BlackRock sees a major risk in the ongoing tensions between the United States and China.
According to their Investment Institute, this conflict has a high-risk score of 1.5. In contrast, the risk score for a significant terrorist act is much lower.
This marks the rivalry as a critical concern for global markets.
Both countries aim for stability in their relations. However, BlackRock observes that any ease in tension would be fragile.
Specific actions by China, like its moves in the South China Sea, add to this volatility. Also, China’s pressure on Taiwan has been increasing.
Meanwhile, the United States is extending its military and economic support to Taiwan. BlackRock suggests this move makes the situation more risky.
The upcoming presidential elections in Taiwan in 2024 could be a turning point in this complex relationship.
In another development, Chinese authorities are scrutinizing Foxconn, a tech company. Terry Gou, its billionaire founder, is running for president in Taiwan.
Foxconn is significant because of its role in making China a global export leader.
It appears that China’s leaders are sending a message to Gou. They seem to warn him to think broadly about politics rather than focus on personal goals.
This action against Foxconn adds another layer of complexity to the already fragile U.S.-China relations.
Background
The tension between the United States and China isn’t new; it has roots in history. Trade conflicts have been a significant part of this relationship for many years.
The U.S. has voiced concerns about China’s intellectual property practices. On the other hand, China feels restricted by U.S. tariffs and trade limitations.
Tech firms like Huawei have found themselves caught in the middle. Issues also extend to human rights and regional security.
Both nations have strong economic ties, making conflict costly for both sides.
Understanding this history is crucial for grasping the risks outlined by BlackRock and the broader implications for global markets.