I’d argue all this stuff is fairly superficial. US is still highly dependent on China for a lot of essentials. This chart is a great visual illustration of just how utterly impossible it is for US to decouple in any meaningful sense:
It’s not about removing supply chain inputs. The US has no near term plans to cut off reliance on Chinese chemicals or other industrial inputs. However those are low value. The profit margins on them are low and it leaves China dependent on the US as customers to keep their own industry humming by producing products and services. The US wouldn’t have cared if China forever remained a low value producer of Walmart toys, cheap cookware and chemicals, those were never threats to the US and its bourgeoisie.
By contrast, these things are targeted at things up the value chain, at high tech industries with high profit margins, places where important innovation with military applications and applications for the newest $1000 must have consumer treat good like smartphones or VR headsets, etc.
Who makes the money in a smartphone? Is it the contracted company making the chips and circuit-boards, the displays, RAM, etc? The company who assembles it? Or is it the company who puts it in a shiny store in the US for $1000? Most of the money is made at that last step and even some of the money at earlier steps is diverted into having to pay fees to license patents held by western countries and their vassals which is another way the west keeps China down and a lever they’re increasing using to prevent them from producing goods at all.
They are not at this point attempting to completely sever trade, rather they are keeping out Chinese brands, this is a form of decoupling, it’s targeted decoupling. They are also moving to try and reduce reliance on Chinese inputs in the categories you mention by trying to source from India among other places but that will take more time (a decade or decade and a half might be optimistic predictions on their part), however that doesn’t matter in the near term as simply blocking these types of products has the desired effect (stated on multiple occasions) of keeping Chinese innovation down, of keeping them 10 years behind the US in terms of cutting edge technology.
I’m not claiming that China couldn’t retaliate and gut-punch the US into a recession but they won’t because it would hurt their own industry, hurt their image of impartiality, and hurt their plans for a peaceful rise and displacement of the US. So short of just not doing trade with the US suddenly, China doesn’t have reciprocal levers of equal pain to pull to hurt US high tech because the west is already established in the high ground and thanks to multiple betrayals on the national security and spying front plus the fact that the US has been restricting their ability to buy (to suppress them) China has already begun phasing them out. Also such threats never cowed the US in the first place, Microsoft and NVIDIA and others went to the government pleading at times for more reasonable policies and were rebuffed because the choice was not keep the Chinese market and suppress China it was either suppress the Chinese competition and keep existing markets or keep the Chinese market for a while then lose all markets. At the end of the day having a walled garden where they are guaranteed no competition from Chinese companies is better than an open market where they are losing badly to superior products at better prices from China.
I’d say it’s not superficial, it’s just step 1 of the plan. The most important part. They’ve slapped restrictions on chip exports for NVIDIA, they’ve prevented ASML from selling China cutting edge lithography tech, China is trying other approaches but honestly they’re not as good as the ASML approach and it will take years for them to get a real breakthrough into production which buys the west time and potentially distance in their minds. That’s part one, to maintain dominance and markets for the profits of their bourgeoisie.
If it works there is a chance that growth slows in China, they experience problems and problems can lead to cracks, discontent and the possibility of undermining or a color revolution. Even if that doesn’t happen it’s laid the groundwork for turning the screws on China, for guaranteeing profits and markets for western bourgeoisie which will be safe from competition. Then comes step 2 “friendshoring” where they try to move those other things you mention out of China gradually, to India, to perhaps a newly de-industrialized and cheaper to operate in Europe whose social safety nets have been gutted in the name of militarism against Russia, etc. This may or may not be allowed but if it is then step 3 is slapping as much of an embargo on China as possible, sanctioning goods, starting color revolutions and fomenting terrorism along the belt and road to disrupt it, trying to squeeze it and Russia into a corner and seize the rest of the world for themselves with various methods to try to get a Soviet Union decline and break-up repeat scenario. Obviously the Ukraine situation and Gaza genocide have thrown the seeds for big wrenches for this part of a plausible plan but they can still do stages 1-2 which is cold war 2.0 with two spheres, either you’re in the US sphere and get to buy from it or the China-Russia sphere and trade and direct purchasing by consumers between the two will be extremely limited. Of course this time you have a rising Africa and the US is not in the position of strength it was in the first cold war but it would buy them time.
It’s not about removing supply chain inputs. The US has no near term plans to cut off reliance on Chinese chemicals or other industrial inputs. However those are low value.
I don’t agree with that at all. What China produces is absolutely not low value inputs. In fact, as the article notes, many of these are very specialized inputs that only China can produce effectively today.
I agree that US is trying to do protectionism to allow their own industries to compete. However, the reality is that US isn’t that big of a market of itself. China is the biggest trading partner for most countries in the world now, and Chinese companies produce cheaper and better goods than American ones at all levels of supply chain. There’s no real way US can compete with that. US can try to slow China’s growth, but it’s not possible to do that without slowing US growth down even more.
What I expect China to do is to keep building out projects like BRICS and the BRI. China is already doing more trade with the developing world than the west, and this trade will only accelerate. Russia is another big factor because decoupling from the west opened a huge market for Chinese companies.
US can try to form a bloc around G7, but it’s going to be economically inferiors to BRICS. So, what we’ll see with cold war 2 is the reverse of the situation during the first one. On top of that, Europe will likely be forced to overinvest in its military once Russia wins in Ukraine. This is going to be a huge economic drain on the west.
