Chinese Economics Thread

[CMP]

From a game theory perspective, you'd start out with the most military sensitive items first. If Japan retaliates, you slowly broaden the embargo to exert pressure.

But I'm also not particularly clued in about what this is in response to. If this is strictly about Japan's recent comments over exploring nuclear weapons, then there's a couple ways this can go.

1. You start out slow and widen the scope of the embargo with time (or in response to Japan's retaliation) until Japan gets the hint.
2. You start out with a bazooka and go for major economic damage to force Japan to either rescind their comments, or to come to the bargaining table.

On the other hand, if this is more about Japan's political direction in general... I don't really see how this ends quickly. Japan is firmly married to America's security umbrella and I don't see them getting rid of Takaichi quickly. Though if there is someone who knows a lot about Japan's politics, feel free to correct me.

Which means that this might be a long and prolonger trade war that's going to be damaging to both countries. The impact to Japan's downstream industries will be significant. Chinese suppliers tho, will also feel the pain. China is also a major importer of Japan's goods. Other than the obvious high-value SEM inputs China buys from Japan, there's plenty of machinery, electronics, medical equipment, etc. Domestic industries can probably fill in gaps, but there's still pain from switching suppliers, possible quality/yield drops. There's probably a few critical irreplaceable inputs as well. $300 Billion USD in trade volume between two neighbors is at stake.

What do you all think? Is this going to quickly escalate...? Or is Japan going to back down?

I think every stage of escalation will have clear forewarning and plenty of opportunities for Japanese surrender. I suspect Japan will not surrender and China should take this as their chance to choke Japanese industries into total failure.

 

[wuguanhui]

Doesn't this embargo potentially help the US harvest Japan?
I'm wondering how much of this was with the connivance with the Americans. Did the US prod Sanae to give China an excuse to de-industrialize Japan? Will Trump turn around to demand a handsome fee to intercede with China?

Is JP getting DP'd in a 3P with XJP and DJT?

 

[CMP]

Doesn't this embargo potentially help the US harvest Japan?
I'm wondering how much of this was with the connivance with the Americans. Did the US prod Sanae to give China an excuse to de-industrialize Japan? Will Trump turn around to demand a handsome fee to intercede with China?

Is JP getting DP'd in a 3P with XJP and DJT?

I think this is highly likely. Given recent events, I suspect Japan is being played by both sides into getting deindustrialized just like the US deindustrialized Europe.

 

[2handedswordsman]

These are the consequences of the brutal free market antagonism. Once, Toshiba, Matsushita, Sony etc made the market toxic for Chinese electronics companies to involve. Now it's different. Monopolies are good only if you are from the side of the profiteers of this kind of market manipulation

 

[AndrewS]

From a game theory perspective, you'd start out with the most military sensitive items first. If Japan retaliates, you slowly broaden the embargo to exert pressure.

But I'm also not particularly clued in about what this is in response to. If this is strictly about Japan's recent comments over exploring nuclear weapons, then there's a couple ways this can go.

1. You start out slow and widen the scope of the embargo with time (or in response to Japan's retaliation) until Japan gets the hint.
2. You start out with a bazooka and go for major economic damage to force Japan to either rescind their comments, or to come to the bargaining table.

On the other hand, if this is more about Japan's political direction in general... I don't really see how this ends quickly. Japan is firmly married to America's security umbrella and I don't see them getting rid of Takaichi quickly. Though if there is someone who knows a lot about Japan's politics, feel free to correct me.

Which means that this might be a long and prolonger trade war that's going to be damaging to both countries. The impact to Japan's downstream industries will be significant. Chinese suppliers tho, will also feel the pain. China is also a major importer of Japan's goods. Other than the obvious high-value SEM inputs China buys from Japan, there's plenty of machinery, electronics, medical equipment, etc. Domestic industries can probably fill in gaps, but there's still pain from switching suppliers, possible quality/yield drops. There's probably a few critical irreplaceable inputs as well. $300 Billion USD in trade volume between two neighbors is at stake.

What do you all think? Is this going to quickly escalate...? Or is Japan going to back down?

The longer China imposes sanctions on Japan, the faster Japan deindustrialises with military and civilian factories shutting down. Japan become less of a threat.

Those Japanese factories could relocate overseas, but they are still dependent on the Chinese supply chain and could still be cut off again in the future.

The safest option is for Japanese companies to shut down Japanese factories and relocate production to joint venture factories in China instead. They have unrestricted access to Chinese materials and components, and have political protection from their Chinese factory partners. That suits China fine.

In the long-run, the domestic Chinese market has the scale (China has a population greater than the current entire developed world) to support world-class companies in every sector.

The Chinese companies just need some time with sustained orders, so they can iterate and reach world-class levels with volume production.

---

The Japanese government is likely to be in denial in the short-term, until Japanese companies start screaming about shortages.

And the longer-term trend will accelerate as Chinese companies know they can't rely on imports from Japan.

 

[tphuang]

https://twitter.com/i/web/status/2009363363642658928

I wrote up a decently long thread here on China's ability to process heavy crude from Venezuela, but how it is also able to switch between different suppliers. The world is full of different crude supply. It seems like more purchases from Canada and Iran will happen if China buys less from Venezuela.

 

[Wrought]

India is apparently lifting their 2020 restrictions on public sector bids by Chinese vendors.

NEW DELHI, Jan 8 (Reuters) - India's finance ministry plans to scrap five-year-old restrictions on Chinese firms bidding for government contracts, two government sources said, as New Delhi seeks to revive commercial ties in an environment of reduced border tensions. The curbs, imposed in 2020 after a deadly clash between the countries' troops, required Chinese bidders to register with an Indian government committee and obtain political and security clearances. The measures effectively barred Chinese firms from competing for Indian government contracts that were estimated to be worth $700 billion to $750 billion.

The Ministry of Finance's plan to ease the curbs followed requests from other government departments that face shortages and project delays due to the 2020 restrictions, the sources said. A high-level committee headed by a former cabinet secretary, Rajiv Gauba, has also recommended easing the restrictions. Gauba is a member of a prominent government think tank. Soon after India imposed its restrictions, the value of new projects awarded to Chinese bidders fell 27% from a year earlier to $1.67 billion in 2021, according to a 2024 report from the Observer Research Foundation. Specifically, curbs on imports from China of equipment for the power sector have hindered India's plans to raise its thermal power capacity to about 307 GW over the next decade.

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[dingyibvs]

Doesn't this embargo potentially help the US harvest Japan?
I'm wondering how much of this was with the connivance with the Americans. Did the US prod Sanae to give China an excuse to de-industrialize Japan? Will Trump turn around to demand a handsome fee to intercede with China?

Is JP getting DP'd in a 3P with XJP and DJT?

I've written what I believe to be China's overarching goal before, which is to win an all aspect conflict with the Western-led world order. As such, who harvests whom within that order doesn't really matter, so long as the order in its entirety weakens.

 

[AndrewS]

I've written what I believe to be China's overarching goal before, which is to win an all aspect conflict with the Western-led world order. As such, who harvests whom within that order doesn't really matter, so long as the order in its entirety weakens.

Well, China becoming technologically advanced (and therefore prosperous) should be the end goal.

And because China has a significantly larger population that the combined West, a byproduct is that China would have a significantly larger economy, which is the foundation of all other forms of power and influence.