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At some point Beijing is going to fire back. They have a lot of leverage over our global corporations. Rather than making token attacks on them while continuin

At some point Beijing is going to fire back. They have a lot of leverage over our global corporations. Rather than making token attacks on them while continuing to consume the goods they make, we should smile and be friendly while methodically moving our manufacturing demand closer to home. There is plenty of cheap labor in Latin America.

redis_mlc 6y ago
> At some point Beijing is going to fire back. Good, let them. That will ensure there's no doubt that we need to decouple with them. > we should smile and be friendly while methodically moving Japan has already started that with mfg. We should do that too, along with unwinding their hegemony over port facilities world-wide. China is literally copying what Japan did in WW2, except with US capital instead of invasions.
lazyeye 6y ago
We should also spend some time focusing on the utterly incompetent leadership over the previous decades that led us to this point.
- jrs235 6y ago
  Corporate or government leadership?
  - fermienrico 6y ago
    Both are in bed with each other. If USA were strategic and had sound economic policies, the government would pass bipartisan laws that prevent an authoritarian regime from gaining the leverage that GP is talking about. It is not too difficult to just look at the trade deficit with China. Not just USA, China has a huge amount of leverage with every nation in the EU, Switzerland, Australia, India, vast APEC region, Korea, Japan and South America. Just look around you and find out what's not made in China.
    - xupybd 6y ago
      New Zealand is also in big trouble if we anger China. Our economy is heavily reliant on China. Even our universities rely on Chinese students to help pay the bills.
      - fermienrico 6y ago
        What's even more surprising is back-end supply chain is also dependent on China. Most people think that their USB cables and computer monitors come from China. But the pill you're taking probably has most of the raw ingredients imported from China. Polymers? China. Lab chemicals? Perfumes? Engine oil? China. Most machines that make these things have parts made in China. Bearings to shafts, motors, wires, adapters, etc. Probably the entire Molex, Keystone, Murata catalog is made in China. I just opened a can of Geisha [1] oranges in syrup. Sounds Japanese, nope, it's made in China. [1] https://www.geishabrand.com/Products/Fruits https://www.geishabrand.com/Products/Fruits Even if China was a free society, completely open culture and they allowed mass protests, guns, and weapons, didn't have a military, hung Abraham Lincoln's posters everywhere and declared Edward Snowden as the president - we should not put all of our eggs in one basket.
        rckoepke 6y ago
        For North American buyers, engine oils (lubricants) and polymers are more often from Houston, I'd imagine. For example, USA produced 21 million metric tons of polyethylene in 2019, exported ~9 million metric tons ($10 Billion), and imported about half what we exported ($5 Billion).
        kohtatsu 6y ago
        I hereby commit 8 of my eggs to that China.
    - lazyeye 6y ago
      The one thing that stands out for me is the postal treaty that was negotiated so that China is able to deliver products to the US for less than it costs a local company to deliver to an adjacent state. I'd love to have the background on how this situation arose. The giving away of the one and only single competitive advantage to a country that manipulates its currency, has little to no environmental laws and occupation health & safety etc. It just boggles the mind the economic devastation this decision would have wreaked across the US.
  - DeonPenny 6y ago
    Government, the corporations are just doing things that are efficient which are allowed by the government.
mlindner 6y ago
> At some point Beijing is going to fire back. They have a lot of leverage over our global corporations. Umm what? They have almost no leverage what-so-ever. China needs those corporations in China to survive. Those are pieces of leverage against China, not something that China can leverage for themselves against others. The reason they're not striking back is because they're already scared of the corporate flight that's occurring from the tariffs. They don't want to do anything that would exacerbate that.
- totalZero 6y ago
  The dewy-eyed mentality that China is powerless in the face of our mighty consumer demand is what got us entangled in China's manufacturing sector in the first place. I think the pandemic has made it clear that what happens in China has an immense impact on the availability of goods in the USA and elsewhere. This is true whether we're talking about webcams, medical PPE, iPhones, or anything else that is made in China. If China were to shut down the exportation of ball bearings tomorrow, the entire world would notice. If you don't consider this to be "leverage," then perhaps you can suggest another name. China doesn't need any one country's corporations in order to survive. Even if what you're saying had been true 20 years ago, I think it's incorrect to believe that China has no leverage over corporations that do business in their massive manufacturing sector today. China doesn't even need the West to be involved in HK, and they have acted to that effect. HK has become a much smaller contributor