This is the sort of thing the US used to be able to do, and Britain back in its day:
China has built over 30,000 basic-level smart factories as part of a nationwide push to accelerate industrial digitalization and intelligent upgrading, according to the Ministry of Industry and Information Technology (MIIT).
The initiative, under the smart factory gradient cultivation action, has also seen the creation of 1,200 advanced-level and 230 excellence-level smart factories…
…The 230 excellence-level factories, distributed across all 31 provincial regions in China and covering over 80 percent of manufacturing sectors, have carried out nearly 2,000 advanced scenarios, including smart warehousing, AI-powered quality inspections, and digital research and development, said MIIT.
On average, these factories are 28.4 percent shorter in product development cycles, 22.3 percent higher in production efficiency, 50.2 percent lower in defect rates and 20.4 percent lower in carbon emissions, said the ministry.
Meanwhile, in South and Central America (a similar map could be done for Africa and chunks of Asia):
So, here’s the thing. Under the threat of Trump’s tariffs, Canada and the EU have been offering America to get tougher on China. “China’s the real enemy!” they scream.
Problem is, in the new Cold War, China’s going to be the stronger and more prosperous side. Russia, and most of Asia, Africa and South America are going to align with it. It will soon be in the “US after WWII” position of having more industry than everyone else combined, and it’s already leading in 80% of technological fields. It won’t be long before that’s 90% and I wouldn’t be surprised if in 15 years it’s damn near 100%.
Choosing to align with America is choosing to align with a declining Empire. It’s like laying your bet on Britain in 1918.
I don’t think this is a done deal for all of Europe. The old order is dying, new parties are challenging the old center-right and center-left parties and while the current leadership are lapdogs, the future leadership in many countries will not be. All China has to do is offer to not de-industrialize Europe, or all European countries have to do is cut a deal along those lines.
The sooner one makes the deal, the sooner one defects to the winning side, the better the deal will be.
It is my judgment that it won’t be long before the two best countries to live in are China and Russia. They are rising, and rising fast and the West is in decline. America’s strategy of cannibalizing its allies industries is stupid, because its allies industries are old legacy industries which are mostly already surpassed by China, and those that aren’t, like Pharma, soon will be.
There’s no reason to be loyal to America. Trump’s made it clear that the United States has no loyalty to anyone else, and it’s offering a really shitty deal. Russia doesn’t want to conquer Europe. They conquered half of it once before and it didn’t work out, they just want security.
This won’t happen this year, that’s clear, but smart nations will make the switch as soon as possible. I suspect the EU is likely to break up, so some European countries will change sides, and some won’t. But if it is done as a group of nations, even if not the whole bunch, the deal will be better.
The Cold War is already in its late early stages. I was writing about it as early as 2017, and it’s gathering steam. This is the new world. Choose your side, but for most countries, choose you must and wise statesmen choose the winning side.
KT Chong
While America has been preoccupied with Chinese AI and Chinese pharma, the real game-changers coming out of China in the past 2-3 weeks are HUMANOID ROBOTS and FUSION ENERGY. IMO those two really should have been the bigger news. It’s like in the past month China has been dropping tech breakthroughs one after another, and those two have almost flown under the radar because of the barrages of non-stop Chinese technological breakthroughs.
bruce wilder
This development coincides with the continued increase in manufacturing productivity that makes nearly all manufactured goods, cheap. The U.S. built a high-price economy to support financialization, leveraging a high dollar to generate debt to purchase and import Chinese manufactures cheaply and very profitably for those whose money controlled the supply chain from the distribution end. And, China built the high-efficiency “workshop of the world” at the other end.
We are approaching very rapidly the end-game where the money runs out. U.S. debt is being manufactured and sold to the world at a fantastic clip. It hasn’t diminished in recent years — it has accelerated. The U.S. is more financially dominant now than it was in the last years of its world economic dominance (at the end of the 20th century). But, the U.S. has less and less it can sell, other than debt. Not fast food franchises. Not Boeing airplanes. Soon, not Teslas. Soon maybe not even Hollywood reboots and sequels.
Anonymous
The other aspect is that wide adaptation ofAI and automation are going to be incredibly disruptive to all social orders. This is on top of disruptions from climate change and resource depletion.
Socialism with the economy managed for the welfare of all is the only way to get through this transition process. China, Iran (which have strong socialist tendencies couched in theological justifications ), and Russia (capitalist but still having legacies of communism plus shifts due to the Ukraine SMO) are in the best shape to weather this process. Market fundamentalist (at least in ideology, even though they’re kleptocratic in practice) countries are not going to be able to undergo this transition. Their only solution has always been about eliminating the competition. That’s going to be challenging when the competition is existential to their survival.
