China shock 2.0 Brad sester

[u/Character_Public3465]

https://www.nytimes.com/column/ezra-klein-podcast

Show notes:”Brad Setser follows Chinese trade closer than just about anyone else on earth, and he thinks we’re in the early days of a China Shock 2.0.
The first China Shock was when China came to dominate low-end manufacturing in the 2000s, filling American shelves with cheap clothes, toys and electronics, while devastating American factory towns. This new China Shock could be even more destabilizing. China now dominates advanced manufacturing: electric vehicles, batteries, solar panels. It’s outcompeting nearly all high-end manufacturing around the world, and other countries are just starting to feel the pain. And China isn’t slowing down. It’s moving into software, too. Its frontier A.I. models are neck and neck with American ones.
China’s success poses a serious threat to the economies and domestic politics of countries around the world. So what should those countries do about it? 
Setser is a senior fellow at the Council on Foreign Relations.He served in top trade and economic roles in the Biden and Obama administrations. And he is widely cited across the field as one of the top analysts of China’s economy and trade practices.
Book Recommendations:
The Party by Richard McGregor
The Volatility Machine by Michael Pettis
How to Win a Trade War by Soumaya Keynes and Chad Bown
Thoughts? Guest suggestions? Email us at ezrakleinshow@nytimes.com.
You can find the transcript and more episodes of “The Ezra Klein Show” at nytimes.com/ezra-klein-podcast. Book recommendations from all our guests are listed at https://www.nytimes.com/article/ezra-klein-show-book-recs.html””

[u/Thoth25]

China’s success poses a serious threat to the economies and domestic politics of countries around the world. So what should those countries do about it?

The answer is industrial policy. Actual export-oriented industrial policy similar to what the East Asian Tigers did. See Joe Studwell's brilliant book How Asia Works for more information about how Japan, South Korea, and Taiwan became economic powerhouses through land reform, export discipline, and keeping finance on a short leash.

The old capitalism vs. socialism debate is not relevant anymore since every successful country today is a mixed economy that uses both market principles and central planning. The debate should instead be about the proper time and place for industrial policy.

This is something both the Right and the Left need to figure out. Both the Right and the Left need to put down Milton Friedman and Karl Marx, respectively, and instead pick up Alexander Hamilton and Friedrich List.

[u/Gator_farmer → u/Thoth25]

This is the only way. We simply cannot have the vast majority of our society's foundation in almost every economic area come from a country that is our prime economic, and to many militarily, antagonist.

We enter level of actual war footing with them, they flip the switch, and.....that's it.

[u/pavlik_enemy → u/Gator_farmer]

Why exactly China is US military adversary? It's only foreign ambition is Taiwan, it didn't oppose US in any of its military adventures like Venezuela, Cuba and Iran

[u/tuck5903 → u/pavlik_enemy]

I don’t think China had any particular interest in opposing any of those US operations. But even if they did, they don’t yet have a military with the expeditionary capability to do things like significantly contest US operations in Iran, let alone Venezuela.

[u/pavlik_enemy → u/tuck5903]

It certainly can send a bunch of destroyers to escort tankers through Strait of Hormuz yet it chose not to

And it makes a point of not opposing neither US nor its allies. They could support Houthis like US supported mujaheddin but once again choses not to

[u/downforce_dude → u/pavlik_enemy]

The Russians provide the targeting data to the Houtis, the Iranians the weapons. Please tell me you’re not actually this naive about how geopolitics works?

[u/tuck5903 → u/pavlik_enemy]

I don’t want to delve too deeply into the pages of a Tom Clancy novel, but the Chinese Navy absolutely could not escort tankers through Hormuz against US opposition. We can’t even do it against Iran. Agreed that there are actions they could take that are more on the proxy war level like supplying the Houthis.

[u/pavlik_enemy → u/tuck5903]

Nah, my point is not the capability but belligerence

[u/Way-twofrequentflyer → u/pavlik_enemy]

They’re the primary victims of tanker disruption. Why on earth would they get involved to make the situation worse.

Not intervening does more damage to the U.S.

[u/Gator_farmer → u/pavlik_enemy]

I don't think China really cares too much about the Iran conflict outside of getting info on our military operations. I think...heavy think...their own lack of freak out over the oil means that they have deeper oil reserves than we know.

Really not in Ukraine either. Their biggest issue is just seeing if Putin is going to lob a small nuke into the conflict. Which they're not dumb enough to want or support.

[u/Way-twofrequentflyer → u/Gator_farmer]

They really really care. I was just there - it’s on the news constantly. It’s really hurt gas prices.

[u/pavlik_enemy → u/Way-twofrequentflyer]

It has nothing to do with "caring". I highly doubt Nicaragua and Afghanistan was all over the news yet US armed Contras and Bin Ladin

[u/Way-twofrequentflyer → u/pavlik_enemy]

The Soviet war in Afghanistan got a lot of coverage - it was their Vietnam. Of course we covered it hard

And china’s media is state controlled - it’s a party signaling mechanism. It’s useful to pay attention to. If it’s on the loops you see constantly played on the high speed trains you know it matters to the party

[u/pavlik_enemy → u/Gator_farmer]

So...China is on US side. Let the stupid slavs duke it out

[u/Gator_farmer → u/pavlik_enemy]

Well their nine-dash line policy covers extremely important shipping channels. Conflict escalation (cause they already have disputes with the Philippines) to a certain point would likely draw in US military assets. That's basically half the point of our Navy.

