Follow the Puck -- Trends in Geopolitics
Follow the Puck -- Trends in Geopolitics
Politicians, pundits and media are frozen in time
The world is changing rapidly but many people — specifically in the West — are frozen in time or stuck in echo chambers, immune to reality. This is a profoundly shocking, surprising and revealing phenomenon. It’s shocking because this is happening despite the internet and abundance of information. It’s surprising because the people in the wealthiest and otherwise smart countries — including those who invented the internet and claim to value freedom of expression — are unaware of what’s happening to them and unprepared for the challenging future. It’s revealing because it shows how human minds are often incapable of absorbing and adapting to new facts.
The monumental geopolitical event over the last two decades has been the rise of Asia and, in particular, China. However, Westerners are still unable to understand this secular shift in the world’s economic center of gravity. America, the hegemon with substantial control over Europe and many other countries, is still stuck in the fantasy of “I am the greatest!” As the chart below shows, this bravado was modified to “I am still the greatest… and China is evil” after China surpassed the U.S. in PPP GDP.
What’s messing up the American brain?
The rise of Asia itself has not really sunk in the Western psyche. By 2030, India will surpass Germany and Japan in terms of GDP. And China will surpass the USA to become the world’s largest economy. This is the inevitable reality, barring some catastrophic wars.
However, US politicians, think tanks, media, social media influencers, and most Americans are unable to come to grips with simple facts. However, there is nuance in this conundrum.
Some smart people understand what’s happening but cannot talk about it openly because their job requires them to stick to the ideological party line. These are the do-not-think tank guys, TV pundits, journalists and politicians. Furthermore, the atmosphere is now so toxic that anyone in America who says anything remotely positive about China gets attacked viciously. I remember a New York Times article five years ago titled, “The American Dream is Alive. In China.” Wow, the mob on social media went crazy, attacking the writer and the paper.
The right-wing in the U.S. are strongly against China because “communism.” However, I don’t buy this excuse because these people don’t foam at the mouth when they now talk about Vietnam (still a communist country); and they didn’t care about China’s communism when Republican Presidents Nixon, Reagan, Bush I and Bush II cozied up to China. All through the 1990s and 2000s, white Republicans in the USA loved Walmart for its "everyday low price.” Yeah, Walmart, where most things were made in China. At that time, Americans loved communist China, which was just a non-threatening place for cheap labor.
What’s happening in the US now is McCarthyism 2.0, but driven by complex motives.
One reason for Americans dismissing China is because Western leaders are very old. For people in their 70s and 80s — or even 90s in Kissinger’s case — their memory of China is associated with extreme poverty. These people might even have visited China many times. The deeply imprinted perceptions are not going to change easily.
Corporate executives in America fully understand China’s progress. After all, they have been getting their asses kicked by China in numerous areas. Here are some examples:
After being the world’s #1 in manufacturing for 100 years, the US lost the title to China in 2010.
Two years later, China surpassed the US as the world’s largest trading nation (Trade = exports + imports). In 2022, China’s trade was staggering $7 trillion! China is now the #1 trade partner for 140 countries.
Orange countries trade more with China than with the USA. Source: Economist And it has been one milestone after another since then.
Now, there are more Chinese than American companies in the Fortune 500 list.
TikTok is beating Facebook, Instagram and YouTube.
Chinese company Shein has become the world’s largest fast-fashion company, beating incumbents like H&M, Zara and Forever 21.
Huawei surpassed Apple in 2018 to become the world’s #2 smartphone vendor. Huawei had also beaten Nokia and Ericsson in telecom infrastructure; and had more 5G patents than anyone else. Now, more than 500 million Chinese are on 5G network.
BYD is now the world’s #1 electric car company, having surpassed Tesla — if you include BEV and PHEV. In pure battery EV, BYD will surpass Tesla in a year or two. Overall, EV sales in China are about 8x the US!
Interior of Chinese car NIO China is far ahead of the US in all renewable energy sectors — solar, wind, and hydro-power.
