Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: China Page 1 of 10

In The New Cold War, One Side Will Be Weaker and Less Prosperous

By

On February 13, 2025

Comments

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.

 

This blog runs on donations and subscriptions from readers. It’s free, but not free to produce. If you value it, please give.

 

France Is Being Kicked Out of YET Another French Country

By

On November 29, 2024

Comments

Recently French troops have had to leave Mali, Niger and Burkina Faso. Now it’s Chad booting them.

Update: Senegal has now announced it intends to seek the withdrawal of French troops.

The first three countries have Russian troops in them now. Wonder how long it’ll be before Chad joins the crowd?

France has been the most important country in a lot of its ex-colonies in Africa, but it’s losing its place, not just militarily but economically. Countries are turning to China for imported goods and development at the same time as they turn to Russia for security. Chinese goods, development and loans are cheaper, and neither Russia nor China interfere nearly as much in domestic politics.

It’s just a better deal. For a long time you HAD to go to the West, but now Russia and China can supply pretty much everything you need.

 

As regular readers know I’ve been following Europe’s collapse for a few years now. It’s practically a freefall. In Germany Volkswagon, for example, is planning on closing factories for the first time.

Europe’s well on its way to being what it was for most of history: a backwards and irrelevant peninsula, with the main action and most important civilizations elsewhere in Asia.

SUBSCRIBE OR DONATE TO OUR 2024 FUNDRAISER

The “China Cycle” Is Mostly A Thing Of the Past

By

On September 9, 2024

Comments

So, this was true once:

The Chinese learned a lot from Western Joint Ventures, and I remember talking to a consultant back in the early 2000’s about tech transfer. He said it was very clear: you got into the Chinese market and/or used their lower cost production and what they got in exchange was tech transfer. This isn’t some evil conspiracy, back in the 80s when the US fell behind on cars they basically forced Japanese car companies to set up factories in the US, and yeah, there was transfer of knowledge to American companies.

Now, for the West, what Western companies and the West in general got in return for their tech was not worth the cost: it was stupid and short-sighted, but companies were lining up to do it and economists and business gurus and politicians in the West were for it: the only thing that mattered was making more short to mid-term profits and all sorts of nonsense about it not mattering where goods were produced was espoused by very important intellectuals and officials. There was no attention to the long term cost in terms of loss of technological lead and moving the industrial base to China. I know: I was one of the voices warning, publicly, to stop taking short term profits by selling China our future.

But at this point it’s no longer accurate. Chinese car companies are more advanced than Tesla: they have better batteries, better HUDS, better auto-pilots and they also have faster product cycles.

Again, in most fields the Chinese are now more advanced than the West: the remains are important but in a minority—things like lithography and aerospace, but they’ll catch up in both in time and for Aerospace I’d already buy a jet-liner from China before Boeing, and Boeing’s problems have nothing to do with China. Airbus is still clearly better, but it won’t be in twenty years, and possibly not even in ten.

The West was 100% complicit in the “China Cycle”, but that cycle is almost entirely over and China is now just straight up more advanced and out-competing us.

The West made this choice. We could have maintained our tech lead for another fifty years or so if we wanted to and followed the necessary policies. We didn’t, and to expect China to not use the same methods every other major country used to industrialize is insane. Every accusation made in the “China Cycle” is something the US did to Britain back in the 19th century.

Perhaps China could have industrialized without it being disastrous for the West, but not under any sort of laissez-faire or neoliberal international trade regime.

If you’re young, learn Mandarin. Maybe even if you’re not young.

My writing happens because readers donate or subscribe. If you value that writing, and you can afford to, please support it.

Open AI Pulls Out Of China In Another Boneheaded Move

By

On July 9, 2024

Comments

The effect of chip sanctions was to create a Chinese chip industry which now controls the low-end of the chip market, and which is coming on strong. The effect of Huawei sanctions was to make Huawei stronger, end Android support and gut Apple’s market share in China.

Now we have this brilliance from “Open AI”, presumably at US government behest:

Chinese attempts to lure domestic developers away from OpenAI – considered the market leader in generative AI – will now be a lot easier, after OpenAI notified its users in China that they would be blocked from using its tools and services from 9 July.

“We are taking additional steps to block API traffic from regions where we do not support access to OpenAI’s services,” an OpenAI spokesperson told Bloomberg last month.

OpenAI has not elaborated about the reason for its sudden decision. ChatGPT is already blocked in China by the government’s firewall, but until this week developers could use virtual private networks to access OpenAI’s tools in order to fine-tune their own generative AI applications and benchmark their own research. Now the block is coming from the US side.

Generative AI isn’t like lithography machines. It takes vast amounts of data and a bunch of coders and scientists, and China has plenty of both. In fact, it’s limited mostly by access to data: social media, websites, books, art work and so on.

There’s no particular reason to think China can’t catch up and exceed in generative AI.

It’s interesting, though, that China’s government was already blocking Chat-GPT. Clear protectionism meant to help the internal market. China’s decoupling as much as America is.

