Illustration: Chen Xia/GT
At a time of rising global protectionism,
MKS sports it is not uncommon to see some countries overstretch the security concept in their economic policies, which undermines the mutual benefits and efficiency of global trade and also exacerbates uncertainty and risk in international markets.
Japan and Germany have agreed to create an economic security framework amid fears about what they view as Chinese industrial "overcapacity" and "nonmarket policies and practices," the Japan Times reported on Saturday.
While it remains unclear how the framework will translate into any specific type of cooperation on economic security, the development suggests a possible trend toward an expansion of the security concept in both countries' economic and trade sphere. This is a worrying sign because it could mean more restrictions on foreign investment and trade on national security grounds, more protectionism, and a greater emphasis on political and strategic factors in international economic cooperation.
This approach will reduce market efficiency and stifle the dynamism of the global economy. In sectors like technical cooperation and trade, some Western countries and their allies are showing a growing preference for state intervention and the creation of so-called safe supply chains, which ironically will only expose their supply chains to more uncertainty by contradicting market principles and hindering the openness and innovation of the global economy.
Moreover, the extent of potential economic collaboration between Japan and Germany remains uncertain. This uncertainty stems from the intense competition between their manufacturing sectors in recent decades, notably in key industries like automobiles and industrial manufacturing, where products from both countries are closely matched and fiercely competitive.
This competitive landscape may pose numerous challenges and impose limitations to practical cooperation. It is important to note that focusing on China does not alleviate this competitive dynamic, nor does it supplant China's significance in their respective economies.
Some European countries' overemphasis on economic security in trade with China is founded on a vague and inaccurate understanding. In recent years, with China's economic growth and expanding economic and trade cooperation, some European countries have recognized the cooperation opportunities with China while perceiving their close economic ties as a threat, which is largely a result of anxiety and misunderstanding of China's economic development.
It is not uncommon to see some in Europe accuse China of "overcapacity" and economic "coercion," but such rhetoric overlooks the economic complementarities in global supply chains and China's contribution to the global economy.
First, the Chinese manufacturing sector is crucial to many industries around the world. China's production capacity not only meets domestic demand but also provides consumers and businesses around the world with a large number of goods and services. For instance, a recent Japanese government white paper showed that Japan relies heavily on China for imports of more than 1,400 types of consumer and industrial products.
Second, China's rapidly growing consumer market offers immense opportunities for multinationals. Despite the tariff dispute over Chinese electric vehicles, China remains an important market for German carmakers.
Third, China's growing investment in technological innovation and research and development has advanced the development and implementation of new technologies, crucial for the long-term growth of the global economy and efforts to combat climate change.
It is impossible for some to restructure supply chains to exclude Chinese companies while relying on the China market and China's supply, especially the intermediate goods. If Japan-Germany cooperation solely focuses on the idea of "countering China" and distorts economic policy by overstretching the security concept, it will only hinder these countries' progress and limit their own potential for growth.
