Step by step, Japan's government and companies are joining their American and European counterparts in a "De-Risking" policy toward China. This goes beyond the normal pullback occurring due to China's economic slowdown, wage hikes, or other natural economic causes. This is due to a combination of geopolitical tensions and various sources of abusive behavior toward foreign companies in China, from arrests of personnel to discrimination in procurement to corporate espionage.

Responding via complete "decoupling"--a Donald Trump term--would mean absolute disaster for all because China and the rest of the world are so interdependent. In the worst case, says the IMF, global GDP could drop by 7%. That's double the drop from Covid. None of the players, including Beijing, wants to see that.

Even though decoupling is out, foreign firms and governments are still less inclined to tolerate China's behavior than they were when business was booming. So, the midway course is what the Europeans call "de-risking," a term now adopted by Washington.

For details, see https://richardkatz.substack.com/p/japan-is-joining-de-risking-from

Richard Katz