It might be a common practice for consulate to do that:
Russian consulate in SF did it in 2017 in response for an eviction related to "Russian gate" [1]
The U.S used shredder to destroy document in Iran in 70s but
Iranians were able to piece back the document to get intel from it so I guess the intelligence community learned a lesson there.
Shredding is absolutely fine. The modulating factor is the size of the pieces and total number of pieces that are shuffled. The problem scales with N^2 (?).
If the shredder shreds with 1mm particles, it will be pretty much impossible to piece it together and it will depend on how each page mixes with other particles. Even if the particle size is 100mm, if you throw those pieces in a pile of 500 tons of paper, and shuffle it sufficiently, then it will be impossible to piece together the original source.
At some point Beijing is going to fire back. They have a lot of leverage over our global corporations.
Rather than making token attacks on them while continuing to consume the goods they make, we should smile and be friendly while methodically moving our manufacturing demand closer to home. There is plenty of cheap labor in Latin America.
Good, let them. That will ensure there's no doubt that we need to decouple with them.
> we should smile and be friendly while methodically moving
Japan has already started that with mfg.
We should do that too, along with unwinding their hegemony over port facilities world-wide. China is literally copying what Japan did in WW2, except with US capital instead of invasions.
Both are in bed with each other. If USA were strategic and had sound economic policies, the government would pass bipartisan laws that prevent an authoritarian regime from gaining the leverage that GP is talking about.
It is not too difficult to just look at the trade deficit with China.
Not just USA, China has a huge amount of leverage with every nation in the EU, Switzerland, Australia, India, vast APEC region, Korea, Japan and South America.
Just look around you and find out what's not made in China.
New Zealand is also in big trouble if we anger China. Our economy is heavily reliant on China. Even our universities rely on Chinese students to help pay the bills.
What's even more surprising is back-end supply chain is also dependent on China. Most people think that their USB cables and computer monitors come from China. But the pill you're taking probably has most of the raw ingredients imported from China. Polymers? China. Lab chemicals? Perfumes? Engine oil? China. Most machines that make these things have parts made in China. Bearings to shafts, motors, wires, adapters, etc. Probably the entire Molex, Keystone, Murata catalog is made in China.
I just opened a can of Geisha [1] oranges in syrup. Sounds Japanese, nope, it's made in China.
Even if China was a free society, completely open culture and they allowed mass protests, guns, and weapons, didn't have a military, hung Abraham Lincoln's posters everywhere and declared Edward Snowden as the president - we should not put all of our eggs in one basket.
For North American buyers, engine oils (lubricants) and polymers are more often from Houston, I'd imagine.
For example, USA produced 21 million metric tons of polyethylene in 2019, exported ~9 million metric tons ($10 Billion), and imported about half what we exported ($5 Billion).
The one thing that stands out for me is the postal treaty that was negotiated so that China is able to deliver products to the US for less than it costs a local company to deliver to an adjacent state.
I'd love to have the background on how this situation arose. The giving away of the one and only single competitive advantage to a country that manipulates its currency, has little to no environmental laws and occupation health & safety etc. It just boggles the mind the economic devastation this decision would have wreaked across the US.
> At some point Beijing is going to fire back. They have a lot of leverage over our global corporations.
Umm what? They have almost no leverage what-so-ever. China needs those corporations in China to survive. Those are pieces of leverage against China, not something that China can leverage for themselves against others. The reason they're not striking back is because they're already scared of the corporate flight that's occurring from the tariffs. They don't want to do anything that would exacerbate that.
The dewy-eyed mentality that China is powerless in the face of our mighty consumer demand is what got us entangled in China's manufacturing sector in the first place. I think the pandemic has made it clear that what happens in China has an immense impact on the availability of goods in the USA and elsewhere. This is true whether we're talking about webcams, medical PPE, iPhones, or anything else that is made in China. If China were to shut down the exportation of ball bearings tomorrow, the entire world would notice.
