Biden Thread

[a completely inoffensive name]

One factor you're missing, that I've learned of recently, is that China has a huge advantage as an economic hub. Inputs and outputs ALL along the supply/value chain can be produced or assembled there, an area with a common legal framework and good infrastructure and plentiful labor. And if some production moves to Vietnam or the Philippines, China still maintains its place as the hub of the entire region. Why ship all around the world when you can go from extraction to retail all in the West Pacific?

Apparently, the TPP was America's attempt to bypass China's development on this path by creating an alternative Asian agglomeration with itself integrated, one key upside from a business perspective (and admittedly this was an area where the TPP went too far) being that American-led economics prioritizes IP security, integrity, and rents in a way China notoriously does not. But that ship has sailed.

A relevant concept here is "economies of agglomeration," and one of America's advantages for the past ~150 years has been its own status as the premier agglomeration economy where all forms of economic activity along the industrial supply/value chain could be located under a single stable and prosperous political regime. This is seemingly also one of the objectives of the EU in integrating European economies, markets, and regulatory frameworks.

Anyway, China has decisive advantages beyond cheap(er) labor; they just used the first burst of FDI and cheap labor to bootstrap themselves into hub status, nearly a generation ago now. Ain't no going back. Remember - the Chinese littoral and riparian zone has been the densest center of population and economic activity (and often political sophistication) for almost the entire history of civilization.

And I'm not even sure the US has any enticing alternatives to present to African or Latin American - or even European! though they're still our biggest partner, for now - governments in place of Chinese investment and trade. Who wants to alienate the largest market in the world, liberal and loose-conditioned with its cash (at least in the short term), in favor of vague and measly promises from what looks ever more like a fading power? I can't imagine the level of leadership and commitment needed to make a credible attempt. To proper effect, the collapse of artificial distinctions between American domestic and foreign policy atop a comprehensive internal civilizational project (i.e. socialism).

I don't know much, but to my mind most trends point to China securing a position where it needs any given country less than they need it. That's clout. Be that as it may, industrial policy is a swell thing that the West might want to try again.

A few things to consider:
1. COVID impacted supply chain management such that business culture began taking a more skeptical look at putting all their eggs in one basket so to speak. When a country such as China is willing to enforce entire lockdowns and terminate all production with relatively little heads up, it creates bottlenecks and disruptions for most manufactured goods many of which still linger such as today's less than normal supply of large appliances, bicycles, plastics, etc. Also long term management of the country (e.g. it's failure to adequately learn from SARS years ago) is still questionable with short term management still undesirable in ways you already mentioned.

2. To my understanding, East-Asian countries retain historical animus towards China (well towards each other in general) and are not as driven by economic ideologies as the West. Countries in the region will continue to promote their own independence as they can by minimizing their economic dependence on China and gravitating toward a more neutral player like the US or Europe as a matter of preference. I liked this passage from 'Factfulness' (page 131):

The Vietnam War was the Syrian war of my generation.
Two days before Christmas in 1972, seven bombs killed 27 patients and members of staff at the Bach Mai hospital in Hanoi in Vietnam. I was studying medicine in Uppsala in Sweden. We had plenty of medical equipment and yellow blankets. Agneta and I coordinated a collection, which we packed in boxes and sent to Bach Mai.

Fifteen years later, I was in Vietnam to evaluate a Swedish aid project. One lunchtime, I was eating my rice next to one of my local colleagues, a doctor named Niem, and I asked him about his background. He told me he had been inside the Bach Mai hospital when the bombs fell. Afterward, he had coordinated the unpacking of boxes of supplies that had arrived from all over the world. I asked him if he remembered some yellow blankets and I got goose bumps as he describes the fabric's pattern to me. It felt like we had been friends forever.

At the weekend, I asked Niem to show me the monument to the Vietnam War. "You mean the 'Resistance War Against America,'" he said. Of course, I should have realized he wouldn't call it the Vietnam War. Niem drove me to one of the city's central parks and showed me a small stone with a brass plate, three feet high. I thought it was a joke. The protests against the Vietnam War had united a generation of activists in the West. It had moved me to send blankets and medical equipment. More than 1.5 million Vietnamese and 58,000 Americans had died. Was this how the city commemorated such a catastrophe? Seeing that I was disappointed, Niem drove me to see a bigger monument: a marble stone, 12 feet high, to commemorate independence from French colonial rule. I was still underwhelmed.

Then Niem asked me if I was ready to see the proper war monument. He drove a little way further , and pointed out of the window. Above the treetops I could see a large pagoda, covered in gold. It seemed about 300 feet high. He said, "Here is where we commemorate out war heroes. Isn't it beautiful?" This was the monument to Vietnam's wars with China.

The wars with China had lasted, on and off, for 2,000 years. The French occupation had lasted 200 years. The "Resistance War Against America" took only 20 years. The sizes of the monuments put things in perfect proportion. It was only by comparing them that I could understand the relative insignificance of "the Vietnam War" to the people who now live in Vietnam.

3. While China has been an economic hub for most of human history it, along with India, was economically self sufficient pre industrial revolution and did not make concerted efforts to further integrate itself into world or even Asian markets most of the time (again, to my understanding). Its foreign policy was sending navies out periodically to enforce tributes and invasions of its closest neighbors. Keep in mind the timeline and strategy of Western colonialism in Asia, how with the exception of Portuguese Macao, Europeans ignored China's ports favoring instead trading ports across modern day Indonesia during the 16th and 17th centuries which had extremely prosperous kingdoms controlling trade between China, India, and East Africa.

4. China may not even have the densest center of economic activity by mid-century. Their population curve is currently transitioning downwards while India still has another 25-30 years of projected growth before their demographic transition towards a shrinking population hits. India will have more people than China as soon as 2027 according to the UN. China's population is aging faster than any other country and they have no effective welfare state to prepare for this. They will have more people over the age of 65 as a % of their country than the US by mid-century. Chinese culture traditionally had multi-generational housing with children expected to take care of their parents and grandparents at home. If the US Social Security is considered a 'ponzi scheme' in a shrinking world, then China has a big one.

5. Data on belt-and-road investments is limited because China continues to withhold information from the world on its decision making processes, such is a big negative in itself. But the available data and analysis has led many to believe that lots of corruption and frankly bad investments are being made, essentially throwing away money that China would be better using to establish domestic welfare.

All of this is to say that China has proven more than capable at manipulation of current environments and making very planned advances towards certain policies and outcomes. But the same could be said to a certain extent of Putin's Russia. Their cyber-warfare is running circles around us, the Crimea is theirs. But the fundamentals of managing shit at home is just not there and Russia continues to decline overall. My hot take is that China has just as much chance of becoming another Russia, projecting a foreign diplomatic weight that outsizes their actual internal strength, as it does of making the 21st the 'Chinese Century'.