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Russia's invasion of Ukraine has implications for China’s relationship with the global economy, with likely disruptive economic consequences

Public Policy / opinion
Russia's invasion of Ukraine has implications for China’s relationship with the global economy, with likely disruptive economic consequences
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By David Skilling*

The Russian invasion of Ukraine is already a major global economic shock, in addition to the brutal military costs and humanitarian disaster.  The immediate economic costs in terms of higher energy, food, and commodity prices are evident.  And massive economic sanctions on Russia have been implemented.

Last week, the OECD estimated that world GDP would be ~1% lower than baseline over the next year, and inflation ~2.5% higher, as a consequence of the Russian invasion and accompanying economic sanctions.  The economic hit is particularly acute in Europe.

But these global economic costs – and particularly the economic costs in Asia – could escalate substantially if China gets drawn into the economic war.  China was 18% of global GDP in 2021 in USD terms, the second largest in the world, whereas Russia and Ukraine combined are 2%.

This note reflects on China’s various exposures to Russia’s invasion of Ukraine, and the likely impacts on the global economy.

A friendship with no limits?

Mr Putin met with President Xi in Beijing in February to sign a cooperation agreement, committing to a friendship with ‘no limits’. 

But the unsuccessful Russian invasion, the aggressive economic sanctions (with strong backing from several Asian countries), and the economic hit to China (higher commodity prices, supply chain disruptions), is bad news for China – particularly in an important political year.  Indeed, there seems to be unusually active debate in China about the wisdom of a close relationship with Russia.

China has since walked a fine line, abstaining in the initial UN votes that condemned Russia’s invasion, calling for peace, but also finding opportunities to vote with Russia more recently. 

The difficulty for China is that it is caught between competing objectives: support for Russia, and a joint desire to reduce Western influence; commitment to territorial integrity and non-interference (a staple of Chinese diplomacy) that Russia has breached; and a desire to avoid economic costs and continue global economic engagement (China wants the war over, and to avoid sanctions).  And personally, it is difficult for President Xi to change course.

Although China cannot walk away from Russia, it also seems unlikely that China will double down on Russia to the extent that it compromises other core interests.  The US has warned China that if it provides military or financial support to Russia, or assists Russia to avoid sanctions, economic sanctions will be imposed on China.

China’s economic relations with the US, the EU, and other members of the Western alliance are much larger than with Russia.  So despite the rhetoric of a friendship without limits, there will be near-term limits to what China is prepared to do. Ongoing ‘pro-Russian neutrality’ is more likely.

Note also that China is likely to benefit from a weakened Russia.  It will be able to drive a harder bargain on energy and commodity imports; and it is already looking for opportunities to acquire cheap Russian assets and firms.  This will be an increasingly unequal relationship, with the Russian economy facing deep and enduring challenges.

A shot heard around the world

But even if China is unwilling to run the risk of sanctions because of stepped-up support for Russia, China is exposed to the emergence of a more fragmented global economy in which trade and investment flows are shaped by political fault lines.  And the Russian invasion of Ukraine has accelerated this fragmentation process.

Decoupling between the US and China has been underway for some time, with increasing restrictions on trade and investment flows.  These restrictions will strengthen, particularly in strategic sectors such as technology.  Attitudes in Europe towards China are also hardening (albeit from a fairly soft base), with various restrictions imposed on trade and investment with China in sensitive sectors. 

Russia’s invasion has further sharpened this sense of strategic rivalry with countries that are challenging the current rules-based system, notably China.  And a precedent has been created for the use of sweeping economic sanctions against a G20 country.  This makes it more likely that sanctions will be used in the event of significant political disputes with China, such as Taiwan.

The caveat is that differences in national exposures to China may make it more challenging to assemble the same broad-based coalition that came together against Russia (the EU has much greater exposures to China than the US, for example).  And the economic scale of China likely means that any sanctions would be less sweeping than those imposed on Russia. 

