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The China Conundrum – are we headed for a supply chain meltdown? (diginomica.com)
107 points by Sequenza 27 days ago | hide | past | web | favorite | 120 comments



We are in process moving a product line from China to Canada as result of the 25% tariff. Fact is, the product was migrating to North America anyway as prices from China increased, and product innovation has not kept pace. It difficult to fully state how the lack of foreign competition, protection, and subsidy has created inefficiencies and other problems across large sections of Chinese goods. Youtube bloggers ADVChina and serpentza are good places to start in understanding the scope of difficulty.

I have one former Chinese partner in China, now far too successful to care anymore, who described it to me this way... You have farmers and one generation down from farmers managing the largest and arguably most complex political-economic situation in the world. The expertise is simply not there at the highest provincial and central levels, where its desperately needed. The political will isn't there to rebalance.

The meltdown won't just be the supply chain. China's military will impact the nature and breadth of the decline.


My previous employer tried the same in 2015 with both BC and Washington with Oregon. We scrapped the plan after 6 month of the pilot plant keeping failing.

Finding cadres was really tough even for the simplest things. Finding a guy who can program a particular brand of chipshooters took 2.5 months. We found a single guy in all BC/Washington/Oregon area, and he demanded 100k+ for something that I can teach a highschooler to do. In Shenzhen, I'm 100% sure that I will get few solid applicants on day one for just any machinery brand.

Simple assembly line workers. 50k+ undergrad students were horrid workers, with terrible discipline. 70k+ masters students, just a bit better. People with years of work experience and 80k+ expectations finally did that, but they were still spending more time wiring simple electric bikes than Chinese highschoolers do. At that stage, we decided to stop.


>Finding a guy who can program a particular brand of chipshooters took 2.5 months. We found a single guy in all BC/Washington/Oregon area, and he demanded 100k+ for something that I can teach a highschooler to do.

So why did you waste 10 weeks searching for a candidate, when you could have so easily trained an entry-level employee?

It seems like your firm either failed to engage suffiently talented recruiters, or possibly failed to set the compensation offered appropriately.


We did not hire him, and I kept doing it myself.

Before, in my whole life, I only touched high end chipshooters less than 10 times.


Most people who need that sort of work done can't do it themselves, and people who can do it are rare in the US. It sounds like the one guy you found knows his value and charges accordingly. I admire him for that. What you charge for your time should be based on the value you return, not how hard your work is.


Good luck paying cleaners then. They provide a lot of value (keep the office 1+ month without cleaning)


As Joe-Z says, there's a large supply of cleaners available which keeps wages down. I'd add I would pay a premium for really good cleaners. A company that employs cleaners who can clean properly and who understand the ways tech workers think would be able to charge more. For example, not moving people's monitors when they clean desks...


Yes, cleaners do provide a lot of value, but there‘s also a huge supply of people willing and able to do that job

supply/demand


And if you've got an office full of sensitive material, you will and do pay a significant premium over what you'd pay to clean an office full of of help-desk employees.


Damn cleaners with security clearance.


Its probably about the compensation. The entry-level employee in u.s. probably was much more expensive and would do less "motivated".

And these skinny guys from the technical focused highschools there, can spend 14 hours doing your tech stuff on the screen + 6.5 hours a day playing DOTA at a massive smoky "smoke-to-death" Lan-house or cyber cafe or whatever its called nowadays. 7 days a week, 28 days a month.

And when this one brakes you take the next one on the line. Too many people.


Can I inquire how you recruited and what your minimum requirements were?

It seems like you said something a highschool students could do but then you discuss masters degrees.

I've personally found that a lot of employers still hire like it's 2009 during the great recession. Sometimes these days you have to be more creative. Like hire an additional manager at $80k and then hire workers at $40k and have that manager be more hands on.

When an economy is expanding, it is statistically impossible to fill all positions with experienced workers because there are now more jobs than there were before but the same amount of experienced workers. The opposite is true during recession when the economy shrinks. In that case there are a surplus of experienced workers because the amount of jobs have reduced.

Please don't take that as criticism, I just wanted to shed some insight into hiring based upon the rate of growth in an economy.


Yes, we surely tried the usual "worker demographic," but got people who can't distinguish volts from amperes and miswiring simplest assemblies even with the most detailed assembly instructions possible...

Electronics assembly requires at least a high school level knowledge of things like physics for a person to just to have an idea what, and what for he is doing, and what each component does.

It does not work as a "fully mechanistic process" where assemblers are treated as brainless robots. It requires cognitive skills, despite of high class "creative" people hating to admit that.


> Electronics assembly requires at least a high school level knowledge of things like physics for a person to just to have an idea what, and what for he is doing, and what each component does.

At least in the state where It each, that means they know nothing about physics. Literally, all that's required is an introductory course split between chemistry and physics. Time constraints means the second one usually gets thrown under the bus, and they barely talk about the laws of motion, let alone electricity.

So, basically, these employees probably do have high school level knowledge of physics.


I think what is really meant is science literacy. You need some sort of context to be able to understand the meaning of resistance, polarity, serial vs. parallel etc. It isn't that hard of course, but when there is maybe a hundred different things you can't purely memorize them all and expect to be efficient, especially not when things change.

