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For the U.S. And China, a Technology Cold War That’s Freezing Over

55 points by fspeech 9y ago

deleted 9y ago
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deleted 9y ago
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ianai 9y ago
Kind of an interesting read. They’re essentially describing current trade pressures between the US and China. Over the years,I’ve come to the opinion that these pressures were foreseen by the US administrations. But they chose this outcome as preferable to any other option. Essentially, I hypothisize this as their mindset: that the over 1 billion citizens of China were going to grow their per capita GDP to levels elsewhere. That’s enough for them to be 3x the size of the US. So the US chose to keep trade as near to free with China as possible. If business in the US was effectively at the level of business in China then the US wouldn’t be pushed too far below historical GDP.
- deleted 9y ago
  [deleted]
- imron 9y ago
  > If business in the US was effectively at the level of business in China Pity about all those pesky environmental and human rights concerns getting in the way /s
- adventured 9y ago
  > That’s enough for them to be 3x the size of the US. Your math doesn't work and it assumes an outcome that is more likely wildly unrealistic. At $20,000 GDP per capita (they're at half that now), which would be a tremendous outcome for a nation as large as China, their national GDP will be $28-$29 trillion. The US economy will be that large in about 12 years. If we're talking that sort of timeline: 3x US GDP would be $84-87 trillion in 2030. ~80%+ of the entire global economy at that point. Even if you shift the figures out another decade, it remains equally silly and impossible. You might as well say instead that the US will soon push its GDP per capita up to $120,000 magically and more than offset China's population benefit difference with a continued per capita superiority. That scenario is about equally fantasy driven to the notion of China somehow magically having ~80% of all global economic output. The US exports more annually than China does. Few people realize that. For China to keep growing like they did in the past, they're going to need to find another planet earth to export the next $2+ trillion in goods to, and fast. Those markets for consumption don't exist. They're already over-producing on a lot of industrial goods by 50% to 100% - such as steel - to artificially prop up their economy. That can't continue. Service economies grow dramatically slower than low-wage industrial economies that are filling in extreme slack, which again points to China having a far lower growth rate in the near future. Put another way, China's easy growth is long since over. That's why they shifted to massive debt binging to keep the fake growth going, taking on $30 to $40 trillion in new debt in just eight or nine years after the great recession. That's a classic signal an economy is running out of easy growth. Their growth return on debt plunged off a cliff many years ago at this point. And their debt is very expensive compared to developed nations, so much so that for every $500 billion in new GDP they've been creating, they're paying $150 to $200 billion just in new debt interest. In short, their economy is being swamped by interest costs, another classic drag-you-down on growth. It's so bad, China's central bank has begun talking about muni bankruptcies in the style of Detroit: "China needs Detroit-style bankruptcy as debt problems remain: central bank official" https://www.reuters.com/article/us-china-economy-debt/china-needs-detroit-style-bankruptcy-as-debt-problems-remain-central-bank-official-idUSKBN1EJ065 https://www.reuters.com/article/us-china-economy-debt/china-... Now does that sound like a country still in its prime on growth, or more likely near the end of an over-extended growth boom? And all of that recent growth came at a high political cost: their mercantilist one-sided trade approach has alienated all of their biggest customers, so now the US and EU are locking down China's access (including to acquisitions), further dampening China's future growth potential. China is just as likely to get stuck in a middle income trap, particularly as their demographics rapidly age and we enter the era of AI + robotics + higher automation (ie their population increasingly becomes a liability). And given what's going on there politically with their new dictatorship, vast re-education camps, the erosion of what little speech & expression they had, becoming the world's most indebted nation, etc - these things point more to a negative outcome than a positive one. They look a lot more like Japan economically right before Japan hit stagnation, than anything else. Historical question: name all the economically very successful dictatorships of the last 200 years.
  - zombieprocesses 9y ago
