investment and the right partnerships.

Mr. Liu stressed in the interview the neutral stance that Switzerland has had, showing that
through this neutrality Switzerland can navigate the effects of the decoupling. Besides that,

61
through balancing the trade relationships between both nations, it can achieve peace, believing
that the two countries will not collapse entirely.

Discussion
Overall, the research findings have revealed many aspects of the implications of the economic
decoupling between the United States and China on the Swiss trade sector.

Participants perceive the term “decoupling” in different ways, and more like a narrative
construct than a reflection of tangible realities. Uncertainties are evident among Swiss
companies, yet the direct effect on the Swiss economy and its trade sector remains unclear and
not fully discernible, especially since the trade sector activities are active and flourishing. This
aligns with the literature review findings that reveal the significant transformations happening in
the economic landscape and the direct effects caused on some countries.

Examining the factors driving decoupling, the participants have revealed disagreements and
conflicts, trade restrictions, and the imperative for Switzerland to become independent,
especially when it comes to its supply chain process. The emergence of the pandemic and the US
inflation are also factors that push Swiss companies to prioritize localized production and avoid
the risks that are accompanied by being dependent on other countries.

In analyzing the impact of Trump’s actions, there is a deep transformation in the relationship
between the three countries, which increases tension and trade war. The technology industry has
created setbacks, despite the increase in the trade volume between the US and China. Moving to
the sanctions, Switzerland’s decision not to go with the tensions imposed by the United States
and the European Union highlights its neutrality. Sanctions’ discussion also extends to Russia,
with frozen assets and alterations in investment. Yet, there is no clear evidence of significant
harm.

As for the most important part which is the impact on Switzerland, participants have seen
continuous growth in the trade sector of Switzerland with more activities with the U.S. and
China, showing strong economic ties. As such, it can be concluded that there is no effect of this

62
decoupling on the trade sector.

Yet, potential risks may arise, and careful attention should be paid to the issue of sanctions,
Swiss laws, ownership caps, business restrictions, regulatory hurdles, and others, to ensure a
smooth flow of trade activities. Moreover, some participants offer varied viewpoints on
Switzerland’s path in such challenges, and on its ability to create a balance between the United
States and China. It is hard to choose sides. Other participants expressed that Switzerland should
maintain neutrality and keep its diplomatic role to create a positive relationship with both
superpowers.

Overall, it is evident that the economic decoupling impact on Switzerland as revealed through
these interviews is a multifaceted concept with many economic, geopolitical, and diplomatic
factors. This decoupling has created complexities and introduced many challenges amid the
global power dynamics. Yet, the trade sector is not significantly affected and a more nuanced
approach to understanding and responding to the decoupling effect is needed.

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 Chapter Five
Conclusion and recommendations

5.1 Background
This research aims to examine the impacts of the economic decoupling between the United
States and China on the Swiss trade sector. The main motivation behind this study is the shifting
dynamics in global economic relationships and the complex relationship arising between these
two superpowers. Another purpose of this research is to reveal the complexities associated with
these relationships. As these nations interact with each other, new factors arise modifying the
way they are connected and creating challenges and opportunities.

Central to this research was the acknowledgment of the interdependencies among these key
players. The relationship between these three countries plays an essential role in altering the
global economic landscape with many implications for several countries in the world.
The results have revealed a nuanced understanding of the effect on the Swiss trade sector. They
have revealed many uncertainties and potential risks in the Swiss economy with unclear effects
on the trade sector that has shown continuous growth, indicating strong economic ties.

The research stressed the need for careful consideration of many factors such as sanctions, Swiss
laws, and regulatory hurdles to create stronger growth and a more promising connection between
these countries.

5.2 Recommendations
Based on the findings of this thesis and the secondary data assembled through the literature
review, several recommendations can be given to assist Switzerland in navigating the challenges
that are arising from the complexity of the relationship between Switzerland, the United States,
and China. Here are several important recommendations:
- Switzerland should understand deeply its interconnectedness with China and the United

64
States, by conducting effective market research, understanding the market trends, and
recognizing what factors lie behind these relationships.
- Switzerland should study carefully the risks that may be imposed due to the continuity
of this relationship to create strategies so that such risks can be mitigated.

- Switzerland should study the strategies followed by the U.S. and China, to better
understand what impacts such strategies can have and to make decisions based upon such
strategies. This knowledge will allow the country to make effective forecasts to better
understand potential disruptions in its economy and its operations.

- Switzerland should create partnerships with powerful countries to diversify its business
portfolio and improve its trade sector. Such partnerships will decrease its dependence on
China and the United States, while also opening new opportunities and new horizons
through the share of creative ideas.

- Switzerland should focus on improving its local production and depending on its
resources to increase its productivity. Such independence will make the country more
resilient against all challenges and complexities.

- Switzerland should actively engage in attempts to promote cooperation and dialogue

among these two superpowers, trying to find a way to end this decoupling. If not,
cooperating with other countries can reduce any vulnerability this country may face.

Switzerland should invest in the development of its labor force where training programs,
mentoring programs, and various workshops can be created, to equip these laborers with
the necessary skills that make them competent. Changes in the global dynamics and the
rapid evolution of technological inventions, require the staff to stay up-to-date with the
latest market trends. By following this step, the country can become a hub for innovation,
and become more attractive to other countries and investors. This will also reduce any
economic disruption.

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 - Switzerland should focus on sustainability and ethics in its business activities, to enhance
its internal operations and to attract more foreign investors. Embracing these
environmentally and socially responsible principles aligns with the SDG goals, and
contributes to a better country’s image and long-term economic stability.

5.3 Limitations and Future Research

While this study aims to examine the effect of economic decoupling between the United States
and China on Switzerland's trade sector, there exist several limitations, and future research may
be needed for a better and deeper understanding of the complex dynamics that involve the
relationship between Switzerland and these two superpowers.

Here are the limitations of this study:

- This study aims to explore how the economic decoupling between the United States and
China affects Switzerland’s trade sector. As such, it only takes into consideration the
trade sector of this country and does not study any other sector. Moreover, it focuses
solely on Switzerland, without studying other countries which limits the scope of the
study and makes it unable to cover all aspects of the geographical areas.

- Qualitative research was used to study the effect of this decoupling and to gather primary
data. No quantitative research was employed with statistical numbers to get a more
comprehensive idea of such an effect

- Only a few people were employed to take part in this research process. This makes the
sample size limited and does not fully represent the various opinions of experts in
Switzerland’s trade sector. It also does not represent the whole population being studied.

- Conducting interviews means having subjective interpretivism of the events where

different stakeholders may regard the effect of the economic decoupling differently and
may view the relationship between the two countries differently. Having a subjective
opinion may create some biases in the analysis.

66
 - This study is limited to a certain time frame since it studies the international relationships
between big countries in a specific period. Political and economic events may be changed,
affecting the accuracy of the outcomes of the study.

- Conducting interviews holds many limitations such as obtaining some random answers that
do not reflect the truest opinion of the participants, or having biased information that may
affect the reliability of the study.

To fix such limitations, future research can be conducted to explore in more depth the effect of
economic decoupling on the trade sector not only in Switzerland but also in other countries.
Another study can be conducted to study how this decoupling can affect other sectors in other
countries or any other sector inside Switzerland.

Besides that, a longitudinal study can be conducted in the future over an extended period, to see
how this economic decoupling will be transformed and to create certain strategies to better
mitigate any negative effect derived from this decoupling.

While only qualitative data were collected, quantitative data can also be collected in future
research where a mixed-method can be employed, giving a deeper understanding of the research
topic, allowing the assembly of additional information, and allowing the objective analysis of the
data gathered. A mixed method can also involve new perspectives on the economic changes that
may result from the transformation in the relationship between the United States and China.
Moreover, by using a mixed method, the sample size can be enlarged with more participants
taking part in this study and a better representation of the whole population.

5.4 Conclusion
In conclusion, this thesis delves into the effect of economic decoupling between the United
States and China on Switzerland's trade sector. Through the use of a qualitative research
approach, this study shows the various strategies employed by the three countries and how the
changing relationship between the USA and China has created many transformations.

67
While the study holds many limitations and invites the researcher to conduct more future
studies, it does reveal the subjective opinions of several key stakeholders in the trade sector in
Switzerland.

Future directions can result in an improved understanding of the topic and its various sides.
Ultimately, this study is a good start for all countries, not only Switzerland, to know how to deal
with the geopolitical shifts, and to know what strategies they should employ to adapt to the
changes in the US-China relations.

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7. Appendix
a. Interview Questions

These questions were the questions that were already decided upon, before being modified to
match the profile of each participant

Economic decoupling

1. From your perspective, what are the key factors driving the decoupling between these
two economic giants (USA and China), and how do these factors impact Switzerland
specifically?

2. Viewing the potential implications of economic decoupling on global peace, what are the
key challenges and opportunities for Switzerland in maintaining its trade relationships
with both the United States and China, and how might this affect the Swiss trade sector?

The relationship between China, Switzerland, and the United States

3. The relationship between the United States and China has been marked by ups and
downs, especially when President Trump took charge. How did this relationship during
such period affected the trade relationship with Switzerland?

4. What are the significant effects of the Trump administration's policy decisions
concerning China, such as the trade war and restrictions on technology and investments,
affected Switzerland's trade sector?

The effect of USA-China economic decoupling on the world

5. How does the economic decoupling between the United States and China impact the
global economic landscape, and what are the potential consequences for Switzerland's
trade sector?

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Switzerland’s relationship with USA and China

6. Given the historical trade data and the importance of both the USA and China as trading
partners for Switzerland, how has Switzerland managed to balance its economic
relationships with these two countries?

The effect of the decoupling in Switzerland

7. How is Switzerland navigating the challenges and uncertainties posed by the growing
decoupling between the United States and China, particularly in terms of supply chain
diversification?

