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Can the USA outbuild China's expansion ?, page-75

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moorookamick

22,353 Posts.

769

04/10/22

20:59

Post #: 64028144
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Originally posted by TillLindemann: ↑

"IMO its dodgy to say the least to take a year's stats (particularly during Covid massive lockdowns)
and then project from there years forward. A more sensible strategy (& I assume you are an investor)
is to take the general trend and project forward from there."

This is a fair point. It would be shallow to say just because growth has stopped in 2022 it will never grow again. But ... my thinking is that the last few years has sped up an end to growth that was already set in stone.

1. The first reason is demography: China's population has started to shrink, and its age structure means it will continue shrinking at a quickening pace in the decades ahead. It is not impossible to have a growing economy with a shrinking population, but it is that much harder. Especially for a middle income country rather than a country that is already wealthy per capita (e.g Japan).

2. China's growth in recent decades was fuelled by a relentless construction boom as hundreds of millions of people moved into cities. That was a one off.

3. China's growth was also fuelled by the era of laissez faire neoliberalism / globalisation that meant governments and businesses were happy to offshore manufacturing to China, no questions asked. There has been a massive backlash against this, and that era is now over. Countries are taking a harder stance on Chinese IP theft, on the use of slave labour in Xinjiang, on Chinese rare earths and critical minerals dominance etc. Countries see the importance of domestic manufacturing capacity and (at least a degree of) self-sufficiency. There are two approaches countries and businesses are taking, and both are bad news for China - either 'bring it home', or, so-called 'friend-shoring', move it to friendlier and freer countries like India, South Korea etc.

4. (perhaps a footnote to point above). Geostrategic politics are back. China is in one camp, China's key export markets are in a different camp. The most powerful buddy China had in its own camp decided in 2022 to get drunk, go rogue, and self-immolate in Ukraine.

5. Xi Jinping, whom unfortunately the Chinese are probably stuck with for life, is far and away the most inept leader China has had in recent years. He is still clinging to the strictest covid policies in the world, even with omicron. He launched an unnecessary clampdown in Hong Kong that trashed its reputation as a global business hub and sparked an exodus of hundreds of thousands of Hong Kong's best and brightest. It also ensured Taiwan could never trust the 'carrot' of a one country two systems offer. At a time when American foreign policy was on the ropes, Xi decided to launch a totally unnecessary, I would say completely mad, invasion into India's border areas that killed any chance of cooperation with its largest neighbour. He launched a trade war on Australia and various other countries (e.g Lithuania, in doing so provoking the ire of the entire EU). He is an unmitigated disaster for China.

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I agree with your list of China's weaknesses but that has to be
balanced against China's strengths which IMO are:
(1) 1.4 billion population base , most of which have been taken out of poverty during the past generation ( positive momentum)
(2) a command economy that can quickly react to global financial crises (eg 2008/09)
(3) world's biggest manufacturer & trader & highly diversified
(4) a well defined / long term economic plan (BRI & Made in China 2025) (this resembles a mega corporations strategic plan)
(5) $3.2 Trillion foreign reserves to protect itself against recession, etc.

We could also look at its Opportunities & Threats and complete the SWOT Analysis....eh?

PS: We could list Australia's 5 chief weaknesses but a reasonable person wouldn't consider
that fair without listing Australia's 5 Cchief strengths and so it is with China, IMO.
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