    > China is just as likely to get stuck in a middle income trap Japan wasn't a middle income country. They didn't get stuck in the middle income trap. In the next sentence you say that china is like japan right before they crashed and here you claim china is going to get stuck in the middle income trap. Those are contradictory assertions. > They look a lot more like Japan economically right before Japan hit stagnation, than anything else. How? Japan's urbanization rate in 1980s was over 90%. Japan's GDP was near parity with the US with half the population. China is at 50% urbanization. Their GDP is near parity with the US with 4X the US population. China today and Japan in the 80s are nothing alike. Not even close. > Historical question: name all the economically very successful dictatorships of the last 200 years. Every european country ( colonial power ). Saudi arabia, UAE, kuwait, etc. South korea, Taiwan, Chile, etc. Also, you conveniently ignore the fact that there are far more economically poor democracies in the world.
  - westiseast 9y ago
    This is the answer I wish I could write :) The only thing I could think to add was that so much of the urban infrastructure is horrendously poor, and it will need to be ripped apart pretty much wholesale within the next 30-50 years. I’m thinking of all the awful quality apartments, road networks, pavements, sewer and water systems, terrible electricity grids, commercial spaces. They managed to do all of that the last 30 years with cheap labor, the whole export fueled boom, and a population that will pretty much tolerate anything because it’s still better than the chaos of the past. Now project that forward with the same disruption and cost, but now you’ve got higher wages, no Mao-baby-boom generation, higher standards and much less credit. It won’t be easy to do.
dis-sys 9y ago
At the same time, US asked China not to stop importing American garbage for recycling. This seems so _free_ trade to me - make your competitor's products more difficult to sell in your country while making your garbage & pollution easier to be shifted to your competitor's home. https://www.reuters.com/article/us-china-environment-usa/u-s-asks-china-not-to-implement-ban-on-foreign-garbage-idUSKBN1GZ2WI https://www.reuters.com/article/us-china-environment-usa/u-s...
- deleted 9y ago
  [deleted]
madez 9y ago
I think this is good news. Advanced technologies like chip production must not be the domain of only part of the world. Also, I hope the EU would also take a similar stance so it would be possible to buy European chips. That the US sees this technology as a matter of national security is all the more a reason to push for more independence to stay sovereign.
- lettergram 9y ago
  Lol... Ugh the EU in itself was an exercise in becoming a non-independent, non-sivereign state for all parties involved. It's why the U.K. peaced out. Not saying, it wouldn't be good to have chip production there. On the contrary, I support the idea. However, I don't really think the EU is about independence.
  - madez 9y ago
    If one can let go of nationalism, one can see that the EU is about independence. It's not about your governments Independence, though, but of the Bloc as a whole. After all, national governments are just a tool in a big machinery. Tools can be enhanced or replaced, if there is something better. So far, I like a lot of what the EU is doing.
    - NicoJuicy 9y ago
      The EU had very solid principles to begin with. Too bad along the way they left some behind and broke some... ( Ugh... Humans)
    - mobilefriendly 9y ago
      It is a strange independence the demands the destruction of local democratic governance.
      - matthewmacleod 9y ago
        Not really. Independence is an axis like any other, and trading it off in some areas can result in a greater benefit at the the scale of all members.
deleted 9y ago
[deleted]
foodislove 9y ago
People see a cold war as a rivalry between equals. That's not the case. The Chinese are more adept at adopting existing tech and adding scale than creating it. This cold war is mostly one way. Their tech champions' strengths come from a potent mix of state-funded and support with local business acumen. The attempts by the government to shift growth away from low-level manufacturing towards tech requires tech and innovation. Things that require the sort of the people the rigid propoganda infused education system is ill-equipped to produce. The shortcut is to simply to let others develop tech, then copy. That's the essence of the forced technology transfers. 20 years ago, companies and governments believed them that the forced transfers is purely for the Chinese market and a fair deal. After that turned not to be true (read: forced tech transfers for the bullet train that China now uses to undercut the original in foreign markets), but that's not the case today. If Trump, who I detest, can get the key European tech countries + Japan on board, they can dramatically increase the time and cost for the Chinese to pivot their economy. Delay enough and China's demographic time bomb of rapidly ageing people plus Xi Jinping's Maoist madness could well result in the Chinese economy stalling similar to the Japanese circa 1980s or worse. We'll have to wait and see it all turns out
- madez 9y ago
  Why is the economic and technological rise of China a problem?
  - foodislove 9y ago
    It's not. It's the zero-sum thinking of a totalitarian dictatorship that's a problem. For example, simply letting the Taiwanese live their own free and happy lives is too much of "a problem" to let go without threatening invasion on a weekly basis :) Also, there is geopolitics at play. The Thucydides Trap is real.
    - adinobro 9y ago
      Which is completely different to the US and Cuba...

