Western Economies May Crumble If Decoupled From China, Warns Think Tank Founder

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The initiator of a German-based political and economic research institution has warned that efforts to reduce dependency on China could “lead to the self-implosion of Western economies.” She emphasized that such reduction strategies could inflict more damage on the implementers than on China itself.

The Perils of Reducing Dependency on China

Helga Zepp-LaRouche, the founder of the Schiller Institute, aired her concerns about the potentially damaging effects of Western nations trying to lessen their reliance on China during a discussion with Global Times correspondent Li Xuanmin, published on Monday. The Schiller Institute is a political and economic research group based in Germany, boasting members from 50 countries.

She stated that politicians advocating for “reducing dependency” fail to comprehend what experienced industrialists are well aware of: it’s impossible to promptly substitute China’s trade and investment partnerships given the country’s robust infrastructure and skilled labor force, which would take years to develop in other countries. She warned:

The policy of “reducing dependency” is likely to backfire, causing more harm to those who implement it than to China, as the repercussions from the sanctioning policy have already shown.

When questioned about the possibility of G7 countries pushing their “reduce dependency” approach towards China, the Schiller Institute’s founder responded, “The G7 countries would only do so at the risk of harming their own economies.” She further noted, “We are celebrating the 10th anniversary of the Belt and Road Initiative (BRI) this year, which currently involves 151 countries and 30 major international organizations partnering with China. It has emerged as one of the key driving forces of the global economy.”

She mentioned, “The G7 only recently acknowledged this at their latest summit in Hiroshima, Japan, and expressed their desire to engage more with ‘swing’ states, such as Brazil, Indonesia, and India.”

However, Zepp-LaRouche highlighted that the G7 “clearly missed the fact that some of these countries are already part of BRICS, and others have reportedly applied for membership.” BRICS consists of Brazil, Russia, India, China, and South Africa. Over 19 countries have either applied or shown interest in joining this economic bloc.

Zepp-LaRouche concluded:

Efforts to “reduce dependency” on China could trigger the self-implosion of Western economies, possibly relegating Europe to a peripheral role in global history.

Last week, Treasury Secretary Janet Yellen stated before the House Financial Services Committee that halting trade with China would be a “grave mistake” for the U.S., but affirmed, “Reduce risk? Yes. Decouple? Definitely not.”

Zepp-LaRouche contended that “‘decoupling’ and ‘reducing dependency’ are essentially the same,” adding, “The underlying geopolitical motive is to hamper China’s economic ascent by limiting its access to certain advanced technologies.” The research institute’s founder emphasized, “But that ship has already sailed, given China’s global leadership in patent registration and critical areas of science and technology, like 5G technology.”

What’s your view on Zepp-LaRouche’s assertions? Share your thoughts in the comments section below.

Frequently Asked Questions (FAQs) about De-risking from China

More about De-risking from China

• Schiller Institute
• Global Times
• Belt and Road Initiative
• G7
• BRICS
• Janet Yellen’s statement
• China’s technology and patents