Chip war to contain China

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The chip war on China is the first step in Western containment of that nation. This probably makes armed conflict more not less likely. But it also means the end of any Chinese empire via eight steps:

Step 1: catch-up growth ends with construction economy bust as demographics slide away
Step 2: logical move up value-added production chain blocked by US chip sanctions
Step 3: growth falls inexorably into the middle-income trap
Step 4: CPC stokes (more) nationalism as a substitute for its failing economic legitimacy
Step 5: as living standards stall and fall, CPC invades Taiwan
Step 6: NATO+ excises China from the global economy a’la Russia
Step 7: China collapses inwardly within “the next decade” or so

The US is actively preparing for this via re-industrialisation.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.