Trump 2.0 official thread

[GZDRefugee]

The just-in-time planning for factory production was a wonderful advancement.

I believe it was first done in a big way in Japan, and it spread worldwide.

The world would not have grown like this, and China would not have risen this fast without just-in-time manufacturing. China Inc owes a lot to this economic/managerial concept.

The problem today, seems rather basic.

The West, to name three prominent persons, President Trump, von Der leyen, and Biden, all wanted to decouple from China on their terms and use the supply chain as weapon.

In essence, the West was going after the just-in-time manufacturing, to derail China's development.

Well, of course, that plan never had a chance, because that was totally ignorant of the facts, that China being the factory floor for the world, already owns the means of production, mostly of it, like upwards of 95%, all of that is in house. Or inputs were readily available through ASEAN, or Russia, or Germany.

The West by weaponizing the supply chain, is very detrimental to West companies, because that pushes up costs, meaning less money is made, which is slower economic growth. To get rid of just-in-time manufacturing will do that. To keep elevated levels of inventory will hurt the bottom line in the long run.

China does not have that problem. Since China manufacturing is that big, just-in-time will continue, business as usual.

Correct me if I'm wrong but as an exporter, wouldn't China benefit more from corporations maintaining stockpiles? They would purchase more inputs and components from China than the bare minimum, leading to greater demand and profits.

Corporation bottom lines also rarely benefit society at large as surplus value ultimately ends up in the pockets of shareholders rather than the pockets of workers themselves. Wealth concentration in a few is not conducive to healthy economic growth.

Therefore I must disagree with your thesis that just-in-time has been more beneficial than a more robust logistics scheme.

 

[siegecrossbow]

"If AI is the reason Americans are being let go, why are companies still asking for hundreds of thousands of foreign tech workers?"

Because to some "AI" stands for "actual(ly) Indians".

Sad thing is even with all the rampant outsourcing, the unemployment situation in India is still very high. From what I've read youth unemployment makes U.S. and China look like a joke.

 

[manqiangrexue]

Correct me if I'm wrong but as an exporter, wouldn't China benefit more from corporations maintaining stockpiles? They would purchase more inputs and components from China than the bare minimum, leading to greater demand and profits.

Corporation bottom lines also rarely benefit society at large as surplus value ultimately ends up in the pockets of shareholders rather than the pockets of workers themselves. Wealth concentration in a few is not conducive to healthy economic growth.

Therefore I must disagree with your thesis that just-in-time has been more beneficial than a more robust logistics scheme.

This ain't just business anymore. This is about trade and tech war.

 

[GZDRefugee]

This ain't just business anymore. This is about trade and tech war.

I understand that but consider this for the moment.

China's position as factory of the world will not change if a more robust logistics scheme were commonly used. China already once dethroned Japan and South Korea from their positions in the supply chain. If corporations were to maintain stockpiles, their continuous appetite would demand even more inputs and components from their suppliers. To keep up with this demand, the owner of the means of production would have to scale up their own infrastructure—China's control over global manufacturing would be even more outsized than it currently is because there is no viable alternative who can reach the same point on the optimization plane between cost-depth-skills.

Wouldn't this be a monumental advantage in tech and trade war?

 

[CMP]

I understand that but consider this for the moment.

China's position as factory of the world will not change if a more robust logistics scheme were commonly used. China already once dethroned Japan and South Korea from their positions in the supply chain. If corporations were to maintain stockpiles, their continuous appetite would demand even more inputs and components from their suppliers. To keep up with this demand, the owner of the means of production would have to scale up their own infrastructure—China's control over global manufacturing would be even more outsized than it currently is because there is no viable alternative who can reach the same point in the optimization plane between cost-depth-skills.

Wouldn't this be a monumental advantage in tech and trade war?

No, because then foreign companies would have buffers to withstand trade shocks, strengthening Western hands. JIT is a net advantage to China.

 

[manqiangrexue]

Sad thing is even with all the rampant outsourcing, the unemployment situation in India is still very high. From what I've read youth unemployment makes U.S. and China look like a joke.

China's youth unemployment is the stand-out here. It's not a function of a poor economy like it would indicate in most places; it's a function of the Chinese mindset, which is that nobody wants to just be an average guy making a living and everybody wants to be part of the white collar/gold collar elite. The advantage of course is that this society progresses quickly on the ambitions of the people, but the underlying illness is that no one wants to work the common jobs that are the foundation of a functioning society. It's to the point where young people will get as educated as possible, then spurn jobs they see as beneath themselves and their education levels so they'd rather sit at home doing nothing or self-studying than pick up an available menial job. I say this is an illness but I am no exception at all. I want my kids to be scientists, outstanding young Chinese scientists with contributions to the nation, the absolute bane of any anti-China/pro-Western pundit. And if someone were to tell me that China needs more regular folk to wash dishes and fix cars so I should be happy to let my kids end up there, I'd tell him he should mind his own fking business and his whole family can go plow fields.

