‘De-risking’ stems from zero-sum mindset

In a sign of Germany’s growing interest in Vietnam, a business delegation comprising representatives of top German companies such as tunnel boring machine maker Herrenknecht and wind farm developer PNE AG is joining German President FrankWalter Steinmeier on a state visit to the Southeast Asian manufacturing hub, which started on Tuesday.

German companies have already invested more than $3 billion in Vietnam, as cooperative engagements flourish at all levels and in numerous policy fields, especially after the two countries established a “strategic partnership” in 2011. Germany is now Vietnam’s most important trading partner in the European Union, while Vietnam is Germany’s top trading partner among the members of the Association of Southeast Asian Nations.

The mutually beneficial cooperation has not been achieved at the expense of any third party. Yet unfortunately, some have tried to depict the closer GermanVietnam economic ties as part of a “de-risking” from China strategy of Germany. The ongoing visit “underlines Germany’s interest in looking beyond China and diversifying its economic relations”, said Florian Feyerabend, the representative in Vietnam for Germany’s Konrad Adenauer Foundation, a think tank.

The remarks reflect a zero-sum mindset as harbored by some people, who tend to oversimplify normal trade relations between countries, for example, by seeing Vietnam’s gain from a closer partnership with Germany as China’s loss. Yet they are glassy-eyed about the fact that trade between

China and Germany reached a record level of $320 billion in 2022, as China remained Germany’s most important trading partner for the seventh year in a row. The volume was about 18 times that between Germany and Vietnam.

Indeed, there have been calls in Europe in recent years to follow the US’ efforts to reduce economic dependence on China, or to “de-risk” from China, amid rising geopolitical tensions.

Some European companies, under pressure from Washington, have even cut business links with China to the detriment of their own interests. The Dutch government, for example, has revoked ASML’s export license to supply some advanced chipmaking machines to China after the US applied great pressure, costing the company a lot of business opportunities.

Yet the Washington-initiated strategy of “de-risking” from China has nothing to do with ensuring Europe’s economic or technology security. “If you look at what the United States is doing, it’s all about curtailing the ability of China to make industrial progress”, as ASML’s EU Government Affairs Lead Wouter Baljon observed. He thus advised the EU to not join “the American exercise”, but instead make its own assessment of what it considers a meaningful way forward.

European leaders should understand that it is impossible to isolate China economically. Europe needs to hold on to its strategic autonomy and expand its practical cooperation with China for its economy to thrive and grow.