The annual parliamentary sittings of China’s National People’s Congress and the Chinese People’s Political Consultative Conference—usually held at the same time—are important political events, with speeches of leaders at the meetings reflecting the country’s policy trajectory. During the last sessions of both in March 2023, President Xi Jinping noted that western countries led by the United States (US) are seeking to “contain and encircle” China, posing challenges to its development. For the Chinese, 2023 is the ‘year of the rabbit’, signifying hope and prosperity. However, data from the last two quarters belie expectations of an economic recovery. At their annual meeting too, the Chinese legislative bodies set a modest target of 5 percent growth in GDP for the coming year. This brief examines the Chinese assessment of de-risking initiatives being undertaken by the US, and how it is responding.
China's president Xi Jinping is seen. (Reuters)
Since the establishment of ties between Communist China and the US in the 1970s, there has been increasing economic interdependence between the two. More recently, the West has begun to recognise that they must alter their approach in response to a changing China. As a new German strategy paper on China noted, “China is simultaneously a partner, competitor and systemic rival.” The paper notes that China is reducing its dependencies on Europe but Germany’s dependencies on China have increased; such unilateral reliance on important preliminary products and sophisticated technologies make countries vulnerable to political pressure. It said Germany will aim to diversify economic relations that will bring down dependence on China in critical sectors.
When Donald Trump was US president, the fashionable jargon was ‘decoupling’—disengaging from China, or reversing the four-decade-old economic intertwining. In the Joe Biden era, the focus is on ‘de-risking’—defined by US National Security Adviser Jake Sullivan as building “resilient supply chains”. The West’s approach has been primarily that of instituting export restrictions on semiconductor technology, and curbs on outbound investment into advanced technology sectors in China, among others.
However, Chinese commentators and strategists have a different assessment. A Xinhua commentary published in May argued that de-risking is not a climb down from the US’s previous position of decoupling, likening it to old wine repackaged in a new bottle. It said the change in nomenclature stems from America’s pursuit of more allies to build a broad-based coalition that will suppress China’s growth and interfere in its internal affairs. The author asserts that the US has not softened its stance, and predicts that measures to contain China will only get more stringent. These include the ‘China Competition Act 2.0’, aimed at bolstering export controls and curbing US investment in China, thereby cutting off China’s access to sophisticated technology.
The economy is a key pillar of the Communist Party of China’s (CPC) legitimacy-building. Thus, there is palpable anxiety in its upper echelons, seen in the Central National Security Commission readout of May 2023 which observes a difficult situation with respect to national security, saying the Party-state must prepare to face “worst-case scenarios”. In the assessment of Li Wei from the China Institute of Contemporary International Relations, China faces challenges from “unilateral trade protection” and “regional and global conflicts”. Moreover, during a conference in June 2023, the Chinese delegation revealed that a retired Colonel from the People’s Liberation Army had been included in an internal task force on securitising supply chains. China perceives that through ‘decoupling-de-risking’, the US is trying to stall its move up the ‘smiling curve’ into more lucrative areas such as product design, branding, or even research and development.
The CPC has begun to invoke nationalism and frame the de-risking initiative in terms of race. Zhong Feiteng from the Chinese Academy of Social Sciences argues that de-risking and decoupling are intrinsically linked, with the ultimate goal being ‘de-Sinification’—i.e., erasing Chinese identity. Jin Canrong of Renmin University places China where the Soviet Union was during the Cold War, and says the US used soft power and “ideological infiltration of its elite” to defeat its rival as it did not want to wage war against a nuclear power. He argues that the US has also cut emerging powers like Japan and the European Union to size. Jin assesses fundamental contradictions in the US-China dynamics in terms of the divergences in their political systems and civilisational moorings. He blames ‘white’ America for its inability to accept China’s rise, and its condescending attitude towards the “black, brown, and yellow races”.
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