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Economic sanctions are primarily made to stop a certain nation's economic activity in face of an adverse action caused by a nation. And nations primarily using this process are western nations with huge economic resources like U.S. and it could have devastating consequences as seen in multiple cases such as Cuba or North Korea and even Russia.

But, how large will be the impact of an economic sanction on a nation if the economic sanction is imposed by China and India as they are the 2nd and 5th largest economies of the planet with combined GDP of 13.46 trillion dollars (72% of U.S.A's GDP) which shows that US is not the only nation with the economic might to impose economic sanctions on nations. China alone has a Forex reserve of over 3 trillion $ , which is 1 trillion dollar more bigger than GDP of U.K. or France.

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It's not the foreign exchange reserve that determines the power of sanctions but the extent to which the sanctions limit the country. Most of the time, United States sanctions are part of a larger sanctions regime, supported by Europe and countries like Canada and Australia. These are effective because these countries have significant imports and exports. So when they apply sanctions to, for example, Russia, they significantly reduce Russia's ability to trade.

China has minimal imports, so it would have to rely on export sanctions. And most countries would be able to substitute other trading partners in case of losing China. An obvious exception would be North Korea. China is one of its few trading partners. So sanctions from China can greatly affect North Korea.

India has more balanced trade but also not that large when compared with western countries as a whole.

Since China doesn't import as much as it exports, the problem is simplified to just finding a replacement for things that it exports. That might be difficult in the near term, but it seems likely that countries like South Korea and the Philippines would be happy to step in for the longer term. If China wanted to launch effective sanctions, it would have to recruit competitive nations first. Sanctions by China plus India plus other Asian nations could be much more effective.

This is not to say that China can't do anything with its foreign exchange reserves. It's just that we wouldn't normally call that sanctions. Perhaps it might get called economic warfare or similar.

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China is in the unique position of being the supplier of 80+ percent (some sources state 90+) of REEs. Thus, as we know from past - and brief - Chinese embargo on those the impact would be devastating to world economy. When that happened some precious metals increased in price over 50 times. That would mean all electronic devices produced outside China would be at least twice (maybe even thrice) as expensive as today. Do the math.

There is a question of who, obviously, would fold first in that situation... Chinese economic bubble is so huge that when it bursts it may take the country whole. And, obviously, when that (a country going down in economic crisis) happened previously we ended up with World War 2.

India, on the other hand, is very export oriented and any economic sanctions on other countries, if reciprocated, would collapse their economy (with maybe exception of nuisance calls and internet scams).

Last thing: China and India aren't on friendliest terms now (and probably never were), so coordinating between those two countries would require some sort of settlement. But that would require India accepting secondary role in this partnership. Not seeing that happening. India may have issues, but it is a proud and industrious nation and country.

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  • from Quora to SE.
    – user17569
    Commented Mar 12, 2018 at 11:07
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How large would be the impact of economic sanctions made by China and India on other nations?

Not much, if those nations maintain good relations with the West. The West will buy goods from China and India and then send those to those nations. Because big corporations are from the West, and they like to do businesses. Example: Kosovo.

The reverse is not true. Example: Iran, Zimbabwe.

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