{"id":87668,"date":"2024-01-03T06:00:00","date_gmt":"2024-01-03T05:00:00","guid":{"rendered":"https:\/\/www.futuribles.com\/de-risking-eclairage-sur-un-nouveau-concept\/"},"modified":"2024-10-31T11:31:24","modified_gmt":"2024-10-31T10:31:24","slug":"de-risking-eclairage-sur-un-nouveau-concept","status":"publish","type":"post","link":"https:\/\/www.futuribles.com\/en\/de-risking-eclairage-sur-un-nouveau-concept\/","title":{"rendered":"De-risking: a new concept in the spotlight"},"content":{"rendered":"
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The notion of de-risking is increasingly present in the discourse of Western political leaders. In addition to a legitimate desire to mitigate the impact of new geopolitical disruptions on value chains, the concept is intended as a response to problematic dependencies on Beijing (critical metals, semi-conductors, etc.). It could lead to measures with serious consequences for any company trading with China.<\/h6>\n\n\n\n

Coined by the President of the European Commission, the concept of \u2018de-risking\u2019 was taken up in the United States in April 2023 by Jake Sullivan<\/a>, Joe Biden\u2019s National Security Adviser. In a speech given to the Brookings Institution, Sullivan justified the need for de-risking by observing the relative failure of happy globalisation as advocated by liberal philosophy: \u201cEconomic integration didn\u2019t stop China from expanding its military ambitions in the region, or stop Russia from invading its democratic neighbors. Neither country had become more responsible or cooperative.\u201d In a world where political pressure intensifies on international economic and financial ties, de-risking is less radical than other terms that have come into vogue in Europe in recent years: \u201cDecoupling suggests a radical separation, whereas de-risking [\u2026] implies curbing risks while avoiding a clean break\u201d, comments Agathe Demarais<\/a>, senior policy fellow at the European Council on Foreign Relations. What remains to be done is to define more precisely what is meant by this term, which is sometimes criticised for its ambiguity.<\/p>\n\n\n<\/div>\n

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Economic coercion, a Chinese strategy<\/h2>\n

It all starts with a simple problem:<\/a> in the event of a conflict \u2014\u00a0the invasion of Taiwan, for example\u00a0\u2014 China could embark on a strategy of economic coercion (embargoes, boycotts, export restrictions) to bring nations opposed to its interests to heel. In addition to a natural incentive for this type of behaviour <\/a>\u2014 linked to China\u2019s central position in globalised value chains \u2014 a long series of precedents support such a prediction. In 2010, for example, restrictions on Norwegian salmon imports followed the award of the Nobel Peace Prize to Chinese dissident Liu Xiaobo.[1]<\/a><\/sup><\/p>\n\n <\/div>\n

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\n Voir aussi<\/span>\n
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\n \n \"\"<\/a>\n <\/span>\n \n What Factors are Driving Global Value-Chain Reconfiguration?<\/a>\n \n \n \n <\/use>\n<\/svg>\n <\/a>\n <\/span>\n
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26 October 2023<\/div>\n LACHAUX Aymeric<\/a>\n
\n 14 p.\n <\/div>\n <\/div>\n\n
\n \n \n <\/use>\n<\/svg>\n\n Journal Article\n <\/a>\n Economics<\/a>\n Geopolitics<\/a>\n <\/div>\n <\/div>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n
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\n Norwegian total exports to China, 1993-2014 (in US$ million)\n <\/p>\n <\/div>\n

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Source: <\/em>Kolstad Ivar, op. cit.<\/em><\/a><\/p>\n\n <\/div>\n\n\n\n

Recent history suggests that the Chinese response will increase if the strategic interests at stake are greater. In 2016-2017, the installation of the first batteries of the US anti-missile system (THAAD\/Terminal High Altitude Area Defense<\/em>) in South Korea was followed by an intense campaign of economic retaliation: unofficial boycotts and dubious convictions for \u201cviolation of the fire prevention code\u201d resulted in the closure in China of nearly 74 shops of the Korean company Lotte Mart.[2]<\/a><\/sup>. The impact of coercive measures has been estimated at around US$10 billion for the Korean economy; in October 2018, faced with falling sales \u2014 down 76.9% in 2017 \u2014 the Lotte Mart conglomerate announced the withdrawal of most of its business from the Chinese market.[3]<\/a><\/sup><\/p>\n\n\n<\/div>\n

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But for Western tech companies, the consequences of restricting China\u2019s exports could be lethal, given current levels of dependence on certain critical Chinese materials and components. \u201cThe EU depends on China for 98% of its supply of rare earths, 93% of its magnesium and 97% of its lithium\u201d, Ursula von der Leyen reminded us in March 2023, and \u201c80% of the world\u2019s critical minerals are processed by China\u201d, Jake Sullivan added a few weeks later.<\/p>\n