If you don't consider this to be "leverage," then perhaps you can suggest another name.
China doesn't need any one country's corporations in order to survive. Even if what you're saying had been true 20 years ago, I think it's incorrect to believe that China has no leverage over corporations that do business in their massive manufacturing sector today.
China doesn't even need the West to be involved in HK, and they have acted to that effect. HK has become a much smaller contributor to their economy than it was when Britain ceded HK to China, in relative terms.
If Apple's assembly campuses in China shut down tomorrow, Apple will be unable to manufacture iPhones, but China would be able to absorb some of the redirected demand in the form of handsets from Oppo, Vivo, Huawei, Xiaomi, etc. Samsung would pick up a lot too.
If Boeing (which contrary to your zero-leverage thesis was strong-armed into opening a finishing plant in China) shuts down sales to Asia Pacific tomorrow, China will be able to take up demand in the form of aircraft sold by Comac. Even if not, a moratorium on Boeing purchases in China would tilt the Airbus-Boeing duopoly toward Airbus.
Apple generated $260B in revenue last year, and Boeing generated $77B. China's GDP was $27T (PPP). See the difference? Our companies need them, but they don't need our companies.
Even if the manufacturing sector were to disappear tomorrow, China would be a huge consumer market. Their buying power is a form of leverage. When you make them the world's factory on top of their substantial consumer activity, that gives them immense power to shape the economic behavior of foreign governments and corporations.
Why do you think that Apple acquiesces to China's government despite claiming to be pro-democracy and pro-privacy back in the States? It's not because China lacks leverage, that's for sure.
The first step to disempowering China is to accept reality; American consumption of Chinese goods has basically subsidized the growth of that country. Once we have accepted the problem, we can take steps to solve it.
umm, no. to all of that. the mentality is that the reason we have china producing our crap vanished a long time ago, and the only reason we're still using them is because change has a high initial cost. they don't make high-tech complex things. they take our design and put up a factory to stamp it our. or they used to. now they tend to outsource it to lesser countries and collect their middle-man fee.
what you are talking about is short term pain that goes away in a year as the factory in china moves to a factory in india, and the supply cost of an iphone goes up. after that, it goes way down, because at this point, china is actually no longer cheap.
we don't need to 'disempower' china -who gives a crap about their power. we, 'the buyer' don't need to think about them, 'the seller.' we go to a different store, which results in short term supply costs, and long-term savings.
the power they have is they are a market. they can cut our companies out of that market. worked out great for the ussr. where i lived. we had 2 pulse dial phones. because no tone dial, and no call waiting. and no answering machine. in 1991. because the ussr closed that market to western companies.
let me ask you -how much do western companies care about that market, with chinese buying stuff from an american company, that was made in china? my wife is chinese. they don't buy it. they buy some local cheap fake ripoff. and the rich people who get that iphone? they'll still get it, as a status symbol, and either import it, or buy it overseas. apple still sold them one. except now it was made in india.
and short supply chains are not good. comparative advantage is good. a town that makes screws is good, and it makes them more efficiently, located near an iron mine. a town that makes glass is good -located near a lot of sand. shipping screws around from one large factory is a lot better than having to ship iron to fifty small screw factories, each of which is not running at optimal output, since demand varies. demand varies a lot less if you're making screws for 50 different industries, instead of for a microwave only. same reason mutual funds are a thing.
the reason china seems efficient is nine of the true cost is ever evident. it's all fake, it's all regulated by the government. chinese solar panels are a great example. cheap, not due to that efficient 'solar panel town.' because they lose money on each one.
instead of disempowering china, what we need is to focus on empowering ourselves for long-term cheaper stuff, and take that initial short-term hit on higher supply prices while we move production. and the tarrifs, the bans, and pissing off china with moves like in the article, so they start treating our companies like crap, is exactly the way to accomplish that. as far as our farmers selling their soybeans? demand goes down, plant something else.
