Start of the end of China’s Domination of the supply Chain

 Start of the end of China's domination of the supply chain.

The spread of the COVID-19 pandemic with China at its centre, either intentionally or accidentally in 2020, has emerged as a boon to China's trade and economic dominance. Its rapid spread in most parts of the world has provided China a greater outlet for its products. When most of the world was closed to stop the spread of the virus, China was apparently open for business. Then the world started to recover. The vaccines did their part and extraordinary precautions were taken to allow the world to control the pandemic. By July or August of 2021, sufficient progress had been made for the world to recover.

What was unknown at the time was the impact of pandemic on China itself. Their vaccines were 50% effective and guess work was that Chinese are as badly impacted by the virus as others. Yet they kept their factories humming for exports.

There are two aspects of their exports 1). Merchandise exports. 2). Exports of supply chain intermediaries. There are other aspects of Chinese perfidy, that include labour exports for building and construction (BRI and CPEC roads), ports and container terminal construction for willing countries in Asia Pacific. Chinese tell us that they continued uninterrupted as they pretended that the Covid -19 virus had not impacted China…..But is that the truth?

Also, since 1999, the Chinese have been spending huge sums of money on infrastructure building with brand new roads, people housing, dams and water works to enhance urban lifestyle and increase food production etc…. etc. This was all financed by export revenues and U.S. FDI (about $1 trillion over 10 years). On the surface, it seemed amazing. Their gleaming cities, brand new skyscrapers, new roads and new everything made them the envy of the rest of the underdeveloped world. The Chinese even subsidized city tours of China for the tourists to come and see. The returning tourists saw it all on the surface, but at the bottom of the interior was a decay that the communist government had covered up. It was a very poor quality hasty build devoid of any quality.

As the world bounced back from the shock of the pandemic in July or August 2021, the Chinese economy started to rot.

Over the past 20 years, the Chinese propaganda machine has spent about $10 billion a year to bribe the media around the world to get their positive views across. Actually, they were successful. Everybody had a positive opinion about China. Then came the bad news……

First bad news in September 2021, was loan default of a very big Chinese real estate company with $300 billion loans which stayed unpaid. Then came the news of a huge power shortage which had blacked out half of China’s industrial heartland. Since there was no power, hence export factories suffered production losses. The ever dependent West found its shelves with a lesser and lesser variety of consumer products. Although the consumer after pandemic was not in a spending mood, they realized that certain everyday items like cars and other industrial products assembled locally of Chinese parts are in short supply. In fact car assembly lines which use computer chips have stopped production altogether……what a mess! Many other products have gone down the same path. The net impact was that Chinese made fake products appeared in the market, ruining the product reputation.

Inside China, excessive rainfall has devastated rural areas. Roads, bridges, small dams, housing, etc. were washed away, adding to the misery of over ambitious Communist government. We only hear from the people’s report, but the Chinese government kept mum.

On top of that since 2008, Chinese with excessive cash at their disposal began a huge military buildup. Their main aim, to dominate the world. In 2020, they picked up a military fight with India in the Himalayas inhospitable land. This year, they are making a serious effort to grab Taiwan back to Chinese rule. The success of these two misadventures is uncertain because India presented an iron fist and to save Taiwan, world powers (USA) are standing by. The Chinese have not relented to these claims.

Hence, where do we stand opposite Chinese ambitions. ….. Their "supply side" has been disrupted as Western consumers buy fewer Chinese products. The Pandemic has ruined their reputation at the cash counter.

With the forgoing, the world’s knowledge of impeding multiple bankruptcies and no power to run the factories has forced them to develop an alternative supply chain. It may take ten years for the West to do that, but it shall be done. And if to shore up their internal situation, they continue their fight in the Himalayas with India or invade Taiwan, then the Chinese reputation of supply chain, consumer goods heaven is permanently ruined.