Re: Is war between China and the US inevitable? The Thucydides Trap.
Quote:
Originally Posted by
MrFanti
If you're a Western business owner and outsourcing to China or doing business with China, then you're part of the problem.
That being said, you can cure your problem by outsourcing and doing business to/with Africa, Mexico, Central America, South America, and a few other places as well.
Setting aside your personal objection to China, the intriguing aspect of your comment is the way in which, since the start of the Pandemic, though it has roots in 2008, international trade that developed global supply chains starting in the 1980s, is now in the process of questioning their efficiency.
On the one hand, China became an irresistible location because of a tamed, obedient non-unionised workforce, low labour and transport costs, and the volume of commodities that could be made. This does not discount the supply chains that source products elsewhere in Asia, but had the additional benefit of enabling China to develop its domestic market to the extent that it has not become dependent on external trade, which was a curse for other 'developing countries' as they were once known -these days re-branded as 'Investment Destinations'.
On the other hand, the global supply chain in commodities key to managing the Pandemic could not cope with demand, so the 'turn' against China is not just a political response to the kind of imperial activism that President Xi believes will cement his reputation as the heir of Mao, but an economic one in which manufacturing may seek a new deal in its country of origin, thus creating an agenda in which Economic Nationalism is viewed as a preference. Trump in 2017 was not the only political leader to promote this cost-heavy alternative to China, which in reality also meant a rejection of Asia. The potential crisis in semi-conductor production in Taiwan, a major source, if tensions with China spiral out of control, is another example of how capitalists are viewing global supply chains with scepticism.
Whether or not Apple, IBM and others can afford to make hardware and software in the US, is open to debate. The opportunity to shift production from China or Taiwan to, say, Honduras would not make sense right now. Honduras does have a growing economy relative to the rest of Central America, but remains a deeply divided country, with agriculture still dominant, along with a lethal narcotics industry, widespread poverty and crime, and corruption of the kind endemic in the region. Industrial production would be starting from zero, and thus require capital expenditure that would not be needed in, say, Indiana, though labour costs would be higher. Unless, without irony, the Corporations did shift to Indiana but then hired workers from Honduras, El Salvador and Guatemala, in an effort to deter illegal immigration from those countries.
And as American firm re-located south of the border for tax purposes and cheaper labour costs, again in the 1980s and since, one can say that to some extent this model has been around for some time.
But economic nationalism may actually mean economic decline, as the great Brexit flop demonstrates. With the promised boon of global trade 'liberated' from the collective regulations of the European Union, the UK has found that in fact other States prefer the EU, or in the case of Japan, signed a deal which was close to the one the UK had already. The bottom line being that trade with the EU has declined -exports to the UK have declined by 14%, imports have declined by 25%.
We are all better off together.
