![]() ![]() We aim to clarify how policy-makers can go from a loose term like “de-risking” to an actual policy. Major leaders (Ursula von der Leyen, Olaf Scholz, Jake Sullivan, Janet Yellen) have called for “de-risking” from China, while warning against “decoupling.” At the same time, security and geopolitical risks are increasingly identified in political discourses as a major factor to consider in any relationship with China. But firms also worry about their exposure to China. This does not come as a surprise - consumers and firms chose these exchanges for their own benefit. After a period of somewhat weaker dynamics during the Covid pandemic, economic relations have picked up again. Exports and imports are substantial, investments occur in both directions, and there is also substantial technological interdependence. Germany, the EU, and the G7 countries are deeply economically intertwined with China. We propose forming a European Economic Security Committee consisting of both member state representatives who bring classified intelligence and relevant Commissioners tasked with defining strategy. To become operational, we suggest focusing policy action on clearly identifiable security risks and developing data-driven approaches to identify broader macroeconomic risks. Political appeals without concrete policy measures will have little effect. Public policy measures require both a precise definition of the risks and appropriate policy measures tailored to them. It is for policy-makers to decide which security risks, production risks, and political risks are so geopolitically relevant that firms need to act on them.
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