Why this China shock will hit close to home

DURING the salad days of global supply chains, the benefits of being on cordial terms with China were barely questioned.

- By Daniel Moss

Being in the same neighborhood was considered better yet. It was a ticket to ever-greater prosperity.

That idea is now getting some welcome scrutiny. Asia’s years of runaway expansion are behind it, and being in China’s economic orbit is more of a mixed blessing. While that nation’s export juggernaut has encountered stiff resistance in the US, its factories are sending increasing volumes of cheap products to the rest of Asia. Consumers will find that attractive, but domestic manufacturers may come to loathe it if they don't already.

And while it's good that inflation has been contained, there is a risk that economies get too much of a good thing. Price gains are below target in many places, and a sustained move south from here would be detrimental.

Don’t expect torrents of loud criticism directed at Beijing. It’s far easier, diplomatically, to level complaints against Washington than to point at the nearby power. China has also been growing in stature as an investor. Asian leaders constantly say they don’t wish to choose between the two economic heavyweights. In practice, they're disinclined to speak ill of President Xi Jinping. Former Malaysian Prime Minister Mahathir Mohamad once put it this way: “Whether we like it or not, China is there and China is going to play a bigger role in world affairs. So one has to learn to live with China... we realize we are a very weak nation, and China is a very powerful nation.”