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Tuesday, March 28, 2023

Economy: IW: China is heavily dependent on imports from the West

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Not only the West is economically dependent on China – China is also dependent on the West, according to a report. He sees economic threat potential.

According to an analysis, China’s economy is heavily dependent on imports from the West. In the case of food, some raw materials, medicines, cars and aircraft, the country would find it difficult to replace imports, according to a report by the Cologne Institute for Economic Research (IW), which is close to employers and available to the German Press Agency. China needs the West, especially when it comes to technology products. “Both sides – China and the West – are interdependent.”

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A third of Chinese semiconductor imports come from the West, as the institute calculated for 2021. Another third comes from Taiwan. “Replacing state-of-the-art chips in particular will remain difficult for China,” the authors conclude, with a view to a possible conflict between China and Taiwan. Tensions with the neighboring country had recently increased. According to the institute, three quarters of the Chinese production machines for chips come from the West.

Courses are set again

This Sunday, the Chinese People’s Congress will hold its annual meeting in Beijing. The government also wants to present its growth targets and set the course for economic policy.

Overall, according to the data, a good half of Chinese imports with a value of 1.25 trillion euros came from western supplier countries. According to the study, dependency is particularly high for aerospace technology, cars and medicines, where the western share of imports is well over 90 percent. In the case of ore, meat and grain, the country imports a multiple of what it exports.

“In the event of a conflict, the West could use this dependency to put sanctions under pressure on the Chinese economy,” the institute said, describing the potential economic threat. China has recognized this and is trying to shift imports to third countries, for example in Africa or Southeast Asia. In addition, the government is working on establishing technology and expertise in its own country.

“Should China actually plan to invade Taiwan, the West would be significantly affected by – then likely – mutual sanctions,” says the report. “But by no means unable to act due to its important position as a supplier of important goods for China.”

Source: Stern

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