Added to the mix is the growing misuse of economic leverage by countries like China as part of their foreign policy to settle diplomatic scores. It is not surprising then that countries worldwide are actively seeking ways to “de-risk” their economic security not only from geopolitical, environmental, and other crises but also from economic practices amounting to diplomatic coercion.
The risks have magnified and diversified amid rising extraneous challenges and their knock-on effects, ranging from environmental degradation and global warming to humanitarian disasters and wars.
In particular, major advanced economies like the United States (US), European Union (EU) countries and other G7 nations are trying to take back control of the global production and supply chains by both looking inwards and outwards outside of China to reduce the risk of exposure to the latter’s increasingly untransparent and unpredictable geopolitical practices which are a result of its state-centric and security-oriented economic policies. These efforts are likely to augur well for emerging economies in the Indo-Pacific like India, Vietnam, and Indonesia, which may not only find economic fillip for their domestic economies in the West’s attempts to de-risk but also a further geopolitical alignment with major powers in a pursuit for a free, fair and multipolar global order. However, it will be crucial for the benefiting nations to be mindful of their own economic entanglements with China, more so because of their geographical proximity to the country, which has long exposed them to more direct and greater geopolitical challenges from the People’s Republic of China (PRC).
Diplomatic de-risking
Within the global economic context, de-risking refers to efforts to reduce risks to economic operations through concerted means, including, most recently, a conscious shift to diversify supply chains and production. However, the current push for de-risking by Western economies as a diplomatic exercise arises not just from a desire for greater economic security, but equally from a geopolitical necessity today to safeguard one’s strategic autonomy vis-á-vis “systemic rivals” like China.