I’d argue all this stuff is fairly superficial. US is still highly dependent on China for a lot of essentials. This chart is a great visual illustration of just how utterly impossible it is for US to decouple in any meaningful sense:
https://edconway.substack.com/p/globalisation-is-a-far-far-bigger
It’s not about removing supply chain inputs. The US has no near term plans to cut off reliance on Chinese chemicals or other industrial inputs. However those are low value. The profit margins on them are low and it leaves China dependent on the US as customers to keep their own industry humming by producing products and services. The US wouldn’t have cared if China forever remained a low value producer of Walmart toys, cheap cookware and chemicals, those were never threats to the US and its bourgeoisie.
By contrast, these things are targeted at things up the value chain, at high tech industries with high profit margins, places where important innovation with military applications and applications for the newest $1000 must have consumer treat good like smartphones or VR headsets, etc.
Who makes the money in a smartphone? Is it the contracted company making the chips and circuit-boards, the displays, RAM, etc? The company who assembles it? Or is it the company who puts it in a shiny store in the US for $1000? Most of the money is made at that last step and even some of the money at earlier steps is diverted into having to pay fees to license patents held by western countries and their vassals which is another way the west keeps China down and a lever they’re increasing using to prevent them from producing goods at all.
They are not at this point attempting to completely sever trade, rather they are keeping out Chinese brands, this is a form of decoupling, it’s targeted decoupling. They are also moving to try and reduce reliance on Chinese inputs in the categories you mention by trying to source from India among other places but that will take more time (a decade or decade and a half might be optimistic predictions on their part), however that doesn’t matter in the near term as simply blocking these types of products has the desired effect (stated on multiple occasions) of keeping Chinese innovation down, of keeping them 10 years behind the US in terms of cutting edge technology.
I’m not claiming that China couldn’t retaliate and gut-punch the US into a recession but they won’t because it would hurt their own industry, hurt their image of impartiality, and hurt their plans for a peaceful rise and displacement of the US. So short of just not doing trade with the US suddenly, China doesn’t have reciprocal levers of equal pain to pull to hurt US high tech because the west is already established in the high ground and thanks to multiple betrayals on the national security and spying front plus the fact that the US has been restricting their ability to buy (to suppress them) China has already begun phasing them out. Also such threats never cowed the US in the first place, Microsoft and NVIDIA and others went to the government pleading at times for more reasonable policies and were rebuffed because the choice was not keep the Chinese market and suppress China it was either suppress the Chinese competition and keep existing markets or keep the Chinese market for a while then lose all markets. At the end of the day having a walled garden where they are guaranteed no competition from Chinese companies is better than an open market where they are losing badly to superior products at better prices from China.
I’d say it’s not superficial, it’s just step 1 of the plan. The most important part. They’ve slapped restrictions on chip exports for NVIDIA, they’ve prevented ASML from selling China cutting edge lithography tech, China is trying other approaches but honestly they’re not as good as the ASML approach and it will take years for them to get a real breakthrough into production which buys the west time and potentially distance in their minds. That’s part one, to maintain dominance and markets for the profits of their bourgeoisie.
If it works there is a chance that growth slows in China, they experience problems and problems can lead to cracks, discontent and the possibility of undermining or a color revolution. Even if that doesn’t happen it’s laid the groundwork for turning the screws on China, for guaranteeing profits and markets for western bourgeoisie which will be safe from competition. Then comes step 2 “friendshoring” where they try to move those other things you mention out of China gradually, to India, to perhaps a newly de-industrialized and cheaper to operate in Europe whose social safety nets have been gutted in the name of militarism against Russia, etc. This may or may not be allowed but if it is then step 3 is slapping as much of an embargo on China as possible, sanctioning goods, starting color revolutions and fomenting terrorism along the belt and road to disrupt it, trying to squeeze it and Russia into a corner and seize the rest of the world for themselves with various methods to try to get a Soviet Union decline and break-up repeat scenario. Obviously the Ukraine situation and Gaza genocide have thrown the seeds for big wrenches for this part of a plausible plan but they can still do stages 1-2 which is cold war 2.0 with two spheres, either you’re in the US sphere and get to buy from it or the China-Russia sphere and trade and direct purchasing by consumers between the two will be extremely limited. Of course this time you have a rising Africa and the US is not in the position of strength it was in the first cold war but it would buy them time.
I don’t agree with that at all. What China produces is absolutely not low value inputs. In fact, as the article notes, many of these are very specialized inputs that only China can produce effectively today.
I agree that US is trying to do protectionism to allow their own industries to compete. However, the reality is that US isn’t that big of a market of itself. China is the biggest trading partner for most countries in the world now, and Chinese companies produce cheaper and better goods than American ones at all levels of supply chain. There’s no real way US can compete with that. US can try to slow China’s growth, but it’s not possible to do that without slowing US growth down even more.
What I expect China to do is to keep building out projects like BRICS and the BRI. China is already doing more trade with the developing world than the west, and this trade will only accelerate. Russia is another big factor because decoupling from the west opened a huge market for Chinese companies.
US can try to form a bloc around G7, but it’s going to be economically inferiors to BRICS. So, what we’ll see with cold war 2 is the reverse of the situation during the first one. On top of that, Europe will likely be forced to overinvest in its military once Russia wins in Ukraine. This is going to be a huge economic drain on the west.