8. Do you see a cooling of Swiss-Chinese relations in the future due to the current problems
both USA and China are having. We saw that Switzerland for the first time took a side in
the Ukraine-Russian after American pressure, and China is in the Russian group. Will
this break of neutrality that Switzerland had will affect its relationship with China?

Trade relationships between Switzerland, USA, and China

9. Have you observed any shifts in the investment patterns of Chinese businesses in
Switzerland or Swiss businesses in China due to the changing dynamics between the
USA and China? How are these shifts influencing the economic landscape in both
countries?

10. Given the unique trade dynamics with the United States and China, how is Switzerland
addressing potential trade deficits and adapting to evolving economic circumstances in its
key trade relationships?

Strategies for Adapting to Changing U.S.-China Relations

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11. How can Switzerland ensure economic stability and resilience while maintaining
diplomatic relations with both superpowers?

12. In the foreseeable future, if Switzerland finds itself in a position where it must choose to
strengthen economic ties significantly either with the USA or China, which nation would
be the preferred strategic partner, and what factors, such as economic stability, political
relations, market diversification, or technological collaboration, would influence
Switzerland's choice? Moreover, how might such a decision align with Switzerland's
long-term economic goals and global trade interests, particularly in the context of the
shifting dynamics between the USA and China?

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b. First Interview

Expert: Mr. Nico Luchsinger, over 15 years of experience, Executive Director at the Asia
Society Switzerland.

Company: Asia Society Switzerland.

Q1

Author: from your perspective what are the key factors driving the decoupling between these
two economic giants? How do these factors impact Switzerland specifically? and what are the
key challenges and opportunities for Switzerland in maintaining its trade relationships with both
the United States and China? How might this affect the Swiss trade sector and economic
relationships with these two countries?

Mr. Nico Luchsinger: On the first question, I think that’s the easy part. The reasons for the
decoupling are ultimately very clear it's a geopolitical decision on both sides there seems to be a
consensus on both the US and the Chinese side that the two countries are economically two
events from each other given the future political rivalry, which is increasing. So, I think there's a
tendency from both sides to try to basically risk or hedge the risk that they have by being
coupling. I should say that I think, maybe we'll get to, but I think decoupling is somewhat of a
problematic term, there are obviously data points and just aspects of the economic connections
between two countries are slightly weakening in certain areas, but as far as I can see, I think
that's something that most other analysts would agree with. There's just no evidence of a
decoupling, so I think decoupling in a sense is also a narrative more than something that is
happening. And so that brings me to the second point, which is that to be very honest, I don't
think that the decoupling which is not really happening yet has any piece of real meaningful
effect on the Swiss economy.

Q2

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Author: Viewing the potential implications of economic decoupling on global peace, what are
the key challenges and opportunities for Switzerland in maintaining its trade relationships with
both the United States and China, and how might this affect the Swiss trade sector?

Mr. Nico Luchsinger: As I previously mentioned that I don’t see a real effect on the swiss
economy. There may be specific effects on specific companies and specific areas. So, there are
certain trade restrictions that are in place on both sides and it's absolutely possible, although they
don't have any concrete examples, but I would imagine you know that some of the export
restrictions around semiconductor production perils that the US has put in place might affect
certain Swiss companies, but I think those effects are limited. They're limited in scope, but
they're also limited in terms of how much of the Swiss economy they impact, I think by and large
the Swiss economy is not directly as is currently impacted by this again also because I think that
the company is something that we may assume it's going to happen at a certain point, but it hasn't
happened yet. I think the effect is in the way indirect. I think the effect that we do see is
increasing uncertainty, which businesses generally don't like. So, there's a lot of uncertainty, you
know, within Swiss businesses .

Q3

Author: When Donald Trump was elected as the President of the US, he said that we could cut
the relationship with China which would cost him 500 billion per year. So, how did this
relationship during such a period affect the trade relationship with Switzerland and China?

Mr. Nico Luchsinger: I mean despite the actions that Trump has taken and again like those
actions are real. For example I had a conversation just yesterday with somebody who’s sort of
was a client of Huawei and that's a clear impact to the actions that US government. Has taken
under Trump has basically led to the almost complete erosion of the Huawei business and the
Western consumer market, so Huawei used to sell a lot of smartphones in the West, but since it
does not have access anymore to US technology and to the Android platform, those sales have
pretty much eroded It has notably sort of dramatically impacted to four-way business in network
components So there are many Western telco operators include in all three large Swiss telco
operators that are that they're all clients of Huawei. So, they to a certain some more and less

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certain to buying Huawei equipment. The company is still around, but that has you know there
has been some effect, however the overall trade volume has increased. Also, between the US and
China, so you are seeing a decrease in it; I think in some of the investment flows, but again
whether that's directly triggered, sort of desire of decoupling, or whether it's just something that
was on a high level and would have decreased maybe overtime. Anyway, I think this is very hard
to say so, I think one of the problems with analyzing these developments is very hard to
determine the root cause of anything. So if the government puts a policy in place and as a result
you see a change in trade shift it could be because of this policy, but the shift could have
happened without the policy as well it's impossible to tell because you can't run it as an
experiment in a lab, so there's always a little bit of uncertainty.

Q4

Author: If we talk a little bit about the sanctions that the US apply on the countries that they
have a conflict with now, mainly China. And I've read that they have applied some sanctions on
the Chinese companies. In general, the country and the European Union kind of moved toward
these sanctions. But Switzerland in a way didn't give a direct answer concerning these sanctions
and is more protective of their relationship or trade sector with China. What are the significant
effects of the Trump administration's policy decisions concerning China, such as the trade war
and restrictions on technology and investments, affected Switzerland's trade sector?

Mr. Nico Luchsinger: I think there’s an importance to kind of distinguish their different types
of sanctions. My recollection, which may be wrong, is that here we were also talking about the
sanctions that were specifically issued against Chinese officials. I think in the repression of the
Uyghurs in Xinjiang so, these are not technically economic sanctions, right? So, there's a
difference between issuing sanctions against the country, for example, the way it's been done
towards Russia, where you sort of effectively tried to cut off a country from international trade
and financial flows. And then kind of the type of sanctuary sanction of making specific
companies or specific individuals and sort of spend much more away to kind of exert specific
political pressure decision-makers, but to have a large symbolic value. So yeah, certain pressure
on the domestic front of maybe your electorate that wants you to do something about the
situation in Taiwan. And so, one way is to go and sanction officials.

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Q5

Author: Shedding light on the Russian sanction that was applied by Switzerland, maybe for the
first time, Switzerland broke its neutrality and I've read that some of the Chinese investors are
now kind of afraid that these sanctions might follow them as well. In your opinion will there be
any effect on the investment like the trade sector in the future?

Mr. Nico Luchsinger: yes, the effect is here, but I think it's important to look at what it is, I
mean the sanctions against Russia that Switzerland adopted, one effect that they have, which of
course is meaningful given the financial industry in Switzerland is that if you were Russian pure
Russian person and you had part of your money in Switzerland, then you would have a problem
with those sanctions, So that you could have your assets frozen. And of course, you don't want
that. you would prefer to have your assets and not have some frozen in business bank account
and I have heard from several Swiss banks that they're getting back to the question from their
Chinese clients and that is an issue. You know the Swiss banks have very good reasons to not
publish that data. I'm not sure if this has led already to the big outflow of Chinese money out of
Swiss banks. There are several reasons to stick to the Swiss bank because, it's a relatively
theoretical discussion, but this is something that is there. By the way, Chinese clients were not
based in China, so there's a relatively large population of Chinese people who live in Singapore,
have invested there. So, this is a conversation that has happened. The Chinese clients were asked
that question and that is the story that I've heard again. But this would have affected the
relationship with like the bottom line of the company and some of that's right.

Q6

Author: Given the historical trade data and the importance of both the USA and China as trading
partners for Switzerland, how has Switzerland managed to balance its economic relationships
with these two countries?

Mr. Nico Luchsinger: You know, Switzerland has always been neutral, however, this changed
when the war between Russia and Ukraine took place. Honestly, I think that if China does not go

85
to war with Taiwan it's safe from the Swiss sanctions. But since Switzerland took a side, it kind
of broke its neutrality which made the Chinese lack trust and fear that Switzerland may apply
sanctions towards them. You know, there's one problem that the US would like many other
countries to be maybe more compliant in supporting us towards China and I think that's
effective, it has been asserted in the past of conflict and will be iterative conflict in the future
probably again. But yeah, I think that the US trade relation has historically been very important,
and I have a hard time imagining how it would stop being important suddenly.

Q7

Author: How is Switzerland navigating the challenges posed by the growing decoupling
between the United States and China, particularly in terms of supply chain diversification?

Mr. Nico Luchsinger: I mean maybe one thing to add here is that we are seeing. So, we are
generally seeing companies are not exempt from that there is a tendency to kind of shift the
investment away from China again, that kind of like the data is I think to this point still
somewhat murky, but the best as I can tell what is happening for most companies is that they're
not actively pulling out of China. Again, there are examples of that, but those are limited so,
most companies that have business interests in China, have their production facilities in China
they're keeping those. But they're starting to invest in those. Any additional investment that they
make, they would sort of start maybe to do elsewhere and to a larger extent than they had in the
past. So, I think this is the label that's usually put on this is, you know, supply chain redundancy
or the China plus one strategy. So, you see Vietnam for example. And a lot of them getting a lot
of that money and getting some of that money. The Philippines, to a certain extent, Mexico I
think the reason for the decoupling, or the fear of decoupling is part of the reason for that. But
there are other reasons, right? So, I think certainly sent the much more relevant reason here is
also just the supply chain disruption that the pandemic has to fraud and come to the realization
has the fragility. Supply chains are and the need to build some redundancy in it, and of course
then that's coupled in also with the fear that's of another disruptive event, you know, an attack on
Taiwan or anything, anything like that could happen, in which case those companies would want
supply chain redundancy. But I think that again, like that's not directly sort of triggered by the
decoupling or the decoupling discussion.