But overall, developments in the global system over the past few weeks create heightened economic risks for China. 

This potential for sanctions makes it more likely that China will accelerate its domestic turn (‘dual circulation’), and its decoupling from Western economies, in order to reduce its external risk exposures.  As with Russia’s ongoing oil and as exports, this decoupling will not be complete.  But there is now an increased risk of a meaningful reduction in intensity of economic engagement with China.

Managing exposures

Although China is not the focus of the economic war on Russia, the sharpening strategic rivalry and the precedent of sanctions increase the odds of further economic conflict between China and the US, Europe, and others.  This increased potential for economic conflict with China broadens the set of countries and firms that are materially exposed to changes in the functioning of the global economy.

Although the direct economic exposure of Asian economies to the Russian invasion is more limited than for European economies, these economies are deeply exposed to structural global changes that impact on China.  Indeed, many advanced economies that imposed sanctions on Russia (Australia, New Zealand, Singapore, Japan, and South Korea) have significant economic exposures to China.

To the extent that geopolitical tensions with China rise over time, these economies will need to respond.  For example, ensuring appropriate market (and supply chain) diversification to manage China-related geopolitical and economic risk exposures.  This will take time, and likely involve some costs.  But a failure to diversify exposures can also be costly, as European countries that are reliant on Russian oil and gas have experienced. 

And the risk profile for multinational firms that do business in China has increased because of the higher likelihood of sanctions being imposed in response to political disputes (either by Western governments or by China).  The past month has reinforced that geopolitics and commercial relationships cannot be cleanly separated.  Indeed, many Western firms have been quick to cut ties with Russia because of sanctions, stakeholder pressure, or supply chain disruptions. 

As geopolitical risks and stakeholder pressures increase for many multinational firms active in China, they should be thoughtful about deliberately managing exposures.  Otherwise, they may need to respond under duress in a crisis situation. And whereas income from Russia operations was relatively small for many multinationals, China’s commercial materiality is utterly different. 

A structural break in the global system has occurred over the past month, and countries and firms around the world need to respond.  There is no going back to pre-invasion ‘normality’.


*David Skilling ((@dskilling) is director at economic advisory firm Landfall Strategy Group. You can subscribe to receive David Skilling’s notes by email here.

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82 Comments

New Zealand is already on Russia's 'Unfriendly' list.  So it's much larger exposure to China both for exports and imports is a risk which Da Gubmint seems to have exacerbated by legislating for sanctions without international legal backing.....

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What international legal backing do you expect to wait for?

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I suspect the UN but that would be blocked by Russia.

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The International Community

Quite proud to be part of that.

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The costs of not imposing sanctions would have been much greater than the risks associated with not imposing any.

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Is that a good thing though? Should there be a penalty for being neutral?

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Someone once said,  "When people see a strong horse and a weak horse, by nature they will like the strong horse".

China is likely to make pragmatic decisions. The West is looking rather strong and united now. 

The days of humans fighting and dying for oppressive authoritarian regimes have likely passed. This is due to modern communications reaching into everyone's mind. They know what freedom is and what it is like to live in a free world. It cannot be hidden.

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If those days have likely passed, what are the Russians doing? Or exception to the general thinking/trend?

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Not doing very well by the looks of it because their soldiers, probably from the top down, aren't keen on fighting for Putin. He has started a war not realizing those days have long passed. I should have written successfully fighting.

Ukraine is a tough prospect. There is no local popular support. Chechnya and Georgia were tiny in comparison. Even the second war in Chechnya was no cakewalk and it has fewer people than Auckland.

I think the West has engineered this. They have prepared for eight years. Weapons, training, tactics, propaganda....all the ducks in a row. It's impressive.

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Did Kevin Rudd first use the phrase "cake walk"

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I don't know but it has an interesting history.

