How derisking and decoupling change China's relation with the remainder of the world

ine.org.pl 2 months ago

Zdjęcie: ChiÅska polityka energetyczna (6)

In fresh years, concerns about economical dependence on China have led many countries to search a strategy that can limit it. The concepts of hazard reduction, namely ‘de-risking’ or even a circumstantial disconnection from China, besides known as ‘decoupling’, are becoming increasingly debated and analysed in the context of relations with the Central State, which is undoubtedly supported by the current geopolitical situation. However, attempts to increase the resilience of the supply chain and diversification are faced with an assertive and decisive consequence from Beijing, which warns against fragmentation and focuses on various types of incentives and strategical partnerships with another countries. knowing the complexity of this situation seems to be crucial in the face of the dynamics of the world's changes.

Since the beginning of 2023, "de-risking" has become a key concept of the EU's approach to relations with Beijing. This is simply a kind of alternate to decoupling, which means a complete break in relations with China. This concept, presented by Ursula von der Leyen in March 2023[1] was besides adapted by Americans[2]. De-risking has contributed to a greater consensus between the European Union and the United States on the perception of safety threats from the People's Republic of China. National safety is increasingly considered in terms of economical stability, leading to an increase in the importance of economical safety worldwide. common economical dependence makes countries susceptible to intentional shocks, and frequently causes globalisation to be utilized as weapons[3].

The People's Republic of China is increasingly utilizing a number of economical and non-economic tools to punish, influence and deter global relations. Forced action has become a key component of the PRC toolbox, which is increasingly assertive in global disputes and seeks to change global order in its favour. China relies heavy on trade restrictions as a means of coercion against countries specified as import and export restrictions, selective application of global rules, targeted customs controls, refusal to grant licences, increased duties and unofficial embargoes[4]. In uncommon cases, this may besides include a simplification in exports by the PRC in order to harm the economy of the mark country and investment constraints. China's adoption of the function of a crucial global investor allowed the Communist organization of China to impose restrictions on Chinese investment activities in the country and abroad, specified as large trade agreements, abroad direct investment, infrastructure projects and joint ventures[5]. For example, in fresh years, abroad companies have faced expanding difficulties in operating in China due to strict zero-COVID policies and a stronger focus of China on itself and the pursuit of self-sufficiency[6]. De-risking aims to combat these practices, reducing the risks to national safety while preserving the benefits of globalisation.

De-risking includes activities specified as China + 1 strategy, consisting in the acquisition by companies of products from 1 or more countries another than the Central State, and the transfer of production back to the home market[7]. China's capital investors besides pay expanding attention to Chinese marketplace orientation and focus on Chinese consumers[8].

ASEAN is frequently cited as a possible alternate to China, but it is surely not “another China”. As an economical bloc of 600 million people (about 9% of the world's population), it seems to offer immense opportunities for companies that want to better manage risks and increase the resilience of their supply chains. ASEAN generates 6% of global GDP. ASEAN can so be an alternate to China, but it should be borne in head that the supply chains of this region are besides closely linked to China, which represents an additional risk.[9].

ASEAN has become a key manufacturing hub for Chinese companies, including, for example, producers of solar systems, electrical cars, batteries and steel products, especially in terms of exports to the United States, which allows them to avoid US anti-dumping and countervailing duties on exports from China and another markets[10].

As far as China and the US are concerned, it seems impossible to completely break Beijing's economical relation with Washington, given that these countries together account for 40% of global GDP.[11]. The United States, despite tensions on the Beijing – Washington line, is inactive the main trading partner of the People's Republic of China[12], and the PRC ranks just outside Mexico and Canada as the 3rd largest trading partner of the United States[13] (behind Japan and UK)[14]. The economical dependency of both countries besides includes crucial US debt reserves, which in July 2025 amounted to $730.7 billion, making the PRC 1 of the main creditors of the United States. 3 sectors item the vulnerability of US companies to supply chain disruptions originating in China. It is simply a pharmaceutical sector, a microprocessor and energy sector. These sectors are liable for ensuring the continuity of modern life, and the disruptions in each of these sectors could be a general shock[15].

Responding to Beijing's activities in the South-East Asia region, the United States signed reciprocal trade agreements with Malaysia and Cambodia, as well as a framework trade agreement with Thailand, which provides for cooperation between countries to combat tariff and non-tariff barriers. The agreements are intended to support efforts to address trade imbalances and diversification of supply chains in the face of China's tightening of export restrictions on uncommon earth elements[16].

