Supply Chain

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.

GF: What about going on the offense?

Charan: On the offensive side, identify the gaps the Chinese are not filling, including which countries and segments, and where the opportunities lie. The best thing I’ve learned is to think 20 years out. Just think: What will humans need 20 years out? 

For example, there’s the Adani Group in India. The [founder] predicted that India would need ports 25 years ago. Now he’s the largest private port developer and operator in India. Look for those opportunities. You don’t spend your money on a 20-year basis, but you learn how to get there. Get three or four people on the payroll to investigate and look at the technologies.

A company is not competing with a company in China. A company is competing against President Xi Jinping of China, so it has to pull together as an industry. Go to the government. Stop fighting alone. India is doing this actively. Europe is struggling; they don’t have an answer yet.

GF: What is China’s impact on the European auto industry? 

Charan: Europe is at a major crossroads. Europe doesn’t have a strategy. Germany’s auto giants spent decades helping build China’s car industry; now, they are outcompeted and heavily dependent on China. Volkswagen is already moving into defense, so that single indicator shows they know the Chinese are coming. The destruction of the auto industry is a major blow to Germany, including parts suppliers and chemical and energy suppliers. They don’t yet know how to deal with it. I would say one option for them: get a hold of Trump and combine three or four countries just for the auto industry.

GF: Do you see boards and CFOs as locked into short-termism by their fiduciary duty to shareholders, even when the long-term strategic risk is larger?

Charan: There are exceptions, but it’s a fact. I sit in the boardrooms. The market drives short-termism. But the more important point is they are unaware that China is attacking their industry. There is no manufacturing industry in the world that is unaffected by China’s strategy, directly or indirectly.

GF: You’ve said there are tools to wage a financial war with China. How fast can these be implemented, and how confident are you?

Charan: Saudi Arabia probably could fight, because China depends on oil. The Saudis have control of the price of oil. Small countries can’t fight alone. America alone cannot fight. It has to be coordinated. There are tools for a financial war with China. If Brussels and Washington can work together, Chinese power will be reduced.

GF: How can finance leaders fund next-generation industries where China is ahead?

Charan: In a crisis, you have to have good execution and a dedicated team. We did that in World War II. This is an economic war, and people don’t realize it, so each company is doing its own thing. 

You select the industries, assign full-time people. We must have a department of manufacturing and technology, which I’ve recommended to President Trump, in the U.S., in Europe, in Japan, in South Korea, and in Israel. People have to understand that the cost and the price China charges for products is absolutely not real. It is based on [the fact] that you incur losses internally and earn a trillion dollars in hard cash. Therefore, your profit is on a national basis. It is not on an industry basis.

GF: Beyond solar panels, batteries, and rare earths, what should CFOs be watching in supply chains that they’re not?

Charan: First, most important, are the ingredients that go into the chemical industry, APIs [active pharmaceutical ingredients]. Then, in biology, they take the molecules, they have very fast testing, build it, and now begin to come in at a tenth of the price. 

I have gone to DuPont and other companies to see what China needs from us and what they’re buying. But they know our people are not doing the detailed work. The people who are advising Donald Trump are economists. You need chemical engineers and biological engineers. You need the R&D people in Washington to deal with this. Economists and consultants cannot do it.

GF: Isn’t China under great strain, due to the challenging job market for young workers, the housing collapse, and extremely thin profit margins?

Charan: President Xi has said many times: austerity, austerity, austerity. I believe he correctly realized the real estate booms and busts were created by the central bank. So he’s letting it cool for a long time, because his concern is the threat to the Chinese Communist Party from inside China. He’s very clear about it; that is, that going forward, it may take a loss, a lower GDP.

The rural areas are not in great shape. President Xi is taking that calculated risk. But selecting industries, giving them money, and creating hyperscale: That is the real model. Civil control is total; students are under full control. 

GF: Twenty years out, will AI and robotics change the manufacturing equation for finance and operations leaders?

Charan: If you don’t have industry, you are nobody, [even if] you use AI, robotics, and automation. Any country that says it will go without manufacturing, I guarantee, will not be a democratic country and probably won’t survive.

GF: What practical tools can finance leaders use to act on what you’ve described?