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Some weeks back we conversed on an”end game” the West may have planned and is now playing. A part of that you suggested, was exposure of Russian deficiencies in both military hardware & planning & execution by its soldiery so to speak. Got that right methinks. If Russia thought to showcase their “shock & awe” capabilities, they have sort of managed to achieve the opposite. Their stature accordingly diminished as an international identity, force & foe.

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Pentagon Drops Truth Bombs to Stave Off War With Russia

US unprepared for Russia’s massive retaliation

'For God's sake, this man cannot remain in power': Biden says Putin should no longer be leader of Russia in fiery speech in Poland - but the White House is forced to walk back his comments and insist he's NOT calling for regime change.  'It's nothing less than a direct challenges to the rules-based system of international order,' Biden said. Link

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There's no such thing as an "int'l rules based order." You're making that up. There is international LAW, however, and the only ones undermining that are western states & proxies waging unnecessary wars.

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What is a necessary war?

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Some erroneously believed this one.

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Aeschylus wasn’t wrong over 2500 years ago or so. Hasn’t ever been wrong since.  And isn’t wrong on this one here today, from both sides, as far as I can tell.

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"Washington’s sanctions are the equivalent of having dropped a thermonuclear weapon on Moscow". Pretty piss poor analysis. The sanctions are as far from dropping a thermonuclear bomb on Moscow as they can possibly be. 

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Biden is hitting Putin hard. Publicly. Not only on this occasion, also prior to NATO trip. Not official foreign policy to ask for a change of regime.

Kremlin spokesman "that not for him to decide...." . Someone coined  "...alzheimers sanctions.."

Meanwhile Nigel Farage mocked Biden's response to chemical weapons on Fox News. They can't say he was soft on Putin.

President Biden's message is broadcasted and let's see if the President of Russia replies.

Scorecard

Biden 1, Fox 0.25, Putin 0 (tentative awaiting reply)

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How much of what we’re hearing/reading in media is accurate? Or is a part of it designed to install fighting optimism and demoralise the Russians.. no conspiracy here, just trying to critique the optimism running through articles currently 

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How would we ever know?

The truth will be somewhere in between. Despite the KGB running most media in Russia for a couple of decades, it would seem overall that the Russian population are at best nervous about the special operation. Its a crime to call it anything else, because the place is governed by a psychopathic autocrat.

On paper Russia wins through force of numbers. Maybe the Ukraine forces are depleted to the point of falling over tomorrow. But at the end of the day Putin is out of tokens. The whole government is designed for only someone like him to preside over though, so it's going to be messy regardless.

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Precisely… we don’t know for sure.

I think there is some truth in the wins Ukraine are achieving… whether this translates into winning the war is different… I say this also as it takes the heat off western powers to not intervene - given the Ukrainian’s are doing so well

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Perhaps, perhaps not. But if a stray missile, or two, should explode in Poland, one of the Baltics, Hungary. What then?

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Zachary,

You make me laugh. Just a few days ago you were pontificating about how the Russian forces would, after a short setback, sweep all before them. Suddenly you have changed your tune.

You write as though you were steeped in military history and lecturing to us and you actually know sod all about it. Your ego vastly outstrips your knowledge, but you are good for a giggle so keep sharing your 'insights' with us.

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Thanks linklater01, I like to think I make people laugh however I don't think I wrote, "sweep all before them". I was more warning that they would get better as time went on. Negotiating something now might be a good idea. A bit like what happened in the war with Finland.

 

After the Soviet military reorganized and adopted different tactics, they renewed their offensive in February and overcame Finnish defences.

Hostilities ceased in March 1940 with the signing of the Moscow Peace Treaty in which Finland ceded 9% of its territory to the Soviet Union. Soviet losses were heavy, and the country's international reputation suffered.[37] Their gains exceeded their pre-war demands, and the Soviets received substantial territories along Lake Ladoga and further north. Finland retained its sovereignty and enhanced its international reputation. The poor performance of the Red Army encouraged German Chancellor Adolf Hitler to believe that an attack on the Soviet Union would be successful and confirmed negative Western opinions of the Soviet military.