55 points by fspeech 9y ago

deleted 9y ago

[deleted]

deleted 9y ago

[deleted]

ianai 9y ago

Kind of an interesting read. They’re essentially describing current trade pressures between the US and China. Over the years,I’ve come to the opinion that these pressures were foreseen by the US administrations. But they chose this outcome as preferable to any other option. Essentially, I hypothisize this as their mindset: that the over 1 billion citizens of China were going to grow their per capita GDP to levels elsewhere. That’s enough for them to be 3x the size of the US. So the US chose to keep trade as near to free with China as possible. If business in the US was effectively at the level of business in China then the US wouldn’t be pushed too far below historical GDP.

deleted 9y ago
[deleted]
imron 9y ago
> If business in the US was effectively at the level of business in China Pity about all those pesky environmental and human rights concerns getting in the way /s
adventured 9y ago
> That’s enough for them to be 3x the size of the US. Your math doesn't work and it assumes an outcome that is more likely wildly unrealistic. At $20,000 GDP per capita (they're at half that now), which would be a tremendous outcome for a nation as large as China, their national GDP will be $28-$29 trillion. The US economy will be that large in about 12 years. If we're talking that sort of timeline: 3x US GDP would be $84-87 trillion in 2030. ~80%+ of the entire global economy at that point. Even if you shift the figures out another decade, it remains equally silly and impossible. You might as well say instead that the US will soon push its GDP per capita up to $120,000 magically and more than offset China's population benefit difference with a continued per capita superiority. That scenario is about equally fantasy driven to the notion of China somehow magically having ~80% of all global economic output. The US exports more annually than China does. Few people realize that. For China to keep growing like they did in the past, they're going to need to find another planet earth to export the next $2+ trillion in goods to, and fast. Those markets for consumption don't exist. They're already over-producing on a lot of industrial goods by 50% to 100% - such as steel - to artificially prop up their economy. That can't continue. Service economies grow dramatically slower than low-wage industrial economies that are filling in extreme slack, which again points to China having a far lower growth rate in the near future. Put another way, China's easy growth is long since over. That's why they shifted to massive debt binging to keep the fake growth going, taking on $30 to $40 trillion in new debt in just eight or nine years after the great recession. That's a classic signal an economy is running out of easy growth. Their growth return on debt plunged off a cliff many years ago at this point. And their debt is very expensive compared to developed nations, so much so that for every $500 billion in new GDP they've been creating, they're paying $150 to $200 billion just in new debt interest. In short, their economy is being swamped by interest costs, another classic drag-you-down on growth. It's so bad, China's central bank has begun talking about muni bankruptcies in the style of Detroit: "China needs Detroit-style bankruptcy as debt problems remain: central bank official" https://www.reuters.com/article/us-china-economy-debt/china-needs-detroit-style-bankruptcy-as-debt-problems-remain-central-bank-official-idUSKBN1EJ065 https://www.reuters.com/article/us-china-economy-debt/china-... Now does that sound like a country still in its prime on growth, or more likely near the end of an over-extended growth boom? And all of that recent growth came at a high political cost: their mercantilist one-sided trade approach has alienated all of their biggest customers, so now the US and EU are locking down China's access (including to acquisitions), further dampening China's future growth potential. China is just as likely to get stuck in a middle income trap, particularly as their demographics rapidly age and we enter the era of AI + robotics + higher automation (ie their population increasingly becomes a liability). And given what's going on there politically with their new dictatorship, vast re-education camps, the erosion of what little speech & expression they had, becoming the world's most indebted nation, etc - these things point more to a negative outcome than a positive one. They look a lot more like Japan economically right before Japan hit stagnation, than anything else. Historical question: name all the economically very successful dictatorships of the last 200 years.
- zombieprocesses 9y ago
  > China is just as likely to get stuck in a middle income trap Japan wasn't a middle income country. They didn't get stuck in the middle income trap. In the next sentence you say that china is like japan right before they crashed and here you claim china is going to get stuck in the middle income trap. Those are contradictory assertions. > They look a lot more like Japan economically right before Japan hit stagnation, than anything else. How? Japan's urbanization rate in 1980s was over 90%. Japan's GDP was near parity with the US with half the population. China is at 50% urbanization. Their GDP is near parity with the US with 4X the US population. China today and Japan in the 80s are nothing alike. Not even close. > Historical question: name all the economically very successful dictatorships of the last 200 years. Every european country ( colonial power ). Saudi arabia, UAE, kuwait, etc. South korea, Taiwan, Chile, etc. Also, you conveniently ignore the fact that there are far more economically poor democracies in the world.
- westiseast 9y ago
  This is the answer I wish I could write :) The only thing I could think to add was that so much of the urban infrastructure is horrendously poor, and it will need to be ripped apart pretty much wholesale within the next 30-50 years. I’m thinking of all the awful quality apartments, road networks, pavements, sewer and water systems, terrible electricity grids, commercial spaces. They managed to do all of that the last 30 years with cheap labor, the whole export fueled boom, and a population that will pretty much tolerate anything because it’s still better than the chaos of the past. Now project that forward with the same disruption and cost, but now you’ve got higher wages, no Mao-baby-boom generation, higher standards and much less credit. It won’t be easy to do.

