U.S. and China Bilateral Relation

• Recently, the United States has stated that it is switching from decoupling to de-risking in its approach to China.

Key highlights:

• The Trump-era focus of 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’?

• United States administration stated that “decoupling” has been changed to “de-risking”.
• De-risking: According to the U.S. National Security Advisor, “de-risking fundamentally means having resilient, effective supply chains and ensuring we cannot be subjected to the coercion of any other country”.
  • Objective: De-risking aims to limit such an effect only in areas where it undercuts the national security and industrial competence of the U.S.
• Decoupling: It stands for an eventual reversal of the four-decade old project to enmesh the two economies.

When the U.S. and China diplomatic ties established?

• After the establishment of diplomatic ties between the 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.

Why de-risking?

• In order to understand the rationale behind the U.S.’s shift from decoupling to de-risking because:
  • Geopolitical significance
  • Disruption of global economy
  • Tensions on Taiwan Strait
  • Acrimonious Spy balloon
  • Russia-Ukraine Conflict
  • Trans-Atlantic Consensus