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Globalization ended when Russia invaded Ukraine, said BlackRock.

The "iron curtain" has emerged again said others.

The US EU alliance morphed into a colossal force, again sparked by the invasion. The invader had over the years, grown too aggressive.

Looks like the G7 will take charge of the Free World. The UN becomes a humanitarian organisation.

Russia becomes another "hermit" regime.

China, which is a mighty and rich dragon, ruled and owned by the CCP, ponders on the best response. Stay in power and prosperity.

 

 

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Yes, China should learn a valuable lesson from all this. It's like a Dirty Harry movie, "You've got to ask yourself a question: 'do I feel lucky?' Well, do ya, punk?"

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It’s a shame really. China has such a rich history and culture. Had they decided to join the global melting pot and relax into the natural syncretism that emerges from open cultural exchange,  then we’d likely all have been the richer for it (same with Russia). Japan, Thailand and South Korea haven’t lost their own identity from this, the cultural exchange went both ways. But China built their fire wall to prevent engagement with global culture and Russia has more or less now done the same. 

The great free trade experiment seems to have failed so I guess we’ll have more nationalism and conflict instead. 

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Remnants, and more, of the old Iron & Bamboo curtains being resurrected then. Both Russia & China moved from absolute monarchies, which in their own way were in their time,  just as repressive. The communist states that evolved to replace them were mostly that in name, in other words just an alternative structure of government, for those replacing those in power to insert &  already on the shelf. It’s interesting when you look at Japan though. Douglas MacArthur, for all his arrogance & conceit, knew wisely, that Japan needed to retain its Emperor after WW2, and that change to a let’s say, more western ideology, would need to be inclusive. Japan now is free of the almost feudal limitations in force prior WW2. Have often wonder if Kaiser Wilhelm hadn’t been such a cantankerous & impossible personality, and had stayed a a figurehead monarch, Germany might not have got Hitler?

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I think there was a faction of the National Socialists that wanted to reinstate the Kaiser. That would have been interesting.

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Certainly some Nazi hierarchy visited him in exile in the Netherlands. But that was after Hindenburg had died and Hitler had assumed total power. That was the critical moment really. Hindenburg had  held  the population's ultimate loyalty. Hitler then replaced that, became the Fuehrer and harvested it unfortunately, rather successfully.

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Yeah, Wilhelm man. Definitely part of the stew that ultimately fermented fascism.

Saw the Kremlin press release earlier about how it was up to the Russian people to choose their leader. Hahaha. Cool story bro. 

I feel deep sympathy with the Russian people. Putin’s tight control was clearly preferable to the chaos after the USSR fell. And had he stepped aside after a few terms in office and allowed democracy to take root in Russia, who knows? But he is certainly more of an absolute monarch than anything approaching democratic leadership. He’s alleged to be incredibly intelligent too….imagine the parallel universe where Putin established democracy and then flexed into his post-political career becoming some world renown academic or thought leader instead of sending confused young men to blow up their fellow Slavs? 

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I question his intelligence on this one… maybe hubris took hold… extreme risk for uncertain outcome.. his security entourage must be large

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The leadership and many of the people of China, Russia and many other countries appear to be a bit behind on the path to advanced human consciousness and civilization. They appear to believe in some sort of collective hive mind fantasy. In the Internet age this is simply impossible. An individual is more complex than any organization.

We all want to be our own "empires of the mind" I like to call it. You can be whoever you want to be and go on your own hero's journey. We are aware of this in ourselves and in others. That's why we can contemplate shared governance with tangata te whenua and support and protect a myriad of lifestyle choices. Our individual consciousnesses can reach out and have empathy with "the lived experiences of others" without it tearing society apart.

This is actually a radical departure from the way I used to think but one can grow and change. My testosterone levels must be getting lower or something.