Revelo
Trump may be suffering from covid brain damage (I sometimes think the same thing about myself), but if so, damage might have improved his ability to see the big picture, hence his threats to sanction into destitution any country that dares leave the USA dollar system, because that is the foundation of USA power and prosperity.
There is about US$20 trillion of accumulated USA current account deficits. To move that wealth out of dollars would require $20 trillion of USA current account surpluses. USA exports more raw materials, weapons, software, etc while USA imports less. At $1 trillion/year surplus (so 20 year to pay off accumulated debt to foreigners, approximately), that is $2 trillion/year change from current $1 trillion deficit. Or about $6000/year change for every man, woman and child in the USA. That is an enormous change. If half increased exports, half reduced imports, and if we assume 4 people per household, that means household needs to produce $12000/year more of value to export while consuming $12000/year less of imports. That is enormous.
More likely is that accumulated current account deficit simply levels off, say at current US$20 trillion. At 2%/year ROI, then every household of 4 must effectively pay perpetual tribute of about $5000/year to foreign creditors and absentee owners/landlords.
Inflation can be used to reduce burden of foreign owned debt, but does little about foreign owned stocks, real estate or direct investment (factories and other business assets located in USA but owned by foreigners). Confiscating such real assets is unrealistic.
Most likely is that USA simply pays perpetual tribute while no longer being allowed to run huge trade deficits and thereby go deeper in debt to foreigners. Foreigners will increasingly worry about confiscation option, regardless of how unrealistic I think this is. So they will try to convert US$ into tradeable products that can be taken out of USA. This will lower exchange rate of dollar and increase USA inflation. Fed cannot fight inflation with very high interest rates because of huge USA indebtedness would cause runaway growth of compounded interest, but it also cannot allow runaway inflation. Fighting inflation with higher taxes only helps if taxes target consumption versus investment.
Final result will be situation of last few years but in aggravated form: soaring cost of consumables, no wage increases, diminished standard of living. Pressure on politicians to do something will be intense. Wealthy will likely rush to get money out of the country before it goes tits up, such as by mafia-style “bust-outs”: managers understate depreciation to boost accounting profits, pay themselves huge bonuses, move bonus money overseas before business declares bankruptcy. Expect to see US stock market collapse from wave of such management arranged bankruptcies.
This is the situation of Argentina, BTW and also any developing country deeply in debt to foreigners. Obviously, if you make confiscation of assets an allowable options, then solving indebtedness to foreigners (as well as local rich) is easy.
Tallifer
I do not think Trump wants a Cold War. He wants to return to the era when big powers carved up the globe. He will offer the former Soviet countries to Russia, Taiwan and South East Asia to China, and he will take the Western Hemisphere.
Feral Finster
Traditionally, everyone else gangs up ont he country most likely to achieve hegemony.
Soredemos
‘AI’ is largely a dumb gimmick. It’s the new dotcom bubble. It was already heading for implosion before Deepseek pulled the rug put from under the energy hungry OpenAI nonsense. Now we have a truly open-source option that is roughly as ‘good’ while being vastly more portable and energy efficient.
So now you can, at the lower consumer end anyway, run your dogshit brain dead bullshit generator for a lot fewer new coal plants. But the clear hard limits on this tech remain. There’s a great shaking out going on where industries figure out the limited number of areas where this tech is actually good for anything.
The impulse of course, just as with outsourcing a few decades ago, will be to destroy jobs with algorithms regardless of the economic case or quality. But the quality is just so fucking bad and annoying in most cases.
different clue
John Michael Greer ( ” the Archdruid”) once said: ” Collapse now and avoid the rush”.
Here is an item from the antiwork subreddit titled: ” Almost like people are saying screw it . . . ” it links to an article about falling retail spending. It also has its own comments section ( as many subreddits do) which I began reading a little bit of. Some of the comments seem to be personal testimonies by well-meaning laypeople about how they are reducing their spending to try doing their bit to shrink the economy till the ruling class feels the pain. Obviously, the better informed such well intended “economy-shrinkers” are, the better they can target their downspending against the most pain-sensitive targets.
Here is the link.
https://www.reddit.com/r/antiwork/comments/1ipbd5q/almost_like_people_are_saying_screw_it/
Every dollar is a bullet on the field of economic combat. Elmo Twitler Musk has Four Hundred Trillion Bullets. I have a few thousand bullets. I have to choose my targets very carefully.
Oakchair
Choosing to align with America is choosing to align with a declining Empire.