The EU and China are closely linked through trade and investment. In 2020 they reached preliminary agreement on a comprehensive investment agreement[17]. Since then, relations have deteriorated. While recognizing the threat from Beijing, the EU announced China as a "system rival" in 2019, despite its function as an economical partner. In 2021, EU sanctions for human rights violations in Xinjiang and Chinese retaliatory sanctions caused a stagnation in the work on the agreement[18]. During the coronavirus pandemic, China utilized its dependence on critical medical equipment to make a affirmative global image of a country fighting a pandemic and attempted to divert attention from the possible origin of the virus in China. Beijing besides reacted aggressively as another countries, specified as Lithuania, strengthened relations with Taiwan. Furthermore, China's decision to strengthen its cooperation with Russia in the war against Ukraine and efforts to exacerbate tensions in the Taiwan Strait further increased the urgent request to reduce dependence on China[19]. China is besides known to usage the rule of divide and regulation in relations with Europe. For example, relations with countries specified as Hungary, in order to conflict associate States and the EU. From a Chinese perspective, the EU is strategically weak and so susceptible to influence. At the same time, Europe has a large economical power that could position it as a " Shuttle State". China is counting on the EU to lead an independent policy towards China, balancing between Washington and Beijing[20]. In addition, the deficiency of equal marketplace access in EU-China economical relations is simply a major challenge. As China implements strategies to destruct abroad companies from the market, EU markets stay mostly open to Chinese companies[21]. Another issue is the state subsidies causing unfair competition, which led the EU to impose duties on Chinese electrical vehicles.

In order to diversify risks, the European Commission has set up a list of 10 technologies critical to EU economical security. These were included in the list due to their landmark economical importance, the anticipation of dual usage (also for military purposes) and the hazard of their usage for human rights violations. These include advanced semiconductors, AI, quantum technologies, biotechnology, advanced communication and navigation technologies, sensory, cosmic, energy, robotics and autonomous systems, as well as technologies for parts of advanced materials, production and recycling methods.[22].

As part of increased hazard mitigation actions, the European Union has revealed broad plans to reduce dependence on China and regain control of key sectors – from chemical to pharmaceutical and biotechnology[23]. It is besides worth noting that hazard simplification and economical safety will undoubtedly be costly, but the deficiency of any action will besides be costly. The EU must so decision distant from relying solely on defence measures, specified as countervailing duties on electrical vehicles, and decision on to decisive measures to increase its competitiveness[24].

It is worth noting that China is committed to stepping up cooperation with the EU, regardless of the EU's allegations of Chinese-Russian relations or escalation of tensions in relations with Taiwan. In February 2024, abroad Minister Wang Yi publically identified the EU and Russia as the most crucial directions of Chinese abroad policy[25]. This shows how crucial Europe remains a marketplace for China.

According to China, de-risking may pose risks to global supply chains. According to Beijing, these measures failed to halt China's economical growth or technological progress, but only increased the cost and efficiency of their own supply chains. According to them, US policies are characterised by economical nationalism and protectionism, and may yet not lead to a simplification in dependence on supply chains in which China is simply a key link.[26]. Chinese media approach de-risking and decoupling in practically the same way, not seeing besides much difference in them and treating them as concepts identical[27]. According to Beijing, both approaches mean withdrawing from relations with the mediate State and actions to halt China's development. Although the thought was created in Europe, Beijing underlines the function of the US in implementing this policy, pointing out that Washington wants to work with China in areas where it considers it necessary, limiting another fields of action[28]. China is, according to its own rhetoric, a victim, while Washington's allies, including Europe, are deprived of any initiative and limited by US abroad policy objectives[29]. Moreover, erstwhile Europe had a comparison of Europe's dependence on Chinese batteries to electrical cars to its dependence on Russian fossil fuels, China stressed that China is an chance for Europe, not a threat[30]. The main Chinese information portals, linked to Beijing authorities, specified as the China regular and the Globe Times, call on the EU to rethink the "de-risking" approach in order to avoid a real break in relations[31]. The de-risking concept was besides restricted by Chinese Prime Minister Li Qiang, stating that "governments should not bend the concept of hazard or transform it into an ideological tool". He besides warned against "politicising economical issues"[32].

In consequence to de-risking, Beijing is developing the "Made in China" initiative[33], improving the innovation of its own economy. China is besides trying to stimulate home consumption to reduce economical dependence on exports. This nonsubjective is besides included in the five-year plan for the period 2026-2030.[34]. The 4th Plenum confirmed that the next plan is to focus on achieving high-quality improvement through "new, high-quality manufacturing forces", "enhance first innovation" and improved self-sufficiency in discipline and technology to lead what it calls the "new circular of technological revolution and industrial transformation". The desire to build the interior marketplace was besides identified"[35]. Moreover, Beijing expands semiconductor production and accelerates technological progress, focusing on the mediate East to rise capital[36]. De-risking besides stimulates the mediate State's independence, as illustrated by Chinese greenfield investments in the production of integrated circuits[37]. In consequence to Western activities, Beijing besides responds to restrictions on exports of uncommon earth metals and another key materials for the production of advanced technologies[38]. China prioritises relations in the Indo-Pacific region and increasingly focuses on organisations specified as BRICS, Belt and way Initiative and the Shanghai Cooperation Organisation[39].

