This is the sixth post discussing content from a program mounted by NACD New England, exploring the business ramifications of the recent Presidential election. International business is affected by Federal policy and of course by war and international tensions, and the United States also is engaged in a world-wide high-stakes sparring match with China that affects both business and peace.
The immediately prior post concerning the US-China battle over AI supremacy addressed part of this issue, the need for AI supremacy to maintain business supremacy. But there is more to the Chinese story.
China’s diplomatic efforts to achieve traction in the Mediterranean, South America, Asia generally and India in particular, is a direct challenge to US interests. But an important unknown is whether China will move against Taiwan and its premier chip manufacturing facility, a move that seems to be more likely. What underlies this likelihood?
China today is suffering under numerous internal pressures. Local governments and banks are in deep trouble due to debt from the housing crisis. We were told that 64,000,000 housing units were unoccupied, a number that seems almost impossible to understand. The government admits that 18% of younger Chinese are unemployed, and the panel thinks the real percentage is at or above 25%. Families are not having children. Women are not even marrying. Riots and killings have broken out, reportage is not permitted to reach the press, but,theseare signs of social unrest. The panel believes that Xi is under very great pressure and some risk, internally. This alone may make a war with Taiwan more possible, diverting attention and creating a rallying nexus. In this context, recent activity in the Straits and the South China Sea takes on more ominous context. The impact of a Chinese take-over of Taiwan on US business and AI prospects would be significant.
The prior post also noted that AI demands for power should affect US policy towards energy-rich Canada.
There was passing mention of relations with Mexico, without substantive analysis except to say that no major changes were anticipated. [SH note: what if deportees are dumped into Mexico?]
The panel noted that the war in Ukraine very likely would be brought to an end with surrender of land to Putin under the new administration, Trump having the geopolitical views he has expressed and his aversion to being involved with wars abroad or financing them. The same may well be applied to the Middle East, more pressure to settle. It was thought that Trump might well have leverage to apply in favor of the Abraham Accords, ability to pressure Saudi Arabia to recognize Israeli existence as part of a peace deal, and greater leverage with the Israeli government.
The panel seemed to treat political alliances and initiatives as integral to ultimate business dealings, and pointed out the major efforts of China to court the third world and particularly India which could in the long run prove to be a major market and substantive player. The Belt and Road economic initiative also had opened up Chinese business and influence in new markets that the US business fails to reach. In this sense, the panel seemed to assume that political progress made by China was synergistic with business initiatives and that in some sense markets were getting closed to US business in the long run, markets that would be greatly expanding.
Further, to the extent global thinking contemplated the US courting India as a counter-weight to China, the combination of Chinese inroads and proximity might be taking that thought off the table.
Finally, Europe by history has been and remains important to US business and trade. How will Trump deal with new leadership emerging in Italy, France and Germany? What attention will he pay to Britain, which itself is on a downward path? If the new administration turns on NATO, or walks away again from the Paris Accords, will American trade with Europe deteriorate? All of the EU is in a slow growth mode, not gaining population, reliant on Russian fossil fuels. The panel seemed concern about US relationships in Europe, but expressed the view that things might stabilize if NATO was “stable enough,” an undefined metric.
The last post will discuss the posture that American boards of directors, and thus the companies they lead, might adopt in light of the change of administration.