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There’s some epigenetic and other developmental factors in that too. The human brain identifies “tribe” based on early childhood experiences and whilst we can empathise and mature in our capacity to consider the lived experience of others, there is still a neurological setting that is established very early in our brain development regarding what is “us” and what is “other”. This is one of the strongest arguments for multiculturalism. The more we see and experience diverse cultures in childhood, the lower our xenophobia setting. 

There is a great chapter on this in the Robert Sapolsky called Behave.  

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More likely you have gained confidence in yourself. It is poor self-esteem that often leads to fear of the other which is what I see in a lot of the discussion about co-governance. Trust requires confidence. Paranoia is born of fear and a sense of inadequacy. 

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We have to be critical and think about the motives of others… not to be, puts one in a vulnerable position of been taken to the cleaners.. this is 101 survival.

trust has to be earned.. it cannot be installed by decree or signed ‘agreement’ … 

co-governance is a model of disaster… in our humanity there are really only two models of governing: democratic or autocratic 

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That free trade experiment despite all its faults has lifted more people out of poverty more quickly than any other time in history.  I grew up seeing pictures of famines in India and Africa - little babies with distended stomachs and twig like limbs; now India is about to be a major wheat exporter.

From Google: ""The target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline. More than 1 billion people have been lifted out of extreme poverty since 1990. In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015.""

My personal finances are stretched; I have to buy the cheapest cuts of meat and less quantity than I would like but I've never had a twang of hunger - slow starvation must be the worst way of dying.  We need more globalisation and more free trade.

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Singtautim, yup. Capitalism/free trade etc has given the human species extended life spans and more education, healthcare and more comparative luxury than hitherto achieved in our history. Unfortunately, it’s also been at the expense of other species , our environment and the dependence on finite resources (so it’s something of a mixed blessing). And reducing countries to rubble (which seems to increase in the absence of free trade and globalisation)  isn’t good for poverty or finite resources and the environment. 

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Great post. It's the nature of authoritarian regimes that means that cannot relax into the global melting pot as you say.  Authoritarian regimes are in constant fear of being booted out, they rule through oppression rather than consent, they cannot by their very nature relax. They cannot live and let live because that requires trust and they are by nature paranoid. That is what makes them weak and less likely to persist.  It's the international equivalent of little man syndrome where their feelings of inadequacy leads them to constantly try to prove themselves and pick fights against non-existent perceived threats.  

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Sadly untrue.  Athens democracy lasted a couple of generations and Sparta for 800 years. A democratic Bristish empire lasted about a century but Egypt under all powerful Pharoahs and China under all powerful Emperors living in hidden cities lasted for millennia. Strong rigid structures do last longer than flexible structures - the pyramids being the only ancient wonder of the world that still exists.

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Sparta and Egypt are very ancient civilizations, there has been no similar regimes in recent times. We live in a very different context to Spartan and Egyptian times. Those type of regimes fail now for the reasons I gave. I mean if there was a global apocalypse and we resorted to Mad Max style society then there is a possibility we would see that sort of thing again but I don't think that is what you are getting at?

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Regimes that come into power through violence and hierarchical in structure will be defined by there need for control of the narrative and their defensive and insular approach to criticism. What I find fascinating is how long will it take in the Information Age before the Chinese people demand more freedom - some may argue people will give up there freedom for security and stability… but does this still work in a society that progressively gets wealthier?

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Our freedom is limited in many ways but we very rarely challenge those lacks of freedom.  There are legal restrictions - which side of the road I can drive on, how much noise I can make in a residential area, the locations I can have sex and the ages of the participants. There are restrictions by convention - heckling at a wedding or funeral, clothing or behaviour deemed inappropriate, disobeying your team captain in a game of rugby. Could China develop a society where its people are generally as free but in most western countries but criticism of the executive branch of the government is taboo? 

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... one thing Russian oligarchs love most is getting out of Russia ... trips to the west ... indulgences of western goods , French champagne , Italian shoes ... they're gonna hate Putin for causing all that to be cut off from them... no more summers on the super yacht in Monaco  ... they'll be hurting ... stuck in mother Russia is a prison sentence to them ... 

