When thinking about the big risks around China, investors tend to focus on a possible invasion of Taiwan and downplay the more gradual impact of the world’s two largest economies decoupling from each other.
“We are clear-eyed about the challenges posed by the PLA’s[People’s Liberation Army] growing capabilities and how it is choosing to use them in threatening and destabilizing ways,” Ratner told a gathering held by the Center for Strategic and International Studies in Washington, D.C.
But it’s a shaky floor, said Waters, who previously served as the State Department’s top China official for nearly three decades. “It’s more like two divorce lawyers trying to not divide the children physically—that’s the goal,” he told the event. In coming weeks, the Biden administration is expected to release modifications and complete export controls introduced last October that try to restrict China’s access to critical advanced chip technology. In recent months, the U.S. has tried to convince allies like Japan and the Netherlands to take similar measures.
Electric vehicles could be the next area of focus. India is looking at restrictions on China while the European Union has launched a probe into electric cars made there.