Can China survive global isolation with nations shifting base amid a geo-economic reform?

On Friday, China’s aggression was met with furr blockades and isolation from countries like Australia and United States. US President Donald Trump ruled out second phase trade deal with China and country is also considering a ban on Chinese apps. 

w China, which is considered to be driving factor for global ecomy, cant afford to continue with its aggression if it is faced with global isolation. Here is why: 

CHINA’S ECOMY HAS SHRUNK BY 6.8% -

China’s ecomy has shrunk by  6.8% in biggest contraction since 1960s with retail sales falling by 19% due to pandemic in March quarter. An international boycott would furr impede China’s ecomy which has already taken a hit domestically. 

HUAWEI’S LOSS DUE TO US BAN -

China’s telecom giant, Huawei after facing a ban from just one country, United States faced a loss of 12 billion US Dollars in 2019. With countries like United Kingdom actively considering a ban on Huawei for supplying 5G network in country, China’s companies could spur up losses. 

READ: Tibetan community, US-Indians & Taiwanese st anti-China protests in New York City

ALARM BELLS FOR MANUFACTURING INDUSTRY -

A ban could also impede China’s manufacturing sector which contributes to 27% of its GDP as of 2019 as world finds alternatives to Chinese products. Commonwealth Bank Analysis of Australian exporters have already shown that y will be able to substitute demand from China.

COST OF TRADE WAR WITH UNITED STATES

trade war with just one country, United States, hurt Chinese ecomy as measured by Purchasing Manrs Index 49.7 points where value of large companies fell by 14.1 points to 36.3 within 12 months in 2019. 

COUNTRIES ARE MOVING OUT IR SUPPLY CHAINS -

Countries have made efforts to move ir supply chains and production lines out of China. Taiwan has encourd supply chain investments in Taiwan leading to more than $33.5 billion domestic investments and Japan has budgeted $2 billion for companies to shift production lines out of China.

READ: US warns its citizens in China; tells m Xi's administration may crackdown arbitrarily

ITALY IS RESTRICTING FOREIGN INVESTMENT -

On 8 April, countries like Italy which is part of China’s Belt Road Initiative expanded its ‘Golden Powers Law’ to restrict foreign investment in sensitive areas to include a large number of or sectors over concerns of foreign takeovers of domestic firms. 

EXPORT MARKET IS CLOSING DOORS -

China’s ecomy depends on $2.49 trillion export market with majority of its trade surplus coming from US and Hong Kong. If countries impose bans on Chinese products like how India’s largest trade body CAIT has vowed to reduce sale of Chinese products, it could impede ecomy.

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