The global Settlement Bank has late revealed that global value chains have increased since the end of 2021, which is peculiarly crucial for links between suppliers from China and customers from the United States[40]. However, the extension of value chains is not accompanied by a diversification of relations. However, fresh developments have not so far reversed the long-term trend towards greater regional trade integration in fresh decades, especially in Asia, where companies from another Asian countries have joined the supply chain[41]. These countries first import Chinese intermediate goods and then export finished products to Western countries. The abrupt relocation of US supply chains from China to brokers has caused importantly higher costs and increasingly complex trading networks for US buyers, which can contribute to wage and cost pressure[42].

IMF warned that expanding economical fragmentation – in the form of various forms of trade tariffs, technological separation, limited capital movements and migration restrictions will rise costs, make price fluctuations and hinder both portfolio flows and abroad direct investment [43]. IMF head Kristalin Georgieva stated that fragmentation of the planet economy could cost up to 7% of planet GDP in the long term, a failure equivalent to the combined value of German and nipponese economies[44].

Many countries are already taking active action to reduce the hazard of besides dependence on the mediate State. An example is India's activities in the battery value chain and key minerals needed for their production. Given the fact that China dominates this area and processes about 65% nickel, 68% cobalt and 60% lithium worldwide, India underlines the request for local sourcing of these natural materials and technologies to produce electrical vehicles to reduce dependence on Beijing[45]. The United States and the EU have besides seen the risks of dependence on critical materials and batteries. Therefore, they are conducting activities to diversify supply chains, leaving Chinese batteries or permanent magnets[46]. Inflation simplification Act (IRA), which assumes that battery components or critical minerals are to come from sources of unsettling concerns and avoid parts of supply chains linked to China, is besides a major influence.[47]. The EU Critical Resources Act (CRM Act) has, on the another hand, created a legal framework to safe supplies of critical natural materials to the EU, whose objectives are national extraction, processing, recycling and improving the authorisation process. This aims to reduce the dependence on individual suppliers of components for batteries of electrical vehicles and to increase EU processing and refining capacity[48]. Australia's efforts to work with allies and safe supplies of natural materials outside China are besides worth mentioning here.[49].

Within the pharmaceutical sector, the European Union has taken measures to decision the production of active pharmaceutical ingredients back to the EU[50]. As far as semiconductor industries are concerned, the CHIPS and discipline Act introduced by the U.S. government covers over 50 billion dollars in support of home factories, subsidies and incentives for semiconductor production to reconstruct home chip production and R & D potential[51]. Another action is enhanced control of exports of advanced semiconductors and equipment by the United States limiting China's access to advanced chip production equipment and related technologies[52]. Cooperation between the United States, Japan, Korea and Taiwan on semiconductors, including regional technological cooperation to coordinate investigation and development, investment and resilience of supply among allied chip manufacturers, is besides being developed.[53]. The increased number of joint programmes, investigation centres and policy adjustment aims to reduce strategical dependence on Chinese factories.

In summary, the efforts of the European Union, the United States and another key global actors to reduce the risks of dependence on China reflect strategical attempts to diversify within supply chains, safe key technologies and become increasingly aware of the risks involved. Many governments see the importance of protecting key sectors and, despite the costs associated with the implementation of these measures, are gradually trying to take appropriate action. Given the degree of global economical integration, it surely seems impossible to completely separate from China. Moreover, these measures force China to take action to adapt to the situation and to search partnership among another countries. Changes in country-to-country relations with you will have a crucial impact on global economical governance, technological competition and geopolitical stableness in the future, and knowing of this complex dynamics is crucial for decision-makers, economists and analysts who want to decision through the changing architecture of planet trade and geopolitics.

[1]https://ec.europa.eu/commission/presscorn/detail/en/speech 23 2063 (accessed 13.11.2025).

[2]https://www.csis.org/analysis/closer-look-de-risking (accessed 13.11.2025).

[3] Ibid.

[4]https://www.aspi.org.au/report/weibo-diplomacy-and-censorship-china/ (accessed 13.11.2025).

[5]https://ad-aspi.s3.ap-southeast-2.amazonaws.com/2023-02/Countering%20Chinas%20coercive%20diplomacy 1.pdf (accessed 13.11.2025).

[6]https://www.wr.no/en/news/de-risking-china-international-companies-respond-to-pressure-to-diversify-supply-chains (accessed 13.11.2025).

[7]https://www.oliverwyman.com/our-expert/insights/2023/jun/five-no-regret-moves-for-derisking-global-supply-chain.html (accessed 13.11.2025).

[8]https://www.wr.no/en/news/de-risking-china-international-companies-respond-to-pressure-to-diversify-supply-chains (accessed 13.11.2025).

[9]https://bst-europe.eu/economy-security-trade/de-risking-asean-as-an-option/ (accessed 13.11.2025).

[10]https://www.wita.org/atp-research/asean-china-export-surge/ (accessed 13.11.2025).

[11]https://www.nytimes.com/2023/07/07/business/economy/us-china-relationship-facts.html (accessed 13.11.2025).

[12]http://english.customs.gov.cn/Statics/7ec9972b-c95f-49c2-a5ba-2d49e3d4dd.html (accessed 13.11.2025).