to their economy than it was when Britain ceded HK to China, in relative terms. If Apple's assembly campuses in China shut down tomorrow, Apple will be unable to manufacture iPhones, but China would be able to absorb some of the redirected demand in the form of handsets from Oppo, Vivo, Huawei, Xiaomi, etc. Samsung would pick up a lot too. If Boeing (which contrary to your zero-leverage thesis was strong-armed into opening a finishing plant in China) shuts down sales to Asia Pacific tomorrow, China will be able to take up demand in the form of aircraft sold by Comac. Even if not, a moratorium on Boeing purchases in China would tilt the Airbus-Boeing duopoly toward Airbus. Apple generated $260B in revenue last year, and Boeing generated $77B. China's GDP was $27T (PPP). See the difference? Our companies need them, but they don't need our companies. Even if the manufacturing sector were to disappear tomorrow, China would be a huge consumer market. Their buying power is a form of leverage. When you make them the world's factory on top of their substantial consumer activity, that gives them immense power to shape the economic behavior of foreign governments and corporations. Why do you think that Apple acquiesces to China's government despite claiming to be pro-democracy and pro-privacy back in the States? It's not because China lacks leverage, that's for sure. The first step to disempowering China is to accept reality; American consumption of Chinese goods has basically subsidized the growth of that country. Once we have accepted the problem, we can take steps to solve it.
robomartin 6y ago
> There is plenty of cheap labor in Latin America. I too believe the US has to invest in and cultivate industrial relationships in Latin America. That said, it has been years since China's advantages boiled down to cost of labor. The manufacturing advantage China developed over decades is to have highly integrated short supply pipelines for a massive category of products. Want to make washing machines? There are entire towns dedicated to making them and they make every component for your washing machines within a one hour truck ride. Want to make microwave ovens? Same thing. Computers? Ditto. Desks? Chairs? Shelving units? Plumbing fittings and valves? Same. The length of a supply pipeline is a crucial cost element in any manufacturing operation. China has the most efficient, short and well integrated multidisciplinary supply chain in the world. Let's say you want to make microwave ovens in Los Angeles. Your screws might come from New York. Wires from China. Glass from Germany. Microprocessor and other chips from Singapore, Taiwan and China. Other components from Japan. Sheet metal, cardboard and packaging materials from Mexico. Etc. The cost of such a disjointed supply pipeline is massive when compared to what they do in China. It is far less about hourly wages these days and more so about this. One of the reasons for which we can't make anything in the US or Europe is that we don't own the supply chain. It isn't the case that we were short in PPE, gowns, syringes and other medical supplies because Trump is an idiot (insert any politician, at any level, in the US or Europe in that statement). Not so. The reality of what we ran into as this pandemic gained strength is that we have no supply pipeline for anything other than a very narrow set of industrial and military products. Everything else is in China. Europe has the same problem. We don't even make the cloth, the yarns, elastics, adhesives and staples you need to manufacture N95 masks. Even worse, we likely don't make any of the components you need in order to make a machine that can test N95 masks. Those of us in manufacturing have been screaming about this for decades. This was OBVIOUS twenty years ago. It was MANAGEABLE thirty to forty years ago. It is near checkmate today. Who's at fault? Our politicians. We (US and Europe) have been treated to decades of politicians seemingly devoid of business sense and long term visions. The Chinese, instead, saw this and decided to take a long term view (decades) towards achieving a goal. And here we are. Go around your house and make a list of how man items you own that were made in China and how many --if you can find any-- in the US or Europe. Then understand that if something says "Made in USA" or "Made in France", it is very likely that every single internal component was made in China. So, where was it really made? Right? This situation is far more complex than most realize. Which, in and of itself, is how we got here.
DeonPenny 6y ago
Beijing doesn't that much ammo. I feel people who say this havent done the necessary mental exercise. Because it seem apparent Beijing only real tool was that they were quiet until now. Not only have they been firing back, they been doing it for a while. I don't see how you can make the argument they haven't based on their threats, stealing of intellectual property, debt diplomacy and everything else they've done to the US and its allies. The US biggest benefit is everyone now is paying attention. Everyone agrees that China is a threat while 4 years ago we laughed at the thought.
catsdanxe 6y ago
The idea that companies manufacture in china because of the cheap labor is misleading. Factory labor in China is not significantly cheaper than other countries. The benefit of China is the supply chain. The availablity of parts, factories, and labor is astonishing. There is no where else like it. There are entire cities devoted to manufacturing.