That said, basic physics in bloody useful as well. I was always a shitty student, but I am constantly surprised people can't even figure out that they need to use physics to know certain things. In contrast with things like economics, physics is actually quite forgiving for the layperson when it comes to casual discussions about e.g. transportation.


It was stupid on my part, but I remember being surprised in an undergrad Physics I lab when our inclined plane motion experiment matched predicted results so accurately.

I went to a decent high school with science labs, but most knowledge seemed so abstract. How often do you do accurate chemistry in everyday life?

Classical mechanics, on the other hand, is most of life. Everything moves. And it felt pretty magical that suddenly I had math that could predict the future.


If your manufacturing process requires your line workers to be making judgements that necessitate "distinguish[ing] volts from amperes", you have a fundamentally flawed manufacturing methodology that cannot and will not scale (as you apparently have seen firsthand).


> If your manufacturing process requires your line workers to be making judgements that necessitate "distinguish[ing] volts from amperes", you have a fundamentally flawed manufacturing methodology

This way of "thinking" is what has happened to manufacturing industry in the states.

It works totally fine in factories staffed with thousands of "poorly educated" workers in China, but not in USA. Why?


Chinese workers aren't poorly educated as such, even if those still exist of course. Contrary to popular belief what make China succeed in manufacturing is ample supply of semi-skilled workers. A lot of Chinese factories aren't that sophisticated overall. In a smaller factories equipment might be domestic Chinese or second hand Japanese/Korean equipment. Every few days, or even multiple times an hour, the machines needs help or maintenance. A light will go red and a machine operator will come an poke it for a bit until it works again. Poking a machine a bit is like a revered hobby in the west, if not a $100k job. And you can barely buy a screw retail. All so the rich can get richer through rents.


This is a good point. It feels like we've chased hyperefficiency in the West by specializing processes and workers.

The end result is that you have great jobs, but no good jobs. Because you've eliminated room for them in the economy.


Or even worse, we still a lot of the really crappy jobs. Where people have no education and very little security. Basically anything that requires some sort of community seems to be diminishing. Which is really the multiplier for human activity. Seemingly even nurses, teacher and policemen are struggling now and it is hard to deny that those professions are pretty crucial to society.


So, I can speak to some of that authoritatively. I work in enterprise process automation and date a nurse.

From what I see, any deterministic back-office job that can be documented is gone by 2024 in leading enterprise companies (various tech). With first-order analysis jobs following in another 5 years (basic feedback ml).

In critical professions, there's a labor-vs-capital struggle. There's a critical shortage of workers (e.g. a nurse can get a job anywhere, tomorrow), but they're seen as cost-centers by the for-profit companies that are managing most of the employers (i.e. hospitals). So you get sluggish wage growth and chronical overwork / shortages as the management companies optimize for financials by delivering just enough service.


"light will go red and a machine operator will come an poke it for a bit until it works again"

This was exactly what I remember, and literally the guy will take a tool that is not a hammer, a screw-wrench, and hit the shit out of the machine like it was a hammer, and then loose some screw, and then bang-bang again, and then tighten some other screw...

Even the young, like 26 y.o. guy , from faraway Sichuan Province thats works doing this will receive a respectul title...

... and will be called a "Gong" (engineer) For example, if the guy's name is Zhao, he will be called with respect even by the bilionaire owner of the factory with the name and title: "Zhao Gong".

Some old Eletric/industrial design like 66 years old are making good bucks still kicking, no one is at Key West drinking margheritas...


If you take a look at my earlier comment you'll notice I mentioned adding additional managers which directly train and supervise the workers.

China tends to have a much hire ratio of supervisors on the actual assembly room floor as opposed to in the office. In the west, many would consider it micromanaging.

Not sure if would have made a difference in your case, but just wanted to mention it.


I'm going to guess it's because they have an engineer or two hands-on fixing and optimizing the process (not the individual assembly tasks) to avoid this problem. I doubt the workers themselves are that different anywhere in the world.


He was probably just giving an example, right, not literally requiring someone to know the difference amp/v, he was saying that the guy was bad at electronics.

I find surprising that this was hard to understand.

Logic and common sense on text comprehension are at it's historic lows, it seems.

The wiring of PLC control panels with servo motors, vacum-pumps (AIR-TACs) and All the moving parts of big machinery is the Slowest job at a chinese machinery assembling factory.

It looks complicated at first, then you see it everyday a lot and it starting to look easy.

Then you try do do it by yourself in a PLC that you have programmed yourself in the simplest and smallest model of the machine and you see that is actually very hard job to do.

Its actually like programming, because if you wire the wrong little cable among hundreds of little cables then you have to "debug" the wiring to see where was the damn little cable miswired...

In this place she was a 16 old girl, who had a son at 14 or so, from GuangXi province, very beautiful mountains but also has poor areas , but she was so nice and so patient and so good-hearted, it was unbelievable.

And she would wire cables all day, but not fast, slowly...slowly...because is hard.

And she learnt everyday from the 60 or 70 years old Shifu (Master, like in the kungfu movies)

I never met a better human being in my life, 100% sure, like this little girl from guangxi.

probably made around 350 USD a month. Poor child. I still have her wechat contact, I will rescue her someday...


That sounds like the perfect case for an apprenticeship or cooperative study model and training the people you need, not hiring people with university degrees for something they've never done?


