Context: The Trump-era policy which focused on the U.S. to decouple from China is being phased out by a new concept. The U.S. has expressed that it is shifting its policy on China from decoupling to de-risking. The EU has already declared that its approach to China will be based on de-risking.
What is ‘de-risking’?
- After the establishment of diplomatic ties between the U.S. and China in 1979, both the countries embarked on a path of increasing economic interdependence. China gained immensely from this relationship, as it helped the country drastically widen and deepen its diplomatic and economic engagement with the rest of the world.
- As China’s economic and military power grew, its ambition to challenge the primacy of the U.S. in the international system became increasingly apparent. China’s rise not only came at the expense of America’s global clout, but also the latter’s domestic industry, which got “hollowed out” in its four-decade old economic embrace with China. ( This has been highlighted by United States as the weakness of the Washington Consensus, and for which it has floated the New Washington Consensus)
- The Trump administration made it a point to attack the gargantuan bilateral trade imbalance in favour of China. It also wished to keep the U.S’s high technology sector out of China’s reach. The U.S.-China ‘trade war’ started, and bilateral relations were set on course for a “decoupling” from the American standpoint.
- The Biden administration added its own features into the China policy inherited from Trump. Most recently the label of “decoupling” has been changed to “de-risking”.
- According to the U.S. “de-risking fundamentally means having resilient, effective supply chains and ensuring we cannot be subjected to the coercion of any other country”. For Example the U.S.’s geo-economic initiatives like the Partnership for Global Infrastructure and Investment as well as the Indo-Pacific Economic Framework for Prosperity are also supposed to reflect the spirit of de-risking.
Why the Change now?
The policy change has been announced in the wake of several events of high geopolitical significance.
- The world has just emerged out of the tentacles of the pandemic after three disruptive years and the global economy is hoping for a resulting rebound.
- The U.S.-China rivalry had peaked in the past few months from the ratcheting of tensions across the Taiwan Strait to the acrimonious spy balloon episode between the two countries.
- China also witnessed Xi Jinping beginning his second decade of rule over China
- China Under XI and under his third leadership tenure, extended his “peace-making diplomacy” to West Asia, striking gold in normalising the frayed Saudi-Iran ties.
- Further the U.S.-China relations as a new Cold War and a zero-sum game appears to be risky for the U.S. Bringing more nuance into its earlier decoupling approach could bring down China’s guard and give the U.S. more room to re-consolidate its strength.
- The Russia-Ukraine conflict could have played a pivotal role in enabling the U.S’s policy shift towards China. The Biden administration, unlike its predecessor, has made it a point to reassure its European allies. At a time when China has been backing Russia in its shadow battle in Ukraine against the West, the idea of decoupling hardly appeals to the European Union (EU). The EU has in fact been looking to woo China in order to convince it to stop supporting Russia from skirting Western sanctions.
All of these developments have necessitated the U.S. to recalibrate its posture towards China
What could be the geopolitical ramifications of de-risking?
- The U.S. efforts to keep its allies closer in its geopolitical rivalry against China by adopting the path of de-risking has already won a significant victory in Japan at the G-7 summit.
- The West’s moves to counter China’s rise much more sustainable by facilitating a united front among allies.
- At the same time China has expressed its scepticism to the West’s de-risking approach, portraying it as a façade to the decoupling agenda. It has expressed its disapproval in painting China as the actor responsible for heightening geopolitical risks. According to China, the real source of risks is the U.S., which it alleges to have created instability across the world by pursuing political and military interventions and perpetuating a Cold War mindset.
- For countries like India it will stand to benefit from de-risking by leveraging its benefits like attracting supply chains and confronting China’s aggressive moves, it could also come at a cost.
To read more about New United States policy towards China visit ( https://compass.rauias.com/current-affairs/countering-the-chinese-rise/ )