The prospect of Mutual Assured Destruction (MAD) helped avoid nuclear conflict during the Cold War. Let’s hope that the fear of its economic equivalent will work properly when it comes to the showdown with China. However, the downed spy balloon, which reportedly came from China and disrupted diplomatic relations, reminds us that mistakes can happen. To see if MAD is enough to prevent a war between America and China, consider how devastating such a conflict would be caused by a Chinese invasion of Taiwan. America is already trying to weaken China’s military capabilities while becoming less dependent on imports from the country. Similarly, China wants to avoid becoming overly dependent on the US. So far, America has taken three major initiatives: imposing export controls to prevent China from gaining access to high-tech semiconductors, subsidizing its own technology companies, and pushing the supply chain for critical raw materials (rare earths, solar panels, etc.). ) in friendly countries. Further steps in this direction seem inevitable.

A Chinese invasion of Taiwan would have economic consequences of a completely different order. According to Paul Tucker, author of Global Disagreements, there are three scenarios where China easily wins or is unopposed in the first. Second, America could impose economic sanctions if the Chinese invasion does not continue. And third, imagine that China is unable to take over Taiwan quickly, but this time the economic response is targeted. In Dante’s Inferno, the poet visits different circles of hell, one worse than the other. A Chinese invasion of Taiwan would be hell, but some scenarios would be especially dire from an economic standpoint. The first round could include sanctions on trade in strategic goods. The second cycle could be a “freeze” of China’s international reserves in the amount of 3.2 trillion. dollars, and the third round could be the suspension of even non-strategic trade between America’s allies and China, with the exception of essential goods such as food and oil. But it’s worth remembering that the Chinese economy is ten times the size of Russia’s and that the invasion of Ukraine caused an economic shock to the world, although Moscow did not face the full range of possible sanctions.