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Chris's avatar

Very well articulated analysis. One point of connection: China was NOT even the 2nd nom-western country to use the international trading system to rise into higher value added industrialization. Japan was first, and committed the unforgivable sin of trying to be an independent pole in the global system in the interwar period. It was then "contained" and subordinated.

After WW2 the 4 (pro-western) Asían tigers were allowed to copy this playbook (given special market access, but collectively only marginal priducers). China then did this at a global scale no-one can compete with or contain, for Sino-Centric ends.

It's doubtful that once China dominates all aspects of industry that they will make room for Indias or Africans: China too will want them as economic adjuncts in their "co-prosperity" sphere.

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Humwawa's avatar

The hollowing out of industry is an inevitable consequence of imperial politics. While the (former) imperial powers US, UK and to a degree France, suffer from this phenomenon, both Japan and Germany have until recently maintained a strong manufacturing sector because they were denied their own empires.

China is not unique in its development. I have been involved with trade, industry and IP in the Far East and Europe since the 1980s. The industrial policies that helped China develop have been pioneered by Japan, Korea and Taiwan before. Visiting Korea, China and Taiwan from my office in Tokyo, I would often be surprised about how similar the state and company structures were to those in Japan. The difference is that the US was able to put political pressure on Japan to curtail its economic development. An example is the chip export quotas the US imposed on Japan during the 1980s, which were to halt the rise of Japanese semiconductor industries. Beijing is not responsive to that sort of pressure.

Emerging economies like the Asian tigers have successfully used industrial policies in combination with state subsidies and selective protectionisms to catch up with the developed West. However, for a developed country to use protectionism for recovering productivity is self-defeating. In a developed country, protectionism will lead to less competitiveness.

Thus, there is no way Trump's attempts at reindustrialization can succeed, because

- the tariffs are not selective,

- there is no industrial policy to build selected domestic industries,

- protectionism will reduce US competitiveness,

- financialization required by the US's global corporate empire disadvantages manufacturing,

- lack of trained workers and engineers,

- Trump's erratic decisions scares away investors who need stability.

On the other hand, the US cannot give up its empire either because its economy is sustained by its global reach.

From my experience in the Far East, I have already feared 30 years ago that the US would choose the military option in its rivalry with China because it cannot compete commercially.

Thus, unless the US Empire rolls over and plays dead, it's hard to see how war can be avoided.

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