Golez: Global trade is China's strength. It is also China's weak under belly. China cannot afford to risk any conflict that could result in the disruption of its economic advance. If China misbehaves geopolitically, like what Russia did in Crimea, China could face economic sanctions which severely slow down or even halt its GDP growth.
The economic sanctions against Russia hit hard: "Recent data confirm Russia’s entry into recession, with GDP growth of -2.2% for the first quarter of 2015, as compared to the first quarter of 2014. Recent forecasts suggest a fall in real GDP in the order of 3%-3.5% for 2015, and growth of around zero for 2016."
Here's a write up on the serious damage caused by the economic sanctions against Russia:
"When Russia illegally annexed Crimea and started interfering in Eastern Ukraine, the West responded with economic sanctions. In July 2014, sanctions were enacted in a coordinated manner by the European Union, the United States, Canada, and other Allies and partners.
"These sanctions were further strengthened in September 2014. EU sanctions, which had been due to lapse in July 2015, have been extended to January 2016. The US and Canadian sanctions are open-ended.
"There are three types of economic sanctions. The first restricts access to Western financial markets and services for designated Russian state-owned enterprises in the banking, energy, and defence sectors. The second places an embargo on exports to Russia of designated high-technology oil exploration and production equipment. The third is an embargo on exports to Russia of designated military and dual-use goods.
"The justification for these Western sanctions is internationally well-understood. But to muddy the waters, Russia imposed a ban on food imports from Western nations in August 2014. That ban remains in place.
"After around a year of these sanctions and measures, what impacts can we see on both the Russian and European economies?
"For the Russian economy, the sanctions are generally assessed to have helped exacerbate the macroeconomic challenges it was already facing, notably the rapid and pronounced fall in oil prices that started in the last months of 2014.
"Recent data confirm Russia’s entry into recession, with GDP growth of -2.2% for the first quarter of 2015, as compared to the first quarter of 2014
"Furthermore, the combined effect of these sanctions and of the fall in oil prices caused significant downward pressure on the value of the Rouble and increased capital flight.
"At the same time, the sanctions on access to financing forced the Russian state to use part of its foreign exchange reserves to shore up the sanctioned entities.
"These developments forced the hand of the Central Bank of Russia, which abruptly ceased to defend the value of the Rouble and hike interest rates in December 2014.
"Russia’s ban on Western food imports had a compounding effect on this challenging picture, as it led to higher food prices and hence to further inflation. This was in addition to the effect of the fall in the value of the Rouble, which had already raised the price of imported goods and services in Roubles.
"Recent data confirm Russia’s entry into recession, with GDP growth of -2.2% for the first quarter of 2015, as compared to the first quarter of 2014. Recent forecasts suggest a fall in real GDP in the order of 3%-3.5% for 2015, and growth of around zero for 2016."