Who Benefits from the Fall of China?
As the Berlin Wall fell and Russia imploded, dividing into dozens of countries, the Chinese Communist Party understood that, in order not to follow Russia’s path, it had to carry out a strategic change, somehow incorporating itself into the capitalist productive system.
For this reason, in 1990, it opened its doors to several electronic and textile companies, first Japanese and then global, who understood the advantage of producing in China, a country that had the cheapest and most abundant labor in the world.
Manufacturing and Services
Only a little more than three decades have passed and China has become the axis of world manufacturing production, covering all items, with exports that reached four trillion dollars in 2020.
Let us remember that during the new century the world economy grew at the rate of Chinese industrialization, that is, between 10% and 15% per year, creating a revolution in the global economy that, seeing its trades with Chinese manufacturers invaded, dedicated its efforts in the development of logistics and technology service companies.
Dividing the world between the countries that produce raw materials (soybeans, copper, meat, oil, etc.), and the countries that provide services, (even through a pandemic), deepening a transformation in health, security, education and transportation services, allowing that all these technical services grow exponentially.
Russia – Ukraine
The Russian invasion of Ukraine, in a war that seems to have no end, caused the costs of international transport to increase. Together with the world pressure for the increase in the minimum wage in China, they caused a change in the logistics strategy of many companies that produce in China, including Washington, reconsider its dependence on Beijing, in semiconductors and advanced technological products.
And so, in 2022 the number of Japanese companies operating in China fell from about 13,600 to 12,700, for example Sony migrated to Thailand, Samsung and Dell no longer use chips made in China, Apple and Google moved the production of their latest products. smartphones from China to Vietnam.
The world understood that there are many substitutes for China, such as South Korea, Taiwan, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Cambodia and Bangladesh, creating a new geopolitical order called Altasia.
Instead of what 30 years ago was called “offshoring”, referring to the strategy of manufacturing in China, today there is “nearshoring”, which is producing close to the buying market, reducing logistics costs.
In this change in strategy there will be several winners. Not only Altasia, which manufactures for the European and Asian markets, but also Mexico and several Latin American countries, which manufacture for the largest consumer in the world, the United States.
As we can see, in the post-pandemic era, manufacturing in several Central and South American countries has increased, generating genuine employment well above pre-pandemic levels, with wages beginning to strengthen, compared to pre-pandemic times. There is even a shortage of industrial space in some cities.
The problem for several Latin American countries is to maintain is economic stability with legal security. For this reason multinationals such as Tesla or Nissan choose Brazil, Chile and Mexico, which, although they are governed by leftist politicians, maintain stable economies and clear commercial rules.
Let us remember that the new oil is lithium and that the 85% of world reserves are shared by Chile, Peru, Bolivia and Argentina, in places like the Salar de Uyuni in Bolivia, the Salar del Hombre Muerto in Argentina and the Salar de Atacama in Chile and Bolivia. The economic future of the citizens of these countries will depend on their rulers, generating the propitious space for investments that seek to produce batteries for electric vehicles and lithium-based manufacturing, near the area of mineral exploitation.
The future depends on it.
Cesar Leo Marcus was born in Buenos Aires, Argentina.
Doctor (PhD) in International Logistics and Foreign Trade, and Master (MBA) in Economic Sociology, he was professor of both chairs at the Universities of Madrid (Spain) and Cordoba (Argentina).
A journalist, he publishes in newspapers in California, Miami, and New York. He is a writer, he published twelve books, and a literary editor, director of Windmills Editions. He currently resides in California.