All the World’s a Stage: Top Risks for Corporates Around the Beijing Winter Olympics

If the 2008 Summer Olympics was an affirmation of China’s arrival on the global stage, the 2022 Winter Olympics is shaping up as a test of Beijing’s political red lines, the critics determined to cross them, and the corporations that are often caught in between. As much as Beijing wants the Olympics to be a smooth affair, the event will be taking place in a highly charged geopolitical climate. Foreign businesses with China exposure will have to navigate a minefield of contentious issues that could trigger political flare-ups. The following are the key risks on Rhodium’s radar as the Winter Olympics gets underway this week.

Posted July 22, 2022
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Beijing Sees Pain and (Some) Gain in Ukraine Crisis

Russian President Vladimir Putin has ordered a full-scale military invasion of Ukraine. At the time of writing, Russian troops were attacking from the north, south, and east, and skirmishes with Ukrainian forces are taking place on the outskirts of the capital Kyiv. If Russia occupies Kyiv, effectively dividing the country along the Dnieper river, a prolonged confrontation with pro-Western insurgent forces seems likely. The United States and Europe are negotiating feverishly to coordinate their response, threatening far-reaching financial and trade sanctions that would severely restrict Russia’s ability to sell sovereign debt, make dollar-denominated transactions, and procure critical technologies. All eyes are on Europe’s next move after the United States announced another raft of sanctions on financial sanctions and export controls.

In this note, we peer through the fog of war from Beijing’s vantage point to understand the risks, benefits, and lessons that are likely to inform China’s response to what may be the biggest military conflict in Europe since World War II.

Posted July 22, 2022
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The Elusivity of Self-Reliance

Russia’s invasion of Ukraine has exacerbated supply chain security concerns for G7 nations and China alike. While efforts among G7 nations are focused on how to relocate critical supply chains away from China and Russia, Beijing itself is doubling down on self-sufficiency goals to try and wean itself off “unreliable” and sanctions-prone trading partners in preparation for more troubled geopolitical times ahead.

But a closer look at China’s trade data reveals how China is falling short in many of its self-sufficiency aims. In this note, we focus on three vital areas: food, energy, and semiconductors. Despite fastidious state planning to shore up domestic output in these areas, China cannot escape heavy external trade dependencies to meet its most vital needs. This may be a bitter pill for China to swallow, but businesses can still find opportunity in these tumultuous trade flows.

Posted July 22, 2022
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