Geopolitical Economies – America and China Trade
Geopolitics has always been closely associated with economies throughout human history. The US and Soviet Union severed economic ties during the Cold War, creating many fun facts like Coca-Cola being banned from Communist countries in the world. However, the rise in globalization via new technologies has made this a lot more complicated as a “global economy” has been created, with new economic partnerships being created in the last few decades.
Tempers have been flaring recently, with tensions brewing between China and Taiwan, and this has forced the US to make tough decisions regarding its economic relationship with China, its third biggest trading partner. The effects of this were displayed on Tuesday as China released economic data regarding their trade numbers, and it wasn’t looking too good. Overseas shipments fell by 14.5 percent from a year earlier, which is the sharpest decline since February of 2020 when COVID had its grip on the country. The key figure here is trade with the US and EU; in July, exports fell by more than 20 percent year over year to both entities. Demand for Chinese goods has decreased in the Western world partly because of fears of a recession, but also because of rising geopolitical tension between the US and China, which has concerned manufacturers. Because of this, Chinese trade with Russia, an American foe, increased rapidly, but it wasn’t enough to make up for the fall. This is a growing threat to a Chinese economy that seems to have stagnated, and its implications cross all over the globe due to China’s position as the second largest power in the world order.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
