Today's uncertainty really only started to creep in around 2014[2], and in those 14 years the global supply chain concentrated so heavily in and around China that you need to overcome a lot of inertia to move elsewhere. Most attempts to do so until now have been either for low-value mfg - t-shirts or bicycles - or focused on relatively less complicated finishing and assembly stages.
1. What I mean here is that in earlier days, you were more likely to be concerned about access to the PRC market and making sure you had strong internal IP protections in place with your contract partners.
2. In addition to the politics, this is also around the time it became clear that the Chinese economy in general needed to change, because they were starting to lose out on low-margin products to lower-wage countries.
In a way, it's better that this decoupling (which will not be a quick process) happens sooner rather than later, before that reliance can be used as an effective weapon against the US (turning off the industrial goods tap/sanctions could be pretty devastating).
The dragon is awake and it is natural for its competitors for resources to react.
The USA is not going to be #2 in 30 years. And to suggest the USA should sit back and passively accept that is will be is as crazy as suggesting China should stop expanding its economic power base and global influence because the USA doesn't like it.
These two behemoths will vye for power until an equilibrium is reached. If one wins its because the equilibrium was not in their favor, such as the USSR.
I was under the impression that those people were lifted out of poverty due to working higher-wage jobs in manufacturing rather than due to explicit wealth redistribution by the government.
If what I explained above is true, then it's time to rejoice. It means that the problems the middle class suffers from are temporary until every other country has been lifted out of extreme poverty. All we have to do is wait until the race to the bottom is over.
However if what I said is wrong, then it's time to be sad. There is no easy solution and the middle class might never get back on track.
But certainly true that American workers are being squeezed, having to compete against more and poorer workers because of globalization and free trade policies.
How and by what metric? China already has a larger GDP (PPP) than the US. And their economy has approximately doubled every decade for the past 3 decades.
There were worries that Japan would surpass the US and that didn't pan out. But Japan has 1/2 the US population. China has 4x the US population. This is also a big difference vs Russia.
I am sure the US does not want to "accept" a 4x bigger country ever having comparable influence. But does the US really have the power to keep China, another nuclear power, at 1/4 US GDP level forever?
You say accepting this is crazy, but escalating a conflict between two world powers in an attempt to permanently repress one of them seems a bit crazy to me (negotiating for a better trade deal is another matter).
There are plenty of countries that enjoy a high standard of living without being the undisputed #1 economic power. I'm skeptical that the US actually looking out for its own interests necessarily involves a big conflict with China, although I could easily imagine that outcome.
You don't come out and say it, but your implication is that this is not possible.
It is not obvious to me that that is the case.
1. China is a low trust country. There is a deep culture of fraud and deceit. This will be a difficult thing to change, which I believe is a precondition to being a tier 1 super power.
2. People like to extend trends into the indefinite future, but macroeconomics is superstition at best. The stagnation of Japan caught just about everyone by surprise. I think there's at least a 30% chance this happens to China, based on some of the reports I've seen coming about of China related to debt and real estate.
I think there is a good chance for China to reach tier 1 status, but it doesn't seem like a foregone conclusion to me. Given this level of uncertainty, it seems reasonable that some powerful Americans might not want the US to go gentle into that good night.
Is it racism? China is low trust. China cannot innovate. What makes you think so?
HN is not the forum for these types of discussions, there is a moral panic going on though and even the better educated are not immune to it. The same tropes get recycled until things we would never say about most countries are able to be said without supporting facts.
As per the comment guidelines some things just need to be flagged rather than flame-discussed. We went through the same phases with Japan, Korea and plenty other places. It is best to see the funny side of it and also tune in to the other side of the story.
It could even be said that the better educated have it worse. At least the less educated are fed some crappy fake news that are easy enough to see through.
The better educated are convinced they know the truth because they read fluff pieces in "trusted" newspapers and magazines (e.g. NYT, The Economist) promoting the financial and corporate interests du jour.
