It is true that high levels of integration are hard to get rid of, but this thought could prove to be as wrong as the one that led our politicians astray in the 1990s and 2000s. two most important recent crises – its policy of zero Covid and the Russian invasion of Ukraine. China is the largest or almost the largest trading partner for about 120 countries on all continents. It is the hub of global supply chains, amassing abundant quantities of copper, iron ore, oil and other raw materials from Perth to Peru and has acted as a magnet for foreign companies, financial and other service companies, fascinated by its market size. or dedicate yourself to it as the ideal place to produce or assemble production, technology and financial products. He is certainly a pioneer in technology to many, but by no means in all fields of science and engineering. The world’s dependence on China is legendary. The production of many lower value goods, such as toys and textiles, has shifted to countries such as Vietnam and Bangladesh, but China continues to supply the West with clothing, footwear, sports equipment, cooking and home appliances and furniture. We also rely on China for some so-called rare earth items, minerals used in mobile phones and electric vehicles, batteries, solar equipment, smartphones, tablets, televisions, computers and other office equipment. As our experience with Covid has shown, China also supplies large quantities of pharmaceutical and medical equipment, antibiotics and prescription drugs. The US-China relationship is one of the most complex and interdependent in the world. The value of their engagement exceeds 2 trillion dollars. Bilateral trade in goods and services amounts to just over $ 700 billion a year. The stock of US investments in China is just under $ 150 billion, while China’s stock in the US is about $ 60 billion. The Chinese government holds more than $ 1 trillion in US financial assets in its foreign exchange reserves of more than $ 3 trillion, and possibly more, as some assets are held in offshore financial centers or outsourced. Bank loans have financed China’s Belt and Road, accounting for most of the roughly $ 1 trillion in loans and projects that have accumulated since 2013. Lending has actually dried up since 2018, but China is still willing to grow. what he calls Digital and Health Silk Roads, where he wants to be the ideal place for public health goods and services and communications and technology equipment and standards. Dependence is of course two-way and China’s dependence on the rest of the world is just as high. It needs the annual $ 1.5 trillion bilateral trade it makes each year with the US and Europe. It needs foreign companies in China that supply high-tech goods and know-how, equipment and spare parts for aerospace and extensive know-how. It wants foreign financial companies to provide know-how in wealth management and investment banking. It still relies heavily on imported technology, especially microchips, for which it spends more than crude oil. With a closed financial sector, capital controls and managed currency, China still needs the global capital markets to be open and to invest in its trade surplus revenue, which seems destined to last.
Separation is not that difficult
You could be forgiven for thinking that such an addictive thing that works in both ways would be difficult to get rid of, and it is. However, it would be wrong to believe that high levels of integration can not be undone by politics, as our predecessors actually learned at great cost after 1914. Today, the political drive for disengagement or disengagement has become much stronger. Business has continued to thrive in China – until recently, at least – and has adapted to the Chinese Communist Party’s temperament, even as Xi’s China has become more authoritarian and controlling. But by about 2020, Beijing’s policies have had a much greater advantage – not only in supporting the already dominant state-owned enterprise and state-owned economy, but also in measures designed to bring private business and entrepreneurs to their heels. . The financial and regulatory punishment of the technology giant Alibaba and a blizzard of regulations affecting data, economics and technology platforms, have shaken the industrial mood as the government puts pressure on private companies to align their activities with social and political goals and goals of the party. Corporate stress and business uncertainty have become more apparent in the wake of the crackdown in Hong Kong that began in 2019 and the deterioration of relations both after the outbreak of the Covid pandemic in 2020 and the revelations about the imprisonment of Uighur Muslims in the province. Xinjiang – where Chinese repression has even sparked allegations of genocide. The 2018 focus on trade tariffs has been replaced by an extensive network of export controls, greater control over foreign investment, restrictions on who can do business and, ultimately, sanctions on those who violate the regime. Some of them have been implemented because of Hong Kong, Xinjiang and for national security reasons, but China has also continued to punish sovereign states and companies whose policies it disagrees with. These actions and developments have already begun to reconcile companies, which are increasingly coming to the uncomfortable target where they have to choose whose rules and laws they will break and who they will follow. China’s support for the Russian invasion of Ukraine, and more recently the aftermath of the quarantine and lockdown of its zero-Covid policy, have taken these issues and concerns to a new, higher level.