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A country can either decide to align with the bully that will demand tribute or the nation that will build roads, hospitals and airports. This is a difficult choice for the ruling classes.
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already surpassed by China, and those that aren’t, like Pharma, soon will be.
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Not being at top of putting chemicals into the population and drugging them into a chronically ill stupor is a plus for China.
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adaptation ofAI and automation are going to be incredibly disruptive
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How is having a quick search engine that can regurgitate what it’s told to tell going to be “disruptive”?
Seriously what has AI done besides allow corporations to slap “AI” onto their products to sell at a higher markup?
Anyone remember when social media was going to bring everyone together, and provide long lasting social connections? When we would be greeted as liberators? When financial deregulation would bring prosperity? When the internet would usher in a new era of awesomeness?
But this time the marketing and hype won’t turn out to be complete utter bull…
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Trump may be suffering from covid brain damage
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Generally harms fall along some type of bell curve. The undeniable harms are the tip of the iceberg. Underneath is everyone else suffering various lesser harms.
This is why any increase in debilitating conditions should be acted on as a canary dropping dead in the mine. Sadly our society responded to the dead canary by plunging ever deeper. On ho!
GrimJim
Ww are rapidly approaching a major inflection point (my autocorrect changed it to “infarction” point: tomato, tomato).
Something is about to give, and give big, taking down a whole mess of the system with it.
Not sure what that is going to be at this point. Lots of irons in the fire, lots of rot.
Ukraine collapses?
China hits back, bigger?
Epic Bird Flu mutation?
Trump pushes back on the judiciary, calling their bluff?
Major shift in the military (it is WAY TOO DAMN QUIET over there).
It’s going to be something big, real soon. I can feel it.
Something is about to pop. Then, crash down. Not all the way, right away, but… something big.
Hold onto your hats!
And make sure you bought a few extra can openers for all those cans of food…
different clue
As one side gets weaker and less prosperous, that side’s campers may get less happy.
Here, in a sign of things to come, is a public statement of gratitude from Saint Luigi of the Adjustication to his many well-wishers.
https://www.reddit.com/r/Fauxmoi/comments/1ipmalm/luigi_mangione_has_made_his_first_public_statement/
different clue
( If I had more nerve than I actually have, I would get some Votive Candles made with the Image of Saint Luigi on them . . . . and see how well they sold).
mago
I always wonder where the resources will come from to service all the production and economic advances that this fancy new high falutin technology is bringing us. (I was born and raised in Idaho, so please forgive my language and ignorance.)
Just mentioned the above to appear kinda sorta on topic. What strikes me is how many of the commentariat here remind me of characters that I knew privately and publicly—in school and the professional world, although probably no one reaches the pirate status of some that I knew in the culinary realm.
Just wanted to share that.
Thanks with a wink.
Carborundum
“China good, west sucks” is great chicken soup for the comfortably outraged geezer soul, but as a standalone it has very limited analytical utility.
Poul
Leaving the EU would be dumb for any member. The UK has shown everyone what happens when you are a lone weakling. You get bullied hard by the big boys.
What has to happen is a change in mindset in the EU. Copy Trump’s focus on domestic strength but using smarter policies than he does.
Wean the EU off their US dependence militarily and economically and look at China and the US as rivals and act accordingly. It’s going to be messy and time consuming with so many governments having to agree but it’s the only way.
China is going down the same path as Japan did after their construction-bubble blew up. So low growth plus china cannot export it’s way out like Japan did. They are just already too big so I expect trade wars will abound.
We are seeing the state debt boom in China as we saw in Japan.
https://bsky.app/profile/michaelpettis.bsky.social/post/3li6x2dayjc2p
Ian Welsh
China good/US bad isn’t what I said. “Allow me to paraphrase someone else’s argument incorrectly, then deride it” may make the terminally nuanced geezer feel good, but it’s not useful analytically.
But I think China good/US bad could be argued to have had more predictive utility than “America and China are morally equivalent.” If you had China good/US bad as your thesis in 1970, say, you’d have predicted the US would kill a lot more people and be involved in a lot more wars than China and you’d have have been right.
You might predict that China would concentrate on poverty reduction, leading to the swiftest and largest reduction in poverty in world history (a good thing) and that the US would concentrate on making the rich richer, eventually leading to a homelessness crisis.
You might predict the US would get rid of foreign aid, after a long period during which their aid was was hijacked almost entirely by the intelligence services, while China would build infrastructure, including hospitals, around the world.
“Every time the Europeans or Americans talk to me I get a lecture. Every time I talk to the Chinese I get a hospital.”
