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It was kind of inevitable that this would happen as China moved up the value chain and ever more of the American industrial supply chain came to rely upon it -

It was kind of inevitable that this would happen as China moved up the value chain and ever more of the American industrial supply chain came to rely upon it - especially hi tech. 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).

DiogenesKynikos 7y ago
It would be best that there be no decoupling. The decoupling is driven by a belief by some in the American government that they can somehow blunt the economic development of China and maintain American geopolitical hegemony into the foreseeable future. That's a very dangerous thing to attempt to do, because it sets the two countries on a definite path towards conflict. The question is really whether the United States is willing to accept its probable status as the #2 power in the world in a few decades, or whether it will make a serious attempt to retain its current position. Certain people who are influential with the current occupant of the White House, including Peter Navarro and Steve Bannon, truly believe that the latter option is possible, and are willing to enter into a major conflict with China.
- steve19 7y ago
  My understanding is that it is driven by belief that the pie has been unevenly divided, with China benefiting far more than the USA (I am not saying I agree with this) . China is investing its extra pie into expanding is global power (military power and soft power),while simultaneously becoming more aggressive (South China Sea). 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.
  - majia 7y ago
    I think the pie between the US and China is fairly divided. However, greedy US cooperates get most of the US share whereas Chinese government at least spent a fraction of the trade profit to lift hundreds of millions people out of property. When US middle class look at their newly enriched Chinese counterpart, they feel they are raped off.
    - yorwba 7y ago
      > Chinese government at least spent a fraction of the trade profit to lift hundreds of millions people out of property 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.
      - majia 7y ago
        While direct wealth redistribution isn't significant, huge spending on infrastructure on roads, railways, telecoms and education certainly helped. Without these infrastructure, people won't be able to build factories and work on higher-wage jobs.
    - imtringued 7y ago
      Well, it is true that globalization hurts the US middle class. Basically the argument in favor of globalization that economists use is that basically it is beneficial at a national level for the USA to exploit Chinese labor. The cost savings obviously go into the pocket of the executives. The people who lost their jobs get nothing. Obviously the same thing happens to every industry to varying degrees. Those who don't lose their jobs can still see their wages stagnate also known as deflation. The central bank then tries to combat the deflation by injecting money into the economy. It doesn't work: Inflation doesn't go up for anything other than housing, education or health insurance. That can only mean one thing. Prices that do not go up are not dictated by the local economy. If inflation would happen in the US and increase widget prices from $4 to $5 then production simply shifts to a country that can indeed produce the widget for $4. 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.
- nordsieck 7y ago
  > The decoupling is driven by a belief by some in the American government that they can somehow blunt the economic development of China and maintain American geopolitical hegemony into the foreseeable future. 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.
  - echaozh 7y ago
    > China is a low trust country. There is a deep culture of fraud and deceit. Is it racism? China is low trust. China cannot innovate. What makes you think so?
    - Theodores 7y ago
      Trust is a two way street, you have to be willing to trust to find trust. 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.
      - coldtea 7y ago
        >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. 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).
- qazpot 7y ago
  So you are saying that America should give it's #1 position in the world and let china takeover.
  - oblio 7y ago
    Yes and he'd be right. Making the transition violent is... unwise. China isn't Germany, this conflict will become hot only after China is convinced it can win. Sun Tzu was Chinese, after all :)

DiogenesKynikos 7y ago

It would be best that there be no decoupling. The decoupling is driven by a belief by some in the American government that they can somehow blunt the economic development of China and maintain American geopolitical hegemony into the foreseeable future. That's a very dangerous thing to attempt to do, because it sets the two countries on a definite path towards conflict. The question is really whether the United States is willing to accept its probable status as the #2 power in the world in a few decades, or whether it will make a serious attempt to retain its current position. Certain people who are influential with the current occupant of the White House, including Peter Navarro and Steve Bannon, truly believe that the latter option is possible, and are willing to enter into a major conflict with China.

steve19 7y ago
My understanding is that it is driven by belief that the pie has been unevenly divided, with China benefiting far more than the USA (I am not saying I agree with this) . China is investing its extra pie into expanding is global power (military power and soft power),while simultaneously becoming more aggressive (South China Sea). 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.
- majia 7y ago
  I think the pie between the US and China is fairly divided. However, greedy US cooperates get most of the US share whereas Chinese government at least spent a fraction of the trade profit to lift hundreds of millions people out of property. When US middle class look at their newly enriched Chinese counterpart, they feel they are raped off.
  - yorwba 7y ago
    > Chinese government at least spent a fraction of the trade profit to lift hundreds of millions people out of property 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.
    - majia 7y ago
      While direct wealth redistribution isn't significant, huge spending on infrastructure on roads, railways, telecoms and education certainly helped. Without these infrastructure, people won't be able to build factories and work on higher-wage jobs.
  - imtringued 7y ago
    Well, it is true that globalization hurts the US middle class. Basically the argument in favor of globalization that economists use is that basically it is beneficial at a national level for the USA to exploit Chinese labor. The cost savings obviously go into the pocket of the executives. The people who lost their jobs get nothing. Obviously the same thing happens to every industry to varying degrees. Those who don't lose their jobs can still see their wages stagnate also known as deflation. The central bank then tries to combat the deflation by injecting money into the economy. It doesn't work: Inflation doesn't go up for anything other than housing, education or health insurance. That can only mean one thing. Prices that do not go up are not dictated by the local economy. If inflation would happen in the US and increase widget prices from $4 to $5 then production simply shifts to a country that can indeed produce the widget for $4. 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.
nordsieck 7y ago
> The decoupling is driven by a belief by some in the American government that they can somehow blunt the economic development of China and maintain American geopolitical hegemony into the foreseeable future. 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.
- echaozh 7y ago
  > China is a low trust country. There is a deep culture of fraud and deceit. Is it racism? China is low trust. China cannot innovate. What makes you think so?
  - Theodores 7y ago
    Trust is a two way street, you have to be willing to trust to find trust. 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.
    - coldtea 7y ago
      >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. 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).
qazpot 7y ago
So you are saying that America should give it's #1 position in the world and let china takeover.
- oblio 7y ago
  Yes and he'd be right. Making the transition violent is... unwise. China isn't Germany, this conflict will become hot only after China is convinced it can win. Sun Tzu was Chinese, after all :)