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Q8

Author: Do you see a cooling of Swiss-Chinese relations in the future due to the current
problems both USA and China are having. We saw that Switzerland for the first time took a side
in the Ukraine-Russian after American pressure, and China is in the Russian group. Will this
break of neutrality that Switzerland had will affect its relationship with China?

Mr. Nico Luchsinger: My understanding is that Switzerland adapted to the sanctions against
Russia but it did not adapt sanctions against China. I think you know the effect would have been
that the Chinese Government would have been angry at Switzerland, whether it would have
meaningfully affected its economic relationship. I think it's much less clear because there's a
difference between diplomatic posturing and trade. So, the Chinese Government sort of steers
trade flows, however, it could say that we don't want to trade with Switzerland anymore or we're
cancelling the free trade agreement it has done nothing. I find it highly questionable that it would
have done something like this. You know, some stuff failed along these relatively limited
sanctions, so I think it's just important to kind of like acknowledge that there are sanctions
against Russia, there are sanctions against Iran and then there are some sanctions in place against
very specific entities and people in China. And those are not to the extent that I understand is
comparable.

Q9

Author: OK, so we can say that there was no shift in the investment patterns between the
Chinese and Switzerland doing business due to the changing dynamics between the USA and
China? How are these shifts influencing the economic landscape in both countries?

Mr. Nico Luchsinger : Oh, there were shifts in investment patterns. I think the question is more
sort of why there has been. There definitely has been, I think of the relatively significant
reduction of FDI in both directions, so those are two somewhat different things one is a Swiss
company investing in China, because they want to build a new factory or something, or Chinese
companies investing in Switzerland because they want to set up a distribution here that's not the

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same as clients and financial institution. So, I think that's again somewhat of two separate effect
there is of course the meaning of an absolute worst-case scenario where China invades Taiwan
and then Switzerland join heavy tension in China. Yet there's a certain risk, that if you were a
Chinese company and you had invested in Switzerland, then we would stand to at least lose
access to those investments. I don't know how large these investments are. So of course, China
would retaliate until then Swiss companies would stand to lose or lose access to their investment
in China. But again. It's a theoretical discussion so, there’s no indication that any of this will
happen soon and I think what's notable here is that although it’s a real risk. Again, I think it's a
risk that's being discussed, but we're not really seeing huge shifts because of that. So again, there
are certain companies which have maybe pulled out of China to a certain extent like reduced
reliance on China a little bit. But I think that they would if they believed. There was an imminent
crisis that would lead to sort of heavy sanctions from their side.

Q10

Author Given the unique trade dynamics with the United States and China, how is Switzerland
addressing potential trade deficits and adapting to evolving economic circumstances in its key
trade relationships?

So, there's a lot of uncertainty, you know, within Swiss businesses of what the impact might be
once you know, so if we get to an actual sort of decoupling or to a stronger state of decoupling
than we currently are. So, I think it's something that is being discussed. Therefore, I think it's
something that some companies may be making contingency plans for. But I have not seen any
data that you said that this already has, like a measurable impact that is measurable in dollars and
cents on the service economy.

Q11

Author: How can Switzerland ensure Its economic stability while maintaining diplomatic
relationships with both superpowers?

Mr. Nico Luchsinger: You know, to be honest, I’m not sure if that's super hard at this point.
There's and there will be continued pressure from both sides, probably mostly from the US side

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on countries like Switzerland to maybe follow along in certain sanctions and that's something
that Switzerland must navigate. But if the situation remains like this and we have a Biden
meeting happening it also looks like we're maybe moving towards somewhat of a de-escalation.
At some point, they're kind of being forced to choose between two sides. Again, to me, it's
somewhat of a theoretical risk no one must understand. Yes, the US is significantly larger than
Switzerland and it does translate into being able to exert a certain amount of pressure. But the
pressure is also limited, so yeah, unless you could cut all economic ties with China, we're going
to cut all economic ties. That's not so easy to do and obviously, this economy is also will hurt the
economy. So, I think those are kind of like horror scenarios that I think are very unlikely to
happen. I think Swiss Switzerland has not done a bad job relative to good diplomatic
relationships with China. But I also think, you know Switzerland has to acknowledge the certain
points that it is geographically and economically, if not politically, a part of Europe, and it's
going to be increasingly hard to sort. A China policy in Switzerland that is misaligned with
Europe will just sort of lead to increased pressure on Switzerland. I think in a way fitting a little
choice but it's not complete and at least partially aligned better policy with that of the
surrounding country. Finally, I think that's what we're seeing happen there's some room. But I
think. That room is shrinking.

Q12

Author: in the foreseeable future, if Switzerland finds itself in a position where it must choose to
strengthen economic ties, either with the US or China, which nation would be the preferred
strategic partner?

Mr. Nico Luchsinger: I mean, as I said before, I think it's a bit of trouble with this question it's a
highly theoretical question and then it depends on a lot of the definition. But China would start
the military invasion of Taiwan that's why the vast majority of other nations in the world have
been issuing sanctions against China, so I think there is something clear. Because that's the
scenario that everybody wants to avoid. Its scenario is different, If I don't know, let's say Trump
gets re-elected and Vincent goes on a crusade and policies that are designed to hurt China, even
though there's nothing and there's no need to trigger for that. I think maybe it's a little bit less
clear. But I think at the end of the day again, it's for better or worse in Europe and so a lot of

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ultimately will depend on Europe and again, I think there's no obviously stronger ideological
path between Europe and the US. But what is the decision? Will be exactly very strong
depending on the scenario.

c. Second Interview

Expert: Dr. Peter Raskin, over 25 years of experience, CEO and partner of Bergos bank.

Company: Bergos bank.

Q1

Author: What are the key factors driving the decoupling between these two economic giants?
And how do these factors impact Switzerland specifically?

Dr. Peter Raskin: I say the reason why the decoupling is more of a fight between 2 different
setups of countries, and therefore in my opinion it's not an economic war, because economic
wise it makes no sense, and it is more of a political conflict. Of course, the economy! I see the
problem is the supply chain with China because everything is coming from China, and it will
have a big impact; now the people are realizing that they don't have to be so dependent on China.

Q2

Author: Viewing the potential implications of economic decoupling on global peace, what are
the key challenges and opportunities for Switzerland in maintaining its trade relationships with
both the United States and China, and how might this affect the Swiss trade sector?

Dr.Peter Raskin: You see this mistake when we with Germany and all the other countries were
so dependent on Russia for oil and gas. Now, in the end, Putin declared war and they have no
way to answer. Similarly, this could be also a problem with China because If you investigate you

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will find that most of the products you need are produced in China. Therefore, they are very
dependent on China and now they would like to get rid of it by becoming more independent so,
this will have an impact on the economy, I don't know, they must find a supplier for this. I guess
that the new suppliers are most likely not cheaper than China. Look well at the other way around,
they all went to China because it was much cheaper, and now they are seeing the risk that they
don't want to be depending so much on China. Let's find somewhere else, maybe more suppliers,
not only one or two and most of them are more expensive thus resulting in higher costs for the
companies.

Q3

Author: As we talked the relationship between the United States and China has been marked by
ups and downs, especially when President Trump took charge. How did this relationship during
this period affect the trade relationship with Switzerland?

Dr.Peter Raskin: Look. Of course, it was affected. I don't know. I'm not a big fan of Trump.
What he did was not the best advice you should follow. You must know that the impact of the
trade was more of a conflict between two systems because Trump was one who just blamed
someone else. Therefore, it was more that you had to find a persuasive way by being a little bit
cleverer and start thinking about the next step since there is a conflict coming in this
zone.They're big players, China, and America if they start fighting because of Trump they want
to become much more independent of each other, and more powerful. Trump was also afraid a
little bit that Europe was coming too close to China, and that maybe another alliance had started
this bloody fight. Of course, if you start dealing with a country, which is not liked by America,
they're like the world police, there's always a risk that if you trade with a country that the United
States doesn't like this. Thus, you suddenly get blacklisted, which doesn’t make it easier if you
make payments for countries they don't like.

Q4

Author: As you said, the American way to solve the problem is always like blacklisting or
applying sanctions on certain countries. I have read research that the restrictions that the USA
applied on the Chinese Government were not really implemented by the Swiss Government,

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however the EU in general, cut off relationships or implemented these sanctions, but Switzerland
didn't really agree with that and tried to find like a loop to keep the businesses with China since it
is number three in the economic scale for Switzerland, like for the exports and imports volume.
So, in your opinion how has Switzerland managed to balance this economic relationship and
what do you think?

Dr. Peter Raskin: I'm not quite sure if Switzerland signs the same sanction as other countries
like European countries and the United States. In most cases it does not, as far as I know, it's not
driven by the economy. We continue the business It may have to do with the neutrality that you
would like to stay neutral, and they don't want to be involved in a fight or, you know, economic
war, and this is the way Switzerland is however, we saw in the Ukraine crisis when suddenly
they also sanctioned Russia, which is also a little bit hesitant because of neutrality. We used to
stay neutral, but this doesn't mean to help aggressors by staying neutral and there, this is maybe
the driver. Of course, from the economic aspect, but I don't vote, I cannot imagine that
Switzerland is not doing sanctions just because of the economy, I don't think so, because there's
more than that, they are risking other relationships with other countries like the United States and
I don't know, to European Unions. I would really check if it's not a political and economic issue
that they have this neutrality doctrine because it took real time for Switzerland to do sanctions
change on them.

Q5

Author: How does the economic decoupling between the United States and China impact the
global economic landscape, and what are the potential consequences for Switzerland's trade
sector?

