Executive summary:
The EU and its member states are gradually clarifying what the concept of derisking means for its economic relationship with China. Derisking is a useful concept to frame EU-China relations since there are risks in close ties to a powerful external actor with a state-led economy. However, in the current debate surrounding China, derisking could easily translate into an overly broad rejection of economic interactions with this country. We urge the EU to be pragmatic and realistic in determining where to derisk economic ties to China which in our view includes considering at which point risks have been sufficiently covered, and which interactions do not carry political or geopolitical risks. The EU should consider which kinds of trade and investment between the two sides should be limited for geopolitical reasons, but also which can be left open to corporate actors and even which ones are still worth actively supporting.
Policy recommendations:
Establish where the limits of derisking lie; at what point do we consider ties to China derisked? Economic interactions with China could be conceived as falling in one of the following categories:
- Red light: the EU should introduce measures discouraging or prohibiting cooperation initiatives;
- Yellow light: the EU is indifferent and leaves interactions with China to sub-state actors;
- Green light: the EU sees public benefits resulting from interactions with China and actively encourages linkages.
Stay tuned with us by reading more: ReConnect China policy brief 18-Thoughts on derisking in EU-China Policy Brief