"China's military will impact the nature and breadth of the decline."

care to elaborate?


I am not OP, but suspect he is referencing South China Sea and Taiwan actions. If the PLA is more aggressive, companies will leave more quickly, and the opposite is true.

If you are in a conflict zone, exporting to other countries isn't the way to get rich; selling to the armies is.


I would say it is more about how closely tied to IP sharing (by law AFAIK) of any company doing business in China.

For example, right now I'm helping indirectly build an AI, that is being shared with a sister company in China, and I just recently learned about said IP sharing law and am now concerned that it will be used in military applications (such as autonomous boats or drones, but with lethal application)


If it can be it will be and expecting otherwise when it comes to China is incredibly naive.


"when it comes to"

And when it comes to any country or even the Green Peace's Rainbow Warrior fighting Vessel or even me myself, if I get my hands in the Lex Luthor's new A.I.

Humans are here for profit, or what.

This is Naive: to expect is only from China......

Come on...


That's a really good point honestly. To pretend the USA doesn't use its massive surveillance engine for that kind of thing is silly.


So if you are saying that the N.S.A. or The CIA are coming to kill me, tell them to stand on the line, because the Chinese Intelligence is already on tis job of eliminating me...Ok...Xi Jin Pin is sending His own personal best killers to hunt me and kill me, If you did not read all my history of comments, then you should know it already, PLUS, Russians are already Hate me too, if you read my comments, you will see I have , Hate , the Sputnik News and Other Bullshit from Nazi name Putin. I am brave guy right????? Nothing to fear when you are already Dead, right, and the chinese, the russian and the american , want you dead...So shut up and survive, right? NO , my friend, I am already dead...you are blackmailing the wrong person, cannot blackmail a Dead Person(body)...so...I am waiting for some argument from you that prove that you are smarter then that, my friend, and don't need fucking B;lackmail to make a point.................

SO if someone(from beijing, moscow or washington) Have all the access to my unedited file, and they have it, my friend, believe me....

They know I am , just a old crazy Marijuana smoker who is Jobless recently and is bored and has nothing better to do then write fucking stupid and insane comments on hacker news....

Old people withou a job is the worst thing for this old people Mental health....

I should find a job as soon as possible, even if is cleaning the streets or taking care of public gardens...anything to do but stupid internet comments...

well and I am for hire, and now , the most important, If is for the good of humanity, I will do it, no matter who is for, ok, i said for the good of humanity...

so... I would do it even for free...but i am broke , no money even to buy my marijuana now...so...

Anyway, I care more for the Good-Faith then the money...

I did't go to the obligatory (law obligation) military service because they decided I was physically useless for them, and I didn't had a high-school degree, so i was intellectually useless for them too....But I didn't want to go....

Because they pay you 0 bucks and I was in age of having girlfriends and smoke pot...But also because I believe in Peace. I am a pacifist...

But I fucking admire people who has fucking Balls and people who has fucking Honor, like the guys in the Navy.


Just to add to the point above where I say that beijing, moscow, washington, have all access to my unedited file, I forgot to mention Her Majesty the Queen and the MI-6 have the oldest file on me, since the day I was born, because I was born by the hands of a surgeon doctor that was an agent of the MI-6, who went to fucking west europe and to fucking east europe to fight the fucking nazi . And he had nightmares and could not sleep well for the rest of his life, because he saw the children in Paris packed in the holes of the street, hunger and freezing, covering themselves with newspaper, and he saw that they look exactly like the poor mouses and rats on the streets too. And he remembered his 5 children 10.000 kilometers away.

So...they know I am for peace and pot.

...even forgot to say that he was my grandfather, and there is a street with his name in owr town...

Already lets open the last bit...The street name is actually of my granpa's father, so my grandgranfather or something like this. American (U.S.) family.

The little hospital my grandGrandpa built, where my grandpa was born, and where my father was born, and where I was born...

still stands to this day, unmodified, in his original taste, since my granGranpa opened it.

Dr. Taves Health Home. We accept credit cards. look at Altavista : )


Let's make a Thought Experiment, like those Einstein use to do:

I wonder who looks Silly, Now.

If I was the boss of N.S.A. , Mister arminiusreturns, I would not hire you, or I would fire you now, because you gave yourself up so easily, and you didn't see even who you was talking too...easy research...easy logic...easy "secure" broke with silly comment...you don't know how to even secure, and you are Fired.


As China's military becomes closer and closer to Western standards, supply chain integration and Western business in China will dry up in response. Western companies will not want to do business with direct competition and even if they did, the US govt wouldn't let them.

If doing business in China means funneling new tech to the PLA that could result in theoretical American deaths, then we don't do business in China anymore.

A historical precedent would be the soviet union, where we wouldn't even let ball bearing be exported to Soviet block countries. You can already see this with the current chip wars.


> Western companies will not want to do business with direct competition and even if they did, the US govt wouldn't let them.

The US was a crucial partner in building up the nazi and soviet manufacturing capabilities.

Public US companies care more about the next quarter way more then ant nationalist loyalties.


> As China's military becomes closer and closer to Western standards, supply chain integration and Western business in China will dry up in response.

You and parent are saying different things.

The US has historically had no problem trading with and building up any economy with cash (your point).

