> The West (USA + Canada, EU + UK, Australia) could circle the wagons, form a trading bloc, essentially negotiate with China as a single entity and start a trade war if China did not bend. But even if they wanted to do so, the cost would be high in the short term and voters would punish them.
China depends a lot less on trade than NATO countries, something like 3% of their GDP is making stuff for Western consumers. If there is a serious Trade War their main concern would be their own real estate market instead of selling plastic toys to US consumers.
China's secondary trading block are near Asian countries.
The "west" collectively have a population LESS than China, and they cannot even hold the "EU" together.
China also has major cards, in a situation that you describe above does happen.
- The first thing China will do is sell their treasury holdings,
creating enough shockwaves in the bond market to wipe of the retirement saving of most boomers, (remember that the median US national has no saving).
- They will unilaterally stop following any sanction / not officially , but unofficially they will sell whatever Iran / NK / Russia want to buy from them.
Iran alone has enough oil reserves to meet their energy needs, not to bring up the cozy relationship between Putin and Xi.
- 1970 style inflation in western countries that have outsourced all their electrial engineering work to China, the west doesn't have a collection of mega city that is the Pearl River Delta - China's greatest asset.
There is no way greater New York will be able compete directly with PRD.
It will require infrastracture spending at a level that would be unprecedented in US history comparable to WW2 - putting inflation pressure on resources. Not to mention major displacement of workers - who might not want to go back to working in a factory floor.
All this will be painful to both the "West" and China.
> What might stop China is if another large country such as India, Indonesia or Nigeria decided to position themselves as the ethical alternative: cheap labor and manufacturing without the rampant state sponsored IP theft.
Try starting a tea shop in India and then come back to me - I know I tried.
You will have to pay bribe to 3 government bureaucrats, 5 state bureaucrats, 2 local mafias leader, leaving aside politians who will come at our door if your business gets big enough.
India / Indonesia are democracies with all the mess that democracy involves. Most MNCs rather put their money in Saudi Arabia then invest in unstable democracies.
India / Indonesia will industrialize on their own terms and will mostly stay neutral since they dislike being pawns between great powers.