The price of dependency: The rhetoric and reality of de-risking US-China ties
Published 27 June 2023
Despite increased geopolitical tensions between the US and China, large swaths of Western business communities remain in thrall to the Chinese state-centric market. This reality suggests that “de-risking” may underestimate the degree of asymmetric interdependence that China has already established and, in recent years, repackaged into the strategic policies of “dual circulation”.
The Sino-US superpower competition is mostly playing out in industrial and technological fields with real consequences for multinationals accustomed to a borderless world. The private sector is slowly coming to terms with the new zeitgeist and its corresponding vocabulary: “deglobalization,” “decoupling,” “de-risking,” and all their variations. At the rhetorical level at least, it is goodbye to the old paradigm.
But while de-risking is real and underway, the implications for global trade and investment remain a matter of negotiation for Western markets. Such divergence could be traced, according to authors Nathan Picarsic and Emily de la Bruyere of Horizon Advisory, to China's goal for asymmetric interdependence. The strategic ideology of the Chinese Communist Party aims to have the world depend on China more than China depends on the world, the authors say.
From China's increased share of global production and sustained share of world trade, it should be apparent that Beijing could very well endure "de-risking". Any attempt to redress Beijing's policy would amount to more significant rewiring of global commerce than most realize.
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