It is also in the metals sector that the China-US trade war is at its fiercest. On July 3, Beijing announced the introduction of an export visa for gallium and germanium, two critical metals used in the manufacture of strategic equipment. In response, on 9 August, Washington announced tighter controls on investment in China in the latest generation of processors, quantum computing and artificial intelligence[4]<\/a><\/sup> and imposed new limits on technology exports to China, in the hope of dominating the race for cutting-edge technologies linked to the energy transition.<\/p>\n\n <\/div>\n

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\n Voir aussi<\/span>\n
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\n \n \"\"<\/a>\n <\/span>\n \n The United States and China: An Unbalanced Techno-Commercial Confrontation?<\/a>\n \n \n <\/use>\n<\/svg>\n <\/a>\n <\/span>\n
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5 October 2023<\/div>\n SEAMAN John<\/a>\n
\n 7 min.\n <\/div>\n <\/div>\n\n
\n \n \n <\/use>\n<\/svg>\n\n Interview\n <\/a>\n Economics<\/a>\n Geopolitics<\/a>\n <\/div>\n <\/div>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n
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A coordinated US-European effort?<\/h2>\n

Following a series of laws signed by Joe Biden, including the Inflation Reduction Act (which earmarks US$369 billion for the relocation of activities in the United States), the White House has endeavoured to convince allied countries to impose their own restrictions on sending technology to China. In November 2023, the European Union (EU) approved the Critical Raw Materials Act, designed to improve Europe\u2019s competitiveness in clean technologies (cleantech). The aim? To diversify European supply chains and counterbalance the overwhelming dependence on Beijing for certain strategic supplies. The regulation establishes a list of 17 strategic raw materials such as cobalt, nickel and aluminium, for which it sets quantified targets. By 2030, no country should supply more than 65% of a strategic material, and the European Union is committed to relocating core capacities on the continent (at least 10% of the EU\u2019s annual consumption for extraction, for example). However, this effort remains minimal compared to all the areas potentially concerned. According to the European Commission<\/a>, the EU is currently over-dependent on 137 strategic products. Of these, 34 imported products, or 0.6% of all imports, have no \u201cobvious substitutes\u201d. The EU imports 52% of these strategic products from China.<\/p>\n\n <\/div>\n

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\n Voir aussi<\/span>\n
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\n \n \"\"<\/a>\n <\/span>\n \n The Long-term Strategic Dependencies of the European Union \u2006<\/a>\n \n \n \n <\/use>\n<\/svg>\n <\/a>\n <\/span>\n
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26 October 2023<\/div>\n VICARD Vincent<\/a>\n WIBAUX Pauline<\/a>\n
\n 18 p.\n <\/div>\n <\/div>\n\n
\n \n \n <\/use>\n<\/svg>\n\n Journal Article\n <\/a>\n Economics<\/a>\n Geopolitics<\/a>\n <\/div>\n <\/div>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n
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Fragmentation or re-globalisation in the future?<\/h2>\n

The new techno-commercial war being waged by the world\u2019s major economies is bound to last for decades, with periods of intense tension alternating with temporary calm. This will necessitate a partial or complete reorganisation of value chains. Even if it is not intended to be a tool for de-globalisation, de-risking could have a wide range of consequences, the most tangible being, in the short term, the raising of protectionist barriers. Minimising risk means striking a balance between securing supplies and maximising profits.<\/p>\n

Contrary to post-Cold War practices \u2014\u00a0where the creation of globalised value chains was accompanied by a reduction in production costs\u00a0\u2014 efforts to de-risk through reshoring and friendshoring (relocation to countries deemed reliable) could lead to higher costs and seriously undermine growth. In a recent study, the International Monetary Fund<\/a> (IMF) warns that the relocation of production or offshoring to other countries could considerably slow growth worldwide, even in the absence of new trade restrictions with third countries.[5]<\/a><\/sup> According to the researchers\u2019 calculations<\/a>, such a scenario would reduce gross domestic product (GDP) by 4.7% in the countries most affected. On the other hand, the IMF recently published an impact study<\/a> on the positive spin-offs that comprehensive reforms in China could generate.<\/p>\n\n <\/div>\n

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\n Voir aussi<\/span>\n
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\n \n \"\"<\/a>\n <\/span>\n \n Industrial Relocalisation: Reshoring or Nearshoring?<\/a>\n \n \n \n <\/use>\n<\/svg>\n <\/a>\n <\/span>\n
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6 September 2022<\/div>\n LAMBLIN V\u00e9ronique<\/a>\n
\n 9 p.\n <\/div>\n <\/div>\n\n
\n \n \n <\/use>\n<\/svg>\n\n Foresight Analysis\n <\/a>\n Economics<\/a>\n <\/div>\n <\/div>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n
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\n Losses from friend-shoring and reshoring scenarios (GDP, percent deviation from baseline)\n <\/p>\n <\/div>\n

