Michael Lewis’ Post

I see this kind of collaborative competition or competitive collaboration are quite natural in global economy cycle. If today we could not see US-China rivalry, we might see US-Germany or US-UK trade war if we think about whoever occupied 2nd largest economy would be definitely beaten by the largest economy. I am confident that I am managing my supply chain very insightfully by assessing who was, who are and who will be the next 2nd largest economy. I found that history is keep repeating itself.

What can the world learn from Japan's experience with industrial policy? Professor Kazuto Suzuki in the latest from ChinaTalk: "It's a renaissance of the industrial policy, but, the post World War II period, 1950s, 60s, 70s, [was] the time that Japan was heavily investing, which was successful. But, there is always a price for success and that price was the confrontation with the United States. So the bureaucrats shifted towards a more neoliberal, market-oriented economic style. But I think the tide has changed ever since 2010 when China started to use the economy as a weapon. Then, the arrival of Donald Trump in the White House changed the whole concept of globalization. Now, the United States—which criticized Japan doing too much industrial policy, and demonized industrial policy during the Reagan administration— But now it's the United States which leads the industrial policy. Japanese bureaucrats are not excited by this change... they are saying,, "Oh my god, we need to do more work." it's a kind of revival of the hard days of work in, during 1960s and 70s. They were happy to do that because they [saw] the growth of the Japanese economy. But now, we are doing something to prevent the economic coercion, try to be more resilient, which is more expensive and ... not exciting." See the full interview here:

In an uncertain world, the Chinese must Dig tunnels deep, store grain everywhere and never seek hegemony. That sort of siege mentality is coming back. “The era when China was able to take over whole industries without foreign pushback is over. Many countries are now taking steps to protect their markets from Chinese-made goods. Under U.S. pressure, Mexico’s government last month reportedly decided it would not award subsidies to Chinese electric vehicle makers seeking to manufacture in Mexico for export to the U.S. market; the European Union is considering action to prevent Chinese electric vehicles from swamping its market; and the Biden administration has moved to encourage semiconductor manufacturing in the United States and limit Chinese access to chip technologies, and has promised more actions to thwart China. China won’t be able to innovate its way out of this. Its economic model still largely focuses on cheaply replicating existing technologies, not on the long-term research that results in industry-leading commercial breakthroughs. All that leaves is manufacturing in volume.” https://lnkd.in/g-Y8bZc3

Self-reliance drives #decoupling. There will be two globalizations, by areas of #geopolitical dominance. #China makes its own #decoupling move. #Beijing seems to have decided that decoupling is a good idea and has moved to wipe out American technology in #China. Chinese Communist Party (#CPCC) leader #XiJinping has launched a campaign to replace any foreign technology, especially American, in China with a local substitute. The pace of decoupling looks set to accelerate. Chinese authorities have favored domestic technology for some time, but have recently accelerated the process with a program called "#EliminateA." Among other things, it requires state-owned companies-dominant in finance, energy and many other major sectors-to replace foreign #software in their #IT systems and complete the transition by 2027. This is part of Xi's stated goal to free China from any dependence on Western food, technology, energy, finance and raw materials; in other words, to make China self-sufficient in everything from computers to grain production. To further the technology transition, Beijing has increased spending on science and technology by about 10 percent this year to the equivalent of $51 billion, a big jump from last year's 2 percent increase. Beijing has identified three companies to fill the gap left by the soon-to-be-banned Americans. They are #Tongfang, #Alibaba and #Huawei. Orders have already come from on high that in all government operations Tongfang equipment will replace all foreign-made computers. https://lnkd.in/d8NVDick

This article in the Weekend AFR states " a key problem is that China's output of high-end (sic, 'high value add') manufactured goods - such as electic cars and washing machines - simply can't be absorbed by its domestic market". Strewth, this is a problem that Ausralia would love to have! It never ceases to amaze how little Australian commentators understand the value of an economy that generates high levels of manufactured goods for export to global markets. And Australia's performance in this regard is pitiful and doesn't even factor in OECD rankings! And the comment dismissively alludes to China's predominance in manufacturing consumables such as whitegoods overlooks the fact that not only can China manufacture high quality and competitively priced goods for global markets, their products are innovative and well designed to meet what consumers both want and need! The article also suggests "that the global economy could soon face an oversupply of advanced manufacturing goods, which will further aggravate global political tensions", an assertion that seems to overlook the fact that the majority of the world's population in the Global South are seeking living standards that the Western economies have enjoyed for decades. Somehow this article seems to have forgotten about the Chinese rationale for rolling out the B&R trading infrastructure. China can well look after is own 'advanced manufacturing' future based on well thought-out strategic planning. However, more attention needs to be focused on Australia's current predicament for its struggling manufacturing sector where most of its SME participants are desperately looking for a strong and effective strategic framework created by government to capitalise on emerging global opportunities. Maybe, as the article concludes, we should recognise that "the Chinese (sic Chinese Premier Chinese Li Qiang) favour greater coordination between countries on macroeconomic policies". Maybe there is an opportunity for the Australian Government to reach out and see if Australia can be part of China's expansion of its manufacturing sector through some innovative joint ventures. Just a thought! Jon Bradshaw BJ Zhuang AM Allen Roberts Karen Maley https://lnkd.in/gjM6rzFQ