I understand that but consider this for the moment.

China's position as factory of the world will not change if a more robust logistics scheme were commonly used. China already once dethroned Japan and South Korea from their positions in the supply chain. If corporations were to maintain stockpiles, their continuous appetite would demand even more inputs and components from their suppliers. To keep up with this demand, the owner of the means of production would have to scale up their own infrastructure—China's control over global manufacturing would be even more outsized than it currently is because there is no viable alternative who can reach the same point in the optimization plane between cost-depth-skills.

Wouldn't this be a monumental advantage in tech and trade war?

Apparently, the CCP has decided that it's a better advantage to hobble Western industries right now. Maybe they sense that Ragnarok is near. Maybe we are at an inflection point where China expects its tech lead to grow to the point that it can dominate the future without rare earth bans, and the current actions to jerk Western nations back, will help realize this balance quicker. In the end, rare earth control is still just a tool to help claim a throne, not the throne itself.

 

[GZDRefugee]

No, because then foreign companies would have buffers to withstand trade shocks, strengthening Western hands. JIT is a net advantage to China.

JIT is on its way out as countries reorient on ideological and realpolitik conditions. The buffers still have to come from somewhere. As of now, there's only one place that can produce those buffers.

Apparently, the CCP has decided that it's a better advantage to hobble Western industries right now. Maybe they sense that Ragnarok is near. Maybe we are at an inflection point where China expects its tech lead to grow to the point that it can dominate the future without rare earth bans, and the current actions to jerk Western nations back, will help realize this balance quicker. In the end, rare earth control is still just a tool to help claim a throne, not the throne itself.

Yes, I can see two ways to go about it. Burn it all down and seize the throne while everyone is still scrambling to adjust or de-escalate and grow the lead further. The mine to end user tracking suggests the former. China will likely make its move before alternative supply chains come online in ~10 years.

 

[CMP]

JIT is on its way out as countries reorient on ideological and realpolitik conditions. The buffers still have to come from somewhere. As of now, there's only one place that can produce those buffers.

You're judging origin of inventory as being the exact same in macroeconomic terms for China as current location of inventory at any given time. That is true enough, but from a corporate, trade war, and supply chain perspective, those two are not equivalent at all. This is a meaningful distinction. I suspect from your reasoning that you have likely never worked in logistics, procurement, supply chains, etc. In this case, you are absolutely missing the trees for the forest. Please just accept that it works to China's advantage to prevent foreign countries from building up reserves outside of China vs JIT inventory. Yes, I know some companies are moving away from JIT already, but it works to China's advantage to delay or halt that process as long as possible.

 

[Dante80]

China will likely make its move before alternative supply chains come online in ~10 years.

Alternative supply chains can be actually spun up pretty quickly if needed. See what happened 10 years ago, in both the US and Japan.
The problem is cost. Which will be subsidized if push comes to shove.

China knows this, which is why they are using strategic materials as a bargaining chip, not a weapon. Wisely I might add, given the context at hand and who they have to deal with.

 

[GZDRefugee]

You're judging origin of inventory as being the exact same as current location of inventory at any given time. Those two are NOT equivalent for supply chain purposes. From the perspective of a large company's operations, it is an absolutely meaningful distinction.

I suspect from your reasoning that you have likely never worked in logistics, procurement, supply chains, etc. In this case, you are absolutely missing the trees for the forest. Please just accept that it works to China's advantage to prevent foreign countries from building up reserves outside of China vs JIT inventory. Yes, I know some companies are moving away from JIT already, but it works to China's advantage to delay or halt that process as long as possible.

You are correct. My exposure to these dynamics come from a stint doing data science for banks. I'm certainly not a SME.

Wouldn't the current export restrictions only cause greater urgency in on-shoring production?

Alternative supply chains can be actually spun up pretty quickly if needed. See what happened 10 years ago, in both the US and Japan.
The problem is cost. Which will be subsidized if push comes to shove.

China knows this, which is why they are using strategic materials as a bargaining chip, not a weapon. Wisely I might add, given the context at hand and who they have to deal with.

Scale does matter though. Can the US spin up the power generation, mines, refineries and train the workforce to staff those fast enough to continue containing China in the west Pacific? Between historical trends of NIMBYism, project delays and cost overruns, I'm not particularly optimistic.