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I'm sure they'll all be crying into their billions of dollars they got privatising state assets.

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If the USA says that any firm listed on a domestic stock exchange cannot manufacture in China then any conflict would finish before the press conference did. 

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Depending on how much of an autocrat Xi is.

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... China needs access to the rest of the world far far more than it needs its " no limits " BFF , Russia ...

End of story !

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Think you may be confusing the 'rest of the world' with the 'West".

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... no ... I'm not  .. .

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What countries are threatening to restrict Chinas access to their markets?

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The US is the only one who has made that threat but that doesn't mean others will not follow suit.  It's just that they do not need to because China hasn't taken the step Putin has yet. Why provoke unnecessarily?  It's been pretty obvious from the global response against Russia who would do what. China can see that and make their own conclusions. 

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And it dosnt mean they will either.....e.g. what will NZs position be?...And India (only 1.4 billion consumers) have made their position fairly apparent, even Turkey (a NATO member) hasnt sanctioned Russia.

The world is larger and more diverse than 'the west'

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India's having at act Swiss because of their military reliance on Russian gear. Which they'll probably be taking stock of, given how amazingly bad it's currently performing against modern man portable weapons.

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A very narrow and simplistic view, .....and it  dosnt change the fact that the motivations for sanctions by any country are not so cut and dried as has been suggested by some.

How about all that resource development in Africa that China has been involved in?....how do you think those countries would respond?

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It should be fairly obvious that there's still a global order that benefits its subscribers far greater than those wanting to start their own private club. There's only a small handful of countries that have actively voted against actions against Russia.

We can say the world is a bigger place than the West, but the West wields significantly more leverage.

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Agree, but voting to condem the war in the UN and implementing economic sanctions are 2 different things

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Global free trade is largely reliant on keeping safe trade paths open. If you're denied access to the routes, you can't deliver to your customers.

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... no one  ... why would they , at this stage  ?

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I don't agree that Ukraine is worth blowing up the global economy for, not after watching the US invade countless countries during my lifetime.  If the msm is to be believed, Russia has already lost and is basically finished already.  What is the point of more self inflicted wounds?

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Russia intercepted info about US biolabs weapons in Ukraine. Caught the US red handed.

Dont believe the MSM propaganda

Russia, China, Iran, Saudi Arabia are now allied for a new petrodollar.

This is all a chess move for the world

https://youtube.com/shorts/PJoNj8Yd32Q?feature=share

https://youtu.be/IZovhzPwxEc

https://youtu.be/nHihyFsgJGc

https://www.rt.com/business/552746-gas-payments-in-rubles-backfire-eu/

https://youtu.be/pENSnTZ6mkc

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“Don’t believe the MSM propaganda…”

Here’s a few unverifiable YouTube clips that are definitely what’s REALLY happening.

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Nonsense. You're down the rabbit hole mate. 

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In a nutshell, China has been preparing to step in as the leader in all aspects any time now.

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And without Xi and the CCP and human right abuses in Tibet & Xinjiang then China would make a good leader - it has the size and history. It has so many artists, scientists and engineers, it has such a variety of geography that would allow it to identify with countries that are cold or hot, wet or dry, landlocked or coastal. 

China could help lead the way for large densely populated countries emerging from poverty: Indonesia, Bangladesh, India, Vietnam, Nigeria, Egypt. It makes more sense than them trying to copy the USA. The only thing stopping China is lack of democracy and tight control of the media.  So at present China is a natural leader for repressive regimes such as Pakistan, Myanmar, Iran etc.

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judging from the country's performance for the past 40 years, China's democracy is way superior than that of the US, UK, NZ, AUS, Canada and many other EU countries. 

 

one simple reason is that in the Chinese version of democracy the people are always above capital. the opposite is true in all other countries with far inferior form of democracy.

 

In the US, NZ ect, capital has turned leaders of a country in cheer leaders, circus clowns, and comedians.

