President Trump is not exactly a strategic geopolitician. The reason for these tariffs may be to force the supply chains of US corporations to become less dependent on China. But the way the global economy has been set up does not support the undoing of these supply chains -- with production de-delocalized back to the US, as Trump would have it. Location, location, location also rules turbo-capitalist logic; corporations will always privilege cheaper labor and production costs, wherever they are.
Now compare it with China investing in high-tech delocalization integrated with US centers of excellence. When it comes to the top of the line innovation battle between China and the US, the strategy of the Zhongguancun Development Group (ZDG) is a fascinating case.
ZDG has established a series of innovation centers abroad. The key ZGC Innovation Center happens to be in Santa Clara, California, quite close to Stanford and the Google and Apple campuses. Then there's a new center in Boston a stone's throw from both Harvard and MIT.
These centers offer the complete package-- from state of the art labs to, crucially, capital, via an investment fund. The matrix comes from Beijing's government, via the city's techno-district. And it goes without saying that ZDG fully aligns with BRI in its emphasis on expansion to "learn overseas experience of [an] innovation ecosystem."
That, in a microcosm, is what Made in China 2025 is all about.
Half a century of trade war?So what happens next?
Amid a tsunami of hysteria, sober analysis provided by Li Xiao, the dean of Jilin University's school of economics, is more than welcome.
Li goes for the jugular, stressing how "China's rise is essentially a status rise within the dollar system." From Beijing's point of view, change is imperative, but it will be gradual. "The goal of the yuan's internationalization is not to replace the dollar. The dollar system is irreplaceable in the short term. Our goal for the yuan is to reduce the risk and cost under such a system."
Li, realistically, also admits, "the conflict between two major powers could go on for at least 50 years or even longer. Everything happening today is just a curtain-raiser of history."
Implicit in the curtain-raiser is that the Chinese leadership seem to interpret this first midnight salvo as the revving up of what's described in the US National Security Strategy. The conclusion, for Beijing, is inescapable; the US is now threatening the Chinese dream.
As the Chinese dream, the "rejuvenation of the Chinese nation," Made in China 2025, BRI, multi-polarity, and China as a driver of Eurasia integration are all non-negotiables, no wonder the stage is set for major, inevitable turbulence.
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