Dr. Peter Raskin: Yeah, I guess this decoupling between the US and China was the way we
ever realized something was coming, but no one took this very seriously. I was in a meeting with
the chairman of IBB, the former chairman, and he said look, they're so crazy since they are
depending on China, this is not good because you must find a way out to get more independent
of China. The mobility issue problems and the prior issues, yeah, this was a wake-up call. Like

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when everyone was clever enough, they had to be more independent, have more suppliers and
have more relationships with other countries and not only with China.

Q6

Author: Given the historical trade data and the importance of both the USA and China as trading
partners for Switzerland, how has Switzerland managed to balance its economic relationships
with these two countries?

Dr. Peter Raskin: Switzerland’s ability to balance economic relationships with these two
countries stems from neutrality and as we know Switzerland has worked as a mediator in global
affairs and always tries to navigate potential conflicts and find acceptable solutions.

Q7

Author: How is Switzerland navigating the challenges and uncertainties posed by the growing
decoupling between the United States and China, particularly in terms of supply chain
diversification?

Dr. Peter Raskin: Switzerland is likely addressing the challenges posed by the growing
decoupling between the United States and China through diversification strategies and risk
management. Swiss companies may seek alternative suppliers for raw materials, instead of
relying on a single supplier companies may adopt a multi-sourcing approach. Some companies
may move back to the local market and expand their local manufacturing capabilities. These
approaches will help to control more the production process and reduce dependence on foreign
suppliers.

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Q8

Author: Talking about neutrality, as we saw in the Russian-Ukrainian War, Switzerland kind of
broke this neutrality in a way. Do you think that the Chinese are now afraid for the money that
they invested in these Swiss banks. What if Switzerland decided to break the neutrality again and
do sanctions on the Chinese people investing in Switzerland.

Dr. Peter Raskin: This was interesting to see because Switzerland sanctioned Russia and
Russian rich people, oligarchs and so on. Suddenly there was a shock, the rich Chinese and rich
people from different countries, said “Oh look, Switzerland is not safe anymore because they do
sanctions when other countries are sanctioned” In this case you're right.

Especially, we realized when there was this Hong Kong crisis, that the Chinese people did not
want to not go to Switzerland because they were afraid after viewing the sanctions on Russia.
They could be the same for everyone who's related to China. Most of the clients went first to
Singapore because it's closer but, also maybe safer for them because there was this risk that
Switzerland is not neutral anymore. As you saw a big debate in the Swiss press about the
sanctions. In my personal view, neutrality cannot help aggressors to survive or to do their
business. But you are right that exposing sanctions of this great crisis was keeping business from
Switzerland because clients were a little bit afraid resulting in the lack of trust in the facility.

Q9+Q10

Author: According to some reports In the last couple of years, Asian investments in Switzerland
have been declining because of the Financial services provided by Asian countries like
Singapore, China, etc... which almost equivalates the financial services provided by Switzerland.
In your opinion, how will Switzerland be able to recover?

Dr. Peter Raskin: For me, because I have some actual accounts on the contacts in Asia and
Hong Kong they are coming to a more holistic approach. To be honest, in Singapore and Hong
Kong the amount of family offices is growing and now they are starting the Swiss system where
you have this holistic approach that takes care of everything which is being sold as a family

94
service. But in the end, it's a pure asset manager since most of them are founded by investor
bankers. Therefore, they are more investment pushers, and product pushers so they only have
these investments. However, this is not comparable to the Swiss way.

I know one office in Hong Kong that they are focusing more on because they came here and
visited me to cooperate and collaborate with us. There was the Chief Investment Officer and the
CEO Lady. I've never had a Chinese Lady who spoke with me for two hours about philosophy
and religion very nice deep discussions. The Chief Investment Officer was brought together with
my Chief Investment Officer this was investment driven. It was funny to see there were some
people like us, but there are only a few because we never had it before which was interesting, but
I don't see the risk that they will really speed up with our level of services product-wise. if you
compare it with the holistic approach of our bank, it’s difficult for them because they are not
used to it, they have no expertise in succession planning because it's first, second, or third-
generation money and not the 15th. But, of course, there's more coming more driven by former
bankers of big banks. All are familiar with CSC and Hong Kong and Singapore, their former
senior banker at UB or very high, high HSBC so on. This is more like an external measure of TV
competition.

The reason why the people in this country go to Switzerland is because of trust. But I realized
during this Corona and Trump crisis, the Chinese wanted to become more independent from
European businesses, because many clients we had were approached by big Chinese companies,
and they wanted to buy big vessels so they're not depending on the Greek ship owners anymore,
they have their own fleet. Basically, they cannot be sanctioned at all. This was an interesting case
to see, because we got approached by a big company that wanted to help us they have shipping
expertise and wanted us to help them to buy and finance. Therefore, to China, it's the same, they
want to become more independent and really try to get everything into the country and do it by
themselves. This was one example we had there.

Q11

Author: What are the specific approaches that Switzerland can implement to effectively manage
this growing tension between the United States and China, and how can it ensure its economic
stability?

95
Dr. Peter Raskin: Switzerland is great to go for contracts, to do contracts between the countries.
Before Trump started this war with China, Switzerland was very keen to get a place to for
Chinese business.

I guess there was the first China Construction Bank or something like this Chinese government-
owned bank came to Switzerland, they did everything to get them here and maybe they wouldn’t
do it anymore, but it's more of the Swiss way to go for contracts, to close the contracts, trade, or
whatever, this could be a solution. But if all the other Countries are claiming China, I guess they
don't do it.

Yeah, in this case for me, it's more really a fight between systems. You must find out which
system you are in, try to find your friends where you are, and not jeopardize your friends by just
focusing on the business.

Q12

Author: In the foreseeable future, if Switzerland finds itself in a position where it must choose
to strengthen economic ties significantly either with the USA or China, which nation would be
the preferred strategic partner, and what factors, such as economic stability, political relations,
market diversification, or technological collaboration, would influence Switzerland's choice?
Moreover, how might such a decision align with Switzerland's long-term economic goals and
global trade interests, particularly in the context of the shifting dynamics between the USA and
China?

Dr. Peter Raskin: Of course, It's Europe and America. If you're in the city center of Europe, it
would be the worst to support China, Russia, and Iran. Therefore, for me, If Switzerland is
partnering with someone, they should partner with the Westernized world thus Europe and the
United States.

I see, maybe it could be that Trump started the war because he was realizing that Europe came
too close to Asia. Then suddenly you have another power there; that he doesn't want to have
therefore, he said look let's divide it let's give it this pill again as someone told me. I think

96
Switzerland will always follow the European way and they would never risk it otherwise; this
would be a disaster. Since they are also depending on other countries like the European Union.

Author: In conclusion, we can say that there is really an effect on the Swiss economy however,
Switzerland will recover from this.

Dr. Peter Raskin: Yeah sure, it's for sure. They will always find a way and they have big
partners in the United States and Europe.

d. Third Interview

Expert: Anonymous 1, Over 15 years of experience, Executive assistant to the vice

president at DOW

Company: DOW

Q1

Author: From your perspective, what are the key factors driving the decoupling between these
two economic giants USA and China? And how do these factors impact Switzerland
specifically?

Anonymous 1: Of course, the inflation in the US, is also affecting all of Europe and
Switzerland. So of course, our inflation has gone up according to the US inflation interest rates
going up and this is all like a ball rolling for everyone and we're kind of following. A little bit
there. And with China, do you mean supply chain or in general?

Q2

Author: I mean mainly this is about the let's say import, export, and financial sectors. Like what
are the key challenges and opportunities for Switzerland in maintaining its trade relationships
with both the United States and China, and how might this affect the Swiss trade sector?
97
Anonymous 1: Of course, you know, since COVID, we have big supply chain issues and since
we have all relied on China for, I don't know 30 years, because everyone wants to save money,
so they go to China to get cheap prices. But they have not realized that, especially since COVID,
they have issues producing manufacturing and delivering goods. So, we're all like behind with
the supply chain, I think a lot of companies, especially in Switzerland, want to go a little bit back
to the routes producing more in Europe and supporting their European economy a bit more. So,
we don't run into these problems in the future so much relying on China as well. I think everyone
is going back a little bit more to quality and certainly you cannot compare Chinese quality to
European quality. You know as well with all labor we have a lot more labor In Europe, we look
more after our employees with our human rights and stuff, and I think that in China is not the
same thing the way they deploy is the way the workers must work under which conditions. So, I
think we're all going a little bit back, more stay locally produced, and maybe pay even a little bit
more for goods.

Q3 and 4

Author: when Trump was the president of the US and that's when the situation really started to
be more, I would say, complicated between these two. How did this relationship during such a
period affect the trade relationship between Switzerland and China taking into consideration
Trump administration's policy decisions concerning China?

Anonymous 1: I don't think it would have affected. I mean the Swiss franc is very, very strong,
has been very strong for years. I don't think when Trump was president that he affected the
relation trade between Switzerland and China, I don't think so. Yes, I don't think he did. of
course, COVID has affected the whole world. So, we can't really specifically talk about
Switzerland. You know that import-export has been difficult in general because of a lot like
supply chain. But that has nothing to do with the trades or anything with the trade. In the
financial sector. I mean, if we even say that COVID has made even property values go up,
because people were just spending money differently, you know, they weren't spending it on
goods because they couldn’t, so they were buying properties, you know, for instance.

98
Question 5

Author: How does the economic decoupling between the United States and China impact the
global economic landscape, and what are the potential consequences for Switzerland's trade
sector? Given the historical trade data and the importance of both the USA and China as trading
partners for Switzerland, how has Switzerland managed to balance its economic relationships
with these two countries?