And so on.
Huh. It’s not what I said, or meant, but perhaps China Good/America Bad IS analytically useful.
Poul
Both the US and China are problem children from the perspective of the EU. EU is the only real answer to those two challenges. There is no other way to get enough power to match them.
The US with it’s military adventures and China with it’s economic beggar-thy-neighbor policies.
https://bsky.app/profile/did:plc:aday7msfnpqba7psqpjq3pij/post/3li4ccziyc22p
Anonymous
Those saying AI and automation are scams are failing to understand that it’s only a scam when the US does it. Yeah, we’ve been talking about this stuff for decades and got mostly junk in a post industrial wasteland, but there is a way to do it that’s actually effective and disruptive and China is showing how it’s done.
China has been building massive automated factories that produce high quality goods very cheaply with minimal human input. In AI, China has until very recently focused not on generative AI (which is just massive IP theft resulting in slightly improved searching with improved formatting), but applied machine learning that’s made it the leader in autonomous driving, drone control, handling customer service inquiries in a user friendly manner, etc.
And this stuff will not stay in China but impact everyone around the globe. If BYD or Xiaomi builds a far better autonomous driving system than the vaporware that Elon has promised for a decade, it will get used everywhere.
This stuff is already at a point of being quite good, good enough that it’s clear many drivers, customer service agents, factory workers, air traffic controllers, etc. Improvements in robotics and machine learning will likely take away more jobs in construction, farming, and other physical labor work. This is going to be massively disruptive as people’s jobs go away. A socialist society can redistribute the benefits to the masses.
In a such society like the US, Elon/Project2025 won’t be able to compete with the Chinese so he’s now focused on burning down the US civil service (including critical functions like weather forecasting, fighting forest fires, and securing the US nuclear arsenal) and will likely push for a massive tariff towards a “sovereign wealth fund” to fund his next AI scam. We’re going down a cliff very very quickly. They already know their side won’t win, but there’s time for another round or two of wringing as much remaining blood from those under their control, domestically or abroad.
John
Ian, thanks. I much prefer your way of dealing with trolls to Yves Smith’s, who seems intent on destroying Naked Capitalism
Soredemos
@Anonymous
Autonomous driving is fucking madness.
Soredemos
@Poul
Europe is a pathetic dessicated husk running off the final fumes of four hundred years of colonialism. It’s hilarious to see it, as it enters steep, terminal decline, attempt to judge anyone else as a ‘problem child’.
Europeans are not the adults in the room, regardless of their endless pretensions. European dominace was never more than a relatively brief abnormalityenabled by circumstances of historical te hbological and economic development. That era has come to an end. Europe is resuming its natural place ad a minor peninsula of Eurasia. It will never be a great power block (and it never was, not as a united whole). The best it could have hoped for was to be a middling peripheral on the edge of an Asian dominated global center, but it seems hellbent on self-sabotaging even that scenario. It’ll fade into irrelevance.
Carborundum
When you publish stuff like counts of “basic level smart factories” and maps of foreign investment, with no context, no attempt at helping the reader understand the data behind them, no sense of the factors guiding China’s option set, the constraints they’re operating, etc. I don’t find that particularly useful, sorry.
I’m a bigger Sinophile than just about anyone, but in my experience analysts who view their subjects as being 30 feet tall and having anything other than feet of clay are making their job a lot harder than it needs to be. The amount of recent Hezbollah-related cope out there from people who got themselves so in love with their perspective (a perspective driven in large part by their opposition to Israel) that they intellectually self-Stockholmed themselves would be a good example of the dangers of this trap.
Mark Level
Shocked (pleasantly) to see the return of Tallifer!! Hi Tallifer.
Even more shocked Tallifer is agreeing with a point a made in previous posts, about a new Tri-polar world . . . Never thought we would agree on anything.
There’s a bit of unfinished business to clear away, though, T– You guaranteed, over many months, a few years even, that “Ukraine will win.” Do you think that “All Europe’s weapons & all Europe’s Men” can put broken, corrupt Ukraine together again? How? They’ve given Ukraine all their defense stocks already! Just one example– Denmark can’t protect their property, Greenland, from Trump’s bombastic threats because they gave away their last 4 fighter jets to Ukraine!! Irony abounds.