Installed Capacity of Renewable Energy — Solar, Wind, Hydropower China surpassed Germany in 2022 to become the world’s 2nd largest exporter of cars.
Chinese smartphones — Xiaomi, Vivo, Oppo etc. — now have about 60% of the world’s market share
In e-commerce, China is 3x the US. And mobile payments in China are mind-blowing ¥526 trillion ($82 trillion) per year. That’s more than 100x the USA.
In artificial intelligence, autonomous driving, robotics, quantum computing, space technology and numerous other vital areas, China has caught up with the US. Chinese students and companies win AI competitions held by MIT and IEEE. (Here’s an amazing video of a self-driving car navigating chaotic traffic in Shenzhen).
In semiconductors, Chinese companies are (were?) designing world-class chips, including their own CPU, memory chips, GPU and so on.
In patents and scientific publications, China has been #1 for many years now. Last year, China spent $460 billion on R&D.
In 2020, China became the richest nation on earth, with a net worth of $120 trillion — McKinsey Report. This was based on the combined net worth of households, corporations and the government. (Net worth = assets minus liabilities).
However, US corporations could not admit they have fallen behind. Hence, they changed the narratives to “China stole our IP” and/or “China is a security threat” and imposed sanctions on 500+ Chinese tech companies.
If you can’t beat them, ban them!
In a true free market, China would easily surpass the USA. Even if China doesn’t match the U.S. in creativity (yet), they will win by hard work and sheer number.
At the bottom of the white hierarchy are blue-collar Americans, who are angry at globalization that sent their jobs to China. These people cannot bear to hear anything positive about China. On social media, these people lick their wounds by telling one another that China just makes cheap sh*t; and without American consumers, China will go bankrupt.
Of course, another factor is racism, as American as apple pie. Go back and read about the Chinese Exclusion Act in the U.S. in the 19th century, and one will have a deja vu. In California and other states, white Americans repeatedly came up with shocking laws to discriminate against Chinese immigrants. And all the trope we hear now were repeated then as well — including, “Chinese are stealing our jobs.” This, of course, after the Chinese did all the toughest jobs that whites did not want to do — like mining gold and building the transcontinental railway through mountains.
You can see the palpable racism on US social media like Twitter, Facebook, Reddit etc., where Americans spread anti-China fake news. They like and upvote anything that’s negative about China; and anything that’s remotely positive about China is deemed as propaganda. On YouTube, “China collapse” videos always get thousands of thumbs up. This crazed environment creates a feedback loop and airtight echo chambers. Thus, if you talk to one person, you have talked to 100 million Americans, since they all have the same talking points.
These zombie people are also full of contradictions. For example, if China’s economy is going to collapse, how can it be a threat to others? Why have the US/EU labeled China as a “strategic rival” and a “threat”? Why is the United States creating alliance like QUAD and AUKUS to counter China, a country that’s allegedly on the verge of collapse?
If China cannot make any good product, why is the US placing sanctions on Chinese tech companies? If Chinese products are so terrible, why did the US force Europe not to buy Huawei 5G infrastructure?
If China is dirt poor, how come Chinese upper-middle class are buying more Porsche, BMW and Mercedes-Benz than Americans do? Why are American and European investment firms drooling over China’s $20 trillion private asset management market?
How come Credit Suisse’s wealth report says there are more Chinese than Americans in the Top 10% of the world’s wealthiest people? By the way, this has been the case since 2018.
If China is so dystopian, how come 10 million Chinese tourists visited the US and Europe in 2019 and yet they all returned home?
With these people, no amount of logic, statistics and chart will work.
The American and white supremacy are quite deeply ingrained. For example, there are tens of thousands of Americans who live and work in China. Of course, they don’t call themselves immigrants. They are expats! These people hang out in American bars in Shanghai and Beijing, never learn the Chinese language, or appreciate the culture. When they use VPN to come on social media, they nitpick on China.
Imperialism cannot accept others as equals.
