The United States appears intent on pulling others along in what critics describe as an effort to separate China from the global economy and to slow or block progress in China’s emerging technology sector.
In place of the word separation, a newer English term has surfaced to describe the move as reducing risk, which essentially means eliminating risks. Yet opinions on this rationale remain divided.
At the last assembly in Tianjin, sometimes called the Davos of Asia, Ngozi Okonjo-Iweala, the director-general of the World Trade Organization, warned about the hazards of this strategy.
She noted that if two trade blocs form—one anchored in the Western world and the other in parts of the global South—the global GDP could suffer over time, with potential losses around five percent. The International Monetary Fund has offered an even more cautious view, suggesting declines near seven percent.
The scale of the disruption would be massive, comparable to the entire output of Japan, the third-largest economy, and Okonjo-Iweala emphasized that such a drop would be unaffordable for the world economy to absorb.
Whether fear of economic pain will trigger a shift in policy remains uncertain. Washington has already signaled further steps that may matter deeply for China’s trajectory.
One policy option gaining attention is what is commonly called outbound investment screening. In practical terms, this approach would subject investments by U.S. companies in China to a screening process that could ban projects if they are deemed to involve undesirable technology transfers.
While the initial focus centers on military applications, observers note the policy could expand to other sectors that support China’s technological development, which Washington views as a key competitive challenge.
A recent report from the Washington-based Peterson Institute for International Economics contends that the Biden administration has not provided clear rules, a factor that could undermine confidence in international trade dynamics.
Beijing has expressed skepticism about Washington’s aims. Li Qiang, the Chinese premier, warned at the Tianjin meeting that described invisible barriers could lead to fragmentation and even conflict if imposed in practice.
Meanwhile, some Western voices urge more openness. New Zealand Prime Minister Christopher Hipkins has stated a commitment to strengthening trade relations with China, signaling a different path from the escalating pressure seen in other capitals.
In Europe, not every leader aligns with Washington’s stance. Peter Szijjarto, Hungary’s foreign minister, condemned what he called an overly ideological mood within the European Union on this issue in the Chinese city where discussions took place.
Meanwhile, European industry has already benefited from Chinese investment. Three major German automakers Audi, BMW, and Mercedes-Benz have established manufacturing plants in Hungary, and the country has attracted significant investments from CATL, a leading Chinese battery producer. Szijjarto cautioned that pulling back from shared economic life would threaten European growth and specifically endanger the German industry still vital to the region’s employment and innovation ecosystem.
The tension between risk management and market integration remains a central challenge for policymakers. Proponents of tougher screening argue they protect national security and technological leadership. Critics warn that excessive protectionism could fracture supply chains, raise costs for consumers, and slow global innovation patterns. The debate continues as governments weigh the balance between safeguarding strategic interests and preserving the benefits of an interconnected global economy.