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0 pointsjollybean4y ago0 comments

It's not so straight forward because China is not a centrally planned economy, and very few products prices are as priced in a straightforward way as are 'rare earths'.

Imagine telling Huawei to stop selling a massively profitable product overseas for example.

I don't really see this strategy being carried out other than in the most general sense. Where are these supply chains popping up and getting swamped?

And remember, this is very costly to China as well - selling at a loss, so they can then sell 'very cheaply'?

The problem with the above thesis is that all of this is a 'secondary economy strategy' i.e. it's good for catching up, it's not very good for surpassing. You need domestic consumption, and the ability to export goods at the highest end of the value chain, both things China will struggle with.

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Animats4y ago

The problem with the above thesis is that all of this is a 'secondary economy strategy' i.e. it's good for catching up, it's not very good for surpassing.

China is past the "catching up stage" in the industrialized areas. Median income in Shenzhen is comparable to US median income. Current policy is to increase domestic consumption and have an internal economy which is less dependent on exports, while still dominating key international markets. This is called "Dual Circulation".

Here's a summary of the 14th Five Year Plan.[1] "President Xi called for building “independent, controllable, secure, and reliable supply chains to ensure industrial and national security with access to at least one alternative source for important products.” President Xi said China should “use existing global dependencies on China as a counterweight to pressures to shift manufacturing out of China” and “use the pull of China’s market to attract global resources and deepen global dependence on China.”"

The "Made in China 2025" plan, issued in 2015, listed 10 sectors where China wanted to be self-sufficient by 2025.

- New information technology

- High-end numerically controlled machine tools and robots

- Aerospace equipment

- Ocean engineering equipment and high-end vessels

- High-end rail transportation equipment

- Energy-saving cars and new energy cars

- Electrical equipment

- Farming machines

- New materials, such as polymers.

- Bio-medicine and high-end medical equipment.

Most of those goals have already been achieved.

Again, none of this is a secret. It's stated policy of the PRC.

[1] https://crsreports.congress.gov/product/pdf/IF/IF11684

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