Anonymous 1 : I mean, Switzerland will always stay neutral, I think, and that's a good thing
they didn't want to join the European Union and they want to stay, like, independent. of course,
they try to play diplomatic. They're trying to be diplomatic with both. So, they're taking what
they need from these relationships. Of course, the US and China, US has sent, a few months ago
they have sent a lot of ships around China, and they're just they're waiting. It's a bit of a conflict
that could clash, of course, in the rest of the world we have bigger things going on. Moreover,
the world is a little bit imbalanced now anyway, with Russia, and Ukraine wars, which have
stabilized Europe a lot and if the US then would go into China and attack, that would not be
good. We are talking probably World War Three scenario and of course, now Gaza, Palestine
and Israel the Middle East is also not stable. Now this conflict is un-stabilized. So, you have a lot
of parties not happy, but I think Switzerland will try and maintain. But Switzerland didn't
maintain its integrity when they sanctioned all the Russians. They got criticized a lot. So, I don't
think they will try and take a position either for the US or China. They will just stay neutral.

Q6

Author: If we look at the export reports for Switzerland, it mainly consists of precious stones
pharmaceutical products, clocks, watches, and machinery. And both the USA and China, are the
biggest countries that usually buy this stuff from Switzerland. In the last years, did you see any
shifts in this type of export between these countries? How are these shifts influencing the
economic landscape in both countries?

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Anonymous 1: I mean often those things are regulated by law. For instance, Switzerland might
have different laws about drugs, for instance, in Switzerland, we can use drugs to do euthanasia,
which in a lot of countries is not allowed. So maybe China has a different law producing drugs,
you know, and maybe that's one of the cases, maybe they don't have the know-how to produce
these drugs. I mean, Switzerland has always been well-known for pharmaceuticals,
pharmaceutical companies, banks and goods like watches. So that's our branding, you know. I
guess they could produce those drugs themselves, or maybe they don't have the t law to be
allowed to do that.

Q7

Author: For this part, especially for the neutrality according to reports that the Chinese people
who invest their money in Switzerland are now afraid since wealthy Russians ultra-high network
people got sanctioned then the Chinese will at some point follow. How will this affect the
relationship between China and Switzerland?

Anonymous 1 : Of course, this chance is always here, but not if there is no conflict going on. If
there is a conflict with the US, probably that could be the case. But as long as there is no conflict,
there is no point because China has many billionaires, they have a lot of really, really rich people
who have bought tons of properties in Geneva, and Zurich, and they are big investors. They
invest big even though they probably don't live here. So, I don't think that Switzerland would risk
it. However, the Russians, of course, also invested a lot in Switzerland. But they had to kind of
take a position in that war to sanction the Russians. I don't think there is any conflict between the
US and China, that will not happen. They wouldn't sanction them.

Q8

Author: Do you see like a cooling of Swiss-Chinese relationship in the future due to the current
problem?

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Anonymous 1 : No, I don't think so. I mean, to be honest, I don't even know if Switzerland will
always stay attractive for investors because of the bank secrecy, of course, because of the quality
of properties we have, we have a high-quality country anywhere we have quality hotels, we have
quality that's what the Chinese like. You know, they come here, they can invest their money
safely. It feels like it's a safe investment and we'll have this quality stamp so I don't think it will
change anything, no.

Q9

Author: How's the firm you are working in is performing and had performed in the last few
years?

Anonymous 1: You know, gas prices have been affected because what we're trying to do we buy
raw materials like gas, different raw materials to produce plastics, ethylene, NAFTA or LPG, oil,
whatever. So of course, as oil prices go up, our margins become smaller. That's of course an
issue and you don't make as much money. We have those crackers one in Spain, one in Germany,
Berlin, and Tennyson, which is in Holland. So basically, we send them the raw materials, so
these crackers must work 24/7. Therefore, it's big, big sites with machines and it must go in and
then we produce the product which we sell to our customers. Thus, these crackers always have to
be running and have to have enough fuel to go. So of course, if the fuel goes up, the crackers
don't make as much money as they should do. So, this is the largest manufacturing. So, for
instance, ozone is the second largest manufacturing location in the world. And its central point
for delivering materials to Europe, the Middle East, Africa, and India. So yeah, this is one of the
crackers we have in Europe also, we have a second one in Spain and then a third one in
Germany, so. And then, of course, our biggest sites are in the US, so that is the US where we
have about 35,000 employees in the world.

Q10

Author: The Swiss Economy approximately have billions of benefits coming from Chinese
exports. Based on your previous answer, would Switzerland be able to recover? Would it be able
to gain these benefits from the US and the European countries? Or will there be a deficit?

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Anonymous 1: I mean in the end, you must think economically for a country, so that would
make more sense to go with China, but you don't want to jeopardize the relationship with US
guys. You must make a balance. What is more beneficial for a country.

Q11

Author: How can Switzerland ensure economic stability and resilience while maintaining
diplomatic relations with both superpowers?

Anonymous 1: The answer to that could be summarized in one word which is neutrality. As we
know Switzerland is known for its neutrality and diplomacy and it can use these strengths to
navigate through these conflicts between US and China and to stay away this economical storm.

Question 12

Author: Since the World is kind of dividing into two parts, let's say Western (USA and Europe)
and Eastern Parts (Russia and China). In your opinion, if Switzerland was to choose between
these two parts who would it choose?

Anonymous 1: I don’t know. I'm not sure. But it’s not logical If Switzerland chose China's side
to go with the Chinese because it's in central Europe, surrounded by the countries that support
America.

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e- Fourth interview

Expert: Rob Llewellyn, has over 15 years of experience, used to work as global head of
trade credit and political risk at Swiss Re. Currently, CEO and CO of Zenik
Solution Gmbh.

Company: CEO and CO of Zenik Solution Gmbh.

Q1

Author: So, from your perspective, what are the key factors driving the coupling between 2
economies Giants USA and China? And how do these factors impact Switzerland specifically?

Mr. Rob Llewellyn: OK. I mean, I had a thought about the way I'd probably look to answer this
and I guess the way I always look at it is there are there are two impact types. I think you know
it's either you know it's there's direct implication, indirect implication. OK, so when you start
looking at direct implications, I mean I would start looking at things like you know sort of trade
disruptions, you know, so Swiss exports and imports, you know facing immediate challenges,
you know from US tensions that lead to either you know sort of trade tariffs or any kind of trade
barriers, restrictions that are then. Potentially put in place. Currency fluctuations, you know, sort
of the if the Swiss franc actually appreciates you know and you know the haven for sort of
investors and using the Swiss currency as that safe haven may be directly affected and also. Not
to mention the big one, which I guess you've probably come across is that you know with. The
appreciation of the Swiss franc and then going to lead to export competitiveness, that's you
know, not overly great for any of the industry sectors or the manufacturing sectors or export
sectors for Switzerland, so then you've got commodity trading. So yeah, Swiss Three is a hub for
any kind of commodity trading that would then be directly impacted. Again, that's mostly
because of any of the sanctions. Then you have to look also at tariffs, but then you also
potentially have sanctions that you actually look in. So, if any sanctions get imposed against
people, companies or Individual goods or exports then that's going to potentially hit Switzerland
or to some degree not, I guess the wider view, I mean, and I guess this is still direct, is the
financial market volatility. Because you know, obviously there's going to be a significant impact

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as a result of, yeah, those two global markets clashing or decoupling themselves. So Switzerland
is going to get caught up in that because they are part of that global economy, so. And as a result,
I guess following on from that, if there is a downturn, then you've got a downturn in investment
flows, foreign direct investments, you know, bilateral tensions are going to cause, you know, sort
of problems towards you know the investor or direct investor. Influence on the direct investor
landscapes.

Q2

Author: Viewing the potential implications of economic decoupling on global peace, what are
the key challenges and opportunities for Switzerland in maintaining its trade relationships with
both the United States and China, and how might this affect the Swiss trade sector?

Mr. Rob Llewellyn: So I guess you know whether you like it or not. You know, you're sort of
going to be pushed into picking one camp or the other and sitting, you know, impartially in
between the fence could be more challenging. So you know, Switzerland has done a very good
job and had a very good career being able to do that and be impartial. So maybe they might be
able to navigate that quite well, but I think there would be that would certainly be more strained,
I would say then I guess if you look at the indirect consequences, I would then probably be
saying things like you know the global economic uncertainty for the future. What does it look
like? That would be the biggest one of the biggest concerns that you have because uncertainty is,
is what breeds then you know, reduces productivity, any kind of downturn in confidence in the
market then leads to. And you know, sort of less investment and less opportunity. So that's an
indirect situation that will play out regulatory change, massive uncertainty there. What does that
look like with a completely decoupled US and China relationship? Again, how does that affect?
Can you be a, can you be a country that can play, you know, in both camps kind of thing? You
know that's I think something that. That's going to affect everything. I mean, you think about all
the contracts that are currently in effect and the jurisdictions and the and the you know. Where
those things potentially being arbitrated, houses of arbitration, seats of arbitration, how that
always going to play out, are you able to then deliver through the normal channels that you
would normally be delivered and distributed through? Yeah, yeah, there's a lot of problems there.
Yeah, global government governance shifts, I guess as well sort of going back to that regulatory
shift. Yeah, I think you know you've got.

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Q3

Author: if we talk about like a certain time when Trump was elected as president of the USA,
and I think mainly that's when the problems started to show in the economy in both countries
why the sanctions and everything, did you see an effect?

