Who would be hurt more in a US-China ECONOMIC confrontation over Taiwan?

[lord of the mark]

Lets assume that China, concerned about the steady development of a distinct Taiwan identity, attacks Taiwan (presumably via air and missile attack, and naval blockade) Assume there is no declaration of independence as provocation.


Assume further that the US does NOT go to war, but responds by embargoing all trade with China. Assume China responds by selling off all its assets in the US.

What are the economic and political consequences in A. The US B. China C. elsewhere ?

[BeBMan]

Taiwan

[GePap]

Both states would be hurt, as would everyone else.

I will add that your hypothetical is nonsense as well, but that is another issue.

[BeBMan]

OK, te be serious, long term consequences would IMO more serious for the US, since China is probably THE place for making money in the next decades, and that chance would be lost for US companies for a long time. But then I can't say that I'm an expert in economical questions

[lord of the mark]

Originally posted by GePap
Both states would be hurt, as would everyone else.

I will add that your hypothetical is nonsense as well, but that is another issue.

a hypothetical is by, definition, a hypothetical, not an assertion that the scenario is likely. Its an attempt to do a thought experiment, not a projection of what is likely to happen. It can nonetheless be illuminating.

[JimmyCracksCorn]

I think both would be hurt, but (maybe) China moreso.

All it would mean for the US is that stuff at Walmart (one of China's biggest importers) would be a bit more expensive... but at the same time it would cause a boon for US and Canadian manufacturing now that they don't have to compete with China.

[Shi Huangdi]

Both sides would be greatly hurt, there'd be skyrocketing prices in the USA and massive job losses/production in China. I would have to say the PRC government would be hurt more though- the USA is stable enough that the system could withstand an economic crisis. An economic catastrophe in China however might lead to severe unrest in China.

The rest of the world is also hurt by the plummeting value of the dollar from China selling off it's US assets.

[Zkribbler]

I say we seize their friggin' assets.

The Chinese economy would tank without us, their largest customer.

[Ned]

Perhaps it is Castro, perhaps it is not. But look at Cuba to see what a happens if you take on Uncle Sam in a trade war.

[el freako]

Originally posted by Zkribbler
I say we seize their friggin' assets.

The Chinese economy would tank without us, their largest customer.

But without the Chinese to finance your deficits you would have to raise taxation and interest rates to compensate.


That said Shi Huangdi's assertion is correct, the political system in the US is more able to withstand an economic downturn.
That might not be a good thing however - the system in china might end up being replaced, but it could easily be replaced by rampant nationalism which would be far worse for the US (and everyone else) than the current regime.

[chequita guevara]

Originally posted by Zkribbler
I say we seize their friggin' assets.

The Chinese economy would tank without us, their largest customer.

And if China dumps their dollars, we're burnt toast.

[Nubclear]

Thread Summary:

The US.
China.

[Odin]

Che:

I say we seize their friggin' assets.

[chequita guevara]

China is the largest external-holder of dollars in the world (maybe #2 after Japan). If they dump our dollars, everyone else will try and dump theirs so as not to be left holding the bag. Then we go into hyper-inflation as our currency tanks. Even if we seize their American holdings, it ain't gonna save our ass-ets.

[el freako]

Even if the assets are siezed it still means that a large chunk of the financing for your deficits will stop (as the chinese will no longer be buying new assets) - which will again mean that the US has to have a combination of higher interest rates and taxes.