Charan: Figure out the whole supply chain’s vulnerabilities, put an industry coalition together, and then try to get to your government and say: Here is the gap. If we don’t fill this gap against China, this industry will go away.

Weld Royal is a contributing writer based in the U.S.

Speedier implementation could boost the country as a regional trade gateway.

Freight rail and port reforms being implemented by South Africa can boost the country’s role as a trade gateway between Africa and the Middle East, a key Southern African export and source market for commodities, including minerals, fertilizers, and fuel.

South Africa launched logistics reforms in 2020 to prop up an economy dragged down by freight rail, port, and electricity supply logjams. President Cyril Ramaphosa’s (pictured) administration recently issued a progress report, noting that reforms in the key freight-rail sector are underway but moving slowly. 

Boosting Regional Trade Competitiveness

There’s every reason to speed up the process, said Lerato Mzezewa, senior operational risk analyst at Fitch Group’s BMI advisory. Accelerated and effective implementation of freight rail reforms can “improve the movement of Gulf-sourced inputs into South Africa and the wider Southern Africa region while helping exporters move bulk, refrigerated, and containerized” cargo, she said.

“This would strengthen South Africa’s competitiveness as a trade gateway, particularly for firms that require dependable port logistics and inland distribution alongside maritime capacity,” she added. “South Africa’s revived freight rail and port infrastructure will support South Africa-Middle East trade by improving the domestic movement of seaborne cargo between ports, inland production centers, and end users.”

Gulf markets accounted for about 11% of South Africa’s total imports in 2025, totaling approximately $11.6 billion; the Gulf supplied 60% of the country’s crude and refined petroleum imports.

Private Operators Step In

As part of the reform process, South Africa recently finalized contracts with 11 private rail operators. Opening core rail corridors to third-party private-sector players strengthens “the investment proposition by shifting rail recovery away from sole public-sector dependence toward a more competitive, multi-operator” environment, said Matteo Addonizio, head of infrastructure research at BMI. 

The moves aim to attract sustained private capital investment in the freight rail sector and support the medium-term recovery of freight rail volumes. The new operators are expected to move an additional 24 million tons of freight rail capacity across coal, manganese, containers, fuel, and general freight. Freight rail volumes rose to about 168 million tons in 2025 from 160.1 million tons in 2024. However, this remains below the 200 million tons of capacity required to improve transport logistics for South African freight rail users.

South Africa’s freight rail and port inefficiencies have significantly affected heavy freight movers, including bulk commodity miners like Kumba Iron Ore, which ships key steelmaking ingredients to China and the Middle East.

Kumba has had to reconfigure its business to “align production more closely with Transnet’s constrained rail” and port capacity, according to a company spokesperson. “Aging infrastructure and inadequate maintenance practices impact the reliability and efficiency of logistics channels, which directly impacts our operations.”

Logistics inefficiencies are not South Africa’s only vulnerability.

The regional powerhouse is also vulnerable to global fuel price fluctuations stemming from the war in Iran, whose effects continue to ripple through supply chains and cost ecosystems across the continent. An overreliance on imported crude oil and refined fuels, alongside a freight system that moves roughly 80% of goods by road, compounds South Africa’s situation, said Jee-A van der Linde, senior economist at Oxford Economics Africa.

Tawanda Karambo is a contributing writer based in South Africa.

Looking ahead to the second half of the year, corporate finance chiefs are hardwiring contingency into strategy.

Global corporate finance leaders are entering the second half of 2026 facing the most complex operating environment of the post-pandemic era, requiring them to balance cost discipline, technology investment, and capital deployment against a backdrop of geopolitical volatility and renewed energy uncertainty. 

At the center of that uncertainty is the Strait of Hormuz. Normally a conduit for around 20% of global oil and liquified natural gas (LNG) exports, the strait has remained largely blocked since war broke out in the Middle East in late February. 

The conflict has added a new shock layer to an environment that was already fragile as a result of tariff turbulence, weakening demand, and declining consumer confidence. 

The consequences for corporate finance professionals are direct and serious, forcing teams into defensive mode: conserving cash, deferring capital investment, and stress-testing portfolios against prolonged geopolitical disruption. 