Comac aircraft are barely even functional. They're death traps and which is why they're only sold in China to state-owned airline companies.
China has leverage over US companies, but that's not without consequences. China doesn't have leverage over the US though. US would be okay with some US companies losing out in China and using that as a tool to drive it's own companies out of China.
> There is plenty of cheap labor in Latin America.
I too believe the US has to invest in and cultivate industrial relationships in Latin America. That said, it has been years since China's advantages boiled down to cost of labor.
The manufacturing advantage China developed over decades is to have highly integrated short supply pipelines for a massive category of products.
Want to make washing machines? There are entire towns dedicated to making them and they make every component for your washing machines within a one hour truck ride.
Want to make microwave ovens? Same thing. Computers? Ditto. Desks? Chairs? Shelving units? Plumbing fittings and valves? Same.
The length of a supply pipeline is a crucial cost element in any manufacturing operation. China has the most efficient, short and well integrated multidisciplinary supply chain in the world.
Let's say you want to make microwave ovens in Los Angeles. Your screws might come from New York. Wires from China. Glass from Germany. Microprocessor and other chips from Singapore, Taiwan and China. Other components from Japan. Sheet metal, cardboard and packaging materials from Mexico. Etc.
The cost of such a disjointed supply pipeline is massive when compared to what they do in China. It is far less about hourly wages these days and more so about this.
One of the reasons for which we can't make anything in the US or Europe is that we don't own the supply chain. It isn't the case that we were short in PPE, gowns, syringes and other medical supplies because Trump is an idiot (insert any politician, at any level, in the US or Europe in that statement). Not so.
The reality of what we ran into as this pandemic gained strength is that we have no supply pipeline for anything other than a very narrow set of industrial and military products. Everything else is in China. Europe has the same problem. We don't even make the cloth, the yarns, elastics, adhesives and staples you need to manufacture N95 masks. Even worse, we likely don't make any of the components you need in order to make a machine that can test N95 masks.
Those of us in manufacturing have been screaming about this for decades. This was OBVIOUS twenty years ago. It was MANAGEABLE thirty to forty years ago. It is near checkmate today.
Who's at fault? Our politicians. We (US and Europe) have been treated to decades of politicians seemingly devoid of business sense and long term visions. The Chinese, instead, saw this and decided to take a long term view (decades) towards achieving a goal. And here we are.
Go around your house and make a list of how man items you own that were made in China and how many --if you can find any-- in the US or Europe. Then understand that if something says "Made in USA" or "Made in France", it is very likely that every single internal component was made in China. So, where was it really made? Right?
This situation is far more complex than most realize. Which, in and of itself, is how we got here.
Ultimately cost of labor alone isn't going to be the deciding factor, and when I say "plenty of cheap labor in Latin America" I'm not suggesting that we can save money in the short term by moving our factories there. I'm suggesting an affordable alternative, geographically closer to home, in a set of countries that (when compared to China) are smaller, more defensible, and culturally more similar to us. We have seen evidence that China's manufacturing sector includes slave labor. You can't compete with slave labor! This is why the "it's just business, save a penny where you can" mentality totally misses the point.
We have to spend some money to get out of this mess. For a major corporation, this would mean spending less on buybacks in order to build new manufacturing facilities elsewhere. For our government, this would mean coordinating with our companies and foreign ally governments to manage a concerted effort at creating new manufacturing ecosystems in mutually-agreed-upon regions that offer logistical and tax advantages.
With respect to your point about efficient, short and well integrated supply chains: large corporations have to be the first movers. They are the only ones who can begin to cultivate the seedlings of regional manufacturing ecosystems developed around the production of a particular type of product.
There are large negative externalities to cross-pacific shipping, and these externalities have to be considered when we answer the question, "how much money do we save by getting our stuff from China?". One such externality is the cost of US-taxpayer-subsidized shipping from China.
