Friday Haymaker
LVG's "The Wrong Question to Ask"
Hello, Subscribers:
Louis-Vincent Gave makes a strong case for a multi-lateral world in his piece just below, titled The Wrong Question to Ask.
Summarizing without giving away too much, there are things the American economy and American industry at large are well-designed to lead the world in both innovating and producing. Likewise, China’s manufacturing base, pioneering efforts in key industries (automotive among them), and incalculably large workforce are primed to outperform virtually every country on earth in key areas and always at massive scale. There are also arenas in which direct cooperation between East and West stands to benefit both sides, far more than prolonged and questionably reasoned conflict could ever be.
With semiconductors, the U.S. has seen over-engineering undercut profitably and/or competitive business fundamentals. As for China, their astronomical industrial growth has led to serious problems in their real estate sector, a direct result of resource over-allocation. In such a reckless economic arms race, both sides will inevitably blunder through haphazard investment, myopic strategy, or some terrible combination of the two.
Core to Louis-Vincent’s argument is his contention that while American economic might remains extraordinary, it is no longer alone at the top, and hasn’t been for some time. And since China’s ascendance has been so beneficial for Western economic activity and growth, anything short of an efficacious partnership is tantamount to economic self-harm for all involved. President Trump himself seems to have adopted a less antagonistic stance towards the Middle Kingdom, perhaps because he realizes we have lost or failed to develop an edge in some areas (rare earths?) and would like to smooth things over until greater parity is reached. Just a guess.
For Team Haymaker’s part, we would like to see China’s emergence as a co-world leader amount to real social reform on their home front. It’s true that the U.S. has no right to dictate terms to a sovereign nation. Still, as East and West grow more economically intertwined, one can hope that constructive ideas and values might circulate freely across both regions. The United States has its own domestic problems, enough to keep us occupied for another few election cycles. But, we are perhaps in a decent enough place to insist that our largest competitor and most consequential international partner tidy itself up with respect to human rights. It might leave us better equipped to help shape what we hope will be a wisely shared future in the rest of this already remarkable century.
The Haymaker Team
The Wrong Question To Ask
Louis-Vincent Gave
One of the questions we hear most often from clients is whether—and when—China will catch up with the US on the latter’s chosen battlefield: high-end semiconductors. Can China ever bypass the ASML–TSMC–Nvidia triumvirate? But perhaps that has been the wrong question all along. Beijing’s recent move to bar Chinese tech firms from using Nvidia chips certainly points this way.