Macro Shocks Add Strain

Cost pressures were already elevated before the war, and are continuing their upward trajectory. According to the ACCA and IMA Global Economic Conditions Survey (GECS), the further rise likely reflects some early impacts of the surge in energy and other commodity prices since the outbreak of hostilities in the Persian Gulf. Among the CFOs surveyed, the proportion reporting increased operating costs eased slightly in the first quarter of 2026, but remains high by historical standards.

Confidence across finance teams, meanwhile, fell sharply in the first quarter, taking sentiment to a low point previously seen only at the onset of the Covid-19 pandemic in 2020. Since the GECS survey was conducted in the first half of March, the outbreak of hostilities would have been a major factor weighing on sentiment, owing to the surge in geopolitical uncertainty and the price jump in energy and some other commodities.

Logistics and energy are the most immediate concerns, according to findings of the Allianz Trade survey of 6,000 companies across 13 major economies: 60% said they are worried about supply chain disruption and rising commodity prices, with concern running highest in Vietnam, Poland, the UK, and the U.S.

One consequence of the war-induced shocks is that businesses are holding more inventory, adding to liquidity demand at precisely the moment rates are falling more slowly than expected, if at all. 

Beyond Hedging

When it comes to sustaining readiness in the months ahead, Naresh Aggarwal, associate director, Policy and Technical at the Association of Corporate Treasurers, says the framework is simple: “plan for the worst, hope for the best.” In practice, this means larger, more committed credit facilities, greater use of derivatives, and hedge duration adjusted to circumstances.

The effects of the war are extending far beyond the energy, shipping, and chemical manufacturing sectors. Alex Ashby, group treasurer at WPP, says the ongoing volatility has driven material change at the global media company. 

“Geopolitical volatility has led us to materially step up our focus on foreign exchange risk management,” he notes. “We have invested heavily in training across the organization to raise capability and accountability and introduced new monitoring and reporting so that FX exposures and outcomes are reviewed regularly at executive and board level. Alongside more frequent liquidity stress-testing, this ensures risks are identified earlier, decisions are taken closer to the underlying exposure, and we remain agile as conditions evolve.”

The world remains deeply interconnected, says Raphael Savalle, CFO at Montblanc, and so shocks travel fast and wide. Businesses are no longer operating in a world where companies can remove volatility by hedging, but one where operating models must be built to absorb it.

“This isn’t going away; if anything, it’s increasing,” he says. “It’s the butterfly effect, times 10. The key is to maintain long-term strategic direction while also building agility into how you operate – what I call dynamic P&L management, or dynamic resource allocation – and still be on the lookout every day for risks that may not at first seem relevant but turn out to be, because of the way the world is connected.”

What impact will this level of uncertainty have on the day-to-day in the coming months? Beyond a structured routine of information exchange, it demands the confidence to be candid about these less-obvious risks.

Reassessing the Tech Arsenal

The challenges of the coming months are also prompting some companies to review their technology needs. ERP systems are still the backbone of corporate finance, but their rigidity is fueling demand for smarter, more flexible tools to augment them. 

Enterprise Performance Management (EPM) platforms are emerging as a viable contender, says Armand Angeli, AI and automation specialist and vice president of the Digital Transformation and AI Group at DFCG, the French network of CFOs, broadening their scope beyond finance to cover sales, purchasing, and logistics. 

Major ERP transformation projects are stalling as companies wrestle with legacy integration, Angeli says; bridging old and new without discarding existing investment remains the central challenge. 

“We can’t just abandon ERP,” he says. “We have to create bridges or APIs between AI tools and all the ERPs. So the question becomes, How do you create these bridges? It’s not easy.” While ERPs can be inflexible, they are still valuable tools, “thought through by experts, for CFOs.” 

While the major ERP providers are working to embed AI in their offerings, corporate users are taking different routes, depending on individual views and budgets. In practice, then, AI adoption by corporate finance teams is advancing with extreme caution. 

“If the pace of change for these tools is 100, the pace of change among individuals is 10, and for companies, it’s 1,” Angeli observes.

Predictive AI, built on auditable algorithms, has earned trust as a tool for reconciliations, fraud detection, and cash posting, while generative AI remains a source of deep skepticism. Hallucinations, compliance failures, and the risk of over-reliance are tangible concerns. 

