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China Rejects US Claims Over ‘De-Risking’ Not ‘Decoupling’

2023-05-30 09:26
President Joe Biden and his European allies have repeatedly stressed their desire to “de-risk,” not “decouple,” from the
China Rejects US Claims Over ‘De-Risking’ Not ‘Decoupling’

President Joe Biden and his European allies have repeatedly stressed their desire to “de-risk,” not “decouple,” from the Chinese economy in recent months as a way to explain a slew of new restrictions on trade with Beijing. The problem is, for China there’s no difference.

Chinese state media, officials and academics have all publicly rejected the distinction in recent weeks, in a seemingly concerted effort to undermine the rhetorical shift. The official Xinhua News Agency said in a Friday commentary that “de-risking is just decoupling in disguise.”

“A change in words does not mean a difference in action. In essence, de-risking is hardly different from decoupling,” the agency said, adding that the US has been “stepping up its siege of China.”

Chinese Foreign Minister Qin Gang voiced similar criticisms at a press briefing in Germany this month, saying that “if the EU seeks to decouple from China in the name of de-risking, it will decouple from opportunities, cooperation, stability and development.”

Fu Cong, China’s ambassador to the European Union, pressed leaders to define what de-risking entails in an interview with the New Statesman. “If de-risking means ridding China of global industrial and supply chains, especially in key areas, and when it involves key technology, we are firmly opposed to that,” he said, according to a transcript published on the embassy’s website.

Technology Cold War

The shift in US language reflects the Biden administration’s attempt to strike a more moderate tone for Western allies worried about completely cutting business ties with Beijing. Washington’s attempts to deprive China of cutting-edge chips over national security concerns have sparked concerns of a new technology cold war.

“Pushing for de-coupling brings the US a lot of international pressure due to its huge economic impact,” said Zhu Feng, a professor of international relations at Nanjing University, adding that the term “de-risking” gives the US more “space to maneuver.”

“There’s no substantial difference between the two terms,” he added. “I don’t see the change in rhetoric brings any adjustments in policies.”

The de-risking narrative began to take hold in March when European Union President Ursula Von Der Leyen gave a speech that, in part, outlined why she planned to travel to Beijing to meet President Xi Jinping.

“I believe it is neither viable, nor in Europe’s interest, to decouple from China,” she said. “We need to focus on de-risk, not decouple.” That approach was widely seen as an attempt to cool US tensions with China, after an alleged Chinese spy balloon was shot down after crossing US airspace a month earlier. That prompted Secretary of State Antony Blinken to cancel a visit to Beijing and further souring diplomatic ties.

The Biden administration echoed her language soon after, with Treasury Secretary Janet Yellen saying in April that “we do not seek to decouple our economy from China’s.” National Security Advisor Jake Sullivan argued the next week: “We are for de-risking and diversifying, not decoupling.”

That rhetorical shift allowed some of the world’s wealthiest democracies to speak in a common voice on countering Chinese economic risks at a Group of Seven summit in Japan this month. The leaders pledged in a final statement to achieve economic security by “diversifying and deepening partnerships and de-risking not de-coupling.”

US ‘Goodwill’

Two researchers at the China Institutes of Contemporary International Relations, a think tank affiliated with China’s top intelligence body, wrote this month that the “de-risking” narrative reflected that Western democracies had realized they couldn’t operate without the world’s second-largest economy.

They also argued that the term demonstrated “some goodwill” from the US and its allies, as it showed they wanted to keep dialog open with China. Biden said at the close of the G-7 that US-China ties could “thaw very shortly,” suggesting a long-awaited call with Xi could be imminent.

Still, the researchers cautioned that the new language didn’t mean there would be any fundamental change in their strategy, such as the US rolling back trade sanctions on Chinese entities.

China declined a US request for the two countries’ defense chiefs to meet this week in Singapore during a marquee Asia-Pacific security gathering, after Beijing said Washington would need to lift sanctions imposed on Li Shangfu for such a meeting to take place. The US Defence Department called the decision a “concerning unwillingness” to engage in military discussions.

Supply Chains

The push to de-risk supply chains could result in the opposite effect: countries depending on a single location for some products, according to Deborah Elms, the Singapore-based executive director of the Asian Trade Centre, who pointed to the recent shortages of baby formula in the US as an example of this.

“This is a classic case of you put all your eggs in the one basket and assume that your domestic production is somehow less vulnerable to disruption, but that’s actually not true,” she said.

The US and other Western nations have been increasingly looking to onshore supply chains of various goods since the pandemic. The Inflation Reduction Act, for example, which offers subsidies and tax breaks for companies that produce in the US, has been criticized by Europe and South Korea for putting their companies at a disadvantage.

Japan is also spending billions of dollars to try and rebuild its domestic semiconductor industry. Tokyo has also introduced export restrictions on some chip-making technology to China.

“What they are trying to realize is the partial decoupling,” said Zhou Xiaoming, a former deputy representative to China’s United Nations mission in Geneva, of the US and its allies’ de-risking strategy.

“This means decoupling in areas of their choice that they believe are important for their national security, as well as important for the effort to contain the rise of China,” he added.

--With assistance from Rebecca Choong Wilkins.

(Updates with China’s decision to turn down US request for defense chief meeting in sixteenth paragraph.)