True enough, but that works both ways. One would assume that China would also try to avoid such a conflict, which would threaten their economic viability. FYI: China holds the world's largest foreign debt, i.e., foreign debt owed to non-residents and repayable in foreign currency.
Wouldn’t an embargo with China instantly cripple the manufacturing base of most companies? Most everything has a ‘made in China’ tag these days.
Maybe, but the world's biggest exporting nations by far are Europe, the US, and Japan. It would not be the end of the world if China were to be taken out of the equation. It would take time to adjust and the global economy would suffer a recession at the very least, but what would happen inside China would be catastrophic.
This Chinese threat will only grow with no one being able to steer or mitigate it.
As I said, it is a two-edged sword. Will China risk its growing prosperity and affluence to pursue policies that could plunge the country into economic ruin and political instability? What is the risk versus the reward?
Yes, valid points there. The situation is complex. Economies today are such that they would avoid a war to prevent a cold. China is also avoiding confrontation... for now.
As for foreign debt, does their holding of over a trillion dollars in foreign exchange help them?