“We now see more and more suspicious posting, more and more duplicate payments,” says Angeli. 

Agentic AI is further still from meaningful deployment, he adds: “CFOs don’t trust agentic AI. And given that studies show that hallucinations account for between 30% and 70% of Gen AI output, we don’t trust Gen AI, either. Maybe 1% or 2% of companies can say they have agents working.” 

Aggarwal concurs, observing that corporate finance teams remain in the exploratory phase when it comes to AI, but with purpose. Companies are mandating structured upskilling; One treasury team of his acquaintance dedicates half a day every other week to some form of AI-related upskilling or evaluating AI processes, he says. 

Data Integrity

The priority for the second half of this year, however, will be data integrity and learning which insights are genuinely actionable, Aggarwal predicts; truly agentic AI is a story for 2027.

“The word I hear a lot in these circles is trust: trusted data, trusted algorithms, trusted outputs, trusted use of the outputs,” he says. Going forward, the deeper cultural question of if and when to remove the human from the loop will become harder to avoid as, presumably, AI systems accumulate error-free track records.

Progress may be cautious for now, but Gartner estimates that CFOs who get AI deployment right could unlock 10 additional margin points by 2029. It won’t be isolated pilots that deliver returns, however; the gains will come from managing technology as a portfolio. Three quarters of CFOs are already raising technology budgets for 2026, the research firm finds, with nearly half boosting them by 10% or more.

Quantifying return on investment is difficult for the majority of AI-based projects, however, and will continue to be so through this year, Angeli predicts: “We know that we have to implement AI and hope for financial ROI in the future, but most companies are not seeing it yet.” 

Another aspect of the technology challenge that is intrinsically linked to wider geopolitical developments, says Montblanc’s Savalle, is digital sovereignty, or a nation’s ability to control, secure, and regulate its entire infrastructure: in accordance with its laws, but also its strategic interests. Different approaches to the governance of these technologies and the accompanying data have deepened geopolitical competition between the U.S., China, and the EU, according to the World Economic Forum.

“Many governments are now insisting that data centers sit within their own borders,” Savalle warns, “and increasingly, they’re looking at software dependency more broadly: not just AI, but email systems, video conferencing tools, the whole stack. As a CFO, you have to consider what that means for your IT architecture.” Under these circumstances, will the old ambition of a single global ERP still be viable in five years’ time? He is not so sure.

Permanent Contingency Thinking

Whether physical war or digital friction, geopolitical risks are forcing the finance function into a state of permanent contingency thinking. The closing of the Strait of Hormuz is an extreme case, but it sits within a pattern that was already familiar to CFOs and treasurers. The post-Covid supply chain collapse, the Russia-Ukraine war’s impact on energy and commodities, the Red Sea disruptions of 2024–25 — each forced treasury teams to rethink counterparty risk, liquidity buffers, FX exposure, and supply chain financing.

What’s different this time is that finance leaders are no longer treating the shocks as exceptional. 

Aggarwal sees the broader geopolitical realignment as structural rather than cyclical, and doubts even a change in US administration can reverse it: “The genie is out of the bottle around using trade as a way of imposing sovereignty.” Looking ahead, he foresees continued pressure on the finance function to operate against a challenging backdrop.

“What I understand from my CFO network is that there is no going back,” Savalle observes. “This is the new normal, and, if anything, it will continue and expand. So the question is about how you adapt your operating model. Make sure that you get that feedback loop and keep an open mind, because you are going into uncharted territory. Things used to work in a certain world order. This is changing.” 

For corporate finance leaders, the priority is no longer waiting for stability to return, but operating effectively in its absence. While keeping to a long-term strategy is vital, so is reconsidering some of the operating model assumptions that a world divided into regional blocs is calling into question. That could include maintaining higher liquidity buffers, diversifying supply chains geographically, stress-testing cash flow forecasts against energy price scenarios, and investing in planning and forecasting tools that allow the organization to model disruption faster. 

For the corporate finance function, these are no longer crisis measures, but the baseline. 

This article appears in the June 2026 issue of Global Finance Magazine.