JK Marshall Mercantile - China Support for Russian Invasion Could Hurt Economy

Seoul, Korea, South, April 05, 2022 --(PR.com)-- A recent report by JK Marshall Mercantile revealed that China’s factory activity had declined at the fastest pace in two years last month. The report cited China’s harsh COVID-19 policies and the fallout from the conflict in Ukraine as the likely reasons for the slowdown, although it noted that factory activity had also slowed in many other Asian countries.

In addition to slowing factory activity, the report showed that China’s stringent COVID-19 measures have proved problematic for the world’s second largest economy’s recovery in recent months.

“As the global pandemic drags on into its third year, China is still utilizing targeted lockdowns to manage outbreaks. This is weighing on the economy and small businesses, especially, are suffering,” said Mr. Ha-Jun Seong, Chief Finance Officer at JK Marshall Mercantile.

In China, small and medium sized businesses are a crucial part of the economy. They contribute the majority of GDP growth and provide more jobs than state owned entities. As the COVID-19 situation in China grew more dire this year, China offered some support in the form of tax refunds and rent waivers, but JK Marshall Mercantile analysts say these measures have done little to alleviate the pressure on small and medium-sized enterprises.

“The Russian invasion of Ukraine has now placed the Chinese economy in an even more perilous position,” said Mr. Seong.

When Russia invaded Ukraine, it is unlikely that Putin expected the West to launch such full-scale sanctions against Russia. If China were to offer support to Russia in its invasion of Ukraine, JK Marshall Mercantile analysts believe it may attract similar economic sanctions from the West.

The JK Marshall Mercantile report warned that if the West were to impose similar sanctions on China, the resulting supply chain disruptions and elevated prices of important goods would be detrimental to China’s economy.

At this time, China has maintained that it will not choose sides in the conflict but has also refused to condemn Russia’s unprovoked invasion of Ukraine.