Xinhua News Review: "Risk Reduction" Increasing Global Risks - Beware of the Traps of "Risk Reduction" Words Part 2: China | Global | Risks

Xinhua News Agency, Beijing, July 17th (Xinhua) - "Risk reduction" increases global risks - Be wary of the trap of "risk reduction" rhetoric - Part 2 of a series of comments

Xinhua News Agency reporter Li Rong

The so-called "de risk" repeatedly promoted by the United States is actually a practice of "de sinicization" under the name of "de risk", and it still adheres to the underlying logic of "decoupling and chain breaking". This kind of "risk reduction" aimed at confrontation will result in the elimination of opportunities, cooperation, stability, and development, which will inevitably bring unbearable weight to the long-term development of the world and bring huge risks to the world today.

"Risk reduction" will increase the risk of conflict and friction in the global economy, dragging down the already weak global economic recovery process. China is the world's second largest economy, and its goods trade has been the world's largest for six consecutive years in 2022, playing a significant role in promoting global economic recovery. The so-called "risk reduction" by the United States is based on treating China as a "risk". Essentially, it politicizes and ideologizes economic and trade issues, which not only violates the basic principles of free trade and non discrimination advocated by the World Trade Organization, but also undermines the authority and effectiveness of the multilateral trading system, and goes against economic laws, ultimately hindering the process of world economic recovery. According to an article published on the website of the German magazine Der Spiegel, attempting to reduce political risks through trade barriers is itself a risk. The reason is not complicated. Engaging in outsourcing with friendly banks and forcefully promoting supply chain restructuring will inevitably hinder global trade flows. For enterprises, developing new and more dispersed supply chains will significantly increase costs, and many companies may collapse or even disappear as a result. "Not cooperating with China is the biggest risk for business development," said Benz, President of the Greater Dutch Company in China. At the same time, the escalating tension may also lead to cross-border capital outflows, including direct investment, which poses particularly high risks for developing and emerging market economies. According to the International Monetary Fund, the intensification of geopolitical tensions may lead to a decrease of 0.2% to 7% in global economic output.

Technological progress is an important way to help the world economy break through bottlenecks and achieve recovery. However, the United States promotes decoupling and disconnection from China through "risk reduction", building "small courtyards and high walls" everywhere, blocking the channels of technology dissemination, and causing global technology research and development to become fragmented, which will delay the overall technological progress of humanity. In today's world, from hardware to software, from basic science to application research and development, the technological development of various countries is constantly optimized, upgraded and promoted through mutual integration. Strengthening technological blockade and disrupting existing global technological exchanges and cooperation will disrupt the technology cooperation ecosystem and supply chain feedback and circulation mechanisms that have been established through years of global efforts, hindering industry innovation and productivity improvement. The huge market owned by China is a fertile ground for incubating and developing new technologies, and consumer usage and demand feedback are of great significance for product updates and technological iterations. "Risk reduction" may even force countries to adopt different technical standards, and some countries will have to use incompatible technologies, damaging interoperability and affecting efficiency and security. Nvidia CEO Huang Renxun has warned that if American companies cannot sell advanced chips to China, they will suffer "huge losses". Nvidia's CFO, Colette Kress, further stated that if restrictions on the sale of data center graphics processors to China are implemented, it will result in the permanent loss of competition and leading opportunities for the US industry in one of the world's largest markets.

Under the guise of "de risk", enterprises are seeking to persuade allies to build a "parallel system" that excludes China. This divisive approach not only poses huge risks to the deeply integrated global economy, but also disrupts global economic governance and hinders the deepening of many common global issues. Singapore's Deputy Prime Minister Huang Xuncai said, "A fragmented global economy will divide the world into competing regional groups." IMF Chief Economist Gulansha warned that so-called "risk reduction" may divide the global economy into independent groups. The dismantling of trade barriers and breaking down ideological barriers has been a noble cause that visionary politicians around the world have been striving for for decades, benefiting countries including the United States and its allies. However, "risk reduction" artificially creates obstacles for economic, technological, intellectual, and cultural exchanges, undermines the cornerstone of mutual trust among countries, and the world may fall back into the quagmire of the "Cold War". Processes that require joint efforts from the international community, such as eliminating inequality and poverty, and jointly addressing climate change, will also be dragged down.

The risks caused by "de risk" are obvious, and many US allies are also cautious about its attitude. Regarding issues related to EU foreign relations, the European Commission on Foreign Relations, a think tank, recently conducted a questionnaire survey of 16000 people in 11 EU countries. The majority of respondents believed that Europe should maintain good economic and trade relations with China and should not take sides in political issues between China and the United States. The German Business Daily recently reported that "risk reduction" encountered difficulties in the implementation process, and 86% of respondents in a related survey believed that this process posed challenges to them.

Expanding the cake of common interests and achieving incremental development is the right path to promote global economic recovery, as well as the fundamental way to solve numerous severe challenges. The so-called "risk reduction" in the United States is based on its paranoid zero sum game and Cold War mentality. Countries need to remain highly vigilant about the prospects of the "new Cold War", join hands, seek common ground while reserving differences, gather and assimilate differences, promote more creative cooperation, and make due contributions to sustainable development of humanity.