According to a Bloomberg report, energy, chips and the situation in the Taiwan Strait will be the three major fire points for the global economy in 2023.

(Reuters file photo)

[Financial Channel/Comprehensive Report] With the flames of war raging in Europe and the escalating Cold War between the United States and China, countries around the world are under pressure to choose sides.

To avoid shortages of vital commodities ranging from natural gas to semiconductors, governments are setting new economic priorities and using the commodities they control as leverage.

For business titans, it all represents a world away from the intimately connected era of the past.

The World Economic Forum (WEF) will be held this week in Davos, Switzerland. This year's discussion is expected to focus on geoeconomic risks, including key commodities and markets. For example, since Russia invaded Ukraine, global concerns about energy security, Or the actions of the United States to deprive China of cutting-edge technology. Others are geographical, the most important of which is the threat of potential conflicts in Taiwan. "Bloomberg" also pointed out several major focuses that deserve attention in 2023.

Please read on...

weaponization of energy

Energy is at the heart of the economic war the U.S. and its allies are waging against Russia, which both sides are trying to weaponize and could further destabilize in 2023.

Russian President Vladimir Putin has stated that Russia will not sell oil to any country that participates in the G7 price cap.

Under the sanctions of Western countries, Rosneft still has buyers, including India, China and Turkey.

Moscow could also choose to cut off supply entirely, which would wreak havoc on the oil market and risk a repeat of the surge in crude prices that drove inflation higher everywhere last year.

The relevant sanctions are not only related to crude oil. Similar restrictions on Russian refined products such as diesel will take effect next (February), and some Western officials worry that this may lead to shortages.

The closure of Russian gas pipelines has left a big gap in global supplies, and countries are likely to scramble for scarce liquefied natural gas this year, although warmer winters have helped reduce severe shortages in Europe and lowered gas and electricity prices so far. (LNG).

war of chips

Semiconductors, a key component of everything from electric cars to missiles to artificial intelligence (AI) technology, are emerging as one of the most important battlegrounds for the global economy.

In the past year, the Biden administration has used various tools including export controls to prevent China from buying or manufacturing the most advanced chips.

At the same time, it also launched a $52 billion subsidy plan for the US chip industry to attract manufacturing back to the United States.

The U.S. says the actions are aimed at limiting China's military capabilities, and Beijing sees them as part of a broader effort to halt China's economic development.

The U.S. also needs the cooperation of its allies to make restrictions work best, and the Netherlands and Japan, home to some of the most advanced chip companies, have both agreed.

Meanwhile, Beijing is trying to build its own semiconductor industry, but cutting-edge technology may be difficult to replicate and could seek retaliation if restrictions in Washington tighten further.

Taiwan Strait Situation

U.S. and European leaders worry that the next front in a new Cold War could be Taiwan, and the situation could become even more heated.

The Pentagon recently stated that it did not see any signs of an immediate detonation of conflict in the Taiwan Strait, but mentioned that since former House Speaker Nancy Pelosi's visit to Taiwan in August last year triggered a strong reaction from Beijing, with military exercises and military aircraft, The increase in disturbance operations by warships has become a fixed pattern.

In addition to the obvious risk of direct conflict, there are also economic aspects of the standoff in the Taiwan Strait. As the seat of the world's leading foundry TSMC (2330), Taiwan is very important to various global supply chains. Even if there is no war, if there is a situation like It is China's blockade that could still trigger a huge domino effect.

Tim Adams, chief executive of the Institute of International Finance, said China's actions against Taiwan and the potential response from the West are potential events on everyone's mind, and every company is thinking about the possibility of sanctions. How, and who will be America's allies.

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