If you want any credibility, T, please admit you were 100% wrong that “Ukraine Will Win.” I shared this already, the Narrative for nearly 3 years (but not anymore!)– ALL the sold out media whores read from the same script– https://www.youtube.com/watch?v=e3F3owL3iQo
I can’t resist changing an old musical title, Give Me a T for Tallifer, Give Me a T for Tinkerbell! The kiddies at the theater (I recall doing this once myself when I was 4 or 5) would applaud for Tink to revive when it seemed evil Captain Hook had killed her! And it worked. But kiddies’ theater is one thing, international war and peace quite another kettle of fish!!
Hopium never worked under Obama. He killed hope, just as he killed change. We all have to grow up sometime & face facts. Admit the truth, or no one will believe you.
Ian Welsh
Got Hezbollah wrong because I didn’t expect Israeli intelligence to have compromised them so severely and their leadership was more cautious than I expected (the sort of caution that is more dangerous than bold action, in my estimation. ) My bad. I note that the Israeli army still didn’t progress far in Southern Lebanon–Hezbollah fought well even after the huge hits.
I remember those who thought that the Ukrainian counter-offensive would do far better than it did. The opposite tendency — overestimating the West and under-estimating its rivals is very common.
I’ve written many articles on China’s economy, tech and science. You know this. Some of them were very detailed. Articles are not written in a vacuum.
And the smart factory bit is a telling detail anyway. The ability to do this sort of mass upgrading and the government direction are important and indicate something important about the Chinese economy and the Chinese government.
different clue
@John,
I am a bi-weekly wage-worker, not a businessman. I can only guess at what Yves Smith’s business model was. My guess is this: that she wanted Naked Capitalism to be a small vest-pocket version of a Social Media platform with free-range comments only controlled with after-the-fact moderation. The reason for that would be getting a commentariat addicted to fast-moving fast–paced action. Fast reading, fast writing, fast ‘send-it’ clicking. So other readers would keep coming back over and over and over again each day. More eyeballs, more clicks, more advertising selling at a better price for more money ( at a very tiny level) to keep the business in business.
She could solve her moderation problem very easily by adopting Ian Welsh’s ( and Pat Lang’s too) moderation model, of letting nothing through until it was pre-deemed pre-worthy of even getting published at all. But that would mean less clicky sticky eyeballs and hence less advertising space sellable at a lower price, which would make Naked Capitalism even more dependent on donations.
So perhaps she has come to a “fork in the road” in terms of moderation model.
Revelo
>We are seeing the state debt boom in China as we saw in Japan
There is nothing inherently wrong with government debt booms, especially if there is a demographic transition to lower population. Middle aged people are anxious to save for old age and so government must accommodate that desire somehow. Government debt is the obvious solution. When these savers become elderly and start to spend down their savings, they may not get everything they expected, if there is a much smaller cohort of young workers. This gap between expectations and reality manifests through inflation combined with negative real interest rates (financial repression). However, the elderly will get a good chunk of what they hoped for. Certainly better to let people save by accumulating government debt than speculate with bitcoin.
The other side of Chinese government debt is the vast stockpile of real assets the Chinese government is accumulating. Some of those assets are in China, like infrastructure that has extremely long lifespan, some outside. So China should have plenty of income from the assets to support its aging population (though, to reiterate, perhaps not as much support as they hope to receive).
Buildup of government debt is bad when the debt ownership is concentrated in a plutocracy or debt is largely owned by foreigners. USA and Argentina have both these problems and Argentina has the additional problem that much debt owed to foreigners is denominated in foreign currency. Neither China nor Japan have either of these problems.
Ian Welsh
After the fact moderation (or no moderation, which I was very close to at one point) drives more comments, but don’t underestimate how much it is preferred because it’s less work. There’s also the bonus of not having to read those comments which are horrid: stupid, or vile or threatening or insulting. There’s a reason why blogs with more revenue hire dedicated comment moderators: there is an emotional cost to comment moderation and principals often want to avoid it.
I honestly don’t know how much traffic having comments drives, or how much of that traffic turns into revenue. A lot of people never read the comments, but having a comment section worth reading is a good thing and non commenters do say so.
Personally I only moved to pre-approval permanently when it became clear the other way wouldn’t work, and that the comments were upsetting regular readers. It reduced the quantity of comments and regular comments significantly, but now I usually get compliments about the commenters and not complaints.
Poul
Soredemos
It’s in the heads of the EU leaders but abilities. You need a new generation of European leaders willing to dump the whole post-Cold War era policies/world views.
Start with recognizing European weaknesses like multiple governments which means that no aggressive foreign policy will be possible due to disagreement internally. Ditto the morality preaching thus I guess the EU’s position on Gaza killed that for good.
But defensively oriented military and economic policies should not cause problems.
There is strength in numbers.
UK ended up as everyone’s little bitch after they left the EU.