It's easier to trust this "high end" version of fake news (where the lies are told with nuance, and the pundits have been shown to be worse in predictions than random coin tosses).
This "Western..." thing is something that is used often in Chinese PRC propaganda, to discredit free press and the rule of law as "Western" ideas. Yet, China has no problems following the "Western" idea of communism ;-)
Well, I couldn't care less what China does. Not to mention that their "idea of communism" has little to do with the indeed western ideas of Marx.
As for the "Taiwanese and Hongkongers", those are not the best examples of freedom one could find. One was a dictatorship up until the 90s (under martial law and everything), and the other was under British occupation (with full blown riots against that rule during the 60s and 70s)...
http://www.chinadaily.com.cn/china/2013-02/18/content_162307... http://www.ssapchina.com/ssapzx/c_00000009000200010007/
I think most of the growth from the 90s to 2008 was generated by the continuous flow of western companies outsourcing to China, investing in the economy and opening factories. That flow dried in 2008 because anything there was to outsource has been moved already and if anything automation will rather repatriate production. Then to compensate that and the collapse in global trade caused with the financial crisis, China embarked in a massive debt bubble. In less than 10 years the size of Chinese banks balance sheets went from nowhere to become the largest in the world, well over US giant banks. This fueled a real estate bubble. But this debt bubble is coming to an end, and what will fuel the growth for the next 15 years? The past 30 years are not reproducible.
That's a low grade racism. China has issues, but is the #1 global manufacturer, and the biggest global companies (from Apple and BMW to Dell and Armani) rely on it for their production. That takes a lot of trust, not "fraud and deceit".
Sure there's "fraud and deceit" from small-timers, but then again the US cities also used to be full of small time crooks and hustlers in the better part of the 20th century, as people were getting out of poverty. In the case of China it's internal, not foreign immigrants, but the dynamics are the same.
>2. People like to extend trends into the indefinite future, but macroeconomics is superstition at best.
Well, the same argument could be said for the hegemony of the USA. Why would it extend to the "indefinite future" (especially since trends show the opposite)?
This is an often underappreciated point regarding the industrial and innovative ability of Western society. It remains to be seen whether it's a precondition to being the most powerful nation in the world in terms of technological development and industrial capability. (In the same way as the question of democracy/freedom of speech in general being such a precondition).
Or they might be simply diversifying because they've too much? It was not uncommon for Americans back in 80s to have a Holliday home in Europe for same reason.
We never say Apple manufacturing in China implies that Apple do not trust American government?
May be it is time to stop using the word Western, which is a word China likes to use. Both I don't see Japan, South Korea, Australia being in the West.
May be we should start using the world "International".
The original comment did not say that China is distrustful because they are of a different race or that their race makes them inherently distrustful. I think shutting down any argument with "that's racist" is disingenuous. If we go by your logic you can say "that's racist" to any criticism of China.
It can still be racist if its counter-factual and driven by a dismissal of China itself. In fact it can be racist even if the same person accepts e.g. Japan, as Japan and Korea faced the same dismissals in the 60s to 80s (as copiers, second rate quality places, corrupt states, etc) before being accepted.
The fact is that China has been trusted by almost all major global companies for their manufacturing, so China can't be said to be a "low trust country" as a blanket statement.
Of course China can have low trust businessmen or low trust state officials, or they might be losing trust now (with the trade war and co).
But for decades they have had the trust of almost all western companies. Enough trust that they have been doing their manufacturing there (even exclusively there) for 2+ decades.
It’s the low cost of human capital, and now the realization of lost non-Chinese suppliers, that continues to keep China thriving.
One does business in China because it’s the only way (currently) to stay afloat.
And yes, corruption is inevitable in China because of its inconsistent rule of law and inability of dedicated journalists and grassroots movements to expose, uproot, and punish said corruption.
Edit: China is at a crossroads, but whether those in power will step-up to greatness and allow its greatest resource (its people) be more than puppets and slaves remains to be seen.
