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Editorial丨'De-risking' efforts and exercise in futility

CHINADAILY · 公众号 · 时评 · 2024-09-05 10:48

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Driven by strategic and economic considerations, in recent years, policymakers in Washington have been encouraging US and other Western multinationals to either "reshore" to the US or relocate their production and supply chains out of China to "friendlier shores".

Pushing ahead with a strategy of "de-risking", to reduce the dependence on Chinese products and supply chains and address purported threats to national security, is aimed at weakening China's position as a manufacturing powerhouse and thus thwarting its development.

As part of these efforts, apart from waging a trade war and continuously cracking down on Chinese high-tech firms, the Joe Biden administration has been working to strengthen the US' relations with India.

▲ Chinese and US flags flutter outside the building of an American company in Beijing. Photo/Agencies

By leveraging closer economic ties with India and encouraging greater collaboration between the two sides in areas such as information technology, space exploration and renewable energy, the Biden administration hopes to hold back China's development by reducing its leadership advantages and, by positioning India as an alternative, diminishing its importance as the center of gravity in the global industry and supply chains.

Yet the US strategy seems to be going nowhere. Chinese supplies remain crucial for India's manufacturing sector. Although the US strategy intends for India to reduce its commercial ties with China, the Indian economy has become even more dependent on Chinese imports, according to a recent report by The Washington Post.

India's imports from China have been growing twice as fast as those overall and now make up nearly one-third of Indian imports in industries ranging from electronics and renewable energy to pharmaceuticals, according to the Global Trade Research Initiative, an Indian think tank.

That dynamic is phenomenal, given the restrictive measures India has taken targeting Chinese investment following a deadly clash between the two countries' border troops in 2020. It is only in recent months that New Delhi seems to have softened its attitude toward Chinese investors, with the issuing of new guidelines to expedite visas from China.

"To boost Indian manufacturing and plug India into the global supply chain, it is inevitable that India plugs itself into China's supply chain", was the conclusion of a recent economic survey prepared by the office of the Indian government's chief economic adviser, Venkatramanan Anantha Nageswaran. Even senior officials of the Biden administration have admitted it is not realistic to think that inputs from China can be excluded at this moment from US supply chains, according to the US newspaper report.

Moreover, the US-led de-risking strategy against China will only make the global supply chains unnecessarily longer and more complex, resulting in a significant drag on the growth of the global economy.

The fundamental reason that China has become the top choice for the international business community lies in the strength, resilience, and vitality of its economy, its complete industry chains and the huge Chinese market. Which explains why, despite the calls from Washington for them to reshore, many multinationals still look to China as their key market and manufacturing base.

Thus, although US policymakers view New Delhi as a crucial partner in their efforts to contain China and reduce the US' reliance on Chinese products and supply chains, growing evidence points to the fact that their partnership is making little headway in achieving those objectives.

Policymakers in Washington should consider the wisdom of continuing with their "de-risking" strategy and, putting aside all the ideological baggage they carry, if just for a moment, pause to ponder what is actually best for the US.