Another is that both sides suffer from invasive species that affect billions of dollars of revenue in tangential industries. The spotted lanternfly was introduced to Berks County, Pennsylvania, in a shipment of stone from China a few years ago. It now threatens billions of dollars of economic productivity from the hardwood, fruit, hops, and wine industries in that state alone. This is but one example of a greater phenomenon. If you source closer to home, some of the invasive species risk gets mitigated.
Beijing doesn't that much ammo. I feel people who say this havent done the necessary mental exercise. Because it seem apparent Beijing only real tool was that they were quiet until now.
Not only have they been firing back, they been doing it for a while. I don't see how you can make the argument they haven't based on their threats, stealing of intellectual property, debt diplomacy and everything else they've done to the US and its allies. The US biggest benefit is everyone now is paying attention. Everyone agrees that China is a threat while 4 years ago we laughed at the thought.
The idea that companies manufacture in china because of the cheap labor is misleading. Factory labor in China is not significantly cheaper than other countries. The benefit of China is the supply chain. The availablity of parts, factories, and labor is astonishing. There is no where else like it. There are entire cities devoted to manufacturing.
32 comments
[ 1.4 ms ] story [ 65.7 ms ] thread> "All I know, it's illegal to have open burning in the city of Houston like that," Houston Fire Chief Samuel Peña said.
[1]: https://www.chron.com/houston/article/U-S-orders-Chinese-Con...
The U.S used shredder to destroy document in Iran in 70s but Iranians were able to piece back the document to get intel from it so I guess the intelligence community learned a lesson there.
[1]: https://www.msnbc.com/all-in/watch/why-was-the-russian-consu...
If the shredder shreds with 1mm particles, it will be pretty much impossible to piece it together and it will depend on how each page mixes with other particles. Even if the particle size is 100mm, if you throw those pieces in a pile of 500 tons of paper, and shuffle it sufficiently, then it will be impossible to piece together the original source.
https://en.m.wikipedia.org/wiki/DARPA_Shredder_Challenge_201...
After the Shah of Iran was overthrown, the US Embassy shredded documents.
The next government hired an army of women, presumably weavers, to successfully reassemble the documents.
Rather than making token attacks on them while continuing to consume the goods they make, we should smile and be friendly while methodically moving our manufacturing demand closer to home. There is plenty of cheap labor in Latin America.
Good, let them. That will ensure there's no doubt that we need to decouple with them.
> we should smile and be friendly while methodically moving
Japan has already started that with mfg.
We should do that too, along with unwinding their hegemony over port facilities world-wide. China is literally copying what Japan did in WW2, except with US capital instead of invasions.
It is not too difficult to just look at the trade deficit with China.
Not just USA, China has a huge amount of leverage with every nation in the EU, Switzerland, Australia, India, vast APEC region, Korea, Japan and South America.
Just look around you and find out what's not made in China.
I just opened a can of Geisha [1] oranges in syrup. Sounds Japanese, nope, it's made in China.
[1] https://www.geishabrand.com/Products/Fruits
Even if China was a free society, completely open culture and they allowed mass protests, guns, and weapons, didn't have a military, hung Abraham Lincoln's posters everywhere and declared Edward Snowden as the president - we should not put all of our eggs in one basket.
For example, USA produced 21 million metric tons of polyethylene in 2019, exported ~9 million metric tons ($10 Billion), and imported about half what we exported ($5 Billion).
Umm what? They have almost no leverage what-so-ever. China needs those corporations in China to survive. Those are pieces of leverage against China, not something that China can leverage for themselves against others. The reason they're not striking back is because they're already scared of the corporate flight that's occurring from the tariffs. They don't want to do anything that would exacerbate that.
If you don't consider this to be "leverage," then perhaps you can suggest another name.
China doesn't need any one country's corporations in order to survive. Even if what you're saying had been true 20 years ago, I think it's incorrect to believe that China has no leverage over corporations that do business in their massive manufacturing sector today.