But once that economy reaches parity with the US, if they have serious ideological / political differences, the US is quick to lock down legal trade (parent's point).

This observation (in general about the West) was the origin of the "hide our capacities and bide our time" component of Deng Xiaoping's 1990 strategy that Xi (foolishly and prematurely, imho) threw out the window.


Funny story: at the moment, Chinese are using the American market for some of their military R&D. This is particularly visible in the civilian firearm industry, where we're seeing a flood of quality Chinese optics and electronics, including stuff like IR laser designators and even night vision.

Their first products were really crappy - stereotypical "made in China" stuff - but cheap, and it carved out the niche. Then more expensive things started showing up, but they still cost 2-3x less than comparable Western offerings, at similar quality levels. Now, most of the mid-range optics segment is dominated by Chinese-manufactured electronics with American and European brands stamped on it.

And I can't help but think that every time an American gun owner buys another Holosun red dot, he actually buys two: one for himself, and one for a PLA soldier.


"then we don't do business in China anymore."

If that is indeed the case, I think is too late, in my opinion.

The historical precedent doesn't account for the fact that Russia and China are currently members of the WTO and that they have their own group named BRICS.

But I applaud your initiative on thinking on the issue and the Logic of your thinking is Good, and this is the most important.

A bit of information less then the needed, in this case, doesn't mean the Logic was not good. So, the understanding can be good.

And something important I have to say, I think, in my opinion, that is a naive misconception to count non-nuclear non-strategical weaponry in any reasoning, those are just toys to play, to show to the other kids and make poor kids envy, they are not weapons, in the Real Game of the Globe. Count only the ICBC in your logic, and you can have a better understanding.


Non-nuclear, non-strategic weaponry been important in every war fought since 1945.

While not between major powers, these wars have changed world affairs.

PS: You might not intend the way your comments come off. Speaking about another's logic for three paragraphs -- seems more negatively patronizing than anything else.


Russia is a paper tiger long past its prime, China is on the rise but needs US technology and innovation (currently).


Russia has shown to improve the skills of mounting 24 nuclear fusion bombs x 30 mach speed - "snow flakes" On Proton[1] derived Rockets, (those to took the turtles to the moon and will take the turtles to Mars,( maybe.) )

attacking capabilities are believed to have evolved in the last 15 years.

And the Proton are the oldest of their rockets, my friend, and is still up and ready in this very moment....

1-https://en.wikipedia.org/wiki/Proton_(rocket_family)


> China is on the rise but needs US technology and innovation (currently).

China never needed, nor used it. USA is not innovating, nor creating new technology, that's a myth, unless you call somebody creating a 1000th clone of Facebook a "technology."

USA sat on the back of engineering and programming sweatshops in the third world for 3 decades already.

It requires one to have a special level of insecurity, to go so far hellbent on claiming their creativity as to print it in bold letters that "we surely did not buy this off the shelf from OEM in China."

The rich elites in USA are the ones with the strongest "pain:" no Chinese parent in his nightmare will imagine spending 100K+ on dumb "creativity" or "leadership" classes for his child, but in the West... you know the story.


If usa is not innovating, noone is.


What are creativity and leadership classes?


Hahaha, what? The USA created the internet, google, the smart phone, most pharmaceuticals. I could go on and on but why bother.

You must be joking with this.


[flagged]


> Is this a Chinese puppet account?

This toxic trope breaks the HN guidelines. Please review https://news.ycombinator.com/newsguidelines.html and follow the rules when posting here.


Good catch Sir. Looks like a crazy robot with random-words-generated comments. Very weird.

I mean the one who was flagged.


A disorderly rebalancing of their economy, which increasingly looks likely, will require the military to repress dissent domestically (at great expense). It will also require that same military to assist the state in repatriating and collecting on financial assets and debt that have been sent abroad. I'm still summarizing, but you likely get the point.


Not just farmers, but farmers who were stripped of the most basic moral and literal education during the worst destruction of culture and morality mankind has ever seen, at lease by some measures.


First of all, most Chinese farmers, like all farmers the world over, never had an education during most of history, and most were still decent, moral human beings. Second of all, poor people do shit rich people don't have to do in order to survive. It was not until wealth inequality increased and traditional social safety nets deteriorated that morality declined. Could a better education have ameliorated this? Certainly, but not in the way you say and not directly, but it would have created earlier conditions for political change and for the protection of individual rights, things that are still happening, but at a slower pace. This generation is still vastly better educated than the last.


I think he's referring to the Great Leap Forward and the Cultural Revolution, in which Mao conducted genocide-level mass purges of ideological deviants such as whichever teachers the Red Guard decided they didn't like.


There are two reasons the OP's partner has a good point. First the Chinese Communists are institutionally against the traditionally more educated class that used to run the government, because their ideology label them as inferior and reactionary. Second is the Cultural Revolution which destroyed any opportunity for the worker and farmer/peasant class to get any decent education. Even for Xi himself there was little formal education:widely believed to be either primary school or middle school. His public speeches are sometimes laughably pompous and verbose. Compare him with Jiang Zemin and Zhu Rongji, who were respectively the party general sectary and prime minister in the 90s and early 2000s: Jiang spoke English effortlessly and Zhu had a habit of quoting English media. These two spent their formative years in the brief republic built upon Dr Sun Yat-sen's democratic ideas. Yes the next gen are going to be better. But it's very hard to imagine why those really good ones would give a fuck about the party bureaucracy and not emigrate like so many Russians do.


