If the US could automate low-value manufacturing through robotics and get a significant cost advantage over China and pull back much of the low-value manufacturing that it lost, while getting very little labor benefit in the process, it would still be ideal for numerous reason to achieve that outcome (tax base, deprive China of that value, onshore capital and technology investment, some construction & maintenance value, wider economic ecosystem, and so on).
China's big problem with this process is of course that they have 1.4 billion people. High-value replacement jobs for so many of their low-value manufacturing workers is something beyond difficult (you don't need 100 million software developers to build China's tech infrastructure; you don't need 10x the workers to build as many planes as Boeing or Airbus do). High-value manufacturing for example doesn't absorb labor like low-value manufacturing does. Their social welfare costs over the next 30-40 years will be extraordinary as their demographics rapidly shift toward being an older society. They're already into a workforce decline demographically, those aging & retiring workers begin to shift more to the liability column in terms of cost. They need their workforce employed and pumping tax dollars into the system. Automation is not China's friend, even if they're the ones doing it to themselves (if they had a critical national labor shortage, that would be a different matter).
If China were to take over all of Germany's auto manufacturing (obviously we're talking a huge share of the global auto market), how many jobs is that worth to China and how does that scope to their 1.4 billion context (Germany has a mere 83m people)? What does something like that do for their context. That's the essential China labor and automation problem going forward. They could conquer a lot of high value manufacturing and be worse off overall than they are now, unless they can somehow keep all of their people employed, keep most of their low-value manufacturing employment simultaneously. And if China did use 4x the labor to build the equivalent of Germany's auto output (say they absorb their labor oversupply that way), that then caps the ability for that labor to rise economically, the margins won't be there to support far higher incomes, which has serious social consequences in terms of stability in China long-term. China would probably need to own all high-value manufacturing globally to both keep their people employed and keep incomes rising like they have been."},"story_title":{"matchLevel":"none","matchedWords":[],"value":"Why is China smashing its tech industry?"},"story_url":{"matchLevel":"none","matchedWords":[],"value":"https://noahpinion.substack.com/p/why-is-china-smashing-its-tech-industry"}},"_tags":["comment","author_adventured","story_28036847"],"author":"adventured","children":[28049387],"comment_text":"It's not the plan, it is probably an inevitability. If you could automate your textiles, with 1/100th the labor, while retaining it all, you'd still want to keep it even at a reduced labor benefit, rather than see it go to China or elsewhere. China would rather keep all of their textile industry and hyper automate it, than see it leave to countries like Vietnam. Keeping industry like that internally has vast benefits, in terms of profit/savings, capital, technology and economic eco-system, leverage, influence, and so on.
If the US could automate low-value manufacturing through robotics and get a significant cost advantage over China and pull back much of the low-value manufacturing that it lost, while getting very little labor benefit in the process, it would still be ideal for numerous reason to achieve that outcome (tax base, deprive China of that value, onshore capital and technology investment, some construction & maintenance value, wider economic ecosystem, and so on).
China's big problem with this process is of course that they have 1.4 billion people. High-value replacement jobs for so many of their low-value manufacturing workers is something beyond difficult (you don't need 100 million software developers to build China's tech infrastructure; you don't need 10x the workers to build as many planes as Boeing or Airbus do). High-value manufacturing for example doesn't absorb labor like low-value manufacturing does. Their social welfare costs over the next 30-40 years will be extraordinary as their demographics rapidly shift toward being an older society. They're already into a workforce decline demographically, those aging & retiring workers begin to shift more to the liability column in terms of cost. They need their workforce employed and pumping tax dollars into the system. Automation is not China's friend, even if they're the ones doing it to themselves (if they had a critical national labor shortage, that would be a different matter).
If China were to take over all of Germany's auto manufacturing (obviously we're talking a huge share of the global auto market), how many jobs is that worth to China and how does that scope to their 1.4 billion context (Germany has a mere 83m people)? What does something like that do for their context. That's the essential China labor and automation problem going forward. They could conquer a lot of high value manufacturing and be worse off overall than they are now, unless they can somehow keep all of their people employed, keep most of their low-value manufacturing employment simultaneously. And if China did use 4x the labor to build the equivalent of Germany's auto output (say they absorb their labor oversupply that way), that then caps the ability for that labor to rise economically, the margins won't be there to support far higher incomes, which has serious social consequences in terms of stability in China long-term. China would probably need to own all high-value manufacturing globally to both keep their people employed and keep incomes rising like they have been.","created_at":"2021-08-02T22:56:28Z","created_at_i":1627944988,"objectID":"28043723","parent_id":28042568,"story_id":28036847,"story_title":"Why is China smashing its tech industry?","story_url":"https://noahpinion.substack.com/p/why-is-china-smashing-its-tech-industry","updated_at":"2024-09-20T09:05:19Z"},{"_highlightResult":{"author":{"matchLevel":"none","matchedWords":[],"value":"kbuchanan"},"comment_text":{"matchLevel":"none","matchedWords":[],"value":"Don't forget that the sales narrative can also be _true_. In other words, giving context, perspective, and a vision is a necessary part of understanding the solution you're providing. How many companies have been bought and sold to others' dismay? ("How can surveys be worth $8 billion?!?") Context."},"story_title":{"matchLevel":"none","matchedWords":[],"value":"The greatest sales deck I've ever seen (2016)"},"story_url":{"matchLevel":"none","matchedWords":[],"value":"https://medium.com/the-mission/the-greatest-sales-deck-ive-ever-seen-4f4ef3391ba0"}},"_tags":["comment","author_kbuchanan","story_18532908"],"author":"kbuchanan","comment_text":"Don't forget that the sales narrative can also be _true_. In other words, giving context, perspective, and a vision is a necessary part of understanding the solution you're providing. How many companies have been bought and sold to others' dismay? ("How can surveys be worth $8 billion?!?") Context.","created_at":"2018-11-26T16:10:31Z","created_at_i":1543248631,"objectID":"18534298","parent_id":18533420,"story_id":18532908,"story_title":"The greatest sales deck I've ever seen (2016)","story_url":"https://medium.com/the-mission/the-greatest-sales-deck-ive-ever-seen-4f4ef3391ba0","updated_at":"2024-09-20T03:19:51Z"}],"hitsPerPage":20,"nbHits":4,"nbPages":1,"page":0,"params":"query=billion-context&advancedSyntax=true&analyticsTags=backend","processingTimeMS":16,"processingTimingsMS":{"_request":{"queue":15,"roundTrip":17},"afterFetch":{"merge":{"mergeLoop":{"prepareNextHit":1,"total":1},"total":1},"total":1},"fetch":{"query":5,"scanning":8,"total":14},"total":16},"query":"billion-context","serverTimeMS":31}