My guess is that in five to ten years the most advanced generative AI will be in China. Just as Tesla was once the world leader in electric-vehicles, then Chinese companies ate its lunch (you can get a decent EV for 14K$ in China and at each price point the quality is better than Tesla), Chinese AI companies will out-perform Open AI.

It’s China’s world now. We just live in it.

IanWelsh.net is supported by readers. Please subscribe or donate, and please share articles. The more you help, the more I can write.

Why Am I Writing About China So Much?

By

On June 27, 2024

Comments

Regular readers will have noted that for the past few years I’ve been writing far more about China than I used to.

Why?

The primary purpose of this blog is to explain the world: how it works, how it has worked, and how it will work.

China is probably the most important nation in the world right now: it has the most manufacturing, is about tied for population, is the largest trade partner of the greatest number of nations and leads in most scientific and technological fields.

If you don’t understand China, you don’t understand the world. In the same way that I spent so much time learning about and understanding America, I (and you) need to understand China. I’m so serious about this I’m probably going to learn Manadarin, and if you’re under fifty, I suggest that you should do the same. In ten to fifteen years not speaking Manadarin will be as crippling as not speaking English currently is.

As we move into a multipolar or cold-war period, nations are rising in importance: China, Russia, Iran, Vietnam, and so on. If we don’t understand the internal and external dynamics of those countries, we are ignorant of how the world works in the worst sense of that word.

As this happens, nations are losing importance: all of Europe, America and the Anglosphere, in particular. I live in Canada, I’m a member of the West and the Anglosphere, and of European descent, so I’m concerned with those countries. But maintaining too much of a focus on them would be foolish.

It is also important to understand what other countries are doing and have done right. If China is now the world’s most important nation, why? What is it doing? How are its policies likely to turn out? The same is true of Russia, whose economy is doing better than, say, Europe’s.

Of course, understanding what the West is doing wrong (and the rare things it’s doing right) matters too, but I’ve spent twenty years writing those articles.

The world is changing. To understand it and to operate skillfully within it, we must change with it.

You get what you support. If you like my writing, please SUBSCRIBE OR DONATE

What Xi Jingping Has Done Right to Preserve CCP Power and Effectiveness

By

On June 26, 2024

Comments

I was a doubter about Xi. His early anti-corruption drive seemed most likely to be a way to purge the Party of his enemies, and I assumed he was driven primarily by ambition for personal power.

I was wrong.

If you want to join the CCP, you have to be accepted. It isn’t automatic. Once accepted you undergo training and if you want real power you have to rise: you have to be in charge and deliver.

In this the CCP is similar to the old Roman Republic: high political rank required you to rise up thru the cursus honorum. Doing so required you to gain experience with government: roads, sewage, trade, law and so on. In practice, few people were elected to the highest offices without military experience, and the result was that high elected officials had some actual experience with how both military and civic affairs ran.

The CCP has much the same virtues, minus the de-facto military experience. You can’t get to the top without having risen from the bottom.

There were serious threats to this in the early years of the second decade of the twenty-first century. The first was corruption: the job of officials shouldn’t be to make themselves and their families rich. People shouldn’t rise to the top because they’ve spread wealth to their supporters.

So an actual crackdown on corruption was required to retain the CCP’s policy effectiveness.

The second threat was the “princelings”. Children or grandchildren of high Communist officials, often companions of Mao. They expected office and power without having truly earned it. Xi has sidelined the majority of them. Very few have any real power in the CCP.

The third was the oligarchs. By one calculation the wealth of billionaires declined by 47% between 2021 and 2024. During the same period in America it increased over 70%. More than that, the CCP has prosecuted and imprisoned multiple billionaires, something the West never does.

Wealth=power. Huge concentrations of power outside the CCP were a huge threat to it, especially in combination with internal corruption, since corrupt and rich party members were cooperating with the oligarchs.

This has allowed China to do things like move massively to social housing and crash the housing market, something oligarchs would never allow the government to deliberately do in America. Young people being unable to afford housing was (and still is) a huge threat to the CCP’s legitimacy, but it’s being dealt with.

Weakening oligarchs hasn’t come at the expense of industry and commerce, either: the Chinese economy continues to grow, science and engineering progress is rapid, and they have recently taken control of the majority of the global EV market.

Internal corruption, cliques and external power centers controlling government are the biggest threats to any government and especially to any one party state. Xi has dealt with these problems effectively and relatively quickly and is moving on other policy concerns.

This doesn’t mean the CCP is perfect or doesn’t make mistakes. Zero Covid was done very badly (avoiding Covid was the right policy, but they screwed it up.) It does mean that they retain the ability to implement policy, often effectively.

And that’s a big win for China and the CCP.

Donors and subscribers make it possible for me to write, so if you value my writing, please DONATE or SUBSCRIBE

US Likely To Sanction World’s Largest Drone Manufacturer

By

On June 20, 2024

Comments

And, it’s Chinese, of course.

The United States House of Representatives passed a ban on the future sale of DJI drones in the U.S. on Friday, making the DJI ban more likely than not. The “Countering CCP Drones Act” is part of the United States’ 2025 National Defense Authorization Act (FY25 NDAA), a major piece of yearly legislation allotting defense spending for the coming year.