By the way, this works in academics and media all over the West. All the “China studies” in the US, UK etc. have blatantly anti-China and anti-CCP (CPC) agenda. And “China watchers” are carefully screened to make sure they are hostile towards everything that is Chinese. 99% of these experts cannot really speak or write Chinese language.
The less you know about a country, the better is your propaganda.
Chris Rock, the African American comedian, talked about how he would be wearing a $1000 suit but the taxi drivers in NY City won’t stop for him! It’s similar to Americans living in crappy cities in Indiana or Arkansas talking about how China is poor, communist or whatever.
Of course, all this madness is orchestrated by America’s oligarchs. At the top of the Western pyramid are bankers and Wall Street overlords, who are extremely worried about China’s success. In China, the government sits above the financial class — the opposite of Western system where politicians are corporate puppets. Thus, the China model is inherently dangerous for the West, even if China is not actively proselytizing its system.
Americans are not Following the Puck
In ice hockey, there is a popular phrase: Follow the puck. You want to be where the puck will be, not where the puck is. It’s the same in geopolitics and economics. However, US elites have consistently failed to follow the puck.
In the late 1990s, political masterminds like Brzezinski and famed China watchers like Gerald Segal dismissed China’s potential and claimed that it will, at the most, be just a regional power.
In his famous 1999 essay, “Does China Matter?” Gerald Segal ripped apart China’s political and economic model. Here are some memorable lines:
At best, China is a second-rank middle power.
In truth, China is a small market that matters relatively little to the world.
China made up a mere 3% of world trade in 1997. Beijing is a seriously overrated power.
Measuring global political power is difficult, but China's influence and authority are clearly puny.
This sort of hubris is why the U.S. invited China into the WTO, ignored China’s rise, and spent the next 18 years bombing Muslim countries. Look at all the mainstream media over the last two decades, the primary theme about China was always how it was on the verge of collapse.
Americans took their eyes off the puck. Sadly, even now, they engage in the same propaganda. Bad habits die hard. Last year, there was a study — based on satellite observations of lights at night! — that claimed China has been overstating its GDP growth for decades.
But reality beats Copium. In the latest IMF report, China is expected to grow 4x faster than the US over the next two years. The IMF also said that half of the world’s economic growth in 2023 will come from just two countries: India and China.
Then there are con men like Peter Zeihan whose message is like a soothing opioid for the anxious American mind. America is still the greatest and here are 10 reasons why China will collapse soon! By the way, shrinking demographics or workforce won’t be a big problem for China. AI and robots will be transforming China in fundamental ways. (Here’s a short speech by Kai-Fu Lee on this topic).
Long-term Trend
Countries and individuals must be clear-eyed about the long-term trends (over the next 10-20 years). Are you going to invest more in emerging markets or the USA? Are your children going to study French or Chinese as a foreign language? Do you support your country going to war against Russia thinking that the entire world will isolate Putin?
The answers depend on what information you are consuming. Are you reading only Western mainstream media? If so, you might miss out on the transformational trends.
America and Europe are declining; China and Asia are rising. That’s the trend.
China will continue to be a manufacturing powerhouse, thanks to automation and 4th industrial revolution, even while offshoring many low-end manufacturing jobs. India and ASEAN countries will benefit a lot from this. That’s the trend.
China’s next development stage will also include financial services. Shanghai and Shenzhen will grab market share from New York and London. That’s the trend.
Yuan will become a global currency. Arabs will be selling oil for yuan. Saudi Arabia and Iran will end their mutual hostility. Russian energy will be flowing to India via Central Asia and the Middle East. Africa’s growth will be phenomenal. That’s the trend.
Trade and finance will get democratized. There will be financial innovations like currencies backed by commodities — hello BRICS+ — and digital currencies from central banks. This de-dollarization of global economy will empower countries in the Global South to trade with whoever they want, without being crippled by American sanctions. That’s the trend.
And my prediction: China will surpass the US by 2030. While GDP is just a number, it will be the front-page news in every newspaper around the world. It will truly symbolize and herald a multipolar world. That’s the trend.
— S.L. Kanthan