Are the West and China moving towards mutually assured economic destruction?

Nikolić Goran (Institut za evropske studije, Beograd), goranvnikolic@gmail.com
Zvezdanović Lobanova Jelena (Institut društvenih nauka, Beograd), jzvezdanovic@idn.org.rs
Ćurčić Petar (Institut za evropske studije, Beograd), petar.pero.curcic@gmail.com

Since the beginning of the war in Ukraine, the US and its allies (primarily the European Union) have been intensively working out scenarios on possible responses to a possible deepening of the crisis in the Taiwan Strait. One of the key questions is: would comprehensive sanctions against China, in the case of escalation over Taiwan, have an effect, bearing in mind the relative ineffectiveness of the economic embargo against Russia? Given that the Chinese economy is ten times larger than the Russian one, that the centre of global trade and finance has moved to the Pacific region, and that China is by far the most important global industrial power (whose industrial output is three times that of the US), Western containment of Beijing through sanctions would certainly have strong effects on the implementers themselves. Analysts increasingly use Cold War terminology, including the concept of “mutually assured destruction”, to which some authors have added an economic dimension. What is already looming as a realistic scenario in the event of the outbreak of the Taiwan crisis is the implementation of G7 sanctions on three levels: against the Chinese financial sector, individuals, companies, and other entities connected to the Chinese authorities. Therefore, the real possibility of a dramatic disruption of global economic security cannot be completely ruled out for now.

Keywords: US, EU, China, mutually assured economic destruction.