Robin Schindowski and I have published a paper on "Unpacking #China’s #industrial policy and its implications for #Europe", with the support of a research grant from European Union as part of the China Horizons project that has received funding from the European Union. "China is often credited with a successful application of industrial policy. One important particularity of China’s industrial policy is that it aims at levelling the playing field between the state economy and the private economy in access to finance, yet within a framework of strategic goals. This aim is not relevant for market economies, such as those of the European Union, but only for those where state enterprises are clearly privileged. Notwithstanding the difficulties in making valid comparisons, our analysis of how China conducts industrial policy in a variety of sectors points to success in some sectors but not all. More importantly, productivity growth in China has already been declining for two decades. Given the very large resources that China has put into industrial policy, with subsidies being only one part, it is surprising that success is not more evident. This relates partly to factors including cronyism and regional protectionism. While the former might be less relevant for the EU given the different institutional background, the latter certainly is relevant since the EU faces the potential consequences of member country-level industrial policy for its single market. A lesson from China seems to come from the sectoral focus, with a long-term and economic-security mindset. The EU is far from this, but it is in the process of linking economic security to industrial policy. Finally, responding to China’s industrial policy involves diverse investigations and challenges in measuring subsidies accurately. Understanding China’s very diverse and complex approach to helping companies achieve the government’s industrial policy goals is crucial for anticipating the consequences of China’s actions. These could be positive, such as cheaper imports of green technology, or negative, such as Chinese overcapacity spilling over to the EU single market." Full paper: https://lnkd.in/gM_iP9P9

🌏💡 U.S. Industrial Policy Shift: Implications for Asian Trade Partners The U.S. shift towards an industrial policy has Asian trading partners concerned about access to the American market. With its economic might and a focus on 'like-minded' trade, there's the worry that Asian exports might face barriers unless they align with U.S. standards. The CHIPS and Science Act of 2022 exemplifies this shift, aiming to bring semiconductor manufacturing back to the U.S. This move, backed by bipartisan support, addresses concerns about reliance on China and Taiwan for critical technology. The impact of these changes on Asian economies and global trade dynamics is a pressing topic. Read the full news here: https://lnkd.in/e7VM5Tx6 #USAsiaTrade #IndustrialPolicyShift #SemiconductorManufacturing #GlobalTradeConcerns #semiconductor #semiconductors #semiconductorindustry #technology #manufacturing

As the US-China relationship deteriorates, the role of trade has come under scrutiny. Not all Americans agree that “they benefit from trade with China.” They believe that benefits are far outweighed by the negative effects, notably massive trade deficits due to influx of cheap Chinese imports. That the “two nations are economically intertwined” had to do with US manufacturers outsourcing jobs to China with its low labour costs. This led to job losses in strong manufacturing sectors in the Midwest and South. While “it’s in America’s interest for the rest of the world to prosper”, China adopts unfair trade practices and tramps on reciprocal exchanges in order to advantage its own industries. In foreign policy Beijing weaponises its economic heft to bully others, while preventing the West to unravel the threads of interdependence from which it had gained. With mounting trade surpluses since joining the WTO in 2001, China has slowly ditched its peaceful rise. The “four decades” of “remarkable peace between, and prosperity for the two countries” have come to an abrupt end since Xi Jinping harboured the ambition to build a modern army that matches the US in firepower. He seeks to replace the current world order and impose a new and authoritarian one by forging stronger alliances with other authoritarian regimes and exporting China’s model of governance across the globe. It explains why Biden seeks to limit US involvement in helping China gain cutting-edge technology.

Hey everyone! I just wanted to share insights from The Geopolitical Correspondent (TGC) on the transformative impact of economic de-risking in global manufacturing. Understanding the geopolitical implications is crucial for businesses navigating the evolving landscape. Check out TGC's post for valuable insights!

For all the talk surrounding China's economic woes, it is worth noting the following: China is the world’s sole manufacturing superpower: A line sketch of the rise by Richard Baldwin https://lnkd.in/emgvDbf9