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Source: <\/em>IMF, op. cit.<\/em><\/a><\/p>\n\n <\/div>\n\n\n\n

Nor is friendshoring (relocating to allied countries) an infallible guarantee of the solidity of value chains. A case in point is Apple, the world\u2019s largest company in terms of market capitalisation, which, despite having moved a significant proportion of its production out of China in recent years, retains significant indirect links with Chinese companies in third countries and remains exposed to risk. The digital giant lists 25 manufacturers in Vietnam on its official list of suppliers, nine of which are from mainland China, reports The Economist <\/em>magazine<\/a>. <\/p>\n\n\n\n

In conclusion, the concept of de-risking raises crucial questions about the balance between security and economic efficiency in a changing geopolitical context. As Western nations seek to reduce their dependence on powers such as China, they must navigate between the risks of disrupting value chains and the imperatives of maintaining competitiveness. The European and American elections (scheduled for June and November 2024 respectively) should open up new prospects, particularly for clarifying the ability of the United States and the EU to present a united front to meet the challenges of China\u2019s rise. <\/p>\n\n\n\n

\u2014\u2014\u2014\u2014\u2014\u2014\u2013
N.B.: <\/em>this article has been translated from French by DeepL, and revised by the author and Futuribles.<\/span><\/p>\n\n\n

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  1. \n

    According to Ivar Kolstad in \u201cToo Big to Fault? Effects of the 2010 Nobel Peace Prize on Norwegian Exports to China and Foreign Policy<\/a>\u201d, Chr. Michelsen Institute (CMI) Working Paper, <\/em>2016. \u2191<\/a><\/p>\n<\/li>\n

  2. \n

    See Feigenbaum<\/span> Evan A., \u201cIs Coercion the New Normal in China\u2019s Economic Statecraft?<\/a>\u201d, Carnegie Endowment for International Peace, July 25, 2017; or Harell<\/span> Peter, Rosenberg<\/span> Elizabeth and Saravalle<\/span> Edoardo, China\u2019s Use of Coercive Economic Measures<\/em><\/a>, Center for a New American Security (CNAS), 2018, p. 9. \u2191<\/a><\/p>\n<\/li>\n

  3. \n

    Lotte, the company hit by these measures, had provided the groundwork for the deployment of THAAD in Korea. See Lim<\/span> Darren J. and Ferguson<\/span> Victor, \u201cChinese Economic Coercion during the THAAD Dispute\u201d<\/a>, The Asian Forum, December 28, 2019. \u2191<\/a><\/p>\n<\/li>\n

  4. \n

    See our interview with John Seaman on this site<\/a> on October 5, 2023. \u2191<\/a><\/p>\n<\/li>\n

  5. \n

    A study based on a modelling of a scenario in which countries have to choose between America and China, their decision as to which of the two superpowers to choose being determined by recent voting patterns at the United Nations. \u2191<\/a><\/p>\n<\/li>\n<\/ol><\/div>","protected":false},"excerpt":{"rendered":"

    The notion of de-risking is increasingly present in the discourse of Western political leaders. In addition to a legitimate desire to mitigate the impact of new geopolitical disruptions on value chains, the concept is intended as a response to problematic dependencies on Beijing (critical metals, semi-conductors, etc.). It could lead to measures with serious consequences … Continued<\/a><\/p>\n","protected":false},"author":25,"featured_media":85405,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"none","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"both","_seopress_redirections_param":"","_seopress_redirections_type":301,"_seopress_analysis_target_kw":"","footnotes":""},"categories":[140],"tags":[133,203],"keyword":[953,863,841,950,896,845,1123,1026,909],"class_list":["post-87668","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newswatch","tag-economie-et-emploi-en","tag-geopolitique-en","keyword-chine-en","keyword-entreprises-en","keyword-union-europeenne-en","keyword-politique-industrielle-en","keyword-relations-internationales-en","keyword-commerce-international-en","keyword-matieres-premieres-en","keyword-risques-en","keyword-etats-unis-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts\/87668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/comments?post=87668"}],"version-history":[{"count":5,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts\/87668\/revisions"}],"predecessor-version":[{"id":99176,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts\/87668\/revisions\/99176"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/media\/85405"}],"wp:attachment":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/media?parent=87668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/categories?post=87668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/tags?post=87668"},{"taxonomy":"keyword","embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/keyword?post=87668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}