China Seeing Robust Post-COVID Rise While US Economy Under Biden is Losing Steam, Author Says
18:17 GMT 29.10.2021 (Updated: 13:36 GMT 06.08.2022)
© AP Photo / Ng Han GuanThe Evergrande headquarters, left, stands in Shenzhen, China, Friday, Sept. 24, 2021
© AP Photo / Ng Han Guan
The Biden administration has only itself to blame for losing the post-COVID recovery competition to China, says Thomas W. Pauken II, a Beijing-based Asia-Pacific affairs commentator and author, who predicts a further spike in foreign investments to the People's Republic.
In the third quarter the US economy grew at its slowest pace since the end of the 2020 recession due to supply chain issues and marked deceleration in consumer spending, the Commerce Department reported earlier this week. For her part, US Treasury Secretary Janet Yellen admitted on 24 October that inflation would persist until the "the middle to end of next year," while former Treasury Secretary Larry Summers is suspecting that it is spinning out of control.
Meanwhile, China's National Bureau of Statistics has announced that the country's economy is recovering at a steady pace. China's total GDP increased by 9.8 percent in the first three quarters of 2021 compared with one year ago, after the deduction of the impact of inflation. Earlier this month, the New York Times revealed that Wall Street moguls are enthusiastically stepping up investments in China despite warnings from dinosaur financier George Soros who has called the trend a "tragic mistake."
Sputnik: What's behind China's economic agility and investment attractiveness?
Thomas W. Pauken: Very simple: It’s all about supply chains. China has performed much better at strengthening its supply chains than any other nation has. Accordingly, the country can better adapt to unexpected disruptions, so-called "black swan" events and find ways to return to a "new normal" amid the ongoing Covid-19 pandemic.
But let’s address other parts of the question. The US economy stood woefully unprepared to handle the Covid-19 pandemic last year and this year more Americans have died from Covid than last year. That’s very embarrassing since Biden was elected to contain the virus but he has proven to be unqualified for that role. Accordingly, his administration has failed to resolve supply chain disruptions.
For months, the Los Angeles and Long Beach international ports in California were running way behind schedule to unload and re-load containers of goods on cargo ships and we have many dozens of ships waiting offshore to enter the port to make deliveries.
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22 October 2021, 17:40 GMT
They have waited weeks and in some cases months to enter the port. The backlogs should have been addressed immediately, but the man in charge of US ports is Pete Buttigieg, US Secretary of Transportation. When US ports had emergencies, Mr. Buttigieg had applied for and was granted two months parental leave. He failed to assign a “point man” to take over the role in his absence. The Biden administration has taken clumsy measures such as this to resolve supply chain disruptions. We should anticipate more tomfoolery to occur in the future, so long as Biden and the Democrats are in charge of the White House. Consequently, soaring inflation rates and shortages of goods at US-based retail shops could become more permanent features of the US economy.
The inflation problem is not ‘transitory’ as Biden’s officials and the US media are claiming them to be. Therefore China will attract more inbound foreign direct investments and the domestic economy stands poised for more growth but mainly by default.
North American and European supply chains are totally broken and the Western markets must rely more on Chinese imports to narrow the gaps, this explains why China’s global trade figures remain so robust this year, despite more and more nations threatening to de-couple from China’s economy. They were just bluffing while still closely working with Chinese manufacturers and exporters. Strong supply chains make for a strong economy.
20 October 2021, 19:35 GMT
Sputnik: The New York Times reported in early October that top Wall Street investors, including JP Morgan and Goldman Sachs, are pumping money into China, much to George Soros' displeasure. What's behind this in your opinion? Could the US economic slowdown prompt a job and capital outflow from the US to China?
Thomas W. Pauken: Wall Street bankers have concluded the US economy is headed for a tail spin and they are searching for better global investment venues to place their money at. China’s economy remains resilient and that will continue onward. The US stock markets have risen too high in recent months and that’s setting the stage for a bubble to pop there. The European markets as a whole seem to be doing even worse than the US so the best places for mid-term to long-term investments are in the Eastern Hemisphere with China and Southeast Asia looking more attractive for investors.
George Soros is no longer perceived as a guru for investors. He had enjoyed enormous success as hedge fund manager a few decades ago but old age and his political activism obsessions have destroyed his ability to think like a genius investor. Perhaps, he no longer cares about chasing after money so he is craving after power and influence instead. He lost his touch as a successful investor and there’s no turning back the clock in this matter.
7 September 2021, 12:17 GMT
But in regards to jobs and capital fleeing the US and pouring into China, I forecast Southeast Asia stands in a better position here. The Chinese government will continue to impose strict international travel restrictions until the latter half of next year and that will result in fewer Americans wanting to live and work in China. China’s social distancing measures to curb Covid are very strict and foreigners will not likely appreciate that. I believe Singapore, Malaysia, and Vietnam could see higher capital flows and Americans coming to work in those countries as the warm climate and less-strict Covid measures enforced there will appeal to many Americans.
Sputnik: Shenzhen is often referred to as a glaring example of China's economic success and technological rise. What was the major driving force for Shenzhen's growth and how could you explain the mind-boggling speed of China's "Silicon Valley's" development?
Thomas W. Pauken: I've startef to write a book about Shenzhen and when digging deeper into the research I discovered that the city succeeded for a number of reasons, China’s Reform and Opening Up introduced by the late Chinese leader Deng Xiaoping in December 1978 was the lightning bolt that paved a path of riches for the city and the surrounding Greater Bay Area.
The launch of the Shenzhen ‘Special Economic Zone,’ (SEZ) in August 1980 was the spark that transformed the city into a hub for manufacturing in the 1980s and 1990s. By the turn of the millennium – year 2000 – local officials and the business community changed focus to promote innovation to become the world’s main manufacturer for hardware to produce electronics devices and their respective components.
A decade later – Shenzhen jumped into software development and design. Accordingly, Shenzhen had developed the world’s best eco-system for hardware productions and could soon surpass California’s Silicon Valley as the developer of software upgrades. That’s why Shenzhen has succeeded and will continue to succeed for the years and decades to come. "Shenzhen speed," plays a crucial role in the city’s success story. Shenzhen residents work hard and work fast.
27 April 2021, 10:51 GMT
Sputnik: Previously, the Trump administration threw sand in the gears of Beijing's Made in China 2025 ambitious plan by severing supplies to China from Western producers of chips and semiconductors. Does the US have the power China's technological development, in your opinion?
Thomas W. Pauken: Washington can try and at times they might succeed at causing some disruptions to China’s hi-tech progress, but in the long run they are harming themselves more so than China. The US eagerness to rush towards decoupling against Chinese hi-tech firms will force Beijing to promote the "dual circulation" policy further and that will push ahead on trends for localised industrialisation, R&D science and hi-tech developments and consumption. China will succeed either with globalisation or with localisation.
Could China outpace the US and become the world's technological powerhouse, in your opinion? If so, what are the major preconditions for that in China's economic system and mentality?
Thomas W. Pauken: China’s supply chains and eco-systems for the science and hi-tech industries will create the right conditions for the nation to become an economic powerhouse but for the country to emerge as number one in the world that’s not for certain. The US, Japan and Europe will hold prominent positions in the tech industry and look for India to rise higher in status here. If China rises on top as the world leader of tech – that will take another decade or two to happen. More time and patience would be needed here.
Thomas W. Pauken II is the author of US vs. China: From Trade War to Reciprocal Deal.