China’s economy is teetering on the brink. Foreign investment in the global powerhouse is shrinking as unemployment surges and manufacturing slows.
Local government debt has also ballooned while the remains of the once booming property sector resemble a disaster movie.
Even amid the rubble, the shadow of “national security” looms over the Chinese economy, sending shock waves through multinational companies entrenched there.
Still, what really scares President Xi Jinping’s regime is the “de-risking” policy, or “decoupling lite,” rolled out by the United States, the European Union and other major allies.
Premier Li Qiang underlined Beijing’s fears in a keynote address at the World Economic Forum in China’s port city of Tianjin.
“In the West, some people are hyping up what is called ‘de-risking’,” Li told delegates on Tuesday at what is now known as “Summer Davos.”
“These two concepts are a false proposition because the development of economic globalization is such that the world economy has become a common entity in which you and I are both intermingled,” he added.
State of play:
- Leading Western democracies are sick of Beijing’s promises to “open up” and embrace global trade rules while raising “national security” barriers.
- US President Joe Biden has banned high-tech exports, such as advanced chips, to China and kept in place Donald Trump’s tough tariff policy.
- The EU has also challenged China’s redlines with European Commission President Ursula von der Leyen calling for “de-risking.”
Diverging views: “The invisible barriers put up by some people are becoming widespread and pushing the world into fragmentation and even confrontation,” Li said, in an apparent reference to von der Leyen’s assessment of China-EU relations.
Delve deeper: Foreign affairs expert Clyde Prestowitz, who advised four US presidents, has constantly warned of the dangers the West faces from China’s authoritarian administration.
Big picture: “Let’s be real and not kid ourselves. There is no such thing as de-risking with China. Serious de-risking means very substantial decoupling,” Prestowitz, who headed the first American Trade Mission to China in 1982, said in his newsletter.
Between the lines: “Maybe we shouldn’t care if Starbucks sells coffee in China, but becoming dependent on a wide range of advanced products and technologies is not advisable for any country committed to free speech, rule of law and democracy,” he added.
China Factor comment: Appeasing China is not only economic suicide but also geopolitical madness.