China and the supply chain problem… With the worsening of the degree of Covid closures in China recently, the secondary supply chain crisis seems to be knocking on our door. 90% of China’s 100 largest cities have lockdowns under the zero covid policy, and these closures have now expanded to include more than half of the economy. In terms of production and supply chain, a new supply chain may be at the door and this has the potential to create a new break after the last Russian war.
US companies, the new trade war dimension… And yet, China, which will be the main economic enemy in political polarization, is becoming an “opponent to beat” (target competitor). In fact, this has been the case since the Trump era, and the political change in America has not changed the direction of trade competition with China. These are not related to political movements, but to major political and economic policies. Therefore, the position of the US in the trade war with China will not change, and the global dominance will also question its production and investment decisions. As a matter of fact, American companies are in a new evaluation phase. The idea of establishing an ‘Economic NATO’ consisting of democratic countries with free markets to replace the World Trade Organization is also being put forward. The Russia-Ukraine war has reinforced ideas that it is impossible to rely on trade or investment with a country that lacks democratic norms, especially a totalitarian regime like China, where the government controls trade.
The balance of economic power… If the political break with Russia is realized and isolation is applied with an embargo dimension, a similar target will be in question for China if it becomes economically and politically aggressive. The activities of Apple CEO Tim Cook and financier Ray Dalio in China are also questioned. Cook pioneered Apple’s entry into China when he was the company’s chief of operations. Now, nearly all Apple products are gathered here, and sales in the Greater China region accounted for roughly 21% of the company’s global revenue in the last quarter. In the ENato concept, the idea is based on the necessity and adequacy of compensating the sales to China with the US and allied countries. Accordingly, any loss of revenue from sales to China could be replaced, or even increased, by increasing sales in the United States and allied countries: “It certainly makes no sense to invest in our enemy’s supply chains rather than our own.”
Strategic and economic enemy China… Let’s see what the new concept has revealed: If we list the political and economic developments that can create a break with the West;
· The Chinese Communist Party’s (CCP) brutal suppression of Hong Kong’s pro-democracy protesters
· Continued bullying against Taiwan
· Construct and fortify man-made islands in the South China Sea
· Imposing a travel ban inside China while allowing travel abroad in a global pandemic.
Well, in this conjuncture, can there be a more practical solution in terms of cheap labor costs rather than local production (the biggest problem will be increased labor costs)? After Wang Yi’s visit to India and the Biden-Modi meeting, Boris Johnson is on his way to India on 21 April. The favorite actor of the conjuncture is India..
Conclusion? The conjuncture created to isolate the countries included in the enemy pole, which the democratic Western world sees as political and economic tyrants, is giving way very seriously. Just like the political isolation on Russia over the invasion of Ukraine, Covid restrictions and political aggression can likewise bring about a Chinese isolation. This could happen if suppliers and investments are driven out of China and democratic countries invest in their own local production, which is what Trump’s trade war perspective is all about. The new supply disruptions created by China due to these Covid restrictions may also cause it to be seen as a new culprit in this concept. In other words, they will be lying somewhere at the root of the main problems that the West is experiencing, especially inflation. While Russia is waging war and causing commodity prices to rise, China is locking in mobility, causing a similar economic slowdown and price crash. In this environment, as Russia’s strategic partner and by making Russia a junior partner in terms of economic power, it will also have a position that is the main enemy of the West.
Kaynak Tera Yatırım
Hibya Haber Ajansı