The powder keg has ignited the global geopolitical fuse to the brink of war. For now, it is economic, although last year’s visit by Nancy Pelosi to Taiwan almost brought the world to a standstill due to the American-Chinese war, which is already being fought in Ukraine. It is quite likely that after Russia, American-European sanctions are waiting for the second largest economy in the world, China. Although (for now) it has not embarked on a military campaign, China has already stepped onto the path of taking over the position of global leader. And while it is quite clear that America will not let go of the reins, even at the cost of (not just trade) war, a big question mark remains whether Europe has any strength to fight America’s battles.
Namely, it is one thing to ban Russia and replace its gas with much more expensive American gas. It is quite another to lock down everything that China is today: a source of raw materials, rare metals, technology, manufacturing, and cheap finished goods. And it is not possible to return production that has been relocated to once cheap China back home overnight. After all, the European Union has already exhausted itself quite a bit by paying a high price for supporting Ukraine.
Simply put, there is neither capital nor other resources to engage in a battle with the new world order while supporting the old one. It has agreed to an open conflict with Russia to show that it believes in Western civilizational values, but another front is not bearable even for much more developed muscles.
China is Russia to the nth degree
Even if the war in Ukraine ends soon and Europe smooths out the sharp edges of economic cooperation with Russia, China is in every detail Russia to the nth degree. There is no way to digest a conflict with such a great power to our advantage. However, the path to some form of war has already been charted; the only question is which trench Europe will dig into. And how deep.
– Nouriel Roubini sees the current situation as an escalation of the second cold war in which four revisionist powers, China, Russia, Iran, and North Korea, challenge the long global dominance of the USA and the international order led by the West, created after World War II. This is the context of his geopolitical depression, which has enormous economic and financial consequences. The cold war between the USA and China could produce stagflationary effects on a large scale because this separation implies the fragmentation of the global economy, the fragmentation of supply chains, stricter restrictions on trade in technology, data, and information, all of which are key elements of future trade patterns. In the context of the ‘security dilemma,’ we may be facing a world in which trade and economics will apply the zero-sum theory, the rivalry of great powers, and the absence of a hegemon who could establish a global order to avoid situations where we will clash more often than cooperate – briefly describes the state of affairs Luka Brkić, a professor of international relations at Libertas University.
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The key question, therefore, is how the quite likely sanctioning of China will affect global trade, consequently affecting the weak European Union and its real sector. The question is also how this will affect domestic companies that have finally opened their export window wide since the last crisis.
– China, as the second largest economy in the world, plays a huge role in global supply chains, and disruptions in the local market trigger a chain reaction in many economic sectors of numerous countries. The best example is the pandemic period, which demonstrated China’s key role in the global economy. Due to the restrictions and measures that introduced a lockdown in China, many factories were closed, resulting in a slowdown or even a complete halt of production processes worldwide. Some products manufactured in China were either unavailable to consumers worldwide or were not delivered within the usual timeframes – points out Silva Stipić Kobali, director of the Center for Internationalization of Business at HGK, adding that China’s global importance and the dependence of certain segments of the European and global economy warn of the difficulties entrepreneurs would face in the event of possible restrictions or trade interruptions with China.
The West has an ace
Kristijan Kotarski from the Faculty of Political Science in Zagreb believes that China is learning from the West’s response to Russian aggression in Ukraine and is further intensifying efforts by investing in three tools to reduce pressure on its economy in the event of future sanctions: the development of the digital yuan, upgrading CIPS as an alternative to SWIFT to facilitate payment transactions, and strengthening currency swap agreements between the Chinese central bank and other central banks with which it has signed such agreements, of which there are more than forty.
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Despite the asymmetrical dependence on China in the trade of ‘rare metals’ and some green technologies (solar panels, batteries, and wind turbines), the West still holds a crucial ace, advanced semiconductors. – As long as there is such asymmetry in the field of key technology, China will not risk making reckless moves – concludes Kotarski.
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