I read The Tiananmen Papers (https://en.wikipedia.org/wiki/The_Tiananmen_Papers) over 15 years ago and it seems like the fundamental political dynamics still haven't changed. Every time you think a liberal reformer (which in Chinese context is still quite conservative) will rise up the balance of power quickly shifts back to the old guard. Though perhaps the consolidation of power under Xi might lead to radical change years down the road.


OP here. Exactly his point. He went on to say that in terms of the net benefit to China in the long run (decades), they may as well have thrown most of the goods manufactured into the ocean, rather than subsidized their creation and export.


Xi finished Tsinghua University, which is a top school.


His first enrollment in Tsinghua was in 75 during the Cultural Revolution, when workers turning in blank exam papers were celebrated and admitted. His second enrollment was as a pretty senior party cadre, when he basically would have no time doing any real academic work. Many officials use such “on-the-job” phds to polish their resume. But really any average person would know they’re pretty worthless academically.


Yes, but Xi entered Tsinghua as a Worker-Peasant-Soldier student and his admission arrangement seemed to be designed for him. Even Premier Li Keqiang has a much stronger academic background than President Xi.


> That’s why global CEOs and business leaders need to deal with the China Conundrum now.

They are. They are:

- 37 percent have moved production out of China in the past 12 months, while 33 percent plan to move in the next 6-12 months.

https://money.usnews.com/investing/news/articles/2019-01-17/...

- Apple Is Moving Some High-End iPhone Production to India

https://www.fool.com/investing/2018/12/27/apple-is-moving-so...

- China’s Xi Jinping 'most dangerous' to free societies, says George Soros

https://www.bbc.com/news/business-46996116


They moved production to India (and Brazil likewise) because THOSE countries have huge import duties, not because of a rebalancing away from China.


i don't see why one precludes the other


They aren’t producing for export outside of those countries.


Yes, Sir. This is the thing. One datapoint here and there doesn't make a Theory...And there are many variables...

shops open and go bankrupt everyday everywhere...


Wow - that first statistic is terrifying, I had no idea things were turning so fast.


@evenequator is not using the statistic he quotes correctly. From the article:

>A recent UBS China survey of 200 manufacturing companies with significant export business or supply to exporters revealed the trade war has had a negative impact on 63 percent of those businesses.

>A quarter of those affected have cut jobs, 37 percent have moved production out of China in the past 12 months, while 33 percent plan to move in the next 6-12 months.

So it's 37% of 63% of a sample of 200 particularly strongly affected businesses, not at all 37% of global CEOs/businesses as GP was leading us to believe.


Apples move to India could be to avoid the high luxury tax they have to pay now to import iPhones there


Who wants their business being held hostage by some trade spat?


People who want access to a 1.2 billion person market, 350 million of which are living close to a first-world lifestyles.

Where are these factories moving? Poorer countries in Asia. Vietnam, Thailand, etc. It's purely a cost-saving measure, due to the rising wages in China.

Despite much wailing and gnashing of teeth about the trade war, those jobs aren't coming back to the US. If neo-liberal economics, and nationalism continues to be a popular in the United States (I predict they will be), its only a matter of time until we'll be talking about a trade war against <The new China>.


Love this Tim Cook quote about why they aren't in the US:

The U.S. labor market "began to stop having as many vocational kind of skills"

If the incentives were there, you'd have those football fields full of tool and die makers Tim.


Yeah, I get really tired of this crap from US CEOs.

The fact that the skills aren't there is because your company doesn't pay for them.

Even worse, it's an outright lie and people like Cook know it because they put their money behind it. Haas Automation has an entire line IN THE US producing CNC machines that get shipped to China solely for Apple. Gee, if China was so much better at those skills, why don't you buy the machines there from Chinese suppliers? Hmmmmmm?


"began to stop"

This one is indeed lovely. Ceos....


"They are. They are:"

Me too. Napoleon said that a retreat in time is a victory.

So I got out to the woods eat berries off-grid and off-borders.

And I think most people agree with Soros.me too.


I believe the article is wrong. It uses Foxconn as an example despite the fact that Foxconn is a Taiwanese company that suffers all the conditions that the author mentions: Chinese spying, Chinese sanctions against Taiwan and vice versa, etc. for years. China and Taiwan are even still technically at war. However, Foxconn has been in China since 1988 and is very big in China.

In my mind the real killer has been increasing costs, China's manufacturing decline has been showing signs since 2016, and is more related to increased labour costs and increased pollution regulations. The trade war is just another final nail in the coffin. The "China conundrum" or manufacturing moving out of China has been happening for a while, its just people haven't paid much attention to it until now. The decline would have happened even without the trade war.


I'm also very sceptical that Foxconn would be setting up that factory for any reason other than avoiding Indian tariffs on mobile phones. India is not really the first place one would think of to build a supply chain.


"The decline would have ..."

this decline is to grow 5% a year next 50 years?

Or is the Nuclear Armagedom?

Or is to delay a few years the chinese pretty girl landing on the dark side of the moon?