They also had a democratic process, a lawful system ( bias or not ) in place where many of these issues can be solved diplomatically.
Not the same of China, everything is tangled together. CCP.
Not sure I follow. It's still China making those products, and American companies trust Chinese companies to make it under their (American) standards...
Japan stagnated after reaching approximate parity with the US in GDP/capita. China only has to reach one quarter the productivity of the United States in order to surpass the US in nominal GDP. If China reaches half the productivity of the US, its economy will be twice as large as that of the US. These are relatively low bars.
> Given this level of uncertainty, it seems reasonable that some powerful Americans might not want the US to go gentle into that good night.
I wouldn't call it "reasonable," but I might call it "predictable." A policy of trying to sabotage China's economic development would put the US and China on a definite collision course, and I don't want to see what the world looks like after that. The most concerning aspect of this is the apparent widespread support for this course of action among both Democrats and Republicans. A lot of people don't know what they're careening into.
But the reality is that these factories, often as the insistence of the Chinese government, are merely contract manufacturers. If another factory can be located somewhere else at a competitive price, moving production isn't as big a deal as if the company actually owned the factory.
Unique today. But what about tomorrow? It's not like another country can't do the same thing. There's nothing inherently Chinese about opening a factory quickly. Another country or two will learn how to do it, just as the Chinese did.
They're not a replacement for China, obviously, but they don't have to be. A large part of China's role in global high-tech manufacturing is final assembly, which can and increasingly is being done everywhere.
The climb up the value ladder is very real, and it's only partially being driven by the political climate in China.
It requires the willingness to throw public money at it and depreciate the currency, decades of patience and favourable trade conditions. Technically other countries could do it but most have neither the patience, capital, time or goodwill. This may well include the US.
>There's nothing inherently Chinese about opening a factory quickly.
It's the ecosystem of factories in close quarters that creates their non-replicable competitive advantage. That includes soft capital (lots of people with experience) with hard (container shipping).
For the time being (and at least for the next decade), that is uniquely Chinese, and only the US or EU are even capable of duplicating that (and it's unclear whether they have the will).
I'd say there is one, the available population to work. India is really the only country that could come close just based on pure population and I don't see there being a drive to do that.
Rather anything that came close would have to be a combination of Indonesia, Malaysia, Vietnam, Cambodia, etc. all working to grow their manufacturing bases to come anywhere close to what China can do when it comes to setting up factories in the near future. Longer term maybe some African countries will industrialize that way, but I don't see a place meeting the scale of Shenzhen/Dongguan manufacturing ever again.
I recently got back from visiting a factory in SEA, and spoke quite a bit with the people there about how the area is growing from a manufacturing standpoint. They have definitely taken notice of what is going on with China at the moment and are trying their best to take advantage of it, but it isn't even close to what I've seen in China.
[1] https://piie.com/blogs/china-economic-watch/manufacturing-em...
There's also the infrastructure. In china it's very easy, fast and cheap to get anything you need for a factory, and get it quickly, be it specialized CNC machines, parts for a mechanical crane, a truckload of leds, - or really anything in the whole chain of running and operating a factory - including expertise people at every level.
My understanding—dated—is that the amount of red tape to deal with is enormous.
No other place to spin up a new factory within the current cost structure and logistics time line. It is not that the capabilities are hard to replicate, it is expensive to replicate. No to mention some of those component can still be exported if necessary.
Once you added traffic, ( If the company is US focused or have US as large customers ) you start doing calculation whether moving make sense in the long term. ( And of course it does )
If anything, it's the U.S. government that's been volatile and unpredictable.
They still keep manufacturing in China. Products that go to Chinese markets or non US markets can still be manufactured in China.
