Media  Global Economy  2023.08.02

Policy toward China Shifting from Decoupling to De-risking

Still, No One Expecting Improvement in U.S.-China Relations

The article was originally posted on JBpress on June 19, 2023

The U.S.A. China Europe

1. Evaluation of G7 Hiroshima Summit

The Group of Seven (G7) summit meeting was held in Hiroshima from May 19 to 21 against the backdrop of increasing political fragmentation around the world.

Nevertheless, it was able to demonstrate the unity of the Western nations on the issues of Ukraine and China, which are currently the critical global issues.

Thanks also to Ukrainian President Volodymyr Zelensky’s in-person attendance, the G7 Summit succeeded in demonstrating to the world the shared position of support for Ukraine and criticism of Russia.

It was also noteworthy that in addition to countries representing the Global South such as India, Indonesia, Vietnam, Brazil, the Cook Islands from the Pacific nations, and the Comoros from Africa, South Korea and Australia participated in the event, displaying the G7’s solidarity with the rest of the world.

Thus, the G7 Hiroshima Summit was highly regarded by experts on international politics in the U.S. and Europe for providing an opportunity for the major Western countries to show solidarity, exchange views on important global issues inviting leaders from the Global South and the Indo-Pacific, and share a certain level of common understanding.

One U.S. expert on international politics described it as: “the G7 is back.”

The role of the G7 had declined in past recent years as the U.S. Obama administration shifted the focus of international consensus building from the G7 to the G20.

However, it became difficult even for the G20 to form a consensus owing to the intensifying diplomatic, security, and ideological conflicts among China, Russia, and the Western countries.

The recent G7 Hiroshima Summit is credited with having somehow put a stop to the decline in the functions of the G7 and G20, which play a role in shaping the world order.

The expression “G7 is back” indicates an appreciation for the revival of the G7.

The above is a summary of the evaluations which I obtained from experts on U.S.-China relations and China issues while exchanging views with them during my three-week visit to the U.S. and Europe from May 21, immediately after the G7 meeting.

2. U.S. More or Less Softening Its Stance on China Prior to G7

A look at the diplomatic stance of the G7 countries on China finds that there is a gap between the U.S. and major European countries.

The U.S. is particularly tough on China, mainly led by a bipartisan Congress taking a strictly hardline approach against the country.

Placing an emphasis on the ideological conflict of dictatorship vs. democracy, hardline politicians and intellectuals against China dismiss the U.S. policy of engagement with Beijing as a blunder.

They believe that in order to prevent China’s military expansion, it is necessary to restrain its underlying economic development, and advocate decoupling as a policy to achieve this.

The Biden administration responded by adopting a harsh attitude to China, including restrictions on semiconductor exports and criticism of Beijing over the spy balloon issue.

In particular, in February 2023, a Chinese balloon was shot down by a U.S. military aircraft as it reached U.S. airspace. Furthermore, U.S. National Security Advisor Jake Sullivan warned China about providing weapons to Russia.

U.S.-China relations were at their worst at this time.

Thereafter, there has been no clear evidence that the Chinese balloon reconnoitered US bases, and additionally no evidence has so far emerged showing Beijing has actually sent arms to Russia.

Many U.S. experts on China believe that Washington’s initial response to these two matters was inappropriate.

Some experts say that the Biden administration wasted the first four months of the year at a time when cooperation with China was necessary for the success of the APEC summit to be held in San Francisco in November 2023.

Meanwhile, criticizing the U.S. for being too naive in its emphasis on ideological confrontation, major EU countries argue that China should be viewed from three perspectives: competitor in markets, cooperating partner in common global issues, and rival in political systems.

In 2023, President of the European Commission Ursula von der Leyen rejected the notion of decoupling from China as advocated by U.S. hardliners and proposed the concept of de-risking instead.

This is a policy of being less reliant on China in specific areas, while expanding economic relations.

The idea was shared by French President Emmanuel Macron and German Chancellor Olaf Scholz, and became the basic economic policies of major EU countries vis-à-vis China.

In her speech on March 30, President von der Leyen reiterated this idea.

Then, on April 27, National Security Advisor Jake Sullivan announced in a speech that the Biden Administration is also working to de-risk, not decouple, from China.