Drone maker DJI is based in China and controls over 70% of the world’s drone market share, a combination that threatens U.S. lawmakers

But…

DJI has 90% market share of the U.S. hobby market, 70% market share of the industrial market and over 80% market share of the first responder market. And their main competitor is Autel Robotics which… is also a Chinese company

(my emphasis)

As I noted years ago, what’s going to happen, er, is happening, is the world splitting into two trade blocs. Problem is the Western bloc is smaller, economically and in terms of land mass, than the one led by China and Russia, which includes a big chunk of Africa and South America, in addition, and which is growing.

Now bans and tariffs aren’t automatically bad. They can give space to domestic industry to compete. China’s “overcapacity” is the result of a lower cost structure and, in many areas, fierce competition. There are twenty-two significant drone manufacturers on this list, for example, and there are hundreds more.

To compete, the US needs to create a competitive market again, and it needs to reduce its cost structure. The simplest ways to do that would be to reduce housing and medical costs; to enforce anti-trust laws vigorously and to reduce barriers to entry for new businesses.

But part of the problem is simple: the US market is no longer as big as the one China has access to. For a long time, access to the American market was what mattered, but that’s no longer the case. The US, and the West in general, has to catch up, and they have to do so in an environment where they are the underdogs. This reality doesn’t seem to have penetrated thru to policy makers—if it had, they wouldn’t still think that sanction after sanction does significant damage to China or Russia, or almost anyone else.

But, with an oligarchy and a commitment to neoliberal “crush wages and workers and embrace austerity” ideology, the West is damaging its internal demand and markets at the same time as it needs those markets to catch up.

The USSR lost to the West for fairly simple reasons, and the main was that the West had more industrial base and more population. Now the shoe is on the other foot. It’s not likely to work out better for us than it did for the Soviets.

China’s Rise Is Normal

By

On June 17, 2024

Comments

China used trade protection and cheap wages & grabbed industry from the leading industrial power exactly the same as the US did with Britain.

 

The tech/science lead follows the manufacturing floor, with some delay, this was, again, the same with Britain & the USA.

The dynamics of industrialization are well understood at this point. The first books to read are “Bad Samaritans” and “Wealth and Democracy”.

Unlike Japan or South Korea, China has a larger population than America (same as America vs. Britain) and is has a large land mass and plenty of resources. In fact, it has slightly more land area than America.

Initial industrialization in England is an interesting story and still hotly debated. Later industrialization waves are mostly all the same. (The USSR is an exception, as are city states.)

Big leaps, as opposed to adaptations of existing models almost always come from states in hot competition, and among them the peripheral states usually win (Britain, for example, is peripheral to Europe.) The biggest tech surges in Chinese history came during warring states periods.

I’m very impressed by China’s rise and the West’s sheer incompetence in enabling it, but it’s not a huge leap the way the industrial revolution was. It’s just an extension of a previously existing model.

Japan’s rise was more impressive than China’s, as the first non-European nation to pull it off. But as an island nation with limited population, they were sharply limited. They made 2 runs at the US, one a war, one industrial, and neither let them become the foremost power.

The West was very good at keeping everyone but client states from industrializing. Even Japan needed British aid (the first time), then America’s (the second time.) But the West got stupid under neoliberal “end of history” ideology & let China run the playbook, thinking it wouldn’t challenge the West. Oops.

Americans probably should have learned from the Western experience with Japan. The British enabled Japan’s rise only to have Japan attack British possessions. Without American aid, that loss would have been permanent. But China is a continental power w/a massive population. The stupid was epic.

A radical change in economic model hasn’t happened yet, and seems unlikely to before ecological and economic collapse puts an end to the viability of the current model. Looking at Chinese cities with the 7 lane highways is instructive. It’s just a better version of the same old

A complete change of the permission system will be necessary for radical economic change. No one in power, whether in the West or China, wants that or can even imagine it.

Who knows, radical economic change might happen in China when collapse really starts biting. After all, they have the manufacturing base. But usually it happens at a periphery or in a tight area with multiple competing states.

This stuff is fairly well understood. However it’s not economists who put the pieces together, it’s sociologist and historians and even some anthropologists. Economists have done more damage to the West than astrologers did to Chinese dynasties. MBA factories get an honorary mention. (They mostly weaponized economic theories, as when they noticed economic theory saying that high profits come from not competing.)

One of the most instructive trends right now is watching so many people screaming about population collapse, when what the world actually needs is a lower population. (We could have avoided that necessity, but the window is closed. Sometimes you have to act at the right time.)

All people who yell about lower birth rates can imagine is economic growth through population expansion. Anyone who thinks that way can’t create a new economic model, they’re stuck in the old one. (Elon Musk is a good example.)

People who can’t even understand population overshoot are incapable of the thinking required to deal with the world’s actual problems.

We’ll talk about permission systems at a later date. As noted, they’re key.

Page 1 of 10

Next

Powered by WordPress & Theme by Anders Norén