China is one of the least trade driven economies in the world. Put another way, China is among the world’s most domestically oriented economies.
I thought the opposite, I was wrong. The facts prove it. Have a look at the article below, especially the chart
Today, I have learned two things about China which changed my views.
First, the property market. I posted this earlier today.
Second, the economy and how little dependent it is on trade.
It seems the fate of the Chinese economy is in the hand of the ordinary Chinese people. The West has very little influence over it despite the sanctions or threats of sanctions.
That article named some data wrongly, trade as a percentage of GDP, or trade-to-GDP ratio in China was not 19% in 2020, but 35%, and in 2022 it climbed to 38%. I think it meant
only exports as percentage of GDP which were indeed around 19% in 2020.
Anyway, that's that, thanks to China's tremendous productivity it isn't so reliant on exports as many people think. Domestic consumption is not only domestic services but also goods.
If they lose the trade surplus from the West, they still have all those physical real-life goods-producing factories left, still able to switch the entire production to domestic buyers.
Just inject new money into the economy (through CB, banking, government) and inflation won't rise, because of the rise of productivity accompanying it - more money, but chasing more goods as well.
Yuan's value against major Western currencies would probably tank if trade with the West stopped, but who cares at that point because China is the most self-reliant country in history - it has limitless entirely completed supply chains, and the lack of raw materials and energy could come from Russia.
This is exactly what happened to Russia a year ago btw, its value against the dollar and other Western currencies dropped twice the value it dropped against the yuan for example (it needed to drop that much because it rose too much at the beginning of the war, affecting Russian exports).
Russia still functioning fine, since they don't care, because they already started using local currencies for trade, with the rest of the world, for example, 95% of trade with China, and also phasing out the West as a trading partner entirely, China could as well.
