China’s trade power: The next chapter

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Focus on Import/Export

The rumours are swirling among the worker base at the Ford plant in Oakville, Ont. They say the plant is closing over Covid-19 and will not re-open, and the focus is not on the spread of the disease, but on the supply chain. Over 80 percent of the parts they assemble, they say, are from China.

As of press time, we are in the worst possible position for a magazine, that being that events are moving quickly and magazines are designed to provide more in-depth information and review. The newspapers were once obliged to have the staff and resources to report on breaking developments, but they have languished, lost their way and been supplanted by bloggers and newscasters that have a vested interest in capturing attention and selling it, rather than providing value to an audience. Not good in this environment.

Earlier this month, Marco Rubio, U.S. Senator from Florida, said that after this crisis the geo-political structure of the world will have changed. He did not elaborate, but it’s clear that good people are trying to maintain order amongst chaos, and not-so-good people are trying to get their foot on victims’ necks and make them gurgle.

Possibly you saw the story about the Kentucky bros that tried to corner the market on hand sanitizer, buying up 18,000 units and offering them for sale at up to $70 U.S. each. They got caught, got threatened and decided to become Samaritans by donating their stash to charity. To appearances, this is hardly a deterrent, but deterrence is something we had lost sight of before the crisis. One thing is certain, if you want to change the geo-political landscape, a sure bet is to interrupt the food supply, and, again as of press time, the federal government has barred the entry into Canada of our seasonal workforce, and that’s who does the work Canadian millennials disdain. Farm groups are requesting an exemption.

Back to imports and exports, the issue in China has become fractured into many large problems. Whether the Ford gossip is correct or not, it is not debatable that China has become the world’s largest producer of disposable goods, from televisions and appliances to smart phones and toothpicks. Therefore, that’s Item 1. China is an export giant capable of affecting the world economy, either by accident or by design.

The second huge item, Item 2, is that the current novel coronavirus, Covid-19, was launched in China. Most reporting points to the live-animal markets in Wuhan, with the fingers diverging toward bats, pangolins and snake blood. So, xenophobes (such as all humans are) like Canadian millennials kind of wonder why other cultures can’t just quit eating those things. EEEEWWW!!

There is another theory, roundly rejected by bureaucrats, that the virus is an accidental release from a biological warfare research lab in Wuhan. Wood Industry has absolutely no information regarding the validity of that claim, and the bureaucrats may well be right. The fact that cannot be disputed, however, is that the theory is out there, and it affects the public discourse.

A third huge item, Item 3, is that China has no credibility. People simply cannot believe what China says. These matters have been hashed out sufficiently, so it’s not necessary to go into them here. However, it’s worth repeating that there cannot be communication when both parties believe the other is lying. It’s as if two people are working on a space capsule, but the assembler disbelieves the drawings. Whoever ends up in that capsule is likely doomed.

On the international stage, this Item is compounded by modern China’s rather horrible record on dealing with complaints. We can start with the Great Leap Forward, in which all the 20-somethings got to kill all the 40-somethings and take power, or we could look at Tiananmen Square. The Chinese government insists nobody died in Tiananmen Square in the early morning of June 4, 1989. Western governments say more than 10,000 did. Choose your source. Or you can look more recently at the protests in Hong Kong, which were spontaneously ended with the advent of Covid-19, which was not named at the time.

All this has had the effect of focusing world attention on China and its export woes, and bugger the luck, one of China’s top proletariat billionaires goes missing right after calling President Xi Jinping a clown.

It seems that the families of the 10,000 people that did not die at Tiananmen Square would think calling Xi a clown a bad idea, but we don’t really know if it was. Granted, Ren Zhiqiang, a member of China’s ruling Communist party and a former top executive of state-controlled property developer Huayuan Real Estate Group, has not been contactable since 12 March, according to The Guardian, but that does not mean Xi had anything to do with it.

On the other hand, if Xi had nothing to do with it, he is likely looking for whoever did, because it’s making him look really bad in an environment where he is a bit short in political capital.

Of course, Ren is not the only one. There has been a veritable epidemic of dead, lost and suicide billionaires in China. Not like the good-old days when billionaires were safe as long as they were buddies with Mao. It is very difficult to be judgmental of a foreign leader, despite the preponderance of the evidence. After all, I don’t want to be a xenophobe, and China has a long history of cultural politics related to heads on poles and such. Each to his own.

However, it makes one scratch one’s head, given the truth of the above Items, to see Xi decide to up and stick his finger in Trump’s eye at this juncture and threaten to cut off America’s supply to America’s drugs that America is paying Chinese labour to produce.

Does Xi think Trump will let that pass? If so, on what basis? Does he think that since Trump has never let anything pass that the law of averages will suddenly catch up and Trump will clap him on the shoulder with a “hail, fellow; well-met” and a bundle of Florida’s oversupply of Burmese pythons and syringes? More likely, if Trump sees that China is holding something of mortal importance to America that belongs to America, he will just go take it.

To our eye, the public relations wheel is beginning to turn against China in the trade sector, not because of any one thing, but because the evidence has overbalanced people’s willingness to suspend their good judgment. Even the millennials are starting to “get it” (wait/what?) that their precious “smart” phones are being created by child slave labour.

The problem for Xi is that very few totalitarian dictators are brought down by outside militaries. They overspend, overbribe, overgift and overconsume until the people they are starving can’t stand it any longer, and there is social discontent. But that alone won’t do it. There has to be an attitude on the outside that the regime is not worth the propping, and there has to be a precipitating event….

Our conclusion? Our conclusion is that Wood Industry committed on its Editorial Calendar to cover import/export this issue. As of presstime, we believe only an idiot would try to counsel the industry on the next trend, except it will be up. Nowhere else to go. But we think in the sea of change facing the world over the next months and years we need to see Xi’s hand removed from the tiller. He seems to have a fever.