The USA started a proxy war against Russia, and in the unintended consequence was pushing Russia into the orbit of China. It was a huge geopolitical mistake. What the USA did not foresee, despite all the touted geopolitical advisors in the White House, was that Russia and China are now complementing each other in ways never envisaged and supporting each other to the chagrin of the USA and the Europeans. Russia's cheap discounted energy is helping China to be even more competitive, while Chinese companies are investing in Russia, taking over the logistics left behind by Western companies. Now the USA and the Europeans are trying very hard to pry them apart. It is not going to happen. The USA and the Europeans now have to deal with two nuclear powers, not to mention North Korea as well. Which is why starting a war with China is not a sure win bet for the USA and the Europeans, although they are nevertheless keen to try their luck to try to save the empire. What do we call that? Not a big mistake I suppose.
The second big mistake was underestimating the resolve of China over the last three or more decades, when China was busy mopping up rare earth resources, essential metals, essential minerals, setting up refining logistics, building bridges with countries for resources and building infrastructures for them in exchange, launching the BRI and most of all the formation of BRICS, all done under the nose of the West. Just a couple of years ago the USA was nonchalant when talking about BRICS, brushing it aside as a threat and claiming that it is just an irritant against the mighty US$. After all, what can chefs, laundrymen and peasants hope to achieve, or so they thought. Now, it is too little too late to try to curb the rise of BRICS. Sure, de-dollarization will take time, maybe decades, but the writing is on the wall and Trump is desperately attempting to counter BRICS with all kinds of threats. Is this not another big mistake as well?
The third big mistake was starting the trade war. We are used to the saying and should heed the saying that people in glass houses should not throw stones. Trump ignited the trade war, China retaliated and USA farmers are suffering the consequences or collateral damage. Now, Trump is begging China to help USA farmers. China did not start the trade war that led to the farmer's plight. Trump himself started that. Was that trade war against China by Trump not another big mistake?
Finally, the tariff war is turning into another big mistake made by the USA. China's trade with the USA is going downhill fast, so any threat of tariff increases is not going to rattle Xi. Trump can now raise tariffs to 1,000%, which China will just look upon as academic. That 10% drop in tariffs by Trump after his meeting with Xi in Seoul means nothing and Xi is not even interested in hearing about it. Less Chinese goods for the USA means less tariff collection for Trump, maybe good for USA consumers as they are the ones paying it. But on the flipside, USA consumers still have to contend with more money chasing fewer goods, which still means leading to higher inflation. That in my thinking, is another big mistake down the road.
When your enemy is shooting itself in the foot, do not tell them it is going to be painful. Just watch, leverage your bets and benefit from the opportunity.
Anonymous
1 comment:
Another big mistake in the making comes after the Nexperia seizure and China's retaliation. The European subsidiaries of Nexperia, and possibly those in the USA, are reported to be ganging up not to supply their wafers to Nexperia in Dongguan. China is unfazed and has pivoted to domestic and other sources while assuring customers that production will continue as usual in the face of such a threat.
China controls 80% of the global silicon production and also controls Gallium, the components of semiconductor wafers. That brings to mind the argument of which comes first - the chicken or the eggs? The Europeans can hold on to the eggs, but without the chicken, where are more eggs going to come from? Without the silicon, can the Europeans control wafer production in Europe and USA while trying to stifle China? It is more like cutting the nose to spite the face without looking at the consequences.
What the Dutch does not fully realize is that such a move is detrimental to European, USA, Japanese and Korean vehicles makers as well. If Nexperia Dongguan is starved of those wafers, and is really decimated by it, it is also hurting its customers around the world. That move, as many are saying will force China to become the wafer capital of the world in no time, and put those in Europe out of business.
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