One way, or another, you can't escape the invisible hand finding ways to smack you good in the end.
The wages that need to be paid to an American worker to assemble phones all day would be really really high. They’d rather just work at McDonald’s or play video games.
Those high wages would give them enormous leverage (unions etc) upsetting the entire American economic system.
The American system is a cyber punk reality where a country is just a container for the aspirations of a bunch of short term thinking warring AIs called corporations. The people being one of its inputs. Elections don’t change much. Anything that disrupts the AIs too much is taken care of one way or the other. Doesn’t matter if it’s Bernie or Trump.
So I would say that China is safe because the last thing america will do give up any notions that their system is the best or needs to change.
The west needs to realize that the momentum of a head start on industrialization and ill gotten gains from historical loot is running out. As everyone joins the industrial game the world inherently becomes multi polar. There’s no reason why only the west can have high living standards or that only the western system can sustain it.
in a situation of having to manage Russia, China and Iran at once while greatly weakened , Multi lateralism is inevitable. Democracy cannot be delivered at the barrel of a gun. That only creates more messes.
This week witnessed the amusing spectacle of Boris Johnson calling himself a Sinophile (give us a trade deal please). All this after running down the Chinese for months. The west can’t even decide what to do.
Look for example how SMIC sanctions effectively shut down the car industry, and few others.
A murmur I heard is of US now backing off on SMIC because of the car industry, but that will send an even worse precedent.
It will mean that nobody else will come and fill the SMIC niche, and it will still have a chokehold on a very well moneyed, and full of lobbyists industry.
The next time, sanctions on SMIC may come not from US, but China itself.
Instead of this ham fisted approach it needs systemic solutions. For eg - make college free. Make corporations subservient to state planning of strategic priorities.
It’s clear that China has the upper hand as long as US is a bunch of warring corporations that think of the next quarter.
US corporations will eventually force a retreat to protect their Chinese profits. China just needs to offer them some returns. As the largest market in the world they now can.
No... SMIC was making a great deal of 200mm business, possibly the biggest 200mm foundry.
A lot of those decades old automotive ICs were fabbed there for the proximity to assembly lines, and tarriff avoidance.
No, SMIC was in very good financial position. They work tax free, got a rather good niche of expensive old chips, and a status of the only first tier foundry in worlds biggest semiconductor market.
200mm is currently booked for years ahead, so they are not going anywhere for those years ahead at least.
People on this forum know very little of how the economics for microchips work. I want people to learn up this industry to a level where they wouldn't embarrass themselves without at least having a glancing doubt about what they say first.
If they give up on that goal, many of their government-given advantages disappear.
Every few years they throw some new tax exemption programs effectively making them perpetual.
I don't see why would the specifically single out SMIC for that.
If the US makes it a battle of who has the better government, they will get crushed by the Chinese. Not even close. The Chinese government is noticeably more competent than the American one.
The only hope America has is letting people do things without government planning. That is why big wealth generators like Microsoft, Google, Apple, etc, etc are all American companies rather than Chinese. Nobody in government saw any of that stuff coming.
Pretty much everything China is doing to get ahead is illegal in the US for environmental or worklaw reasons. Copying the parts that keep China behind isn't going to help.
The government sent people to the moon and invented the internet.
America can win if it makes its government great again.
And the internet didn't achieve widespread success until the government turned it over to the free market where it became the most ultra-free-market environment we've seen this generation.
So we should continue to invest in defense because it is a massive industry for the US. To solve the trade imbalances though, the dollar should be weakened (it may occur naturally). That will allow us to rebuild our manufacturing base as our products will be more competitive on the international stage.
Additionally, right now we're in a low interest rate period of the long term debt cycle and will probably remain there for about a decade (at least). This is great because it means there is a ton of money exiting bonds looking for yield. There is a lot of capital ready to invest in projects. Combined with a weaker dollar, we're at a critical point for on-shoring and rebuilding US manufacturing.
I'm pretty hyped about the next 10 years for this reason. It will allow us to shore up the DoD supply chain as we currently rely on adversaries for defense critical parts.
A side effect of this not talked often is that the bigger you economy, and currency is globally, the more deficit spending by the government hit your balance of payment.
US can't devalue the USD dramatically for as long as its debt is held of special value inside the country, and around the world.
Americans, want slash, and murder your trade deficit? Run state budged at surplus for a few years, and you will see it melt away.
By doing so you'll be able to see that the US Navy is strategically positioned to defend international trade against any kind of blockade that an enemy would try to pull up in a strategic chokepoint
If you squint, though, you'll be able to see that coincidentally the US can use those same fleets to enact said chokeholds. In other words: no one can have a significant world-wide logistics network without the implied consent of the US. Do you know what kind of requires this scale of transportation? a world war between great powers
Is it clear now what you're paying for?
What is "international" trade these days. It's trade in between two countries, yours, and China.
To blockade anybody economically, China just needs to put an embargo.
We will likely move to a world where no one is able to enforce more than localized blockades for a while.