China doesn't even need the West to be involved in HK, and they have acted to that effect. HK has become a much smaller contributor to their economy than it was when Britain ceded HK to China, in relative terms.
If Apple's assembly campuses in China shut down tomorrow, Apple will be unable to manufacture iPhones, but China would be able to absorb some of the redirected demand in the form of handsets from Oppo, Vivo, Huawei, Xiaomi, etc. Samsung would pick up a lot too.
If Boeing (which contrary to your zero-leverage thesis was strong-armed into opening a finishing plant in China) shuts down sales to Asia Pacific tomorrow, China will be able to take up demand in the form of aircraft sold by Comac. Even if not, a moratorium on Boeing purchases in China would tilt the Airbus-Boeing duopoly toward Airbus.
Apple generated $260B in revenue last year, and Boeing generated $77B. China's GDP was $27T (PPP). See the difference? Our companies need them, but they don't need our companies.
Even if the manufacturing sector were to disappear tomorrow, China would be a huge consumer market. Their buying power is a form of leverage. When you make them the world's factory on top of their substantial consumer activity, that gives them immense power to shape the economic behavior of foreign governments and corporations.
Why do you think that Apple acquiesces to China's government despite claiming to be pro-democracy and pro-privacy back in the States? It's not because China lacks leverage, that's for sure.
The first step to disempowering China is to accept reality; American consumption of Chinese goods has basically subsidized the growth of that country. Once we have accepted the problem, we can take steps to solve it.
what you are talking about is short term pain that goes away in a year as the factory in china moves to a factory in india, and the supply cost of an iphone goes up. after that, it goes way down, because at this point, china is actually no longer cheap.
we don't need to 'disempower' china -who gives a crap about their power. we, 'the buyer' don't need to think about them, 'the seller.' we go to a different store, which results in short term supply costs, and long-term savings.
the power they have is they are a market. they can cut our companies out of that market. worked out great for the ussr. where i lived. we had 2 pulse dial phones. because no tone dial, and no call waiting. and no answering machine. in 1991. because the ussr closed that market to western companies.
let me ask you -how much do western companies care about that market, with chinese buying stuff from an american company, that was made in china? my wife is chinese. they don't buy it. they buy some local cheap fake ripoff. and the rich people who get that iphone? they'll still get it, as a status symbol, and either import it, or buy it overseas. apple still sold them one. except now it was made in india.
and short supply chains are not good. comparative advantage is good. a town that makes screws is good, and it makes them more efficiently, located near an iron mine. a town that makes glass is good -located near a lot of sand. shipping screws around from one large factory is a lot better than having to ship iron to fifty small screw factories, each of which is not running at optimal output, since demand varies. demand varies a lot less if you're making screws for 50 different industries, instead of for a microwave only. same reason mutual funds are a thing.
the reason china seems efficient is nine of the true cost is ever evident. it's all fake, it's all regulated by the government. chinese solar panels are a great example. cheap, not due to that efficient 'solar panel town.' because they lose money on each one.
instead of disempowering china, what we need is to focus on empowering ourselves for long-term cheaper stuff, and take that initial short-term hit on higher supply prices while we move production. and the tarrifs, the bans, and pissing off china with moves like in the article, so they start treating our companies like crap, is exactly the way to accomplish that. as far as our farmers selling their soybeans? demand goes down, plant something else.
China has leverage over US companies, but that's not without consequences. China doesn't have leverage over the US though. US would be okay with some US companies losing out in China and using that as a tool to drive it's own companies out of China.
I too believe the US has to invest in and cultivate industrial relationships in Latin America. That said, it has been years since China's advantages boiled down to cost of labor.
The manufacturing advantage China developed over decades is to have highly integrated short supply pipelines for a massive category of products.
Want to make washing machines? There are entire towns dedicated to making them and they make every component for your washing machines within a one hour truck ride.
Want to make microwave ovens? Same thing. Computers? Ditto. Desks? Chairs? Shelving units? Plumbing fittings and valves? Same.
