A Thread on Thucydides Trap and Chinese dilemma amidst a Trade War
Inevitability of Sino US conflict is best explained by the change in global division of labor which has necessitated a radical shift in global balance of power.
Inevitability of Sino US conflict is best explained by the change in global division of labor which has necessitated a radical shift in global balance of power.
What is global division of labor?
Core countries manufacture high end capital intensive goods and consume imported stuff
Semi periphery ones manufacture low cost labor intensive goods
Periphery ones provide raw materials and labor
Core countries manufacture high end capital intensive goods and consume imported stuff
Semi periphery ones manufacture low cost labor intensive goods
Periphery ones provide raw materials and labor
Offshoring and investment from advanced states paved way for industrialization in China which led to transfer of technology, breakneck growth, social mobility of masses, societal transformation and improved standards of living. Result : China became the manufacturer of the world.
Now China has to 'sustain the unsustainable' in words of Graham Allison. It has to move up in the global division of labor. Chinese Communist party relies upon performance legitimacy and economic growth is indispensable for its social and political stability. This is the dilemma
In context of this, China has decided to unleash its third economic revolution which rests upon the following transitions:
1. Escaping the middle income trap
2. From Labor intensive production to capital intensive one
1. Escaping the middle income trap
2. From Labor intensive production to capital intensive one
3. Vertical mobility in integrated global supply chains. It will move towards advanced goods in a supply chains
4. Transforming high savings rate towards domestic and foreign investment
5. Production to consumption driven economy
6. Achieving technological preeminence
4. Transforming high savings rate towards domestic and foreign investment
5. Production to consumption driven economy
6. Achieving technological preeminence
7. Finding new markets for raw materials and dumping
8. Structural reforms in loss making state owned enterprises
9. Cooling off a high debt economy
10. From export oriented economy to domestic consumption framework as are all advanced states due to rising cost of labor
8. Structural reforms in loss making state owned enterprises
9. Cooling off a high debt economy
10. From export oriented economy to domestic consumption framework as are all advanced states due to rising cost of labor
11. Demographic deflation and aging workforce
"Let China sleep, when she wakes she will shake the world"
-Napolean.
The world is beginning to shake
"Let China sleep, when she wakes she will shake the world"
-Napolean.
The world is beginning to shake
"It was the rise of Athens and the fear that this instilled in Sparta made conflict inevitable"
-Thucydides
-Thucydides
