Financial TimesFinancial Times

The other economic security threat from China

By Martin Sandbu

25 May 2023 · 5 min read

Editor's Note

Many Western companies regard the prospect of decoupling from China with trepidation, writes the FT's Martin Sandbu. But the more acute risk may be that the economy isn't all it's cracked up to be.

Governments on both sides of the Atlantic have resolved that they will not let their economic relations with China become — or remain — a geopolitical dependency that Beijing could use for its own strategic purposes. While this fear had been growing for years, helped along nicely by an increasingly unabashed Chinese openness that economic dependencies on it were precisely what it was seeking, Russian president Vladimir Putin’s weaponisation of energy demonstrated how real the risk was. That political shock is a main driver of global politics today, as the latest G7 summit shows. That is despite Europe’s surprisingly creditable performance in weaning itself off Russian gas at much less economic cost than many had feared — including in Germany, as I highlighted in my column this week.

Western companies, however, are starting to squeal. A striking example is Nvidia, the US chipmaker that is a global leader in AI-suitable semiconductors. In an interview with the FT, chief executive Jensen Huang warned that US policies to limit US chip sales to China threatened “enormous damage to US companies” because it removed the incentive to invest in capacity:

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