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Research Staff Report

Huawei Exclusion: An Intense Jolt to the World Economy

Major Impact if Europe Follows Suit
— Blocking China Will Also Alter Supply Networks —

  Lead Economist


There are moves underway to exclude Huawei Technologies, a giant in China’s telecoms equipment industry, and other Chinese manufacturers. If output at Chinese corporations shrinks due to a decrease in turnover, the economic climate in China and surrounding countries is at risk of a decline. In the long term, the situation also has the potential to alter the Global Value Chain (GVC) with demands for other supply centers than China. This article explores the magnitude of Chinese exclusion on the global economy from two perspectives: the impact on the economic climate in the short term and on structural adjustments in the medium term.