simply far too many absolute economic gains to be lost for other economies, even for the most ardent allies. To put it bluntly, who is going to call President Macron some fateful day and tell him that France can no longer sell Airbus planes to China?
Marko Papic is a Partner and Chief Strategist at Clocktower Group, an alternative investment asset management firm based in Santa Monica, California. He is also the author of Geopolitical Alpha: An Investment Framework for Predicting the Future (Wiley 2020), a book that introduces his constraints-based framework to investors. This article is based on a chapter from his book. laughable attempt at playing high-level geopolitics (they simply re-list in Hong Kong, or Frankfurt, or London, and make some other country’s bankers and brokers money!). Cutting off China’s access to U.S.-designed microprocessors apparently halts production in U.S. auto factories as much as in China’s. These are crude policies designed by technocrats with little imagination and no historical context. The geopolitical context in which we find ourselves resembles the 19th century far more than the 20th. If there is anything we should learn from that century, it’s that alliances were fluid, red lines were blurred, and outcomes were often unexpected. Given the stakes for everyone involved, both Beijing and Washington should remember these lessons. The point is that a neat bifurcation of the globe into two economic spheres is just not going to happen.
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The answer, of course, is nobody... Instead, the U.S. will be forced to continue to trade and invest in China simply because others – including its geopolitical allies – will. The U.S. will dance to the tune of halted, albeit still actionable globalization, lest it fall behind in the global race for innovation and markets. This does not mean that U.S. policymakers cannot use the access to their own market to force compliance with intellectual property laws, labor regulations, a domestic industrial policy, or any other policy that furthers national interests. Or that they cannot use tariffs and currency devaluation to gain an advantage from time to time. These are all fair game, just as they have been over the past century. The point is that a neat bifurcation of the globe into two economic spheres is just not going to happen. Forcing allies into compliance with such a vision, neatly copy- pasted from the Cold War chapter of the history books, will lead to folly. Unfortunately, U.S. strategists are going to have to work much harder than they thought if they mean to beat China in the geopolitical arm-wrestling match. Forcing Chinese companies to delist from the New York Stock Exchange is a particularly
American Consequences
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