The choice is clear. Brussels can craft a policy regime that can entice Chinese capital to rebuild Europe, or watch the global economic future be built entirely without it.
Great article. But I would like to add a few notes.
1. China’s economic system consists of over 360,000 SOCs and they dominate the heavy industries, telecommunications, energy, banking and others.
They produce the inputs for the private sector manufacturing such as cars. These SOCs don’t maximise profits, they maximise affordability and accept razor thin profit margins or even losses to support the private sector.
This allows Chinese manufacturing to be incredibly cost competitive. And western economies where each stage of production is based on “profit maximisation,” simply can’t compete against the Chinese system, especially since they’re vertically integrated and they spent billions on R&D and hold the patents.
2. Energy - Again this is where the state has its hand. The Chinese have strategically invested in renewables at an unprecedented scale and this allows the entire country to access extremely low electricity prices which have barely increased in price for over a decade.
3. When former IMF head, Christine Laggard said the world was watching China transition from a low cost manufacturing nation to a high tech nation. She’s right, the world watched and the west expected China to fail. But now China is offering amazing robots, EVs, batteries, high speed railways, and etc… and it seems like the west didn’t have a plan where China would succeed this in this transformation.
Thank you — a brilliant essay, and it all makes good sense.
Essentially, the current neoclassical economic model is broken, and Europe needs to be actively building a better future instead of desperately trying to get back to the past. To build that future by partnering with China will, however, require that Europeans are able to drop their current feelings of superiority — and that in turn requires first acknowledging that those feelings exist.
I don't think Europe is ready to shift from a political and economic system that depends on externalised extraction to one that truly runs on its own energy budget. It's too early for Europe to give up on its colonial dreams. Sadly, it will choose to continue down the path of defensive protectionism and delusional coercion.
Outstanding clarity and an excellent helping hand for the EU elites, in terms of a pragmatic approach, instead of the crybaby antics and blaming everyone and anyone for Europe's problems, currently on display.
I hope you sent this to some of the finance ministers and I hope they read it. But that might be optimistic.
And I doubt the US would allow the EU to set up outside of swift.
I think one element is missing: the tie in of the carbon ( footprint) mechanism for every product in the EU. It ties in with the UN SDGs loan/ financial structure. Couple that with the things you have mentioned and the overall picture looks very bad. The insistance on the green policies no matter what is creating havoc for Europe.
Btw, Europe is not the only area halting hatchback production. The US has already done that. This has to do w subsidies. No more Ford Fiesta, Focus or any of the other players. I live in Ireland. Small hatchbacks are disappearing. The ones still on the road, like my Suzuki Swift are 10+ years old. New ones are mostly ugly, high big panel ones looking more like a SUV.
Great article. But I would like to add a few notes.
1. China’s economic system consists of over 360,000 SOCs and they dominate the heavy industries, telecommunications, energy, banking and others.
They produce the inputs for the private sector manufacturing such as cars. These SOCs don’t maximise profits, they maximise affordability and accept razor thin profit margins or even losses to support the private sector.
This allows Chinese manufacturing to be incredibly cost competitive. And western economies where each stage of production is based on “profit maximisation,” simply can’t compete against the Chinese system, especially since they’re vertically integrated and they spent billions on R&D and hold the patents.
2. Energy - Again this is where the state has its hand. The Chinese have strategically invested in renewables at an unprecedented scale and this allows the entire country to access extremely low electricity prices which have barely increased in price for over a decade.
3. When former IMF head, Christine Laggard said the world was watching China transition from a low cost manufacturing nation to a high tech nation. She’s right, the world watched and the west expected China to fail. But now China is offering amazing robots, EVs, batteries, high speed railways, and etc… and it seems like the west didn’t have a plan where China would succeed this in this transformation.
Thank you — a brilliant essay, and it all makes good sense.
Essentially, the current neoclassical economic model is broken, and Europe needs to be actively building a better future instead of desperately trying to get back to the past. To build that future by partnering with China will, however, require that Europeans are able to drop their current feelings of superiority — and that in turn requires first acknowledging that those feelings exist.
I don't think Europe is ready to shift from a political and economic system that depends on externalised extraction to one that truly runs on its own energy budget. It's too early for Europe to give up on its colonial dreams. Sadly, it will choose to continue down the path of defensive protectionism and delusional coercion.
Outstanding clarity and an excellent helping hand for the EU elites, in terms of a pragmatic approach, instead of the crybaby antics and blaming everyone and anyone for Europe's problems, currently on display.
I hope you sent this to some of the finance ministers and I hope they read it. But that might be optimistic.
And I doubt the US would allow the EU to set up outside of swift.
I think one element is missing: the tie in of the carbon ( footprint) mechanism for every product in the EU. It ties in with the UN SDGs loan/ financial structure. Couple that with the things you have mentioned and the overall picture looks very bad. The insistance on the green policies no matter what is creating havoc for Europe.
Btw, Europe is not the only area halting hatchback production. The US has already done that. This has to do w subsidies. No more Ford Fiesta, Focus or any of the other players. I live in Ireland. Small hatchbacks are disappearing. The ones still on the road, like my Suzuki Swift are 10+ years old. New ones are mostly ugly, high big panel ones looking more like a SUV.