Xi Jinping has made a staggering miscalculation. He has shown the world that he is ready to invade Taiwan, throwing The Center of Everything (“China” in English) back several centuries. In effect, making The Center the center of nothing.
The woman who pushed him into showing his enormous weaknesses is the Speaker of the U.S. House of Representatives, Nancy Pelosi. She has no executive power, no control of the military, nothing. Powerless as she is, when she visited Taiwan, Xi rushed into her trap. Now he is caught. If he doesn’t invade Taiwan and assert Center authority there, he will be shown for what he is and pay a very high price. So, to preserve his Trumpista sense of manliness, he must invade. The Center’s economy will implode overnight. It won’t be the center of anything.
How dumb can Xi be?
The numbers tell Xi everything he needs to know. But, being dumb as Don, he evidently doesn’t.
The Center exports $419 billion to the US and $709 billion to the EU for a total of $1.1 trillion or 6.2% of its economy. Total exports are about 18% of the Center’s economy. That’s a staggering 133 million jobs. Xi can expect a minimum of 75% of these, or 100 million, to vanish overnight if he invades Taiwan.
If he doesn’t invade Taiwan to show how manly he is in face of Nancy’s challenge, he goes down. If he does invade, the numbers say that his whole country goes down. Worse, The Center’s trade surpluses have financed The Center’s growth since The Party’s Tiananmen screw up. This money engine will be gone. For a very, very long time.
Do we get away scot-free?
Nope.
Apple depends on The Center for 18% of its smartphone sales and 90% of its production. If Xi invades Taiwan, Apple disappears overnight. General Motors isn’t much better off. The Center is its largest market worldwide, accounting for 50% of sales. You can give it a week before it closes. Intel is slightly better off. It has three facilities in The Center and The Center accounts for about a quarter of its sales. Disney? The Center is the largest movie market in the world and core to Disney’s survival. Walmart is in good shape. Of its 10,500 stores, only 397 are in The Center.
There are some really dumb folks out there. The world’s largest asset manager, Blackrock, just raised a $1 billion fund to invest in The Center.
The risks of doing business in The Center are now so great that no company can afford to have even a single femtometer of its ecosystem there. Xi has made it clear that, to minimize risk and maximize shareholder value, all foreign companies must leave The Center. Fast.
Xi made an additional mistake, and it’s a big one. By showing his Trumpian manliness to Nancy, he showed his hand: how he will attack Taiwan, with what and The Center’s military weaknesses and vulnerabilities. Xi has given a spectacular amount of free information to Taiwan and its allies. For what possible advantage?
He added to this show of weakness by placing limited embargoes on only those Taiwanese goods that have a minimal impact on Taiwan’s economy. And The Center’s. In other words, he admitted that The Center is too dependent on global trade to attack Taiwan. Yet that he is dumb enough to do this anyway. Make any sense?
Then there is the case of TSMC, Taiwan Semiconductor, the world’s largest producer of semiconductors. The moment The Center attacks Taiwan, TSMC vanishes and, with it, vital supplies for Center companies. One reason why TSMC is building a $12 billion fab in Arizona is to make strategically important 5 nanometer chips there by 2024.
How effective was Xi’s military bluster? Taiwan just got another Congressional delegation and the U.S. is starting trade talks.
Had Xi any brains, he would long ago have ported the Hong Kong system to The Center, giving Taiwan every reason to work with a democratic, open, free market country. No conflict, no loss of lives, no loss of global position. And lots of new business and economic growth. Taiwan might even have sought unification with The Center.
The Center would have been back in the center. And Xi the center of The Center.
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