All opinions expressed in this article are solely the opinions of the contributors.
China’s role as a leader in global manufacturing is fading, and you can blame COVID for the setback. COVID restrictions are increasing in Beijing and Tianjin, in addition to the ongoing and fluctuating lockdown in Shanghai. Straight Arrow News contributor and geopolitical strategist Peter Zeihan explains how these lockdowns will impact worldwide production for years.
Now, if Tianjin goes into lockdown, as seems increasingly likely, that will mean that Tianjin and Beijing are in lockdown in the north, Shanghai in the center, and Guangzhou in the south. And that also means that the three biggest transport and manufacturing hubs in the country, again, Tianjin, Guangzhou and Shanghai, would all be in lockdown of some degree all at the same time.
So we are looking at the majority of Chinese manufacturing for all intents and purposes, being inaccessible to the wider world, or even to the internal Chinese system.
Now I’ve been telling my clients for quite some time that it was only a matter of issue as to how the American-Chinese relationship imploded. Could be Trump, could be Biden, could be energy, could be food, could be security, could be trade, could be ethics, could be genocide.
You know, there, it’s a long list, but it appears that COVID ultimately is the one that is winning out.
And now the majority of the parts of China that matter are offline. If you’re stuck in manufacturing in China, this is the beginning of the end if it’s not the end already, because as soon as you have an opening, Omicron comes back in, and then you get a closing again, because that is the only tool that the Chinese Communist Party has left. So the question is what’s next? There is a limited option for relocating manufacturing supply chains from China to other parts of the world, most notably North America.
We are experiencing a labor shortage in the United States that will not be let up for at least 20 years. We just know that the Zoomer generation is a relatively small one. They’ve all been born already. They’re feeding into the labor market now, and we know exactly how big our shortage of labor is going to be until the 2040s.
Mexico also is capable of helping, but only to a limited degree because they had a baby bust back in 1995. And their birth rate has been declining ever since. That’s long ago, that is starting to affect their labor markets.
