De-risking from China

The covid-19 pandemic and Russia’s invasion of Ukraine exposed the perils of high supply dependencies on single markets. Now the United States, the European Union, Japan and other major economies are advancing policies designed to mitigate supply chain risks.

At the top of the new de-risking agenda is lowering high dependences for critical resources and technologies from the world’s largest manufacturer: China. From printed-circuit boards to electric vehicle batteries, the Chinese market is a large supplier of technologies essential for the digital and green transitions. Alternative investment destinations in India and Southeast Asia offer possibilities to diversify away from high dependencies on China, but the process is neither quick nor easy. From new mines for critical minerals to the development of new manufacturing hubs for digital and green technologies, some supply chains will endure and others will be remade.

In “Remaking the Chain”, a series for the Wire China, DIIS senior researcher Luke Patey writes about the challenges, opportunities, and consequences of western and East Asian governments de-risking supply chains and advanced technologies from China. The series explores whether the European Union can overcome its deep reliance on China’s rare earths and critical minerals supply chains, what western countries can learn from Japan’s economic security agenda, the consequences of outbound investment regulation on advanced technologies in the United States, and India’s potential as a de-risking destination for multinational corporations.