China May Make Attractive Offers to De-Risking Companies, Expert Says

Although the EU, the U.S. and other nations want companies to pursue a de-risking strategy toward China, the Chinese government has a “number of tools” to make Western firms’ de-risking strategies “a lot less attractive to the company,” said Janka Oertel, director of the Asia program and senior policy fellow at the European Council on Foreign Relations. She said Western governments should keep in mind that some companies may not voluntarily choose to de-risk, especially if they're given a convincing business offer from Beijing.

China can “make very attractive offers to individual companies that are still desiring to be in the Chinese market,” Oertel said during an Oct. 11 event hosted by the Center for Strategic and International Studies. That may be challenging for some firms to turn down. “I want to see the company that is capable of handling that properly,” Oertel said. “I think that’s going to be incredibly difficult.”

Oertel also said there are a number of unanswered questions surrounding the U.S. and EU export control policy toward China. She noted there are “very different narratives” around export controls within Europe and the U.S., with some believing that withholding advanced technologies from China will only encourage it to develop those technologies itself. Others believe China is “going to do that anyway,” Oertel said, so the U.S. and the EU might as well use export controls to slow that process as much as possible.

“I think that's not resolved yet” and there are “all of these questions on our approach,” Oertel said. “I think that's really worth looking into for policymakers at the moment to understand what the end game is supposed to be.”