"The essence of US-China strategic competition is a struggle between economic development and domestic governance rather than a traditional hegemonic or military-security struggle."
A useful reminder that Chinese analysts are at least as prone to slanting things favorably as their American counterparts:
These quotes consistently underestimate how much value, IP, and technological capability is still within American hands when it comes to the development and fabrication of chips.
They overestimate goodwill towards and dependence on China in Taiwan and the Netherlands, doubly so in South Korea, whose sitting government seems to remember the Lotte debacle well, and triply so in Japan.
They obviously misunderstand the reality that the GOP will be more than willing to follow CHIPS up with further direct subsidies to industry, even if perhaps dressed up as tax cuts.
They still proclaim that state-led allocation of capital is more conducive to bleeding-edge technological development than market-led.
Most importantly, however, they continue to delude themselves that the US strategy plays into the hands of China's "strengths," namely its investment-led development model. For the last 3-4 years, I've seen Chinese policymakers and think-tankers desperately grasping for a reason as to why that model will continue to be world-beating, instead of already being a decade past its expiration date.
They *know* that the Party lacks the institutional capacity to shift China out of the channel that a legacy of rapid development has carved in the bedrock, and they understand that even if the Party had the capability, Xi's conception of comprehensive national power will not brook any such attempt. So everyone whistles past the graveyard, hunting for a rationale as to why it's actually a *good* thing that investment is 45% of GDP in 2022, when Wen Jiabao said consumption should take a leading role in 2011.
Let's see how that goes; I think Pettis is more or less on-point when he says the hangover from existing overinvestment has already ensured China faces a Japan-style Lost Decade (or two), but if they continue down this road further I think the collapse of the Brazilian military regime in the crisis of the 1980's is a more relevant model.
I was wondering if a "super strong dollar" policy, if it could be pursued discretionarily on purpose, is a part of the US' economic warfare v China toolkit? A lot of the supply chains which China claims to be heavily integrated into are likely low margin supply chains, and for China's economy to maintain its earnings, would necessitate RMB devaluation in step with other suppliers like ASEAN S. Korea etc. And then, given that the US would be exporting inflation to the global South with it's rate hikes and super strong dollar, would require/test price-increase power among the supply chain links, at a time of US import disruption. Not to mention the debt crises that might unfold for the heavily leveraged, overseas.
However, this strong dollar policy is drawing blood in the OECD countries and home in the US as well!