Mr. Rob Llewellyn: Yeah, I mean, well, yes, I thought, I mean you have to see the effects I
mean the effects you know are I think even at this moment in time, playing out in the Middle
East. I mean so. In some ways, the effect of Donald Trump was actually for America to start
taking a step back as the global economy and the global peacekeeper and the global regulatory
body, as well as you know. Potentially the talk of what people were talking about was also the
US taking a step back as having the US dollar as the global currency and economic leader. And
so to take a more nationalist view as. Ultimately led to destabilisation generally across the globe,
and I think that's playing out quite fiercely. Let's say sort of in the Middle East at the moment
where you. Know the sort of. The US to some degree, whether you like it or not, is worse sort of
playing the policing party or the OR the policing entity. Throughout the Middle East, and since
they have completely sort of, you know, sort of exited themselves from that region, there's them
in this kind of sort of fight to fight for, OK, who's going to be top dog or who's going? To you
know. Be the dominant power in that. And that means there are lots of people there dying for and
jockeying for position and political position, you know, in that open environment at the moment.
So there's certainly been a, you know, class as a yeah, a knock-on effect there. And I think that
could be one of the dangers potentially again. You know a second term of, you know. Sort of
you. Donald Trump being elected again would be that you know, all of them, the rhetoric and
things pointing to him potentially, you know, starting to move further away from, you know, sort
of the. You know the UN and the and the G20 and its contribution and then certainly
contributions that it's making towards you know, all of the current conflicts around the world and
most namely most notably the Ukraine conflict conflict so. Which obviously will only create
further instability. You know sort of across the globe, the globe really with that with them taking
more of a backseat. And I think it's a very short-sighted and short-term view that points towards
nationalism being you know sort of prioritised or the US, but ultimately them losing their

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standing is. Going to ultimately lose them their foothold in the world and themselves, as that
economic superpower, which again doesn't necessarily bode well for, you know, their
relationship with China, but then. With China, they've got other problems with their sort of
population and demographic and how they're going to sustain their economies and that kind of
things in the future as well. So are we even talking about the right kind of superpowers at the
moment? So really, if they both fade into the background so.

Q4

Author: Yeah. What are the significant effects of the Trump administration's policy decisions
concerning China, such as the trade war and restrictions on technology and investments, affected
Switzerland's trade sector?

Mr. Rob Llewellyn: Yeah. I think to some degree, you know, Switzerland doesn't necessarily
benefit so much from that, but certainly, you know the whole restriction and downturn in you
know sort of that area is going to have some impact as to the amount of money or available
capacity for any kind of investment which does happen from Switzerland so. And then the last
one, which I think it directly probably to do with research and development, I would say so. You
know any kind of collaboration and that's across you know multiple technologies or sciences or
education programmers or sharing of data and information, that kind of thing I think could
certainly be restricted.

Q5

Author: Yeah. And if we focus on Switzerland now, like during your work, did you sometimes
get sad about, like, not being allowed to do business? An insurance or something with the
Chinese companies or something like that.

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Mr. Rob Llewellyn: Yeah, absolutely. I mean, there's there's lots of nuances that that play out
and they've always kind of been there. And I mean there, there's China has always been a funny
one where they've had and they've got better. Let's put it that way. So initially there was perhaps
one or there were issues. If you're gonna start, let's say, an insurance company or work with
Chinese insurers, especially locally, they had ownership caps. So as a foreign investor or as a
foreign insurance company, when you set up your local insurer, you're only able to have
potentially 50% ownership. And then you had to have a local partner who was also then a 50%
owner. Now over time, and I mean in the more recent times probably in the last, I mean I was
last over in China in 2000 and 1617 and there are certain restrictions on even the business that
you're even allowed to do because they have, they've tied up monopoly over that kind of
business. So, therefore, yeah, you're not even allowed to compete with the local market on that
and then the local market has to go to this local government-owned insurance company 1st as a
first refusal. What they are actually, but what it looks like even in the last so-called five or six
years, they have certainly allowed for greater ownership of Foreign-owned insurance companies
and also then brought down some of the restrictions as to the allowance of those local companies
or corporates to be able to procure insurance from overseas insurers, which let's say the Chinese
insurance market is a lot more restricted from an international marketplace than the US. Then
you've got things like the regulatory approval and then there's market entry limitations. As I said,
product restrictions and you've got capital requirements are subject to a minimum, so you've got
minimum capital requirements which are relatively hefty for your classes like non-admitted, non-
localized insurers, the licensing requirements but this is in both cases are pretty extensive and
then security issues, which is another area of issues which are kind of playing out you certainly
potentially got more security concerns if you are operating in China. So, what I've seen is that
when I've worked for insurance companies, you tend to try to be very careful about the firewalls
you have between your Chinese entities and then your entities to make sure that your globalized
data and company or corporate data isn't then being pillaged. Let's say so, and then you've got
things like. You know, currency controls taxation. Yeah. And I and I kind of talked about it as
well as like the local concessions, but there's nothing, I mean, let's say that's overly unusual about
what China does from an insurance point of view apart from, let's say it's more restrictive than
what you have the only one of the big differences, let's say compared to someone like the US, is
that once you become you can operate in the US as what they class as a non-emitted carrier and

107
want to meet the carrier basically gives you is that if you are assigned and you have a status as a
surplus lines or admitted carrier you can then benefit from these state bailouts. So, if your
company goes under with a load of obligations to it, then the government will bail you out. If
you don't, then you basically the government don't step in at all because you're a non-admitted
carrier but, when you issue your certificates of insurance and those kind of things you issue it
with a thing called a chicken letter where you used to anyway, which is, yeah, it's the nickname
for it. It's a declaration that says, please be aware that this is a non-admitted carrier, and that
there is no fallback. If the insurance company goes bust, then you know generally you're using
your credit rating and your credit writing is a reflection of your liquidity and your ability to repay
those claims, so the volatility and stabilization of your organization. But that's something that's
quite a bit more unique to Switzerland than, let's say, the European, whereas there isn't, I don't
know of any such law regulation existing in China at all because they're not going to extend that
kind of courtesy to within China.

Q6+Q7

Author: Given the historical trade data and the importance of both the USA and China as trading
partners for Switzerland, how has Switzerland managed to balance its economic relationships
with these two countries? particularly in terms of supply chain diversification?

Mr. Rob Llewellyn: Switzerland has had a remarkable ability to balance its economic
relationships between the US and China mainly and between different countries through
combination of policies and a commitment to neutrality. Concerning the supply chain
diversification of trade partners helped Switzerland a lot we can notice how Switzerland is
connected to almost the whole world. If we talk about service sector mainly financial
Switzerland positions itself as a global financial hub and has facilitated economic ties with both
USA and China, in addition to the role that Switzerland plays as a bridge between these different
markets.

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Q8

Author: OK, so now if we move to the Russian-Ukrainian war and we saw that maybe for the
first time, Switzerland broke its neutrality in a way and they kind of blacklisted and froze all
their accounts for the Russian people, whether they are with or against this war, just because
you're Russian, then it's frozen. So I read the reports that also the Chinese investors are kind of
afraid. They say, well, if Switzerland in a couple of years decides to also sanction the Chinese.
Because of the US pressure, if we can say so, how is this effect and how would Switzerland try
to maintain the relationship?

Mr. Rob Llewellyn: Well, it's not a blanket. I think you gotta remember, that it's not a blanket
sanction. Sanctions are never a blanket. Generally, sanctions work in kind of three levels you
have an overall country sanction, but in those country sanctions, you generally have then certain
corporations that get sanctioned. Then you have certain people who get sanctioned and generally,
it depends on the association with ultimately the government that how those sanctions then draw
down to say that at the moment Switzerland is somewhat sanctioning Russia. It's true to a degree.
But those sanctions aren't to everybody you can still I mean it's more challenging to send funds
and send money to and from, you know, sort of any kind of Swiss entity into Russia, but it's not
impossible, and it's not illegal, let's say and also you know, it doesn't apply to everybody. It
doesn't automatically mean that just because you are Russian or you're living in Switzerland as a
Russian person or anywhere around the world, that's a Russian person that you are open to these
sanctions, especially if you're not localized or living in Russia. And even if you were, the
difference is it's just that there are more challenges, let's say, and fewer options open to you to be
able to facilitate. Now also you have to bear in mind that there is always work some of those
workarounds have come out through the Middle East through Dubai and those kinds of places
where the funds just get channeled through some intermediary and that's true of money
investments or even capital goods, that kind of thing and potentially services. So I think there's
always a workaround. If I was Chinese saying OK well. How would how would Switzerland
view that? Well, I think this is this is different there. There's a very different dynamic in much
that if China invades Taiwan and then starts having an all-out war with Taiwan, that drags the

109
US into it and everything else, then there is more of a case of picking sides. If you feel there is a
need to, but again you know this is something where you would say that there would still be a
mediation that's kind of going on and everyone would still be trying to claim neutrality whilst
this is going on with the US and China the sanctions would be coming in from all corners, but
you also have to think about with sanctions as well. As for the sanctions, I'm a bit gassed about
this, that sanctions don't work as well as I'd hoped they would have. Because, they're not global
and they're not universal so you know, even though you know there may be some sanctions
coming, even if some sanctions were coming out of the European Union, the European Union
would have to have causality as to why they are then looking to sanction the Chinese and just
because there is a dispute between China and the US doesn't necessarily mean that they then
actually have sanctions. Russia was a different kind of thing because they believe that there, you
know, there were clear breaches of the Geneva Convention and invasion of what is classified as a
sovereign entity and which, you know, sort of goes against everything we hold dear in the
democratic, modern world. So, unless China starts invading somebody or starts, then, you know,
using force and violence to impose their will on the world. Then I think the sanctions will be
relatively limited. Coming certainly out of Europe anyway.

Q9

Author: in general, the main point is to see if there is an effect on the Swiss economy. So, I
believe that we can say that there is kind of an effect because if I look at the charts and
everything we see that the relationship like say trade or export-import mainly it's always
increasing and there's no like decrease or like a cut off between Switzerland and the US or China.
Maybe there's a little bit of like we said, like fear from investing in the banks because of
sanctions, maybe future sanctions, but do you see a change of patterns in this? Investments or?

