Home Capital Raising & Corporate Finance Ram Charan: China Has the World by Its Throat
How China’s $7.4T trade strategy impacts global supply chains—and steps CFOs must take now to regain control.
This article appears in the July/August issue of Global Finance Magazine.
Ram Charan is an adviser to CEOs and boards who built his reputation advising CEOs and boards inside some of the world’s largest companies. In his new book, China’s 90% Model: China Has America by the Throat: Here’s How to Fight Back and WIN , he turns that lens on the trade war reshaping global supply chains.
In this Global Salon conversation , he lays out how Beijing uses cheap exports to flood markets and squeeze out rivals — and what CFOs need to do, in the boardroom and beyond, to respond.
Global Finance: Your book lays out the scale of China’s trade surplus and cash reserves. Can you walk us through what you believe are the actual numbers?
Ram Charan: China has earned over time $7.4 trillion in hard cash [e.g., dollars, yen, euros] and 2,250 tons of gold. It is now earning hard cash at a rate of $1.5 trillion a year. My forecast is $1.8 trillion. If nothing is done, in five years China will have an additional $10 trillion in cash in dollars, yen, euros, South Korean won, and other currencies of countries that trade with them.
Negotiations between President Trump and President Xi Jinping have taken place. They have now stopped because President Xi has clearly declared, “If you do this, I will supply the supply chain. If you don’t do this, I will stop supplying the supply chain.” He’s done the same thing with India.
GF: The Indian rupee is down about 10% against the U.S. dollar compared to a year ago. What does India’s currency situation tell us about the mechanics of the risk from China?
Charan : Nobody knows the outcome of that crisis [the currency and trade deficit spiral] like the Indian currency going to hell, and trade deficits, which are increasing [India’s bilateral trade deficit with China grew from about $44 billion in 2020 to roughly $100 billion in 2025]. If you call 10 business people of reasonably sized companies in India, now they understand it.
The reason? The currency. They’re taking action. Your business model has got to change. You better make cash flow [a priority]. If nothing is done, your currency will decline, as it has in India. Your balance of payments will decline, and that is a real cycle.
GF: If a CFO agrees with you on the China threat, what three things should they do in the next 12 months, and what should they avoid?
Charan : First, be defensive. Analyze your country. Which imports are coming from China? If nothing is stopped, what will it do to your country’s currency and balance of payments? A country’s currency is directly relevant to the CFO.
Second, the CFO should look at which industries are totally dependent on China. If the industry stops, what happens to the country’s GDP? What happens to the value chain? Because almost all value chains, in some way, are interconnected. The CFO has to allocate cash for defensive purposes.
Third, the CFO should substitute China [products] if they can. But the cost of every single thing non-Chinese is very high. How would this change the market? How would they sell, and how would they price? I recommended they start a war room, every morning, see what’s changed, what’s the pattern, who’s driving it, and what are the signals.
Charan: On the offensive side, identify…