There will be a Russia-like situation with China within the year and the economic impact will be 10x 😐
I’d guess an open economic war rather than movement on Taiwan though.
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And hard to prepare. You can hoard China-sourced supplies to a bit as a consumer, but the economic entanglement is extremely deep. We got a preview during Covid supply shocks when all sides were desperately trying to *solve* the problem. Imagine if they’re trying to *create* it.
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Russia is also a preview. They have *one* big bargaining chip — oil and gas. China has a thousand small bargaining chips that add up to like 3x oil-and-gas probably.
Biden hitting them on semiconductors feels like using up biggest economic options early, like shock-and-awe.
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I’m frankly surprised the Biden admin moved this fast and this aggressively. Coupled with a spike in deep media coverage of Xi’s consolidation, 3rd term, purges, etc. I think they know something we don’t. This is possibly a preemptive economic strike due to intelligence info?
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The general view in IR world in the last few decades as I understand it has been that time/waiting favors China because US weakens slowly due to demographics. I think this is no longer true. China is aging too, and it’s economic model feels like a ticking Mindel-Fleming time bomb
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5 things I read this morning that set off major alarm bells for me:
1. wsj.com/articles/xi-ji
2. cnn.com/2022/10/15/chi
3. foreignpolicy.com/2022/10/12/bid
4. chinatalk.media/p/xi-jinping-o
5. chinatalk.media/p/export-contr
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My best guess on what’s triggered movement in China is a combination of:
1. Economic downturn/deleveraging cycle brewing since pre-pandemic
2. Covid control PTSD
3. New writing on wall since Ukraine re window for geopolitical aims
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I’ve been slowly reading Slouching Towards Utopia, which is what made me tweet “Slouching towards the Thucydides trap” last night.
Though China and US are *both* acting like declining powers, rather than a rising/declining pair. It’s 2 aging nations.
Quote Tweet
Slouching into the Thucydides Trap
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👀 til about currency forwards
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"A source noted that the state banks' trades appeared to be managed so that the country's closely-watched $3 trillion foreign exchange reserves will not be tapped for intervention."
reuters.com/business/energ
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