The EU welcomed the U.S. policy’s shift to a conciliatory stance toward China, as indicated by this statement.

The change in the U.S. was presumably due to the fact that the Biden administration was seeking an opportunity to halt deteriorating U.S.-China relations, where President von der Leyen acted as a mediator for closer cooperation with the U.S. government.

As described above, the rift between the U.S. and Europe had been gradually narrowing in the period prior to the G7 Hiroshima Summit. It thus can be said that Western unity was realized as an extension of this trend at the G7 Summit.

3. Policy toward China as Expressed in G7 Hiroshima Leaders’ Communiqué

Amid the narrowing gap between the U.S. and Europe in terms of policy toward China as seen above, the G7 Hiroshima Leaders’ Communiqué provides statements regarding China as the Western countries' basic policy toward the country.

Below is a summary of the evaluation of their characteristics by U.S. and European experts on China and others.

First, the overall tone of the statements was based on the arguments of the major EU countries, which are more conciliatory toward China, and the U.S. accepted these arguments.

Specifically, it is clearly stated that they recognize the importance of engaging with China; they do not seek to thwart China’s economic progress and development; they are de-risking, not decoupling; etc. All of these are incompatible with the claims of the hardliners in the U.S. against China.

Second, the statements regarding China were unusually detailed for a comment on a single country in the G7 Leaders’ Communiqué. The U.S. intentions were respected with regard to individual points made.

Third, the detailed statements of individual points are moderately and circumspectly worded so as not to provoke China.

In conclusion, the G7 Hiroshima Leaders’ Communiqué is credited with striking a balance between the U.S. and Europe, although a gap existed between them in terms of the stance on China.

Many experts almost unanimously agree that the G7 Hiroshima Leaders’ Communiqué has demonstrated G7 unity by being well-balanced in this way.

Nevertheless, while the communique is well-balanced in terms of language, it would be an overestimation to view it as a major change in U.S. policy toward China.

Quite a few experts point out that it is only a verbal agreement, and neither the U.S. nor the EU should be seen as having made any changes in their basic stance on China.

4. Future of U.S.-China Relations

The U.S. government launched an effort to restore dialogue with China shortly before the G7 Hiroshima Summit, and China responded in kind, resulting in a series of important talks between the two countries.

On May 8, U.S. Ambassador to China Nicholas Burns and State Councilor and Foreign Minister Qin Gang met in Beijing. On May 10, National Security Advisor Jake Sullivan and Chinese Politburo Member Wang Yi held a total of 10 hours of talks over two days in Vienna.

On May 23, Xie Feng, the new Chinese Ambassador to the U.S. arrived to assume office (his arrival had been postponed owing to worsening U.S.-China relations), while China’s Minister of Commerce Wang Wentao met with U.S. Secretary of Commerce Gina Raimondo in Washington, DC on May 25 and then with U.S. Trade Representative Katherine Tai on May 26.

Furthermore, it was announced that Secretary of State Antony Blinken would travel to Beijing from June 18 to 19. As evidenced by these moves, the U.S.-China dialogue has been active since May.

That being said, it is unlikely that these moves will help improve U.S.-China relations.

As the November 2024 presidential election rapidly approaches, election campaigns will soon get into full swing.

In the campaigns, both Democrats and Republicans are highly likely to become more hawkish on China, the only bipartisan position in an otherwise deeply divided policy. Accordingly, even if dialogue between the two countries increases, no improvement in their relations can be expected.

What can be expected is that increased dialogue will have the effect of strengthening crisis management to avoid armed conflict, but nothing more.

The above points are the unanimous view of all Western experts with whom I met during my recent trip.

Some U.S. experts point out as follows.

If President Joe Biden wins the presidential election in November 2024, a second-term Biden administration may push forward with a policy of accommodation with China, despite congressional opposition.

On the other hand, if former President Donald Trump wins, it is unclear what kind of policy he will pursue vis-à-vis China, and the risk of further deterioration in U.S.-China relations will likely be more severe.

In that case, not only U.S.-China relations but also U.S.-European relations are anticipated to fall into the worst possible situation again.

Therefore, the EU has no choice but to maintain a wait-and-see attitude toward the U.S. until the results of the presidential election are known.

The unstable domestic political situation in the U.S. is a serious cause for concern for both U.S.-China and U.S.-European relations.