This has been the reality of trade with China for years if not decades.
China's approach to foreign investment has always revolved around extracting as much intellectual property as possible.
The flaw in China's strategy is that it has not evolved its overall economic system to incentivize the growth of a strong base of knowledge workers able to take that IP and run with it. Yes, China can duplicate a lot of US tech, and has in some specific areas pushed ahead where the US has not, but their ongoing youth unemployment problem alone indicates that they are not succeeding at cultivating a Chinese equivalent of Silicon Valley where innovation is almost de rigueur.
Besides, with foreign investment now fleeing China, China does not have to worry about "deleting America" from its tech sector--America is already working to erase itself from that same sector!
“Most economists agree that if it needed to, China could launch a big bazooka.” Is an interesting choice of words. The question is will China’s economic condition make it more or less likely to lead her to war. It can be argued both ways.
My personal take is that China's geography is all wrong for using war as a means of economic stimulus.
China has already expanded to her natural borders. To the south the jungles of Southeast Asia are pretty impenatrable, to the West there is the Himalayan Mountain range and the Gobi desert. To the north there is the Siberian steppe--a vast area of little infrastructure and fewer people. To the east is the Pacific Ocean.
Unlike Germany in the 1930s, or Russia today, there are no territories close at hand which are easily invaded for the purposes of exploiting their resources. Moreover, the one territory China has expressed a desire to conquer is Taiwan, and its dominant position in global semiconductors makes it impossible for China to even attempt an invasion of the island without a swift and not very kind international response.
Additionally, China imports the vast majority of its energy, most of the raw materials for its manufacturing economy, and a significant quantity of its foodstuffs and other materials for agriculture. In the event of a war with another major power, all that power has to do is blockade the Malacca Strait and China's economy is pretty much shut down. India would almost certainly participate in such a blockade--they have the naval assets and the proximity to mount and sustain such a blockade far longer than China can withstand having their imports effectively curtailed. Australia would be quite likely to join in, and the United States would of course be involved as the US is the major power with whom China is most likely to go to war.
Japan, for its part, would certainly participate in blockading the northern accesses to the First Island Chain.
There are few war scenarios for China which do not include having seaborne imports and most exports dramatically curtailed, all with major negative consequences for the Chinese economy.
It would not matter how much wealth, money, and gold China had stockpiled--if the imports are blocked at sea then China's economy is effectively at a standstill.
Does Xi Jinping realize this? That no one can really say. But even if he does not, the vulnerabilities are a factor of China's geography and not what Xi does or does not understand about that geography.
Xi might try war to sustain the economy--but he would almost certainly put China in an untenable position leading to both military and geopolitical defeat. The end result could be a domination of China by the West to rival the Unequal Treaties of the 19th century.
Although manufacturing activity has been down for ten out of the past eleven months, I’ve read that China has over-manufactured goods in recent years, and has been dumping them on the US to raise cash. Meanwhile, Trump has said that he will impose a 60% tariff on China. I would think that this threat would make China try to dump even more of their excess, and quickly, before tariffs are imposed. This will impact the US economy in ways that will make Trump and Congress all the more likely to carry out the threat - UNLESS, in doing so, they precipitate the collapse of China’s economy in ways that are destructive to the US economy. So, my question is: how would you think the imposition of a 60% tariff would play out?
I’ve been reading quite a few media deep-dives on China in recent months, and yours, Peter, are always the best on every metric I can think of - hard data, comprehensiveness, insightful analysis and conclusions, wise interpretations, etc. You are not misled by anything, whether it’s propaganda, fudged data, or superficial coverage by reporters. You are just the best, so thank you once again!
The Forbes editorial surprised me - are they really that superficially informed and naive about China’s culture and economy? It makes me think that their editorial was a paid piece by someone with interests in propping up China, or some similar explanation. Did you have that suspicion as well?
https://www.wsj.com/world/china/china-technology-software-delete-america-2b8ea89f?st=f21a183e3aaixg2&reflink=article_imessage_share
This has been the reality of trade with China for years if not decades.
China's approach to foreign investment has always revolved around extracting as much intellectual property as possible.
