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 theres 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, Chinas 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 embassys website. 

Technology Cold War

The shift in US language reflects the Biden administrations attempt to strike a more moderate tone for Western allies worried about completely cutting business ties with Beijing. Washingtons 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.

Theres no substantial difference between the two terms, he added. I dont 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 Europes 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 Chinas. 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 worlds 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. 

U.S. Goodwill

Two researchers at the China Institutes of Contemporary International Relations, a think tank affiliated with Chinas top intelligence body, wrote this month that the de-risking narrative reflected that Western democracies had realized they couldnt operate without the worlds 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 didnt mean there would be any fundamental change in their strategy, such as the US rolling back trade sanctions on Chinese entities. 

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 thats 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 Chinas 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, he added, as well as important for the effort to contain the rise of China.


Spinning loader