India and Australia stand up to PRC and lead Boycott of trade
With the PRC backtracking on the deal with Hong Kong, COVID-19 deaths and world-wide economic disaster, PRC bullying and threats, and Debt Trap Diplomacy, much of the world is moving away from the dependence of the PRC as fast as possible. However, ending all trade with China is logistically and financially impossible.
Why is India is Boycotting China?
India has had military border battles for years with the PLA (Peoples Liberation Army). As late as a few weeks ago, there was a border altercation between a PLA platoon and a platoon from India in the border in the Himalayan Mountains. China is actively trying to control ports on either side of India to put pressure on trade from India. China is looking to control a port in Myanmar, Sri Lanka, and Pakistan. China also tried to offer incentives to the Maldives, but that deal seems to have been rebuffed, leading to increased ties to India and the US.
Why is Australia Boycotting China?
The PRC has overplayed its hand with bullying Australia, causing the Aussie Government and people to retaliate politically and economically. Australia has unique leverage over the PRC for two reasons:
- They are a massive consumer of Chinese manufactured products.
- But far more importantly, Australia supplies China with a significant portion of its iron ore, which is needed to make steel. Steel is one of China’s biggest and most strategic exports.
Moreover, the Australian Prime Minister, said last week, “why should Australia so much iron ore to China when we can start making steel ourselves.”
PRC’s Belt and Road Initiative or Debt Trap Diplomacy
Africa is another producer of iron ore but will take several years to build up infrastructure to replace the Australian supply. China has already made infrastructure Belt and Road Initiative loans to several countries in Africa that cannot be repaid, giving the PRC port access in Africa. There are rumors that the PLAN (Peoples Liberation Army’s Navy) will make a base in Africa. The PRC uses “Debt Trap Diplomacy” via high-risk infrastructure loans to countries with strategic ports to gain access.
Economic Motivations for Countries to side against China
With the vastly increased business risks, many (not all) western companies are fleeing from relying solely on China for their supply chain and manufacturing. These plants have to somewhere so India, Australia, The Philippines, Vietnam, Mexico, Canada, South America, and the US. The new plants moving to these countries will be a boon to many manufacturing countries not named China.
China’s leverage on the World
The Boycott and moving of plants from China will most certainly hurt the PRC economy. China’s economy has shrunk by 6% in recent months. However, China’s manufacturing is vast. China will always make vital and strategic goods. Two primary strategic goods that are “made in China” are the steel mentioned above as well as modern computer chips. Russia’s Angstrom Holdings just went under, AMD may have just dodged a bullet and is now announcing new product offerings. But are can they replace the modern chips from Huawei? Some techies say, “no – not possible.” The modern semi-conductor is clearly a vital issue for the world. The US and much of the world put the brakes on Huawei products due to fears of back door code that could hold the world hostage.
Military Risks for the World over China
- India does not need a wall between it and China. Instead, they have the most massive mountain range in the world – The Himalayans. The mountain passes are too small and will make an invasion by the PLA or India a bloodbath. The PLAN will have access to ports in the Indian Ocean, but the US still has Diego Garcia in the middle of the Indian Ocean for airstrikes. Plus, India has as many aircraft carriers as does China. Moreover, China’s naval jets (the J-22) are underpowered, limiting their fuel or bomb load when taking off of their non-nuclear aircraft carrier. India, China, and Russia have some of the best hypersonic anti-ship missiles in the world.
- Australia (officially) and Taiwan (unofficially) will have the backing of the US military. Australia has an ocean between it and China. More importantly, the PLAN ships are not built for conducting operations at long distances. The Aussies just purchased more military hardware from the US, including sea-skimming anti-ship missiles.
- The Philippine Government just flipflopped from backing China to siding with the US for military access one week ago. The US is currently putting Marine units on various islands throughout the Pacific with lethal anti-ship batteries to deter PLAN aggressions. The Marine units will move randomly from island to island to make it harder for PLA ballistic missile attacks to take them out.
How to Monetize These Developments in China and the World
The US must create new steel factories, pharma manufacturing, and new and modern chip manufacturing. The US will need to subsidize these strategic areas with grants, tariffs, and other funding. These are areas to consider for investing purposes.