China state think tank sees ‘targeted decoupling’ in supply chains with the West as a top risk for 2022 amid rising tensions
- Report comes as Washington continues to restrict China’s access to strategic technologies, such as advanced chips
- Global financial turmoil and increased tensions over Taiwan Strait also seen as key risks in 2022
A Chinese state think tank has listed a “targeted decoupling of supply chains” as one of the top 10 global risks in 2022, along with mutations of the Covid-19 virus, underlining how serious the issue is viewed by top scholars in the country.
The list, which also includes possible US financial turmoil amid Federal Reserve policy changes and heightened tensions over the Taiwan Strait, was produced by the National Institute for Global Strategy and the Institute of World Economics and Politics, both under the Chinese Academy of Social Sciences (CASS). It indicates that Chinese academics see a partial decoupling between China and the Western world as a realistic threat as Washington continues to restrict China’s access to strategic technologies, such as advanced chips.
“The world economy made a quick recovery in 2021, with China and the US the first two countries to bounce back to pre-pandemic levels with their output,” states the institute’s report, published by the official Guangming Daily on Friday. “But the worldwide deficit remains unsolved, and the China-US stand-off has entered a long-term phase.”
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“Western countries may further add ideological and geopolitical factors into supply chain management to push partial decoupling through the EU-US Trade and Technology Council, the India-Japan-Australia Supply Chain Resilience Initiative, and the supply chain leg of the Quadrilateral Security Dialogue between the US, India, Japan and Australia,” the institute added.
The report comes as China’s deep integration into global value chains as a result of decades of trade and investment faces growing geopolitical headwinds, and after repeated pledges by the Chinese government to improve technology self-sufficiency in areas such as semiconductors.
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The CASS institute also listed a military conflict between Russia and Ukraine and debt default risks in emerging economies such as Turkey and Argentina, as major risks for 2022.
On the issue of the Taiwan Strait, the institute said tensions may grow in 2022.
“The US will also hold midterm elections in November and the Biden administration may toughen its China policies and intensify provocations on Taiwan issues … the US may even substantially advance US-Taiwan free trade talks,” the institute predicts.
“Japan may accelerate talks with the US over deployment of intermediate-range missiles, while Australia may acquire more military technologies and enhance its military capabilities against China through the Aukus alliance,” said the institute, referring to the trilateral security pact signed in September 2021 between the US, the UK and Australia.