Mr. Rob Llewellyn: I haven't. I mean, I think the place that I would look is, I mean, look at the
long-term bond yields from China or the US because they can give you, I mean, you know when
you've got 30-year bond yields and those kinds of things and it starts to give you a bit of a
picture as to you know how investors are viewing those long term risks because if you know you
have an investment that's ultimately tied up in a long term transaction and with a long term
outlook well, you know, obviously you have to be concerned whether or not you know that's

110
going to be impeded in some kind of way and that's always a good metric to sort of you know
along with some of the long term CDs spreads and things like that to start forecasting as to what
the investor sentiment is. But I don't think sanctions are an issue here. Unless there's an outreach
or unless something significant happens that you know is there and must be an outcry. The
outcry can really, in modern times, really only be triggered by there being some kind of violation
that would the only violation I really see China doing would be the invasion of Taiwan, which
could potentially then invoke sanctions, but you also have to remember that what's different to
Russia as well is that any sanctions they invoke are also then going to dramatically hit the
economies of Europe and America as well because, you know, China is only just a huge
production, a producer of goods and services they also consume a lot as well, so that would
obviously massively import the exports of a lot of those countries that are looking to sanction
them and I just think that's probably a very last resort that they want to get to because that's
gonna cause some significant volatility or not significant volatility talking market crashes really.
Whereas let's say a disagreement or a decoupling between the US and China to a more
significant degree than we've already seen. I mean, yeah, you're going to see a downturn
potentially in the economy and you're going to see less of, you know, sort of global exports and
trade potentially diminished, but then they'll find their routes through other it provides
opportunity in other areas. If you're not getting the things that you wanted from China or from
America where you're getting them from to some degree. You've already kind of seen that play
out where this decoupling happened. If you look at the cost of actually producing goods now
with the human capital and the cost of the human workforce in China, it's now three times higher
than it is from Mexico. Mexico is on the border with America therefore, you see a lot more
production shifting. I can see that being a more realistic transition as to more of that work going
South of the border kind of thing rather than finding a replacement for China as other countries
might also look to do well. That's maybe going to be a natural way that has to go anyway,
because obviously with the diminishing, working-age population within China and their ability
to maintain those manufacturing levels and you know sort of production levels at cost-efficient
price is going to be somewhat limited.

Q10

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Author: OK, so Given the unique trade dynamics with the United States and China, how is
Switzerland addressing potential trade deficits and adapting to evolving economic circumstances
in its key trade relationships?

Mr. Rob Llewellyn: Its nott going all rosy , because of the Swiss banking laws, and the
overreach of America wanting transparency over the Swiss accounting systems and accounts. It's
made it a lot more difficult if you're an American citizen to live in Switzerland and open a bank
account. Because if you have now, if you go to a Swiss bank and try to open a bank account,
they always as a question the only country they ever ask you about generally, you could you can
be from anywhere really apart from if they say if you're you a U.S. citizen, you have to go
through a much, much tougher sort of set of procedures because of the bank banking secrecy
law. Which have become a bit of a headache, for the Swiss Government, and unfortunately it's
one of these kind of situations where the Swiss have had to bow down to this. This is the
American superpower telling them what they want and what they want to do so, what they've
done instead if they just made it more difficult for American citizens to have bank accounts over
in, the EU in Switzerland, for them not to jump through so many hoops with the US. So that's
one concern. Switzerland understands the pecking order, they understand where they are it's just
that they can get ordered about by the US to be pushed around and told what they need to be
doing and they will do it. So, to some degree that also points towards the fact that you know, if in
the future they have to ally, that alliance is more likely to be with the US as well. I would say,
but I would say, I mean one of the interesting things, if you had to make a case as to who they
would put, I think that having a look at the demographics side of it is also a really interesting
thing to look into because if you are doing a long term investment and a long term partnership.
You want to be betting on the right horse. And you know you need a horse that is still gonna
have some legs. You know, but you know in 5-10-15-20 year’s time kind of thing because, if you
back the wrong one then you a bit ********. So, I think that would be a key area to look into to
say what is the long-term viability of China versus the long-term viability of the US. I would say
that there's a quite as large contrast between how they would probably look, especially when you
start looking at the population consideration and what's out there at the moment. China released
their numbers to The WHO earlier this year, and the numbers and everyone knows that the
numbers it's generally recognized that the numbers that are released by the Chinese government
are generally fictitious, wrong, and spurious, but the numbers they released look terrible. So, if

112
the numbers look terrible and we know they are numbers that are not real, it's probably even
worse than that. I think in some ways that also gives me a little bit of comfort is the way the
Russian war and the Ukraine war, you know, the Russian-Ukraine war has played out. You
know, it's not just been this, this clean sweep, across into Russia, across into the Ukraine. And
it's caused a lot more problems than China is not like they don't want the brazen head-on clash.
They're very much more subtle and subversive and use underhand tactics sort of the killing them
softly approach kind of thing and I don't think from a financial point of view wars are very
expensive and that's the last thing they need to be doing. Disrupting their economy is one thing
and then fighting the war on the other side, which is also very costly, is only detrimental to their
situation where probably they need as much money as they can going forward. They are then to
try to branch out from the current situation they're in

Q11

Author: OK, so if. If we talk about the short term in Switzerland, we can say that yeah, of
course, there is an effect on the economy, but it's not a major effect. It's almost negligible maybe.

Mr. Rob Llewellyn: Yeah, I mean, well the short-term effect, again depends on what happens in
with the elections in the US. If we're talking short term, I mean if it is, I thought it was January
24 was the election but, I could be wrong seems like it's a bit close. Therefore, It would be more
run up to it. But ultimately to me, it's going to be predominantly the next biggest shift, unless
things completely unravel in the Middle East with, you know, sort of Iran stepping into the
conflict more seriously. And then it just escalates in a big kind of the worst thing that could
happen is that it turns into a sort of another Syrian dispute where, you know, superpower starts
playing out there. You know this game of chess in someone else's back garden kind of thing and
destroying the region and countries along with it. Seeing how that can is going to play out, but if
let's say the Republicans win the election, then you would potentially see a lot more

113
destabilization, I think happening in the short term, in my view and that's because I think there
will be more. Although their nationalization from the US, which then leads to more
destabilizations around the world, potentially so, that's kind of what I would see, thus the
uncertainty in the trade environment and the investment market.

Q12

Author: in your opinion, in the foreseeable future, if Switzerland finds itself again in a place to
choose between the USA and China. Which side? It will be better to go with it just either USA or
China. If we say let's like the countries are dividing into sides and choosing sides.

Mr. Rob Llewellyn: I would say the US, in my opinion, because China in the next 10 years is
going to have some mega, mega problems. These aren't problems that I think can be solved
unless they start importing people from other parts of the world, or they start being able to
delegate into Africa well to start delegating manufacturing into other countries or other
emerging, you know, emerging countries that where they can start. Yeah, getting decent. You
know, cheap human labour effectively, but that will require massive amounts of investment,
which is part of what this sort of 1 belt, one Rd projects as kind of initiative is trying to been
focused on. But I think the level of investment is even more significant whereas you look at the
US, it's still very well established they still have, even with the nationalized outlook there is still
room for a lot more growth there, room for a lot more upturn. And it doesn't look as if their
demographics from, you know, their population demographics aren't looking as dire, let's say as
you know the ageing population as China potentially is. So if I said that if I was going to hedge
my bets as to where I'd put my money, it would be in the US, I think over China, unless China
has some, sort of miracle up their sleeve that they can pull to sort of get themselves out of this
issue that they're going to be facing imminently so.

f- Fifth interview

114
Expert: Mrs. Danting Liu has over 15 years of experience,

Deputy COO/CFO of a private bank in Zurich.

Company: Private Bank in Zurich

Q1
Author: From your perspective, what are the key factors driving the decoupling between these
two economic giants (USA and China), and how do these factors impact Switzerland
specifically?

Mrs. Danting Liu: I just tell you one thing that I just realized recently, like strongly. In sense of
the relation between US and the rest of the world is. Although Switzerland somehow announces
still to be neutral, but in terms of the financial sector, we follow very strongly on the US
sanctions and of course we also follow the EU sanctions and different sanctions, but U.S.
sanctions are number one. The whole world and especially banks must follow because if you do
not follow those ones, there will be a huge impact. It's the USA, the whole transfer the whole
bank will be canceled everything is U.S. dollar related. So that's dependency number one.

Q2

Author: Viewing the potential implications of economic decoupling on global peace, what are
the key challenges and opportunities for Switzerland in maintaining its trade relationships with
both the United States and China, and how might this affect the Swiss trade sector?

Mrs. Danting Liu: The world between Russia and the Ukraine happened, right? And then
suddenly the whole world must follow very, very, very strong sanctions. And then you can see
the EU and Switzerland also follow the same sanction. So that's the one impact. I would say the,
the one to indicate. The rest of the world, how strong the rest of the world is dependent on USA
more than China, you see you see from the details like if everything is fine then everything is
fine. But if tensions happen between US and the rest of the world then you know exactly which
rule you must follow.

115
Q3 and Q4

Author: The relationship between the United States and China has been marked by ups and
downs, especially when President Trump took charge. How did this relationship during such
period affected the trade relationship with Switzerland?
What are the significant effects of the Trump administration's policy decisions concerning China,
such as the trade war and restrictions on technology and investments, affected Switzerland's trade
sector?

Mrs. Danting Liu: Well, I don't really think so, but I would think would really impact the whole
world was it started already at Obama that the US general economy like pushed by printing
money strategy has of course a very strong impact on the whole world. And that's I would say, if
the US is doing well, then the whole world is doing well. That's the indirect impact. I would say
for the sanctions that Switzerland is following or not following. It's probably because those ones
have a limited impact to Switzerland itself otherwise. Switzerland will be more cautious on
behaving on those sanctions. Yeah. And, like US, even they increase, they increase a lot of taxes
of import goods from China in different sectors in different ways. They increase quite a few. But
in general, if you still look at the big pictures of general the impact is still limited, right?In
certain sectors, of course, you're fighting with telecommunications. It's very hard side. They don't
just do sanctions across the whole industry. They pick up some certain topics, which is probably
just, I don't know, for the whole picture of economy, it's maybe just 1% or even 0 point
something. The politicians, they are not stupid. They do look at the impact.

