THE GREAT SPLIT
What is it?
As Western and Chinese international agendas conflict, the likelihood of economic sanctions increases. For example, Chinese support for Russia, or an attempt to force the reunification with Taiwan, may prompt the West to target Beijing and its interests with a raft of sanctions. Beijing has recently passed laws that allow for, and actually demand, a counter-sanction list to be created for any company complying with Western sanctions. Retaliatory sanctions could lead to a major economic decoupling of the economies of the West and China which we have termed The Great Split.
What is China doing to prepare?
Beijing has already begun to prepare for such an eventuality, carrying out a wargaming session in late February or early March to identify vulnerable areas of its economy. It is likely Beijing will continue both observable, and hidden efforts to prepare the country for some form of sanctions. We expect to see China to attempt to secure its economic growth, including access to sufficient resources and regional markets.
What does it mean for the West?
Depending on the pace and extent of sanctions and counter-sanctions, The Great Split could have far-reaching impacts for individuals and organisations. Components and raw materials will become more difficult and costly to obtain. Suppliers’ costs, on top of existing increases in energy costs, will have a knock-on impact on component-dependent industries. Technology and manufacturing sectors are likely to be the most immediately hit, though industries which depend on these sectors, such as construction, will also suffer.
How can Evenstar help?
We provide a range of strategic analysis and risk consulting to support companies understand what The Great Split could mean for their business and mitigate its impact. This can take the form of bespoke reporting, presentations, as well as experiential products, like scenario planning, stress-testing and wargaming. See Our Services to see how else we can help.
Our thoughts on The Great Split
We need to prepare for the Great Split between China and the West - 29 March
China’s new Global Security Initiative - 5 May