China has a number of advantages: * Highly developed manufacturing/shipping coordination * Well trained assembly line workers * Government supplied infrastructure and subsidies (effectively an internal "Marshall Plan") * Large population that is more than big enough to support its own internal middle class market development in the same way as the US/EU/"West" did after WW2 * Relaxed IPR environment in the same way as the US (and most other countries) did when developing (the US blatantly stole IP from the UK in the late 19th/early 20th centuries)
China also has a number of disadvantages: * Lack of rule of law * Central government planning lacking the flexibility to react to rapidly changing events * Inhibited creative class by the nature of a communist/totalitarian ruling class.
But saying that China "absolutely depends" on the US is untrue. The nature of international trade is that both countries are suffering due to the current US administrations trade "policies". Tariffs are inherently a tax on the consuming nation, not the producer. China has already found a) alternative suppliers for US products (eg soybeans) and b) alternative markets (SEA, APAC, EU, ME).
Africa. Bangladesh. Haiti. India(?) Look for where the clothing manufacturers have moved.
Most people who can be trained to run a stitching machine can be trained to work on an electronics assembly line.
The infrastructure scale in China is huge. Even in small towns electricity is offered 24/7.
In India even in the largest cities there is constant load shedding, power cuts often 1 or 2 hours daily.
Internet is slower in India, heck you can't find screws for sales on Amazon India and in china even in the smallest towns, I saw speciality stores at every few kilometres who stocked every kind of screws.
India might be able to compete in terms of population but it's decades behind china in infrastructure.
No disrespect to India but I am afraid till India has insane custom duties on foreign imported products, Indian talent will have a self imposed ceiling.
In Chinese market, you can find quality German tools but in Indian market, even tools are hard to find, I've no idea how makers deal with this shit here.
If I had to tweak one policy in India, I'd remove all custom duties so that youth is able to import quality tools and inputs from abroad and is able to produce quality output from that.
India limits what you can import and puts tariff on that, this results in using shoddy input for manufacturing resulting in shoddy output.
Garbage in garbage out.
Talent is crushed before kt gets a chance to blossom.
And whatever companies product in India do not sell buy export their stuff to other rich countries and domestic market is kinda empty.
1. http://www.unz.com/akarlin/world-map-of-pisa-2015-results/
"This year, Chinese administrators chose their students from a group of cities and regions aptly named B-S-J-G, after Beijing, a province-level municipality, Jiangsu, a province on the eastern coast of the country, Guangdong, a southern coastal province, and Shanghai, a province-level municipality. Previously, Chinese authorities had chosen Shanghai as mainland China’s sole representative, whose students finished at the top of all three subject areas in both the previous two PISA studies in 2012 and 2009.
Now, if all countries were to take this approach, we would see London selected to be the sole representative of Britain, or Boston and its suburbs representing the U.S. This year, in fact, saw a separate score calculated for Massachusetts, which if taken as the nation’s results, would grab the top spot in reading with eight other nations, 2nd place in science with ten other nations, and 12th in math.
If we dig deeper into the sampling, we come across another potential problem with the PISA testing: that the sampling done on mainland China (Beijing, Jiangsu, Guangdong and Shanghai) and other cities was not taken from a wide variety of schools. Rather, the very best schools were chosen and the very best students were cherry-picked from those schools."
https://www.forbes.com/sites/realspin/2017/01/04/are-the-pis...
IQ is largely a measure of education, which itself is largely related to how developed your country is. Large groups of relatively uneducated rural dwellers will drag the average down.
It's well known Asians are smarter, whether for cultural or genetic reasons, but the devil is in the details. If you look at average populations I would expect the inverse for counties like China that only developed recently.
I am going to assume good faith.
100 is the definition of average IQ.
That does mean that 100 is a somewhat arbitrary cutoff to require. A better criterion would be what percentage of the population has the education necessary to retrain for a manufacturing job quickly.
And of course the whole point of IQ tests is to be culturally biased, since it's about performing well on a particular set of tasks at the exclusion of others. If the illiterate farmer wanted to find out how smart someone is, they'd probably use completely different criteria.
If you <insert screw here> all day, low IQ might be a good thing.