The horizon is not so far as we can see, but as far as we can imagine

Why China Is Wise Not To Sanction The West

The West has sanctioned China repeatedly, most notably in chip production technologies, but not just in those.

It has backfired, with China quickly building its own chip manufacturing capacity, though they still have a ways to go to entirely catch up. Huawei has also created their own phone OS, cutting the Google/Apple duopoly, and Apple sales are crashing, while the government is telling all government departments not to use Intel or AMD chips.

But China has largely not replied with its own sanctions. The reason is obvious: as long as they don’t, the US remains dependent on China for a vast swathe of goods. The reason chips were sanctioned is that it was one of the only areas where the West was ahead of China (the others are biotech and arguably aviation, though given Boeing’s problems, that’s an arguably.)

If China sanctioned the West, the West would have to re-shore a vast swathe of manufacturing: if not back to Europe and the US, at least to reliable allies. It would become stronger, as Russia did under sanctions.

It would also be in a far better position to wage war. Right now, in a US/China war, the US would be swiftly be crippled by its need for manufactured goods it can only get from China.

To put it simply, the US is far more dependent on China than vice-versa, and China wants to keep it that way.

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  1. Reminds me of the quote “If you owe the bank $100 that’s your problem. If you owe the bank 1 million that’s the banks problem.”

    The complexity of power dynamics often results in those who appear to have less power flipping the tables and being on top. The West thinks China/Russia depend on them because the west has the currency to buy the latters goods.

    Over and over the West views the world through the lens of a childhood Disney film.
    In the real world invaders aren’t greeted as liberators.
    In the real world your enemies wont help you defeat their ally because you’ve labeled the ally as Evil.
    In the real world pharmaceutical products aren’t “safe and effective” because the pharmaceutical paid “experts” say so.
    In the real world the producing goods gives you economic power.

  2. Purple Library Guy

    Actually, I think the West tends to fail the “Disney film” test.

    I mean, in Disney films the invaders are pretty much always the bad guys, so if you were going to be guided by Disney films you wouldn’t go around invading places. In Disney films, the dictators are the bad guys and the plucky resistance (AKA terrorists) are generally the good guys, so if you were going to be guided by Disney films you would not back dictators over people resisting them, which the US does all the bloody time. In Disney films, very frequently the bad guy is a corporate douchebag seeking to move from “very rich and powerful” to “even way more rich and powerful” at people’s expense, ironic considering Disney itself but anyway, so if you were going to be guided by Disney films you should stop corporate douchebags from doing self-aggrandizement instead of helping them. And so on.

  3. GrimJim

    China and it’s citizenry needs to slowly start selling off its investments in the US. As has been shown, the US is happy to seize anything and everything from anyone it wants to, for any reason or none.

    Leave the US nothing to seize when they start up their war with China, and then they’ll have everything to lose.

    Most of Walmart’s warehouses and shelves will be empty in a matter of days.

    Then China can seize any and all rights and interests of US citizens in factories, properties, goods, and intellectual properties in China with impunity, and turn them to the war effort.

    That will be something to see.

  4. mago

    Walt Disney was a blood dripping from the fangs madman and a creative genius at the same time.
    Often difficult to reconcile contradictions.

  5. different clue


    It sounds like Hammer Films really should have made a biopic movie of Walt Disney’s life starring Christopher Lee as Walt Disney.

  6. Altandmain

    The Chinese are far more long-term thinkers than the Western leadership.

    However, one point I strong disagree with Ian on. If China did sanction the West, the progress the Western world’s ability to reshore would be far more complex and difficult than Russia’s efforts to become self-sufficient.

    Putin and Xi are competent leaders with a large number of competent industrialists under their control. Their economies are much more industrial based. Putin and Xi, along with their governments (since its incorrect to personalize a nation the way the Western media do), have their oligarchs under control.

    The US economy is not like that at all. The rich own the government and run the government at the expense of the ordinary citizen to make the rich richer. It’s heavily financialized and the leadership has no idea how to execute a competently set up industrial policy. That means there are fewer blue collar workers now than there were with manufacturing experience and fewer people in manufacturing related professions (like engineers).

    What will happen is that if China wages a trade war in retaliation, we will see the Western world with far fewer consumer goods and what few goods they can get are going to be much more highly priced. It will look like many of those banana republics.

    If this isn’t obvious, the Western leadership knows little of how to set up a competent industrial base, but a lot about how to transfer wealth from the poor and what’s left of the middle class to the rich. What will happen is lots of greedflation. We will see the wealthy use this as an excuse to transfer wealth upwards.

    Perhaps in that regard, China might be better off someday waging the trade war. However, there’s no rush and if they were to do it, the Chinese would only do it after careful planning and preparation. The other (and risk averse) strategy is to keep the status quo of one sided trade war, since China is winning anyways.

  7. Jan Wiklund

    Even a not-so-strong industrial country as South Africa was better off under sanctions than they became after the sanctions were lifted. At least they had running industries, which had to be closed when SA was put under WTO rules.

    My friend the unorthodox economist Erik Reinert ( used to advise his client third world states to upset the west so that they would also be sanctioned. Then they wouldn’t have to obey WTO rules and could freely support industrialization. Perhaps somewhat tongue in cheek – you must have some competence to support industrialization – but just to present the logic.

  8. different clue

    @Jan Wiklund,

    If an America Survival Movement somehow came to power here, and sought to spend several decades restoring the rump shadow of a balanced multi-sector industrial ecosystem back into existence in America, its very first action might well be to resign America from membership in the World Trade Organization.

    ” America has stood up!” Isn’t it pretty to imagine?

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