The last video was not fake, I mean, the one on the dark side of the moon.

And as long as I know the massive miles and miles long Infrastructure Integration with Pakistan, India and Russia on Railways,

Oil pipelines and wherever and whatever is going very strong, thank you for your concern.

(If there is any update and it was cancelled ,and my info is old, please correct me) (I'm hidden in the woods eat berries off-grid)

So Russia is the one who has The Proton rockets and the Avangard (NATO denomination is Snow Flake) Heads in this rockets so the Chinese are not stupid , right.


> In the late 1970s and 1980s, Americans fretted a lot about something called “The China Syndrome.” The idea was that in the case of a nuclear reactor meltdown, the fiery radioactive core would burn a hole through the earth and come out somewhere north of Peking

Good grief, no. It was a colorful metaphor in the industry for explaining the self-sustaining problem with meltdowns: the fuel was very dense and would naturally flow and pool together, remaining a cohesive blob even as it escaped its containiment. Other runaway reactions naturally disperse and explode, meltdowns don't. So the failure mode analysis needs to worry about what happens long after it leaves the building and hits bedrock.

It was also the title of a pretty good movie, FWIW.


By 2015, Samsung already moved more than half of smartphone manufacturing from China to Vietnam. All others are late to the party.


What's after Vietnam?--is my question.


Cambodia... I was just in Sihanouk last week and the entire city is under massive development by the Chinese. You have 4-5 star hotels built with potholed dirt roads out front. Giant apartment buildings are going up in marshland. There is also a massive port built there where China can now move goods through. There is zero care for the environment and the entire city is a mess. Tons of gambling, prostitution and drugs... it is literally like the wild wild west there. All in the last couple of years. [1] [2]

Vietnam doesn't work so well with the Chinese because of their history and because the US has already been giving Vietnam a bunch of free boats [3] [4] and money.

[1] https://www.theguardian.com/cities/2018/jul/31/no-cambodia-l...

[2] https://www.washingtonpost.com/world/asia_pacific/this-cambo...

[3] https://thedefensepost.com/2018/03/29/us-gives-vietnam-6-pat...

[4] https://www.reuters.com/article/us-vietnam-usa/u-s-delivers-...


Won't the collapse of China's economy take their investments in Cambodia with it? The point of moving your supply chain away from China is to avoid that.


Maybe, but if anything I'd think this investment would help protect them since it allows the occupation of a major shipping hub.


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Use Google to search "Impending Collapse of China".

Read.


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We've banned this account for repeatedly violating the site guidelines. Would you please stop creating accounts to do that with?

If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future.

https://news.ycombinator.com/newsguidelines.html


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Personal attacks and name calling will get you banned on HN, regardless of how wrong another user is. If you'd please review https://news.ycombinator.com/newsguidelines.html and use the site in its intended spirit from now on, we'd be grateful.


When i saw the new burger shops popping with their new invented names and the bread shops with 6 shops chain in the neighbourhood and the young people in Jeans working and living I imagined the 50's in the U.S.A,

But now you go even far and mention the wild old west, yeas, those are the developments of the free market.


India. That's why Samsung built "world's largest mobile factory" in Noida. Factory started operation in 2018.


African countries. Many see parts of Africa as ‘Chinas China.’


Lets dispel those claims

> 1. China has attracted many billions of dollars in investment and outright purchases from Western companies

Not Western, the West and US in particular never were the no.1 investors in China. China was at all times bad at soliciting foreign money. Claiming foreign capital as a reason for China's past growth is like claiming that electric trains are running on gasoline. Most of that growth was from internal sources. That's beyond any dispute.

> 2. Tariffs and Trade Wars – President Trump and President Xi Jinping have pushed their trade war to the brink of disaster.

China and USA can mutually embargo each other tomorrow, and it will be a just a needle prick for both. USA and China have really little economic interdependence, completely contrary to the popular opinion. Though China will fare a little bit better, as it trades in more elastic goods, and will find markets to replace the US faster.

> 3. In terms of psychological advantage, US has the upper hand (my rephrasing)

And that, the only thing that's true. Despite all of above being relatively insignificant, the US side managed to make it sound like the end of the world was coming, and even convince many people in China of that. In fact, the prime majority of recent deflationary wave in China was due to people who were closing down and panic selling businesses that were perfectly fine.

> 4. “These China-U.S. tensions are real, and it’s a long-term problem I don’t want to deal with. I want to find other suppliers in other countries and even completely move to another country for manufacturing. It’s just not worth the long-term risk anymore.”

The prime majority of China's problems are fully internal, and completely orthogonal to the trade disputes. If something will sink China, it will be its own baggage of troubles.


I think what we're seeing is the culmination of a breakdown in the decades old neoliberal political consensus that Chinese nationalism could be gradually dispelled through a policy of opening up Western economies to integration with China's. In practice, at the highest level, the Chinese government has kept the market subservient to nationalist goals, and remains stubbornly autocratic, repressive and hegemonistic.

The populist leanings of the Trump administration perhaps may make them more receptive to this argument, because they understand these kind of nationalist and hegemonistic instincts better than neoliberal technocrats, but I think this has been a dawning realisation throughout Western policymakers over the past decade. Even the Obama administration, which was strongly neoliberal, worked hard to isolate China economically through the TPP. Trump's disdain for trade deals killed that, but his confrontation of China is really just a noisier continuation of a pre-existing US foreign policy.

