I’m just not as convinced that China is as essential going forward as they were for the last 40 years or so. There’s a bunch of reasons for that. But as to other countries wanting to do business with them there’s a lot political going on too.

• China isn’t cheap labor comparatively anymore. A lot of low skill has moved to India, Vietnam, etc.
• We saw several movements of manufacturing, I see no reason it can’t move out of China just like it did elsewhere chasing either cheaper labor or better supply chains or more amenable political systems.
• China is having all sorts of economic woes in their property and bank crisis.
• China is going to go through a demographic contraction like Japan did starting in the 90s. It’s going to be on a larger scale.
• China isn’t a better partner than the west for developing nations. It’s proven it also just exploits for raw materials and the like.
• The US and Europe after COVID see manufacturing as the strategic issue it always was again, so they want to move stuff closer or back into their countries.

That said, I think a lot of people overestimate how much the US needs China. There are plenty of countries that would step up and be happy to get any set of consumer spending from western countries IMO. I think a lot of multinationals could make it the next “offshoring” cycle to move production from China to Mexico, India, etc etc. The other thing people forget is the west can and does play dirty too.

Like I said - all that would make it seem like just assuming China has a long term plan that is going to obviously beat the US is buying their propaganda IMO. The bigger issues though are the wildcards - will LLM AI actually provide a huge productivity boost again and let China manage their shrinking population in terms of economic output? Will it do it in a way that doesn’t also advantage using the enhanced automation within Western countries vs China’s previous inherent cheaper labor due to lots and lots of people?

Will Climate Change make it more and more difficult to have a global shipping network, making it even more expensive to have a world manufacturing hub in the future? Will the US Navy keep patrolling the seas to prevent piracy?

But back to being an essential part of the global economy. China doesn’t have a lot of settlement networks outside China that third parties are using. China doesn’t even let you take Yuan out of the country in most cases, even if someone wanted to take it in payment. So China isn’t a big Finance player outside their borders. COVID already showed that we can survive if China stops shipping stuff for a while, and I think that will get more robust and diversified as time goes on.