| | | Almost every element wrong in some measure...
The author seemingly knows nothing of economic history or the history of trade.
"Globalization" is presented as a universal proxy of the benefits of trade (or, as if it is "free trade"), ignoring that, as it is used, the globalization they present is a form of protectionism... mercantilism being NOT free trade... but, a restrictive and limiting form of state control and direction of commerce... that seeks to capture, limit, contain and channelize its benefits, denying market access to all but those "approved" participants...
China reaching wage parity with the rest of the world... removes much of its relative market advantage... and it forces costing in other features of trade with China that were gladly ignored while wages were still below market.
Covid coincided with and in part masked, or was blamed for creating and accelerating changes, that were already occurring anyway. Mercantilism's failure modes... are brittle... and inescapable. (Or, the escape is in change terminating mercantilist policy... which the Xi branded CCP will not allow, and likely cannot survive.)
The drivers of that change are deep rooted, and now well and fully entrenched...
The west supported China's development with investment and trade for 40+ years... not only for altruistic reasons, obviously... That period of "the tide coming in" for China was made possible, first, and enabled by the incremental policy change following that period in which communism had destroyed China's economy.
Global equilibrium being restored... doesn't mean the tide can just keep rising ?
So China is going to have to compete, from here... without relying on others gladly subsidizing the costs of enabling trade with China...
that
Globalization is failing... which doesn't mean trade outside the broken system is failing... or that the only or most obvious alternative to mercantilism is protectionist... it only means mercantalist controlled trade is failing, as mercantilism has reach and exceeded sustainable limits. Market participants, who do have rational choices to make, are opting out, now... and will continue to do so... not due to ideology... but to economic reality being realized... as, once at wage parity, other features of systems and many incremental costs other than costs avoided by exploitation of low wages, comes to dominate the competition...
Doesn't mean change occurring will be rapid, steady, or invariable... but, yes, irreversible.
China's reaching limits... does also mean the inflation problem is here to stay... as the dislocations of value in trade as "exporting deflation" from China, or "exporting inflation" from the U.S., is also a product fully dependent on the disparity in wages and other "costs of business" that parity requires recognizing. |
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