The length of a supply pipeline is a crucial cost element in any manufacturing operation. China has the most efficient, short and well integrated multidisciplinary supply chain in the world.
Let's say you want to make microwave ovens in Los Angeles. Your screws might come from New York. Wires from China. Glass from Germany. Microprocessor and other chips from Singapore, Taiwan and China. Other components from Japan. Sheet metal, cardboard and packaging materials from Mexico. Etc.
The cost of such a disjointed supply pipeline is massive when compared to what they do in China. It is far less about hourly wages these days and more so about this.
One of the reasons for which we can't make anything in the US or Europe is that we don't own the supply chain. It isn't the case that we were short in PPE, gowns, syringes and other medical supplies because Trump is an idiot (insert any politician, at any level, in the US or Europe in that statement). Not so.
The reality of what we ran into as this pandemic gained strength is that we have no supply pipeline for anything other than a very narrow set of industrial and military products. Everything else is in China. Europe has the same problem. We don't even make the cloth, the yarns, elastics, adhesives and staples you need to manufacture N95 masks. Even worse, we likely don't make any of the components you need in order to make a machine that can test N95 masks.
Those of us in manufacturing have been screaming about this for decades. This was OBVIOUS twenty years ago. It was MANAGEABLE thirty to forty years ago. It is near checkmate today.
Who's at fault? Our politicians. We (US and Europe) have been treated to decades of politicians seemingly devoid of business sense and long term visions. The Chinese, instead, saw this and decided to take a long term view (decades) towards achieving a goal. And here we are.
Go around your house and make a list of how man items you own that were made in China and how many --if you can find any-- in the US or Europe. Then understand that if something says "Made in USA" or "Made in France", it is very likely that every single internal component was made in China. So, where was it really made? Right?
This situation is far more complex than most realize. Which, in and of itself, is how we got here.
Ultimately cost of labor alone isn't going to be the deciding factor, and when I say "plenty of cheap labor in Latin America" I'm not suggesting that we can save money in the short term by moving our factories there. I'm suggesting an affordable alternative, geographically closer to home, in a set of countries that (when compared to China) are smaller, more defensible, and culturally more similar to us. We have seen evidence that China's manufacturing sector includes slave labor. You can't compete with slave labor! This is why the "it's just business, save a penny where you can" mentality totally misses the point.
We have to spend some money to get out of this mess. For a major corporation, this would mean spending less on buybacks in order to build new manufacturing facilities elsewhere. For our government, this would mean coordinating with our companies and foreign ally governments to manage a concerted effort at creating new manufacturing ecosystems in mutually-agreed-upon regions that offer logistical and tax advantages.
With respect to your point about efficient, short and well integrated supply chains: large corporations have to be the first movers. They are the only ones who can begin to cultivate the seedlings of regional manufacturing ecosystems developed around the production of a particular type of product.
There are large negative externalities to cross-pacific shipping, and these externalities have to be considered when we answer the question, "how much money do we save by getting our stuff from China?". One such externality is the cost of US-taxpayer-subsidized shipping from China.
Another is that both sides suffer from invasive species that affect billions of dollars of revenue in tangential industries. The spotted lanternfly was introduced to Berks County, Pennsylvania, in a shipment of stone from China a few years ago. It now threatens billions of dollars of economic productivity from the hardwood, fruit, hops, and wine industries in that state alone. This is but one example of a greater phenomenon. If you source closer to home, some of the invasive species risk gets mitigated.
Not only have they been firing back, they been doing it for a while. I don't see how you can make the argument they haven't based on their threats, stealing of intellectual property, debt diplomacy and everything else they've done to the US and its allies. The US biggest benefit is everyone now is paying attention. Everyone agrees that China is a threat while 4 years ago we laughed at the thought.
Didn’t Mr. Bolton said that China was asked to help with re-election? If that’s the case then this is just another political distraction.
J