The flaw in China's strategy is that it has not evolved its overall economic system to incentivize the growth of a strong base of knowledge workers able to take that IP and run with it. Yes, China can duplicate a lot of US tech, and has in some specific areas pushed ahead where the US has not, but their ongoing youth unemployment problem alone indicates that they are not succeeding at cultivating a Chinese equivalent of Silicon Valley where innovation is almost de rigueur.
Besides, with foreign investment now fleeing China, China does not have to worry about "deleting America" from its tech sector--America is already working to erase itself from that same sector!
“Most economists agree that if it needed to, China could launch a big bazooka.” Is an interesting choice of words. The question is will China’s economic condition make it more or less likely to lead her to war. It can be argued both ways.
My personal take is that China's geography is all wrong for using war as a means of economic stimulus.
China has already expanded to her natural borders. To the south the jungles of Southeast Asia are pretty impenatrable, to the West there is the Himalayan Mountain range and the Gobi desert. To the north there is the Siberian steppe--a vast area of little infrastructure and fewer people. To the east is the Pacific Ocean.
Unlike Germany in the 1930s, or Russia today, there are no territories close at hand which are easily invaded for the purposes of exploiting their resources. Moreover, the one territory China has expressed a desire to conquer is Taiwan, and its dominant position in global semiconductors makes it impossible for China to even attempt an invasion of the island without a swift and not very kind international response.
Additionally, China imports the vast majority of its energy, most of the raw materials for its manufacturing economy, and a significant quantity of its foodstuffs and other materials for agriculture. In the event of a war with another major power, all that power has to do is blockade the Malacca Strait and China's economy is pretty much shut down. India would almost certainly participate in such a blockade--they have the naval assets and the proximity to mount and sustain such a blockade far longer than China can withstand having their imports effectively curtailed. Australia would be quite likely to join in, and the United States would of course be involved as the US is the major power with whom China is most likely to go to war.
Japan, for its part, would certainly participate in blockading the northern accesses to the First Island Chain.
There are few war scenarios for China which do not include having seaborne imports and most exports dramatically curtailed, all with major negative consequences for the Chinese economy.
It would not matter how much wealth, money, and gold China had stockpiled--if the imports are blocked at sea then China's economy is effectively at a standstill.
Does Xi Jinping realize this? That no one can really say. But even if he does not, the vulnerabilities are a factor of China's geography and not what Xi does or does not understand about that geography.
Xi might try war to sustain the economy--but he would almost certainly put China in an untenable position leading to both military and geopolitical defeat. The end result could be a domination of China by the West to rival the Unequal Treaties of the 19th century.
Although manufacturing activity has been down for ten out of the past eleven months, I’ve read that China has over-manufactured goods in recent years, and has been dumping them on the US to raise cash. Meanwhile, Trump has said that he will impose a 60% tariff on China. I would think that this threat would make China try to dump even more of their excess, and quickly, before tariffs are imposed. This will impact the US economy in ways that will make Trump and Congress all the more likely to carry out the threat - UNLESS, in doing so, they precipitate the collapse of China’s economy in ways that are destructive to the US economy. So, my question is: how would you think the imposition of a 60% tariff would play out?
Of possible interest:
https://www.theepochtimes.com/china/ccp-again-touts-rising-east-propaganda-to-cover-up-the-declining-economy-5598210?utm_source=ref_share&utm_campaign=copy
https://www.theepochtimes.com/china/is-china-exporting-deflation-to-the-world-5598434?utm_source=ref_share&utm_campaign=copy
https://www.theepochtimes.com/china/chinas-leadership-faces-challenges-at-annual-two-sessions-meeting-experts-5600226?utm_source=ref_share&utm_campaign=copy
I’ve been reading quite a few media deep-dives on China in recent months, and yours, Peter, are always the best on every metric I can think of - hard data, comprehensiveness, insightful analysis and conclusions, wise interpretations, etc. You are not misled by anything, whether it’s propaganda, fudged data, or superficial coverage by reporters. You are just the best, so thank you once again!
The Forbes editorial surprised me - are they really that superficially informed and naive about China’s culture and economy? It makes me think that their editorial was a paid piece by someone with interests in propping up China, or some similar explanation. Did you have that suspicion as well?
It's not impossible.
Admirably sticking to the facts, as always.