Big business might have put a restraint on Western policymakers' wishes to oppose China if they'd had more success in penetrating the Chinese market. But here the Chinese government has been too defensive, and Western business leaders have realised that they simply won't be allowed to be dominate in China in any meaningful way. Meanwhile, they have watched their infrastructure get attacked and their IP stolen, and have decided enough is enough.


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> TPP started in 2010, involved too many countries, and needed to be ratified by all in 2018 to go into effect.

When the USA withdrew from TPP the other members renamed it and went ahead and ratified it. https://en.m.wikipedia.org/wiki/Comprehensive_and_Progressiv...


And took out the worst parts that we put in that Trump/Bernie and eventually Clinton railed against.


And at what cost to the citizens? Will this action be the spark for war in the future?


US has no reason to attack China.

If China attacks US because US stopped giving China money, well, they should stop giving sooner rather than later


> China’s goal, simply put, is to replace the U.S. as the world’s leading superpower, and they’re using illegal methods to get there. China’s state-sponsored actors are the most active perpetrators of state-sponsored espionage against us.

The goal is absolutely true, thanks for pointing out, as China has to raise its huge population.

But ... illegal? WTF ... China has been ranked as the 2nd country after US by Nature Index [1] for years, which presents research outputs by institution and country. Is it illegal??

I believe there're tons of engineers in HN. I do think that if a private enterprise in China can inject a spy program on the chip without being discovered by the most developed countries in the world for years, that should be the concern.

But the question is, why do a country with such ability still want to spy United States? That ability should be more advanced than the current US technology for decades ...

[1] https://www.natureindex.com/annual-tables/2018/country/all


>But the question is, why do a country with such ability still want to spy United States? That ability should be more advanced than the current US technology for decades ...

Mainly because it's cheaper to let somebody else do the research and find the problems.

If you were interested in stealth aircraft technology, you might be glad to read about another country's research into Schiff base salts for paint. Or somebody else's modeling for multistatic radar aircraft detection.

It costs tons to do these sorts of things. If by spying, you could just eliminate half of the tech dev blind alleys, you've saved a lot of money and maybe time as well.


My point is, developing such spy tech, cost tons tons more, which is almost impossible. This is not some kind of movie, it’s about software and chip!


Spying is cheap: software and hardware cadets in a military academy learning to exploit specific systems. The main cost is wages, which are lower in China. For military tech, you need materials and engineering specialists. Often multimillion dollar prototypes just to find out where the problems with the techniques are. Specialized facilities for testing prototypes. De novo techniques for testing those facilities. Compare spywork, where it might be enough to bribe a single person in a chip fab to add a backdoor circuit.


Spying is not cheap, and the main cost is technology & science, not wages. Even in WWII the technology spies are definitely top tier geniuses with brilliant minds, not to mention now it's 2019 already.


My TAke on this all is that, yes, Mister Xi is bad...

But Hackernews is probably being spread with "Guided-Stampede" , you know, It is like a stampede when all the bison run following the one before him without knowing where is heading...........

Happened in the old wester movies with the cows. If you shoot a rifle at the bovines, for example.

Or if you let a napkin fall in the ground, sometimes, and this is true.

But this Stampede is "guided" , is not spontaneous, It must be whatsapp or facebook Religious groups "Reinforced Opinion Formation" Spammed messages, if you know what I mean, Reinforced , yes.

The kinds of The Brexit, Hungary, Yellow Jacket, Brazil, you know whoever......

This is to make people believe Chinas economy is collapsing????????? !!!!!!!!!!!

Did I miss Any headline here, really???????


The goal is not to convince people "China's economy is collapsing 25 question marks". The goal varies from article to article. This article is only trying to convince people that some companies are moving away from China for various reasons and trying to explain the reasons why. Whether you think it's correct is a different story.


This article is perfectly OK, and this headline "Conundrum" is perfectly OK. I was talking generally about some of the comments made , really, they sound like people has fever and are in Delirium state.

So it cannot be a coincidence when many people have the same coincidental completely mistaken perception, "It" All Has a Commom Source. Humans are smarter then this...

They are being lead into that......


Yes, I believe you missed the headline on purpose.

This style of English and syntax is very similar to what I've seen pop up on, well, any article that mentions China in a non-positive light.

These comments always try to discredit the article (or attempt to use whataboutism with the US), and coincidentally, often read like badly machine-translated English.


What? can you link a serious headline talking about "collapse" of chinese economy please?

Are you on the planet Earth???

Logic. Please. Keep The Logic.

I said "collapse"

Where is the collapse headline? ? ?


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We've asked you not to post flamebait to HN before. If you keep doing it we will ban you.

We detached this subthread from https://news.ycombinator.com/item?id=19009281 and marked it off-topic.


Trump is on the out it 2 or 6 years. Xi potentially has far more staying power which makes the long term risks much higher.

The regular party shifts in the US actually add quite a bit of stability to the system where dictatorships can more easily enter a downward spiral. Xi’s early term has seen a rather stark consolidation of power in the name of anti corruption policies, but don’t be fooled it’s a classic political move aiming for a long term in office.