Q5

Author: I mean we we've seen this, like you said, when they sanctioned the Russians. And I saw
in some reports that the Chinese are kind of afraid. They said OK, maybe Switzerland will also
decide to sanction us, maybe in the future. And this is maybe affected the investing in
Switzerland by Chinese people.

116
Mrs. Danting Liu: No, no, no, it's a different way I would say like. So, if we're talking about
now this year, I don't or let's say during COVID the post COVID because the economic situation
in China has dramatically changed, right since COVID the economy really let's say was really
cut. If you see the number, it was China always to try to say a soft landing, never hard landing,
but indeed it was a quite big impact. So, it's turning down actually. And then you also see like
the whole world is hiking the rates and Chinese only one who cuts through it, one of the very
little and it's the reason it's a reason because the economy is not really doing well and hugely
impact the COVID. But before COVID, let's say while China was still very active, it was rather
the restriction of Switzerland or the Europe side, if you have heard the story, Chinese is buying
everything like put a lot of investment in Europe and also in Switzerland and buying like big it's
a good value corporate and especially the very big ones and that.I would say that appetite is for
sure still there from Chinese, but it has been a tightened by Europe, the whole Europe and
Switzerland also follow somehow. I've read articles about it that Switzerland says we should take
the experience, or at least look into the experience of Europe, how Europe behaves on Chinese
huge investment coming like let's say, the money coming from China and invest in Europe, but
it's not a bad way to stop this, but rather make it more regulated. So that's also something. Then
you see articles like Chinese want to buy this and that? And got caught or stopped by the
European governments or whatever, it’s too big, too high political risk or exposure whatever has
been called off quite a few. So, I would not say this would be some concerns for Chinese not to
invest. In Europe, in that sense, because of the sanction. Because the sanctions that happened are
still very limited. It's not that US is sanctioning the whole Russian it is only on certain companies
or let’s say certain sectors or people that support a kind of entities, then we can say that sanctions
are still limited.That will not impact, I would not think that that would not have impact on the
Chinese appetite of in having investment in Europe. But the other reality is, is the economy in
China is not working very well. So, there will not be a lot of free money to just transfer abroad
and make further investment, that's another problem.

Q6

Author: If we start from the economic decoupling in general. Like you said, it's. Two systems,
and so and we talked about the factors and how its impacts Switzerland. How do you think
Switzerland can maintain its trade relationship with these two countries like US and China?

117
Mrs. Danting Liu: Well, that's every country tried to play neutral, and Switzerland is kind of
doing a good job in staying neutral between these two countries. At the end Switzerland cares
about maintain it is economic stability and to keep on being seen as the safest country for
investment.But if the relationship is between US and China, which I think it will remain in some
reasonably good way, there will always be tensions here and there in some particular sectors,
particular areas. But the general relation between US and China, I don't think it will really
collapse or totally decoupled or being enemies again. I personally don't think so. So, for that, the
impact of Switzerland is rather small, but potential risk could be is that everyone's just starts
searching for their own alliance right US is also having their alliance like Europe that they say
the Western countries. China is of course also they are also searching their own alliance in Asia
and Africa maybe South America, or the developing countries.I do not see China there yet.
Maybe their purpose, but I don't think it's in terms of. Political economic impact of China is still
not I would say, half of the weight of USA. Because, I mean, if you look at the major economies
of the world It's not there. It’s very it's also very hard for China to really have those kind of
alliance countries. Really having the same impact as US have, that's long term to go for China.
So, in that sense I personally would not expect Worsening situations a lot like being significantly
worse and impact the rest of the world. It's rather it's always the fight for power. Sometimes here
it's the topic here you have more tensions here and you search for more collaborations and. That's
it has been doing that for many years. Yeah. And I think it's gonna maintain this for Switzerland,
I would say. For the relevance of Switzerland or Switzerland as the relevance for US and China
is. Not that significant yet rather limited.

Q7

Author: In conclusion can we say that there is an effect on the Swiss economy right now from
this decoupling that's happening?

Mrs. Danting Liu: No, I don't think so. Look Switzerland is a highly developed and export-
oriented economy, but Switzerland is known for it is neutrality and it always tries to maintain
this title. Effect wise there is no affect, and we do not see any effect on the economy when we

118
talk about the trade financial sector and exports imports between Switzerland and the US or
Switzerland and China. Right. like from the number you don't see any effect, because I mean,
like if you look at Swiss economy in general, the unemployment rate and the inflation rate and
the general health of the economy, Switzerland is doing great, I will say one of the best at the
time being, so for the impact it is almost negligible.

Q8

Author: Yeah. OK. And the relationship between the Swiss and Chinese, how can you describe
this relation?

Mrs. Danting Liu: What I would say there is always ups and downs. Generally, it's getting
better. I think they even sign some agreements; they keep on signing every couple of years a
bilateral trade agreement, and they are always setting up agreements. Right. No, I don't think it's
like from the number. You don't see, yeah, because I mean, like if you look at Swiss economy in
general. The unemployment rate and the inflation rate and the general health of the economy,
Switzerland is doing bad, I would say one of the best at the time being so. For that impact this.

Q9

Author: Have you observed any shifts in the investment patterns of Chinese businesses in
Switzerland or Swiss businesses in China due to the changing dynamics between the USA and
China? How are these shifts influencing the economic landscape in both countries?

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Mrs. Danting Liu: Well, I would say like it was a big shift like 20 years ago, maybe it started
when the whole world was trying to build their factory in China and now the situation of China
has changed because the labors in China are no more very cheap and the labor have shifted from
less skilled to more and more skilled and that's why in the past was rather textile industry moved
to China but now they are kind of moving out of China. They're moving to Vietnam, Indonesia,
Bangladesh where the other factories like assembling chips and those ones which requires a bit
more skilled labor also IT those ones are moving more to China. So, China is shifting its own
industrial segment, and, in that sense, I don't know what the mix of Swiss companies. What kind
of productions? They literally still having in China or planning to move to China or move out of
China, it's. I would say it rather depend on how the Chinese labor segment looks like. I couldn't
tell these unit numbers. This is something you must investigate the numbers. Because even
though even when I know some of them who are doing their factories or productions or whatever
sells in China, it does not represent the whole market. For that you need the data to see how the
market has been affected. But generally, whether you are doing investment in some certain.
Interest is. The different ways of investment the classical way of having. Investment in China is
rather because of outsourcing. You are actually building your factory also and it's not really
outsourcing you are building new factories in China to save to cost, you are opening some
branches in US or in China because you want to open the cells so there is different ways of
having investment or some others, let's say it's just a pure investment, I'm not investing in my
own company, but I'm investing in some foreign companies because I believe that the market
there has a potential.So, there are different ways of investment, and it was always a high barrier
for foreign people, even just opening factory or just open whatever a brand in China or just doing
investment in China, it's regulated in different ways than US and the barrier is very high. For
those activities and just the language barrier is already high. It depends on I would say I don't
think those ones truly affected by US or China, but it's rather to be between the bilateral
agreement Switzerland and China, and what China offers the Swiss companies having more
convenience you the easy way to open the branch or to run their investment. That's rather would
impact more the flow of investment is the policy itself.

Q10

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Author: OK, now if we focus mainly on Switzerland, not Europe in general and the question is
like given the unique trade dynamics with the United States and China, how is Switzerland
addressing potential trade deficits and the debt thing to evolving economic circumstances? And
its key trade relationship. Only Switzerland like. In case something happened, how Switzerland
addressing potential trade deficits? That’s

Mrs. Danting Liu: Import. What do you mean? Like I don't think Switzerland has a trade deficit
with China, I think. Switzerland well to be honest, I don't know. I think I'm not sure whether it's
true, but I've read some articles a. there were always some assumptions and guesses or
discussions about Switzerland should Develop their own strategy exactly to those situations to
the China trying to build up more alliance and in between US and China. I think there have been
discussions there, but I don't think that Switzerland so far has a very clear strategy. How to really
deal with those situations, but it's also depended it on what kind of conflict will happen between
US and China. I mean like, if it's a physical war, it's different than if it's just a trade war It's
different than if it's just a currency war.

Q11

Author: how has Switzerland managed to balance its economic relationship with these two
countries? With all this tension between the US and China.

Mrs. Danting Liu: I guess that's the way always Switzerland trying to do is trying to be neutral.
Just do not pick side but if that will be one day, Switzerland will have to pick side, then it will
hurt.

I don't think it will reach that level, so that Switzerland will have to pick side, which I don't think
so. I personally don't think so. I think the general relation between US and China is still
improving. You have local conflicts. But the general relationship between US and China it's still
working there. It will only fit the interests of US and China if both have a good relation. None of
the countries will risk being enemy of the other.

Q12

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Author: And since we are now here, it's one of my questions. In the foreseeable future, if
Switzerland finds itself in a position where it must choose to strengthen economic ties
significantly either with the USA or China, which nation would be the preferred strategic partner,
and what factors, such as economic stability, political relations, market diversification, or
technological collaboration, would influence Switzerland's choice? Moreover, how might such a
decision align with Switzerland's long-term economic goals and global trade interests,
particularly in the context of the shifting dynamics between the USA and China?

Mrs. Danting Liu: If yeah, if it's status quo, then it's for sure US because the US has a much
greater impact to Switzerland also culturally. But The thing is that if you are going to that day,
you don't even know where China is standing. We can look at the current situation that we live
now when Switzerland and the whole Europe followed the US sanctions against Russai, the gas
prices almost doubled or tripled, but when we focus on Switzerland, we can see that they were
able to manage, yeah despite the increase in process the economy was not highly affected, and
the prices are now falling again.So, I guess Switzerland will always find a way to cover from its
losses, it is a rich country with a powerful and stable economy, strongly related and connected
with almost the whole world, then I think it will manage to recover from any impact.

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