redis_mlc 6y ago

> At some point Beijing is going to fire back. Good, let them. That will ensure there's no doubt that we need to decouple with them. > we should smile and be friendly while methodically moving Japan has already started that with mfg. We should do that too, along with unwinding their hegemony over port facilities world-wide. China is literally copying what Japan did in WW2, except with US capital instead of invasions.

lazyeye 6y ago

We should also spend some time focusing on the utterly incompetent leadership over the previous decades that led us to this point.

jrs235 6y ago
Corporate or government leadership?
- fermienrico 6y ago
  Both are in bed with each other. If USA were strategic and had sound economic policies, the government would pass bipartisan laws that prevent an authoritarian regime from gaining the leverage that GP is talking about. It is not too difficult to just look at the trade deficit with China. Not just USA, China has a huge amount of leverage with every nation in the EU, Switzerland, Australia, India, vast APEC region, Korea, Japan and South America. Just look around you and find out what's not made in China.
  - xupybd 6y ago
    New Zealand is also in big trouble if we anger China. Our economy is heavily reliant on China. Even our universities rely on Chinese students to help pay the bills.
    - fermienrico 6y ago
      What's even more surprising is back-end supply chain is also dependent on China. Most people think that their USB cables and computer monitors come from China. But the pill you're taking probably has most of the raw ingredients imported from China. Polymers? China. Lab chemicals? Perfumes? Engine oil? China. Most machines that make these things have parts made in China. Bearings to shafts, motors, wires, adapters, etc. Probably the entire Molex, Keystone, Murata catalog is made in China. I just opened a can of Geisha [1] oranges in syrup. Sounds Japanese, nope, it's made in China. [1] https://www.geishabrand.com/Products/Fruits https://www.geishabrand.com/Products/Fruits Even if China was a free society, completely open culture and they allowed mass protests, guns, and weapons, didn't have a military, hung Abraham Lincoln's posters everywhere and declared Edward Snowden as the president - we should not put all of our eggs in one basket.
      - rckoepke 6y ago
        For North American buyers, engine oils (lubricants) and polymers are more often from Houston, I'd imagine. For example, USA produced 21 million metric tons of polyethylene in 2019, exported ~9 million metric tons ($10 Billion), and imported about half what we exported ($5 Billion).
      - kohtatsu 6y ago
        I hereby commit 8 of my eggs to that China.
  - lazyeye 6y ago
    The one thing that stands out for me is the postal treaty that was negotiated so that China is able to deliver products to the US for less than it costs a local company to deliver to an adjacent state. I'd love to have the background on how this situation arose. The giving away of the one and only single competitive advantage to a country that manipulates its currency, has little to no environmental laws and occupation health & safety etc. It just boggles the mind the economic devastation this decision would have wreaked across the US.
- DeonPenny 6y ago
  Government, the corporations are just doing things that are efficient which are allowed by the government.

mlindner 6y ago

> At some point Beijing is going to fire back. They have a lot of leverage over our global corporations. Umm what? They have almost no leverage what-so-ever. China needs those corporations in China to survive. Those are pieces of leverage against China, not something that China can leverage for themselves against others. The reason they're not striking back is because they're already scared of the corporate flight that's occurring from the tariffs. They don't want to do anything that would exacerbate that.