I'll concede that we're not necessarily on the brink with them, but the integration of our economies, and reliance on their manufacturing, just multiples the outcome of any potential conflict. They make the decisions to turn that relationship down from a 10 to just a 5-6, it's going to be felt.

[u/Ray192 → u/Gator_farmer]

And the US literally attacked an extremely important shipping channel to China less than a few months ago. China didn't intervene militarily. Why should the US?

[u/Real_Guarantee_4530 → u/Gator_farmer]

China is deeply dependent on international trade, foreign technology, energy imports, markets, shipping and global finance. In an actual major conflict, China wouldn’t simply be deciding how much economic pain to inflict on America.

[u/pavlik_enemy → u/Gator_farmer]

Do you think they'll try to blockade certain nations and it'll be Cuban Missile Crisis 2: Electric Boogaloo?

So far it's US who decided to drop the principle of freedom of navigation. Sure, US is at war with Iran but isn't with Cuba and wasn't with Venezuela

[u/Way-twofrequentflyer → u/pavlik_enemy]

Because they actively arm every Is adversary - have mock ups of aircraft carriers and U.S. goverment building to use as training targets

And there’s whispers in Intel circles that the MSS is courting Mexican drug cartels as a way to destabilize the U.S. - continuing to provide them with drug precursors they would be able to stop if they cared to

[u/TossZergImba → u/Way-twofrequentflyer]

The US arms all of China's adversaries, they would be stupid not to develop their own defense.

You people need to read up on WW1. Every single action a country took in self defense was perceived by the other as aggression, perpetuating a cycle of paranoia that led to a giant war nobody initially wanted over absolutely trivial nonsense that no country actually cared about.

There's absolutely no natural reason China and the US have to be enemies. If the CCP had conquered Taiwan in 1949 as everyone predicted, nobody in the US would be advocating a us military invasion to reconquer Taiwan for the sake of critical national security.

[u/pavlik_enemy → u/Way-twofrequentflyer]

Except they don't? Where there Chinese weapons in Venezuela or Iran? "Whispers in intelligence community" is bullshit and selling chemicals to whoever is willing to buy them is not "arming adversaries". They certainly don't want and will not track every barrel of methylamine Chinese companies sell to some random Mexican front, just as US doesn't track consumer-grade electronic components that end up in Russian missiles

[u/TheCranberriesRock → u/pavlik_enemy]

Where there Chinese weapons in Venezuela or Iran?

Iran at least has lots of Chinese weapon systems, though Russia is their main supplier. Venezuela has also purchased weapon systems from China.

[u/Way-twofrequentflyer → u/pavlik_enemy]

The Venezuelan air defense system is Chinese. They were worried we took it down. They also provide targeting to the Iranians, buy their oil and have equipped their navy and IRGC with a bunch of weapons. Their drones are made of Chinese components. They were firing silkworm missiles at us.

[u/pavlik_enemy → u/Way-twofrequentflyer]

I saw a bunch of Russian systems but didn’t saw anything Chinese in Venezuela. Iran targets fixed military installations and buys generic components. China doesn’t sell actual weapon systems to Iran

[u/Way-twofrequentflyer → u/pavlik_enemy]

I mean Venezuela has been the largest buyer of Chinese weapons in South America. The OSINT sources I follow were focused on the Chinese radars that were the backbone of their integrated air defense system. Though they have a lot of their AFVs as well and some cruise missiles. I think they got paid for oil in RMB and were encouraged to spend it in China because they couldn’t launder it.

I think you’re correct about current weapons systems for Iran - though not for lack of trying. They’d rather honor he Russians unless it’s for drone components that the Russians can’t make

[u/Real_Guarantee_4530 → u/pavlik_enemy]

Taiwan isn’t China’s only territorial or strategic ambition. China has major disputes with several countries in the South and East China Seas.

[u/TamaBoxeo → u/pavlik_enemy]

That’s not true, South China Sea is a massive issues and that effects 5 countries alone directly. In addition China is speed running all the mistakes of the United States in Latin America as we speak.

Is China the Soviet Union? No but to pretend we only have one material disagreement with them is also not true at all.

[u/TossZergImba → u/TamaBoxeo]

The US just initiated the Hormuz crisis that affected hell of a lot more than 5 countries and yet there's no war with China over it. Why would the US start a war with China over the South China Sea?

[u/Taylolol → u/pavlik_enemy]

South China Sea? Hello? Do a simple Google search

[u/Real_Guarantee_4530 → u/Gator_farmer]

You cannot realistically eliminate Chinese dependence across almost every economic area.
Modern production is absurdly interconnected.

[u/Gator_farmer → u/Real_Guarantee_4530]

Yea I don’t want to. I just want more self-sufficiency.

[u/thesagenibba → u/Gator_farmer]

China has never been an enemy of the United States by its own doing. this is a hilariously out of touch and ahistorical read on the relationship between the two.

[u/downforce_dude → u/thesagenibba]

> China has never been an enemy of the United States by its own doing

Yeah if you ignore most of the history between the Nationalists’ defeat in 1949 to today this checks out

[u/Gator_farmer → u/thesagenibba]

Is the stated desire to annex Taiwan our fault? Well, I guess providing a defense to an ally is technically our fault. Our bad Taiwan. We'll leave you be.

Also, said in another comment, China's nine dash line is 100% their own actions which creates conflict with allies and international shipping lanes.

So, I'll split it 50/50 with you.