Tianjin, Brussels, Berlin China’s Premier Li Qiang has rejected calls by Western leaders for a reduction in economic dependence on the People’s Republic. Li warned against turning the notion of risk into an “ideological tool.”
Both the EU and the US are currently working to reduce dependence on the world’s second-largest economy, fearing that the authoritarian country could use it as a means of leverage. To this end, supply chains are to be organized in such a way that, if necessary, they can also do without Chinese components. This strategy is known as “derisking”.
China firmly rejects “artificial politicization of economic and trade issues,” Li said in his opening speech at the summer edition of the World Economic Forum in Tianjin on Tuesday.
Last week, EU Commission chief Ursula von der Leyen presented an economic security strategy aimed at reducing political risks in economic relations with China. Before the end of this year, the Commission intends to draw up a legislative proposal that will enable a state examination of certain investments in China for the first time.
Von der Leyen is following the policy of the US government. However, the EU member states are still skeptical. They insist that Europe’s derisking plans would not target China.
The European Union has no intention of decoupling or turning inwards,” the EU heads of state and government want to emphasize at their summit meeting later this week. This is what it says in the draft of the final declaration for the summit, which is available to the Handelsblatt. European “policy is not aimed at harming China or hampering China’s economic progress and development,” it said.
In some member states, there is concern that the US is also using derisking as an excuse to weaken Chinese economic growth and avoid being overtaken economically. The EU wants to break away from this.
The summer version of the WEF in China also uses the country as a stage for its economic interests.
(Photo: IMAGO/VCG)
For ethical reasons alone, the EU should not follow this path, Jeromin Zettelmeyer, head of the Bruegel think tank in Brussels, recently told the Handelsblatt.
What exactly falls under the term derisking and how it can be implemented is currently one of the most important economic debates – and also characterizes the Economic Forum in Tianjin. The event, also known as “Summer Davos”, is taking place in China for the first time since the pandemic. The state leadership had largely sealed off their country from the outside world for the past three years and pursued a strict zero-Covid policy.
>> Read here: European companies complain about the poor business environment in China
Since the abrupt end of the restrictions, China’s government has been making great efforts to attract investments and know-how from abroad, also because there have recently been increasing indications that the world’s second-largest economy is recovering more slowly from the corona chaos than many had hoped.
In his speech, however, Li countered speculation that economic growth in the People’s Republic was weakening. He pointed out that the economy grew by 4.5 percent in the first quarter. It is expected that it will “grow even faster” in the second quarter and be “on track” to achieve its self-imposed growth target of around five percent.
Beijing puts security before economic growth
China’s prime minister, in office since March, has just returned from his first trip abroad to Germany and France. In Berlin, Li had spoken critically to German company representatives about calls for derisking. According to the state news agency Xinhua, companies should “take control” themselves again when it comes to risk assessment. He warned against “artificially exaggerating” the discussion of dependencies. The biggest risk is not cooperating, Li said.
Unlike in previous years, this time only a few well-known private entrepreneurs are represented at the summer Davos.
(Photo: Reuters)
The atmosphere of the meeting last week was relaxed, one participant reported to the Handelsblatt. The Prime Minister reported with a wink that he used to drive a Volkswagen Santana or an Audi without seeing this as a risk. He also did not consider examinations in the hospital with medical devices from Siemens to be risky.
>> Read here: German companies invest more than ever in China – where the greatest dependencies exist
China’s criticism of the politicization of the economy and the concept of risk reduction is not without a certain irony. The state leadership under Xi Jinping has been pushing for greater independence of the domestic economy for years. The economic policy strategy “Made in China 2025” was presented as early as 2015, followed in 2020 by the concept of the double economic cycle, which envisages strengthening the domestic economy. In addition, the ruling Communist Party increasingly placed national security above economic interests.
In Tianjin, too, the increasing politicization was evident at first glance. Right at the entrance of the convention center, the organizers set up a booth presenting Xi Jinping’s ideological doctrine – the collected works of “Ideas of Socialism with Chinese Characteristics in the New Age.”
Unlike in previous years, this time only a few well-known private entrepreneurs are represented at the summer Davos. Even top-class participants from abroad were hardly to be found on the list of participants. China is apparently finding it difficult to convince the international business elite that they are welcome back after three years of corona lockdown.
More: Von der Leyen moves away from free trade.