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The question and answers at To what extent does China need the SWIFT system? explain why China needs the SWIFT system to to interact with the west and whether it would be reasonable to come up with alternatives. The answers seem to imply that the SWIFT system is crucial for China, because it allows it to export goods. But they don't focus at all on what the result would be for the buyer's of said goods.

I would like to ask the converse then. How much does the "west", think US/EU I guess, need China to be on the SWIFT system because it needs to buy the goods China has to sell. What would the economic impacts be of a defacto complete embargo of Chinese goods to the west?

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    By West do you mean people living in Western countries or the Western private corporations that use China as a provider of cheap labour and make huge profits from the current situation? Or maybe you meant the Western financial system that uses SWIFT to decide with whom any participant can do business with? There are different contrasting interests at play in the context of your question.
    – FluidCode
    Feb 25, 2023 at 7:45
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    The simple equation is that SWIFT facilitates trade. Without SWIFT, less trade. If China is not on SWIFT, so is no trade with China. That would mean less imports of consumer products and the like (all that China exports). I thought that would be clear if people talk about cutting China off SWIFT. That would be akin to a trade war. "What would the economic impacts be of a defacto complete embargo of Chinese goods to the west?" Nobody knows exactly. Surely shocking at first. Feb 25, 2023 at 7:50
  • @FluidCode I'm mostly interested in the impact on the economies/people. I assume that the private corporations who make these huge profits will go ahead and redistribute the profits to all the good folks and home and then hire them? Joking aside is there the labour force to meet demand? Are there factories in the west that just ramp up and fill the gap with slightly pricier goods? Or will the goods be significantly pricier? I mean that's why I'm asking.
    – DRF
    Feb 25, 2023 at 7:54

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I was thinking about expanding my answer to the other Q with something about this, so I'm glad you asked (separately).

I don't want to speculate much on what "the West" would do if China were to send weapons to Russia in the present circumstances, but suffice to say that's pretty different from invading a country, and even the SWIFT measures against Russia have exceptions, e.g. to accommodate those countries (like Hungary etc.) that absolutely insisted on still buying energy or nuclear materials/tech from Russia etc., while being part of "the West", or more precisely of the EU in this case. So there are exceptions in sanctions for Gazprombank, Rosatom, etc. which IIRC Russia reciprocated by only asking for rubles from "unfriendly countries". [Rosatom is still building new reactors in Hungary, so it's not just gas and oil.]

Sending weapons is also a matter of degree/types and quantity (just see how the Western version of that played out over the last year), so that leaves plenty of room for graduated/proportional responses when one group of countries doesn't like another sending some weapons. Suddenly stopping some imports [not necessarily intentionally] has a reverse side of the coin of causing some inflation in the importer, unless similarly priced substitutes are found. We saw plenty examples of that in the past couple of years, including from the Covid-related disruptions in shipping [from China to the US, but also much more broadly around the globe] seeing, Russia's changes in energy supply or conditions for that seeing price spikes in some Western countries etc.

So, the reverse side of the coin is that the West has some habit/expectancy of cheap goods from China on a fairly large scale. This is in essence the basic theory of "peace through trade" that countries would be unwilling to go nuts on each other when they have substantial economic interdependencies. It's easy to point to counter-examples when it fails, but some statistical modelling/evidence suggests there is some [sound] basis for that idea. Slightly more nuanced view/data on that that accounts for nationalism identifies one locus of said exceptions. (Another factor dampening the effect of [bilateral] trade is having multilateral trade, i.e. countries with diversified [or easily diversifiable] trade partners are less likely to be deterred that way.)

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  • Thank you. Yeah that's what I was thinking. Because it's one thing to cut off (to some extent, there are still exceptions and backdoors) Russia, which exports some natural resources and a fairly minor amount of goods and services. It's a much different thing to cut off China that exports a huge amount of goods and services and most of them are the ones that let a lot of the poorer people survive. It would be interesting to see what the consumers basket of poor to lower middle class westerners looks like in terms of Chinese imports.
    – DRF
    Feb 25, 2023 at 14:03
  • @DRF: In the EU, I recall that it's mostly Eastern Europe that imports more from China (as a fraction of their imports). But the are some anomalies with that because the Netherlands is sometimes incorrectly accounted as the [final] destination. Some data here politics.stackexchange.com/questions/73648/… on that. Feb 25, 2023 at 14:11
  • Which would make sense given the "poor to lower middle class" designation I gave above.
    – DRF
    Feb 25, 2023 at 14:13

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