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Macroscope | De-risking from China: companies and countries have different goals
- Businesses might use similar ‘de-risking’ rhetoric to some governments, but their priorities are different as they try to stay connected to a critical market
- Many foreign firms already derive a large part of their revenue from China, and the country’s infrastructure lets them produce at scale and deliver on time
Reading Time:3 minutes
Why you can trust SCMP
There is no hiding that China’s relationship with the West, especially the United States, has become more complicated in the past decade. At the state level, there is strategic competition in the technology and finance sectors, as well as China’s expanding influence in geopolitics.
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The Ukraine war has exacerbated differences between China and the West, with China maintaining its comprehensive strategic partnership, including economic ties, with Russia.
At the business level, the trade war between the US and China that began during the Trump administration has expanded to export restrictions on hi-tech products that could be used in developing artificial intelligence and advanced semiconductor manufacturing. Foreign businesses also experienced supply chain disruptions during the Covid-19 pandemic.
The growing tensions between the world’s two superpowers are raising alarm bells with companies that have business interests across the world.
These shifts in relationships require both governments and businesses to adjust their strategies. This is where a flurry of D-words comes into play, including deglobalisation, decoupling and de-risking.
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De-risking is perhaps the most popular strategy now since US and European officials have come to realise the reality of trade and investment links with China.
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