Ukraine’s war negatively impacts almost every area of life in the global supply chain. With the rise of the price of grain oil and the danger of commercial shipping getting to and from Ukraine, Ukrainian grain and food supplies help seed over 400 million people on this planet.
With the Ukraine War, nations like Niger, the African continent also, including Egypt and China, are facing potential famine are a vast increase in food prices for China.
At the moment, they still have enough calorie intake. China currently needs 3.5 trillion worth of grain to feed its population of 1.4 billion.
These estimates vary due to inaccurate data from China, with some poor population and 1.2 billion or even 800 million, though this data is out to verify its accuracy.
One of the leading causes of a banking crisis is loan defaults, but with personal incomes on the rise and unemployment rates falling, banks aren’t facing their typical roster of issues. However, anytime a bank is overexposed to risk, a crisis isn’t often far behind.
With the Ukraine War heating up with the Russian invasion of Ukraine from Belarus and the East and North in February 2022, financial institutions and companies were highly aware they would need to limit their exposure to the Russian Federation.
Also, indirectly, many firms aside to reduce their exposure to Chinese financial institutions.
The reason for this withdrawal and the widening of space between firms investing in China is how the Chinese view financial institutions and lending not as a force for economic development but as a force that meets political goals.
The Chinese got this economic view due to their experience and interaction with the Japanese empire before 1945 due to Japanese economics viewing money primarily as a political tool. If there are financial issues, there is a culture of debt forgiveness.
This is something that Western financial institutions have their origins in England, the Dutch Republic and the Italian city-states of the 15th century.
Very much sees finance as an economic tool, not a political tool.
This ideological mismatch sees Western investors being particularly concerned about Chinese financial institutions.
As Russia and China continue to cut themselves off from the rest of the world, many of the US banks may have dodged a bullet.
There’s always the risk of a break, but the US financial sector looks pretty good, with low international exposure, a low unemployment rate, and high growth.
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