Decoupling From China Proves Harder Than Western Policymakers Expected

Since Donald Trump’s first term as U.S. president, curbing China’s economic and technological rise has become a central priority for policymakers in both the United States and the European Union. This shift has been accompanied by the emergence of several new policy concepts, such as “decoupling,” “de-risking,” “de-globalization” and “re-globalization,” which reflect evolving strategies toward China’s role in the global economy.

Within these policy frameworks, “de-globalization” carries an implicit meaning closely aligned with decoupling or de-risking. It signals an effort by Western economies to reduce dependence on Chinese manufacturing, trade networks and supply chains in order to undermine China’s competitive edge in the global economy.

Conversely, “re-globalization” reflects not a retreat from globalization itself, but an attempt to reshape it. The goal is to redesign global economic structures — particularly in high-tech sectors and strategic industries — in ways that reduce dependence on China and reorganize supply chains around “trusted” partners. In this sense, re-globalization points to a new phase of globalization characterized less by efficiency-driven integration and more by strategic competition against China.

Together, these ideas illustrate a broader transformation: globalization is not ending, but being reconfigured under the pressures of geopolitical rivalry, with China at the center of this reordering.

The policy agendas built around these concepts, however, have so far failed to significantly diminish China’s central role in global manufacturing and supply chains. Recent evidence suggests that China’s position has proven resilient and, in some respects, structurally embedded.

A key explanation comes from a 2024 U.S. Federal Reserve report titled “As the U.S. is Derisking from China, Other Foreign U.S. Suppliers Are Relying More on Chinese Imports.” This report demonstrates that although the U.S. has reduced its direct imports from China, it has simultaneously increased imports from third countries that are themselves more reliant on Chinese inputs. In effect, dependence has not been eliminated but rerouted: China’s role has shifted upstream in global value chains, with its components and intermediate goods continuing to flow indirectly into U.S. imports. These dynamics highlight the limits of “de-risking” when supply chains remain deeply interconnected.

A central insight is that these third-party suppliers increasingly use Chinese intermediate goods in their own production. The report notes that as their share of imports from China rises, so too does the Chinese value-added content embedded in the goods they export. This means that even when the U.S. imports from alternative partners, those imports often still contain significant Chinese inputs, effectively preserving China’s role within the supply chain.

Empirical data across major U.S. partners, including Canada, Mexico, Germany, Japan, South Korea and Vietnam, support two key findings. First, these countries have generally increased their own reliance on Chinese imports over time. Second, the U.S. has shifted its sourcing toward countries that already have stronger trade linkages with China.

A complementary perspective from a European policy report, “How China is de-risking better than Europe,” echoes these findings: while the EU has struggled to articulate and implement a coherent de-risking strategy, China has been more effective in reducing its own vulnerabilities. Through long-term diversification of markets and resources, expansion into the Global South and coordinated industrial policy, China has strengthened its resilience even as Western economies attempt to rebalance away from it.

The report argues that China has been more effective than Europe in mitigating risks to its economic and strategic position, largely because it has pursued a long-term, coordinated and comprehensive approach, whereas the EU’s efforts remain fragmented and reactive. A key finding is that Europe’s concept of “de-risking,” introduced in 2023, has lacked clarity in both strategy and implementation.

While EU leaders identified the so-called vulnerabilities — such as dependence on China in critical technologies and supply chains — policy responses have been slow, inconsistent and often counterproductive. In several cases, including energy and semiconductors, Europe has merely shifted dependence from one dominant supplier to another rather than genuinely diversifying risk.

In contrast, China has pursued risk mitigation through decades of deliberate policy. Its strategy centers on diversification: expanding export markets beyond the U.S. and EU, securing multiple sources of energy and raw materials, and strengthening domestic demand through the “dual circulation” model. At the same time, China has reduced exposure to Western financial and technological pressure while increasing engagement with the Global South via investment and diplomacy.

Another central argument is that China’s success stems from a holistic approach to national security, which integrates economic, technological, political and military policy under centralized coordination. This allows China to anticipate and manage external shocks — such as trade wars or sanctions — more effectively than the EU, where decision-making is slower and more fragmented. The report concludes that China’s coordinated diversification and long-term planning have made it more resilient to global economic and geopolitical risks.

Faced with intensifying strategic competition and a shifting global landscape, China is navigating a dual imperative that is both defensive and proactive. On the one hand, consolidating its structural position means reinforcing the foundations that made China central to the global economy: its manufacturing depth, infrastructure, supply chain integration and scale.

This involves cultivating new quality productive forces by upgrading industrial capabilities, especially in advanced manufacturing, reducing vulnerabilities in critical technologies and strengthening domestic demand. It also requires maintaining its role as a key hub in global supply chains despite external pressures such as tariffs, export controls and investment restrictions from the U.S. and its partners.

On the other hand, China is not merely reacting; it is actively seeking to shape the contours of the emerging economic order. This includes expanding economic ties with the Global South, promoting alternative trade and investment frameworks, and setting standards in next-generation technologies such as AI, green energy and digital infrastructure. Such initiatives reflect an ambition to shape globalization’s reconfiguration rather than be constrained by it.

Recent data show that China has effectively mitigated the impact of Western de-risking by expanding its trade ties with the Global South. China’s exports to these countries reached approximately $1.6 trillion in 2024, more than 50% higher than its combined exports to the U.S. and Western Europe. Driven by trade diversification and programs such as the Belt and Road Initiative, China’s economic engagement has increasingly focused on regions including Africa, Southeast Asia and the Middle East. By 2025, trade with Belt and Road partner countries accounted for 51.9% of China’s total trade.

China’s experience demonstrates that effective risk management is not synonymous with disengagement, but with abiding by objective economic laws. Through long-term diversification, industrial upgrading and the expansion of South-South economic and trade linkages, China has not only mitigated external vulnerabilities but reinforced its structural embeddedness in global supply chains and value chains.

Rather than being displaced or replaced, China has moved upstream, deepening its role as a provider of intermediate goods and a coordinator of production networks. In this sense, China continues to function as a centripetal force in the global economy, drawing production, trade and investment into its orbit, thereby making sustained contributions to the stability, predictability and growth of the global economy.

When China advocates win-win cooperation and inclusive, shared economic globalization, perhaps it is more than mere rhetoric.

Li Xing is a Yunshan Leading Scholar and director of the European Research Center at the Guangdong Institute for International Strategies, Guangdong University of Foreign Studies. He is also an adjunct professor of international relations at Aalborg University in Denmark.