Could China cut ties with OECD countries?

The war in Ukraine and OECD countries’ first steps to sever economic, trade and financial ties with Russia have led some investors and companies to wonder whether the same could occur in the future with China, for example in the event of a conflict over Taiwan. An economist can only answer this question in the negative: There are huge trade ties between China and OECD countries. Chinese exports to the United States and Europe have grown very rapidly in the recent period and are a key growth driver for China; There have been very rapid increases in both investment by Chinese companies abroad and investment by foreign companies in China, which would result in considerable losses on both sides in the event economic ties were severed; The Chinese government’s main objective is to maintain vigorous growth in China, which begets social stability, and could not be done if China isolated itself from the OECD; China holds considerable foreign assets (including foreign exchange reserves) in OECD currencies, which it cannot sell and would certainly not want to be frozen like in the case of Russia’s foreign exchange reserves.