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  ... the economic powerhouse that currently is China has a massive demographic hurdle coming rapidly straight at it .... low birth rates  , and an aging population .... a depopulation of 40 % by year 2100 is postulated ...

The true alternative to challenge America as world #1 economy is somewhere else .... hint ... they speak good English , love cricket , have elections , and their curries are superb .... have a guess  , Mr X ...

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Is that Bangladesh or Sri Lanka? Probably Barbados.

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Nah a suburb or two in Auks I think he means.

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Roskill for the win!

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You have a point about capital.  No point about democracy because China does not have a democracy - the media is too controlled by the state. In the west the media is strongly influenced by the power of wealth and the power of the state - both providing the advertising that is the lifeblood of the media. However in the west it is only an influence not a control which explains why a weathly Pres Trump was so savagely attacked by US media and why most western countries elect left of centre parties despite the clear preference of capital. Wealth in NZ generally votes National but the Labour party is in power.  China does not have that flexibility. 

BTW I would not dispute China's remarkable economic success - the last place to manage such consistent growth for four decades was NZ 160 years ago.  But if you start from the bottom of a ladder you can climb more steps than those that are near the top. Judging merely by recent growth rate then Bangladesh is better than China.  GDP per capita is probably the best measure. China is about No 80 on that list and NZ is about No 30 which explains why Kiwis head for Australia not China and the Chinese head to NZ.

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We always view this from such a anglo-centric perspective. China has far bigger problems than the Russo-Ukrainian war and most of them are internal to do with demographics, dead-end investments and a Covid-19 epidemic starting to sweep across the country.

The reason China expresses little interest in this is that this is just a distraction from its real issues.

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They also lack food and energy security.

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And a large land border with the worlds second largest energy producer and worlds largest grain exporter

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China's success has been related to its 1 child policy.  Controlling an exploding population growth is the secret to success - just look at the alternatives.  A declining population could be an advantage for a modern China.  Since man first evolved more people meant more food and therefore more power and success.  But now firstly it is more technology that produces more food and secondly there is enough food so other things underpin a countries power and success.

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Ordinarily I'd agree but the decline will be so rapid based on the current birth rate I think it will have a substantial economic impact. In fact that impact will felt globally.

Also China has virtually no immigration to offset population decline.

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It is an interesting subject.  Cycle the Otago railroad and you can see rapid demographic decline in action. Shrinking towns with few children.  Someone said it is easy to manage growth (well not for Auckland Council) but managing decline is the proof of good management. Equivalent to judging the qualities of an army by how it retreats not how it attacks - with the conclusion that in WW2 the German armies slow retreat in Italy against overwhelming force proved they were the best army.

Another related issue is the gender balance - if girl foetuses are aborted your society becomes ill balanced with too many men; is it in India that there are 40 million 'missing' girls?  And China has girls kidnapped and taken to distant provinces.

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F around and find out, China. History is over.

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This is really going to set the cat among the pigeons: https://www.cnbctv18.com/economy/rupee-ruble-trade-to-be-ready-by-next-…

So India and Russia setting up their own international systems of exchange outside of Western influence. What's the US going to do? Put sanctions on India next?

And what happens if China then joins them, along with a couple of Arab nations rich in oil? Here's looking at you Iran which has been sanctioned by the US for years, maybe Turkey which could see them expelled from NATO and US nukes removed... probably not Saudi yet, but they would be eyeing it up if Iran aren't given too much control.

Like I said when this all kicked off - the US world order is reaaaaallly shooting itself in the foot with the ridiculous sanctions it imposed, the seizing of Russian funds and essentially cancelling Russias ability to transact globally. It could mean the end of the US dollar as an international store of value and a renegotiation of the world order... or at least creation of an order that exists outside of Western influence. 

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You do remember the Russian war being waged on Ukraine don’t you??

Just checking……

Is that you Mr Putin? if it is, I claim my prize!

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