Remeber Mao’s long term was associated with huge issues. China’s growth has come when the upper echelon’s have been relatively unstable.


Yes. The current law in China forbiddens to stay more then 8 years in power, so we can have some hope Mister Xi will sail as smoothly as possible to the end of his mandate term

...without putting in risk the world's long term peace and growth wishes and the Hopes of the chinese commoners of a more "european meaning of liberal" society ,

It means , more individual freedom and respect for peoples religion, sex orientation, traveling in and out the country, things like this, that give a good "air of freedom" to a place.

Mister Xi makes the chinese people scared of loosing, or to see the reversion, of the achievements and improvements and progresses that were made in this field of "micro-freedom" for decades.

But "If you see turtle on a tree, you deduce someone has put it there, cause turtles don't climb trees" , So...

...His vice president is the next president, as Mister xi was the vice-president of the one before him. Thats the unwritten rule. So....

HIs vice-president is the for a reason, and he was not appointed by Mister Xi, he was "swallowed" by Mister Xi, and tolerated, and it was a Business Trade, if you know what I mean, so....

The vice-president is almost as powerful as him, you can be completely sure of that. This the way china goes, it is not like other places. "No Elections" there, my friend.

And there is the prime-minister, same thing, is a "partner" of Xi, is not an "underling" by any means...

So, they are there and we have Hope.....

n.a:

The "liberal in the u.s. meaning", I mean , economy "laissez-faire" , in the trivial sense of it, the chinese economy is wildly free to run desregulated, for instance, a minority of workers are registered and pay labor taxes, and the gov does not care for the huge majority of workers and bosses that don't pay any labor taxes and are unregistered. So , it is already pretty "micro-liberal", in the economic sense.

1-https://en.wikipedia.org/wiki/Laissez-faire


”China Removes Presidential Term Limits, Enabling Xi Jinping To Rule Indefinitely”

https://www.npr.org/sections/thetwo-way/2018/03/11/592694991...


Well It was detached but thanks Cris, I really have forgot, I saw this probably last year and the brain didn't want to let it in to protect 'him'self : D :D

Yes, the hope is that "it" is still scheduled to step down, just the limitation for a new mandate was removed...

...Sofar...so...we are worried, of course.

And praying


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Trump is most likely to be replaced with somone with at least nominally the opposite platform. Bush, Clinton, Bush, Obama, Trump, ? is really not more of the same. Hell, he already got thrashed in the last election. It may not look like progress, but people are willing to tackle each sides failures to score points. This tends to remove the absolute dumbest policies.

Mao on the other hand was able to double down and maintain power through the great Chinease famine. This was after a policy of killing off at least one land owner in every village. It’s hard for most people to get just how quickly things can deteriorate without external corrections.


People who vote populists have both fickle loyalties, and short memory. The OP is right. I myself began to sense the trend back in nineties, back then there were centrist ultrapopulists, now the cohort catering to their electorate just changed their purely nominal titles from centre to right.


Trump did better during his mid-terms then practically any predecessor and his approval ratings were recently higher then Obama at the same period of his presidency.


They lost the house, that’s the real test of a president’s midterm. It normal to lose some seats and same thing happened to Obama, but even still the shift was unusually large.

Such shifts are likely very good for countries over time.

The biggest risk for China is the system failing. Mao was being given bad data because the system in place rewarded people lying to those above them. This becomes common in many dictatorships. Eventually you get a lot of ‘dumb’ choices because accurate information is really important for any government to function.


no: https://news.gallup.com/poll/116479/barack-obama-presidentia... https://news.gallup.com/poll/203198/presidential-approval-ra... Interesting, you could think of something like that after more than a month long federal shutdown. Now most of people that were quite vocal supporting President Donald Trump tend to denied that now they did.


> [...] his approval ratings were recently higher then Obama at the same period of his presidency

That doesn't look to be correct. Scroll down on this page [1] for approval, disapproval, and net approval comparisons between Trump and all past Presidents back to Truman at the same points into the term.

[1] https://projects.fivethirtyeight.com/trump-approval-ratings/...


> In fact, the U.S. and other countries are barring the use of Chinese-built 5G equipment from Huawei and ZTE thanks to allegations...

This doesn't seem like it should be legal either but the article has no issue with it, rather touts it as being good. I'm sure if the US lost economically due to allegations it would be a different story altogether.


> I'm sure if the US lost economically due to allegations it would be a different story altogether.

Are you joking? China has many more restrictions on foreign competition in far less sensitive areas than their communications networks.

Setting that aside, it seems reasonable for any country to decide for any reason what they allow to be used in such core infrastructure. Any country that can afford not to depend on someone they might not completely trust now or decades in the future is foolish to do so.


I don't really follow your thinking. When you said "Any country that can afford not to depend on someone they might not completely trust now or decades in the future is foolish to do so." I believe by "any country" you were referring to the U.S. But when you said "China has many more restrictions on foreign competition in far less sensitive areas than their communications networks.", you seemed to completely ignore your rhetoric that "any country" (say China?) would be foolish to not put restrictions on foreign competition if they don't trust them. I guess you like to have your cake and eat it too.


My comment was about the reporting and not the actions of the US or China. Reporters should speak straight. If it’s about competition say so and not muddled with unverified threats.




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