It is not by chance that China is starting to dominate new sectors like Electric Vehicles or ship building because this was all part of the plan. The Chinese government outlines and targets certain sectors for growth through a calculated strategy offering government subsidies for those companies involved. These advantages give them the edge to destroy their competitors and there is only 1 winner. This has been ongoing for the last 70 years and only since the 1990's have we seen how these plans perform.
This is not about playing by the rules and this is more about crippling the competitors knowing they have the advantages by being backed by the state. The competition is eliminated through unfair business practices with not only state backing via subsidies, but preventative measures blocking competitors via newly introduced trade barriers. The sectors that are on the plan will also be backed by Chinese state owned steel companies providing materials way below what their competitors are paying.
If one remembers how bad the 1990's were for local manufacturers as back then the Chinese government targeted this sector and manufacturing companies were either lured to China by the cheap labor or were forced out of business. When a sector is targeted by the state the aim is to remove the competition so the Chinese dominate that sector globally.
I did a post the other day on the EV market that China has been targeting with some success and this is not exactly as it seems. BYD has been aggressively attacking the local Chinese market and the auto industry globally. The numbers on paper are not as they seem and have been inflated to reflect a dominance in this sector. When you have 0km second hand cars moving ownership to shelf companies these are vehicles that have not been sold but still reflect in the sales figures.
Many believe the EV Chinese car manufacturers like BYD could be the next Evergrande due to debt that is spiraling out of control. BYD debt sits at a reported $4-$5 billion but this does not take into account money owed to suppliers which is sitting at 270 days or 9 months. This would place BYD's debt somewhere in the $45 billion range and without state backing are basically bankrupt. This is a false business model and is totally unsustainable giving the impression China is dominating the EV market.
China has been focusing on dominating maritime logistics and it is not a shocker to see them topping the ship building charts which they were not doing 20 years ago. The South Koreans and Japanese were the top 2 ship building countries back then with China emerging building smaller vessels. Today they build more than South Korea and Japan combined all down to government subsidies and cheap Chinese steel.
The plan is to dominate the logistics maritime trade sector via owning the fleets, container manufacturing which they have an 86% dominance today plus controlling the ports themselves. China control or own 129 major ports around the world in 90 countries with the expansion being a continuous project. Owning the fleets means there will be shipping subsidies coming for container exports from China which will hit Maersk and MSC trying to remove their dominance.
The top 3 shipping companies are not owned by the Chinese however they are heavily reliant on the Chinese for ship building. If like everything else the Chinese targets then this graph will look very different come 2030.
Chinese dominating this ship building sector which should only increase creating less competition and more job losses globally.
China over the next 5 years is investing in new alloys and materials such as carbon fiber so they are less reliant on importing raw materials. This is all about self sufficiency through innovation and research. New materials that can be used instead of steel and use less carbon emissions in manufacturing helping by pass the carbon emission taxes that will play a role in the future.
What is interesting to see is how the Chinese have a plan to dominate trade in the world whilst the rest of the world is caught up in migration issues. China is moving so fast the rest of the world needs to wake up because we have been left behind due to the idiots in charge running these countries.
The other part of their strategy which is key to all of this is to raise Chinese employment along with incomes creating an ever increasing local demand which in turn creates a thriving economy. If the Chinese can get the balance right here internally then the rest of the world is in big trouble.