dis-sys 9y ago

At the same time, US asked China not to stop importing American garbage for recycling. This seems so _free_ trade to me - make your competitor's products more difficult to sell in your country while making your garbage & pollution easier to be shifted to your competitor's home. https://www.reuters.com/article/us-china-environment-usa/u-s-asks-china-not-to-implement-ban-on-foreign-garbage-idUSKBN1GZ2WI https://www.reuters.com/article/us-china-environment-usa/u-s...

deleted 9y ago
[deleted]

madez 9y ago

I think this is good news. Advanced technologies like chip production must not be the domain of only part of the world. Also, I hope the EU would also take a similar stance so it would be possible to buy European chips. That the US sees this technology as a matter of national security is all the more a reason to push for more independence to stay sovereign.

lettergram 9y ago
Lol... Ugh the EU in itself was an exercise in becoming a non-independent, non-sivereign state for all parties involved. It's why the U.K. peaced out. Not saying, it wouldn't be good to have chip production there. On the contrary, I support the idea. However, I don't really think the EU is about independence.
- madez 9y ago
  If one can let go of nationalism, one can see that the EU is about independence. It's not about your governments Independence, though, but of the Bloc as a whole. After all, national governments are just a tool in a big machinery. Tools can be enhanced or replaced, if there is something better. So far, I like a lot of what the EU is doing.
  - NicoJuicy 9y ago
    The EU had very solid principles to begin with. Too bad along the way they left some behind and broke some... ( Ugh... Humans)
  - mobilefriendly 9y ago
    It is a strange independence the demands the destruction of local democratic governance.
    - matthewmacleod 9y ago
      Not really. Independence is an axis like any other, and trading it off in some areas can result in a greater benefit at the the scale of all members.

deleted 9y ago

[deleted]

foodislove 9y ago

People see a cold war as a rivalry between equals. That's not the case. The Chinese are more adept at adopting existing tech and adding scale than creating it. This cold war is mostly one way. Their tech champions' strengths come from a potent mix of state-funded and support with local business acumen. The attempts by the government to shift growth away from low-level manufacturing towards tech requires tech and innovation. Things that require the sort of the people the rigid propoganda infused education system is ill-equipped to produce. The shortcut is to simply to let others develop tech, then copy. That's the essence of the forced technology transfers. 20 years ago, companies and governments believed them that the forced transfers is purely for the Chinese market and a fair deal. After that turned not to be true (read: forced tech transfers for the bullet train that China now uses to undercut the original in foreign markets), but that's not the case today. If Trump, who I detest, can get the key European tech countries + Japan on board, they can dramatically increase the time and cost for the Chinese to pivot their economy. Delay enough and China's demographic time bomb of rapidly ageing people plus Xi Jinping's Maoist madness could well result in the Chinese economy stalling similar to the Japanese circa 1980s or worse. We'll have to wait and see it all turns out

madez 9y ago
Why is the economic and technological rise of China a problem?
- foodislove 9y ago
  It's not. It's the zero-sum thinking of a totalitarian dictatorship that's a problem. For example, simply letting the Taiwanese live their own free and happy lives is too much of "a problem" to let go without threatening invasion on a weekly basis :) Also, there is geopolitics at play. The Thucydides Trap is real.
  - adinobro 9y ago
    Which is completely different to the US and Cuba...