Summary:

Although policymakers hoped for a US-China decoupling, they abandoned it in favor of derisking. There are significant differences in these two terminologies: decoupling is a radical disengagement, and derisking is to reduce risk without complete disentanglement.
 

From Decoupling to Derisking

• Given China's enormous economy, it is unrealistic for a complete decoupling.
• A US-China decoupling may split the global economic landscape into Sino-centric or Western-centric. Most countries have profound economic ties with China and are reluctant to break it off completely.
• Severing all ties to China would decrease Washington's economic leverage over Beijing.

The Aims of Derisking

• Fortify the US's global technological leadership by preventing China from catching up.
• Stall Chinese military modernization as most semiconductors have dual-use purposes.
• Lessen overreliance on China's supply of critical goods.
• The US will focus its derisking efforts on the technology sector, especially semiconductors, AI, and quantum computing. Other sectors include energy and biotechnology because China is progressing fast.

How does the US Derisk?

• Export control measures on China to prevent access to dual-use technologies.
• Reform US industrial policy through selective protectionism and tough investment screening.
• Increase coordination with like-minded allies to secure critical mineral supplies and standardize technology standards.