Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Why leave Russia and stay in China?

My question above might be rhetorical. Several articles (eg, WSJ) highlight that foreign investors are fleeing China due to (1) its zero-Covid policy, including factory lockdowns, (2) its transition from pragmatism to ideology, (3) its saber-rattling on Taiwan, and (4) its support for the Russian invasion of Ukraine.

A recent Dutch FT article still argued that leaving China is different (eg, scope, size, timing) than stopping business in Russia. It might indeed be premature to quit China. On the other hand, it’s better to be safe than sorry (ie, prudence). Doing business in China is only getting worse – for everyone.

It takes time rebuilding factory lines. Hence, these will be the last to leave. The first to leave China was money. Please see my blogs of 2 April 2022, 4 May 2022, 11 December 2021 and 10 October 2021. The Chinese supply chain issues, for companies like Apple and Tesla, should worry any MNC.

It’s not only China that is worrisome. Reuters: “Taiwan now accounts for 92% of the world’s most advanced semiconductor manufacturing capacity, according to the April report from Boston Consulting and the Semiconductor Industry Association. South Korea holds the remaining 8%.”

The US support for Ukraine against the Russian invasion is (probably) small compared to the US response if/when China would attack Taiwan. Taiwan is of vital global strategic economic interest. Hence, Joe Biden’s recent support for Taiwan. Bloomberg: “Once is a gaffe, three times is a policy.” See my recent blog.

What will emerge from the Western decoupling from China and Russia?

As history always repeats, it might be a new Hanseatic League (originally from 13th to 17th century): a commercial and defensive confederation of Western nations. In 2018, a New Hanseatic League was already established by several northwestern European countries.

In my view, it’s much more likely that Putin and Xi will be removed from their presidential positions (eg, Bloomberg). Their ideologies have become a threat to the wealth of their citizens. Allegedly, Putin survived a March 2022 assassination attempt (eg, SCMP, Telegraph). After all, money talks while ideologies shout.

Shout (1984) by Tears For Fears
artists, lyrics, video, Wiki-band, Wiki-song

Shout, shout, let it all out
These are the things I can do without

Note: all markings (bolditalicunderlining) by LO unless in quotes or stated otherwise.

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