By Qaiser Nawab, Chairman BRISD
In an era of intensifying strategic competition, the persistent reliance of American enterprises on the Chinese market and supply chains offers a sobering counterpoint to narratives of easy decoupling. From consumer electronics giants to leaders in artificial intelligence, many US companies continue to depend on China as both a critical marketplace and a manufacturing backbone that remains difficult and expensive to replace at scale. As Washington considers further restrictions, the practical economic realities facing corporate America deserve honest examination.
This dependence stems from decades of integration. China is the world’s second-largest consumer market and possesses unmatched manufacturing scale, speed, and cost efficiency in key sectors. For America’s AI ambitions, these links are especially critical. The massive build-out of data centres, servers, and high-performance computing infrastructure relies heavily on components and materials where Chinese production dominates.
Market Access and Corporate Revenue
China remains a major profit driver for flagship US firms. Apple generated approximately $64.4 billion from Greater China in fiscal 2025, accounting for roughly 15.5% of its total revenue of around $416 billion. Its supply chain remains deeply embedded in the region for assembly and component sourcing. Tesla derived about 21% of its revenue from China in recent reporting periods, with its Shanghai Gigafactory serving as a vital production hub for both domestic sales and exports.
Broader surveys of US businesses operating in China show that a large majority continue to report stable or growing revenues despite geopolitical tensions. This exposure extends well beyond consumer electronics. Semiconductor companies, industrial manufacturers, agricultural exporters, and firms in chemicals and machinery all maintain significant stakes. When tariffs escalate, the impact lands on American boardrooms, factory towns, and farming communities. Past trade disputes demonstrated how retaliatory measures can lead to billions in lost sales, often requiring government subsidies to offset farmer losses.
The economic logic is clear. China’s middle class, despite cyclical challenges, offers unmatched scale for premium products — from vehicles to smartphones. Rapidly abandoning this market would force companies to seek replacements in economies with lower purchasing power or weaker infrastructure. Gradual diversification is prudent, but abrupt rupture risks ceding market share to local Chinese competitors or faster-moving third-country players.
The AI Imperative and Supply Chain Realities
The interdependence is most pronounced in the AI sector. America’s push for technological supremacy depends on an unprecedented expansion of data centres and computing power. Yet critical inputs trace back to Chinese supply chains. China controls approximately 90% of global rare earth processing capacity, materials essential for magnets used in electronics, motors, and specialised semiconductor manufacturing. Diversification efforts have advanced slowly due to technical challenges, environmental costs, and long lead times.
Electrical infrastructure faces similar constraints. Transformers, switchgear, and large-scale batteries — vital for powering and stabilising data centres — remain heavily dependent on imports, with China holding dominant production capacity and cost advantages. US data centre projects have encountered delays due to shortages of these components, compelling continued reliance on Chinese or Chinese-linked sources even as companies attempt to diversify. Power electronics and battery storage systems, crucial for managing the enormous energy demands of AI training and inference, further expose the gap between policy goals and supply realities.
These linkages extend to precision assembly ecosystems. Integrated supplier clusters in China produce components for servers, networking equipment, and devices with efficiency that is hard to replicate quickly elsewhere. While US policy pursues resilience through friend-shoring and domestic incentives, the transition raises input costs that flow into consumer prices and corporate margins. In an economy already sensitive to stagflation risks, such added pressures could hinder the very innovation drive Washington seeks to accelerate.
Critics rightly warn that heavy reliance creates strategic vulnerabilities, particularly in sensitive technologies. Targeted safeguards in those areas are necessary. However, broad decoupling overlooks how US firms have used these efficient supply chains to focus on high-value design, software, and innovation rather than commoditised production. Aggressive severance risks higher costs and slower iteration cycles at the technological frontier.
Pragmatic Engagement as Strategic Wisdom
From Pakistan’s perspective, global supply chains function as complex, interconnected systems where disruption creates widespread costs. A strong, technologically advancing United States benefits global stability through trade, investment, and innovation spillovers. Overly confrontational policies that damage American competitiveness ultimately serve no one’s interests. Emerging economies rely on stable commodity prices, open sea lanes, and measured great-power behaviour to advance their development.
The responsible path lies in calibrated policy. Washington can maintain strict export controls on sensitive technologies while keeping commercial channels open for non-strategic goods. Targeted diplomacy on imbalances, intellectual property, and overcapacity can produce incremental gains without destroying mutual value. American businesses frequently advocate this balanced approach, noting that engagement delivers leverage and market intelligence that isolation cannot provide.
Economic interdependence has historically served as a stabilising factor even during periods of political rivalry. For AI leadership specifically, success will depend as much on securing reliable inputs and large markets as on raw computing power. Ignoring on-the-ground supply realities in pursuit of ideological purity could prove self-defeating.
American enterprises demonstrate this understanding through their investment decisions and continued operations. Policymakers should heed these market signals. In a world of finite resources and rapid technological change, smartly managed interdependence — with clear-eyed risk mitigation — provides a stronger foundation for long-term prosperity than attempts at complete separation.
The coming years will test America’s ability to balance strategic autonomy with economic realism. Getting this balance right will strengthen US companies and contribute to a more predictable global environment — a public good that benefits nations like Pakistan navigating these same turbulent currents.
About the Author:
Qaiser Nawab is Chairman of the Belt and Road Initiative for Sustainable Development (BRISD), an international platform fostering cooperation and innovation across Asia, Africa, and Latin America. He can be reached at qaisernawab098@gmail.com
