De-risking
Topic: Globalisation and MNCs · NCERT: Beyond NCERT
Meaning
De-risking means reducing a country's dependence on one other country for critical supplies, while still keeping trade and investment ties with it. The country usually in focus is China. The aim is to avoid being hurt if that one supplier stops supplying because of a war, a pandemic or political pressure. European Commission President Ursula von der Leyen used the term in March 2023, and the G7 adopted it at Hiroshima in May 2023.
Example
Global firms keep factories in China but add at least one more country. This strategy is called China plus one. Apple and Foxconn's smartphone assembly in India is the flagship case. India also joined the US-led Minerals Security Partnership in June 2023 to spread out its sources of critical minerals such as lithium and cobalt.
Don't confuse with
- Decoupling: fully cutting trade, investment and technology links between economies, especially the US and China. De-risking lowers dependence but does not cut the ties.