totalZero 6y ago
The dewy-eyed mentality that China is powerless in the face of our mighty consumer demand is what got us entangled in China's manufacturing sector in the first place. I think the pandemic has made it clear that what happens in China has an immense impact on the availability of goods in the USA and elsewhere. This is true whether we're talking about webcams, medical PPE, iPhones, or anything else that is made in China. If China were to shut down the exportation of ball bearings tomorrow, the entire world would notice. If you don't consider this to be "leverage," then perhaps you can suggest another name. China doesn't need any one country's corporations in order to survive. Even if what you're saying had been true 20 years ago, I think it's incorrect to believe that China has no leverage over corporations that do business in their massive manufacturing sector today. China doesn't even need the West to be involved in HK, and they have acted to that effect. HK has become a much smaller contributor to their economy than it was when Britain ceded HK to China, in relative terms. If Apple's assembly campuses in China shut down tomorrow, Apple will be unable to manufacture iPhones, but China would be able to absorb some of the redirected demand in the form of handsets from Oppo, Vivo, Huawei, Xiaomi, etc. Samsung would pick up a lot too. If Boeing (which contrary to your zero-leverage thesis was strong-armed into opening a finishing plant in China) shuts down sales to Asia Pacific tomorrow, China will be able to take up demand in the form of aircraft sold by Comac. Even if not, a moratorium on Boeing purchases in China would tilt the Airbus-Boeing duopoly toward Airbus. Apple generated $260B in revenue last year, and Boeing generated $77B. China's GDP was $27T (PPP). See the difference? Our companies need them, but they don't need our companies. Even if the manufacturing sector were to disappear tomorrow, China would be a huge consumer market. Their buying power is a form of leverage. When you make them the world's factory on top of their substantial consumer activity, that gives them immense power to shape the economic behavior of foreign governments and corporations. Why do you think that Apple acquiesces to China's government despite claiming to be pro-democracy and pro-privacy back in the States? It's not because China lacks leverage, that's for sure. The first step to disempowering China is to accept reality; American consumption of Chinese goods has basically subsidized the growth of that country. Once we have accepted the problem, we can take steps to solve it.

robomartin 6y ago

> There is plenty of cheap labor in Latin America. I too believe the US has to invest in and cultivate industrial relationships in Latin America. That said, it has been years since China's advantages boiled down to cost of labor. The manufacturing advantage China developed over decades is to have highly integrated short supply pipelines for a massive category of products. Want to make washing machines? There are entire towns dedicated to making them and they make every component for your washing machines within a one hour truck ride. Want to make microwave ovens? Same thing. Computers? Ditto. Desks? Chairs? Shelving units? Plumbing fittings and valves? Same. The length of a supply pipeline is a crucial cost element in any manufacturing operation. China has the most efficient, short and well integrated multidisciplinary supply chain in the world. Let's say you want to make microwave ovens in Los Angeles. Your screws might come from New York. Wires from China. Glass from Germany. Microprocessor and other chips from Singapore, Taiwan and China. Other components from Japan. Sheet metal, cardboard and packaging materials from Mexico. Etc. The cost of such a disjointed supply pipeline is massive when compared to what they do in China. It is far less about hourly wages these days and more so about this. One of the reasons for which we can't make anything in the US or Europe is that we don't own the supply chain. It isn't the case that we were short in PPE, gowns, syringes and other medical supplies because Trump is an idiot (insert any politician, at any level, in the US or Europe in that statement). Not so. The reality of what we ran into as this pandemic gained strength is that we have no supply pipeline for anything other than a very narrow set of industrial and military products. Everything else is in China. Europe has the same problem. We don't even make the cloth, the yarns, elastics, adhesives and staples you need to manufacture N95 masks. Even worse, we likely don't make any of the components you need in order to make a machine that can test N95 masks. Those of us in manufacturing have been screaming about this for decades. This was OBVIOUS twenty years ago. It was MANAGEABLE thirty to forty years ago. It is near checkmate today. Who's at fault? Our politicians. We (US and Europe) have been treated to decades of politicians seemingly devoid of business sense and long term visions. The Chinese, instead, saw this and decided to take a long term view (decades) towards achieving a goal. And here we are. Go around your house and make a list of how man items you own that were made in China and how many --if you can find any-- in the US or Europe. Then understand that if something says "Made in USA" or "Made in France", it is very likely that every single internal component was made in China. So, where was it really made? Right? This situation is far more complex than most realize. Which, in and of itself, is how we got here.

DeonPenny 6y ago

Beijing doesn't that much ammo. I feel people who say this havent done the necessary mental exercise. Because it seem apparent Beijing only real tool was that they were quiet until now. Not only have they been firing back, they been doing it for a while. I don't see how you can make the argument they haven't based on their threats, stealing of intellectual property, debt diplomacy and everything else they've done to the US and its allies. The US biggest benefit is everyone now is paying attention. Everyone agrees that China is a threat while 4 years ago we laughed at the thought.

catsdanxe 6y ago

The idea that companies manufacture in china because of the cheap labor is misleading. Factory labor in China is not significantly cheaper than other countries. The benefit of China is the supply chain. The availablity of parts, factories, and labor is astonishing. There is no where else like it. There are entire cities devoted to manufacturing.